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Item 7. Management’s Discussion and Analysis

2022-03-31 compared with 2021-03-30 · 138 added, 120 removed, 94 unchanged (73% of the section changed)

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Business Overview

We are a clinical-stage biopharmaceutical company committed to advancing innovative products for women’s health.

We are driven by a mission to identify, develop and bring to market a diverse portfolio of differentiated therapies that expand treatment options, improve outcomes and facilitate convenience for women, primarily in the areas of contraception, vaginal health, 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, and to establish and leverage strategic partnerships to achieve commercialization.

We are a biopharmaceutical company committed to advancing innovative products for women’s health.

We are driven by a mission to identify, develop and bring to market a diverse portfolio of differentiated therapies that prioritize women's health and well-being, expand treatment options, and improve outcomes, primarily in the areas of contraception, fertility and vaginal and sexual health.

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 operate in one business segment.

Since July 2017, we have assembled a portfolio of clinical-stage and pre-clinical-stage candidates.

While we will continue to assess opportunities to expand our portfolio, our current focus is on advancing our existing product

candidates through mid and late stages of clinical development or FDA approval.

Our portfolio includes three product candidates in advanced clinical development:

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

• Ovaprene® , a hormone-free, monthly vaginal contraceptive;

Our first product, XACIATO, which was approved by the FDA in December 2021, is a single-dose vaginal gel prescription product for the treatment of bacterial vaginosis in females 12 years of age and older.

In March 2022, we entered into an exclusive global license agreement with Organon to commercialize XACIATO.

XACIATO is expected to be available commercially in the United States in the fourth quarter of 2022.

Our product pipeline includes diverse programs that target unmet needs in women's health in the areas of contraception, fertility and vaginal and sexual health and aim to expand treatment options, enhance outcomes and improve ease of use for women.

Our portfolio includes two product candidates in advanced clinical development:

• Ovaprene® , a hormone-free, monthly contraceptive;

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

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

• DARE-HRT1 , a combination bio-identical estradiol and progesterone intravaginal ring for the treatment of menopausal symptoms, including vasomotor symptoms, as part of a hormone therapy following menopause;

• DARE-FRT1 , an intravaginal ring containing bio-identical progesterone for the prevention of preterm birth and broader luteal phase support as part of an in vitro fertilization treatment plan;

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

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

• DARE-LARC1 , a combination product designed to provide long-acting, reversible contraception comprising an implantable, user-controlled wireless drug delivery system and levonorgestrel;

• ORB-204 and ORB-214 , injectable formulations of etonogestrel designed to provide contraception over 6-month and 12-month periods, respectively;

Our portfolio also includes four product candidates in Phase 1 clinical development or that we believe are Phase 1-ready:

• DARE-HRT1 , a combination bio-identical estradiol and progesterone intravaginal ring, for the treatment of menopausal symptoms, including vasomotor symptoms, as part of hormone therapy following menopause;

• DARE-VVA1 , a vaginally delivered formulation of tamoxifen to treat vulvar vaginal atrophy as an option for women with hormone-receptor positive breast cancer;

• DARE-FRT1 , an intravaginal ring containing bio-identical progesterone for broader luteal phase support as part of an in vitro fertilization treatment plan;

• DARE-PTB1 , an intravaginal ring containing bio-identical progesterone for the prevention of preterm birth.

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

• 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;

• ADARE-204 and ADARE-214 , injectable formulations of etonogestrel designed to provide contraception over 6-month and 12-month periods, respectively;

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

"BUSINESS," in Part I of this report for additional information regarding our product candidates.

Our primary operations have consisted of, and are expected to continue to consist primarily of, product research and development and advancing our portfolio of product candidates through clinical development and regulatory approval.

We expect that the majority of our research and development expenses in 2021 and 2022 will support the advancement of DARE-BV1, Ovaprene and Sildenafil Cream, 3.6%.

To date, we have not obtained any regulatory approvals for any of our product candidates, commercialized any of our product candidates or generated any revenue.

We are subject to several risks common to clinical-stage biopharmaceutical companies, including dependence on key individuals, competition from other companies, the need to develop commercially viable products in a timely and cost-effective manner, and the need to obtain adequate additional capital to fund the development of product candidates.

We are also subject to several risks common to other companies in the industry, including rapid technology change, regulatory approval of products, uncertainty of market acceptance of products, competition from substitute products and larger companies, compliance with government regulations, protection of proprietary technology, dependence on third parties, and product liability.

The effect of the COVID-19 pandemic and efforts to reduce the spread of COVID-19 remain a rapidly evolving and uncertain risk to our business, operating results, financial condition and stock price.

In November 2020, the U.S.

began to experience a substantial surge in cases and hospitalizations and intensive care unit capacity became strained.

