What changed in this filing

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Item 1A. Risk Factors

2020-08-06 compared with 2020-05-07 · 137 added, 241 removed, 92 unchanged (80% of the section changed)

3 unchanged sentences

in the Company's Annual

Report filed on Form 10-K for the year ended December 31, 2019 filed with the SEC on March 13, 2020 and the risk factors discussed

Report filed on Form 10-K for the year ended December 31, 2019 filed with the SEC on March 13, 2020, risk factors discussed

in Item 1A of the Form 10-Q for the quarter ended March 31, 2020 filed with the SEC on May 7, 2020 and the risk factors discussed

in Item 1A of this Form 10-Q, which could materially affect our business, financial condition or future results.

6 unchanged sentences

have materially changed from our risk factors included in our Form 10-K for the year ended December 31, 2019 filed with the SEC

on March 13, 2020:

on March 13, 2020 and from our risk factors included in our Form 10-Q for the quarter ended March 31, 2020 filed with the SEC on

Risks Relating to Our Business and Industry

The timelines of our clinical trials may be impacted by

numerous factors and any delays may adversely affect our ability to execute our current business strategy.

Our expectations regarding the success of

our product candidates, including our clinical candidates and lead compounds, and our business are based on projections which may

not be realized for many scientific, business or other reasons, including the effects of the COVID-19 pandemic and responses thereto.

We therefore cannot assure investors that we will be able to adhere to our current schedule.

We set goals that forecast the accomplishment

of objectives material to our success:

selecting clinical candidates, product candidates, failures in research, the inability to

identify or advance lead compounds, identifying target patient groups or clinical candidates, the timing and completion of clinical

trials, and anticipated regulatory approval.

The actual timing of these events can vary dramatically due to factors such as slow

enrollment of subjects in studies, uncertainties in scale-up, manufacturing and formulation of our compounds, failures in research,

the inability to identify clinical candidates, failures in our clinical trials, requirements for additional clinical trials and

uncertainties inherent in the regulatory approval process and regulatory submissions.

Decisions by our partners or collaborators

may also affect our timelines and delays in achieving manufacturing capacity and marketing infrastructure sufficient to commercialize

our products.

The length of time necessary to complete clinical trials and to submit an application for marketing approval by applicable

regulatory authorities may also vary significantly based on the type, complexity and novelty of the product candidate involved,

as well as other factors.

We may have to dedicate resources to the defense and resolution

of litigation.

Securities legislation

in the United States makes it relatively easy for stockholders to sue.

This can lead to frivolous law suits which take substantial

time, money, resources and attention or force us to settle such claims rather than seek adequate judicial remedy or dismissal of

Historically, securities class action litigation has often been brought against a company following a decline in the

market price of its securities.

Biotechnology and pharmaceutical companies, including the Company, have experienced significant

stock price volatility in recent years, increasing the risk of such litigation.

As we defend the class action lawsuits or future

patent infringement actions should they be filed, or if we are required to defend additional actions brought by other shareholders,

we may be required to pay substantial litigation costs and managerial attention and financial resources may be diverted from business

operations even if the outcome is in our favor.

In addition, while our insurance carrier may cover the costs of settling claims,

the Company’s capital resources are critical to its continued operations, and the payment of litigation settlements and associated

legal fees diverts these capital resources away from our operations, even if such amounts do not have a material impact on our

financial statements.

On February 15,

2019, a purported shareholder filed a shareholder derivative complaint in the Court of Chancery of the State of Delaware, John

Wajda, derivatively on behalf of Lipocine Inc.

Mahesh Patel, et al., against certain of the our current and former

officers and directors as well as the Company as a nominal defendant.

The complaint asserts claims for alleged breaches of

fiduciary duty and unjust enrichment arising out of our dissemination of purportedly false and misleading statements relating to

the filing of the NDA for TLANDO.

The relief sought in the complaint includes unspecified damages, changes to our corporate

governance procedures, equitable and/or injunctive relief, restitution, and attorneys’

On August 16, 2019, defendants

filed a motion to dismiss the complaint.

