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| x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||||
2023
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| ☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||||
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DARÉ BIOSCIENCE, INC. (Exact Name of Registrant as Specified in its Charter) | ||||||||
Delaware |
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(State or Other Jurisdiction of |
| 20-4139823 (IRS Employer Identification No.) | ||||||
3655 Nobel Drive, Suite
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 | ||||||
Registrant’s telephone number, including area code
(858) 926-7655
(Former Name or Former Address, if Changed Since Last Report.)
Yes
x No o| Large Accelerated Filer |
| Accelerated filer |
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Non-accelerated filer |
| Smaller reporting company |
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Emerging growth company |
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Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒
x
statement. The following factors are among those that may cause •Inability to raise additional capital, under favorable terms or at all, to fund our operating needs and continue as a going concern; •Unfavorable differences between preliminary, interim or topline clinical study data reported by us and final study results; •Lack of patent protection for the active ingredients in XACIATO and certain of our product candidates that expose them to competition from other formulations using the same active ingredients; •Actual and anticipated fluctuations in our quarterly or annual operating results or results that differ from investors' expectations for such results; •Price and volume fluctuations in the •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. Item 1. Item 2. Item 3. Item 4. Item 1. Item 1A. Item 2. Item 3. Item 4. Item 5. Item 6. Statements (Unaudited) September 30, 2017 December 31, 2016 (unaudited) Assets Current Assets Cash and cash equivalents $ 8,529,220 $ 44,614 Other receivables 710,692 — Prepaid expenses and other current assets 1,143,373 — Total current assets 10,383,285 44,614 Goodwill 12,880,574 — Other non-current assets 2,800 — Total assets $ 23,266,659 $ 44,614 Liabilities and Stockholders’ equity (deficit) Current Liabilities Accounts payable and accrued expenses $ 839,374 $ 12,678 Convertible promissory notes — 697,500 Interest payable — 45,057 Total current liabilities 839,374 755,235 Deferred rent 157 — Total liabilities 839,531 755,235 Commitments and contingencies (Note 6) Stockholders' equity (deficit) 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, 6,047,161 shares issued and outstanding at September 30, 2017 and $0.001 par value, 10,000,000 shares authorized, 910,000 shares issued and outstanding at December 31, 2016 605 91 Accumulated other comprehensive loss (9,774 ) — Additional paid-in capital 25,535,872 17,123 Accumulated deficit (3,099,575 ) (727,835 ) Total stockholders' equity (deficit) 22,427,128 (710,621 ) Total liabilities and stockholders' equity (deficit) $ 23,266,659 $ 44,614 Stockholders’ Equity (Deficit) Three months ended September 30, Nine months ended September 30, 2017 2016 2017 2016 Operating expenses: General and administrative $ 1,052,628 $ 5,963 $ 1,729,338 $ 119,283 Research and development expenses 280,793 — 312,169 72,666 License expenses — — — 250,000 Total operating expenses 1,333,421 5,963 2,041,507 441,949 Loss from operations (1,333,421 ) (5,963 ) (2,041,507 ) (441,949 ) Interest income (expense) (296,262 ) (10,142 ) (330,233 ) (30,205 ) Net loss $ (1,629,683 ) $ (16,105 ) $ (2,371,740 ) $ (472,154 ) Other comprehensive loss, net of tax: Foreign currency translation adjustments $ (9,774 ) $ — $ (9,774 ) $ — Comprehensive loss $ (1,639,457 ) $ (16,105 ) $ (2,381,514 ) $ (472,154 ) Loss per common share - basic and diluted $ (0.33 ) $ (0.02 ) $ (1.04 ) $ (0.58 ) Weighted average number of common shares outstanding: Basic 4,986,226 820,000 2,283,673 820,000 Diluted 5,638,153 830,519 2,935,600 830,519 Nine months ended September 30, 2017 2016 Operating activities: Net loss for period $ (2,371,740 ) $ (472,154 ) Adjustments to reconcile net loss to net cash used in operating activities: Stock-based compensation 6,953 3 Non-cash interest 316,804 — Changes in operating assets and liabilities, net impact of acquisition: Other receivables — 250,000 Prepaid expenses and other current assets (224,433 ) — Other assets (2,800 ) — Accounts payable and accrued expenses 659,223 (13,401 ) Interest payable 36,776 30,205 Deferred rent 157 — Net cash used in operating activities (1,579,060 ) (205,347 ) Investing activities: Cash acquired through merger 9,918,440 — Net cash provided by investing activities 9,918,440 — Financing activities: Proceeds from issuance of convertible promissory notes 155,000 — Net cash provided by financing activities 155,000 — Effect of exchange rate changes on cash and cash equivalents (9,774 ) — Net increase (decrease) in cash and cash equivalents 8,484,606 (205,347 ) Cash and cash equivalents, beginning of period 44,614 219,413 Cash and cash equivalents, end of period $ 8,529,220 $ 14,066 ORGANIZATION AND DESCRIPTION OF BUSINESS future) will be by Organon and/or its affiliates, agents or sublicensees. Presentation liabilities that may result from the outcome of the uncertainty of the Company's ability to continue as a going concern. If Fair Value of Financial Instruments •Level •Level U.S. and received a $1.0 million upfront non-refundable license fee payment from Bayer. (See Note 3, Strategic Agreements.) Bayer, in its sole discretion, has the right to make the license effective by paying the Company an additional $20.0 million. The Company 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 1,689 Accounts payable (209 ) Total assets acquired and liabilities assumed 11,398 Goodwill $ 12,881 the agreement. The Number of Shares Weighted Average Exercise Price Outstanding at December 31, 2016 412,248 $ 42.04 Granted 156,349 8.11 Exercised — — Cancelled/expired (14,557 ) 51.38 Outstanding at September 30, 2017 (unaudited) 554,040 29.93 Exercisable at September 30, 2017 (unaudited) 545,640 $ 32.62 specified development work. The Company has Three months ended Nine months ended September 30, 2017 September 30, 2017 Expected life in years 10.0 4.6-10 Risk-free interest rate 2.26% 1.7-2.4% Expected volatility 127% 67%-127% Forfeiture rate 23.6% 1.86%-29.9% Dividend yield 0.0% 0.0% Weighted-average fair value of options granted $ 6.30 $ 4.49 Shares Underlying Outstanding Warrants Exercise Price Expiration Date 169 $ 17.70 August 8, 2018 2,906 $ 12.04 December 1, 2021 3,737 $ 12.04 December 6, 2021 17,190 $ 6.05 January 8, 2020 6,500 $ 1.00 April 4, 2026 30,502 not commenced. would be materially adversely affected. •expenses incurred under agreements with •laboratory and vendor expenses related to the execution of nonclinical studies and clinical trials; •contract manufacturing expenses, primarily for the production of clinical supplies; •internal costs Expenses estimates used in the preparation of our accompanying condensed consolidated financial statements, refer to Item 7 in Management’s Discussion and Analysis of Financial Condition and Results of Operations 2022 (Unaudited) Three months ended September 30, Change 2017 2016 Dollars Operating expenses: General and administrative $ 1,052,628 $ 5,963 1,046,665 Research and development expenses 280,793 — 280,793 Total operating expenses 1,333,421 5,963 1,327,458 Loss from operations (1,333,421 ) (5,963 ) (1,327,458 ) Interest income (expense) (296,262 ) (10,142 ) (286,120 ) Net Loss $ (1,629,683 ) $ (16,105 ) (1,613,578 ) Other comprehensive loss: Foreign currency translation adjustments $ (9,774 ) $ — (9,774 ) Comprehensive loss $ (1,639,457 ) $ (16,105 ) (1,623,352 ) approximately $23,000. 2022 (Unaudited) Nine months ended September 30, Change 2017 2016 Dollars Operating expenses: General and administrative $ 1,729,338 $ 119,283 1,610,055 Research and development expenses 312,169 72,666 239,503 License expenses — 250,000 (250,000 ) Total operating expenses 2,041,507 441,949 1,599,558 Loss from operations (2,041,507 ) (441,949 ) (1,599,558 ) Interest income (expense) (330,233 ) (30,205 ) (300,028 ) Net Loss $ (2,371,740 ) $ (472,154 ) (1,899,586 ) Other comprehensive loss: Foreign currency translation adjustments $ (9,774 ) $ — (9,774 ) Comprehensive loss $ (2,381,514 ) $ (472,154 ) (1,909,360 ) percentage: condensed consolidated financial statements contained in this report. Nine months ended September 30, 2017 2016 Net cash used in operating activities $ (1,579,060 ) $ (205,347 ) Net cash provided by investing activities 9,918,440 — Net cash provided by financing activities 155,000 — Effect of exchange rate changes on cash and cash equivalent (9,774 ) — Net increase (decrease) in cash $ 8,484,606 $ (205,347 ) receivables of approximately $1.1 million. 2022 was de minimis. 2022 of approximately $1.3 million primarily consisted of proceeds from sales of our common stock under our ATM sales agreement. Other Contractual Obligations Changes in Internal Control future. If a prolonged U.S. government shutdown or other event or condition occurs that prevents the FDA, NIH, SEC or other regulatory agencies from hiring and retaining personnel and conducting their regular activities, it could significantly impact the ability of these agencies to timely review and process our regulatory submissions and may impede our access to additional capital needed to maintain or expand our operations or to complete important acquisitions or other transactions, which could have a material adverse effect on our business. None. Incorporated by Reference Exhibit Number Description of Exhibit Form File Number Date of Filing Exhibit Filed 3.1 10-Q 001-36395 08/14/2017 3.1 3.2 Second Amended and Restated By-laws, effective July 20, 2017 8-K 001-36395 07/20/2017 3.3 Incorporated by Reference Exhibit Number Description of Exhibit Form File Number Date of Filing Exhibit Filed X 10.2 X 10.3 X 10.4 X 10.5 8-K 001-36395 08/18/2017 10.1 10.6 8-K 001-36395 08/18/2017 10.2 10.7 8-K 001-36395 08/18/2017 10.3 31.1 X 31.2 X 32.1 X 32.2 X 101.INS XBRL Instance Document X Date: November By: /s/ Sabrina Martucci Johnson Sabrina Martucci Johnson President and Chief Executive Officer (Principal Executive Officer) Date: November By: /s/ Lisa Walters-Hoffert Lisa Walters-Hoffert Chief Financial Officer (Principal Financial and Accounting Officer)CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTSThis 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 Quarterly Report on Form 10-Q,report, including statements regarding our strategy, future operations, future financial position, projected costs,revenue, funding and expenses, prospects, plans and objectives of management, are forward-looking statements. Forward-looking statements, include all statements that are not historical facts and, in some cases, can be identified by terms such as “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “design,” “intend,” “expect,” “could,” “plan,” “potential,” “predict,” “seek,” "pursue," “should,” “would”“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 “Risk Factors”Part II, Item 1A, "Risk Factors", in this report, and elsewhere in this report. Given these uncertainties, you should not place undue reliance on theseany forward-looking statements.actual results to differ materially from our forward-looking statements:•Failure to complete development of our product candidates or submit and obtain United States Food and Drug Administration, or FDA, or foreign regulatory authority approval for our product candidates on projected timelines or budgets, or at all;•Inability to demonstrate sufficient safety and efficacy of our product candidates;•The timely supply of XACIATO™ (clindamycin phosphate) vaginal gel 2%, or XACIATO, and our clinical trial supplies, including their components as well as the finished product, in the quantities needed in accordance with current good manufacturing practices, our specifications and other applicable requirements;•The performance of third parties on which we rely to conduct nonclinical studies and clinical trials of our product candidates;•Our failure, or a failure of a strategic collaborator, to successfully commercialize our product candidates, if needed;approved, or our failure to otherwise monetize our portfolio programs and assets;•The timing and amount of future royalty and milestone payments to us, if any, under our out-license agreements for commercialization of XACIATO and Ovaprene®;•Termination by a collaborator of our respective out-license agreements for commercialization of XACIATO and Ovaprene, or, in the case of Ovaprene, a decision by the collaborator not to make the license grant fully effective following its review of the results of a pivotal clinical trial of Ovaprene;•The performance of third parties on which we rely to commercialize, or assist us in commercializing, XACIATO and any future product;•Difficulties with maintaining existing collaborations relating to the development and/or commercialization of our product candidates, or establishing new ones on a timely basis or on acceptable terms, or at all;•The terms and conditions of any future strategic collaborations relating to our product candidates;•The degree of market acceptance that XACIATO and any future product achieves;•Coverage and reimbursement levels for XACIATO and any future product by government health care programs, private health insurance companies and other third-party payors;•Our loss of, or inability to attract, key personnel;•A change in the FDA's prior determination that the Center for Devices and Radiological Health would lead the review of a premarket approval application for potential marketing approval of Ovaprene;•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;•Communication from the FDA or another regulatory authority, including a complete response letter, that such agency does not accept or agree with our assumptions, estimates, calculations, conclusions or analyses of clinical or nonclinical study data regarding a product candidate, or that such agency interprets or weighs the importance of study data differently than we have in a manner that negatively impacts the candidate's prospects for regulatory approval in a timely manner, or at all;•Failure to select orproduct candidates that capitalize on the most scientifically, clinically or commercially promising or profitable indications or therapeutic areas for our product candidateswithin women's health including due to our limited financial resources;Inability to develop and commercialize our product candidates;Failure•Loss or delay in completing clinical trials or obtaining United States Food and Drug Administration (“FDA”) or foreign regulatory approval for our product candidates in a timely manner;A change in the FDA’s primary oversight responsibility;Unsuccessful clinical trials stemming from clinical trial designs, failure to enroll a sufficient number of patients, undesirable side effects and other safety concerns;Negative publicity concerning the safety and efficacyimpairment of our products in development;Inability to demonstrate sufficient efficacy of product candidates;Reliance on the success of our product candidates;Delays in commencement or completion of clinical trials or suspension or termination of clinical trials;candidates;Loss of our licensedin-licensed rights to develop and commercialize aXACIATO and our product candidate as a result of the termination of the underlying licensing agreement;candidates;Monetary obligations•Our payment and other requirements in connection withobligations under our exclusive, in-license agreement covering the critical patents and related intellectual property related toacquisition agreements for XACIATO and our product candidate;Competitors may•Developments by our competitors that make XACIATO, or any potential product we develop, products renderingless competitive or obsolete;•Macroeconomic factors, including inflation, interest rates and recessionary pressures, geopolitical conflicts and events, public health emergencies such as the COVID-19 pandemic and any future pandemic, epidemic, or similar public health threat or natural disasters;•Weak interest in women's health relative to other healthcare sectors from the investment community or from pharmaceutical companies and other potential development and commercialization collaborators;•Cyber-attacks, security breaches or similar events compromising our product candidates obsoletetechnology systems and noncompetitive;Inability to successfully attract partnersdata, our financial resources and enter into collaborations on acceptable terms;on which we rely;Dependence onother assets, or the technology systems and data of third parties to conduct clinical trials and to manufacture product candidates;Dependence on third parties to market and distribute products;Our product candidates, if approved, may not gain market acceptance or obtain adequate coverage for third party reimbursement;A reduction•Difficulty in demand for contraceptives caused by an elimination of current requirements that health insurance plans cover and reimburse FDA-cleared or approved contraceptive products without cost sharing;Difficulty introducing branded productproducts in a market made up of generic products;•Inability to adequately protect or enforce our, or our licensor’s, intellectual property rights;•Higher risk of failure associated with product candidates in preclinical stages of development that may lead investors to assign them little to no value and make these assets difficult to fund;•Dependence on grant funding for preclinical development of DARE-LARC1 and DARE-LBT;•Disputes or other developments concerning our intellectual property rights;market, and in our stock in particular, which could cause investors to experience losses and subject us to securities class-action litigation;overall stock markets;Litigation or public concern about•Failure to maintain the safetylisting of our potential products;•Development of safety, efficacy or quality concerns related to our product or product candidates (or third-party products or product candidates that share similar characteristics or drug substances), whether or not scientifically justified, leading to delays in or discontinuation of product development, product recalls or withdrawals, diminished sales, and/or other significant negative consequences;•Product liability claims or governmental investigations;Strict•Changes in government laws and regulations on our business;candidates and related intellectual property, health care information and data privacy and security laws, transparency laws and fraud and abuse laws, and the enforcement thereof affecting our business; andRegulationsin the United States and other jurisdictions, including laws and regulations governing the production research, development, approval, clearance, manufacturing, supply, distribution, pricing and/or marketing of our products, product candidates;Loss of, or inability to attract, key personnel; andYouIn 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 this Quarterly Report on Form 10-Q and the documentsto indicate that we have filed as exhibitsconducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and investors are cautioned not to this Quarterly Report on Form 10-Q completely and with the understanding that our actual future results may be materially different from what we expect. You should also read carefully the factors described in the section “Risk Factors” of this Quarterly Report on Form 10-Q and “Item 1A. Risk Factors” in our Quarterly Report on Form 10-Q for the quarter ended June 30, 2017 to better understand the risks and uncertainties inherent in our business and underlying any forward-lookingunduly rely upon these statements. You are advised, however, to consult any further disclosures we make on related subjects in our subsequent Current Reports on Form 8-K, press releases, and our website. AnyAll forward-looking statements that we make in this Quarterly Report on Form 10-Q speakreport are current only as of the date of this Quarterly Report on Form 10-Q, and wereport. We do not undertake noany obligation to publicly update such statementsany forward-looking statement to reflect events or circumstances after the date of this Quarterly Report on Form 10-Qwhich any statement is made or to reflect the occurrence of unanticipated events.events, except as required by law.TABLE OF CONTENTSPagePage 1Condensed Consolidated Statements of Operations and Comprehensive Loss2341623232525252525252528Item 1. Condensed Consolidated Financial Statements.Condensed Consolidated Balance SheetsSeptember 30,
2023December 31,
2022(unaudited) Assets Current assets Current assets Cash and cash equivalents $ 13,894,424 $ 34,669,605 Other receivables 1,129,759 1,703,160 Prepaid expenses Prepaid expenses 6,579,933 6,665,988 Other current assets Other current assets 831,379 — Total current assets 22,435,495 43,038,753 Property and equipment, net Property and equipment, net 58,623 64,908 Deposits Deposits 1,763,477 10,502 Other non-current assets 796,435 712,220 Total assets $ 25,054,030 $ 43,826,383 Liabilities and stockholders’ equity (deficit) Liabilities and stockholders’ equity (deficit) Current liabilities Current liabilities Accounts payable Accounts payable $ 4,987,397 $ 2,027,953 Accrued expenses Accrued expenses 5,293,246 10,894,016 Deferred grant funding Deferred grant funding 15,662,335 18,303,567 Deferred revenue Deferred revenue 205,206 — Current portion of lease liabilities Current portion of lease liabilities 194,586 398,391 Total current liabilities 26,342,770 31,623,927 Deferred revenue, non-current Deferred revenue, non-current 1,000,000 1,000,000 Lease liabilities long-term Lease liabilities long-term — 90,346 Total liabilities 27,342,770 32,714,273 Commitments and contingencies (Note 7) Commitments and contingencies (Note 7) Stockholders' equity (deficit) Preferred stock, $0.01 par value, 5,000,000 shares authorized; None issued and outstanding Preferred stock, $0.01 par value, 5,000,000 shares authorized; None issued and outstanding — — Common stock, $0.0001 par value; 240,000,000 shares authorized; 98,292,344 and 84,825,481 shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively Common stock, $0.0001 par value; 240,000,000 shares authorized; 98,292,344 and 84,825,481 shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively 9,829 8,482 Accumulated other comprehensive loss (419,497) (351,311) Additional paid-in capital 164,299,397 152,529,579 Accumulated deficit (166,178,469) (141,074,640) Total stockholders' equity (deficit) (2,288,740) 11,112,110 Total liabilities and stockholders' equity (deficit) $ 25,054,030 $ 43,826,383 See Accompanying Notes to Interim accompanying notes.1Daré Bioscience, Inc. andSubsidiariesCondensed Consolidated Financial Statements.The operations presented in the Interim Condensed Consolidated Financial Accompanying Notes for the three months ended September 30, 2017 represent the operations of the Company following the Stock Purchase Transaction. The Interim Condensed Consolidated Financial Statements and Accompanying Notes for the three months ended September 30, 2016 represent the operations of the Company when it was private, making a comparison between periods difficult.Comprehensive Loss
(Unaudited)Three months ended September 30, Nine months ended September 30, 2023 2022 2023 2022 Revenue License fee revenue $ 1,000,000 $ — $ 1,000,000 $ 10,000,000 Total revenue 1,000,000 — 1,000,000 10,000,000 Operating expenses General and administrative 2,696,779 2,651,543 8,954,877 8,014,424 Research and development 6,674,636 4,462,250 17,738,543 17,065,497 License fee expense 25,000 25,000 75,000 75,000 Total operating expenses 9,396,415 7,138,793 26,768,420 25,154,921 Loss from operations (8,396,415) (7,138,793) (25,768,420) (15,154,921) Other income 97,319 118,950 664,591 150,406 Net loss $ (8,299,096) $ (7,019,843) $ (25,103,829) $ (15,004,515) Net loss to common shareholders $ (8,299,096) $ (7,019,843) $ (25,103,829) $ (15,004,515) Foreign currency translation adjustments (15,030) (230,748) (68,186) (375,767) Comprehensive loss $ (8,314,126) $ (7,250,591) $ (25,172,015) $ (15,380,282) Loss per common share - basic and diluted $ (0.09) $ (0.08) $ (0.29) $ (0.18) Weighted average number of shares outstanding: Basic and diluted 91,051,642 84,822,516 87,221,575 85,553,134 See accompanying notes.2Condensed Consolidated Statements of Operations and Comprehensive Loss(Unaudited)Nine Months Ended September 30, 2023 Additional Accumulated
otherTotal Common stock paid-in comprehensive Accumulated stockholders' Shares Amount capital loss deficit equity (deficit) Balance at December 31, 2022 84,825,481 $ 8,482 $ 152,529,579 $ (351,311) $ (141,074,640) $ 11,112,110 Stock-based compensation — — 624,621 — — 624,621 Issuance of common stock from the exercise of warrants 1,353,515 136 1,299,239 — — 1,299,375 Net loss — — — — (8,042,501) (8,042,501) Foreign currency translation adjustments — — — (22,005) — (22,005) Balance at March 31, 2023 86,178,996 $ 8,618 $ 154,453,439 $ (373,316) $ (149,117,141) $ 4,971,600 Stock-based compensation — — 650,186 — — 650,186 Issuance of common stock, net of issuance costs 454,592 45 452,150 — — 452,195 Net loss — — — — (8,762,232) (8,762,232) Foreign currency translation adjustments — — — (31,151) — (31,151) Balance at June 30, 2023 86,633,588 $ 8,663 $ 155,555,775 $ (404,467) $ (157,879,373) $ (2,719,402) Stock-based compensation — — 636,086 — — 636,086 Issuance of common stock and warrants, net of issuance costs 11,658,756 1,166 8,107,536 — — 8,108,702 Net loss — — — — (8,299,096) (8,299,096) Foreign currency translation adjustments — — — (15,030) — (15,030) Balance at September 30, 2023 98,292,344 $ 9,829 $ 164,299,397 $ (419,497) $ (166,178,469) $ (2,288,740) 3Nine Months Ended September 30, 2022 Additional Accumulated