States and counties across the country imposed or re-imposed stay-at-home orders and shutdowns of non-essential businesses in efforts to reduce spread of the disease.

As of March 29, 2021, the U.S.

Food and Drug Administration (FDA) had issued emergency use authorizations for three vaccines for the prevention of COVID-19.

However, while President Biden recently said that there will be enough vaccine supply for every adult in the U.S.

by the end of May 2021, the vaccination effort in the U.S.

and elsewhere got off to a bumpy start and continues to face significant, complex challenges, and the timeline for the pandemic and its associated restrictions to end remain uncertain.

Given the high level of uncertainty regarding the duration and impact of the pandemic on the U.S.

and global economies, workplace environments and capital markets, we are unable to assess the full extent of the effects of the pandemic on our business.

These effects could have a material adverse impact on our business, operating results and financial condition, including, without limitation, by adversely impacting our ability to raise capital when needed or on terms favorable or acceptable to us and increasing the anticipated aggregate costs and timelines for the

development and marketing approval of our product candidates.

For further discussion of risks and uncertainties related to the COVID-19 pandemic, see the risk factor titled, The COVID-19 pandemic and efforts to reduce the spread of COVID-19 could negatively impact our business, including by increasing the cost and timelines for our clinical development programs.

"BUSINESS," in Part I of this report 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 clinical development and regulatory approval.

We expect our research and development expenses will continue to represent the majority of our operating expenses for at least the next twelve months.

In 2022, we expect to focus our resources on advancement of Ovaprene and Sildenafil Cream, 3.6%, and our other product candidates that have reached the human clinical study development phase.

In addition, we expect to incur significant research and development 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.

To date, we have not generated any revenue .

We are subject to several risks common to biopharmaceutical companies, including dependence on key employees, dependence on third-party collaborators and service providers, competition from other companies, the need to develop commercially viable products in a timely and cost-effective manner, and the need to obtain adequate additional capital to fund the development of product candidates.

We are also subject to several risks common to other companies in the industry, including rapid technology change, regulatory approval of products, uncertainty of market acceptance of products, success of third parties in the marketing, sale and distribution of our products, competition from substitute products and larger companies, compliance with government regulations, protection of proprietary technology, and product liability.

The COVID-19 pandemic remains an evolving and uncertain risk to our business, operating results, financial condition and stock price.

To date, we believe the pandemic contributed to a slower than expected initial pace of enrollment in our Phase 2b clinical study of Sildenafil Cream, 3.6% and delays in commencement of clinical studies and nonclinical testing for more than one of our earlier stage clinical programs, but has not had a material adverse effect on our business as a whole.

Continued uncertainty regarding the duration and impact of the pandemic on the U.S.

and global economies, healthcare systems, workplace environments and capital markets, preclude any prediction as to the ultimate effect of the pandemic on our business.

See the risk factor in Part I, Item 1A of this report

titled, The COVID-19 pandemic has negatively impacted our business and, in the future, may materially and adversely affect our business, financial condition and results and stock price, including by increasing the cost and timelines for our clinical development programs.

Recent Events

Positive Topline Results from DARE-BVFREE Phase 3 Clinical Trial of DARE-BV1

In December 2020, we announced positive topline results from our DARE-BVFREE Phase 3 clinical trial of DARE-BV1 for the treatment of bacterial vaginosis.

The study met its primary endpoint, demonstrating that a single administration of DARE-BV1 was superior to placebo as a primary therapeutic intervention for women diagnosed with bacterial vaginosis.

Based on the topline results from the DARE-BVFREE study and our meetings and other communications with the FDA since we announced those results, we plan to submit an NDA for DARE-BV1 for the treatment of bacterial vaginosis by the end of the second quarter of 2021 and to request priority review status for the NDA upon submission.

Assuming we submit the NDA in the second quarter of 2021, the FDA grants priority review and sets a PDUFA date within approximately six months from the NDA submission date, and the FDA approves the NDA in 2021, we would expect a commercial launch of DARE-BV1 in the United States in early 2022.

"BUSINESS—Our Clinical Stage and Phase 1-ready Product Candidates and Programs—DARE-BV1," in Part I of this report for additional information regarding the DARE-BVFREE study and the DARE-BV1 program.

Commencement of Phase 2b Clinical Trial of Sildenafil Cream, 3.6%

In March 2021, we announced commencement of our Phase 2b clinical trial of Sildenafil Cream, 3.6% for the treatment of female sexual arousal disorder.

We currently anticipate reporting topline data from the trial by year-end 2021.

