Edited Transcript of DARE earnings conference call or presentation 30-Mar-20 8:30pm GMT

But in this highly dynamic and uncertain environment, we believe we have the ability to react quickly to changes in circumstances due to our unique accelerator model with our variety of programs and diversity of indications and development stages. As a result, we believe we are well positioned to deliver the top-line clinical data and regulatory actions projected over the next 3 years.

As I mentioned, we are not actively recruiting in any of our planned clinical studies as many of these activities are slated to commence during the second half of 2020. And therefore, the recent local and national actions to address COVID-19, which has impacted enrollment of trials across our industry has not impacted our clinical timelines as of today. We believe our variety of programs and diversity of indications and development stages, as I mentioned, enable us to recalibrate our resources and direct investment across the portfolio in ways that’ll meaningly advance our programs, so that we remain on track in the near term to deliver top-line clinical study results and regulatory milestones on projected timelines. Given, for instance, the relatively short duration of some of our planned clinical studies, as is the case with the planned Phase III for this year of DARE-BV1, our potential first-line single administration product candidate for bacterial vaginosis, and broader timeline flexibility with some of our other programs, including Sildenafil Cream and Ovaprene, we have some flexibility in how we operate over the next several months. By focusing our near-term efforts on study startup activities and other nonclinical work necessary to support our overall program objectives that can continue while restrictive work policies and government orders are in place, we can continue to advance the programs against the timeline we’ve guided. If it becomes necessary, we believe we can also, in some cases, adjust study initiations from this year to next without materially affecting our communicated timelines for important data readouts. So therefore, while there clearly is uncertainty as to the effects of COVID-19, the pandemic we’re facing, we recognize that circumstances can change in this rapidly evolving environment. But at this time, and based on the information available today, as I’ve outlined, we continue to anticipate top-line results this year for the DARE-BV1 Phase III as well as top-line results for our planned Phase IIb study of Sildenafil Cream in 2021 and our planned pivotal study of Ovaprene in 2022 as we have been guiding.

We’re fortunate in that we believe we are well positioned to stage our activities and financially manage our burn during these uncertain times, and we will continue to work hard to maintain our forward progress.

To that end, we’ll spend the balance of this call focusing on our plans for the DARE-BV1 Phase III study and the data readout this year, our next steps with our Sildenafil Cream program and our Ovaprene program. We’ll also provide an update on partnering activities and a review of our 2019 financial results.

So first to DARE-BV1 for bacterial vaginosis. DARE-BV1 is a novel thermosetting bioadhesive hydrogel, containing clindamycin phosphate 2%. It’s being developed for onetime vaginal administration for the treatment of BV, a highly prevalent condition, estimated to affect more than 20 million women in the U.S. We remain extremely excited about DARE-BV1 as we look for it to demonstrate, in the Phase III study, the meaningful clinical cure rates seen in the proof-of-concept study.

As we previously reported, 86% of the valuable subjects in the proof-of-concept study achieved clinical cure at the test of cure visit 7 to 14 days after a single administration of DARE-BV1. In comparison, current FDA-approved products for BV have clinical cure rates, which range from the mid-30s to the high 60s on a percent cured basis.

BV’s been associated with preterm birth and infertility and is the most common form of vaginitis worldwide. With the relatively low clinical cure rates of the current FDA-approved products and a high rate of recurrence, this condition requires more innovative effective medicines.

DARE-BV1 has received both Fast Track and qualified infectious disease product designations from the FDA for the treatment of BV. Fast Track designation is granted by the FDA for drugs that are intended for the treatment of serious or life-threatening diseases or conditions that — it’s intended to — and it’s intended to facilitate the development for these conditions and expedite the reviews, so that an approved product can reach the market as quickly as possible.

Our Fast Track designation for DARE-BV1 underscores that BV is a serious infection for which current treatment options are inadequate, and it validates DARE-BV1’s potential to address this unmet medical need.

As I’ve mentioned, we are on track to initiate a Phase III clinical study of DARE-BV1 this year in approximately 220 women. We’re intending to initiate in the second half of the year with an anticipated top-line data readout by the end of 2020.

Based on discussions with the FDA, the Phase III study will include a placebo control and it will assess the primary endpoint of clinical cure BV designed as — defined as resolution of specified clinical signs and symptoms from baseline visit at the test of cure visit to occur 21 to 30 days after enrollment in the study. If this single Phase III study and the nonclinical studies to be conducted in parallel with the Phase III are successful, we intend to file the new drug application for DARE-BV1 in 2021.

