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Item 2. Management’s Discussion and Analysis

2021-11-10 compared with 2021-08-05 · 563 added, 492 removed, 434 unchanged (71% of the section changed)

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

following discussion of our financial condition and results of operations should be read in conjunction with our unaudited condensed

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additional context with which to understand our financial condition and results of operations, see the management’s discussion

and analysis included in our Form 10-K, filed with the SEC on March 11, 2021, our first quarter Form 10-Q filed with the SEC on May 6,

2021, as well as the financial statements and related notes contained therein.

and analysis included in our Form 10-K, filed with the U.S.

Securities and Exchange Commission (“SEC”) on March 11, 2021,

our first quarter Form 10-Q filed with the SEC on May 6, 2021, our second quarter Form 10-Q filed with the SEC on August 5, 2021, as

well as the financial statements and related notes contained therein.

used in the discussion below, “we,” “our,” and “us” refers to Lipocine.

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Factors that might cause such differences include, but are not limited to, those discussed

in Part II, Item 1A (Risk Factors) of this Form 10-Q, or in Part II, Item 1A (Risk Factors) of our Form 10-Q for the quarter ended March

in Part II, Item 1A (Risk Factors) of this Form 10-Q, or in Part II, Item 1A (Risk Factors) of our Form 10-Q for the quarter ended June

30, 2021 filed with the SEC on August 5, 2021, or in Part II, Item 1A (Risk Factors) of our Form 10-Q for the quarter ended March 31,

2021 filed with the SEC on May 6, 2021 or in Part I, Item 1A (Risk Factors) of our Form 10-K filed with the SEC on March 11, 2021.

Except as required by applicable law, we assume no obligation to revise or update any forward-looking statements for any reason.

as required by applicable law, we assume no obligation to revise or update any forward-looking statements for any reason.

of Our Business

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bioavailable drugs.

We have a portfolio of proprietary product candidates designed to produce favorable PK characteristics and facilitate

lower dosing requirements, bypass first-pass metabolism in certain cases, reduce side effects, and eliminate gastrointestinal interactions

that limit bioavailability.

most advanced product candidate, TLANDO®, is an oral TRT comprised of TU.

On December 8, 2020, we received tentative approval from

the FDA regarding our NDA filed in February 2020 for TLANDO as a TRT in adult males for conditions associated with a deficiency of endogenous

testosterone, also known as hypogonadism.

In granting tentative approval, the FDA concluded that TLANDO has met all required quality,

safety and efficacy standards necessary for approval.

However, TLANDO has not received final approval and is not eligible for final approval

to market in the U.S.

until the expiration of the exclusivity period previously granted to Clarus Therapeutics, Inc.

with respect to

Jatenzo ®, which expires on March 27, 2022.

We remain committed to taking appropriate

actions with the goal of receiving final approval to permit the launch of TLANDO.

The FDA has also required us to conduct certain post-marketing

studies to (i) assess patient understanding of key risks relating to TLANDO and (ii) evaluate development of adrenal insufficiency with

chronic TLANDO therapy.

pipeline candidates include LPCN 1144, an oral prodrug of bioidentical testosterone comprised of TU for the treatment of

non-cirrhotic NASH which is currently in Phase 2 testing, TLANDO® XR, a next generation oral TRT product comprised of

testosterone tridecanoate (“TT”) with the potential for once daily dosing which has completed Phase 2 testing, LPCN

1148, an oral prodrug of bioidentical testosterone for the management of symptoms associated with cirrhosis, LPCN 1154, an

oral neuro-steroid targeted for the treatment of postpartum depression (“PPD”) ,

and LPCN 1107, potentially the first oral HPC product indicated for the prevention of recurrent PTB, which has completed a dose

finding Phase 2 clinical study and has been granted orphan drug designation by the FDA.

1144 is currently being tested in the LiFT (“Liver Fat intervention with oral Testosterone”) proof-of-concept (“POC”)

Phase 2 clinical study, a paired-biopsy study in confirmed non-cirrhotic NASH subjects.

Study enrollment has been completed and positive

top-line primary endpoint results after 12 weeks of treatment were released in January 2021.

Treatments with LPCN 1144 resulted in robust

liver fat reduction, assessed by MRI-PDFF technique, and showed improvement of liver injury markers with no observed tolerability issues.

We have a portfolio of proprietary product candidates designed to produce favorable pharmacokinetic (“PK”)

characteristics and facilitate lower dosing requirements, bypass first-pass metabolism in certain cases, reduce side effects, and eliminate

gastrointestinal interactions that limit bioavailability.

most advanced product candidate, TLANDO®, is an oral testosterone replacement therapy (“TRT”) comprised of testosterone

undecanoate (“TU”).

On December 8, 2020, we received tentative approval from the United States Food and Drug Administration

(“FDA”) regarding our new drug application (“NDA”) filed in February 2020 for TLANDO as a TRT in adult males

for conditions associated with a deficiency of endogenous testosterone, also known as hypogonadism.

In granting tentative approval, the

FDA concluded that TLANDO has met all required quality, safety and efficacy standards necessary for approval.

However, TLANDO has not

received final approval and is not eligible for final approval to market in the U.S.

until the expiration of the exclusivity period previously

granted to Clarus Therapeutics, Inc.

(“Clarus”) with respect to Jatenzo ®,

which expires on March 27, 2022.

The FDA has affirmed that the resubmission of the NDA for TLANDO will be a Class 1 resubmission.

1 NDA resubmission includes a two-month FDA review goal period.

On October 14, 2021, we entered into a license agreement (the “Antares

License Agreement”) with Antares Pharma, Inc.

(“Antares”), pursuant to which we granted to Antares an exclusive, royalty-bearing,

sublicensable right and license to develop and commercialize, upon final approval of TLANDO from the FDA, our TLANDO product with respect

to TRT in the U.S.

We and Antares remain committed to taking appropriate actions with the goal of receiving final approval to permit

the launch of TLANDO.

The FDA has also required us to conduct certain post-marketing studies to (i) assess patient understanding of key

risks relating to TLANDO and (ii) evaluate development of adrenal insufficiency with chronic TLANDO therapy which will be conducted and

paid for by Antares.

pipeline candidates include LPCN 1144, an oral prodrug of bioidentical testosterone comprised of TU for the treatment of non-cirrhotic

non-alcoholic steatohepatitis (“NASH”) which is currently in Phase 2 testing, TLANDO® XR, a next generation oral TRT

product comprised of testosterone tridecanoate (“TT”) with the potential for once daily dosing which has completed Phase

2 testing, LPCN 1148 comprising a novel prodrug of bioidentical testosterone, testosterone laurate (“TL”), for the management

of symptoms associated with cirrhosis, LPCN 1154, an oral neuro-steroid targeted for the treatment of postpartum depression (“PPD”) ,

and LPCN 1107, potentially the first oral hydroxy progesterone caproate (“HPC”) product indicated for the prevention

of recurrent preterm birth (“PTB”), which has completed a dose finding Phase 2 clinical study and has been granted orphan

drug designation by the FDA.

1144 is currently being tested in an open label extension (“OLE”) study to the Liver Fat intervention with oral Testosterone

(“ LiFT “) proof-of-concept (“POC”) Phase 2 clinical study, a paired-biopsy study in confirmed non-cirrhotic

NASH subjects.

Positive top-line primary endpoint results after 12 weeks of treatment in the LiFT clinical study were released

in January 2021.

Treatments with LPCN 1144 resulted in robust liver fat reduction, assessed by magnetic resonance imaging, proton density

fat fraction (“MRI-PDFF”) technique, and showed improvement of liver injury markers with no observed tolerability issues.

Additionally, key secondary endpoint results after 36 weeks of treatment in the LiFT clinical study were released in August

Treatments with LPCN 1144 met the non-alcoholic steatohepatitis (“NASH”) resolution regulatory endpoint, showed positive

effects in appendicular lean mass and whole-body fat mass and continued to show substantial reductions in markers of liver injury compared

date, we have funded our operations primarily through the sale of equity securities, debt and convertible debt and through up-front payments,

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We have not generated any revenues

from product sales and we do not expect to generate revenue from product sales unless and until we obtain regulatory approval of TLANDO

or other products.

from product sales and we do not expect to generate revenue or royalties from product sales unless and until we obtain regulatory approval

of TLANDO or other products.

have incurred losses in most years since our inception.

As of June 30, 2021, we had an accumulated deficit of $182.2 million.

As of September 30, 2021, we had an accumulated deficit of $185.3 million.

and losses fluctuate year to year, primarily depending on the nature and timing of research and development occurring on our product

Our net loss was $10.2 million for the six months ended June 30, 2021, compared to $12.1 million for the six months ended

June 30, 2020.

Substantially all of our operating losses resulted from expenses incurred in connection with our product candidate development

programs, our research activities and general and administrative costs, including on-going litigation, associated with our operations.

Our net loss was $13.3 million for the nine months ended September 30, 2021, compared to $16.5 million for the nine months

ended September 30, 2020.