otherTotal Common stock paid-in comprehensive Accumulated stockholders' Shares Amount capital loss deficit equity Balance at December 31, 2021 83,944,119 $ 8,394 $ 149,027,802 $ (154,973) $ (110,126,902) $ 38,754,321 Stock-based compensation — — 532,409 — — 532,409 Net loss — — — — (8,398,670) (8,398,670) Foreign currency translation adjustments — — — (9,150) — (9,150) Balance at March 31, 2022 83,944,119 $ 8,394 $ 149,560,211 $ (164,123) $ (118,525,572) $ 30,878,910 Stock-based compensation — — 537,521 — — 537,521 Issuance of common stock, net of issuance costs 751,040 75 1,218,675 — — 1,218,750 Stock options exercised 125,699 13 120,136 — — 120,149 Net income — — — — 413,998 413,998 Foreign currency translation adjustments — — — (135,869) — (135,869) Balance at June 30, 2022 84,820,858 $ 8,482 $ 151,436,543 $ (299,992) $ (118,111,574) $ 33,033,459 Stock-based compensation — — 556,448 — — 556,448 Stock options exercised 4,623 — 4,456 — — 4,456 Net loss — — — — (7,019,843) (7,019,843) Foreign currency translation adjustments — — — (230,748) — (230,748) Balance at September 30, 2022 84,825,481 $ 8,482 $ 151,997,447 $ (530,740) $ (125,131,417) $ 26,343,772 See Accompanying Notes to Interim Condensed Consolidated Financial Statements.The operations presented in the Interim Condensed Consolidated Financial Statements for the three months ended September 30, 2017 represent the operations of the Company following the Stock Purchase Transaction. The Interim Condensed Consolidated Financial Statements for the three months ended September 30, 2016 represent the operations of the Company when it was private, making a comparison between periods difficult.Condensed Consolidated Statements of Cash Flows(unaudited)Nine months ended September 30, 2023 2022 Cash flows from operating activities Net loss $ (25,103,829) $ (15,004,515) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation expense 28,383 13,580 Stock-based compensation expense 1,910,893 1,626,378 Non-cash operating lease cost (18,602) 29,320 Gain on early termination of lease — (46,477) Changes in operating assets and liabilities: Other receivables 573,401 (1,146,724) Prepaid expenses 86,053 (4,408,886) Deposits (1,752,975) — Other current assets (831,379) 77,939 Other non-current assets (24,764) — Accounts payable 2,959,446 1,374,109 Accrued expenses (6,068,350) 1,000,086 Deferred grant funding (2,641,232) 4,293,433 Deferred revenue 205,206 — Net cash used in operating activities (30,677,749) (12,191,757) Cash flows from investing activities Purchases of property and equipment (22,099) (60,372) Net cash used in investing activities (22,099) (60,372) Cash flows from financing activities Net proceeds from issuance of common stock and warrants 8,560,897 1,218,750 Proceeds from the exercise of stock options — 124,605 Proceeds from the exercise of common stock warrants 1,299,375 — Issuance of note payable 601,174 — Payments on note payable (133,594) — Net cash provided by financing activities 10,327,852 1,343,355 Effect of exchange rate changes on cash and cash equivalents and restricted cash (68,185) (375,767) Net change in cash, cash equivalents and restricted cash (20,440,181) (11,284,541) Cash, cash equivalents and restricted cash, beginning of period 34,669,605 51,674,087 Cash, cash equivalents and restricted cash, end of period $ 14,229,424 $ 40,389,546 Reconciliation of cash, cash equivalents and restricted cash to amounts reported in the condensed consolidated balance sheets: Cash and cash equivalents $ 13,894,424 $ 40,389,546 Restricted cash included in other non-current assets 335,000 — Total cash, cash equivalents and restricted cash $ 14,229,424 $ 40,389,546 Supplemental disclosure of non-cash investing and financing activities: Operating right-of-use assets obtained in exchange for new operating lease liabilities, net $ — $ 585,942 See Accompanying Notes to Interim Condensed Consolidated Financial Statements.The operations presented in the Interim Condensed Consolidated Financial Statements for the three months ended September 30, 2017 represent the operations of the Company following the Stock Purchase Transaction. The Interim Condensed Consolidated Financial Statements for the three months ended September 30, 2016 represent the operations of the Company when it was private, making a comparison between periods difficult.Notes to Condensed Consolidated Financial Statements (Unaudited)1. Description of Business and Basis of PresentationDescription of BusinessDaré Bioscience, Inc. (“Daré” or the “Company”), is a healthcarebiopharmaceutical company committed to the development and commercialization ofadvancing innovative products infor women’s reproductive health. Daré’s business strategy is to license the rights to novel reproductive health product candidates, some of which have existing clinical proof-of-concept data, and to take those candidates through advanced stages of clinical development.On July 19, 2017, all of the outstanding shares of capital stock of Daré Bioscience, Operations, Inc., a private Delaware corporation, (“Private Daré”) were purchased by Cerulean Pharma Inc. (“Cerulean”) in accordance withand its wholly owned subsidiaries operate one segment. In this report, the terms of a stock purchase agreement dated as of March 19, 2017 (the “Stock Purchase Agreement”), by and among Cerulean, Private Daré and the holders of capital stock and securities convertible into capital stock of Private Daré named therein (the “Private Daré Stockholders”). Pursuant to the Stock Purchase Agreement, each Private Daré Stockholder sold its shares of common stock in Private Daré to Cerulean in exchange for newly issued shares of Cerulean common stock. On July 19, 2017, Cerulean also completed the sale of its proprietary Dynamic Tumor Targeting™ Platform (the “Platform”) to Novartis Institutes for BioMedical Research, Inc. (“Novartis”) for $6.0 million. Following the closing of the transactions contemplated by the Stock Purchase Agreement (collectively, the “Stock Purchase Transaction”) and the sale of the Platform, Cerulean changed its name“Company” refers collectively to Daré Bioscience, Inc. As a resultand its wholly owned subsidiaries, unless otherwise stated or the context otherwise requires.The Company began assembling its diverse portfolio in 2017 through acquisitions, exclusive in-licenses and other collaborations. The Company's programs target unmet needs in women's health in the areas of contraception, vaginal health, reproductive health, menopause, sexual health, and fertility, and aim to expand treatment options, enhance outcomes and improve ease of use for women.The Company’s primary operations have consisted of, and are expected to continue to consist primarily of, research and development activities to advance its product candidates through clinical development and regulatory approval.The Company's portfolio includes one FDA-approved product, drug and drug/device product candidates and potential product candidates in various stages of development.The first shipment of the Stock Purchase Transaction, Private Daré became a wholly owned subsidiary of Daré Bioscience, Inc. andCompany's product, XACIATO™ (clindamycin phosphate) vaginal gel 2%, or XACIATO, in connection with the Private Daré Stockholders became majority shareholders of Daré Bioscience, Inc. owning approximately 51%first commercial sale of the issuedproduct in the United States occurred in October 2023. XACIATO was approved by the FDA in December 2021 as a single-dose prescription medication for the treatment of bacterial vaginosis in females 12 years of age and outstanding shares of the Company’s shares of common stock.On July 20, 2017,older. In March 2022, the Company effected a 1-for-10 reverse stock splitentered into an exclusive global license agreement with an affiliate of its common stock (the “Reverse Stock Split”). All shareOrganon & Co., Organon International GmbH, or Organon, to commercialize XACIATO, which became fully effective in June 2022. Under the license agreement, the marketing, distribution and per share amountssale of common stock, options and warrants in this Quarterly Report on Form 10-Q, including those amounts includedXACIATO in the accompanying condensed consolidated financial statements, have been restated for all periods to give retroactive effect toUnited States (and outside the Reverse Stock Split.The operations presentedU.S. if approved in non-U.S. jurisdictions in the accompanying condensed consolidated financial statements and related notes for the period ending September 30, 2017 represent the operations of the Company and give effect to the Stock Purchase Transaction, including stock-based compensation awards. The condensed consolidated financial statements and related notes for all periods prior to the Stock Purchase Transaction represent the operations of Private Daré, making a comparison between historical and recent periods difficult.Following the Stock Purchase Transaction, the Company began trading on the Nasdaq Capital Market under the symbol “DARE.” Prior to the Stock Purchase Transaction, the Company traded under the symbol “CERU.”2. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESBasis of presentationThe accompanying condensed consolidated financial statements have been prepared in conformityaccordance with generally accepted accounting principles generally accepted in the United States, (“or U.S. GAAP”)GAAP, as defined by the Financial Accounting Standards Board, (“FASB”). Theseor FASB, for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In management’s opinion, the accompanying condensed 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 condensed 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, 20162022, or the 2022 10-K.Cash, Cash Equivalents and Restricted CashThe Company considers cash and all highly liquid investments with an original maturity of three months or less to be cash and cash equivalents. The Company has an aggregate of approximately $0.3 million in restricted cash related to (i) letters of credit established under real property leases for the Company's wholly owned subsidiary, Dare MB Inc., that were attachedserve as Exhibit 99.1 tosecurity for potential future default of lease payments, and (ii) collateralized cash for the Company’s Amendment No. 1 toCompany's credit cards. The restricted cash is unavailable for withdrawal or for usage for general obligations and are included in other non-current assets on the Current Report on Form 8-K filed with the Securities and Exchange Commission (“SEC”) on October 2, 2017.Company's consolidated balance sheets.Going ConcernThe interimCompany prepared its condensed consolidated financial statements included in this document are unaudited. The unaudited interim financial statements have been prepared on a going concern basis, which assumes that the same basis as the annual financial statementsCompany will realize its assets and reflect,satisfy its liabilities in the opinionnormal course of management, all adjustmentsbusiness. The Company has a history of a normal and recurring nature that are necessary for a fair statement of the Company’s financial position as of September 30, 2017, andlosses from operations, expects negative cash flows from its results of operations to continue for the threeforeseeable future, and nine months ended September 30, 2017expects that its net losses will continue for at least the next several years as it develops and 2016,seeks to bring to market its existing product candidates and cash flows forto potentially acquire, license and develop additional product candidates. These circumstances raise substantial doubt about the nine months ended September 30, 2017 and 2016.Company's ability to continue as a going concern. The results of operations for the three and nine months ended September 30, 2017 are not necessarily indicative of the results to be expected for the year ending December 31, 2017 or for any other future annual or interim period. The December 31, 2016 consolidated balance sheet was derived from audited financial statements, but does not include all disclosures required by U.S. GAAP. Theseaccompanying condensed consolidated financial statements should be read in conjunction withdo not include any adjustments to reflect the audited financial statementspossible future effects on the recoverability and notes thereto forreclassification of assets or the year ended December 31, 2016.2. Summaryamounts and classifications of Significant Accounting PoliciesLiquidityAs of September 30, 2017,2023, the Company had an accumulated deficit of approximately $3.10$166.2 million, cash and cash equivalents of approximately $13.9 million, deferred grant funding liabilities under the Company's grant agreements related to DARE-LARC1 and DARE-LBT of approximately $15.7 million, and a working capital deficit of approximately $3.9 million. TheSubstantially all of the Company's cash and cash equivalents at September 30, 2023 represented grant funds received under such grant agreements that may be applied solely toward direct costs for the development of DARE-LARC1 and DARE-LBT, other than approximately 10% of such funds, which may be applied toward general overhead and administration expenses that support the entire operations of the Company. For the nine months ended September 30, 2023, the Company alsoincurred a net loss of approximately $25.1 million and had negative cash flow from operations of approximately $1.58 million during$30.7 million.Based on the nineCompany'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 ended September 30, 2017. The Company had cash and cash equivalentsfrom the date of approximately $8.53 million asissuance of September 30, 2017.the accompanying condensed consolidated financial statements. The Company will need to raise substantial additional capital to furthercontinue to fund the development of,its operations and seek regulatory approvals for,to successfully execute its current product candidate and any future candidates it may license as well as to commercialize any approved products.The Company is currently focused primarily on the development and commercialization of innovative products in women’s reproductive health and believes such activities will result in the Company’s continued incurrence of significant research and development and other expenses related to those programs. If the clinical trials for any of the Company’s product candidates fail or produce unsuccessful results and those product candidates do not gain regulatory approval, or if any of the Company’s product candidates, if approved, fails to achieve market acceptance, the Company may never become profitable. Even if the Company achieves profitability in the future, it may notstrategy.There can be able to sustain profitability in subsequent periods. The Company intends to cover its future operating expenses through cash and cash equivalents on hand and through a combination of equity offerings, debt financings, government or other grant funding, collaborations and strategic alliances. The Company cannot be sureno assurance that additional financingcapital will be available when needed or that, if available, financingit will be obtained on terms favorable to the Company orand its stockholders.additional funding is not availablethe Company cannot raise capital when needed, on a timely basisfavorable terms or at adequate levels,all, the Company will not be able to continue development of its product candidates, will need to reevaluate its operating plans.planned operations and may need to delay, scale back or eliminate some or all of its development programs, reduce expenses, file for bankruptcy, reorganize, merge with another entity, or cease operations. If the Company becomes unable to continue as a going concern, the Company may have to liquidate its assets, and might realize significantly less than the values at which they are carried on its condensed consolidated financial statements, and stockholders may lose all or part of their investment in the Company's common stock. The Company's condensed consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.Principles of ConsolidationThe condensedCompany’s significant accounting policies are described in Note 2 to the consolidated financial statements ofincluded in the Company are stated in2022 10-K. Since the date on which the 2022 10-K was filed with the U.S. dollarsSecurities and are prepared using U.S. GAAP. These financial statements includeExchange Commission, or the accounts of the Company and its wholly owned subsidiaries, Daré Bioscience Operations, Inc., and Daré Bioscience Australia PTY LTD. The financial statements ofSEC, there have been no material changes to the Company’s wholly owned subsidiaries are recorded in their functional currency and translated into the reporting currency. The cumulative effect of changes in exchange rates between the foreign entity’s functional currency and the reporting currency is reported in Accumulated Other Comprehensive Income. All intercompany transactions and accounts have been eliminated in consolidation.The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Significant estimates include the fair value of stock-based compensation, goodwill impairment and purchase accounting. Actual results could differ from those estimates and could materially affect the reported amounts of assets, liabilities and future operating results.Risks and UncertaintiesThe Company will require approvals from the U.S. Food and Drug Administration or foreign regulatory agencies prior to being able to sell any products. There can be no assurance that the Company’s current or future product candidates will receive the necessary approvals. If the Company is denied regulatory approval of its product candidates, or if approval is delayed, it may have a material adverse impact on the Company’s business, results of operations and its financial position.The Company is subject to a number of risks similar to other life science companies, including, but not limited to, risks related to the ability to license product candidates, successfully develop product candidates, raise additional capital, compete with other products, and protect proprietary technology. In the event the Company receives a regulatory approval for a product, the market’s acceptance of the product remains a risk. As a result of these and other factors and the related uncertainties, there can be no assurance of the Company’s future success.For a more comprehensive list of risk factors, please refer to the Company’s interim report on Form 10-Q for the quarterly period ended June 30, 2017.Cash and Cash EquivalentsThe Company considers cash and all highly liquid debt instruments with an original maturity of three months or less to be cash and cash equivalents.Concentration of Credit RiskFinancial instruments, which potentially subject the Company to concentrations of credit risk, consist principally of cash and cash equivalents. The Company places its cash and cash equivalents with a limited number of high quality financial institutions and at times may exceed the amount of insurance provided on such deposits. The Company has not experienced any loss on deposits of cash and cash equivalents.Business CombinationsAssets acquired, and liabilities assumed as part of a business acquisition are recorded at their estimated fair value at the date of acquisition. The excess of the total purchase consideration over the fair value of assets acquired and liabilities assumed is recorded as goodwill. Determining fair value of identifiable assets, particularly intangibles, and liabilities acquired also requires management to make estimates, which are based on all available information and, in some cases, assumptions with respect to the timing and amount of future revenue and expenses associated with an asset.GoodwillGoodwill is not amortized but is tested annually for impairment or more frequently if impairment indicators exist. The Company adoptedsignificant accounting guidance related to annual and interim goodwill impairment tests which allows the Company to first assess qualitative factors before performing a quantitative assessment of the fair value of a reporting unit. If it is determined on the basis of qualitative factors that the fair value of the reporting unit is more likely than not less than the carrying amount, a quantitative impairment test is required. The Company recorded goodwill of approximately $12.88 million related to the Stock Purchase Transaction, from the acquisition date, July 19, 2017. The Company assessed goodwill at September 30, 2017 and determined there was no impairment during the period.Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision maker, or decision-making group, in making decisions on how to allocate resources and assess performance. Our chief operating decision maker is the chief executive officer. The Company has one operating segment, women’s reproductive health.Certain assets and liabilities are carried atGAAP defines fair value in accordance with Accounting Standards Codification (“ASC”) 820, Fair Value Measurement. Fair value is defined as the exchange price that would be received for an asset or the exit price that would be paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measuredate, and also establishes a fair value musthierarchy which requires an entity to maximize the use of observable inputs, and minimize the usewhere available. The three-level hierarchy of unobservable inputs. A fair value hierarchy is based on three levels of inputs which are usedvaluation techniques established to measure fair value of which the first two levelsis defined as follows:•Level 1: inputs are considered observable and the last is considered unobservable:Level 1—Quotedunadjusted quoted prices in active markets for identical assets or liabilities.data for substantially the full term of assets or liabilities.2—Observable2: inputs (otherother than Level 1 quoted prices)that are observable, either directly or indirectly, such as quoted prices in active markets for similar assets orand liabilities, quoted prices in markets that are not active 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.3—Unobservable3: unobservable inputs that are supported by little or no market activity and that are significant to determining the fair value of the assets or liabilities, including pricing models, discounted cash flow methodologies and similar techniques.7The Company’s instruments that are carried at fair value are cash and cash equivalents, accounts payable and accrued interest. The carrying values of accounts payable and accrued interest approximate their fair value due to following tables present the short-term nature of these liabilities.Net Loss Per ShareBasic net loss attributable to common stockholders per share is calculated by dividing the net loss by the weighted average number of shares of common stock outstanding during the period without consideration of common stock equivalents. Since the Company was in a loss position for all periods presented, diluted net loss per share is the same as basic net loss per share for all periods presented as the inclusion of all potential dilutive securities would have been antidilutive. All per share figures have been retroactively adjusted for the Reverse Stock Split.Stock-Based CompensationThe Company records compensation expense for all stock-based awards granted based onclassification within the fair value hierarchy of financial assets and liabilities that are remeasured on a recurring basis as of September 30, 2023 and December 31, 2022. There were no financial assets or liabilities that were remeasured using a quoted price in active markets for identical assets (Level 2) or using unobservable inputs (Level 3) as of September 30, 2023 or December 31, 2022.Fair Value Measurements Level 1 Level 2 Level 3 Total Balance at September 30, 2023 Current assets: Cash equivalents (1)$ 13,528,906 $ — $ — $ 13,528,906 Balance at December 31, 2022 Current assets: Cash equivalents (1)$ 33,238,658 $ — $ — $ 33,238,658 (1) Represents cash held in money market funds.Revenue RecognitionUnder Accounting Standards Codification Topic 606, or ASC 606, the Company recognizes revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which it expects to be entitled in exchange for those goods or services. To determine revenue recognition for contracts with customers, the Company performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the Company satisfies its performance obligations. At contract inception, the Company assesses the goods or services agreed upon within each contract, assesses whether each good or service is distinct, and determines those that areperformance obligations. The Company then recognizes as revenue the amount of the award attransaction price allocated to the time of grant. Therespective performance obligation when (or as) the performance obligation is satisfied.In a contract with multiple performance obligations, the Company uses the Black-Scholes Pricing Modeldevelops estimates and assumptions that require judgment to determine the fair value ofunderlying stand-alone selling price for each performance obligation, which determines how the transaction price is allocated among the performance obligations. The estimation of the awardsstand-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.Collaboration Revenues. The Company enters into collaboration and licensing agreements under which considers factors such as expected term, volatility, risk free interest rate and dividend yield. Dueit out-licenses certain rights to its products or product candidates to third parties. The terms of these arrangements typically include payment of one or more of the following to the limited historyCompany: non-refundable, up-front license fees; development, regulatory and/or commercial milestone payments; and royalties on net sales of the Company, the simplified method was utilized in order to determine the expected termlicensed products. As of the awards. Additionally, the Company considered comparable companies in the industry which have available share price history to calculate the volatility. The Company compared U.S. Treasury Bills in determining the risk-free interest rate appropriate given the expected term. Finally,September 30, 2023, the Company has not establishedrecognized any collaboration revenues.License Fee Revenue. If the license to the Company’s intellectual property is determined to be distinct from the other performance obligations identified in a contract, the Company recognizes revenues from non-refundable, upfront fees allocated to the license when the license is transferred to the customer and the customer is able to use and benefit from the license. For licenses bundled with other promises, the Company utilizes judgment to assess the nature of the combined performance obligation to determine whether the combined performance obligation is satisfied over time or at a point in time and, if over time, the appropriate method of measuring progress for purposes of recognizing revenue from non-refundable, upfront fees. The Company evaluates the measure of progress each reporting period and, if necessary, adjusts the measure of performance and related revenue recognition. To date, the Company has no plansrecognized $11.0 million in license fee revenue, $10.0 million of which represents the upfront payment under its license agreement for XACIATO and $1.0 million of which represents the payment required by the first amendment to establishsuch license agreement entered into in July 2023.8The Company also has a dividend policy$1.0 million upfront non-refundable license fee payment from collaborator Bayer HealthCare LLC, or declare any dividendsBayer, recorded as deferred license revenue in the foreseeable futureCompany's consolidated balance sheets at September 30, 2023 and thus no dividend yield was determined necessaryDecember 31, 2022. In 2020, the Company entered into a license agreement with Bayer regarding the further development and commercialization of Ovaprene in the calculation of fair value.accounts for income taxes using the asset and liability method in accordance with ASC 740, Income taxes. Under this method deferred income taxes are provided to reflect the tax consequences in future years of differences between the tax basis of assets and liabilities and their financial reporting amounts based on enacted tax laws and statutory tax rates applicableconcluded that there was one significant performance obligation related to the periods$1.0 million upfront payment: a distinct license to commercialize Ovaprene effective upon the receipt of the $20.0 million fee. The $1.0 million upfront payment will be recorded as license revenue at the earlier of (i) the