On to Sildenafil Cream. We announced in December of 2019 the important alignment we reached with the FDA on the Phase IIb study design and the novel primary endpoint instruments. Sildenafil Cream has the potential to be the first FDA-approved product for female sexual arousal disorder, or FSAD. FSAD is a female sexual dysfunction disorder most analogous to erectile dysfunction, or ED, in men. And Sildenafil is the active ingredient in a tablet for oral administration currently market under the brand name Viagra for the treatment of ED in men. Sildenafil is topically administered, it’s a topical formulation, therefore, of Sildenafil. It’s designed to increase local blood flow and provide a potential improvement in general arousal, utilizing the same pathway that is active in the ED medications in men. While oral Sildenafil is effective for men, it’s not the optimal way to achieve the same response in women. With the potential to deliver Sildenafil as a fast-acting cream that can be applied locally, we may be able to offer the benefits of increased blood flow and improvement, therefore, in general sexual arousal response without the same systemic issues observed with the oral formulation.

Market research suggests that 33% of women in the U.S. ages 21 to 60 experience symptoms of low or no sexual arousal and 16% or approximately 10 million women are distressed and are seeking a solution to improve their condition. To put the market opportunity for an FDA-approved FSAD treatment in context, the prevalence of complete ED is estimated to be just 5% of men at age 40, increasing to 15% at age 70.

In a Phase IIa trial, Sildenafil Cream increased measurable blood flow to the vaginal tissue in both pre- and post-menopausal women with FSAD compared to placebo cream and further data from a thermography study in healthy women demonstrated significantly greater increases in general temperature after administration of Sildenafil Cream compared to after administration of placebo cream and no cream at all, indicating a positive impact on genital blood flow.

As we have previously communicated, discussions with the FDA followed the completion of a content validity study of the proposed patient-reported outcome instruments. It was a non-interventional study integral to initiating the at-home product dosing portion of our Sildenafil Cream Phase IIb program.

That Phase IIb study will utilize the agreed-upon patient-reported outcome instruments to measure achievement of the primary efficacy endpoints, namely improvement in that local genital sensation of arousal response and reduction of the distress that women with FSAD experience.

We’re pleased that the FDA recognized the validity of the patient-reported outcome instruments to test the efficacy of the drug to treat FSAD that are specific to Sildenafil Cream and its mechanism of action. It’s a significant milestone in the development of what has the potential to be the first FDA-approved product to treat FSAD. In addition, we aligned with the FDA on several exploratory efficacy endpoints, which will be measured in our Phase IIb study and could potentially be additional measurements of efficacy in a future Phase III program. We’re really encouraged by the continued collaborative approach we’ve been experiencing with all FDA divisions and are thrilled to have reached this point in the Sildenafil Cream development program.

So over the next months we’ll focus our efforts on preparing to conduct the Phase IIb study. Activities such as preparing the electronic diary and other start-up activities as well as other nonclinical activities to support a future NDA submission.

The Phase IIb study is designed to evaluate Sildenafil Cream versus placebo over 12 weeks of dosing, following both the non-drug and placebo run-in period. And as we’ve indicated, we would expect results in 2021.

On to Ovaprene. Ovaprene, as you know, is an investigational hormone-free monthly vaginal contraceptive, currently in clinical development for the prevention of pregnancy. If approved, it could be the first monthly non-hormonal contraceptive product. On January 13 of this year, Bayer, the marketers of the $1 billion Mirena contraceptive franchise and Daré announced that we signed a license agreement, under which Bayer may commercialize Ovaprene in the United States once approved by the FDA. Bayer received the right to obtain exclusive rights to commercialize the product in the U.S., following completion of the pivotal clinical trial of Bayer in its sole discretion pays Daré $20 million. In addition, we may receive up to $310 million in commercial milestone payments plus tiered royalties on net sales in the double digits. Daré will support the development and regulatory process by providing up to 2 full-time equivalents or internal experts as an advisory capacity role, which gives us access to their global manufacturing, their regulatory, medical and importantly, commercial internal expertise.

We believe the licensing agreement with Bayer is validation of our broader strategy and confirmation of Ovaprene’s market potential as the first monthly non-hormonal contraceptive product. Bayer is committed to bringing to market innovation in women’s health and is the only company to have built a contraceptive brand family in excess of $1 billion. We believe partnering now with Bayer is a means to commercially derisk the program and unlock the program’s full value.

Over the next several months, we intend to continue our regulatory manufacturing and other nonclinical activities as planned to advance the program. We plan to file an investigational device exemption application, or an IDE, for Ovaprene this year and pending the FDA’s review and clearance of the IDE, we plan to initiate a pivotal contraceptive effectiveness and safety clinical study of Ovaprene anticipated to report out in 2022. If successful, we expect the study to support marketing approvals of Ovaprene in the U.S., Europe and other countries worldwide.