"BUSINESS—Our Clinical Stage and Phase 1-ready Product Candidates and Programs—Sildenafil Cream, 3.6%," in Part I of this report for additional information regarding the Sildenafil Cream, 3.6% program.

Global License Agreement with Organon to Commercialize XACIATO

On March 31, 2022, we entered into an exclusive license agreement with Organon, pursuant to which Organon will obtain exclusive worldwide rights to develop, manufacture and commercialize XACIATO.

"BUSINESS," in Part I of this report under “Strategic Agreements for Product Commercialization – Organon License Agreement,” for a description of the terms of the license agreement.

We will receive a $10.0 million non-refundable and non-creditable payment from Organon following the effective date of the agreement, which is expected in the second quarter of 2022, and we are entitled to receive a $2.5 million milestone payment following the first commercial sale of a licensed product in the United States, which is expected to occur in the fourth quarter of 2022.

We currently cannot predict with any reasonable certainty the timing or amount of other potential payments from Organon under the license agreement in future periods.

Under the license agreement, we will be 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 us at a transfer price equal to our manufacturing costs plus a single-digit percentage markup.

We will not be responsible for other costs of commercializing XACIATO.

FDA Approval of XACIATO

On December 7, 2021, the FDA approved our new drug application for XACIATO for the treatment of bacterial vaginosis in female patients 12 years of age and older.

October 2021 ATM Sales Agreement

On October 13, 2021, we entered into a new sales agreement with SVB Leerink LLC to sell shares of our common stock from time to time through an “at-the-market,” or ATM, equity offering program under which SVB Leerink acts as our agent.

SVB Leerink also acts as our sales agent under an ATM sales agreement we entered into in April 2021.

As with the April 2021 sales agreement with SVB Leerink, under the October 2021 sales agreement, we set the parameters for the sale of shares of our common stock, including the maximum number or amount of shares to be sold, the time period during which sales may be made, any limitation on the number or amount of shares that may be sold in any one trading day, and any minimum price below which sales may not be made.

Subject to the terms and conditions of the October 2021 sales agreement, the sales agent could sell shares of our common stock by any method permitted by law deemed to be an "at the market offering” as defined in Rule 415 promulgated under the Securities Act of 1933, as amended, or the Securities Act, including, without limitation, including sales made directly on or through the Nasdaq Capital Market, on or through any other existing trading market for our common stock or to or through a market maker.

The sales agent must use commercially reasonable efforts in conducting such sales activities consistent with its normal trading and sales practices and applicable state and federal laws, rules and regulations and applicable Nasdaq rules.

If expressly authorized by us, the sales agent could also sell shares in privately negotiated transactions.

We made certain customary representations, warranties and covenants to the sales agent in the October 2021 sales agreement, and we agreed to customary indemnification and contribution obligations, including with respect to liabilities under the Securities Act and the Securities Exchange Act of 1934, as amended, or the Exchange Act.

The October 2021 sales agreement may be terminated by us for any or no reason at any time upon five days' prior notice to the sales agent or by the sales agent for any or no reason at any time upon five days' prior notice to us.

We have no obligation to sell any shares under the October 2021 sales agreement, and we may suspend solicitation and offers under the agreement for any reason in our sole discretion.

We agreed to pay the sales agent a commission equal to 3.0% of the gross proceeds from the sales of shares pursuant to the agreement.

Shares of our common stock sold under the October 2021 sales agreement will be issued pursuant to our shelf registration statement on Form S-3 (File No.

333-254862) and the base prospectus included therein, originally filed with the SEC on March 30, 2021 and declared effective by the SEC on April 7, 2021, and the prospectus supplement, dated October 13, 2021, relating to the offering of up to $50.0 million in shares of our common stock under the October 2021 sales agreement and any subsequent prospectus supplement related to the offering of shares of our common stock under the October 2021 sales agreement.

Financial Overview

To date we have not generated any revenue.

In the future, and if we are successful in advancing our product candidates through late stages of clinical development and regulatory approval, we may generate revenue from product sales of approved products, if any, and license fees, milestone payments, research and development payments in connection with strategic partnerships, as well as royalties and commercial milestones resulting from the sale of products by partners.

Our ability to generate such revenue will depend on the successful clinical development of our product candidates, the receipt of regulatory approvals to market such product candidates and the eventual successful commercialization of products.

If we fail to complete the development of product candidates in a timely manner, or to receive regulatory approval for such product candidates, our ability to generate future revenue and our results of operations would be materially adversely affected.

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, research and development payments in connection with strategic collaborations.

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 product 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 the commercialization of XACIATO is not successful or we fail to complete the development of product candidates in a timely manner, or to receive regulatory approval for such product candidates, our ability to generate future revenue and our results of operations would be materially adversely affected.