point in time the Company receives the $20.0 million fee, the license is transferred to Bayer and Bayer is able to use and benefit from the license and (ii) the termination of the agreement. As of September 30, 2023, neither of the foregoing had occurred.Milestone Payments. At the inception of each arrangement in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets toCompany is a licensor and that includes developmental, regulatory or commercial milestones, the Company evaluates whether achieving the milestones is considered probable and estimates the amount expected to be realized.The Company followsincluded in the two-step approach to recognizing and measuring uncertain tax positions. The first step is to evaluatetransaction price using the tax position for recognition by determining if the weight of available evidence indicatesmost likely amount method. If it is more likely thanprobable that a significant revenue reversal would not thatoccur, the position will be sustainedassociated milestone value is included in the transaction price. Potential future milestone payments not within the Company's control, such as where achievement of the specified milestone depends on audit, including resolutionactivities of related appealsa third party or litigation processes, if any. The second step is to measure the tax benefit as the largest amount, which is more than 50% likelyregulatory approval, are not considered probable of being realized upon ultimate settlement. The Company considers many factors when evaluating and estimatingachieved until the Company's tax positions and tax benefits, which may require periodic adjustments. Atspecified milestone occurs. As of September 30, 2017, the Company did not record any liabilities for uncertain tax positions.As2023, the Company has not recognized any milestone payment revenues.Royalties. For arrangements that include sales-based royalties, including milestone payments based on the level of sales, and for which the license is deemed to be the predominant item to which the royalties relate, the Company recognizes revenue at the later of (i) when the related sales occur, or (ii) when the performance obligation to which some or all of the royalty has been allocated has been satisfied (or partially satisfied). As of September 30, 2023, the Company has not recognized any royalty revenues.Product Supply.Arrangements that include a promise for future supply of product for commercial supply at the licensee’s discretion are generally considered as options. The Company assesses if these options provide a material right to the licensee and if so, they are accounted for as separate performance obligations. The Company evaluates whether it is the principal or agent in the arrangement. The evaluation is based on the degree the Company controls the specified product at any time before transfer to the customer. Revenues are recognized on a gross basis if the Company is in the capacity of principal and on a net basis if the Company is in the capacity of an agent. As of September 30, 2023, the Company has not recognized any product supply revenues.3. STRATEGIC AGREEMENTSStrategic Agreements for Product CommercializationOrganon Exclusive License AgreementIn March 2022, the Company entered into an exclusive license agreement with Organon, which became effective in June 2022, whereby Organon licensed exclusive worldwide rights to develop, manufacture and commercialize XACIATO and other future intravaginal or urological products for human use formulated with clindamycin that rely on intellectual property controlled by the Company. In July 2022, the Company received a $10.0 million non-refundable and non-creditable payment from Organon, which was recorded as license fee revenue.In July 2023, the Company entered into an amendment to the license agreement whereby Organon agreed to pay $1.0 million to the Company as reimbursement for registration fees paid to the FDA in connection with the new drug application for XACIATO (known as PDUFA fees) and other manufacturing expenses and to support continued advancement of the development and commercialization of XACIATO, which was recognized as license fee revenue. The amount payable by Organon to the Company in connection with the first commercial sale of a licensed product in the United States was revised to $1.8 million.Under the terms of the license agreement, as amended, the Company is entitled to receive tiered double-digit royalties based on net sales and up to $181.8 million in milestone payments as follows: $1.8 million in connection with the first commercial sale of a licensed product in the United States; and up to $180.0 million in tiered commercial sales milestones and regulatory milestones. Royalty payments will be subject to customary reductions and offsets.9At the inception of the license agreement, the Company concluded that the transaction price was $10.0 million and should not include the variable consideration related to unachieved development, regulatory, commercial milestones and future sales-based royalty payments. This consideration was determined to be constrained as it is probable that the inclusion of such variable consideration could result in a significant operating losses,reversal in cumulative revenue. The Company re-evaluates the transaction price at each reporting period as uncertain events are resolved and other changes in circumstances occur. For the quarter ended September 30, 2023, the transaction price was updated to $11.0 million.The Company will recognize any consideration related to sales-based payments, including milestones and royalties which relate predominantly to the license granted, at the later of (i) when or as the related sales occur, or (ii) when the performance obligation to which some or all of the royalty has been allocated has been satisfied (or partially satisfied).The Company is responsible for regulatory interactions and for providing product supply on an interim basis until Organon assumes such responsibilities. Until such time, Organon will purchase all of its product requirements of XACIATO from the Company at a transfer price equal to the Company's manufacturing costs plus a single-digit percentage markup.Unless terminated earlier, the agreement will expire on a product-by-product and country-by-country basis upon expiration of the applicable royalty period for each licensed product. In addition to customary termination rights for both parties, following the first anniversary of the effective date of the agreement, Organon may terminate the agreement in its entirety or on a country-by-country basis at any time in Organon's sole discretion on 120 days' advance written notice.Bayer HealthCare License AgreementIn January 2020, the Company entered into a license agreement with Bayer, regarding the further development and commercialization of Ovaprene in the U.S. The Company received a $1.0 million upfront non-refundable license fee payment from Bayer and Bayer agreed to support the Company in development and regulatory activities by providing the equivalent of two experts to advise the Company in clinical, regulatory, preclinical, commercial, CMC and product supply matters. The Company is responsible for the pivotal trial for Ovaprene and for its development and regulatory activities and has product supply obligations. Bayer, in its sole discretion, has the right to make the license effective by paying the Company an additional $20.0 million, referred to as the $20.0 million fee. After payment of the $20.0 million fee, Bayer will be responsible for the commercialization of Ovaprene for human contraception in the U.S. Such license would be exclusive as to the commercialization of Ovaprene for human contraception in the U.S. and co-exclusive with the Company with regard to development.The Company concluded there was one significant performance obligation related to the $1.0 million upfront payment: a distinct license to commercialize Ovaprene effective upon the receipt of the $20.0 million fee. The $1.0 million upfront payment will be recorded as license revenue at the earlier of (i) the point in time the Company receives the $20.0 million fee, the license is transferred to Bayer and Bayer is able to use and benefit from the license and (ii) the termination of the agreement. As of September 30, 2023, neither of the foregoing had occurred. The $1.0 million payment is recorded as long-term deferred license revenue in the Company's consolidated balance sheets at September 30, 2023 and December 31, 2022.If Bayer elects to make the license effective, the Company will be entitled to receive (a) a milestone payment in the low double-digit millions upon the first commercial sale of Ovaprene in the U.S. and escalating milestone payments based on annual net sales of Ovaprene during a calendar year, totaling up to $310.0 million if all such milestones, including the first commercial sale, are achieved, (b) tiered royalties starting in the low double digits based on annual net sales of Ovaprene during a calendar year, subject to customary royalty reductions and offsets, and (c) a percentage of sublicense revenue.The initial term of the agreement, which is subject to automatic renewal terms, continues until the later of the expiration of any valid claim covering the manufacture, use, sale or import of Ovaprene in the U.S. or 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 expectreceive the $20.0 million fee if and when due.10Strategic Agreements for Pipeline DevelopmentDouglas License AgreementIn August 2023, the Company entered into a license agreement with Douglas Pharmaceuticals Limited, or Douglas, and a stand-by direct license agreement with The University of Manchester, or Manchester, under which the Company acquired the exclusive rights to pay any income taxesdevelop and commercialize a lopinavir and ritonavir combination soft gel vaginal insert for 2017the treatment of cervical intraepithelial neoplasia (CIN).Under the terms of the Douglas agreement, the Company agreed to make potential future payments of up to $5.25 million in the aggregate upon achievement of certain development and as such no income tax provision has been made. Management evaluatedregulatory milestones, and of up to $64.0 million in the aggregate upon achievement of certain commercial sales milestones for each product covered by the licenses granted under the agreement. The development and regulatory milestones may be paid, in the Company’s tax positionssole discretion, in cash or shares of the Company’s common stock.Additionally, Douglas is eligible to receive tiered royalties in low single-digit to low double-digit percentages based on worldwide net sales of products and concluded thatprocesses covered by the licenses granted under the agreement.As of September 30, 2023, no payments had been made under the Douglas agreement.Hennepin License AgreementIn August 2022, the Company had taken no uncertain tax positions that require adjustment to the financial statements. The tax years 2015 to 2016 remain open to examination by federal and state taxing authorities.Recent Accounting PronouncementsOn May 28, 2014, the FASB issued Accounting Standards Update (“ASU”) 2014-09, Revenue From Contracts With Customers,entered into a license agreement with Hennepin Life Sciences LLC, or Hennepin, under which impacts the way in which some entities recognize revenue for certain types of transactions. The new standard will become effective beginning in 2018 for public companies. As the Company does not currently have any contracts with customers we do not expect any impact from this accounting standard.In February 2016,acquired the FASB issued ASU 2016-02, Leases (Topic 842), which sets outexclusive global rights to develop and commercialize treatments delivering the principlesnovel antimicrobial glycerol monolaurate (GML) intravaginally for a variety of health conditions including bacterial, fungal, and viral infections. Under the recognition, measurement, presentationagreement, the Company received an exclusive, worldwide, royalty-bearing license to research, develop and disclosure of leases for both parties to a contract (i.e., lessees and lessors). The new standard requires lessees to apply a dual approach classifying leases as either finance or operating leases based oncommercialize the principle of whether or not the lease is effectively a financed purchase by the lessee. This classification will determine whether lease expense is recognized based on an effective interest 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 for all leases with a term 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.licensed technology. The Company is currently assessingentitled to sublicense the potential impactrights granted to it under the agreement.Under the terms of this accounting standard and the effect it might have on the financial statements.In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments, which intended to add or clarify guidance on the classification of certain cash receipts and payments on the statement of cash flows. The new guidance addresses cash flows related to the following: debt prepayment or extinguishment costs, settlement of zero-coupon bonds, contingent consideration payments made after a business combination, proceeds from the settlement of insurance claims, proceeds from the settlement of corporate-owned life insurance policies and bank-owned life insurance policies, distributions received from equity method investees, beneficial interest in securitization transactions, and the application of predominance principle to separately identifiable cash flows. The standard is effective forlicense agreement, the Company for annual periods beginning after December 15, 2017, and interim periods within those fiscal years with early adoption permitted. Daré is currently evaluating the effectagreed to make potential future payments of this new guidance on its financial statements.In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business, which intendedup 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 is effective for Daré for annual periods beginning after December 15, 2017. Daré’s early adoption of this standard did not have a material impact on the Company’s financial statements.In January 2017, the FASB issued ASU 2017-04, Simplifying the Test for Goodwill Impairment (Topic 350). The guidance removes Step 2 of the goodwill impairment test, which requires a hypothetical purchase price allocation. A goodwill impairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. The guidance should be adopted on a prospective basis for the annual or any interim goodwill impairment tests beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. Daré adoption of this standard on September 30, 2017 did not have a material impact on the Company’s financial statements.In May 2017, the FASB issued ASU 2017-09, Compensation – Stock Compensation (Topic 718): Scope of Modification Accounting, which intended to provide clarity when to account for a change to the terms or conditions of a share-based payment award as a modification. Under the new guidance, modification accounting is required only if the fair value, the vesting conditions, or the classification of the award (as equity or liability) changes as a result of the change in terms or conditions. The standard is effective for the Daré for annual periods beginning on or after December 15, 2017 with early adoption permitted. The Company’s early adoption of this standard did not have a material impact on the Company’s financial statements.In July 2017, the 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 ASC 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 is currently evaluating the impact that the adoption of the standard may have on its consolidated financial statements.3. AcquisitionsOn July 19, 2017, Private Daré completed the Stock Purchase Transaction with Cerulean as discussed in Note 1. For purposes of clarity, prior to the Stock Purchase Transaction, we sometimes refer to the Company as Cerulean. The Stock Purchase Transaction was accounted for as a reverse merger under the acquisition method of accounting whereby Private Daré was considered to have acquired Cerulean for financial reporting purposes because immediately upon completion of the Stock Purchase 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 attributable to the cash and cash equivalents at closing of approximately $9.92$6.25 million and the impact of the unamortized fair value of Cerulean stock options of approximately $3.65 million. The unamortized fair value of the Cerulean stock options relates to an option modification approved on March 19, 2017 that provided for an acceleration of vesting upon a change in control event. Such modification became effective upon the completion of the Stock Purchase Transaction. Hence, the unamortized fair value of such options is deemed to be part of total purchase consideration and goodwill. Transaction costs associated with the Stock Purchase Transaction of $963,380 are included in general and administrative expense. The total purchase price consideration of approximately $24.28 million represents the fair value of the shares of Cerulean stock issued in connection with the Stock Purchase Transaction and the unamortized fair value of Cerulean options assumed on July 19, 2017 which was allocated as follows:The final allocation of the purchase price is dependent on the finalization of the valuation of the fair value of assets acquired and liabilities assumed and may differ from the amounts included in these financial statements. The Company expects to complete the final allocation as soon as practical but no later than one year from the acquisition date.4. Convertible Promissory NotesOn December 4, 2015, Private Daré issued convertible promissory notes in the aggregate principal amountupon achievement of $500,000. The convertible promissory notes accrue interest at a ratecertain development and regulatory milestones, and up to $45.0 million in the aggregate upon achievement of 8% per annum, are convertible into Private Daré’s next preferred stock financing round and are payable following the delivery of a demandcertain commercial sales milestones for each product covered by the holders of a majoritylicenses granted under the agreement, which may be paid, in interestthe Company’s sole discretion, in cash or shares of the outstanding principal (includingCompany’s common stock.outstanding principal amountlicenses granted under the convertible promissory notes issuedagreement.As of September 30, 2023, no payments have been made under this agreement.MBI AcquisitionIn November 2019, the Company acquired Dare MB Inc., or MBI, to secure the rights to develop a long-acting reversible contraception method, that a woman can turn on or after November 18, 2016,off herself, according to her own needs. This candidate is now known as described further below)DARE-LARC1.Under the terms of the merger agreement, the Company agreed to pay former MBI stockholders: (a) up to $46.5 million contingent upon the achievement of specified funding, product development and regulatory milestones; (b) up to $55.0 million contingent upon the achievement of specified amounts of aggregate net sales of products incorporating the intellectual property the Company acquired in the merger; and (c) tiered royalty payments ranging from low single-digit to low double-digit percentages based on or after December 4, 2017. In the eventannual net sales of a preferred stock financing, all outstanding principal and unpaid interest under the convertible promissory notes will convert into the shares of Private Daré’s preferred stock issued in such financing at the price per share paidproducts sold by the purchasersCompany (but not by sublicensee) and a percentage of sublicense revenue related to such shares and an additional numberproducts.In June 2021, a total of shares equal to 15% to 25%$1.25 million of the outstanding principal and unpaid interest based oncontingent consideration became payable upon the amount of time that has passed between the issuance of the convertible promissory notes and the closing of such preferred stock financing.During the week of November 18, 2016, Private Daré’s issued additional convertible promissory notes, and amended the termsachievement of certain of the outstanding convertible promissory notes held by persons who purchased additional convertible promissory notes on or after November 18, 2016. These convertible promissory notes (including the convertible promissory notes issued in December 2015funding and amended in connection with the sale of additional convertible promissory notes in November 2016) accrue interest at a rate of 8% per annum, are convertible into Private Daré’s next preferred stock financing round and are payable following the delivery of a demand by the holders of a majority in interest of the outstanding principal (including the outstanding principal amount under the convertible promissory notes issued in December 2015) on or after December 4, 2017.product development milestone events. In the event of a preferred stock financing, all outstanding principal and unpaid interest under the convertible promissory notes (including the amended convertible promissory notes originally issued in December 2015) will convert into the shares of Private Daré’s preferred stock issued in such financing at the price per share paid by the purchasers of such shares and an additional number of shares equal to 40% of the outstanding principal and unpaid interest. In addition, in the event of a change of control in which the convertible promissory notes (including the amended convertible promissory notes originally issued in December 2015) are repaid, the holders of such notes are entitled to receive 2 to 5 times the amount of the principal based on the proceeds payable to Private Daré or its stockholders in connection with such change of control. During the week of November 18, 2016, Private Daré issued convertible promissory notes in the aggregate principal amount of $197,500 and amended the terms of prior notes in the aggregate principal amount of $275,000 to correspondaccordance with the terms of such additional convertible promissory notes. On February 17, 2017 the Company issued an additional convertible promissory note in the principal amount of $100,000.In connection with the Stock Purchase Transaction, described in further detail below, all outstanding convertible promissory notes issued prior to March 31, 2017 were further amended to provide that such notes will convert into shares of Private Daré common stock at a price per share of $0.18727 (subject to stock splits, combinations and similar events) effective as of immediately prior to the closing of the Stock Purchase Transaction and that the Stock Purchase Transaction would not constitute a change of control, including for purposes of the repayment premium described above.On July 19, 2017, Private Daré amended the notes to provide that (i) the interest on the notes be subject to compounding on an annual basis as of December 31 of each year and (ii) the number of shares of common stock issuable upon conversion of the convertible promissory notes issued prior to March 31, 2017 will be equal to the outstanding principal amount plus accrued interest through March 31, 2017 divided by $0.18727 (subject to stock splits, combinations and similar events) plus, in the case of the convertible promissory notes issued in December 2015, 25% of the principal amount plus accrued interest through March 31, 2017 divided by $0.18727 (subject to stock splits, combinations and similar events), and, in the case of the convertible promissory notes issued on or after November 18, 2016 (including certain of the amended convertible promissory notes originally issued in December 2015 the holders of which also participated in the November 2016 note offering), 40% of the principal amount plus accrued interest through March 31, 2017 divided by $0.18727 (subject to stock splits, combinations and similar events).Between April 1, 2017 and June 6, 2017 Private Daré issued additional convertible promissory notes in the aggregate principal amount of $55,000 pursuant to a new note purchase agreement. One note in the principal amount of $20,000 was issued on May 31, 2017 and two notes in the aggregate principal amount of $35,000 were issued during the first week of June. The new note purchasemerger agreement, provides for one or more additional closings through the earlier to occur of September 28, 2017 and the date on which the Company’s stockholders approve the Stock Purchase Transaction, and limits the aggregate principal amountboard of the convertible promissory notes issued thereunderdirectors elected to $2.0 million. The convertible promissory notes issued pursuant to the May 31, 2017 note purchase agreement bear an annual interest ratepay a portion of 8% and will automatically convert immediately prior to closing of the transaction into the number of shares of Private Daré common stock equal to 120% of the original principal amount of each such note divided by $0.38. The interest on such notes will not convert into shares of Private Daré’s common stock. In addition, the holders of such notes issued pursuant to the new note purchase agreement are entitled to convert the value of any then outstanding notes plus unpaid and accrued interest plus an additional 20% of the principal amount of their notes into Qualified and Non-Qualified Equity Financings (with such terms having the same meaning asthese milestone payments in the December 2015 note purchase agreement) at the price paid by investors in the Qualified and Non-Qualified Equity Financings. Each purchaser of notes pursuant to the new note purchase agreement also executed and delivered a counterpart signature page to the Stock Purchase Agreement.Immediately prior to the closing of the Stock Purchase Transaction, all of the convertible promissory notes of Private Daré, in aggregate principal of, and accrued interest on, were converted into shares of common stock of Private Daré and all of the outstanding shares of common stock of Private Daré were exchanged for shares of common stock of the Company pursuant to the exchange ratio defined in the Stock Purchase Agreement. As a result of the conversion, the Company recognized an expense of $316,804 relating to the beneficial conversion feature present in each of the note agreements.5. Stock-based CompensationPrior to the Stock Purchase Transaction, the 2015 Employee, Director and Consultant Equity Incentive Plan of Private Daré, (the “2015 Plan”) governed the issuance of incentive stock options, non-qualified stock options, stock grants and stock-based awards to individuals who were then employees, officers, non-employee directors or consultants of the Company. Upon closing of the Stock Purchase Transaction, the 2015 Plan was assumed by the Company and each outstanding option to acquire stock of Private Daré that was not exercised prior to the closing of the Stock Purchase Transaction was assumed on the same terms and conditions as were applicable under the 2015 Plan, and became an option to acquire such shares of the Company’s common stock, as was equaland in September 2021, the Company issued approximately 700,000 shares of its common stock to former stockholders of MBI and paid $75,000 in cash to the numberstockholders’ representative in satisfaction of Private Daré shares subjectthe $1.25 million in milestone payments associated with milestones achieved in June 2021.11TriLogic and MilanaPharm License Agreement / Hammock Assignment AgreementIn December 2018, the Company entered into an assignment agreement with Hammock Pharmaceuticals, Inc., or the Assignment Agreement, and a first amendment to such unexercised option multipliedlicense 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 exchange ratio definedLicense 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 XACIATO, this proprietary technology is formulated with clindamycin for the treatment of bacterial vaginosis. In December 2019, the Company entered into amendments to each of the Assignment Agreement and License Amendment. In September 2021, the Company entered into a second amendment to the License Agreement. In March 2022, the Company entered into a Consent, Waiver and Stand-By License Agreement with TriLogic, MilanaPharm and Organon, which further amended the License Agreement.Under the terms of the License Agreement, the Company paid clinical and regulatory development milestones in the Stock Purchase Agreement, at a correspondingly adjusted exercise price. Stock Options Underaggregate of $300,000 to MilanaPharm, the 2015 Planfinal payment of Private Daré (the 2015 Plan)Options granted under$250,000 was expensed in 2021. The Company may also pay MilanaPharm up to $500,000 upon the 2015 Plan havefirst commercial sale in the United States of the first licensed product for each vaginal and urological use, and up to $250,000 upon the first commercial sale in the United States of each successive licensed products for each vaginal or urological use. In accordance with the terms of ten years from the dateLicense Agreement, the first commercial sale of grant unless earlier terminated and generally vest overXACIATO in the U.S. triggers a three-year period. There were no options granted under$500,000 payment to MilanaPharm. In addition, upon achievement of $50.0 million in cumulative worldwide net sales of licensed products the 2015 Plan during the nine months ended September 30, 2017 and effective asCompany must pay MilanaPharm $1.0 million. MilanaPharm is also eligible to receive (a) a low double-digit percentage of July 19, 2017 following closing of the Stock Purchase Transaction, no further options may be granted under the 2015 Plan.The exercise price of the 50,000 options granted for the year ended December 31, 2016 was equal to the estimated fair value of the common stock of Private Daré on the date of grant. On July 19, 2017, these options in Private Daré were assumedall 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, and 10,148 options were outstanding(b) high single-digit to low double-digit royalties based on annual worldwide net sales of licensed products and processes.