With that product overview, I’ll now turn the call over to Lisa to review the financials.

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Lisa Walters-Hoffert, Daré Bioscience, Inc. – CFO & Secretary [3]

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Thank you, Sabrina, and thanks to all of you for participating on this update call. I would now like to summarize Daré’s financial results for the full year ended December 31, 2019. As you know, Daré’s business model is to assemble, advance and monetize a portfolio of novel product candidates in women’s health. As a result, our expenses generally fall into 3 buckets. First, corporate overhead; second, costs associated with portfolio acquisition and maintenance, such as license fees and future milestones and finally, research and development expenses related to clinical, nonclinical, preclinical work, to generate safety and efficacy data and advance our candidates through clinical and regulatory milestones.

So with that, for the full year ended December 31, Daré’s general and administrative expenses were $5.3 million. Our license expenses representing fees due under our various product candidate license agreements were approximately $530,000. And our research and development expenses for 2019 were approximately $8.5 million. The R&D expenses included the completion and related top-line data readout of the postcoital test clinical trial for Ovaprene, work to prepare for the initiation of the Phase III study for DARE-BV1, regulatory and other activities to advance Sildenafil Cream, preparatory work on 2 of our vaginal rings, one for hormone replacement and the other for pregnancy maintenance, these are DARE-HRT1 and DARE-FRT1, as well as personnel costs of our R&D team. Our comprehensive loss for the year was about $15.1 million.

Suffice it to say, we had quite a bit of meaningful activity over the past 2 quarters. So let’s start with the fourth quarter of 2019. In Q4, we announced those positive top-line results of the Ovaprene PCT study, which was a huge milestone for us. In Q4, we also announced the acquisition of Microchips Biotech through which we acquired an exciting technology platform, a relationship with the Bill & Melinda Gates Foundation, a seasoned development team to complement our own and at the time of closing, Microchips had cash and cash equivalents of approximately $5.9 million after the payment of various transaction-related expenses.

Daré issued approximately 3 million shares of our common stock and agreed to pay future consideration contingent on the achievement of specified funding, product development, regulatory and commercial milestones as well as tiered royalty payments.

We currently expect that approximately $1 million of the contingent consideration may become payable through the end of 2021. So we ended 2019 with approximately $4.8 million in cash and cash equivalents, $19.8 million in common shares outstanding and no debt.

But now on to the first quarter of 2020. The compelling data from our PCT study of Ovaprene opened to the door to serious negotiations with a number of potential partners. And as Sabrina said, on January 13, we announced the license agreement with Bayer. We believe Bayer’s exhaustive due diligence and our license agreement served to validate, first, the market opportunity for Ovaprene as potentially the first monthly non-hormonal contraceptive product. Second, the capabilities of Daré’s clinical and regulatory team and lastly, the value of our business model.

During the first quarter of 2020, we increased our cash by approximately $8.1 million gross or $7.9 million net of fees and expenses from a combination of sales of stock under our ATM, warrant exercises for cash and partnering fees. None of this cash is reflected in our cash and cash equivalents as of year-end December 31, 2019. So as a result of those activities, as of today, March 30, 2020, we have 24.7 million shares outstanding and no debt. We will need to access additional capital to advance our programs, particularly for our 3 later stage candidates. A variety of funding sources are potentially available to us to finance our operations and clinical development activities. Since our inception, we have raised cash through private placements and public offerings of our equity securities, M&A transactions, the exercise of warrants for cash, non-dilutive grant funding and license fees. In our recently filed 10-K, we noted that Daré continues to have a going concern as we do not have sufficient cash to satisfy our working capital needs or other liquidity requirements for at least the next 12 months. We will continue to be creative and opportunistic to raise the capital we need to advance our candidates, and we will strive to be very efficient in the use of that capital. We encourage all investors to review the more detailed discussion of our financials and financial conditions, liquidity, capital resources and our risk factors that were filed in the 10-K — included in our 10-K that was filed last Friday.

So with that, I would like to now turn the call over to John Fair.