Substantially all of our operating losses resulted from expenses incurred in connection with our product candidate

development programs, our research activities and general and administrative costs, including recently settled litigation, associated

with our operations.

expect to continue to incur significant expenses and operating losses for the foreseeable future as we:

any other post-approval clinical studies required in support of TLANDO;

pre-commercialization and commercialization activities in support of TLANDO;

the OLE clinical study with LPCN 1144;

further development of our other product candidates, including LPCN 1144, LPCN 1148, LPCN 1154 and LPCN 1107;

our research efforts;

new products or new uses for our existing products;

new product candidates or new uses for our existing products candidates;

expand and protect our intellectual property portfolio;

general and administrative support for our operations, including on-going litigation.

fund future long-term operations, including the potential commercialization of TLANDO or other products, we will need to raise additional

The amount and timing of future funding requirements will depend on many factors, including capital market conditions, regulatory

requirements and outcomes related to TLANDO, regulatory requirements related to our other product development programs, the timing and

results of our ongoing development efforts, the potential expansion of our current development programs, potential new development programs,

our ability to license our products to third parties, the pursuit of various potential commercial activities and strategies associated

with our development programs and related general and administrative support.

We anticipate that we will seek to fund our operations

through public or private equity or debt financings or other sources, such as potential license, partnering and collaboration agreements.

We cannot be certain that anticipated additional financing will be available to us on favorable terms, in amounts sufficient to fund

our operations or at all.

Although we have previously been successful in obtaining financing through public and private equity securities

offerings and our license and collaboration agreements, there can be no assurance that we will be able to do so in the future.

general and administrative support for our operations.

fund future long-term operations, including the potential commercialization of our products, we will need to raise additional capital.

The amount and timing of future funding requirements will depend on many factors, including capital market conditions, regulatory requirements

related to our other product development programs, the timing and results of our ongoing development efforts, the potential expansion

of our current development programs, potential new development programs, our ability to license our products to third parties, the pursuit

of various potential commercial activities and strategies associated with our development programs and related general and administrative

We anticipate that we will seek to fund our operations through public or private equity or debt financings or other sources,

such as potential license, partnering and collaboration agreements.

We cannot be certain that anticipated additional financing will be

available to us on favorable terms, in amounts sufficient to fund our operations or at all.

Although we have previously been successful

in obtaining financing through public and private equity securities offerings and our license and collaboration agreements, there can

be no assurance that we will be able to do so in the future.

Product Candidates

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an oral androgen therapy for the treatment of non-cirrhotic NASH, LPCN 1144, a next-generation potential once daily oral TRT, TLANDO

XR, an androgen therapy for the management of cirrhosis, LPCN 1148, an oral neuro-steroid targeted for the treatment of PPD ,

LPCN 1154, an oral therapy for the prevention of PTB, LPCN 1107, and we continue to explore other product candidates targeting

indications with a significant unmet need.

XR, an androgen therapy for the management symptoms associated with cirrhosis, LPCN 1148, an oral neuro-steroid targeted for the treatment

of PPD , LPCN 1154, an oral therapy for the prevention of recurrent PTB, LPCN 1107, and we

continue to explore other product candidates targeting indications with a significant unmet need.

On October 14, 2021, we entered into

the Antares License Agreement with Antares, pursuant to which we granted to Antares an exclusive, royalty-bearing, sublicensable right

and license to develop and commercialize, upon final approval of TLANDO from the FDA, our TLANDO product with respect to TRT in the U.S.

The Antares License Agreement also provides Antares with an option, exercisable on or before March 31, 2022, to license TLANDO XR.

products are based on our proprietary Lip’ral drug delivery technology platform.

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An Oral Product Candidate for Testosterone Replacement Therapy

most advanced product, TLANDO, is an oral formulation of the chemical, TU, which is an eleven carbon side chain attached to T.

an ester prodrug of T.

most advanced product, TLANDO, is an oral formulation of the chemical, TU, which is an eleven-carbon side chain attached to testosterone

TU is an ester prodrug of T.

An ester is chemically formed by bonding an acid and an alcohol.

Upon the cleavage, or breaking, of the ester

bond, T is formed.

TU has been approved for use outside the United States for many years for delivery via intra-muscular injection and

in oral dosage form and more recently TU has received regulatory approval in the United States for delivery via intra-muscular injection

and in oral dosage form.

Upon the cleavage, or

breaking, of the ester bond, T is formed.

TU has been approved for use outside the United States for many years for delivery via intra-muscular

injection and in oral dosage form and more recently TU has received regulatory approval in the United States for delivery via intra-muscular

injection and in oral dosage form.

We are using our proprietary technology to facilitate steady gastrointestinal solubilization and absorption

Proof-of-concept was initially established in 2006, and subsequently TLANDO was licensed in 2009 to Solvay Pharmaceuticals, Inc.

which was then acquired by Abbott.

Following a portfolio review associated with the spin-off of AbbVie by Abbott in 2011, the rights

to TLANDO were reacquired by us.

All obligations under the prior license agreement have been completed except that Lipocine will owe

Abbott a perpetual 1% royalty on net sales.

Such royalties are limited to $1 million in the first two calendar years following product

launch, after which period there is not a cap on royalties and no maximum aggregate amount.

If generic versions of any such product are

introduced, then royalties are reduced by 50%.

which was then acquired by Abbott Products, Inc.

Following a portfolio review associated with the spin-off of

by Abbott in 2011, the rights to TLANDO were reacquired by us.

All obligations under the prior license agreement have been

completed except that Lipocine will owe Abbott a perpetual 1% royalty on net sales.

Such royalties are limited to $1 million in the first

two calendar years following product launch, after which period there is not a cap on royalties and no maximum aggregate amount.

versions of any such product are introduced, then royalties are reduced by 50%.

PDUFA Outcome

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granted to Clarus with respect to Jatenzo ®, which expires on March 27, 2022.

committed to taking appropriate actions with the goal of receiving final approval to permit the launch of TLANDO.

the Pediatric Research Equity Act (“PREA”), if TLANDO receives full approval, we will need to address the PREA requirement

to assess the safety and effectiveness of TLANDO in pediatric patients.

The FDA has also required us to conduct certain post-marketing

studies including:

(i) conduct an appropriately designed label comprehension and knowledge study that assesses patient understanding

of key risk messages in the Medication Guide for TLANDO and (ii) conduct an appropriately designed one-year trial to evaluate development

of adrenal insufficiency with chronic TLANDO therapy.

The timetables for these post-marketing requirements will be established at the

time of full approval of TLANDO.

We are actively pursuing and currently evaluating commercial alternatives with TLANDO, should it receive

FDA approval, including out-licensing TLANDO to a third-party, launching TLANDO on our own, or launching TLANDO on our own with the assistance

from a “risk share” partner.

has affirmed that the resubmission of the NDA for TLANDO will be a Class 1 resubmission.

A Class 1 NDA resubmission includes a two-month

FDA review goal period.

We remain committed to taking appropriate actions with the goal of receiving final approval to permit the launch

the Pediatric Research Equity Act (“PREA”), if TLANDO receives full approval, under the terms of the Antares Licensing Agreement,

Antares will need to address the PREA requirement to assess the safety and effectiveness of TLANDO in pediatric patients.

also required us to conduct certain post-marketing studies including:

(i) conduct an appropriately designed label comprehension and knowledge

study that assesses patient understanding of key risk messages in the Medication Guide for TLANDO and (ii) conduct an appropriately designed

one-year trial to evaluate development of adrenal insufficiency with chronic TLANDO therapy which will be conducted and paid for by Antares.

The timetables for these post-marketing requirements will be established at the time of full approval of TLANDO.

execution of the Antares License Agreement, Antares paid to us an initial payment of $11.0 million.

Antares will also make additional

payments of $5.0 million to us on each of January 1, 2025 and January 1, 2026, provided that certain conditions are satisfied.

also eligible to receive milestone payments of up to $160.0 million in the aggregate, depending on the achievement of certain sales milestones

in a single calendar year with respect to all products licensed by Antares under the Antares License Agreement.

In addition, upon commercialization,

we will receive tiered royalty payments at rates ranging from percentages in the mid-teens to up to 20% of net sales of TLANDO in the

United States, subject to certain minimum royalty obligations.

If Antares exercises its option to license TLANDO XR, we will be entitled

to an additional payment of $4.0 million, as well as development milestone payments of up to $35.0 million in the aggregate and tiered

royalty payments at rates ranging from percentages in the mid-teens to 20% of net sales of TLANDO XR in the United States.

Competition Update

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Additionally,

our competitors may introduce other T-replacement therapies.

For example, on January 5, 2021 Marius submitted a NDA to the FDA seeking

approval of KYZATREX®, its novel oral TU soft gelatin capsule for the treatment of primary and secondary hypogonadism in adult men.

According to Marius, it has been assigned a PDUFA date of October 31, 2021 for KYZATREX®.

are also aware of other pharmaceutical companies that have T-replacement therapies or testosterone therapies in development that may

be approved for marketing in the United States or outside of the United States.

on publicly available information, we believe that several other T-replacement therapies that would be competitive with TLANDO are in

varying stages of development, some of which may be approved, marketed and/or commercialized prior to TLANDO.

These therapies include

T-gels, oral-T, an aromatase inhibitor, a new class of drugs called Selective Androgen Receptor Modulators and hydroalcoholic gel formulations

our competitors may introduce other TRTs.