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. Hammock is eligible to receive up to $1.1 million in the aggregate upon achievement of certain clinical and regulatory development milestones, $850,000 of which has been paid as of September 30, 2017 after adjustments2023.Pear Tree AcquisitionIn May 2018, the Company acquired Pear Tree Pharmaceuticals, Inc., or Pear Tree, to secure exclusive, sublicensable, worldwide rights under certain patents and know-how to develop and commercialize a proprietary formulation of tamoxifen for vaginal administration. This acquisition led to the Stock Purchase Transaction and Reverse Stock Split. Stock Options Company's DARE-VVA1 program.Under the 2014 Plan (the Current Plan)Options granted under the Company’s 2014 Stock Incentive Plan (the “2014 Plan” or “Current Plan”) have terms of no more than ten yearsthe merger agreement, the Company agreed to pay the former stockholders of Pear Tree: (a) up to $15.5 million in the aggregate upon achievement of certain clinical development and regulatory milestones by licensed products, and (b) up to $47.0 million in the aggregate upon achievement of certain commercial milestones by licensed products. Additionally, the former stockholders of Pear Tree are eligible to receive tiered royalties based on single-digit to low double-digit percentages of annual net sales of licensed products by the Company or its affiliates, subject to customary reductions and offsets, and a portion of royalties the Company receives from sublicensees. Both the milestone and royalty payments may be made, in the Company's sole discretion, in cash or in shares of its common stock in accordance with the terms of the merger agreement. Under the merger agreement, in addition to customary royalty reductions and offsets, royalty payments and payments based on income received from sublicensees of licensed products made by the Company to Pear Tree's licensors are creditable against all royalty and sublicense revenue share payments payable to the former stockholders of Pear Tree.12The Company agreed to pay licensors of Pear Tree (a) up to approximately $3.2 million in the aggregate upon achievement of certain clinical development, regulatory and commercial milestones by each licensed product, and (b) semi-annual royalties based on a single-digit percentage of net sales of licensed products by the Company or its affiliates, subject to customary reductions and offsets, or a portion of any royalties the Company or its affiliates receives from sublicensees, and a low double-digit percentage of all sublicensing fees or other lump sum payments or compensation the Company receives from sublicensees, subject to customary exclusions. The milestone payments to the licensors of Pear Tree may be made, in the Company's sole discretion, in cash or in shares of its common stock in accordance with the terms of the license agreements. Portions of certain milestone payments made to Pear Tree's licensors may be creditable against royalty payments due to Pear Tree's licensors.Catalent JNP License AgreementIn April 2018, the Company entered into an exclusive license agreement with Catalent JNP, Inc., or 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.Under the terms of the license agreement, the Company paid a $250,000 non-creditable upfront license fee to Catalent in connection with the execution of the agreement and will pay a $100,000 annual license maintenance fee on each anniversary of the date of grant unless earlier terminated.Company’s board of directors approved two modificationsannual maintenance fee will be creditable against royalties and other payments due to the stock options issued under the 2014 Plan to participants who were providing services to the Company as of March 19, 2017. The Company extended the exercise period for such stock options to two years beyond such participant’s termination date, unless the original option terms provided for a longer exercise period, and provided for the acceleration of vesting for such stock options upon a change in control event (such as the Stock Purchase Transaction). Modifications to the existing option terms resulted in unamortized fair value expense of approximately $3.7 million and was recorded as part of the total considerationCatalent in the Stock Purchase Transactionsame calendar year but may not be carried forward to any other year. Catalent is eligible to receive up to (a) $13.5 million in the aggregate in payments based on the achievement of specified development and discussed in Note 3.As partregulatory milestones, $1.0 million of the Stock Purchase Transaction, 544,040 Cerulean stock options were assumed by the Company and remain outstandingwhich has been paid as of September 30, 2017. Together with2023; and (b) up to $30.3 million in the Private Daré options assumedaggregate in connection withpayments based on the Stock Purchase Transaction,achievement of specified commercial sales milestones for each product or process covered by the licenses granted under the agreement. Additionally, Catalent is eligible to receive mid single-digit to low double-digit royalties based on worldwide net sales of products and processes covered by the licenses granted under the agreement. In lieu of such royalty payments, the Company had 554,040 options outstanding aswill pay Catalent a low double-digit percentage of September 30, 2017.A summary of stock option activity with regards toall sublicense income the 2015 Plan and the Current Plan, and related informationCompany receives for the nine months ended September 30, 2017 issublicense of rights under the agreement to a third party.Adare Development and Option AgreementIn March 2018, the Company entered into an exclusive development and option agreement with Adare Pharmaceuticals USA, Inc., or Adare, for the development and potential exclusive worldwide license of injectable formulations of etonogestrel for contraceptive protection over 6-month and 12-month periods (which the Company refers to as follows:Options outstandingDARE-204 and exercisable at September 30, 2017 had a weighted average contractual lifeDARE-214, respectively). The agreement, as amended, provides the Company with an option to negotiate an exclusive, worldwide, royalty-bearing license, with rights to sublicense, for the programs if the Company funds the conduct of 8.15 years. As of September 30, 2017, $44,460 represents unamortized stock-based compensation expense which will be amortized over the weighted average period of 1.79 years.Compensation Expenserecorded stock-based compensation expense relatedno obligation to the issuance of stock option awards to employees of $6,947 for the three months ended September 30, 2017 with no comparable expense in the same period of the prior year,exercise its option.SST License and $6,953 and $3 forCollaboration AgreementIn February 2018, the nine months ended September 30, 2017 and 2016, respectively. There were no stock options granted during the three or nine months ended September 30, 2016.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 and nine months ended September 30, 2017 are as follows:Restricted Stock After the Stock Purchase TransactionThe 3.14 million shares of common stock issued in connection with the Stock Purchase Transaction to the shareholders of Private Daré have not been registered with the SEC and may only be sold pursuant to an exemption from the SEC’s registration requirements. Some of these shares may become eligible for sale beginning six months after the date of the Stock Purchase Transaction pursuant to Rule 144.Common Stock WarrantsNo warrants were exercised during the nine months ended September 30, 2017. The following table summarizes the outstanding warrants for the Company’s common stock as of September 30, 2017:6. Commitments and ContingenciesOperating LeasesThe Company entered into a leaselicense and collaboration agreement that commenced on January 1, 2017with Strategic Science & Technologies-D LLC and provided for termination by either party upon 30 days’ notice. In July 2017,Strategic Science & Technologies, LLC, referred to collectively as SST, under which the Company provided noticereceived an exclusive, royalty-bearing, sublicensable license to develop and commercialize, in all countries and geographic territories of terminationthe world, for all indications for women related to female sexual dysfunction and/or female reproductive health, including treatment of this lease agreement.Thefemale sexual arousal disorder and/or female sexual interest/arousal disorder, or the Field of Use, SST’s topical formulation of Sildenafil Cream, 3.6% as it existed as of the effective date of the agreement, or any other topically applied pharmaceutical product containing sildenafil or a salt thereof as a pharmaceutically active ingredient, alone or with other active ingredients, but specifically excluding any product containing ibuprofen or any salt derivative of ibuprofen, or the Licensed Products.13SST will be eligible to receive payments of up to $18.0 million in the aggregate upon achievement of certain clinical and regulatory milestones in the U.S. and worldwide, and up to $100.0 million in the aggregate upon achievement of 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. Additionally, SST is eligible to receive tiered royalties based on percentages of annual net sales of licensed products in the single-digit to mid double-digits subject to customary royalty reductions and offsets, and a percentage of sublicense revenue.ADVA-Tec License AgreementIn March 2017, the Company entered into a new subleaselicense agreement on July 27, 2017with ADVA-Tec, Inc., or ADVA-Tec, under which provides facilities space as well as other administrative services for a monthly fee of $5,651 that increases 3% annually. The sublease agreement commenced on August 1, 2017 and expires on June 30, 2019. The parties have agreed to negotiate in good faith for an extension of this sublease agreement under similar terms. The Company may terminate the sublease by providing 30 days’ written notice.Other Legal ContingenciesFrom time to time, the Company may be involved in various claims arising in the normal course of business. Management is not aware of any material claims, disputes or unsettled matters that would have a material adverse effect on the Company’s results of operations, liquidity or financial position that the Company has not adequately provided for in the accompanying financial statements.The Company maintains various forms of insurance that the Company’s management believes are adequate to reduce the exposure to these risks to an acceptable level.Employment AgreementsCertain executive officers are entitled to payments if they are terminated without cause or as a result of a change in control of the Company. Upon termination without cause, and not as a result of death or disability, each officer is entitled to receive a payment of an amount equal to six to twelve months of base salary and to receive continuing health benefits coverage for periods ranging between six to twelve months following the termination of employment or until such officer is covered under a separate plan from another employer. Upon termination other than for cause or for good reason within three months prior or twelve months following a change in control of the Company, each officer will be entitled to receive a payment of an amount equal to nine to eighteen months of base salary and target bonus and to receive continuing health benefits coverage for periods ranging between nine to eighteen months following the termination of employment. In addition, upon a change in control of the Company, each officer’s outstanding unvested options shall fully vest and accelerate subject to the conditions outlined in such officer’s employment agreement.License and Royalty AgreementsThe Company signed an agreement to obtain a license from ADVA-Tec (the “ADVA-Tec Agreement”) forwas granted the exclusive right to develop and commercialize Ovaprene for human contraceptive use worldwide that became effective once the initial funding called for by the ADVA-Tec Agreement was secured. 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 these financial statements, this patent portfolio includes 12 issued patents worldwide, along with 8 patent applications, all of which are exclusively licensed to the Company in accordance withworldwide.Under the terms of the ADVA-Tec Agreement. The Company also has a right of first refusal to license these patents and patent applications for purposes of additional indications for Ovaprene. Under the ADVA-Tec Agreement, ADVA-Tec will conduct certain research and development work as necessary to allowagreement, the Company to seek a Premarket Approval (“PMA”) from the United States Food and Drug Administration (“FDA”), and will supply the Company with its requirements of Ovaprene for clinical and commercial use on commercially reasonable terms. Under thepay ADVA-Tec Agreement, the Company is required to make payments of(a) up to $14.6 million in the aggregate to ADVA-Tec based on the achievement of specified development and regulatory milestones, $1.2 million of which include the completion of a successful Postcoital Clinical Trial (“PCT”) Study (as definedhas been paid; and (b) up to $20.0 million in the aggregate based on the achievement of certain worldwide net sales milestones.Additionally, ADVA-Tec Agreement); approval by the FDAis eligible to commence the Phase 3 pivotal human clinical trial; successful completion of the Phase 3 pivotal human clinical trial; the FDA’s acceptance of the filing of a PMA for Ovaprene; the FDA’s approval of the PMA for Ovaprene; Conformite Europeene (“CE”) 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. In addition, after the commercial launch of Ovaprene, the Company is also required to make royalty payments to ADVA-Tecreceive royalties based on aggregate annual net sales of Ovaprene in specified regions which percentageat a royalty rate that will vary between 1% and 10% and will increase based on various net sales thresholds. Finally,thresholds, subject to customary reductions and offsets.If the Company is also required to make up to $20.0 millionsublicenses its rights under the agreement, in the aggregate in commercial milestonelieu of royalty payments to ADVA-Tec, upon reaching certain worldwide net sales milestones. TheADVA-Tec is eligible to receive a double-digit percentage of sublicense revenue received by the Company is obligatedduring the royalty term; provided, however, that for sublicense revenue the Company receives prior to 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. The ADVA-Teca licensed product that represents an upfront payment or license continuesfee due on a country-by-country basis untilor around the latereffective date of the lifesublicense, ADVA-Tec is eligible to receive a single-digit percentage of that sublicense revenue.4. STOCKHOLDERS’ EQUITYIncrease in Authorized Shares of Common StockIn July 2022, following the approval of the licensed patentsCompany's stockholders at its annual meeting of stockholders, the Company amended its restated certificate of incorporation to increase the Company's authorized shares of common stock to 240,000,000.14September 2023 Registered Direct OfferingOn August 29, 2023, the Company entered into a securities purchase agreement with an institutional investor and an investor affiliated with Douglas for the purchase and sale of 10,000,000 shares of the Company's common stock and warrants to purchase an aggregate of 10,000,000 shares of the Company's common stock in a registered direct offering priced at-the-market under Nasdaq rules. Each warrant is exercisable for one share of the Company's common stock. The terms of the warrants are further described below in this Note 4. The offering price was $0.70 per share of common stock and accompanying warrant. The aggregate gross proceeds to the Company from the offering were $7.0 million, and net proceeds were approximately $6.8 million. The offering was made pursuant to the Company's registration statement on Form S-3 (File No. 333-254862), filed with the SEC on March 30, 2021, and declared effective by the SEC on April 7, 2021, and a prospectus supplement thereunder. The offering closed on September 1, 2023.March 2023 ATM Sales AgreementIn March 2023, the Company entered into a sales agreement with Stifel, Nicolaus & Company, Incorporated, or Stifel, and Cantor Fitzgerald & Co., or Cantor, to sell shares of its common stock from time to time through an "at-the-market," or ATM, equity offering program under which Stifel and Cantor act as the Company's agents. The Company agreed to pay a commission equal to 3% of the gross proceeds of any common stock sold under the agreement or such lower amount as the Company and Stifel and Cantor agree, plus certain legal expenses. Shares of the Company's common stock sold under the agreement will be issued pursuant to the Company's shelf registration statement on Form S-3 (File No. 333-254862), the base prospectus included therein, originally filed with the SEC on March 30, 2021 and declared effective by the SEC on April 7, 2021, the prospectus supplement dated March 31, 2023 relating to the offering of up to $50.0 million of shares of the Company's common stock under the sales agreement, and any subsequent prospectus supplement related to the offering of shares of the Company's common stock under the sales agreement. During the nine months ended September 30, 2023, the Company sold 2,113,348 shares of common stock under this agreement and received aggregate gross proceeds of approximately $1.8 million and incurred sales agent commissions and fees of approximately $41,000.October 2021 ATM Sales AgreementIn October 2021, the Company entered into a sales agreement with SVB Securities LLC (formerly known as SVB Leerink LLC) to sell shares of its common stock from time to time through an ATM equity offering program under which SVB Securities acted as the Company's agent. During the nine months ended September 30, 2023 and 2022, the Company sold zero and 751,040 shares of its common stock under the agreement, respectively. The Company terminated the agreement in March 2023.Common Stock WarrantsSeptember 2023 WarrantsIn connection with the registered direct offering completed in September 2023, the Company issued to the investors in that offering warrants to purchase up to an aggregate of 10,000,000 shares of the Company's common stock. The warrants will be exercisable six months after issuance. The warrants have a term of five and one-half years from the date of issuance and an exercise price of $0.77 per share, subject to adjustment for stock splits, reverse stock splits, stock dividends and similar transactions. A holder (together with its affiliates) may not exercise any portion of a warrant to the extent that the holder would own more than 4.99% (or, at the election of the holder 9.99%) of the Company's outstanding common stock immediately after exercise. The warrants include certain rights upon “fundamental transactions” as described in the warrants, including the right of the holders thereof to receive from the Company or a successor entity the same type or form of consideration (and in the same proportion) that is being offered and paid to the holders of the Company's common stock in such fundamental transaction in the amount of the Black-Scholes value (as described in the warrants) of the unexercised portion of the applicable warrants on the date of the consummation of such fundamental transaction.15The warrants were allocated a value of $2.9 million using a Black-Scholes option pricing model based on the relative fair value method as they were issued with common stock. The Black-Scholes model used the following assumptions: expected volatility: 87.77%; risk-free interest rate: 4.29%; expected dividend yield: 0%; and expected term: 5.5 years. The warrants were deemed to be classified as equity and recorded within additional paid in capital on the condensed consolidated balance sheets. As of September 30, 2023, none of the warrants have been exercised.February 2018 WarrantsIn connection with an underwritten public offering in February 2018, the Company issued to the investors in that offering, warrants exercisable through February 15, 2023 with an initial exercise price of $3.00 per share.The Company estimated the fair value of the warrants as of February 15, 2018 to be approximately $3.0 million which was recorded in equity as of the grant date. The warrants included a price-based anti-dilution provision, which resulted in automatic reductions to the exercise price of the warrants in April 2019 and July 2020 to $0.98 per share and to $0.96 per share, respectively.Summary of Warrant ActivityDuring the nine months ended September 30, 2023, February 2018 warrants to purchase 1,353,515 shares of common stock were exercised for gross proceeds of approximately $1.3 million and the remaining unexercised February 2018 warrants expired on February 15, 2023. No warrants were exercised during the nine months ended September 30, 2022.As of September 30, 2023, the Company had the following warrants outstanding:Shares Underlying
Outstanding WarrantsExercise Price Expiration Date 10,000,000 $ 0.77 03/01/2029 6,500 $ 10.00 04/04/2026 10,006,500 5. STOCK-BASED COMPENSATION2014 Employee Stock Purchase PlanThe 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. There was no stock-based compensation related to the ESPP for the nine months ended September 30, 2023 or September 30, 2022.Amended and Restated 2014 Stock Incentive PlanThe Amended and Restated 2014 Stock Incentive Plan, or the Amended 2014 Plan, provided 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 increased annually on the first day of each fiscal year 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 last commercial saleboard of Ovaprene,directors. On January 1, 2022, the number of authorized shares increased by 2,000,000 to 2,201,855. As a result of the approval of the 2022 Plan (as defined below) by the Company's stockholders on June 23, 2022, no further awards have been or will be granted under the Amended 2014 Plan. Outstanding awards previously granted under the Amended 2014 Plan continue to remain outstanding in accordance with their terms.2022 Stock Incentive PlanIn April 2022, the Company's board of directors approved the Daré Bioscience, Inc. 2022 Stock Incentive Plan, or the 2022 Plan, which was subsequently approved by the Company's stockholders on June 23, 2022, and became effective as of that date. The 2022 Plan provides for the ADVA-Tec Agreement includes customary termination rightsgrant of stock-based incentive awards to employees, consultants, advisors, and directors.The number of shares of common stock authorized for both parties,issuance under the 2022 Plan is (a) 10,117,305; plus (b) up to 6,144,682 shares subject to awards granted under the Amended 2014 Plan or the 2007 Stock Incentive Plan that expire, terminate or are otherwise forfeited on or after June 23, 2022.16Summary of Stock Option ActivityThe table below summarizes stock option activity under the Company's stock incentive plans and providesrelated information for the nine months ended September 30, 2023. The exercise price of all options granted during the nine months ended September 30, 2023 was equal to the market value of the Company’s common stock on the date of grant. As of September 30, 2023, unamortized stock-based compensation expense of approximately $4.9 million will be amortized over a weighted average period of 2.27 years. The number of shares of common stock available for future awards granted under the 2022 Plan at September 30, 2023 was 6,725,247.Number of Shares Weighted Average
Exercise PriceOutstanding at December 31, 2022 6,612,554 $ 1.60 Granted 2,857,665 1.13 Exercised — — Cancelled/forfeited (6,331) 1.17 Expired — — Outstanding at September 30, 2023 9,463,888 $ 1.46 Exercisable at September 30, 2023 5,225,163 $ 1.50 Compensation ExpenseTotal stock-based compensation expense related to stock options granted to employees and directors recognized in the condensed consolidated statements of operations is as follows:Three Months Ended
September 30,Nine Months Ended