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John A. Fair, Daré Bioscience, Inc. – Chief Business Officer [4]

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Thank you, Lisa. As we navigate our dynamic global health and economic environment, we will continue to focus on effectively executing against activities that position us to deliver on key program milestones and build additional incremental value in the portfolio. We believe the agreement with Bayer for our hormone-free monthly contraceptive candidate Ovaprene was a significant validating event for Daré and moving forward, we will execute against our broader business strategy of accelerating novel innovation in women’s health and continue to engage with potential partners on subsequent collaborations and follow-on transactions. As we have discussed, we view partnerships as core to our business strategy, and we will continue to evaluate collaboration opportunities and the timing of these opportunities in the context of what we believe will deliver the greatest value for our shareholders. We believe that the level of interest in our portfolio from potential strategic partners really from our early-stage programs through to our mid- and late-stage assets will enable us to provide significant value for investors and most importantly, for women.

And with that, I believe we will now turn it over to the operator, who will open the lines for Q&A.

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Questions and Answers

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Operator [1]

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(Operator Instructions) Our first question comes from the line of Jason Kolbert from Dawson James.

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Jason Howard Kolbert, Dawson James Securities, Inc., Research Division – Director of Research [2]

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I just want to talk a little bit — I mean, clearly, the acquisition of Microchips, which brought in cash, was very, very smart. And I know Lisa, you mentioned the outstanding share count. Can you spend a little time with us — and you also mentioned the going concern. Can you spend a little time with us and just talk about the cash runway and what we should expect as you clear the hurdles to continue clinical progress? And I say that — I hesitate to say that because as we all understand running clinical trials around the world right now is going to be likely delayed. And so does it mean that you reduce spending a little bit in second quarter, extend the runway and then maybe amp up business development and look for some other ways to strengthen the balance sheet into the second half?

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Sabrina Martucci Johnson, Daré Bioscience, Inc. – President, CEO & Director [3]

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Yes. So Jason, this is Sabrina. I’ll give some context to the last part of your question around kind of how we can manage our resources to your point, and then I’ll turn it over to Lisa. And first and foremost, of course, we are a biotech company, and therefore, we always need to bring additional capital at some point. And clearly, we funded the company accretively, as Lisa said, since the beginning. So I’ll let her address that part. But to the second part of your question, in terms of how do we believe we’re going to be on track to hit those milestones, particularly in this environment, and how are we doing that? So as I mentioned, and you kind of touched on it, it’s a combination of the variety of the programs we have and where we are in those stages of development and importantly, the types of activities that we need to be doing to keep us on track, that actually gives us a lot of flexibility and particularly, the fact that we were not actively enrolling into any clinical studies, gives us a lot of flexibilities in terms of how we can recalibrate our resources and direct our investment as needed across the portfolio, but in ways that can meaningfully advance them particularly in this environment. So the flexibility really gives us some insulation from the uncertain market impacts of COVID-19 in this uncertain times. And gives us flexibility, kind of to your point, I think that you’re getting at, on when and how we raise fund so that we can react quickly to changes in circumstances. And I just also want to highlight one thing that may not have been obvious before I turn it over to Lisa, that I think is a little bit touched on your question, which is why do we remain confident we can have data on BV1 this year — our Phase III study this year with the readout expected by the end of this year, if we haven’t commenced enrollment in that? And really, I want to use this opportunity to be clear that in spite of the current market situation, we think we can do that for a couple of reasons. One is just the high prevalence of BV. So that coupled with today’s ineffective treatments, enrolling in BV studies has tended to be quite efficient. But importantly, BV is kind of an acute condition. And so the study, therefore, is a short one. It’s basically a 1-month study. Patients will be diagnosed, enrolled, treated and examined at the test of cure visit. And all of that will occur 21 to 30 days after they enroll in the study. So just 1 month or less for enrollment. So that gives us a lot of flexibility in terms of when we actually initiate enrollment while still meeting the objective of a data readout before the end of the year, 2020. And then importantly, an NDA submission in 2021, where we get to leverage that Fast Track. So let me turn it over to Lisa and let her talk a little bit specifically and maybe remind you again on cash and…

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Lisa Walters-Hoffert, Daré Bioscience, Inc. – CFO & Secretary [4]