For example, on January 5, 2021 Marius submitted a NDA to the FDA seeking approval of KYZATREX®,

its novel oral TU soft gelatin capsule for the treatment of primary and secondary hypogonadism in adult men.

According to Marius, it

has been assigned a PDUFA date of October 31, 2021 for KYZATREX®.

are also aware of other pharmaceutical companies that have TRTs or testosterone therapies in development that may be approved for marketing

in the United States or outside of the United States.

on publicly available information, we believe that several other TRTs that would be competitive with TLANDO are in varying stages of

development, some of which may be approved, marketed and/or commercialized prior to TLANDO.

These therapies include T-gels, oral-T, an

aromatase inhibitor, a new class of drugs called Selective Androgen Receptor Modulators and hydroalcoholic gel formulations of dihydrotestosterone

An Oral Prodrug of Bioidentical Testosterone Product Candidate for the Treatment of NASH

are currently evaluating LPCN 1144, an oral prodrug of bioidentical testosterone comprised of TU, for the treatment of non-cirrhotic

NASH is a more advanced state of NAFLD and can progress to a cirrhotic liver and eventually hepatocellular carcinoma/ liver cancer.

NASH is a more advanced state of non-alcoholic fatty liver disease (“NAFLD”) and can progress to a cirrhotic liver

and eventually hepatocellular carcinoma/ liver cancer.

Twenty to thirty percent of the U.S.

population is estimated to suffer from NAFLD and fifteen to twenty percent of this group progress

to NASH, which is a substantially large population that lacks effective therapy.

Currently, there are no FDA approved treatments for

NASH, a silent killer that affects approximately 30 million Americans.

Approximately 50% of NASH patients are in adult males.

is becoming more common due to its strong correlation with obesity and metabolic syndrome, including components of metabolic syndrome

such as diabetes, cardiovascular disease and high blood pressure.

In men, especially with comorbidities associated with NAFLD/NASH, testosterone

deficiency has been associated with an increased accumulation of visceral adipose tissue and insulin resistance, which could be factors

contributing to NAFLD/NASH.

There is currently no approved therapy for the treatment of NASH although there are several drug candidates

currently under development with many having clinical failures to date.

population is estimated to suffer from NAFLD

and fifteen to twenty percent of this group progress to NASH, which is a substantially large population that lacks effective therapy.

Currently, there are no FDA approved treatments for NASH, a silent killer that affects approximately 30 million Americans.

Approximately

50% of NASH patients are in adult males.

NAFLD/NASH is becoming more common due to its strong correlation with obesity and metabolic

syndrome, including components of metabolic syndrome such as diabetes, cardiovascular disease and high blood pressure.

In men, especially

with comorbidities associated with NAFLD/NASH, testosterone deficiency has been associated with an increased accumulation of visceral

adipose tissue and insulin resistance, which could be factors contributing to NAFLD/NASH.

There is currently no approved therapy for

the treatment of NASH although there are several drug candidates currently under development with many having clinical failures to date.

of Liver Disease

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Liver diseases can result from injury to the liver caused by a variety

of insults, including HCV, HBV, obesity, chronic excessive alcohol use or autoimmune diseases.

Regardless of the underlying cause of

the disease, there are important similarities in the disease progression including increased inflammatory activity and excessive liver

cell apoptosis, which if unresolved leads to fibrosis.

Fibrosis, if allowed to progress, will lead to cirrhosis, or excessive scarring

of the liver, and eventually reduced liver function.

Some patients with liver cirrhosis have a partially functioning liver and may appear

asymptomatic for long periods of time, which is referred to as decompensated liver disease.

Decompensated liver disease is when the liver

is unable to perform its normal functions.

Many people with active liver disease remain undiagnosed largely because liver disease patients

are often asymptomatic for many years.

of insults, including hepatitis C virus, hepatitis B virus, obesity, chronic excessive alcohol use or autoimmune diseases.

of the underlying cause of the disease, there are important similarities in the disease progression including increased inflammatory

activity and excessive liver cell apoptosis, which if unresolved leads to fibrosis.

Fibrosis, if allowed to progress, will lead to cirrhosis,

or excessive scarring of the liver, and eventually reduced liver function.

Some patients with liver cirrhosis have a partially functioning

liver and may appear asymptomatic for long periods of time, which is referred to as decompensated liver disease.

Decompensated liver

disease is when the liver is unable to perform its normal functions.

Many people with active liver disease remain undiagnosed largely

because liver disease patients are often asymptomatic for many years.

of Liver Cell Death

is an enzyme that is produced in liver cells and is naturally found in the blood of healthy individuals.

In liver disease, liver cells

are damaged and as a consequence, ALT is released into the blood, increasing ALT levels above the normal range.

Physicians routinely

test blood levels of ALT to monitor the health of a patient’s liver.

ALT level is a clinically important biochemical marker of

the severity of liver inflammation and ongoing liver disease.

Elevated levels of ALT represent general markers of liver cell death and

inflammation without regard to any specific mechanism.

AST is a second enzyme found in the blood that is produced in the liver and routinely

measured by physicians along with ALT.

As with ALT, AST is often elevated in liver disease and, like ALT, is considered an overall marker

of liver inflammation.

aminotransferase (“ALT”) is an enzyme that is produced in liver cells and is naturally found in the blood of healthy individuals.

In liver disease, liver cells are damaged and as a consequence, ALT is released into the blood, increasing ALT levels above the normal

Physicians routinely test blood levels of ALT to monitor the health of a patient’s liver.

ALT level is a clinically important

biochemical marker of the severity of liver inflammation and ongoing liver disease.

Elevated levels of ALT represent general markers

of liver cell death and inflammation without regard to any specific mechanism.

Aspartate aminotransferase (“AST”)is a second

enzyme found in the blood that is produced in the liver and routinely measured by physicians along with ALT.

As with ALT, AST is often

elevated in liver disease and, like ALT, is considered an overall marker of liver inflammation.

between Hypogonadism and NAFLD

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NAFLD/NASH symptom severity.

A recent NIDDK report suggests that 75% of biopsy confirmed NASH subjects have less than 372 ng/dL of total

testosterone and that the degree of fibrosis severity is inversely related to free testosterone levels;

thus, providing a good rationale

for testing LPCN 1144 in adult NASH patients regardless of their hypogonadal status.

We have received clearance from the FDA to clinically

investigate LPCN 1144 in an expanded target population of adult male NASH patients.

Specifically, the FDA waived the limitation of only

testing LPCN 1144 in NASH subjects with total testosterone levels below 300 ng/dL (threshold for hypogonadism).

have initiated the LiFT Phase 2 clinical study in confirmed non-cirrhotic NASH subjects.

The LiFT clinical study is a prospective,

multi-center, randomized, double-blind, placebo-controlled multiple-arm study in biopsy-confirmed hypogonadal or eugonadal male NASH

subjects with grade F1/F3 fibrosis and a NAFLD Activity Score ≥ 4 with a 36-week treatment period.

A recent National Institute of Diabetes and Digestive Kidney Diseases report suggests that 75% of biopsy

confirmed NASH subjects have less than 372 ng/dL of total testosterone and that the degree of fibrosis severity is inversely related

to free testosterone levels;

thus, providing a good rationale for testing LPCN 1144 in adult NASH patients regardless of their hypogonadal

We have received clearance from the FDA to clinically investigate LPCN 1144 in an expanded target population of adult male NASH

Specifically, the FDA waived the limitation of only testing LPCN 1144 in NASH subjects with total testosterone levels below

300 ng/dL (threshold for hypogonadism).

have recently completed the LiFT Phase 2 clinical study in confirmed non-cirrhotic NASH subjects.

The LiFT clinical study

enrolled 56 biopsy confirmed NASH male subjects.

Subjects were randomized 1:1:1 to one of three arms (Treatment A is a twice daily oral

dose of 142 mg testosterone equivalent, Treatment B is a twice daily oral dose of 142 mg testosterone equivalent formulated with 217

was a prospective, multi-center, randomized, double-blind, placebo-controlled multiple-arm study in biopsy-confirmed hypogonadal or eugonadal

male NASH subjects with grade F1/F3 fibrosis and a NAFLD Activity Score ≥ 4 with a 36-week treatment period.

The LiFT clinical

study enrolled 56 biopsy confirmed NASH male subjects.

Subjects were randomized 1:1:1 to one of three arms (Treatment A is a twice daily

oral dose of 142 mg testosterone equivalent, Treatment B is a twice daily oral dose of 142 mg testosterone equivalent formulated with

217 mg of d-alpha tocopherol equivalent, and the third arm is twice daily matching placebo).

We currently expect 36-week biopsy data in August

primary endpoint of the LiFT clinical study is change in hepatic fat fraction via MRI-PDFF and exploratory liver fat/marker end

primary endpoint of the LiFT clinical study was change in hepatic fat fraction via MRI-PDFF and exploratory liver fat/marker end

points post 12 weeks of treatment.

Additionally, key secondary endpoints post 36 weeks of treatment include assessment of histological

Additionally, key secondary endpoints post 36 weeks of treatment included assessment of histological

change for NASH resolution and/or fibrosis improvement as well as liver fat data.

Other important endpoints include the following:

in liver injury markers, anthropomorphic measurements, lipids, insulin resistance and inflammatory/fibrosis markers;

as well as patient

reported outcomes.