September 30, 2023 2022 2023 2022 Research and development $ 207,081 $ 168,323 $ 617,580 $ 514,875 General and administrative 429,006 388,125 1,293,313 1,111,503 Total $ 636,087 $ 556,448 $ 1,910,893 $ 1,626,378 6. LEASED PROPERTIESThe Company's lease for its corporate headquarters (3,169 square feet of office space) commenced on July 1, 2018. In February 2022, the Company entered into an amendment to extend the term of the lease for two years such that the term now expires on August 31, 2024.MBI, a wholly owned subsidiary the Company acquired in November 2019, leases general office and laboratory space in Lexington, Massachusetts. The lease for that space commenced on July 1, 2013. In February 2022, the Company entered into an amendment to extend the term of the lease for three years to December 31, 2025, subject to the landlord's right to terminate withthe lease on December 31, 2023. The extension of the lease in February 2022 resulted in an increase in operating lease liabilities and ROU assets of approximately $1.0 million. In September 2022, the landlord exercised its option to terminate the lease, resulting in the new lease term ending on December 31, 2023. The termination of the lease resulted in a reduction of operating lease liabilities and ROU assets of approximately $504,000 and $458,000, respectively, and a $46,000 gain on the modification of the lease which was included as a reduction to research and development expense for the year ended December 31, 2022. MBI entered into a new lease for general office space and laboratory space in June 2023 that will commence on November 1, 2023 and will create an obligation to pay approximately $1.4 million over the lease period of three years.MBI previously leased warehouse space in Billerica, Massachusetts, under a lease that commenced on October 1, 2016 and terminated on March 31, 2022.17Under the terms of each lease, the lessee 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 without cause in whole orrestrictive 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-countrycollateralized basis upon 60 daysover the term of the lease within a particular currency environment. The Company uses an incremental borrowing rate consisting of the current prime rate plus 200 basis points for operating leases that commenced prior written notice. In addition, ADVA-Tec may terminateto January 2019 (and all of the ADVA-Tec Agreement ifCompany's operating leases commenced prior to such date). The depreciable lives of operating leases and leasehold improvements are limited by the expected lease term.At September 30, 2023, the Company failsreported operating lease ROU assets of approximately $182,000 in other non-current assets, approximately $195,000 in current portion of lease liabilities, and approximately $0 in lease liabilities long-term in the condensed consolidated balance sheets.Total operating lease costs were approximately $125,000 and $409,000 for the three and nine months ended September 30, 2023, respectively, and $116,000 and $469,000 for the three and nine months ended September 30, 2022, respectively. Operating lease costs consist of monthly lease payments expense, common area maintenance and other repair and maintenance costs and are included in general and administrative expenses in the condensed consolidated statements of operations.Cash paid for amounts included in the measurement of operating lease liabilities was approximately $105,516 and $314,774 for the three and nine months ended September 30, 2023, respectively, and $81,000 and $231,000 for the three and nine months ended September 30, 2022, respectively. These amounts are included in operating activities in the condensed consolidated statements of cash flows. At September 30, 2023, operating leases had a weighted average remaining lease term of 0.58 years.As of September 30, 2023, future minimum lease payments under the Company's operating leases are as follows (does not include any minimum lease payments under the lease MBI entered in June 2023 because the lease does not commence until November 1, 2023):Remainder of 2023 $ 107,000 2024 93,000 Total future minimum lease payments 200,000 Less: accreted interest 5,000 Total operating lease liabilities $ 195,000 187. COMMITMENTS AND CONTINGENCIESInsurance FinancingIn July 2023, the Company obtained financing for certain director and officer and other liability insurance premiums. The agreement for such financing assigns to dothe lender a first priority lien on and a security interest in the financed insurance policies and any additional premium required in the financed insurance policies including (a) all returned or unearned premiums, (b) all additional cash contributions or collateral amounts assessed by the insurance companies in relation to the financed insurance policies and financed by the lender, (c) any credits generated by the financed insurance policies, (d) dividend payments, and (e) loss payments which reduce unearned premiums. If any circumstances exist in which premiums related to any financed insurance policy could become fully earned in the event of loss, the lender will be named a loss-payee with respect to such policy.The total premiums, taxes and fees financed was approximately $0.8 million with an annual interest rate of approximately 8.0%. In consideration of the following: (i) satisfypremium payment by the annual spendinglender to the insurance companies or the agent or broker, the Company unconditionally promised to pay the lender the amount financed plus interest and other charges permitted under the agreement. The Company will make monthly installment payments on the financed amount through April 20, 2024. The financed amount is recognized as an insurance financing cost included in other current assets and accrued expenses in the Company's consolidated balance sheets. At September 30, 2023, the Company's remaining obligation described above, (ii) failunder the agreement was approximately $0.5 million.CRADA with NICHD for the Pivotal Phase 3 Study of OvapreneIn July 2021, the Company entered into a Cooperative Research and Development Agreement, or the CRADA, with the U.S. Department of Health and Human Services, as represented by the Eunice Kennedy Shriver National Institute of Child Health and Human Development, or NICHD, for the conduct of a multi-center, non-comparative, pivotal Phase 3 clinical study of Ovaprene, or the Ovaprene Phase 3. The Ovaprene Phase 3 will be conducted within NICHD’s Contraceptive Clinical Trial Network with NICHD's contract research organization providing clinical coordination and data collection and management services for the Ovaprene Phase 3. The Company and NICHD will each provide medical oversight and final data review and analysis for the Ovaprene Phase 3 and will work together to use commercially reasonable effortsprepare the final report of the results of the Ovaprene Phase 3. The Company is responsible for providing clinical supplies of Ovaprene, coordinating interactions with the FDA, preparing and submitting supportive regulatory documentation, and providing a total of $5.5 million in payments to complete all necessary pre-clinicalNICHD to be applied toward the costs of conducting the Ovaprene Phase 3. NICHD is responsible for the other costs related to the conduct of the Ovaprene Phase 3. In accordance with the payment schedule under the CRADA, the Company has made aggregate payments of $5.0 million to NICHD, $3.5 million of which was paid in 2022. The Company's remaining obligation under the CRADA at September 30, 2023 was $0.5 million.198. GRANT AWARDSNICHD Non-Dilutive Grant FundingThe Company has received notices of awards and clinical studies requirednon-dilutive grant funding from NICHD to support the development of DARE-PTB1, DARE-LARC1, DARE-204/214 and DARE-PTB2. NICHD 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 PMA, (iii) faildetailed accounting of such expenses to conduct clinical trials as set forthreceive payment. If the Company receives payments under the award, the amounts of such payments are recognized in the statements of operations as a reduction to research and development planactivities as the related costs are incurred to meet those obligations over the period.DARE-PTB1In August 2020, the Company received a notice of award of a grant from NICHD to support the development of DARE-PTB1. The award of approximately $300,000 was to be used for what is referred to as the "Phase I" segment of the project outlined in the Company's grant application. The Phase I segment ended in July 2023. Additional potential funding of up to approximately $2.0 million for the "Phase II" segment of the project outlined in the grant application is contingent upon satisfying specified requirements, including, assessment of the results of the Phase I segment, determination that the Phase I goals were achieved, and availability of funds. No determination has been received by the Company to date as to whether the Company will receive any funding for the Phase II segment and there is agreed by Daréno guarantee the Company will receive any such funding.The Company recorded credits to research and ADVA-Tec,development expense for costs related to the NICHD award of $100 and $1,000 during the three and nine months ended September 30, 2023, respectively, and $459 and $19,911 during the three and nine months ended September 30, 2022, respectively. No receivable was recorded at September 30, 2023 or December 31, 2022. The Company received aggregate reimbursements under the NICHD award of approximately $216,000 during the grant period, which ended in July 2023. No further funds are available under this award for the Phase I segment.DARE-LARC1In September 2021, the Company received a notice of award of a grant from NICHD to support the development of DARE-LARC1. The award in the amount of approximately $300,000 was to be used to explore device insertion and removal in nonclinical studies.The Company recorded credits to research and development expense of approximately $0 and $32,000 for costs related to the NICHD award during the three and nine months ended September 30, 2023, respectively, and $3,000 and $196,000 for the three and nine months ended September 30, 2022, respectively. The Company recorded a receivable of approximately $33,000 at December 31, 2022 for expenses incurred through such date that were subsequently reimbursed under the grant. No receivable was recorded at September 30, 2023. The Company received aggregate reimbursements under the NICHD award of approximately $278,000 during the grant period, which ended in June 2023. No further funds are available under this award.DARE-204 and DARE-214In May 2022, the Company received a notice of award of a grant from NICHD of approximately $249,000 to support end-user research to better understand women's preferences for a long-acting injectable contraceptive method. The findings from the research will inform the Company's target product profile and guide its development priorities for DARE-204 and DARE-214.The Company recorded credits to research and development expense of approximately $32,000 and $113,000 for costs related to the NICHD award during the three and nine months ended September 30, 2023, respectively, and approximately $65,000 for each of the three and nine months ended September 30, 2022. The Company recorded a receivable of approximately $65,000 and $24,000 at September 30, 2023 and December 31, 2022, respectively, for expenses incurred through such date that it believes are eligible for reimbursement under the grant.20DARE-PTB2In July 2023, the Company received a notice of award of a grant from NICHD of approximately $385,000 to support preclinical development of a potential new therapeutic for the prevention of idiopathic preterm birth. The grant funds will support activities related to the conduct and completion of proof-of-concept target validation studies in collaboration with the University of South Florida, or USF, which are to occur over a 12-month period.The Company recorded credits to research and development expense of approximately $600 for costs related to the NICHD award during the three and nine months ended September 30, 2023. The Company recorded a receivable of approximately $600 at September 30, 2023 for expenses incurred through such date that it believes are eligible for reimbursement under the grant.Other Non-Dilutive Grant FundingThe Company has received funding to support the preclinical development of DARE-LARC1 and DARE-LBT under grant agreements it entered into with the Bill & Melinda Gates Foundation, or the Foundation, in June 2021 and November 2022, respectively. The Company is required to apply the funds it receives under the agreements solely toward direct costs for the applicable funded projects, other than approximately 10% of such funds, which it may apply toward general overhead and administration expenses that support the entire operations of the Company. The Company receives funding in advance and tracks and reports eligible expenses incurred to the Foundation. Funds received that have not been spent are recorded as cash and cash equivalents and as maya deferred grant funding liability in our condensed consolidated balance sheets. Our deferred grant funding liability also includes grant funds spent but not yet expensed in accordance with GAAP. The grant agreements include the Foundation's standard discretionary termination provisions. Any grant funds that have not been used or committed to the funded project must be modified by a joint research committee, where such failure is not caused by events outsidereturned promptly to the Foundation upon expiration or termination of the Company’s reasonable control, or (iv) failagreement.2022 DARE-LBT Grant AgreementIn November 2022, the Company entered into an agreement with the Foundation under which the Company was awarded $585,000 to enrollsupport the development of DARE-LBT. The Company received the full amount of the award in November 2022. As of September 30, 2023, the Company recorded a patientdeferred grant funding liability of approximately $464,000 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, where non-enrollment is not caused by events outside of the its reasonable control. Company's condensed consolidated balance sheets.2021 DARE-LARC1 Grant AgreementIn addition, ADVA-Tec may terminate the ADVA-Tec Agreement ifJune 2021, the Company developsentered into an agreement with the Foundation under which the Company was awarded up to approximately $49.0 million to support the development of DARE-LARC1. The agreement supports technology development and preclinical activities over the period of June 30, 2021 to November 1, 2026, to advance DARE-LARC1 in nonclinical proof-of-principle studies. As of September 30, 2023, the Company has received a cumulative total of approximately $28.3 million in non-dilutive funding under the agreement: approximately $11.5 million in 2021, approximately $12.4 million in 2022, and $4.5 million in 2023. Additional payments are contingent upon the DARE-LARC1 program’s achievement of specified development and reporting milestones. As of September 30, 2023, the Company recorded a deferred grant funding liability of approximately $15.2 million in the Company's condensed consolidated balance sheets.9. NET LOSS PER SHAREThe Company computes basic net loss per share, or commercializes any non-hormonal ring-based vaginal contraceptive deviceEPS, using the weighted average number of common shares outstanding during the period, without consideration for common stock equivalents. Diluted EPS is based upon the weighted average number of common shares and potentially dilutive securities (common share equivalents) outstanding during the period. Dilutive securities include the dilutive effect of in-the-money options and warrants, which is deemed competitive to Ovaprenecalculated based on the average share price for each period using the treasury stock method. Under the treasury stock method, the exercise price of an option or in certain limited circumstances,warrant, the amount of compensation cost, if any, for future service that the Company failshas not yet recognized, and the amount of estimated tax benefits that would be recorded in paid-in capital, if any, when the option or warrant is exercised are assumed to commercialize Ovaprenebe used to repurchase shares in certain designated countries within three yearsthe current period.Dilutive securities are excluded from the diluted EPS calculation if their effect is anti-dilutive.21The following potentially dilutive outstanding securities were excluded from diluted EPS for the period indicated because of their anti-dilutive effect:Potentially dilutive securities Three Months Ended
September 30,Nine Months Ended
September 30, 2023 2022 2023 2022 Stock options 9,463,888 6,612,554 9,463,888 6,612,554 Warrants 10,006,500 1,381,015 10,006,500 1,381,015 Total 19,470,388 7,993,569 19,470,388 7,993,569 10. SUBSEQUENT EVENTSAchievement of First Commercial Milestone Under License Agreement for XACIATOIn October 2023, the Company became entitled to receive a $1.8 million milestone payment from Organon in connection with first commercial sale in the U.S. of Ovaprene.XACIATO in accordance with the license agreement between the Company and Organon, as amended.
ATM SalesDuring November 2023, the Company sold an aggregate of 270,000 shares of common stock under its ATM equity offering program and received aggregate gross proceeds of approximately $108,000 and incurred sales agent commissions and fees of approximately $2,500 (For a discussion of the ATM program, see Note 4, Stockholders' Equity).22Item 2. Management's Discussion and Analysis ofof Financial Condition and Results of OperationsThe following discussion and analysis of financial condition and results of operations should be read in conjunction with the condensed consolidated financial statements of Daré Bioscience, Inc. and accompanying notes appearing elsewhere in this report. For additional context with which to understand our financial condition and results of operations, see the discussion and analysis included in the discussion and analysis included in our Current Report on Amendment No. 1 to Form 8-K filed with the SEC on October 2, 2017, and the unaudited condensed consolidated financial statements and accompanying notes contained therein. In addition to historical information,thereto included in this Quarterly Report on Form 10-Q and our audited financial statements and notes thereto for the year ended December 31, 2022 included in our Annual Report on Form 10-K for the year ended December 31, 2022, or our 2022 10-K, filed with the Securities and Exchange Commission, or SEC, on March 30, 2023. 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 analysis contains forward-looking statements that involve risks, uncertainties, and assumptions. Ourour actual results may differ materially from those currently anticipated in these forward-looking statements asand from historical results depending upon a resultvariety of various factors, including, but not limited to, those identified under “Forward Looking Statements” below, those discussed in Part I, Item 1A1A. Risk Factors of our 2022 10-K, and in our subsequent filings with the SEC, including any discussed in Part II, Item 1A of this report under the heading “Risk Factors,” which are incorporated herein by reference.In this report, “we,” “us,” “our,” “Daré” or the “Company” refer collectively to Daré Bioscience, Inc. and includedits wholly owned subsidiaries, unless otherwise stated or the context otherwise requires. All information presented in “Item 1A. Risk Factors” inthis report is based on our Quarterly Report on Form 10-Q forfiscal year. Unless otherwise stated, references to particular years, quarters, months or periods refer to our fiscal years ending December 31 and the quarter ended June 30, 2017. Ovaprene™associated quarters, months and periods of those fiscal years.Daré Bioscience® is a registered trademark of Daré Bioscience, Inc. and XACIATO™ is a trademark of Daré Bioscience, Inc. with registration pending. Ovaprene® is a registered trademark licensed by our company.to Daré Bioscience, Inc. All other trademarks, service marks or trade names appearing in this report are the property of their respective owners. Use or display by us of other parties’ trademarks, service marks or trade names is not intended to and does not imply a relationship with, or endorsements or sponsorship of, us by the trademark, service mark or trade name owners.Business OverviewDaré Bioscience, Inc. (“Daré,” “we,” “us,” “our,”We are a biopharmaceutical company committed to advancing innovative products for women’s health. We are driven by a mission to identify, develop and “our Company”),bring to market a Delaware corporation, was formed on November 28, 2005. The Companydiverse portfolio of differentiated therapies that prioritize women's health and itswell-being, expand treatment options, and improve outcomes, primarily in the areas of contraception, vaginal health, reproductive health, menopause, sexual health and fertility. Our business strategy is to in-license or otherwise acquire the rights to differentiated product candidates in our areas of focus, some of which have existing clinical proof-of-concept data, to take those candidates through mid to late-stage clinical development or regulatory approval, and to establish and leverage strategic collaborations to achieve commercialization. We and our wholly owned subsidiaries Daré Bioscience Operations, Inc. and Daré Bioscience Australia Pty LTD, operate in one segmentbusiness segment.The first shipment of our first product, XACIATO (clindamycin phosphate) vaginal gel 2%, or XACIATO (pronounced zah-she-AH-toe), in connection with its principal officethe first commercial sale of the product in San Diego, California. The Company isthe United States occurred in October 2023. XACIATO was approved by the FDA in December 2021 as a healthcare company committedsingle-dose prescription medication for the treatment of bacterial vaginosis in females 12 years of age and older. In March 2022, we entered into an agreement with an affiliate of Organon & Co., Organon International GmbH, or Organon, which became fully effective in June 2022, whereby Organon licensed exclusive worldwide rights to develop, manufacture and commercialize XACIATO. Accordingly, our potential future revenue from the development and commercialization of innovative productsXACIATO will consist of royalties based on net sales and milestone payments from Organon, and, for an interim period, payments from Organon for commercial supply of XACIATO.Our product pipeline includes diverse programs that target unmet needs in women’swomen's health in the areas of contraception, vaginal health, reproductive health. The Company seeks product candidates thathealth, menopause, sexual health and fertility, and aim to expand treatment options, improveenhance outcomes and are easy for women to use. The Company’s first product candidate is Ovaprene, a non-hormonal contraceptive intravaginal ring intended to provide protection over multiple weeksimprove ease of use requiring no intervention at the time of intercourse.Since our inception, we have devoted significant resources to license and prepare for women. We are primarily focused on progressing the development of Ovaprene. Asour existing portfolio of September 30, 2017, Daré had cashproduct candidates. However, we also explore opportunities to expand our portfolio by leveraging assets to which we hold rights or obtaining rights to new assets, with continued focus solely on women's health.Our current portfolio includes five product candidates in advanced clinical development (Phase 2-ready to Phase 3):•Ovaprene®, a hormone-free, monthly intravaginal contraceptive;23•Sildenafil Cream, 3.6%, a proprietary cream formulation of approximately $8.53 million.sildenafil for topical administration to the female genitalia on demand for the treatment of female sexual arousal disorder (FSAD) and/or female sexual interest/arousal disorder (FSIAD);•DARE-HRT1, an intravaginal ring designed to deliver both bio-identical estradiol and progesterone together, continuously over a 28-day period, for the treatment of moderate-to-severe vasomotor symptoms, as part of menopausal hormone therapy;•DARE-VVA1, a proprietary formulation of tamoxifen for intravaginal administration being developed as a hormone-free alternative to estrogen-based therapies for the treatment of moderate-to-severe vulvovaginal atrophy; and•DARE-CIN, a proprietary, fixed-dose formulation of lopinavir and ritonavir in a soft gel vaginal insert for the treatment of cervical intraepithelial neoplasia (CIN) and other human papillomavirus (HPV) related pathologies.Our portfolio also includes five product candidates in Phase 1 clinical development or that we believe are Phase 1-ready:•DARE-PDM1, a proprietary hydrogel formulation of diclofenac, a nonsteroidal anti-inflammatory drug, for vaginal administration as a treatment for primary dysmenorrhea;•DARE-204 and DARE-214, injectable formulations of etonogestrel designed to provide contraception over 6-month and 12-month periods, respectively;•DARE-FRT1, an intravaginal ring designed to deliver bio-identical progesterone continuously for up to 14 days for luteal phase support as part of an in vitro fertilization treatment plan; and•DARE-PTB1, an intravaginal ring designed to deliver bio-identical progesterone continuously for up to 14 days for the prevention of preterm birth.In addition, our portfolio includes five preclinical stage programs:•DARE-LARC1, a contraceptive implant delivering levonorgestrel with a woman-centered design that has the potential to be a long-acting, yet convenient and user-controlled contraceptive option;•DARE-LBT, a novel hydrogel formulation for vaginal delivery of live biotherapeutics to support vaginal health;•DARE-GML, an intravaginally-delivered potential multi-target antimicrobial agent formulated with glycerol monolaurate (GML), which has shown broad antimicrobial activity, killing bacteria and viruses;•DARE-RH1, a novel approach to non-hormonal contraception for both men and women by targeting the CatSper ion channel; and•DARE-PTB2, a novel approach for the prevention and treatment of idiopathic preterm birth through inhibition of a stress response protein.The product candidates and potential product candidates in our portfolio will require review and approval from the FDA, or a comparable foreign regulatory authority, prior to being marketed or sold. See below and ITEM 1. "BUSINESS," in Part I of our 2022 10-K for additional information regarding our product and product candidates.Our primary operations have consisted of research and development activities to advance our portfolio of product candidates through late-stage clinical development and/or regulatory approval. We expect our research and development expenses will continue to requirerepresent the majority of our operating expenses for at least the next twelve months. For the rest of 2023 and until we secure additional capital to continuefund our clinicaloperating needs, we will focus our resources primarily on advancement of Ovaprene and Sildenafil Cream, 3.6%. In addition, we expect to incur significant research and development activities, expand our product portfolio and if successful, to commercialize approved products. Accordingly,expenses for the DARE-LARC1 program for the next several years, but we also expect such expenses will be supported by non-dilutive funding provided under a grant agreement we entered into in June 2021.24As discussed below, we will need to raise substantial