Plaintiff’s response to the motion to dismiss was due on October 18, 2019;

rather than file an opposition brief, plaintiffs filed an amended stockholder derivative complaint.

Defendants’

dismiss the amended complaint was filed on December 12, 2019;

plaintiff’s response was filed on January 27, 2020 and defendants’

reply was filed on February 26, 2020.

On November 14, 2019, the Company

and certain of its officers were named as defendants in a purported shareholder class action lawsuit, Solomon Abady v.

et al ., 2:19-cv-00906-PMW, filed in the United District Court for the District of Utah.

The complaint alleges that the

defendants made false and/or misleading statements and/or failed to disclose that our filing of the NDA for TLANDO to the FDA contained

deficiencies and as a result the defendants’

statements about our business and operations were false and misleading and/or

lacked a reasonable basis in violation of federal securities laws.

The lawsuit seeks certification as a class action (for a purported

class of purchasers of the Company’s securities from March 27, 2019 through November 8, 2019), compensatory damages in an

unspecified amount, and unspecified equitable or injunctive relief.

We have insurance that covers claims of this nature.

intend to vigorously defend themselves against these allegations, but doing so may result in substantial litigation costs and managerial

attention and financial resources may be diverted from business operations even if outcome is in favor of our current and former

officers and directors and the Company.

On April 2, 2019, we filed a lawsuit against

Clarus in the United States District Court in Delaware alleging that Clarus’s JATENZO®

product infringes six of Lipocine’s

and 6,923,988.

Clarus has answered the complaint and

asserted counterclaims of non-infringement and invalidity.

We answered Clarus’s counterclaims on April 29, 2019.

Court held a scheduling conference on August 15, 2019 and a claim construction hearing on February 11, 2020 and scheduled a five-day

jury trial beginning on February 8, 2021.

On February 11, 2020, we also voluntarily dismissed allegations of patent infringement

for expired U.S.

6,569,463 and 6,923,988 in an effort to streamline the issues and associated costs for dispute.

parties are currently engaged in the fact discovery phase of the lawsuit.

if we obtain FDA approval for TLANDO, our ability to commercialize TLANDO may be limited.

ability to commercialize TLANDO, should it receive approval, is uncertain.

Our ability to commercially launch TLANDO is

contingent upon numerous factors including FDA approval, the availability of commercial launch supplies, the impact of COVID-19,

our financial resources, and our ability to license TLANDO to a third party or build out a commercial sales and marketing team/organization.

If we are unable to launch TLANDO commercially at scale, our business and operations will be adversely affected.

As an alternative

to launching TLANDO directly, we are exploring the possibility of licensing TLANDO to a third party, although no licensing agreement

has been entered into by us yet.

We are unable to estimate whether or when we will be able to out-license TLANDO, should it be

We rely on a single supplier for our supply of TU, the

active pharmaceutical ingredient of TLANDO, and the loss of this supplier could harm our business.

rely on a single third-party supplier for our supply of TU, the active pharmaceutical ingredient of TLANDO and LPCN 1144.

purchased sufficient quantities of TU for early commercial launch supplies should TLANDO get approved by the FDA.

We plan on using

this same supplier for our commercialization needs if TLANDO is approved.

Since there are only a limited number of TU suppliers

in the world, if this supplier ceases to provide us with TU, we may be unable to procure TU on commercially favorable terms, may

not be able to obtain it in a timely manner, or may not be able to qualify a new supplier timely post FDA approval, if that occurs.

Furthermore, the limited number of suppliers of TU may provide such companies with greater opportunity to raise their prices.

we are unable to obtain TU in a timely manner and/or in sufficient quantities, our ability to commercially launch TLANDO will be

adversely affected.

In addition, any increase in price for TU will likely reduce our gross margins.

We rely on limited suppliers for our supply of inactive

ingredients and the loss of these suppliers could harm our business.

rely on limited qualified third-party raw material suppliers for our supply of inactive ingredients of TLANDO and our other product

We do not have supply agreements in place with these suppliers.

We purchased sufficient quantities of some of

these inactives for early commercial launch of TLANDO if it is approved.