The LiFT clinical study was not powered to assess

statistical significance of any of the secondary endpoints.

Other important endpoints included the following:

change in liver injury

markers, anthropomorphic measurements, lipids, insulin resistance and inflammatory/fibrosis markers;

as well as patient reported outcomes.

Additionally,

subjects will have access to LPCN 1144 through an open label extension study.

The extension study will enable the collection of additional

data on LPCN 1144 for up to a total of 72 weeks of therapy.

subjects have access to LPCN 1144 through an OLE study.

The extension study will enable the collection of additional data on LPCN 1144

for up to a total of 72 weeks of therapy.

The OLE is currently on-going and has enrolled 25 subjects.

We expect topline results from

the OLE study mid-2022.

with LPCN 1144 post 12 weeks of treatment resulted in robust liver fat reduction, assessed by MRI-PDFF, and showed improvement of liver

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results are presented in the following tables:

Mean absolute liver fat using MRI-PDFF in all subjects (n=56)* at Week 12.

Change from baseline (CBL)

Placebo-adjusted CBL

absolute liver fat using MRI-PDFF in all subjects (n=56)* at Week 12.

from baseline (CBL)

Placebo-adjusted

Placebo (n = 19)

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Not significant (p > 0.05)

Mean relative liver fat using MRI-PDFF at Week 12 in subjects (n=52) with liver fat ≥ 5% at baseline.*

Change from baseline (CBL)

Placebo-adjusted CBL

relative liver fat using MRI-PDFF at Week 12 in subjects (n=52) with liver fat ≥ 5% at baseline.*

from baseline (CBL)

Placebo-adjusted

Placebo (n = 18)

Based on available data.

Responders with > 30% Relative Reduction in Liver Fat at Week 12, Intent to Treat Dataset (n=56)*.

(% of subjects)

with > 30% Relative Reduction in Liver Fat at Week 12, Intent to Treat Dataset (n=56)*.

Placebo (n = 19)

Subjects with missing data are considered non-responders

Average changes in key serum liver injury markers ALT and AST at Week 12 (n=52)*.

Placebo-Adjusted Absolute

Placebo (n = 17)

All available data

the 12 weeks of treatment, the observed rate and severity of Treatment Emergent Adverse Events (“TEAEs”) in both the LPCN

1144 treatment arms were comparable to the placebo arm.

Three subjects in the placebo group and one subject in the combined treatment

arms discontinued study drug due to TEAEs.

We currently expect 36-week biopsy data in August 2021.

biopsies were performed at baseline (“BL”) and after 36 weeks of treatment (“EOS”).

Prespecified biopsy analyses

included NASH Clinical Research Network (“CRN”) scoring as well as a continuous paired (“Paired Technique”) and

digital technique (“Digital Technique-Fibronest”).

All biopsy analyses were performed on the same slides and the reads for

the three techniques were done independently.

Analysis sets included the NASH Resolution Set (all subjects that have BL and EOS biopsy

with NASH at BL [NAS ≥4 with lobular inflammation score ≥ 1 and hepatocyte ballooning score ≥1 at BL] (n=37)), the Biopsy Set

(all subjects with baseline and EOS biopsies (n=44)), and the Safety Set (all randomized subjects (n=56)).

LPCN 1144 treatment arms met with statistical significance the pre-specified accelerated approval regulatory endpoint of NASH resolution

with no worsening of fibrosis based on NASH CRN scoring.

Additionally, both treatment arms showed substantial improvement of the observed

NASH activity in steatosis, inflammation and ballooning.

results are presented in the following table:

Histology NASH CRN Scoring Outcomes1

NASH Resolution responders, n (%) 2

NASH Resolution with No Worsening of Fibrosis responders, n (%)

NASH Resolution Set

Improvement in NASH defined as improvement in ballooning or inflammation, and no worsening of ballooning or inflammation

p < 0.05 vs placebo

p < 0.01 vs placebo

p < 0.001 vs placebo

LPCN 1144 treatment arms showed significant improvement in NASH without worsening of fibrosis using Paired Technique, which concurred

with the NASH CRN scoring findings (per Biopsy Set;

NASH Improvement responders:

Placebo – 13%, Treatment A – 60%, Treatment

NASH Improvement with No Worsening of Fibrosis responders:

Placebo – 13%, Treatment A – 60%, Treatment B –

treatment effects on fibrosis improvement need confirmation in a larger study.

both treatment arms substantial reductions in markers of liver injury compared to placebo were observed post four weeks of treatment

and were sustained through EOS.

Using all available Safety Set data, ALT decreased up to a mean of 23.4 U/L at EOS from all group mean

baseline of 51.5 U/L and AST decreased up to a mean of 13.3 U/L at EOS from all group mean baseline of 31.9 U/L.

effects in appendicular lean mass and whole-body fat mass, an indicator overall tissue quality, based on dual-energy X-ray absorptiometry

scans were noted in both LPCN 1144 treatment arms.

the 36 weeks of treatment, LPCN 1144 was well tolerated with an overall safety profile comparable to placebo.

Frequency and severity

of treatment emergent adverse events (“TEAEs”) in both treatment arms were comparable to placebo.

Study drug related TEAEs

were mild to moderate.

Four subjects discontinued due to TEAEs in the placebo arm vs one subject in total across the treatment arms.

Cardiovascular events were balanced among groups with hematocrit increases averaging <2% in the treatment arms, no observed thromboembolic

events, and comparable blood pressure changes in both treatment arms to placebo.

were no reported cases of hepatocellular carcinoma or Drug Induced Liver Injury (“DILI”).

Weight change from baseline, GI

adverse events and prostate-specific antigens (“PSA”) changes were small and comparable among groups.

Additionally, no clinically

meaningful changes in lipids in treatment groups were noted compared to placebo, and rates of pedal edema were low and similar in all

have requested a meeting with the FDA to discuss the clinical development path forward with LPCN 1144.

We anticipate that the meeting

will occur in the first quarter of 2022.

November 2021, the FDA granted Fast Track Designation to LPCN 1144 as a treatment for non-cirrhotic NASH.

The Fast Track program is designed

to accelerate the development and expedite the review of products, such as LPCN 1144, which are intended to treat serious diseases and

for which there is an unmet medical need.

to the LiFT clinical study, we completed a 16-week POC liver imaging clinical study to assess liver fat changes in hypogonadal

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well tolerated with no drug-related severe or serious adverse events reported in the Phase 2b study.

in October 2014, we completed a Phase 2a proof -of-concept (“POC”) study in hypogonadal men.

The Phase 2a open-label, dose-escalating

single and multiple dose study enrolled 12 males.

Results from the Phase 2a clinical study demonstrated the feasibility of a once daily

dosing with TLANDO XR in hypogonadal men and a good dose response.

Additionally, the study confirmed that steady state is achieved by

day 14 with consistent inter-day performance observed on day 14, 21 and 28.

No subjects exceeded Cmax of 1500 ng/dL at any time during

the 28-day dosing period on multi-dose exposure.

Overall, TLANDO XR was well tolerated with no serious AE’s reported.

in October 2014, we completed a Phase 2a POC study in hypogonadal men.

The Phase 2a open-label, dose-escalating single and multiple dose

study enrolled 12 males.

Results from the Phase 2a clinical study demonstrated the feasibility of a once daily dosing with TLANDO XR

in hypogonadal men and a good dose response.

Additionally, the study confirmed that steady state is achieved by day 14 with consistent

inter-day performance observed on day 14, 21 and 28.

No subjects exceeded Cmax of 1500 ng/dL at any time during the 28-day dosing period

on multi-dose exposure.

Overall, TLANDO XR was well tolerated with no serious adverse events (“AE’s”) reported.

have also completed a preclinical toxicology study with TLANDO XR in dogs.

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be included as part of the Phase 3 clinical study.

We anticipate the next steps in developing TLANDO XR will be to scale up the formulation

and conduct a food effect study with TLANDO XR.

We are also exploring the possibility of licensing TLANDO XR to a third party, although

no licensing agreement has been entered into by us.

We are currently transferring the manufacturing of TLANDO XR to a third-party contract

manufacturer and scaling up the formulation.

After that is complete, we anticipate the next steps in developing TLANDO XR will be to

conduct a food effect/phlebotomy study with TLANDO XR.

Under the terms of the Antares License Agreement, Antares has been granted an

option, exercisable on or before March 31, 2022, to license TLANDO XR to develop and commercialize upon approval..

An Oral Prodrug of Bioidentical Testosterone Product Candidate for the Management of Cirrhosis

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improvement in post liver transplant survival, including outcomes and costs.

are currently planning to conduct a Phase 2 POC study (NCT04874350) in male cirrhotic subjects to evaluate the therapeutic potential

of LPCN 1148 for the management of cirrhotic subjects.

The planned Phase 2 POC study is a prospective, multi-center, randomized,

placebo-controlled study in approximately 48 to 60 male cirrhotic patients that are on the liver transplant list.

Subjects will be

randomized 1:1 to one of two arms.

The treatment arm is an oral dose of a testosterone ester and the second arm is matching placebo.

The primary endpoint is change in skeletal muscle index at week 24 with key secondary endpoints including change in liver frailty

index and number of waitlist events, including all-cause mortality.