additional capital to continue to fund our operations. The amountoperations and timingexecute our current business strategy. We are also subject to a number of other risks common to biopharmaceutical companies, including, but not limited to, dependence on key employees, reliance on third-party collaborators, service providers and suppliers, being able to develop commercially viable products in a timely and cost-effective manner, dependence on intellectual property we own or in-license and the need to protect that intellectual property and maintain those license agreements, uncertainty of market acceptance of products, uncertainty of third-party payor coverage, pricing and reimbursement for products, rapid technology change, intense competition, compliance with government regulations, product liability claims, and exposure to cybersecurity threats and incidents.XACIATOIn October 2023, we became entitled to receive a $1.8 million milestone payment from Organon in connection with the first commercial sale in the U.S. of XACIATO in accordance with our exclusive global license agreement, as amended, and a $0.5 million payment from us to a third-party licensor became payable.In July 2023, we entered into an amendment to our license agreement with Organon and received $1.0 million from Organon as reimbursement for registration fees paid to the FDA in connection with the new drug application (NDA) for XACIATO (known as PDUFA fees) and other manufacturing expenses and to support continued advancement of the development and commercialization of XACIATO, which was recognized as license fee revenue. Under our agreement with Organon, we are also entitled to receive tiered double-digit royalties based on net sales and eligible to receive up to $180.0 million in tiered commercial sales milestones and regulatory milestones.Under the terms of our agreement with Organon, for an interim period, we will remain the holder of the FDA’s marketing approval for XACIATO and be responsible for providing commercial product supply. Upon Organon's request, we will assist with the transfer of the NDA by the FDA to Organon, as well as the transfer of manufacturing responsibilities to Organon. As the current NDA holder, we will continue to be responsible for regulatory and compliance matters, though Organon is responsible for commercializing, promoting, determining pricing, and negotiating reimbursement matters related to XACIATO. Organon will purchase all of its product requirements of XACIATO from us at a transfer price equal to our manufacturing costs plus a single-digit percentage markup. We will fulfill our commercial supply obligations through the contract manufacturer that provided clinical supplies of XACIATO for our pivotal Phase 3 DARE-BVFREE clinical study of XACIATO. We will not be responsible for other costs of commercializing XACIATO.Clinical-Stage Program UpdatesOvapreneWe anticipate subject enrollment in a single arm, open-label pivotal contraceptive efficacy study of Ovaprene to begin before the end of 2023. The multi-center, non-comparative pivotal Phase 3 clinical study will evaluate Ovaprene’s effectiveness as a contraceptive device along with its safety and usability. We will target having approximately 250 women complete approximately 12 months (13 menstrual cycles) of use of Ovaprene. Based on typical dropout rates for contraceptive efficacy studies, we will seek to enroll more than double the number of subjects we target to complete 13 menstrual cycles of use. We have been working with our collaborators at the National Institutes of Health, or NIH, and at Bayer to review and implement study design considerations provided by the FDA with its Investigational Device Exemption, or IDE, approval letter, which we believe will further position the Phase 3 study to collect safety and effectiveness data to enable the preparation of, and to support the submission of, a premarket approval, or PMA, application for Ovaprene. The primary objective of the study is to assess the typical use pregnancy rate over 13 menstrual cycles, or the estimated Pearl Index for Ovaprene. Secondary objectives are to assess Ovaprene's 13-cycle use cumulative pregnancy rate, safety, acceptability, product fit/ease of use, and assessments of vaginal health. If successful, we expect the study to support a PMA application to the FDA, as well as regulatory filings in Europe and other countries worldwide, to allow for marketing approvals of Ovaprene.25The Phase 3 study will be conducted under our Cooperative Research and Development Agreement, or CRADA, with the U.S. Department of Health and Human Services, as represented by the Eunice Kennedy Shriver National Institute of Child Health and Human Development, or the NICHD, part of the NIH, and within NICHD’s Contraceptive Clinical Trial Network. We and NICHD will each provide medical oversight and final data review and analysis for the study and will work together to prepare the final report of the results of the study. We are responsible for providing clinical supplies of Ovaprene, coordinating interactions with the FDA, preparing and submitting supportive regulatory documentation, and providing a total of $5.5 million to NICHD to be applied toward the costs of conducting the Phase 3 study, $5.0 million of which has been paid. NICHD is responsible for the other costs related to the conduct of the Phase 3 study and for managing the payment of expenses to the contract research organization for the study, the clinical sites, and other parties involved with the study. We and NICHD are in discussions regarding an amendment to the CRADA, which we expect will delay the due date of our remaining $0.5 million payment to NICHD to the first quarter of 2024. In the future, funding requirementsdepending on the duration of the enrollment period and number of subjects enrolled in the Phase 3 study, there may be costs associated with the study that are not reflected in the current budget under the CRADA, in which case, we and NICHD would discuss the mechanism to potentially provide for additional future payments by us in support of the Phase 3 study. We do not expect any such potential additional amounts to be payable in 2023.Sildenafil Cream, 3.6%In June 2023, we announced topline results from our exploratory Phase 2b RESPOND clinical study of Sildenafil Cream, 3.6%, or Sildenafil Cream, in premenopausal women with FSAD, and in July and November 2023, we announced additional findings based on further analyses of data from the study. During the multi-center, double-blind, randomized, placebo-controlled study, subjects used Sildenafil Cream and placebo cream in their home setting over 12 weeks following a 4-week non-drug run-in period and a 4-week, single-blind placebo run-in period. The study was a first of its kind Phase 2b clinical study that included patient reported outcome instruments to screen for eligible women with FSAD and measure efficacy endpoints. There are no treatments approved by the FDA for FSAD, as described in the fourth edition of the Diagnostic and Statistical Manual (DSM), or for FSIAD, as described in the fifth edition of the DSM, and thus, there are no efficacy endpoints that have been previously validated in a Phase 3 pivotal study for potential treatments for FSAD or FSIAD.We believe data from the Phase 2b RESPOND study support advancing clinical development of Sildenafil Cream into a Phase 3 pivotal study in women with FSAD and women with FSIAD whose primary complaint is arousal dysfunction using co-primary endpoints similar to those used in the Phase 2b RESPOND study to measure Sildenafil Cream's efficacy compared to placebo cream as a potential treatment for FSAD and FSIAD. Phase 3 clinical study design, including primary and secondary efficacy endpoints, study duration, timing for efficacy endpoint assessment, use of endpoints that reduce burden on study subjects (e.g., 28-day recall assessments as opposed to recall assessments within 24 hours after each sexual event), and inclusion/exclusion criteria for study subjects, will dependbe determined following discussions with the FDA, including an end-of-phase 2 meeting with the FDA, which we expect to occur before the end of 2023.In April 2023, we announced the initiation of subject enrollment in a Phase 1, single-dose, double-blind, placebo-controlled, 3-way crossover clinical study of Sildenafil Cream using thermography to assess the pharmacodynamic (PD) and pharmacokinetic (PK) characterization of Sildenafil Cream. We expect this study will enroll approximately 15 women and be completed in early 2024. Data from the study will expand our existing clinical and nonclinical data for Sildenafil Cream and are expected to support the ongoing development of Sildenafil Cream as a potential treatment for FSAD and/or FSIAD.DARE-HRT1Based on many factors, including the pace and results of our randomized, open-label, two arm, parallel group Phase 1/2 clinical study of two versions of DARE-HRT1 (estradiol 80 µg/progesterone 4 mg intravaginal ring (IVR) and estradiol 160 µg/progesterone 8 mg IVR) conducted by our wholly owned subsidiary in Australia and pre-IND communications with the FDA , we plan to advance DARE-HRT1 directly into a Phase 3 clinical trial. We believe FDA approval of DARE-HRT1 for the treatment of moderate-to-severe vasomotor symptoms, or VMS, due to menopause in women with intact uteri is achievable via the FDA's 505(b)(2) pathway supported by a single, placebo-controlled Phase 3 clinical trial and a scientifically justified PK “bridge” (via a relative bioavailability trial) between DARE-HRT1 and the selected listed estradiol and progesterone drugs. We are conducting activities necessary to enable submission of an investigational new drug application, or IND, to the FDA for a pivotal Phase 3 clinical study of DARE-HRT1. We do not plan to conduct the Phase 3 study until after we secure additional capital.26DARE-VVA1The results of our randomized, multi-center, double-blind, parallel-arm, placebo-controlled, dose-ranging Phase 1/2 clinical study of DARE-VVA1, conducted by our wholly owned subsidiary in Australia, support ongoing development of DARE-VVA1 as a potential hormone-free treatment for moderate-to-severe VVA. We are conducting activities to support an IND submission to the FDA and an IND-opening Phase 2 clinical study. We do not plan to conduct the Phase 2 study until after we secure additional capital.DARE-CINWe acquired exclusive rights to develop and commercialize in the United States an investigational, proprietary lopinavir and ritonavir combination soft gel vaginal insert, which we refer to as DARE-CIN (formerly referred to as R-131-2), for the treatment of CIN and other HPV-related pathologies. DARE-CIN was previously evaluated in a proof-of-concept clinical study and the results demonstrated its potential as a self-applied therapy for HPV infection and related cervical lesions. We are conducting limited activities to support an IND submission to the FDA to enable progression to Phase 2 clinical development efforts. Failurein the United States.DARE-PDM1In February 2023, we announced the start of a Phase 1 clinical study of DARE-PDM1, which is being conducted by our wholly owned subsidiary in Australia. The DARE-PDM1 Phase 1 study, DARE-PDM1-001, is a multi-center, randomized, placebo-controlled, double-blind, three-arm parallel group study expected to raise capitalenroll approximately 36 healthy, premenopausal women with primary dysmenorrhea. This study is designed to assess the systemic (plasma) and local mucosal (vaginal fluid) diclofenac PK and safety after a single dose and during three daily doses of vaginally administered DARE-PDM1, given in two different strengths (1% or 3% diclofenac in 2.5 mL of hydrogel) versus placebo. The study will also assess, as an exploratory endpoint, the preliminary dysmenorrhea treatment efficacy of DARE-PDM1, when dosed in three daily doses at the onset of dysmenorrhea symptoms, compared to a no-treatment, baseline, control cycle. The study observation period will encompass approximately three menstrual cycles. We anticipate announcing topline data from the study in 2023.DARE-204 and when needed, on favorable terms or at all, wouldDARE-214We plan to conduct Phase 1 clinical studies of DARE-204 and DARE-214 in Australia through our wholly-owned subsidiary in Australia. Additional manufacturing activities are necessary to commence the Phase 1 studies and these activities have a negative impact on our financial condition and our ability to advance Ovaprene and to acquire or license the rights to other potential product candidates.Recent EventsOnAmendment of License Agreement for XACIATO and Achievement of First Commercial MilestoneAs discussed above, in July 19, 2017, all2023, we entered into an amendment to our exclusive global license agreement to commercialize XACIATO and received a $1.0 million payment from Organon, and in October 2023, we became entitled to receive a $1.8 million milestone payment from Organon in connection with the first commercial sale in the U.S. of the outstanding shares of capital stock of Daré Bioscience Operations, Inc., a private Delaware corporation (“Private Daré”), were purchased by the CompanyXACIATO in accordance with the terms of a stock purchaselicense agreement, dated as of March 19, 2017 (the “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 (the “Private Daré Stockholders”). Pursuantamended. In addition to the Stock Purchase Agreement, each Private Daré Stockholder sold its sharesmilestone payment, we are entitled to receive tiered double-digit royalties based on net sales and eligible to receive potential future milestone payments of common stockup to $180 million. See "XACIATO," above.Receipt of Grant Funding Installment to Support DARE-LARC1In September 2023, we received a payment of $4.5 million as the latest installment under a grant to advance the development of our investigational contraceptive DARE-LARC1 through nonclinical proof-of-principle studies and other IND-enabling work to allow for the submission of an IND application with the FDA, approval of which will be required to commence testing in Private Daré to the Company in exchange for newly issued shares of the Company’s common stock.On July 19, 2017, the Company also completed the sale of its proprietary Dynamic Tumor Targeting™ Platform (the “Platform”) to Novartis Institutes for BioMedical Research, Inc. (“Novartis”) for $6.0 million. Following the closing of the transactions contemplated by the Stock Purchase Agreement (collectively, the “Stock Purchase Transaction”) and the sale of the Platform, the Company changed its name to Daré Bioscience, Inc. As a result of the Stock Purchase Transaction, Private Daré became a wholly owned subsidiary of Daré Bioscience, Inc. and the Private Daré Stockholders became majority shareholders of Daré Bioscience, Inc. owning approximately 51% of the issued and outstanding shares of the Company’s shares of common stock.Immediately prior to the closing of the Stock Purchase Transaction, all the convertible promissory notes, principal and accrued interest of Private Daré were converted into shares of common stock of Private Daré at conversion prices of $0.18 and $0.36 per share in accordance with their respective note agreements. In addition, the holders of the convertible promissory notes received additional common shares of Private Daré ranging from 20% to 40% of total outstanding principal and accrued interest as of the date of conversion. All outstanding shares of common stock of Private Daré were exchanged for newly-issued shares of common stock of the Company and outstanding stock options of Private Daré were assumed by the Company pursuant tohumans. Under the terms of the Stock Purchase Transaction. For purposesgrant agreement, we may receive a total of clarity,up to approximately $49.0 million to support nonclinical development of DARE-LARC1. As of September 30, 2023, we sometimes referhad received a cumulative total of approximately $28.3 million of such total potential amount under the grant agreement. Additional payments are conditioned on the program meeting specified development and reporting milestones.27Registered Direct OfferingOn August 29, 2023, we entered into a securities purchase agreement with two investors relating to the purchase and sale in a registered direct offering of an aggregate of (i) 10,000,000 shares of our common stock, and (ii) warrants to purchase an aggregate of 10,000,000 shares of our common stock. Each warrant is exercisable for one share of our common stock. The offering price was $0.70 per share of common stock and accompanying warrant. The aggregate gross proceeds to us from the offering were $7.0 million before deducting offering expenses, and net proceeds were approximately $6.8 million. The warrants are exercisable six months after issuance, have a term of five and one-half years from the date of issuance and have an exercise price of $0.77 per share, subject to adjustment for stock splits, reverse stock splits, stock dividends and similar transactions.NICHD Non-Dilutive Grant AwardIn July 2023, we received a notice of award of a grant from NICHD of approximately $385,000 to support preclinical development of a potential new therapeutic for the prevention of idiopathic preterm birth. The grant funds will support activities related to the conduct and completion of proof-of-concept target validation studies in collaboration with the University of South Florida, or USF, which are to occur over a 12-month period. We previously entered into an option agreement with the University of South Florida Research Foundation, Inc., or USFRF, a nonprofit Florida corporation that is a direct support organization of USF, pursuant to which we have an exclusive right, and not an obligation, to elect to negotiate to acquire the exclusive worldwide rights in the field of human reproduction to patents and know-how controlled by USFRF relating to the potential therapeutic whose development is being supported by the NICHD award.Financial OverviewRevenueTo date we have generated $12.8 million in revenue, all of which is recognized as license fee revenue. Of our revenue, $10.0 million represents the upfront payment under our license agreement with Organon to commercialize XACIATO, $1.0 million represents payment under our license agreement with Organon as reimbursement for PDUFA fees and other manufacturing expenses and to support continued advancement of the development and commercialization of XACIATO, and $1.8 million represents the milestone payment under our license agreement with Organon in connection with the first commercial sale of XACIATO which will be recognized in the fourth quarter of 2023.In the future, we may generate revenue from royalties and commercial milestones based on the net sales of XACIATO, from product sales of other approved products, if any, and from license fees, milestone payments, and research and development payments in connection with strategic collaborations. In the future and for an interim period until the NDA for XACIATO is transferred to Organon, we may also generate revenue from commercial supply of XACIATO to Organon. Our ability to generate such revenue, with respect to XACIATO, will depend on the extent to which its commercialization is successful, and with respect to our business as “Private Daré” when discussingproduct candidates, will depend on their successful clinical development, the receipt of regulatory approvals to market such product candidates and the eventual successful commercialization of products. If XACIATO is not commercially successful or we fail to complete the development of our 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 and financial condition when we were a private company prior to the Stock Purchase Transaction.Immediately after the Stock Purchase Transaction, the Company implemented a reverse stock split (“Reverse Stock Split”) at a ratio of one new share for every ten shares of its common stock outstanding. No fractional shares were issued and instead, shareholders received cash for the value of their fractional shares. Following the closing of the Stock Purchase Transaction, the previous Cerulean equity holders of the Company immediately prior to the closing of the Stock Purchase Transaction owned approximately 49% and equity holders of Private Daré owned approximately 51% of the shares of the Company.Financial Operations OverviewResearch and Development ExpensesThe majority of our operating expenses during a fiscal year are research and development expenses, a significant portion of which, excluding those funded by non-dilutive grants, are associated with the clinical development for our product candidates that have reached the human clinical study development phase. Research and development expenses represent costs incurred to conductinclude research and development of Daré’scosts for our product candidates.candidates and transaction costs related to our acquisitions. We recognize all research and development costsexpenses as they are incurred. Research and development expenses consist primarily of the following:of:consultants and clinical trial sites and consultants that conduct research and development and regulatory affairs activities on our behalf;•transaction costs related to acquisitions of companies, technologies and related intellectual property, and other assets;28•milestone payments due to third parties under acquisition and in-licensing arrangements we incur, or the incurrence of which we deem probable; and that are associated with activities performed by our research and development organization and generally benefit multiple programs.Daré expects research and development expenses will increaseInvestment in the future as we advance Ovaprene ordevelopment of and seeking regulatory approval for our clinical-stage and Phase 1-ready product candidates and the development of any other potential product candidates we may advance into and through clinical trials and as we pursuein the pursuit of regulatory approvals, whichwill increase our research and development expenses. Activities associated with the foregoing will require a significant increasedincrease in investment in regulatory support, and contract manufacturing andclinical supplies, inventory build-up related costs.costs, and the payment of success-based milestones to licensors. In addition, Daré continueswe 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.Until the first commercial sale of XACIATO, we recognized contract manufacturing expenses associated with producing commercial supplies of XACIATO and costs of regulatory affairs activities related to XACIATO as research and development expenses. Following the first commercial sale of XACIATO, and for the interim period during which we remain the holder of the FDA's marketing approval and continue to provide commercial supplies of XACIATO to Organon, those expenses will be recognized as selling, general and administrative expenses.We recognize the Australian Research and Development Tax Incentive Program, or the Tax Incentive, as a reduction of research and development expenses. The processamounts are determined based on our eligible research and development expenditures and are non-refundable, provided that in order to qualify for the Tax Incentive the filing entity must have revenue of conductingless than AUD $20.0 million during the tax year for which a reimbursement claim is made and cannot be controlled by an income tax exempt entity. The Tax Incentive is recognized when there is reasonable assurance that the Tax Incentive will be received, the relevant expenditure has been incurred, and the amount can be reliably measured or reliably estimated.We receive funding through grants that support activities related to the development of certain of our product candidates. As we incur eligible expenses under those grants, we recognize grant funding in the statements of operations as a reduction to research and development expense (contra-research and development expense). For more information, see Note 2, Basis of Presentation and Summary of Significant Accounting Policies – Grant Funding, to our consolidated financial statements contained in our 2022 10-K and Note 8, Grant Awards, to our condensed consolidated financial statements contained in this report. For the three and nine months ended September 30, 2023 and 2022, we recognized contra-research and development expenses of approximately $2.6 million and $7.3 million, respectively, and $2.0 million and $4.0 million, respectively.Conducting clinical trials necessary to obtain regulatory approval is costly and time consuming. We may never succeed in timely developing and achievingnot obtain regulatory approval for ourany product candidates.candidate on a timely or cost-effective basis, or at all. The probability of success of Daré’sour 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 are unable tocannot 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.License Fee ExpensesLicense fee expenses consist of up-front license fees and annual license fees due under our in-licensing arrangements.General and Administrative ExpenseGeneral and administrative expenses consist of personnel costs, facility expenses, expenses for outside professional services, including legal, audit and accounting services.services, and commercial-readiness expenses. Personnel costs consist of salaries, benefits and stock-based compensation. Facility expenses consist of rent and other related costs. Daré expects to incur additionalCommercial-readiness expenses as a resultconsist of increased costs associated with being a public company, including expenses related to compliance with the rulesconsultant and regulations of the SEC and Nasdaq, additional insurance, investor relations, and other administrative expenses and professional services.advisor costs.Critical Accounting Policies and Significant Judgments and EstimatesManagement’s discussion and analysis of financial condition and results of operations is based on our interim condensed consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States, or GAAP. The preparation ofPreparing 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, Daré evaluateswe evaluate these estimates and judgments. We base our estimates on historical experience and on various assumptions that Daré believeswe 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. Daré believes that theFor a description of critical accounting policies discussed below are critical to understandingthat affect our historical and future performance, as these policies relate to the more significant areas involving management’s judgments and estimates.