We plan on using these same suppliers for our commercialization

needs if TLANDO is approved.

We may be unable to procure inactives on commercially favorable terms, or may not be able to obtain

them in a timely manner, which would adversely affect our ability to commercially launch TLANDO.

In addition, any increase in price

for inactives will likely reduce our gross margins, which could further limit our ability to commercially launch TLANDO.

The ongoing outbreak of coronavirus

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and certain projects until the travel and logistical impacts of COVID-19 are lifted, which will delay the completion of such projects.

In addition, the conduct of clinical trials

and studies required to obtain regulatory approvals for our products have been and we expect may continue to be affected by the

COVID-19 pandemic.

As hospital resources are prioritized for the COVID-19 outbreak and quarantines impede patient movement or interrupt

healthcare services, clinical studies may continue to be disrupted.

If we are unable to successfully complete our clinical studies,

our business and operating results will be harmed.

addition, the conduct of clinical trials and studies required to obtain regulatory approvals for our products have been and we

expect may continue to be affected by the COVID-19 pandemic.

As hospital resources are prioritized for the COVID-19 outbreak and

quarantines impede patient movement or interrupt healthcare services, clinical studies may continue to be disrupted.

unable to successfully complete our clinical studies, our business and operating results will be harmed.

Further, we are

uncertain as to the actual number of subjects that will be enrolled in our clinical studies and we believe that subject drop-out

rates and the number of subjects that ultimately complete the clinical study could be negatively impacted by COVID-19.

Interruptions

caused by COVID-19 may also limit our ability to collect data from clinical studies.

If we are unable to complete or effectively

collect data from clinical studies, our business and operating results will be harmed.

The global outbreak of COVID-19 continues

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operations, sales and ability to continue as a going concern.

We depend on M.W.

for the supply of the TLANDO

capsules and the loss of this supplier or any delays in the delivery of TLANDO by this supplier would significantly harm our business.

We have entered into a Commercial Manufacturing

Services and Supply Agreement with M.W.

(“Encap”), a United Kingdom based contract manufacturer, a division

of Capsugel Dosage Form Solutions, which was recently acquired by Lonza Group AG .

Pursuant to the Agreement, Encap has agreed

to manufacture and supply bulk commercial quantities of TLANDO.

Encap is currently our sole contract manufacturer and is our sole

supplier of TLANDO for our clinical trials on a worldwide basis.

If Encap is unable to produce sufficient capsules in a timely

manner, for whatever reason, to support demand for TLANDO if it becomes commercially available, our revenue and profitability would

be materially and adversely harmed.

Also, we may not be able to engage an alternative supplier to meet our needs.

Reliance on a third-party manufacturer involves

risks, such as capacity and capabilities of the manufacturer to deliver products in a timely manner and in sufficient quantities,

to which we would not be subject if we manufactured TLANDO ourselves.

We also face risks related to reliance on the third party

for regulatory compliance and quality assurance, the possibility of breach of the manufacturing agreement by the third party because

of factors beyond our control and the possibility of termination or non-renewal of the agreement by the third party, based on its

own business priorities, at a time that is costly or damaging to us.

The FDA and other regulatory authorities require that TLANDO

be manufactured according to cGMP.

Any failure by any third-party manufacturers to comply with cGMP could be the basis for action

by the FDA to withdraw approvals previously granted to us and for other regulatory action against us.

We added the highlighted text to this risk factor, based on the disclosure committee discussions.

We may have to dedicate resources to the defense and resolution

of litigation.

legislation in the United States makes it relatively easy for stockholders to sue.

This can lead to frivolous law suits which take

substantial time, money, resources and attention or force us to settle such claims rather than seek adequate judicial remedy or

dismissal of such claims.

Historically, securities class action litigation has often been brought against a company following a

decline in the market price of its securities.

Biotechnology and pharmaceutical companies, including the Company, have experienced

significant stock price volatility in recent years, increasing the risk of such litigation.

As we defend the class action lawsuits

or future patent infringement actions should they be filed, or if we are required to defend additional actions brought by other

shareholders, we may be required to pay substantial litigation costs and managerial attention and financial resources may be diverted

from business operations even if the outcome is in our favor.