Total treatment is expected to be 52

1148 comprises a novel prodrug of bioidentical testosterone,TL We are currently making preparations to initiate a Phase 2 POC study (NCT04874350)

in male cirrhotic subjects to evaluate the therapeutic potential of LPCN 1148 for the management of cirrhotic subjects.

The planned Phase

2 POC study is a prospective, multi-center, randomized, placebo-controlled study in approximately 48 to 60 male cirrhotic patients that

are on the liver transplant list.

Subjects will be randomized 1:1 to one of two arms.

The treatment arm is an oral dose of a testosterone

ester and the second arm is matching placebo.

The primary endpoint is change in skeletal muscle index at week 24 with key secondary endpoints

including change in liver frailty index and number of waitlist events, including all-cause mortality.

Total treatment is expected to

We currently expect the first subject will be dosed in the fourth quarter of 2021.

An Oral Neuro-Steroid Candidate for the Treatment of Postpartum Depression

is a major depressive disorder that is under diagnosed in the U.S., impacts approximately 1 in 7 women after giving birth.

can lead to devastating consequences for a woman, her newborn and her family.

Currently, there is no oral therapy approved for the treatment

a major depressive disorder that is under diagnosed in the U.S., impacts approximately 1 in 7 women after giving birth.

to devastating consequences for a woman, her newborn and her family.

Currently, there is no oral therapy approved for the treatment of

The active moiety in LPCN 1154 is an endogenous positive allosteric modulator of γ-aminobutyric acid (“GABA A ”)

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initiate a Phase 2 study to evaluate the therapeutic potential of LPCN 1154 for the treatment of PPD in adults.

We recently initiated

a pharmacokinetic (“PK”) study to assess dose proportionality with LPCN 11154 with top-line results expected in the third

quarter of 2021.

Following the PK study, we plan to conduct a proof-of-concept study to evaluate the safety, tolerability, and efficacy

of LPCN 1154 in adult female subjects diagnosed with PPD.

We expect the first subject dosed will occur in the fourth quarter of 2021.

We have completed a PK

study to assess dose proportionality with LPCN 1154 in which dose proportionality was observed.

Pending further PK analyses, we plan

to conduct a proof-of-concept study to evaluate the safety, tolerability, and efficacy of LPCN 1154 in adult female subjects diagnosed

with PPD in the future.

An Oral Product Candidate for the Prevention of Preterm Birth

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Also, unlike the injectable HPC, steady state exposure was achieved for all three LPCN 1107 doses within seven days.

also completed a proof-of-concept Phase 1b clinical study of LPCN 1107 in healthy pregnant women in January 2015 and a POC Phase 1a clinical

study of LPCN 1107 in healthy non-pregnant women in May 2014.

These studies were designed to determine the PK and bioavailability of

LPCN 1107 relative to an IM HPC, as well as safety and tolerability.

also completed a POC Phase 1b clinical study of LPCN 1107 in healthy pregnant women in January 2015 and a POC Phase 1a clinical study

of LPCN 1107 in healthy non-pregnant women in May 2014.

These studies were designed to determine the PK and bioavailability of LPCN 1107

relative to an IM HPC, as well as safety and tolerability.

traditional PK/PD based Phase 2 clinical study in the intended patient population is not expected to be required prior to entering into

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on recent developments with Covis’ Makena®.

We plan to resume our interactions with the FDA to discuss our pivotal Phase 2b/3

clinical trial design and better understand next steps to advance LPCN 1107.

Additionally, a pivotal Phase 2b/3 study will not occur

until the results from a planned food-effect study with LPCN 1107 are reviewed by the FDA, though manufacturing scale-up work for LPCN

1107 has been completed.

do not anticipate the initiation of a pivotal Phase 2b/3 study with LPCN 1107 to occur until the required food effect study is complete.

We currently intend to proceed with plans to conduct the required food effect clinical study.

We are exploring the possibility of licensing

LPCN 1107 to a third party, although no licensing agreement has been entered into by the Company.

No assurance can be given that any

license agreement will be completed, or, if an agreement is completed, that such an agreement would be on acceptable terms.

We plan to resume our interactions with the FDA to discuss our pivotal clinical

trial design and better understand next steps to advance LPCN 1107 after completion of the planned food-effect study.

do not anticipate the initiation of a pivotal study with LPCN 1107 to occur until the required food effect study is complete.

exploring the possibility of licensing LPCN 1107 to a third party, although no licensing agreement has been entered into by the Company.

No assurance can be given that any license agreement will be completed, or, if an agreement is completed, that such an agreement would

be on acceptable terms.

FDA has granted orphan drug designation to LPCN 1107 based on a major contribution to patient care.

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clinical benefit of Makena and concluded that the available evidence does not show Makena is effective for its approved use.

issued AMAG, the NDA holder at the time, a Notice of Opportunity for Hearing (“NOOH”) to withdraw approval of Makena, for

which AMAG Pharmaceuticals responded by requesting a hearing and providing detail on the company’s position, recognizing clinicians’

decade-long use of Makena’s treatment and the public health implications of withdrawing approval.

The FDA Commissioner has not

determined whether it will hold a public hearing, and if one is granted, the process is expected to take months.

During this time, Makena

and the approved generics of Makena will remain on the market until the FDA makes a final decision about these products.

issued AMAG, the NDA holder at the time, a Notice of Opportunity for Hearing to withdraw approval of Makena, for which AMAG Pharmaceuticals

responded by requesting a hearing and providing detail on the company’s position, recognizing clinicians’ decade-long use

of Makena’s treatment and the public health implications of withdrawing approval.

The FDA Commissioner has recently granted Covis

a public hearing although the date of that hearing is not publicly known.

During this time, Makena and the approved generics of Makena

will remain on the market until the FDA makes a final decision about these products.

Makena and the approved generics of Makena are the only products approved for the prevention of recurrent preterm birth.

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from our licensees.

Since our inception through June 30, 2021, we have generated $28.1 million in revenue under our various license and

collaboration arrangements and from government grants.

We may never generate revenues from TLANDO or any of our other clinical or preclinical

development programs or licensed products as we may never succeed in obtaining regulatory approval or commercializing any of these product

Since our inception through September 30, 2021, we have generated $28.1 million in revenue under our various license

and collaboration arrangements and from government grants.

We may never generate revenues from TLANDO or any of our other clinical or

preclinical development programs or licensed products as we or our licensees may never succeed in obtaining regulatory approval or commercializing

any of these product candidates.

and Development Expenses

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Research and development expenses also include an allocation of indirect costs,

such as those for facilities, office expense, travel, and depreciation of equipment based on the ratio of direct labor hours for research

and development personnel to total direct labor hours for all personnel.

such as those for facilities, office expense, and depreciation of equipment based on the ratio of direct labor hours for research and

development personnel to total direct labor hours for all personnel.

We expense research and development expenses as incurred.

our inception, we have spent approximately $123.9 million in research and development expenses through June 30, 2021.

our inception, we have spent approximately $126.3 million in research and development expenses through September 30, 2021.

December 8, 2020 we received tentative approval from the FDA regarding our NDA filed in February 2020 for TLANDO as a TRT in adult males

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granted to Clarus with respect to Jatenzo ®, which expires on March 27, 2022.

result, we are uncertain as to whether we will incur additional research and developments costs for TLANDO.

Any further expenditures,

if needed, are subject to numerous uncertainties regarding timing and cost to completion.

expect to continue to incur significant costs as we develop our other product candidates, including the ongoing LiFT Phase 2 clinical

study with LPCN 1144.

14, 2021, we entered into the Antares License Agreement with Antares, pursuant to which we granted to Antares an exclusive, royalty-bearing,

sublicensable right and license to develop and commercialize, upon final approval of TLANDO from the FDA, our TLANDO product with respect

to TRT in the U.S.

The Antares License Agreement also provides Antares with an option, exercisable on or before March 31, 2022, to license

Under the terms of the Antares License Agreement, all future research and development activities for TLANDO will be conducted

and paid for by Antares.

Any further expenditures, if needed, are subject to numerous uncertainties regarding timing and cost to completion.

expect to continue to incur significant costs as we develop our other product candidates, including the ongoing LiFT Phase 2 OLE

clinical study with LPCN 1144 and the planned Phase 2 study with LPCN 1148.

general, the cost of clinical trials may vary significantly over the life of a project as a result of uncertainties in clinical development,

including, among others:

the number of sites included in the trials;

the length of time required to enroll suitable subjects;

the duration of subject follow-ups;

the length of time required to collect, analyze and

report trial results;

the cost, timing and outcome of regulatory review;

potential changes by the FDA in clinical trial and

NDA filing requirements for testosterone replacement therapies.

have also incurred significant manufacturing costs to prepare launch supplies for TLANDO and additional expenditures will be required

to prepare for a commercial launch of TLANDO, should it be approved, if it is not out-licensed.