Research and Development Expenses

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• transaction costs related to acquisitions of companies, technologies and related intellectual property, and other assets;

• milestones payments under our in-licensing arrangements and our merger agreement with Microchips that we incur, or the incurrence of which we deem probable;

• milestone payments under our in-licensing arrangements and under our merger agreement with MBI that we incur, or the incurrence of which we deem probable;

• internal costs that are associated with activities performed by our research and development organization and generally benefit multiple programs.

In 2020, our research and development expenses consisted primarily of costs associated with continued development of DARE-BV1, Ovaprene and Sildenafil Cream 3.6%.

In 2021, our research and development expenses consisted primarily of costs associated with the continued development of XACIATO, Ovaprene and Sildenafil Cream 3.6%.

We expect research and development expenses to increase in the future as we continue to invest in the development of and seek regulatory approval for our clinical-stage and Phase 1-ready product candidates and as any other potential product candidates we may develop are advanced into and through clinical trials in the pursuit of regulatory approvals.

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Historically, revisions to our estimates have not resulted in a material change to the financial statements.

The items in our financial statements requiring significant estimates and judgments are as follows:

the fair value of stock-based compensation and purchase accounting .

While our significant account policies are described in more detail in Note 2 to our consolidated financial statements included herein, we believe that the following accounting policies are most important to the portrayal of our financial condition and results of operations and require management's most difficult, subjective and complex judgments.

Stock-Based Compensation

The compensation cost for all stock-based awards is measured at the grant date, based on the fair value of the award (determined using a Black-Scholes option pricing model), and is recognized as an expense over the requisite service period (generally the vesting period of the equity award).

Determining the fair value of stock-based awards at the grant date requires significant estimates and judgments, including estimating the market price volatility of our common stock, future employee stock option exercise behavior and requisite service periods.

Determining the fair value of stock-based awards at the grant date requires significant estimates and judgments, including estimating the market price volatility of our common stock, future stock option exercise behavior and requisite service periods.

Due to our limited history of stock option exercises we applied the simplified method prescribed by SEC Staff Accounting Bulletin 110, Share-Based Payment:

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The fair value of non-employee stock options or stock awards are remeasured as the awards vest, and the resulting increase or decrease in fair value, if any, is recognized as an increase or decrease to compensation expense in the period the related services are rendered.

Stock options or stock awards issued to non-employees who are not

directors with performance conditions are measured and recognized when the performance is complete or is expected to be met.

Stock options or stock awards with performance conditions issued to non-employees who are not directors are measured and recognized when the performance is complete or is expected to be met.

Refer to Note 10 to our consolidated financial statements included in this report for more information.

Business Combinations

Assets 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.

Acquired In-Process Research and Development Expense

We have acquired, and may continue to acquire, the rights to develop new product candidates.

Payments to acquire a new product candidate, as well as future milestone payments associated with asset acquisitions which are deemed probable of achievement, are immediately expensed as acquired in-process research and development provided that the product candidate has not achieved regulatory approval for marketing and, absent obtaining such approval, has no alternative future use.

Grant Funding

We receive certain research and development funding from the U.S.

government and not-for-profit organizations.

In accordance with a policy we adopted in 2018, we recognize grant funding in the statements of operations as a reduction to research and development expense as the related costs are incurred to meet those obligations over the grant period.

Grant funding payments received in advance of research and development expenses incurred are recorded as deferred grant funding liability in our consolidated balance sheets.

For the years ended December 31, 2021 and December 31, 2020, there were no material adjustments to our prior period estimates of grant funded research and development expenses.

Refer to Note 13 to our consolidated financial statements included in this report for more information.

Clinical Trial Expense Accruals

We estimate expenses resulting from our obligations under contracts with vendors, CROs and consultants and under clinical site agreements in connection with conducting clinical trials.

The financial terms of these contracts vary and may result in payment flows that do not match the periods over which materials or services are provided.

We record clinical trial expenses in the period in which services are performed and efforts are expended.

We accrue for these expenses according to the progress of the trial as measured by patient progression and the timing of various aspects of the trial.

We estimate accruals through financial models taking into account discussion with applicable personnel and outside service providers as to the progress of trials.

During the course of a clinical trial, we may adjust our clinical accruals if actual results differ from our estimates.

We estimate accrued expenses as of each balance sheet date based on the facts and circumstances known at that time.

Our clinical trial accruals are dependent

upon accurate reporting by CROs and other third-party vendors.

Although we do not expect our estimates to differ materially from amounts actually incurred, our understanding of the status and timing of services performed relative to the actual status and timing of services performed may vary and may result in reporting amounts that are too high or too low for any particular period.

For the years ended December 31, 2021 and 2020 there were no material adjustments to our prior period estimates of accrued expenses for clinical trials.