In addition, while our insurance carrier may cover the costs

of settling claims, the Company’s capital resources are critical to its continued operations, and the payment of litigation

settlements and associated legal fees diverts these capital resources away from our operations, even if such amounts do not have

a material impact on our financial statements.

February 15, 2019, a purported shareholder filed a shareholder derivative complaint in the Court of Chancery of the State of Delaware, John

Wajda, derivatively on behalf of Lipocine Inc.

Mahesh Patel, et al., against certain of the our current and

former officers and directors as well as the Company as a nominal defendant.

The complaint asserts claims for alleged breaches

of fiduciary duty and unjust enrichment arising out of our dissemination of purportedly false and misleading statements relating

to the filing of the NDA for TLANDO.

The relief sought in the complaint includes unspecified damages, changes to our corporate

governance procedures, equitable and/or injunctive relief, restitution, and attorneys’

On August 16, 2019, defendants

filed a motion to dismiss the complaint.

In response, the plaintiff’s filed an amended stockholder derivative complaint.

Defendants’

motion to dismiss the amended complaint was filed on December 12, 2019;

plaintiff’s response was filed

on January 27, 2020 and defendants’

reply was filed on February 26, 2020.

Oral arguments on the motion to dismiss were held

on July 28, 2020.

On July 30, 2020, the court entered an order dismissing the complaint in its entirety.

On November 14, 2019, the Company

and certain of its officers were named as defendants in a purported shareholder class action lawsuit, Solomon Abady v.

et al ., 2:19-cv-00906-PMW, filed in the United District Court for the District of Utah.

The complaint alleges that the

defendants made false and/or misleading statements and/or failed to disclose that our filing of the NDA for TLANDO to the FDA contained

deficiencies and as a result the defendants’

statements about our business and operations were false and misleading and/or

lacked a reasonable basis in violation of federal securities laws.

The lawsuit seeks certification as a class action (for a purported

class of purchasers of the Company’s securities from March 27, 2019 through November 8, 2019), compensatory damages in an

unspecified amount, and unspecified equitable or injunctive relief.

We have insurance that covers claims of this nature.

intend to vigorously defend themselves against these allegations , but doing so may result in substantial litigation costs

and managerial attention and financial resources may be diverted from business operations even if outcome is in favor of our current

and former officers and directors and the Company.

April 2, 2019, we filed a lawsuit against Clarus in the United States District Court in Delaware alleging that Clarus’s

product infringes six of Lipocine’s issued U.S.

and 6,923,988.

Clarus has answered the complaint and asserted counterclaims of non-infringement and invalidity.

Clarus’s counterclaims on April 29, 2019.

The Court held a scheduling conference on August 15, 2019 and a claim construction

hearing on February 11, 2020 and scheduled a five-day jury trial beginning on February 8, 2021.

On February 11, 2020, we also voluntarily

dismissed allegations of patent infringement for expired U.S.

6,569,463 and 6,923,988 in an effort to streamline the

issues and associated costs for dispute.

The parties are currently engaged in the fact discovery phase of the lawsuit.

Risks Related to Ownership of Our Common Stock

6 unchanged sentences

In the November 2019 Offering, the Company sold

(i) 10,450,000 Class A Units, with each Class A Unit consisting of one share of common stock and a common warrant to purchase one

share of common stock, and (ii) 1,550,000 Class B Units, with each Class B Unit consisting of one pre-funded warrant to purchase

(i) 10,450,000 Class A Units, with each Class A Unit consisting of one share of common stock and a common stock warrant to purchase

one share of common stock, and (ii) 1,550,000 Class B Units, with each Class B Unit consisting of one pre-funded warrant to purchase

one share of a common stock and one common stock warrant to purchase one share of common stock at a price of $0.50 per Class A

7 unchanged sentences

We account for

the warrants as a derivative instrument, and changes in the fair value of the warrants are included under other income (expense)

in the Company’s statements of operations for each reporting period.

At March 31, 2020, the aggregate fair value of the warrant

liability included in the Company’s consolidated balance sheet was $5.7 million.