However, future expenditures are subject

to numerous uncertainties regarding timing and cost to completion, including, among others:

the timing and outcome of regulatory filings and FDA

reviews and actions for TLANDO;

our dependence on third-party manufacturers for the

production of satisfactory finished product for registration and launch should regulatory approval be obtained;

the potential for future license or co-promote arrangements

for TLANDO, when such arrangements will be secured, if at all, and to what degree such arrangements would affect our future plans

and capital requirements;

the effect on our product development activities of

actions taken by the FDA or other regulatory authorities.

change of outcome for any of these variables with respect to the development of TLANDO and our other product development candidates could

mean a substantial change in the costs and timing associated with these efforts, will require us to raise additional capital, and may

require us to reduce operations.

number of sites included in the trials;

length of time required to enroll suitable subjects;

duration of subject follow-ups;

length of time required to collect, analyze and report trial results;

cost, timing and outcome of regulatory review;

changes by the FDA in clinical trial and NDA filing requirements.

have also incurred significant manufacturing costs to prepare launch supplies for TLANDO.

However, any additional expenditures required

to prepare for a commercial launch of TLANDO, should it be approved, will be paid by Antares.

research and development expenditures are subject to numerous uncertainties regarding timing and cost to completion, including, among

timing and outcome of regulatory filings and FDA reviews and actions for product candidates;

dependence on third-party manufacturers for the production of satisfactory finished product for registration and launch should regulatory

approval be obtained on any of our product candidates;

potential for future license or co-promote arrangements for our product candidates, when such arrangements will be secured, if at

all, and to what degree such arrangements would affect our future plans and capital requirements;

effect on our product development activities of actions taken by the FDA or other regulatory authorities.

change of outcome for any of these variables with respect to our product development candidates could mean a substantial change in the

costs and timing associated with these efforts, will require us to raise additional capital, and may require us to reduce operations.

the stage of clinical development and the significant risks and uncertainties inherent in the clinical development, manufacturing and

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The following table summarizes our research and development expenses:

Months Ended June 30,

September 30,

External service provider

Total external service provider

Total external service

provider costs

Internal personnel costs

research and development costs

research and development

Other research and development

Total research and development

expect research and development expenses to increase in the future as we complete on-going clinical studies, including the LiFT

Phase 2 clinical study with LPCN 1144, as we conduct future clinical studies with LPCN 1148, LPCN 1154 and LPCN 1107, and as we manufacture

commercial supplies of TLANDO pre-approval if it is not out-licensed.

However, if we are unable to raise additional capital, we may need

to reduce research and development expenses in order to extend our ability to continue as a going concern.

Phase 2 OLE clinical study with LPCN 1144, and as we conduct future clinical studies with LPCN 1148, LPCN 1154 and LPCN 1107.

if we are unable to raise additional capital, we may need to reduce research and development expenses in order to extend our ability

to continue as a going concern.

and Administrative Expenses

and administrative expenses consist primarily of salaries and related benefits, including stock-based compensation related to our executive,

finance, business development, marketing, sales and support functions.

Other general and administrative expenses include rent and utilities,

travel expenses, professional fees for auditing, tax and legal services, litigation settlement and market research and market analytics.

finance, business development, and support functions.

Other general and administrative expenses include rent and utilities, travel expenses,

professional fees for auditing, tax and legal services, litigation settlement and market research and market analytics.

and administrative expenses also include expenses for the cost of preparing, filling and prosecuting patent applications and maintaining,

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costs, professional fees and other costs.

If TLANDO is approved by the FDA and it is not out-licensed, we expect we will incur significant

additional expenses relating to the commercialization of TLANDO, including, among other things, expenses relating to building out sales

and marketing teams, manufacturing expenses, expenses relating to licensing TLANDO to third parties, and other expenses.

we are unable to raise additional capital, we may need to further reduce general and administrative expenses in order to extend our ability

to continue as a going concern.

If we are unable to raise additional capital, we may be unable to effectively commercialize TLANDO if

not out-licensed after receiving FDA approval.

However, if we are unable to raise additional capital, we may need to further reduce general

and administrative expenses in order to extend our ability to continue as a going concern.

Expense (Income), Net

expense (income), net, consists primarily of interest income earned on our cash, cash equivalents and marketable investment securities,

and interest expense incurred on our outstanding Loan and Security Agreement, losses (gains) on our warrant liability and litigation

settlement accruals.

interest expense incurred on our outstanding Loan and Security Agreement, losses (gains) on our warrant liability and litigation settlement

of Operations

of the Three Months Ended June 30, 2021 and 2020

following table summarizes our results of operations for the three months ended June 30, 2021 and 2020:

Three Months Ended June 30,

of the Three Months Ended September 30, 2021 and 2020

following table summarizes our results of operations for the three months ended September 30, 2021 and 2020:

Three Months Ended September 30,

License revenue

Research and development expenses

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Interest expense

Loss (gain) on warrant liability

Litigation settlement

Gain on warrant liability

recognized license revenue of $55,000 during the three months ended September 30, 2021, compared to no license revenue recognized during

the three ended September 30, 2020.

License revenue in 2021 relates to payments received from Spriaso LLC (“Spriaso”) under

a licensing agreement in the cough and cold field.

and Development Expenses

decrease in research and development expenses during the three months ended June 30, 2021 was primarily due to a $777,000 decrease in

contract research organization expense and outside consulting costs related to the LPCN 1144 LiFT Phase 2 clinical study in NASH

subjects, a $100,000 decrease in costs associated with TLANDO and a $168,000 decrease in personnel expense which was mainly due to a

decrease in stock compensation and bonus expense.

The decreases were offset by a $95,000 increase in costs related to LPCN 1154 and a

$53,000 increase in costs for LPCN 1107, as well as net increases in other R&D expenses of $94,000.

decrease in research and development expenses during the three months ended September 30, 2021 was primarily due to a $819,000 decrease

in contract research organization expense and outside consulting costs related to the LPCN 1144 LiFT Phase 2 clinical study in

NASH subjects, a $466,000 decrease in costs associated with TLANDO, a $37,000 decrease in personnel expense, net decreases in other R&D

expenses of $68,000.

The decreases were offset by a $806,000 increase in costs related to LPCN 1154, a $384,000 increase in costs related

to LPCN 1148, and a $80,000 increase in costs for TLANDO XR.

and Administrative Expenses

decrease in general and administrative expenses during the three months ended June 30, 2021 was primarily due to a $273,000 decrease

in personnel costs, which was mainly due to a decrease in stock compensation and bonus expense, and a $239,000 decrease in legal costs

in 2021 as compared to 2020 relating to a decrease the following legal activities:

lawsuit filed against Clarus Therapeutics Inc.

patent infringement in April 2019 and the on-going class action lawsuit defense.

These decreases were offset by a $49,000 increase in

corporate insurance expenses and a $35,000 increase in other general and administrative expenses.

decrease in general and administrative expenses during the three months ended September 30, 2021 was primarily due to a $552,000 decrease

in legal costs in 2021 as compared to 2020 relating to a decrease the following legal activities:

lawsuit filed against Clarus for patent

infringement in April 2019 and the on-going class action lawsuit defense;

and a $122,000 decrease in personnel costs, which was mainly

due to a decrease in stock compensation expense.

These decreases were offset mainly by a $31,000 increase in corporate insurance expenses.

and Investment Income

increase in interest and investment income during the three months ended June 30, 2021 was due to higher cash and marketable investment

increase in interest and investment income during the three months ended September 30, 2021 was due to higher cash and marketable investment

securities balances in 2021 compared to 2020.

decrease in interest expense during the three months ended June 30, 2021 was due to a decrease in interest expense on our Loan and Security

Agreement with SVB, as a result of lower principal balances and lower interest rates in 2021 compared to 2020.

decrease in interest expense during the three months ended September 30, 2021 was due to a decrease in interest expense on our Loan and

Security Agreement with Silicon Valley Bank (“SVB”), as a result of lower principal balances in 2021 compared to 2020.

(Gain) on Warrant Liability

recorded a gain of $221,000 and a loss of $2.1 million, respectively, on warrant liability during the three months ended June 30, 2021

and 2020 related to the change in the fair value of outstanding common stock warrants issued in the November 2019 Offering.

in 2021 was attributable to a decrease in the value of warrants outstanding as of June 30, 2021 as compared to March 31, 2021 due to

a decrease in our stock price.

The loss in 2020 was mainly due to an increase in the value of warrants outstanding as of June 30, 2020

as compared to March 31, 2020 due to an increase in our stock price.

There were zero and 10,006,000 common stock warrants from the

November 2019 Offering exercised during the three months ended June 30, 2021 and 2020, respectively.

The warrants are classified as a

liability due to a provision contained within the warrant agreement which allows the warrant holder the option to elect to receive an

amount of cash equal to the value of the warrants as determined in accordance with the Black-Scholes option pricing model with certain

defined assumptions upon a change of control.

The warrant liability will continue to fluctuate in the future based on inputs to the Black-Scholes

model including our current stock price, the remaining life of the warrants, the volatility of our stock price, the risk-free interest

rate and the number of common stock warrants outstanding.

recorded an expense of $4.0 million and zero, respectively, on litigation settlement during the three months ended June 30, 2021 and

2020 related to the Global Agreement with Clarus to resolve all outstanding claims in the on-going intellectual property litigation between

the two companies as well as the on-going interference proceeding between the two companies.

Under the terms of the settlement, we agreed

to pay Clarus $4.0 million payable as follows:

$2.5 million immediately, $1.0 million on July 13, 2022 and $500,000 on July 13, 2023.