Results of Operations

Comparison of the Years ended December 31, 2021 and 2020

The following table summarizes our consolidated results of operations for the years ended December 31, 2020 and 2019, and the change in the applicable category in terms of dollars:

The following table summarizes our consolidated results of operations for the years ended December 31, 2021 and 2020, and the change in the applicable category in terms of dollars and percentage:

2021 2020 $ %

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Other income 2,520 1,514 1,006 66 %

Gain on extinguishment of note payable 369,887 — 369,887 —

Net loss $ (38,696,105) $ (27,400,743) $ (11,295,362) 41 %

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General and administrative expenses

The increase of approximately $1.3 million in general and administrative expenses from 2019 to 2020 was primarily attributable to increases in (i) personnel costs of approximately $640,000 reflecting the hiring of additional employees which resulted in increased salary, benefit and bonus expenses, (ii) expenses for legal, professional, and accounting services of approximately $212,000, (iii) insurance costs of approximately $192,000 due to increased premiums, (iv) rent and facilities expenses of approximately $183,000 due to the addition of two leases for office and laboratory facilities when we acquired Microchips in November 2019, and (v) stock-based compensation expense of approximately $161,000.

The increase of approximately $1.8 million in general and administrative expenses from 2020 to 2021 was primarily attributable to increases in (i) personnel costs of approximately $688,000, (ii) commercial-readiness expenses of approximately $635,000, (iii) stock-based compensation expense of approximately $559,000, and (iv) expenses for legal, professional, and accounting services of approximately $112,000.

Such increases were partially offset by a decrease in rent and facilities expenses of approximately $264,000 attributable to the allocation of a portion of rent and facilities expense included in general and administrative expenses in 2020 to research and development in 2021.

We expect an increase in general and administrative expenses of approximately 15% to 20% in 2022 compared to 2021 primarily due to increased personnel expenses and other general corporate overhead.

Our 2021 general and administrative expenses could also include significant costs related to commercial readiness activities for DARE-BV1 depending on the type and nature of commercial partnership we establish for DARE-BV1 in the U.S., which, if incurred, could increase our 2021 general and administrative expenses above our current expectation.

Our 2022 general and administrative expenses will include costs related to commercial-readiness activities and obtaining commercial supplies of XACIATO from our contract manufacturer.

Following commercial launch of XACIATO, we expect our general and administrative expenses will include payments by us to a third-party licensor, including royalty payments at rates in the high single-digit to low double-digits based on annual net sales of XACIATO.

In 2022, in connection with commercialization of XACIATO in the U.S., these payments may include a milestone payment in the mid six-figures and royalty payments on net sales at a high single digit royalty rate.

Research and development expenses

The increase of approximately $12.2 million in research and development expenses from 2019 to 2020 was primarily attributable to increases of approximately (i) $11.6 million in costs related to development activities for our clinical-stage product candidates, primarily driven by the DARE-BVFREE Phase 3 clinical trial and manufacturing and regulatory affairs activities for Ovaprene;

(ii) $2.0 million in costs related to development activities for our pre-clinical stage programs, primarily related to DARE-LARC1;

(iii) $1.3 million in personnel costs reflecting our first full year of personnel costs for the former Microchips employees we hired in November 2019, and (iv) stock-based compensation expense of approximately $118,000.

Those increases were partially offset by (a) an increase in grant funding recorded as a reduction to research and development expenses of approximately $2.4 million under grant awards for DARE-LARC1, Ovaprene and DARE-FRT1 and;

(b) a cash payment of approximately $192,000 and a receivable of approximately $268,000, both of which are recorded as a reduction to research and development expenses and are related to Australia's research and development tax incentive which gives 43.5% of every dollar spent by eligible companies on eligible research and development activities back to those companies in a cash payment.

We expect research and development expenses to increase significantly in 2021 as we continue to develop our product candidates and seek FDA approval for DARE-BV1.

The increase of approximately $9.8 million in research and development expenses from 2020 to 2021 was primarily attributable to increased research and development spend for Sildenafil Cream, 3.6% related to the ongoing Sildenafil Cream, 3.6% Phase 2b RESPOND clinical trial of approximately $7.7 million.

Also contributing to the increase were increases in (a) costs related to manufacturing and regulatory affairs activities for Ovaprene and development activities for our Phase 1 and Phase 1-ready programs of approximately $5.6 million, (b) personnel costs of approximately $553,000, and (c) stock-based compensation expense of approximately $298,000.

Such increases were partially offset by a decrease in development costs of approximately $5.0 million as a result of the completion of the Phase 3 clinical trial for XACIATO in December 2020.