We use the Black-Scholes option pricing

model to determine the fair value of the warrants.

As a result, the option-pricing model requires the input of several assumptions,

including the stock price volatility, share price and risk-free interest rate.

Changes in these assumptions can materially affect

the fair value estimate.

While the liability may only result from a change of control at that point in time, we ultimately may

incur amounts significantly different than the carrying value.

the common stock warrants as a derivative instrument, and changes in the fair value of the warrants are included under other income

(expense) in the Company’s statements of operations for each reporting period.

At June 30, 2020, the aggregate fair value

of the warrant liability included in the Company’s consolidated balance sheet was $2.2 million.

We use the Black-Scholes

option pricing model to determine the fair value of the warrants.

As a result, the option-pricing model requires the input of several

assumptions, including the stock price volatility, share price and risk-free interest rate.

Changes in these assumptions can materially

affect the fair value estimate.

While the liability may only result from a change of control at that point in time, we ultimately

may incur amounts significantly different than the carrying value.

Our management and directors will be able to exert influence

over our affairs.

As of March 31, 2020, our executive officers

As of June 30, 2020, our executive officers

and directors beneficially owned approximately 5.8% of our common stock.

1 unchanged sentence

to influence our management and affairs and all matters requiring stockholder approval, including significant corporate transactions.

This concentration of ownership may have the effect of delaying or preventing a change in control and might affect the market

price of our common stock.

This concentration of ownership may have the effect of delaying or preventing a change in control and might affect the market price

of our common stock.

Our common stock is thinly traded, may continue to be

1 unchanged sentence

their shares.

Currently, we have a low volume of daily

trades in our common stock on NASDAQ.

For example, the average daily trading volume in our common stock on NASDAQ during the first

quarter of 2020 was approximately 1.6 million shares per day.

Our stockholders may be unable to sell their common stock at or near

their asking prices or at all, which may result in substantial losses to our stockholders.

we have a low volume of daily trades in our common stock on NASDAQ.

For example, the average daily trading volume in our common

stock on NASDAQ during the second quarter of 2020 was approximately 1.4 million shares per day.

Our stockholders may be

unable to sell their common stock at or near their asking prices or at all, which may result in substantial losses to our stockholders.

The market for our common stock may be

7 unchanged sentences

a seasoned issuer that could better absorb those sales without adverse impact on its share price.

Risks Relating to Our Financial Position and Capital Requirements

Our loan agreement contains covenants which may adversely

impact our business;

the failure to comply with such covenants could cause our outstanding debt to become immediately payable.

On January 5, 2018, we entered into a Loan

and Security Agreement (the “Loan and Security Agreement”) with Silicon Valley Bank (“SVB”) pursuant to

which SVB lent us $10.0 million.

The principal borrowed under the Loan and Security Agreement bears interest at a rate equal to

the Prime Rate plus one percent per annum, which interest is payable monthly.

The loan matures on June 1, 2022.

In addition, as

TLANDO was not approved by the FDA by May 31, 2018, we are required to maintain $5.0 million of cash collateral at SVB until such

time as TLANDO is approved by the FDA.

The Loan Agreement includes a number of restrictive covenants, including restrictions on

incurring additional debt, transactions with affiliates, disposing of property, business combinations or acquisitions, paying dividends

and making other distributions or payments on our capital stock, subject to limited exceptions.

Collectively, these covenants could

constrain our ability to grow our business through acquisitions or engage in other transactions.

In addition, the Loan Agreement

includes covenants requiring, among other things, that we provide financial statements, comply with all laws, pay all taxes and

maintain insurance.

If we are not able to comply with these covenants, the loan under the Loan Agreement could become immediately

due and payable and would have a material adverse effect on our liquidity, financial condition, operating results, business, and

prospects and cause the price of our common stock to decline.

Risks Relating to Our Intellectual Property

We may incur substantial costs as a result of litigation

or other proceedings relating to patent and other intellectual property rights, and we may be unable to protect our rights to our

products and technology.