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Yes. So just as a reminder, everyone, we did end the year with $4.8 million and then subsequently raised about $7.9 million. I’m very happy that we did that. So to answer your question first, Jason, about going concern to make sure everyone on the phone understands what that means, that means as of the time we filed last Friday, so that was March 27, 2020, if you don’t believe you have adequate cash through next year’s March 27 of 2021, you have a going concern. So based on 3 active programs, some uncertainty on the timing, but these are later stage programs, the cash that we currently have, we don’t believe is enough to get us all the way through to basically April of next year. In terms of financing strategies, and I know we sort of talked about this, one of the interesting parts for Daré is, again, sales of equity remain one of our options. We have an S-3 shelf. We’ve raised over $11 million over the last — beginning in January of last year. So we will continue to monitor our availability to use that. But we also have the opportunity, which we are aggressively exploring for non-dilutive grant funding. Recall that, that — the grant for Ovaprene basically funded the variable cost, if you will, not all of our salaries, but the variable costs associated with the Ovaprene PCT. There is money available out there. We are doing our best to be creative and clever and keep our eyes open and apply for those grants. So that’s something that we are actively watching and doing. And then, of course, partnering fees. John touched on it, too. Our portfolio is finally getting to that point where it’s in later stage and we’re starting to have data readouts. That’s when investors of all kinds, including strategic start to get — to take some interest. So our goal is to kind of manage these various buckets of financing. And you’re right, we’ll have to keep an eye on what the impact of COVID is. Things would basically never slow down, but most likely, things may be a little bit slower.

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Operator [5]

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Our next question comes from the line of Nathan Weinstein from Aegis Capital.

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Nathan S. Weinstein, Aegis Capital Corporation, Research Division – Analyst [6]

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Congrats on the progress. So I was just hoping we could step back and look at — maybe you could opine a little on the overarching theme of your pipeline, just specifically how your various products could help improve patient choice in the market? Maybe there’s been some underinvestment at an industry level in focusing on those? So how maybe some of your products could help patients have more choice?

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Sabrina Martucci Johnson, Daré Bioscience, Inc. – President, CEO & Director [7]

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Yes, Nathan, thank you for that. This is Sabrina speaking and it’s a great opportunity to remind everyone why Daré exist and really what the value creation opportunity here is at Daré, and you really touched on it, is there are a number of really compelling and interesting unmet needs in women’s health. And we’ve touched on some of them with products like Ovaprene, first potential monthly hormone-free contraceptive; Sildenafil, first product for female sexual arousal disorder, which, as I shared with those number of women statistics versus ED in man, I think you get a sense for how much demand there is out there for that. But there really hasn’t been an industry-focused on developing, despite the fact that as we’ve demonstrated as we’ve built our portfolio, selecting products that address some of the most persistent unmet needs in women’s health that have these first-line and first in category opportunities, while often like Sildenafil, leveraging that 505(b)(2) regulatory pathway and with BV1, which means that you’re using a well-known and well-understood product. There’s a lot of data to show that 505(b)(2) products often have a faster time to approval and a higher success rate. We’re able to leverage that but still have first in category product opportunities because we are delivering them often in a way that really takes advantage of the unique female biology. Again, I think BV1 delivered vaginally, I think Sildenfil Cream delivered topically to the genital tissue. So while on the one hand, there’s great innovation, there’s unmet need, all of that is outstanding. But the fact that there is a lack of industry investment and development, while there are nonetheless companies like there, as was exhibited with our Ovaprene transaction, that are looking for truly differentiated, disruptive products to add to their portfolio. It really creates this very unique business dynamic that we have built Daré around, this accelerator opportunity that we think really has an opportunity to drive value and not just around 1 program or 2 programs, but several in the portfolio. And so hopefully, that addresses your question of what we’re trying to do and why we think the opportunity is this. But frankly, importantly, for investors, hopefully, that gives everyone a sense of what the value opportunity is here with our portfolio and what that means in terms of where we should be as a company, not based on just one of our products, but, I mean, we have 3 late-stage assets.

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Operator [8]

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(Operator Instructions)

Our next question comes from the line of Sally (inaudible) from [Brookland Capital]

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Unidentified Analyst, [9]

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You can do — okay. All right. Here’s the credit card. It’s…

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Sabrina Martucci Johnson, Daré Bioscience, Inc. – President, CEO & Director [10]

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Hi. Hello? Sally? Sally? Sally? I…

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Lisa Walters-Hoffert, Daré Bioscience, Inc. – CFO & Secretary [11]

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I hear her — we can hear her credit card number, operator.

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Operator [12]

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(Operator Instructions) And this does conclude the question-and-answer session of today’s program. I’d like to hand the program back to Sabrina Martucci Johnson. Please go ahead.

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Sabrina Martucci Johnson, Daré Bioscience, Inc. – President, CEO & Director [13]

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Thank you. Well, thank you all for taking the time this afternoon, and thanks for the great questions that we had an opportunity to answer. We definitely look forward to keeping you updated on our progress, and we’re really grateful to the entire Daré team, of course, and particularly, our shareholders for their commitment and dedication to our mission and particularly during these times. So thank you so much, and we look forward to keeping you updated.

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Operator [14]

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Thank you, ladies and gentlemen, for your participation in today’s conference. This does conclude the program. You may now disconnect. Good day.