We expect research and development expenses to increase significantly in 2022 as we continue to develop our product candidates.

If we advance our programs as currently planned, our research and development expenses for 2022 could be more than double our research and development expenses for 2021.

Our 2021 research and development expenses could include up to $4.5 million in milestone payments under license agreements related to certain of our product candidates payable by us to our third-party licensors and up to approximately $1.0 million in contingent consideration payments under our merger agreement with Microchips, all or any portion of which we may elect to pay to the former stockholders of Microchips in shares of our common stock.

Our 2022 research and development expenses could include up to $4.0 million in milestone payments due under license agreements related to certain of our product candidates payable by us to our third-party licensors.

As discussed below in the section titled “Liquidity and Capital Resources,” we will need to raise substantial additional capital to continue to fund our operations and successfully execute our current operating plan.

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We expect our research and development spend to vary across our fiscal quarters.

In regard to Sildenafil Cream, 3.6%, we anticipate that the costs of the planned Phase 2b clinical study will be approximately $15.0 to $17.0 million, not all of which will be payable in fiscal 2021.

The $450,001 decrease in license expenses from 2019 to 2020 was attributable to a decrease in license fees accrued or paid.

During 2019, we accrued or paid $533,334 of license fees under our license agreements related to DARE-HRT1 and DARE-BV1.

During 2020, we accrued or paid $83,333 of license fees under our license agreement related to DARE-HRT1.

See Note 3 "License and Collaboration Agreements—In License Agreements" to the accompanying consolidated financial statements for more information about our license agreements.

The decrease of $79,536 in other income from 2019 to 2020 was primarily due to a decrease in interest earned on cash balances in 2020.

In regard to Sildenafil Cream, 3.6%, we anticipate that the costs of the Phase 2b RESPOND clinical trial will be approximately $20.0 million, approximately $8.8 million of which was recorded in fiscal 2021 and approximately $0.7 million of which was recorded in fiscal 2020.

The $16,667 increase in license expenses from 2020 to 2021 was attributable to an increase in license fees accrued or paid under our license agreement related to DARE-HRT1.

During 2020 and 2021, we accrued or paid $83,333 and $100,000, respectively, of license fees under such license agreement.

See Note 3 "Strategic Agreements— Strategic Agreements for Pipeline Development" to the accompanying consolidated financial statements for more information about our license agreements.

Other income and gain on extinguishment of note payable

The increase of $1,006 in other income from 2020 to 2021 was primarily due to an increase in interest earned on cash balances in 2021.

The $369,887 recorded as a gain on extinguishment of note payable and debt forgiveness income represents the forgiveness of all the principal and accrued interest of the loan we obtained under the Paycheck Protection Program, or the PPP, of the Coronavirus Aid, Relief, and Economic Security Act, administered by the U.S.

Small Business Administration, which forgiveness occurred during the first quarter of 2021.

Liquidity and Capital Resources

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The accompanying 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.

At December 31, 2020, our accumulated deficit was approximately $71.4 million, our cash and cash equivalents were approximately $4.7 million, and our working capital deficit was approximately $0.7 million.

At December 31, 2021, our accumulated deficit was approximately $110.1 million, our cash and cash equivalents were approximately $51.7 million, and our working capital was approximately $39.2 million.

For the year ended December 31, 2021, we incurred a net loss of $38.7 million and had negative cash flow from operations of approximately $28.8 million.

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

Our future funding requirements could also include significant costs related to commercialization of our product candidates, if approved, depending on the type and nature of commercial partnerships we establish.

As discussed above, we expect our expenses, and in particular our research and development expenses, to increase significantly in 2021 compared to 2020 as we continue to develop and seek to bring to market our product candidates, with a focus on DARE-BV1, Ovaprene and Sildenafil Cream, 3.6%.

To date, we have not obtained any regulatory approvals for any of our product candidates, commercialized any of our product candidates or generated any product revenue, and we cannot anticipate if or when we will generate any revenue.

We have devoted significant resources to acquiring our portfolio of product candidates and to research and development activities for our product candidates.

We must obtain regulatory approvals to market and sell any of our products in the future.

We will need to generate sufficient safety and efficacy data on our product candidates for them to receive regulatory approvals and to be attractive assets for potential strategic partners to license or for pharmaceutical companies to acquire, and for us to generate cash and other license fees related to such product candidates.

We expect our primary uses of capital to be staff-related expenses, the cost of clinical trials and regulatory activities related to our product candidates, costs associated with contract manufacturing services and third-party clinical research and development services, payments to third-party licensors upon the occurrence of commercial milestones for XACIATO and development milestones for our product candidates, legal expenses, other regulatory expenses and general overhead costs.