No future royalties are owing from either party.

Under the terms of the Global Agreement, Lipocine and Clarus have agreed to dismiss

the Lipocine Inc.

v Clarus Therapeutics, Inc., No 19-cv-622 (WCB) litigation in the U.S.

District Court for the District

Also, both parties have reached an agreement on the interference proceedings captioned Clarus Therapeutics, Inc.

Inc., Interference No.

106,128 in the U.S.

Patent and Trademark Office.

of the Six Months Ended June 30, 2021 and 2020

following table summarizes our results of operations for the six months ended June 30, 2021 and 2020:

Six months ended June 30,

recorded a gain of $480,000 and $140,000, respectively, on warrant liability during the three months ended September 30, 2021 and 2020

related to the change in the fair value of outstanding common stock warrants issued in the November 2019 Offering.

The gain in 2021 was

attributable to a decrease in the value of warrants outstanding as of September 30, 2021 as compared to June 30, 2021 due to a decrease

in our stock price.

The gain in 2020 was mainly due to a decrease in the value of warrants outstanding as of September 30, 2020 as compared

to June 30, 2020 primarily attributable to a decrease in the value of warrants exercised during the period, offset by an increase in

the value of warrants outstanding as of September 30, 2020 as compared to June 30, 2020 due to an increase in our stock price.

were no common stock warrants from the November 2019 Offering (as defined below) exercised during the three months ended September 30,

2021 and 2020, respectively.

The warrants are classified as a liability due to a provision contained within the warrant agreement which

allows the warrant holder the option to elect to receive an amount of cash equal to the value of the warrants as determined in accordance

with the Black-Scholes option pricing model with certain defined assumptions upon a change of control.

The warrant liability will continue

to fluctuate in the future based on inputs to the Black-Scholes model including our current stock price, the remaining life of the warrants,

the volatility of our stock price, the risk-free interest rate and the number of common stock warrants outstanding.

of the Nine Months Ended September 30, 2021 and 2020

following table summarizes our results of operations for the nine months ended September 30, 2021 and 2020:

months ended September 30,

License revenue

Research and development expenses

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Income tax expense

recognized license revenue of $55,000 during the nine months ended September 30, 2021, compared to no license revenue recognized during

the nine ended September 30, 2020.

License revenue in 2021 relates to payments received from Spriaso under a licensing agreement in the

cough and cold field.

and Development Expenses

decrease in research and development expenses during the six months ended June 30, 2021 was primarily due to a $1.7 million decrease

decrease in research and development expenses during the nine months ended September 30, 2021 was primarily due to a $2.6 million decrease

in contract research organization expense and outside consulting costs related to the LPCN 1144 LiFT Phase 2 clinical study in

NASH subjects, a $98,000 decrease in costs associated with TLANDO and a $90,000 net decrease in personnel expense which was mainly due

to a decrease in stock compensation expense offset by increases in salaries partially due to headcount increases.

These decreases were

offset by a $102,000 increase in costs related to LPCN 1154 and a $53,000 increase in costs for LPCN 1107, as well as increases in other

R&D expenses of $41,000.

NASH subjects, a $565,000 decrease in costs associated with TLANDO and a $127,000 net decrease in personnel expense which was mainly

due to a decrease in stock compensation expense offset by increases in salaries partially due to headcount increases.

These decreases

were offset by a $908,000 increase in costs related to LPCN 1154, a $384,000 increase in costs associated with LPCN 1148 and a $58,000

increase in costs for LPCN 1107, as well as increases in other R&D expenses of $48,000.

and Administrative Expenses

decrease in general and administrative expenses during the six months ended June 30, 2021 was primarily due to a $847,000 decrease in

legal costs in 2021 as compared to 2020 relating to a decrease the following legal activities:

decrease in general and administrative expenses during the nine months ended September 30, 2021 was primarily due to a $1.4 million decrease

in legal costs in 2021 as compared to 2020 relating to a decrease the following legal activities:

lawsuit filed against Clarus Therapeutics

for patent infringement in April 2019 and the on-going class action lawsuit defense, and a decrease of $288,000 in personnel costs

for patent infringement in April 2019 and the on-going class action lawsuit defense;

and, a decrease of $410,000 in personnel costs

mainly due a reduction in stock compensation expense.

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and Investment Income

decrease in interest and investment income during the six months ended June 30, 2021 was due to lower interest rates in 2021 compared

decrease in interest and investment income during the nine months ended September 30, 2021 was due to lower interest rates in 2021 compared

to 2020, despite higher cash and marketable investment securities balances.

decrease in interest expense during the six months ended June 30, 2021 was due to a decrease in interest expense on our Loan and Security

Agreement with SVB, mainly as a result of lower principal balances 2021 compared to 2020.

decrease in interest expense during the nine months ended September 30, 2021 was due to a decrease in interest expense on our Loan and

Security Agreement with SVB, mainly as a result of lower principal balances 2021 compared to 2020.

(Gain) on Warrant Liability

recorded a gain of $26,000 and a loss of $3.2 million, respectively, on warrant liability during the six months ended June

recorded a gain of $506,000 and a loss of $3.0 million, respectively, on warrant liability during the nine months ended September

30, 2021 and 2020 related to the change in the fair value of outstanding common stock warrants issued in the November 2019 Offering.

The gain in 2021 was attributable to a decrease in the value of warrants outstanding as of June 30, 2021 as compared to December 31,

2020 due to a small decrease in the number of warrants outstanding, a decrease in our volatility and the shorter term remaining on

the outstanding warrants and the loss in 2020 was mainly due to an increase in the value of warrants outstanding as of June 30, 2020

as compared to December 31, 2019 due to an increase in our stock price.

There were 10,000 and 10,127,000 common stock warrants from

the November 2019 Offering exercised during the six months ended June 30, 2021 and 2020, respectively.

The warrants are classified

as a liability due to a provision contained within the warrant agreement which allows the warrant holder the option to elect to

receive an amount of cash equal to the value of the warrants as determined in accordance with the Black-Scholes option pricing model

with certain defined assumptions upon a change of control.

The warrant liability will continue to fluctuate in the future based on

inputs to the Black-Scholes model including our current stock price, the remaining life of the warrants, the volatility of our stock

price, the risk-free interest rate and the number of common stock warrants outstanding.

recorded an expense of $4.0 million and zero, respectively, on litigation settlement during the six months ended June 30, 2021 and 2020

related to the Global Agreement with Clarus to resolve all outstanding claims in the on-going intellectual property litigation between

the two companies as well as the on-going interference proceeding between the two companies.

Under the terms of the settlement, we agreed

to pay Clarus $4.0 million payable as follows:

The gain in 2021 was attributable to a decrease in the value of warrants outstanding as of September 30, 2021 as compared to

December 31, 2020 due to a small decrease in the number of warrants outstanding, a decrease in our volatility, and a shorter term

remaining on the outstanding warrants.

The loss in 2020 was mainly due to an increase in the value of warrants outstanding as of

September 30, 2020 as compared to December 31, 2019 due to an increase in our stock price.

There were 10,000 and 10,127,000 common

stock warrants from the November 2019 Offering exercised during the nine months ended September 30, 2021 and 2020, respectively.

warrants are classified as a liability due to a provision contained within the warrant agreement which allows the warrant holder the

option to elect to receive an amount of cash equal to the value of the warrants as determined in accordance with the Black-Scholes

option pricing model with certain defined assumptions upon a change of control.

The warrant liability will continue to fluctuate in

the future based on inputs to the Black-Scholes model including our current stock price, the remaining life of the warrants, the

volatility of our stock price, the risk-free interest rate and the number of common stock warrants outstanding.

recorded an expense of $4.0 million and zero, respectively, on litigation settlement during the nine months ended September 30, 2021

and 2020 related to the Global Agreement with Clarus to resolve all outstanding claims in the on-going intellectual property litigation

between the two companies as well as the on-going interference proceeding between the two companies.

Under the terms of the settlement,

we agreed to pay Clarus $4.0 million payable as follows:

$2.5 million immediately, $1.0 million on July 13, 2022 and $500,000 on July

No future royalties are owing from either party.

Under the terms of the Global Agreement, Lipocine and Clarus have agreed to

dismiss the Lipocine Inc.

v Clarus Therapeutics, Inc., No 19-cv-622 (WCB) litigation presently pending in the U.S.

District Court for

the District of Delaware.

Also, both parties have reached an agreement on the interference proceedings captioned Clarus Therapeutics,

Lipocine Inc., Interference No.

106,128 presently pending in the U.S.

Patent and Trademark Office.

and Capital Resources

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We have incurred operating losses in most years since our inception and we

expect to continue to incur operating losses into the foreseeable future as we evaluate our options related to TLANDO should it receive

final approval and it’s not out-licensed and as we advance clinical development of LPCN 1144, TLANDO XR, LPCN 1148, LPCN 1154,

LPCN 1107 and any other product candidate, including continued research efforts.

of June 30, 2021, we had $46.6 million of unrestricted cash, cash equivalents and marketable investment securities compared to $19.7

expect to continue to incur operating losses into the foreseeable future as we advance clinical development of LPCN 1144, TLANDO XR,

LPCN 1148, LPCN 1154, LPCN 1107 and any other product candidate, including continued research efforts.

of September 30, 2021, we had $38.7 million of unrestricted cash, cash equivalents and marketable investment securities compared to $19.7

million at December 31, 2020.