— and Note 2 to our financial statements contained in our 2022 10-K, and Note 2 to our condensed consolidated financial statements contained in this report.Results of OperationsComparison of Three Months Ended September 30, 20172023 and 2016The operations presented in the interim condensed consolidated financial statements and accompanying notes for the three months ended September 30, 2017 represent the operations of the Company following the Stock Purchase Transaction. The interim condensed consolidated financial statements and accompanying notes for the three months ended September 30, 2016 represent the operations of Private Daré, making a comparison between periods difficult.The following table summarizes Daré’sour condensed consolidated results of operations for the three months ended September 30, 2017 and 2016,periods indicated, together with the changes in those items in dollars:Generalterms of dollars and administrativeGeneral and administrative expenses increased by $1,046,665 to $1,052,628percentage:Three Months Ended September 30, Change 2023 2022 $ % Revenues: License fee revenue $ 1,000,000 $ — $ 1,000,000 100 % Total revenue 1,000,000 — 1,000,000 100 % Operating expenses: General and administrative 2,696,779 2,651,543 45,236 2 % Research and development 6,674,636 4,462,250 2,212,386 50 % License fee expenses 25,000 25,000 — — % Total operating expenses 9,396,415 7,138,793 2,257,622 32 % Loss from operations (8,396,415) (7,138,793) (1,257,622) 18 % Other income 97,319 118,950 (21,631) (18) % Net loss $ (8,299,096) $ (7,019,843) $ (1,279,253) 18 % Other comprehensive loss: Foreign currency translation adjustments (15,030) (230,748) 215,718 (93) % Comprehensive loss $ (8,314,126) $ (7,250,591) $ (1,063,535) 15 % RevenuesLicense fee revenue for the three months ended September 30, 2017 from $5,9632023 relates to our license agreement with Organon to commercialize XACIATO. We recognized $1.0 million in license fee revenue upon execution of the amendment to our license agreement in July 2023.General and administrative expensesThe increase of approximately $45,000 in general and administrative expenses for the three months ended September 30, 2016. The increase2023 as compared to the three months ended September 30, 2022 was primarily dueattributable to $535,003increases in commercial-readiness expenses of legalapproximately $0.2 million and stock-based compensation expense accounting expense and other expenses incurredof approximately $41,000. These increases were partially offset by decreases in connection with the Stock Purchase Transaction. Daré personnel costs increased $319,197 due to salariesof approximately $177,000, general corporate overhead, including rent and facilities expenses, of approximately $42,000 and professional services expense in the current period, including bonuses, with no comparable expense in the same period of the prior year. Following the Stock Purchase Transaction, and based upon the market data presented and recommendation of Radford, the Company’s compensation consultant, and upon approval of the Compensation Committee of the Company’s Board of Directors, the Company began paying its newly appointed executives compensation at a level in line with market rates for executive officers of early stage, pre-commercial biopharmaceutical public companies.30Research and developmentResearch expensesThe increase of approximately $2.2 million in research and development expenses for the three months ended September 30, 20172023 as compared to the three months ended September 30, 2022 was primarily attributable to increases in (i) expenses related to our Sildenafil Cream exploratory Phase 2b RESPOND clinical study of approximately $2.0 million, (ii) expenses related to clinical trial and manufacturing and regulatory affairs activities for Ovaprene of approximately $0.4 million, (iii) costs related to preclinical and other development expenses of approximately $0.3 million, and (iv) stock-based compensation expense of approximately $39,000. These increases were $280,793 with nopartially offset by decreases in costs related to development activities for our Phase 1 and Phase 1-ready programs of approximately $0.3 million, personnel costs of approximately $0.1 million, and expenses related to XACIATO of approximately $38,000.License fee expensesFor each of the three months ended September 30, 2023 and September 30, 2022, we accrued $25,000 of the $100,000 annual license maintenance fee payable under our license agreement related to DARE-HRT1.For further discussion of these license fees, see Note 3 to our condensed consolidated financial statements contained in this report.Other incomeThe decrease of approximately $22,000 in other income for the three months ended September 30, 2016. The expenses are all related2023 as compared to Ovaprene development costs in the current period.Interest expense increased by $286,120 to $296,262 for the three months ended September 30, 2017 from $10,142 for the three months ended September 30, 2016. The increase2022 was primarily due to $316,804 expense associated witha decrease in interest earned on cash balances in the beneficial conversion of the Convertible Promissory Notes.Results of Operations — current period.31Comparison of Nine Months Ended September 30, 20172023 and 2016The operations presented in the interim condensed consolidated financial statements and accompanying notes for the nine months ended September 30, 2017 represent the operations of the Company and give effect to the Stock Purchase Transaction. The interim condensed consolidated financial statements and accompanying notes for the nine months ended September 30, 2016 represent the operations of Private Daré, making a comparison between periods difficult.The following table summarizes Daré’sour condensed consolidated results of operations for the nine months ended September 30, 2017 and 2016,periods indicated, together with the changes in those items in dollars:Generalterms of dollars and administrativeNine Months Ended
September 30,Change 2023 2022 $ % Revenues: License fee revenue $ 1,000,000 $ 10,000,000 $ (9,000,000) (90) % Total revenue 1,000,000 10,000,000 (9,000,000) (90) % Operating expenses: General and administrative 8,954,877 8,014,424 940,453 12 % Research and development 17,738,543 17,065,497 673,046 4 % License fee expenses 75,000 75,000 — — % Total operating expenses 26,768,420 25,154,921 1,613,499 6 % Loss from operations (25,768,420) (15,154,921) (10,613,499) 70 % Other income 664,591 150,406 514,185 342 % Net loss $ (25,103,829) $ (15,004,515) $ (10,099,314) 67 % Other comprehensive loss: Foreign currency translation adjustments (68,186) (375,767) 307,581 (82) % Comprehensive loss $ (25,172,015) $ (15,380,282) $ (9,791,733) 64 % RevenuesLicense fee revenue relates to our license agreement with Organon to commercialize XACIATO. For the nine months ended September 30, 2023, see "—Comparison of Three Months Ended September 30, 2023 and 2022 (Unaudited)—Revenues," above.For the nine months ended September 30, 2022, we recognized $10.0 million in license fee revenue related to the transfer of the license and related know-how to Organon upon effectiveness of the agreement in June 2022.General and administrative expenses increased by $1,610,055 to $1,729,338The increase of approximately $0.9 million in general and administrative expenses for the nine months ended September 30, 2017 from $119,2832023 as compared to the nine months ended September 30, 2022 was primarily attributable to (i) an increase in commercial-readiness expenses of approximately $0.4 million, (ii) a one-time fraud loss of approximately $0.2 million, net of proceeds we received under an insurance policy, related to criminal fraud commonly referred to as "business email compromise fraud" to which we were subject, (iii) an increase in stock-based compensation expense of approximately $0.2 million, and (iv) an increase in professional services expense of approximately $0.2 million. These increases were partially offset by decreases in general corporate overhead, including rent and facilities expenses, of approximately $79,000, and personnel costs of approximately $24,000.Research and development expensesThe increase of approximately $0.7 million in research and development expenses for the nine months ended September 30, 2016. 2023 as compared to the nine months ended September 30, 2022 was primarily attributable to increases in (i) costs related to development activities for our Phase 1 and Phase 1-ready programs of approximately $1.8 million, (ii) costs related to our Sildenafil Cream exploratory Phase 2b RESPOND clinical study of approximately $0.4 million, (iii) stock-based compensation expense of approximately $0.1 million, and (iv) personnel costs of approximately $89,000. These increases were partially offset by decreases in costs related to (a) clinical trial and manufacturing and regulatory affairs activities for Ovaprene of approximately $1.5 million, (b) clinical trial and manufacturing and regulatory affairs activities for XACIATO of approximately $0.2 million, and (d) rent and facilities costs of approximately $78,000.32License fee expensesFor each of the nine months ended September 30, 2023 and September 30, 2022, we accrued $75,000 of the $100,000 annual license maintenance fee payable under our license agreement related to DARE-HRT1.For further discussion of these license fees, see Note 3 to our condensed consolidated financial statements contained in this report.Other incomeThe increase was primarily due to $963,380 of legal expense, accounting expense andapproximately $0.5 million in other expenses incurred in connection with the Stock Purchase Transaction. Daré personnel costs increased $326,349 due to salaries expense, including bonuses, in the current period with no comparable expense in the same period of the prior year. Following the Stock Purchase Transaction, and based upon the market data presented and recommendation of Radford, the Company’s compensation consultant, and upon approval of the Compensation Committee of the Company’s Board of Directors, the Company began paying its newly appointed executives compensation at a level in line with market rates for executive officers of early stage, pre-commercial biopharmaceutical public companies.Research and developmentResearch and development expenses increased by $239,503 to $312,169income for the nine months ended September 30, 2017 from $72,666 for2023 as compared to the nine months ended September 30, 2016. The expenses are2022 was primarily due to directan increase in interest earned on cash balances in the current period.Liquidity and indirect Ovaprene development costs.License expenseThe license expenseCapital ResourcesPlan of $250,000 forOperations and Future Funding RequirementsAt September 30, 2023, our accumulated deficit was approximately $166.2 million, our cash and cash equivalents were approximately $13.9 million, and our working capital deficit was approximately $3.9 million. We incurred a loss from operations of approximately $25.1 million and had negative cash flow from operations of approximately $30.7 million during the nine months ended September 30, 2016 related to fees paid to ADVA-Tec for exclusive option related to the Ovaprene technology. For further discussion2023. Substantially all of the ADVA-Tec Agreement, see Note 6 of Notes to the Condensed Consolidated Financial Statements.Interest expense increased by $300,028 to $330,233 for the nine months ended September 30, 2017 from $30,205 for the nine months ended September 30, 2016. The increase was primarily due to the $316,804 expense associated with the beneficial conversion of Convertible Promissory Notes.Liquidity and Capital ResourcesAs of September 30, 2017, Daré had $8.53 million inour cash and cash equivalents at September 30, 2023 represented funds received under grant agreements related to DARE-LARC1 and an accumulated deficitDARE-LBT and such funds may be applied solely toward direct costs for the development of $3.1 million. Daré expectsDARE-LARC1 and DARE-LBT, other than approximately 10% of such funds, which may be applied toward general overhead and administration expenses that over time, its generalsupport our entire operations. For additional information about these grant agreements, see "—Deferred Grant Funding" and administrative"—Grant Agreements," below.We expect to incur significant losses from operations and research and development expenses will increase. As a result, Daré anticipates that it willnegative cash flows from operations for the foreseeable future as we continue to incur increasing losses in the foreseeable future. Therefore, Daré will needdevelop and seek to raise additional capitalbring to fund its operations, which may include the issuance of public and private equity and debt financings, as well as government grants and strategic alliances.Plan of Operations and Future Funding RequirementsOurmarket our product candidates. We expect our primary uses of capital are, and we expect will continue to be staff-related expenses, the cost of clinical trialtrials and regulatory activities related to our product candidates, costs associated with contract manufacturing services and third-party clinical research and development services, payments to third-party licensors upon the occurrence of commercial milestones for XACIATO and development milestones for our product candidates pursuant to terms of the agreements under which we acquired or in-licensed rights to those programs, legal andexpenses, other regulatory expenses and general overhead costs.Following the closing on July 19, 2017 of the Stock Purchase Transaction and the sale Our future funding requirements could also include significant costs related to commercialization of our right, titleproduct candidates, if approved, depending on the type, nature and interestterms of commercial collaborations we establish, and in andparticular, if we determine to the patent rights, know-how andengage in commercialization activities directly as opposed to through a third-party collaborator.Currently, our sources of potential revenue are our license agreements relating to XACIATO and Ovaprene. In October 2023, we became entitled to receive a $1.8 million milestone payment from Organon in connection with the Platformfirst commercial sale in the U.S. of XACIATO in accordance with our exclusive global license agreement, as amended, and we are eligible to Novartisreceive royalty payments at rates in the tiered double-digits based on annual net sales of XACIATO. We do not expect royalty payments for $6.0 million,2023 net sales of XACIATO to materially impact our cash resources or requirements. In regard to our license agreement relating to the commercialization of Ovaprene in the U.S., if approved, we believeare not eligible to receive any additional payments from our collaborator until after we complete the planned pivotal Phase 3 clinical study of Ovaprene, which we do not expect to be completed in 2024.We anticipate our general and administrative expenses for 2023 will exceed our general and administrative expenses for 2022 primarily due to increased commercial-readiness expenses, personnel costs and other general corporate overhead. Our general and administrative expenses for the fourth quarter of 2023 will include a $500,000 milestone payment by us under our in-license agreement for XACIATO as a result of the first commercial sale of XACIATO in the U.S.The majority of our operating expenses during a fiscal year are research and development expenses, a significant portion of which, excluding those funded by non-dilutive grants, are associated with the clinical development for our product candidates that have reached the human clinical study development phase. In large part, we can control the pace of advancement of our existingdevelopment programs and therefore, we can control the timing of when we incur most of our research and development expenses.33We closely monitor our limited cash resources will be sufficientand we have implemented cost-savings measures, primarily by controlling our spend on research and development activities related to clinical-stage programs other than Ovaprene and Sildenafil Cream. Our research and development expenses for the remainder of 2023 and until we secure additional capital to fund our operating needs, will continue to be primarily associated with manufacturing activities in connection with our planned pivotal Phase 3 clinical study of Ovaprene, our ongoing Phase 1 thermography clinical study of Sildenafil Cream and other activities, including regulatory affairs activities, related to advancing Sildenafil Cream toward a Phase 3 clinical study. However, we plan to continue to advance preclinical development of DARE-LARC1 and DARE-LBT, the costs of which are being supported by grant funding.We will need additional capital to fund our operating needs into the first quarter of 2024 and to meet our current obligations as they become due. We are in ongoing discussions with multiple potential third-party sources of additional capital, including non-dilutive sources of capital. Many aspects of our ability to obtain additional capital are not entirely within our control and there can be no assurance that we will receive additional capital when needed, on favorable terms, or at all. 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 approximately two years. Basedbankruptcy, 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 current plansfinancial statements, and existing cash balances, we believe thatstockholders may lose all or part of their investment in our available funds will be sufficient for us to commence and complete a postcoital clinical trialcommon stock. See the risk factor in Item 1A of our lead clinical candidate, Ovaprene duringPart II of this period. We have based this estimate on assumptions that may prove to be wrong, and we could deplete our available cash resources sooner than we currently expect. report titled, We will need to raise substantial additional financingcapital to continue our operations and execute our business strategy, and we may not be able to raise adequate capital on a timely basis, on favorable terms, or at all.Historically, the clinical developmentcash used to fund our operations has come from a variety of Ovaprene,sources and predominantly from sales of shares of our common stock. We have also received a significant amount of cash through non-dilutive grants and strategic collaborations. We will continue to evaluate and may pursue a variety of capital raising options on an on-going basis, including a pivotal contraceptive study, and to support new licenses or other rights related to future portfolio candidates. We intend to cover future operating expenses through cash and cash equivalents on hand and through a combinationsales of equity offerings,(including sales of our common stock in ATM offerings), debt financings, government or other grant funding, collaborations, structured financings, and strategic alliances. Adequate additional financing may notalliances or other similar types of arrangements, to cover our operating expenses, and the cost of any license or other acquisition of new product candidates or technologies. 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. Our ability to raise capital through sales of our common stock will depend on acceptablea variety of factors including, among others, market conditions, the trading price and volume of our common stock, our clinical and commercial developments, and investor sentiment. In addition, macroeconomic factors and volatility in the financial market, which may be exacerbated in the short term by concerns over inflation, rising interest rates, economic recession, adverse developments affecting financial institutions or the financial services industry, impacts of the wars in Ukraine and the Middle East, strained relations between the U.S. and several other countries, and social and political discord and unrest in the U.S., among other things, may make equity or debt financings more difficult, more costly or more dilutive to our stockholders, and may increase competition for, or limit the availability of, funding from other potential third-party sources of capital, such as strategic collaborators and sources of grant funding.In addition, equity or debt financings may have a dilutive effect on the holdings of our existing stockholders, and debt financings may subject us to restrictive covenants, operational restrictions and security interests in our assets. If we raise capital through collaborations, structured financings, strategic alliances or other similar types of arrangements, we may be required to relinquish some or all of our rights to potential revenue or to intellectual property rights for our product candidates on terms or at all. that are not favorable to us.We can make no assurancesprepared the accompanying condensed consolidated financial statements on a going concern basis, which assumes that we will be ablerealize our assets and satisfy our liabilities in the normal course of business. As discussed above, there is substantial doubt about our ability to raisecontinue as a going concern because we do 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 condensed consolidated financial statements. The accompanying condensed 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.34Deferred Grant FundingWe have received substantial funding under grant agreements related to DARE-LARC1 and DARE-LBT. Under these agreements we generally receive grant funds before we incur the eligible expenses. Funds received that have not been spent are recorded both as cash neededand cash equivalents and as a deferred grant funding liability in our condensed consolidated balance sheets. Our deferred grant funding liability also includes grant funds spent but not yet expensed in accordance with GAAP. At September 30, 2023, our deferred grant funding liability was approximately $15.7 million, which primarily consisted of unspent funds for the DARE-LARC1 program. The balance of our deferred grant funding liability at September 30, 2023 primarily consisted of funds for the DARE-LARC1 program that have been spent but not yet expensed in accordance with GAAP. For more information about these grant agreements, see "—Grant Agreements" below, Note 2, Basis of Presentation and Summary of Significant Accounting Policies—Grant Funding, to fund the development of Ovaprene, potential other product candidatesour consolidated financial statements contained in our 2022 10-K and Note 8, Grant Awards—Other Non-Dilutive Grant Funding, to our operating expenses.Cash FlowsThe following table summarizes Daré’sshows a summary of our cash flows for the periods indicated:Nine months ended September 30, 2023 2022 Net cash used in operating activities $ (30,677,749) $ (12,191,757) Net cash used in investing activities (22,099) (60,372) Net cash provided by financing activities 10,327,852 1,343,355 Effect of exchange rate changes on cash, cash equivalents and restricted cash (68,185) (375,767) Net decrease in cash, cash equivalents and restricted cash $ (20,440,181) $ (11,284,541) Net cash used in operating activitiesCash used in operating activities for the nine months ended September 30, 2017 was $1,579,060. Cash used in operating activities2023 included the net loss of $2,371,740,$25.1 million, decreased by noncash chargesnon-cash stock-based compensation expense of $6,953approximately $1.9 million. Components providing operating cash were an increase in accounts payable of approximately $3.0 million, a decrease in other receivables of approximately $0.6 million, an increase in deferred revenue of approximately $0.2 million related to XACIATO commercial product supply, and non-cash interesta decrease in prepaid expenses of $$316,804. A major componentapproximately $0.1 million. Components reducing operating cash waswere a $224,433decrease in accrued expenses of approximately $6.1 million, a decrease in deferred grant funding of approximately $2.6 million, an increase in deposits of prepaid expenses andapproximately $1.8 million primarily related to deposits paid for the construction of capital equipment, an increase in other current assets offset byof approximately $0.8 million primarily related to the financing of certain director and officer and other liability insurance premiums recorded as insurance financing payable, deferred financing costs related to our ATM sales agreement, and inventory of XACIATO commercial supply, and a $659,223 increase accounts payableone-time fraud loss of $0.2 million related to a "business email compromise fraud" to which we were subject, net of insurance reimbursement, which was recognized in general and accruedadministrative expenses.Cash used in operating activities for the nine months ended September 30, 2016 was $205,347. Cash used in operating activities2022 included the net loss of $472,154,$15.0 million, decreased by noncash chargesnon-cash stock-based compensation expense of $3. A major componentapproximately $1.6 million. Components providing operating cash were an increase in deferred grant funding of approximately $4.3 million, an increase in accounts payable of approximately $1.4 million, and an increase in accrued expenses of approximately $1.0 million. Components reducing operating cash was a $13,401 decreasewere an increase in accounts payableprepaid expenses of approximately $4.4 million and accrued expenses, offset by a $250,000 decreasean increase in other receivables.Net cash provided byused in investing activitiesCash provided byused in investing activities for the nine months ended September 30, 2017 was $9.9 million, consisting of cash acquired through the Stock Purchase Transaction. No cash was provided by investing activities for the nine months ended2023 and September 30, 2016.35Net cash provided by financing activitiesCash provided by financing activities for the nine months ended September 30, 2017 was $155,000, consisting2023 of approximately $10.3 million primarily consisted of proceeds from issuance(i) the sale of Convertible Promissory Notes.our common stock and warrants in the registered direct offering completed in September 2023, (ii) sales of our common stock under our ATM sales agreement, (iii) the exercise of warrants, and (iv) the financing of certain director and officer and other liability insurance premiums.No cash wasCash provided by financing activities for the nine months ended September 30, 2016.Future Funding RequirementsLicense and Royalty AgreementsWe agreed to make royalty and milestone payments under the license and development agreements related to XACIATO, Ovaprene, and Sildenafil Cream, and under other agreements related to our other clinical and preclinical candidates. During the remainder of 2023, based on our current expectations regarding the development of our product candidates and sales of XACIATO, we expect to pay approximately $0.6 million in license fee expense and milestone payments under the license and development agreements, which is significantly less than our previously reported expected amount, primarily due to lesser anticipated royalty payments we may owe with respect to sales of XACIATO resulting from the delay of its commercial launch from earlier expectations and lesser anticipated milestone payments with respect to milestone events for certain product candidates no longer expected to occur in 2023. For further discussion of these potential payments, see Note 3 to our condensed consolidated financial statements contained in this report.Grant AgreementsWe have not generated any revenuereceived substantial funding under grant agreements related to DARE-LARC1 and DARE-LBT. In September 2023, following an assessment of our activities and the milestones we achieved to date, and we cannot anticipate if, and when we will generate any revenue. Future product revenue will require us to obtain regulatory approvals in order to sell any products. Revenue from potential strategic partnerships will also require usreceived $4.5 million as the latest installment under the grant agreement to advance clinical candidates to meaningfulthe preclinical development milestones. Atof DARE-LARC1. Grant funds under these agreements generally are received before we incur the same time, we expecteligible expenses. Unspent grant funds are recorded as deferred grant funding liability in our expenses to increase in connection with the postcoital clinical study of Ovaprenecondensed consolidated balance sheets and any other development activities we may undertake in the future. We also expect to incur additional costs given the requirements of operatingour deferred grant funding liability as a public company.As of September 30, 2017, we had cash2023 primarily consisted of approximately $8.53 million. We will continue to require additional capital to continue to fund our operations, our clinical development activities, expand our product portfolio and if successful, to commercialize any approved products. The amount and timing of our future funding requirements will depend on many factors, including the pace and results of clinical development efforts. Failure to raise capital as and when needed, on favorable terms or at all, would have a negative impact on our financial condition.We intend to cover our future operating expenses through cash and cash equivalents on hand and through a combination of equity offerings, debt financings, government or otherunspent grant funding, collaborations and strategic alliances. To the extent that we raise additional capital through the issuance of additional equity or convertible debt securities, the ownership interest of our current stockholders will be diluted.License and Royalty AgreementsWe signed an agreement to obtain a license from ADVA-Tec (the “ADVA-Tec Agreement”)funds for the exclusive rightDARE-LARC1 program. For more information, see Note 2, Basis of Presentation and Summary of Significant Accounting Policies —Grant Funding, to develop and commercialize Ovaprene for human contraceptive use worldwide that became effective once the initial funding called for by the ADVA-Tec Agreement was secured. 