If we or our collaborators choose to go

to court to stop a third party from using the inventions claimed in our owned or licensed patents, that third party may ask a court

to rule that the patents are invalid and should not be enforced against that third party.

These lawsuits are expensive and would

consume time and other resources, including financial resources, even if we were successful in stopping the infringement of these

In addition, there is a risk that a court will decide that these patents are not valid or not enforceable and that we

do not have the right to stop others from using the inventions.

There is also the risk that, even if the

validity of these patents is not challenged or is upheld, the court will refuse to stop the third party on the ground that such

third-party’s activities do not infringe on our owned or licensed patents.

In addition, the U.S.

Supreme Court has changed

some standards relating to the granting of patents and assessing the validity of patents.

As a consequence, issued patents may

be found to contain invalid claims according to the newly revised standards.

Some of our owned or licensed patents may be subject

to challenge and subsequent invalidation or significant narrowing of claim scope in a reexamination or other proceeding before

the PTO, or during litigation, under the revised criteria which make it more difficult to obtain or maintain patents.

For example, On April 2, 2019, we filed

a lawsuit against Clarus in the United States District Court for the District of Delaware alleging that Clarus’s JATENZO®

product infringes six of Lipocine’s issued U.S.

and 6,923,988.

Clarus has answered the complaint and asserted counterclaims of non-infringement and invalidity.

We answered Clarus’s

counterclaims on April 29, 2019.

The Court held a scheduling conference on August 15, 2019 setting a claim construction

hearing on February 11, 2020 and a five-day jury trial beginning on February 8, 2021.

On February 11, 2020, we also voluntarily

dismissed allegations of patent infringement for expired U.S.

6,569,463 and 6,923,988 in an effort to streamline the

issues and associated costs for dispute.

The parties are currently engaged in the fact discovery phase of the lawsuit.

While our in-licensed patents and applications

are not currently used in our product candidates, should we develop other product candidates that are covered by this intellectual

property, we will rely on our licensor to file and prosecute patent applications and maintain patents and otherwise protect the

intellectual property we license from them.

Our licensor has retained the first right, but not the obligation to initiate an infringement

proceeding against a third-party infringer of the intellectual property licensed to us, and enforcement of our in-licensed patents

or defense of any claims asserting the invalidity or unenforceability of these patents would also be subject to the control or

cooperation of our licensor.

It is possible that our licensor’s defense activities may be less vigorous than had we conducted

the defense ourselves.

We also license our patent portfolio, including

and foreign patents and patent applications that cover our TLANDO and our other product candidates, to third parties for their

respective products and product candidates.

Under our agreements with our licensees, we have the right, but not the obligation,

to enforce our current and future licensed patents against infringers of our licensees.

In certain cases, our licensees may

have primary enforcement rights and we have the obligation to cooperate.

In the event of an enforcement action against infringers

of our licensees, our licensees might not have the interest or resources to successfully preserve the patents, the infringers may

countersue, and as a result our patents may be found invalid or unenforceable or of a narrower scope of coverage and leave us with

no patent protection for TLANDO and our other product candidates.

Our intellectual property lawsuit against

Clarus will consume a portion of our capital resources.

Moreover, we may be subject to a third party pre-issuance submission of

prior art to the PTO, or become involved in opposition, derivation, reexamination, inter partes review, post-grant review or interference

proceedings challenging our owned or licensed patent rights or the patent rights of others.

An adverse determination in any such

submission, proceeding or litigation could reduce the scope of, or invalidate, our owned or licensed patent rights, allow third

parties to commercialize our technology or products and compete directly with us, without payment to us, or result in our inability

to manufacture or commercialize products without infringing third party patent rights.

In addition, if the breadth or strength

of protection provided by our patents and patent applications is threatened, it could dissuade companies from collaborating with

us to license, develop or commercialize current or future product candidates and impair our ability to raise needed capital.

If we are required to defend patent infringement

actions brought by other third parties, or if we sue to protect our own patent rights or otherwise to protect our proprietary information

and to prevent its disclosure, we may be required to pay substantial litigation costs and managerial attention and financial resources

may be diverted from business operations even if the outcome is in our favor.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

2 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1A. Risk Factors