Our future funding requirements could also include significant costs related to commercialization of our product candidates, if approved, depending on the type, nature and terms of commercial collaborations we establish.

As discussed above, we expect our expenses, and in particular our research and development expenses, to increase significantly in 2022 compared to 2021 as we continue to develop and seek to bring to market our product candidates, with a focus on our product candidates that have reached the human clinical study development phase.

Under the terms of our license agreement, Organon will purchase all of its product requirements of XACIATO from us

at a price equal to our manufacturing costs plus a single digit percentage markup.

As a result, we do not anticipate our costs of providing XACIATO commercial supplies will have a material impact on our cash resources and requirements.

Based on our current operating plan estimates, 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 financial statements.

Historically, the cash used to fund our operations has come from a variety of sources.

Historically, the cash used to fund our operations has come from a variety of sources and predominantly from sales of our common stock.

During 2021, we received (1) approximately $68.5 million in net proceeds from ATM sales of shares of our common stock;

(2) approximately $11.5 million in non-dilutive grant funding to advance DARE-LARC1 in non-clinical proof of principle studies;

(3) approximately $6.8 million in net proceeds from sales of shares of our common stock under our equity line;

(3) approximately $2.5 million under an existing grant from the Bill & Melinda Gates Foundation that funded a portion of research and development expenses for DARE-LARC1;

(4) approximately $1.8 million upon the exercise of warrants to purchase 1.8 million shares of our common stock;

(5) a $1.0 million upfront non-refundable license fee payment under our license agreement with Bayer HealthCare, LLC, (6) approximately $722,000 under an existing grant from the National Institutes of Health, or NIH, that funded a portion of the Ovaprene PCT clinical study costs;

(7) approximately $367,000 under a loan we obtained under the Paycheck Protection Program, or the PPP, of the Coronavirus Aid, Relief and Economic Security Act administered by the U.S.

Small Business Administration, or the SBA;

and (8) approximately $192,000 in cash under Australia's research and development tax incentive program.

From January 1, 2021 and through March 29, 2021, we received (a) approximately $7.4 million in net proceeds from ATM sales of shares of our common stock;

(b) approximately $3.9 million in net proceeds from sales of shares of our common stock under our equity line;

(c) approximately $139,000 under existing grants from the NIH that funded (i) a portion of the Ovaprene PCT clinical study costs and (ii) a portion of the research and development expenses for DARE-FRT1;

and (d) approximately $50,000 upon the exercise of warrants to purchase 52,500 shares of our common stock.

We will need to raise substantial additional capital to continue to fund our operations and successfully execute our current operating plan, including the development of our product candidates.

We are currently evaluating a variety of capital raising options, including equity and debt financings, government or other grant funding, collaborations and strategic alliances or other similar types of arrangements to cover our operating expenses, including the development of our product candidates and any future product candidates we may license or otherwise acquire.

The amount and timing of our capital needs have been and will continue to depend highly on many factors, including the product development programs we choose to pursue and the pace and results of our clinical development efforts.

and (4) approximately $0.5 million upon the exercise of warrants.

We will need to raise substantial additional capital to continue to fund our operations and to successfully execute our current business strategy.

During 2022, we may receive up to $12.5 million under our license agreement for XACIATO, and we will continue to seek to raise capital through the sale of shares of our common stock under our ATM sales agreements, however, when we can effect such sales and the amount of shares we can sell depends on a variety of factors to be determined by us from time to time, including, among others, market conditions, the trading price of our common stock and our determination as to the appropriate sources of funding for our operations.

For the foreseeable future, we will evaluate and may pursue a variety of capital raising options on an on-going basis, including equity and debt financings, government or other grant funding, collaborations and strategic alliances 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.

The amount and timing of our capital needs have been and will continue to depend highly on many factors, including the product development programs we choose to pursue, the pace and results of our clinical development efforts, and the nature and extent of expansion of our product candidate portfolio, if any.

If we raise capital through collaborations, strategic alliances or other similar types of arrangements, we may have to relinquish, on terms that are not favorable to us, rights to some of our technologies or product candidates we would otherwise seek to develop or commercialize.

There can be no assurance that capital will be available when needed or that, if available, it will be obtained on terms favorable to us and our stockholders, particularly in light of the effects that the COVID-19 pandemic has recently had on the capital markets and investor sentiment.

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.

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.

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If we become unable to continue as a going concern, we may have to liquidate our assets, and might realize significantly less than the values at which they are carried on our financial statements, and stockholders may lose all or part of their investment in our common stock.

"RISK FACTORS—Risks Related to Our Business— We will

need to raise additional capital to continue our operations and execute our current product development plans ,” above.