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 theseour consolidated financial statements contained in our 2022 10-K and Note 8, Grant Awards—Other Non-Dilutive Grant Funding, to our condensed consolidated financial statements contained in this patent portfolio includes 12 issued patents worldwide, along with eight patent applications, all of which in accordance with the terms of the ADVA-Tec Agreement are exclusively licensed to the Company. We also have a right of first refusal to license these patents and patent applications for purposes of additional indications for Ovaprene. Under the ADVA-Tec Agreement, ADVA-Tec will conduct certain research and development work as necessary to allow us to seek a Premarket Approval (“PMA”) from the FDA, and will supply us with our requirements of Ovaprene for clinical and commercial use on commercially reasonable terms. Under the ADVA-Tec Agreement, we are required to make payments of up to $14.6 million in the aggregate to ADVA-Tec based on the achievement of specified development and regulatory milestones, which include the completion of a successful Postcoital Clinical Trial Study (as defined in the ADVA-Tec Agreement); approval by the FDA to commence the Phase 3 pivotal human clinical trial; successful completion of the Phase 3 pivotal human clinical trial; the FDA’s acceptance of the filing of a PMA for Ovaprene; the FDA’s approval of the PMA for Ovaprene; Conformite Europeene 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. In addition, after the commercial launch of Ovaprene, we are also required to make royalty payments to ADVA-Tec based on aggregate annual net sales of Ovaprene in specified regions, which percentage royalty rate will vary between 1% and 10% and will increase based on various net sales thresholds. Finally, we are also required to make up to $20.0 million in the aggregate in commercial milestone payments to ADVA-Tec upon reaching certain worldwide net sales milestones. We are obligated to 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. The ADVA-Tec 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, and the ADVA-Tec Agreement includes customary termination rights for both parties, and provides us the right to terminate with or without cause in whole or on a country-by-country basis upon 60 days prior written notice. In addition, ADVA-Tec may terminate the ADVA-Tec Agreement if we fail to do any of the following: (i) satisfy the annual spending obligation described above, (ii) fail to use commercially reasonable efforts to complete all necessary pre-clinical and clinical studies required to support and submit a PMA, (iii) fail to conduct clinical trials as set forth in the development plan that is agreed by Daré and ADVA-Tec, and as may be modified by a joint research committee, where such failure is not caused by events outside of our reasonable control, or (iv) fail to 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, where non-enrollment is not caused by events outside of the our reasonable control. In addition, ADVA-Tec may terminate the ADVA-Tec Agreement if we develop or commercialize any non-hormonal ring-based vaginal contraceptive device which is deemed competitive to Ovaprene or, in certain limited circumstances, if we fail to commercialize Ovaprene in certain designated countries within three years of the first commercial sale of Ovaprene. The above description of the ADVA-Tec Agreement is qualified in its entirety by the full text of the agreement, a copy of which is filed as Exhibit 10.1 to this Quarterly Report on Form 10-Q.ContractsWe 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 therefore Daré believeswe do not believe that our non-cancelable obligations under these agreements are not material.Off-Balance Sheet ArrangementsWe did not have during the periods presented, and we do not entered intocurrently have, any off-balance sheet arrangements, and do not have any holdings in variable interest entities.as defined under applicable SEC rules.36Item 3. Quantitative and Qualitative Disclosures About Market RiskWeUnder SEC rules and regulations, as a smaller reporting company we are exposednot required to market risk related to changes in interest rates. As of September 30, 2017, Daré had cash on hand of approximately $8.53 million, consisting primarily of investments in money market funds and certificates of deposit. Our primary exposure to market risk is interest rate sensitivity, which is affectedprovide the information required by changes in the general level of United States interest rates, particularly because our investments are in cash and cash equivalents. Due to the short-term duration of our investment portfolio and the low risk profile of our investments, an immediate 10% change in interest rates would not have a material effect on the fair market value of our investment portfolio.this item.Evaluation of Disclosure Controls and ProceduresOur management, under the supervision and with the participation of our principal executive officer and principal financial officer, has evaluated the effectiveness of ourWe maintain disclosure controls and procedures as(as defined in Rule 13a-15(e) of the end of the period covered by this Quarterly Report on Form 10-Q. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, or the Exchange Act, means controls and other procedures of a company that areAct) designed to ensureprovide reasonable assurance that information required to be disclosed by a company in the reports that it files or submits under theour Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’sSEC’s rules and forms. Disclosure controlsforms, and procedures include, without limitation, controls and procedures designed to ensure that such information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the Company’sour management, including its principal executiveour Chief Executive Officer and principal financial officers,Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures.Management recognizesdisclosure. In designing and evaluating the disclosure controls and procedures, management recognized that any disclosure controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives. Our disclosure controls and procedures have been designed to provide reasonable assurance of achieving their objectives. 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 suchan evaluation performed under the supervision and with the participation of our principal executive officermanagement, including our Chief Executive Officer and principal financial officerChief Financial Officer, of the effectiveness of our disclosure controls and procedures, 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 September 30, 2023 at the reasonable assurance level as of September 30, 2017.level.overOver Financial ReportingNoThere was no change in our internal control over financial reporting (as definedidentified in connection with the evaluation required by Rules 13a-15(f)13a-15(d) and 15d-15(f) under15d-15(d) of the Exchange Act)Act that occurred during the nine months ended September 30, 2017,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 INFORMATIONItem 1. Legal ProceedingsFrom 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. We are not currently party to anyAs of the date of filing this report, there is no material pending litigationlegal proceeding to which we are a party or other material legal proceeding.to which any of our property is subject, and management is not aware of any contemplated proceeding by any governmental authority against us.Item 1A. Risk FactorsThereAn investment in shares of our common stock involves a high degree of risk. You should carefully consider the risks and uncertainties described in our 2022 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. Except as discussed below, there have been no material changes infrom the risk factors from those disclosed in Part II,I, Item IA.1A. Risk Factors in our interim2022 10-K.We will need to raise substantial additional capital to continue our operations and execute our business strategy, and we may not be able to raise adequate capital on a timely basis, on favorable terms, or at all.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 the foreseeable future as we develop and seek to bring to market our existing product candidates and as we seek to potentially acquire or license and develop additional product candidates. These circumstances raise substantial doubt about our ability to continue as a going concern. Our financial statements as of December 31, 2022 and September 30, 2023 were prepared under the assumption that we will continue as a going concern and do not include any adjustments that might result from the outcome of this uncertainty. At September 30, 2023, our accumulated deficit was approximately $166.2 million, our cash and cash equivalents were approximately $13.9 million, our deferred grant funding liabilities under our grant agreements related to DARE-LARC1 and DARE-LBT were approximately $15.7 million, and we had a working capital deficit of approximately $3.9 million. Substantially all of our cash and cash equivalents at September 30, 2023 represented funds received under such grant agreements and such funds may be applied solely toward direct costs for the development of DARE-LARC1 and DARE-LBT, other than approximately 10% of such funds, which may be applied toward general overhead and administration expenses that support our entire operations. We will require additional capital to fund our operating needs into the first quarter of 2024 and to meet our current obligations as they become due. Advancing our investigational women's health products through clinical development and pursuing regulatory approval and commercialization will require substantial additional investment. We will need to raise substantial additional capital to continue to fund our operations and execute our current business strategy. The amount and timing of our capital needs have and will continue to depend highly on many factors, as discussed further below as well as under "ITEM 2. MANAGEMENT'S DISCUSSION OF AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS—Liquidity and Capital Resources—Plan of Operations and Future Funding Requirements" in Part I of this report.Our management has devoted, and may continue to devote, significant time and we may incur substantial costs in pursuing, evaluating and negotiating potential capital-raising transactions and those efforts may not prove successful on a timely basis, or at all. If we cannot raise adequate additional capital when needed, we may be forced to reduce, or even terminate our operations. We may delay, scale back or eliminate one or more of our product development programs; delay, limit or terminate activities in support of our third-party collaborator’s commercialization of XACIATO in the U.S.; relinquish rights under our license agreements with third parties relating to our product and product candidates; forgo opportunities to expand our product portfolio; take other measures to reduce our expenses; reorganize or merge with another entity; or file for bankruptcy 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 our stockholders may lose all or part of their investment in our common stock.Our capital needs have depended on, and will continue to depend on, many factors that are highly variable and difficult to predict, including:•the product development programs we choose to pursue;38•the cost and pace of preclinical and clinical development;•the results of preclinical activities and clinical trials;•the cost and timing of obtaining clinical supplies of product candidates and commercial supplies of products;•the cost and timing of regulatory submissions and decisions by the FDA and other regulatory authorities on our applications to commence and advance clinical development of and to market our product candidates;•the amount and timing of payments to third parties required under acquisition, in-license and other agreements relating our rights to develop and commercialize our product and product candidates;•the cost and timing of commercialization activities we undertake or engage third parties to undertake for any approved product;•the amount and timing of future royalty, milestone or other payments, if any, we receive under our commercial collaboration agreements for XACIATO and Ovaprene;•our ability to maintain, and establish new, strategic collaborations relating to the development and/or commercialization of our product and product candidates;•the extent to which we acquire, in-license, or otherwise invest in new product candidates or technologies and the terms of any such transaction; and•the cost and timing of preparing, filing, and prosecuting patent applications, maintaining and enforcing our intellectual property rights, and defending any intellectual property-related claims, including any claims by third parties that we are infringing upon their intellectual property rights.Should we add product candidates to our portfolio, should our existing product candidates require testing or other capital-intensive development activities that we do not anticipate, should the duration of our clinical trials be longer than anticipated, should manufacturing and supply be disrupted, or should regulatory approvals be delayed, our cash resources will be further strained. Should our product development efforts succeed, we will need to develop a commercialization plan for each product, which may also require significant resources to create and implement. In addition, the terms of any collaboration agreements for development and/or commercialization of our product and product candidates may significantly impact our need for additional capital. Because of these uncertainties and the other risks and uncertainties discussed in the “Risk Factors” sections of this report and our 2022 10-K, we cannot reasonably estimate the amount funding necessary to successfully complete development of and seek regulatory approval for our product candidates or to commercialize any approved products. In addition, we may seek additional capital due to favorable market conditions or strategic considerations even if we believe we have sufficient funds for our planned operations.We may seek to raise additional capital through a variety of means, including equity, equity-linked or debt securities offerings, government or other grant funding, strategic collaborations or alliances, debt, royalty monetization or other structured financings, or other similar types of arrangements. Our past success in raising capital through equity offerings, grant funding and collaboration agreements should not be viewed as an indication we will be successful in raising capital through those or any other means in the future. We expect that our ability to raise additional capital and the amount of capital available to us will depend not only on progress we and our collaborators make toward successfully developing, obtaining regulatory approval for and commercializing our product and product candidates, but also on factors outside of our control, such as macroeconomic and financial market conditions. To the extent we seek to obtain additional capital before achieving clinical, regulatory and/or sales milestones or when our stock price or trading volume or both are low, or when the general market for biopharmaceutical or women’s health companies is weak, additional capital may not be available to us on favorable terms, or at all.39Unstable and unfavorable market and economic conditions may harm our ability to raise additional capital. An economic downturn, recession or recessionary concerns, increased inflation, rising interest rates, adverse developments affecting financial institutions or the financial services industry, or the occurrence or continued occurrence of events similar to those in recent years, such as the COVID-19 pandemic or other public health emergencies, geopolitical conflict (such as the wars in Ukraine and the Middle East), natural/environmental disasters, supply-chain disruptions, terrorist attacks, strained relations between the U.S. and a number of other countries, social and political discord and unrest in the U.S. and other countries, and government shutdowns, among others, increase market volatility and have long-term adverse effects on the U.S. and global economies and financial markets. Volatility and deterioration in the financial markets and liquidity constraints or other adverse developments affecting financial institutions may make equity or debt financings more difficult, more costly or more dilutive and may increase competition for, or limit the availability of, funding from other third-party sources, such as from strategic collaborations and government and other grants.There is no assurance that we will continue to satisfy the listing requirements of the Nasdaq Capital Market.Our common stock is listed on the Nasdaq Capital Market. As previously reported, on July 19, 2023, we received a letter from the Listing Qualifications Department (the “Nasdaq Staff”) of the Nasdaq Stock Market (“Nasdaq”) notifying us that, for the last 30 consecutive business days, the closing bid price for our common stock was below the minimum $1.00 per share requirement for continued listing on The Nasdaq Capital Market as set forth in Nasdaq Listing Rule 5550(a)(2) (the “Minimum Bid Price Requirement”), and that we have initial period of 180 calendar days, or until January 16, 2024 (the “Compliance Date”), to regain compliance. We will regain compliance if the closing bid price of our common stock is at least $1.00 for a minimum of 10 consecutive business days during such 180-day period, unless the Nasdaq Staff exercises its discretion to extend such 10-day period.If we have not regained compliance by the Compliance Date, we may be eligible for an additional 180 calendar day compliance period. To qualify for this additional compliance period, we would have to meet the continued listing requirement for market value of publicly held shares and all other initial listing standards for The Nasdaq Capital Market, except for the Minimum Bid Price Requirement, including having stockholders’ equity of at least $5.0 million under the “Equity Standard” or of at least $4.0 million under the “Market Value of Listed Securities Standard” or “Net Income Standard,” and we would need to provide written notice of our intention to cure the minimum bid price deficiency during the additional compliance period, by effecting a reverse stock split, if necessary. Our stockholders' equity at September 30, 2023 was negative $2.3 million and, as a result, we do not currently meet all the initial listing standards for The Nasdaq Capital Market. If we are not granted the additional compliance period for any reason, the Nasdaq Staff will provide written notice to us that our common stock will be subject to delisting. At that time, we may appeal the Nasdaq Staff’s delisting determination to a Nasdaq Hearing Panel.There can be no assurance we will regain compliance with the Minimum Bid Price Requirement or continue to satisfy the other continued listing requirements of The Nasdaq Capital Market. The delisting of our common stock, or the commencement of delisting proceedings, for whatever reason could, among other things, substantially impair our ability to raise additional capital; result in the loss of interest from institutional investors, the loss of confidence in our company by investors and employees, and in fewer financing, strategic and business development opportunities; and result in potential breaches of agreements under which we made representations or covenants relating to our compliance with applicable listing requirements. Claims related to any such breaches, with or without merit, could result in costly litigation, significant liabilities and diversion of our management’s time and attention and could have a material adverse effect on our financial condition, business and results of operations. In addition, the suspension or delisting of our common stock, or the commencement of delisting proceedings, for whatever reason may materially impair our stockholders’ ability to buy and sell shares of our common stock and could have an adverse effect on the market price of, and the efficiency of the trading market for, our common stock.An extended curtailment or halt of operations at the FDA, NIH, SEC and other government agencies, including due to a U.S. federal government shutdown, could delay or disrupt clinical and preclinical development and potential marketing approval of our product candidates and our ability to raise additional capital.40Twice in the past decade, the previous appropriations legislation deadline was reached and Congress failed to pass a new appropriations bill or continuing resolution to temporarily extend funding, resulting in U.S. government shutdowns that caused federal agencies to halt non-essential operations. Political polarization among lawmakers may lead to a higher frequency and longer duration of government shutdowns in the future. If lawmakers cannot pass a continuing resolution or a new federal budget by November 17, 2023, another federal government shutdown would begin. A federal government shutdown could prevent staff at federal agencies from performing key functions that may adversely affect our business. For example, disruptions at the FDA may delay meetings and other communications with agency staff necessary to progress development of our product candidates and may slow the time necessary for acceptance, review and approval of applications to commence clinical studies or to market a new product in the U.S. By way of further example, disruptions at the NIH, including its various institutes and centers, such as NICHD, could delay processing of new grant awards to fund research and development of potential new therapies or the disrupt staff’s work and other activities or funding under active grant/cooperative agreements. Based on recent discussions with NICHD staff, we currently do not expect a government shutdown to materially affect the commencement or conduct of our planned Phase 3 clinical study of Ovaprene because funding for planned costs into the third quarter of 2024, including the $5.0 million we previously paid under the CRADA toward the cost of the study, has been allocated and will be available. If a prolonged government shutdown occurs, however, it could adversely impact the ability of NICHD to carry out its responsibilities under our CRADA, including funding its share of the costs of the study, which could have a material adverse impact on our business. In addition, a government shutdown could prevent SEC staff from performing key functions, including, for example, granting acceleration requests for registration statements, declaring registration statements or amendments thereto effective and providing interpretive guidance or no-action letters. While we currently have an effective shelf registration statement on Form 10-QS-3, if a federal government shutdown halts non-essential SEC operations for an extended period, it may negatively impact our ability to raise additional capital through registered offerings of our securities in the quarterly period ended June 30, 2017.Item 2. Unregistered Sales of Equity Securities, and Use of Proceeds
and Issuer Purchases of Equity Securities(a)NONE
(a) None.(b)NONE
(b) None.(c)NONE(c) None.Item 3. Defaults Upon Senior SecuritiesNONENone.Item 4. Mine Safety DisclosuresNONENot applicable.Item 5. Other Information(a) NONE(b) NONENone.(c) Under SEC rules and regulations, as a smaller reporting company, we are not required to provide the information required by this item in this report.41Item 6. ExhibitsThe exhibits filed as part of this Quarterly Report on Form 10-Q are set forth on the Exhibit Index immediately below.
Number
HerewithIncorporated by Reference ExhibitNumberDescription of Exhibit Form File No. Filing Date Exhibit No. Filed Herewith 4.1 8-K 001-36395 8/30/2023 4.1 10.1 8-K 001-36395 8/30/2023 10.1 10.2+ X 10.3* X 31.1 X 31.2 X 32.1 # 32.2 # 101.INS XBRL Instance Document X 101.SCH XBRL Taxonomy Extension Schema Document X 101.CAL XBRL Taxonomy Extension Calculation Linkbase Document X 101.DEF XBRL Taxonomy Extension Definition Linkbase Document X 101.LAB XBRL Taxonomy Extension Label Linkbase Document X 101.PRE XBRL Taxonomy Extension Presentation Linkbase Document X 104 Cover Page Interactive Data File (embedded within the Inline XBRL document and included in Exhibit 101) X + Portions of this exhibit have been redacted in accordance with Item 601(b)(10)(iv) of Regulation S-K. The omitted information is not material and is information that the registrant customarily and actually treats as private or confidential.
Number
Herewith42Incorporated by ReferenceExhibitNumberDescription of ExhibitFormFile NumberDate of FilingExhibit
NumberFiled
Herewith# XBRL Taxonomy Extension Schema DocumentX101.CALXBRL Taxonomy Calculation Linkbase DocumentX101.DEFXBRL Taxonomy Extension Definition Linkbase DocumentX101.LABXBRL Taxonomy Label Linkbase DocumentX101.PREXBRL Taxonomy Presentation Linkbase DocumentXΔ Portions of this document are subject to a confidential treatment request submitted to the SECSignaturesPursuant 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. 13, 201713, 20172844