"RISK FACTORS—Risks Related to Our Financial Position and Capital Needs — We will need to raise additional capital to continue our operations and execute our business strategy ,” above.

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

Net cash used in operating activities $ (28,764,037) $ (25,234,924)

Net cash provided by (used in) investing activities (17,625) 6,143,893

Net cash used in investing activities (14,524) (17,625)

Net cash provided by financing activities 75,846,766 25,130,672

Effect of exchange rate changes on cash and cash equivalents (63,585) 11,237

Net decrease in cash $ (110,640) $ (2,025,782)

Operating activities

Cash used in operating activities during the year ended December 31, 2020 included a net loss of $27.4 million, decreased by non-cash stock-based compensation expense of $742,031.

Components providing operating cash were an approximately $1.3 million increase in accrued expenses, a $1.0 million increase in deferred license revenue, a $157,725 increase in other non-current assets and deferred charges and a $95,042 increase in other receivables.

Components reducing operating cash were a $454,133 increase in prepaid expenses, a $455,121 decrease in deferred grant funding, and a $61,850 decrease in accounts payable.

Cash used in operating activities during the year ended December 31, 2019 included a net loss of $14.3 million, decreased by non-cash stock-based compensation expense of $462,239.

Components providing operating cash were a $621,618 increase in accrued expenses, an increase of $608,650 in accounts payable, and an increase of $237,937 in other non-current assets and deferred charges.

Components reducing operating cash were a $322,482 increase in prepaid expenses, a $238,109 increase in deferred grant funding, and a $201,423 increase in other receivables.

Investing activities

Cash used in investing activities during the year ended December 31, 2020 was related to minimal purchases of property and equipment.

Cash provided by investing activities during the year ended December 31, 2019 consisted of the approximately $6.1 million of cash of Microchips as of the date we acquired Microchips.

Financing activities

Cash provided by financing activities during the year ended December 31, 2020 included approximately $15.2 million of net proceeds received from ATM sales of shares of our common stock, approximately $7.7 million of net proceeds received from sales of shares of common stock under our equity line, approximately $1.8 million received upon the exercise of warrants to purchase shares of our common stock, and approximately $367,000 in proceeds received under our PPP loan.

Cash provided by financing activities during the year ended December 31, 2019 consisted of proceeds from the underwritten public offering completed in April 2019.

Net increase (decrease) in cash $ 47,004,620 $ (110,640)

Net cash used in operating activities

Cash used in operating activities during the year ended December 31, 2021 included the net loss of $38.7 million, decreased by non-cash stock-based compensation expense of approximately $1.6 million, and increased by the non-cash gain on extinguishment of the note payable and accrued interest of approximately $370,000 related to our PPP loan.

Components providing operating cash were an increase in deferred grant funding of approximately $9.0 million, and an increase in accounts payable of approximately $1.1 million.

Components reducing operating cash were

an increase in other receivables of approximately $685,000, an increase in prepaid expenses of approximately $622,000, and a decrease in accrued expenses of approximately $46,000.

Cash used in operating activities during the year ended December 31, 2020 included the net loss of $27.4 million, decreased by non-cash stock-based compensation expense of approximately $742,000.

Components providing operating cash were an increase in accrued expenses of approximately $1.3 million, an increase in deferred license revenue of $1.0 million, an increase in other non-current assets and deferred charges of approximately $158,000, and an increase in other receivables of approximately $95,000.

Components reducing operating cash were an increase in prepaid expenses of approximately $454,000, a decrease in deferred grant funding of approximately $455,000, and a decrease in accounts payable of approximately $62,000.

Net cash used in investing activities

Cash used in investing activities during the years ended December 31, 2021 and December 31, 2020 was related to purchases of property and equipment of approximately $15,000 and $18,000, respectively.

Net cash provided by financing activities

Net cash provided by financing activities during the years ended December 31, 2021 and December 31, 2020 was approximately $75.8 million and $25.1 million, respectively, consisting primarily of net proceeds from sales of our common stock under our ATM sales agreements and our equity line.

License and Royalty Agreements

We agreed to make royalty and milestone payments under the license and development agreements related to XACIATO, Ovaprene, and Sildenafil Cream, 3.6%, and under other agreements related to our other clinical and preclinical candidates.

For further discussion of these potential payments, see Note 3 "Strategic Agreements—Strategic Agreements for Pipeline Development" to the accompanying consolidated financial statements for more information about our license agreements.

Other Contracts

We enter into contracts in the normal course of business with various third parties for research studies, clinical trials, testing and other services.

These contracts generally provide for termination upon notice, and we do not believe that our non-cancelable obligations under these agreements are material.

Off-Balance Sheet Arrangements

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What changed 10-K

Item 7. Management’s Discussion and Analysis