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However on February 16,

2021, we amended the Loan and Security Agreement with SVB (as defined below) to, among other things, remove the cash collateral requirement.

2021, we amended the Loan and Security Agreement with SVB to, among other things, remove the cash collateral requirement.

October 14, 2021, we entered into the Antares License Agreement with Antares, pursuant to which we granted to Antares an exclusive, royalty-bearing,

sublicensable right and license to develop and commercialize, upon final approval of TLANDO from the FDA, our TLANDO product with respect

to TRT in the U.S.

The Antares License Agreement also provides Antares with an option, exercisable on or before March 31, 2022, to license

Upon execution of the Antares License Agreement, Antares paid to us an initial payment of $11.0 million.

Antares will also

make additional payments of $5.0 million to us on each of January 1, 2025 and January 1, 2026, provided that certain conditions are satisfied.

We are also eligible to receive milestone payments of up to $160.0 million in the aggregate, depending on the achievement of certain

sales milestones in a single calendar year with respect to all products licensed by Antares under the Antares License Agreement.

upon commercialization, we will receive tiered royalty payments at rates ranging from percentages in the mid-teens to up to 20% of net

sales of TLANDO in the United States, subject to certain minimum royalty obligations.

If Antares exercises its option to license TLANDO

XR, we will be entitled to an additional payment of $4.0 million, as well as development milestone payments of up to $35.0 million in

the aggregate and tiered royalty payments at rates ranging from percentages in the mid-teens to 20% of net sales of TLANDO XR in the

United States.

Our ability to realize benefits from the Antares License Agreement, including milestone and royalty payments, is subject

to a number of risks.

We may not realize milestone or royalty payments in anticipated amounts, or at all.

January 28, 2021, we completed a public offering of securities registered under an effective registration statement filed pursuant to

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more than 4.99% (or, at the election of the holder, 9.99%) of the shares of common stock then outstanding after giving effect to such

November 18, 2019, we completed the November 2019 Offering.

The gross proceeds from the November 2019 Offering were approximately $6.0

million, before deducting placement agent fees and other offering expenses of $404,000.

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 one share

of common stock and one common warrant to purchase one share of common stock, at a price of $0.50 per Class A Unit and $0.4999 per Class

The pre-funded warrants, which were exercised for common stock in December 2019, were issued in lieu of common stock in order

to ensure the purchaser did not exceed certain beneficial ownership limitations.

The pre-funded warrants were immediately exercisable

at an exercise price of $.0001 per share, subject to adjustment.

Additionally, the common stock warrants were immediately exercisable

at an exercise price of $0.50 per share, subject to adjustment, and expire on November 17, 2024.

By their terms, however, neither the

pre-funded warrants nor the common stock warrants can be exercised at any time that the pre-funded warrant holder or the common stock

warrant holder would beneficially own, after such exercise, more than 4.99% (or, at the election of the holder, 9.99%) of the shares

of common stock then outstanding after giving effect to such exercise.

January 5, 2018, we entered into the Loan and Security Agreement with SVB pursuant to which SVB agreed to lend us $10.0 million.

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insolvency, a material adverse change, and one or more judgments against us in an amount greater than $100,000 individually or in the

March 6, 2017, we entered into the Sales Agreement with Cantor pursuant to which we may issue and sell, from time to time, shares of

our common stock having an aggregate offering price of up to the amount we have registered on an effective registration statement pursuant

to which the offering is being made.

We currently have registered up to $50.0 million for sale under the Sales Agreement, pursuant to

our Registration Statement on Form S-3 (File No.

March 6, 2017, we entered into the Sales Agreement with Cantor Fitzgerald & Co.

(“Cantor”) pursuant to which we may issue

and sell, from time to time, shares of our common stock having an aggregate offering price of up to the amount we have registered on

an effective registration statement pursuant to which the offering is being made.

We currently have registered up to $50.0 million for

sale under the Sales Agreement, pursuant to our Registration Statement on Form S-3 (File No.

333-250072) (the “Form S-3”),

through Cantor as our sales agent.

Cantor may sell our common stock by

any method permitted by law deemed to be an “at the market offering” as defined in Rule 415(a)(4) of the Securities Act,

including sales made directly on or through the NASDAQ Capital Market or any other existing trade market for our common stock, in negotiated

transactions at market prices prevailing at the time of sale or at prices related to prevailing market prices, or any other method permitted

Cantor uses its commercially reasonable efforts consistent with its normal trading and sales practices and applicable law and

regulations to sell these shares.

We pay Cantor 3.0% of the aggregate gross proceeds from each sale of shares under the Sales Agreement.

We have also provided Cantor with customary indemnification rights.

shares of our common stock sold under the Sales Agreement are sold and issued pursuant to our Registration Statement on Form S-3 (File

333-250072) (the “Form S-3”), which was previously declared effective by the Securities and Exchange Commission, and

the related prospectus and one or more prospectus supplements.

Cantor may sell our common stock by any method permitted by law deemed to be an “at the market

offering” as defined in Rule 415(a)(4) of the Securities Act of 1933, as amended, including sales made directly on or through the

NASDAQ Capital Market or any other existing trade market for our common stock, in negotiated transactions at market prices prevailing

at the time of sale or at prices related to prevailing market prices, or any other method permitted by law.

Cantor uses its commercially

reasonable efforts consistent with its normal trading and sales practices and applicable law and regulations to sell these shares.

pay Cantor 3.0% of the aggregate gross proceeds from each sale of shares under the Sales Agreement.

We have also provided Cantor with

customary indemnification rights.

shares of our common stock sold under the Sales Agreement are sold and issued pursuant to our Form S-3, which was previously declared

effective by the Securities and Exchange Commission, and the related prospectus and one or more prospectus supplements.

are not obligated to make any sales of our common stock under the 2020 Sales Agreement.

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terminate the 2020 Sales Agreement at any time upon ten days’ prior notice.

the three months ended June 30, 2021, we did not sell any shares of our common stock our current Registration Statement on Form S-3 (File

As of June 30, 2021, we had $41.2 million available for sale under the Sales Agreement.

the three months ended September 30, 2021, we did not sell any shares of our common stock our current Registration Statement on Form

S-3 (File No.

As of September 30, 2021, we had $41.2 million available for sale under the Sales Agreement.

believe that our existing capital resources, together with interest thereon, will be sufficient to meet our projected operating requirements

through at least June 30, 2022 which includes an on-going clinical study for LPCN 1144, future clinical studies for LPCN 1148 and LPCN

1154, compliance with regulatory requirements, satisfaction of our obligations under the settlement agreement with Clarus, and on-going

litigation activities.

We have based this estimate on assumptions that may prove to be wrong, and we could utilize our available capital

resources sooner than we currently expect if additional activities are performed by us including pre-commercial and commercial activities

for TLANDO if not out-licensed and new clinical studies for LPCN 1144, TLANDO XR, LPCN 1148, LPCN 1154 and LPCN 1107.

While we believe

we have sufficient liquidity and capital resources to fund our projected operating requirements through at least June 30, 2022, we will

need to raise additional capital at some point through the equity or debt markets or through out-licensing activities, either before

or after June 30, 2022, to support our operations, including, if FDA approval is received, potential commercialization activities for

through at least September 30, 2022 which include planned and on-going clinical studies for LPCN 1144 and LPCN 1148, future clinical

studies for TLANDO XR, LPCN 1154 and LPCN 1107, compliance with regulatory requirements, and satisfaction of our obligations under the

settlement agreement with Clarus.

We have based this estimate on assumptions that may prove to be wrong, and we could utilize our available

capital resources sooner than we currently expect if additional activities are performed by us including new clinical studies for LPCN

1144, TLANDO XR, LPCN 1148, LPCN 1154 and LPCN 1107.

While we believe we have sufficient liquidity and capital resources to fund our

projected operating requirements through at least September 30, 2022, we will need to raise additional capital at some point through

the equity or debt markets or through additional out-licensing activities, either before or after September 30, 2022, to support our

If we are unsuccessful in raising additional capital, our ability to continue as a going concern will be limited.

operating plan may change, and we may need additional funds to meet operational needs and capital requirements for product development,

our operating plan may change, and we may need additional funds to meet operational needs and capital requirements for product development,

regulatory compliance and clinical trial activities sooner than planned.

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modify or suspend on-going clinical studies.

We can raise capital pursuant to the Sales Agreement when not restricted due to terms of

previous financings but may choose not to issue common stock if our market price is too low to justify such sales in our discretion.

There are numerous risks and uncertainties associated with the development and, subject to approval by the FDA, commercialization of

our product candidates.

There are numerous risks and uncertainties impacting our ability to enter into collaborations with third parties

to participate in the development and potential commercialization of our product candidates.

We are unable to precisely estimate the

amounts of increased capital outlays and operating expenditures associated with our anticipated or unanticipated clinical studies and

ongoing development and pre-commercialization efforts.

We can raise capital pursuant to the Sales Agreement but may choose not to issue common

stock if our market price is too low to justify such sales in our discretion.

In addition, we currently have 1,586,959 unissued and unreserved

shares available for issuance at September 30, 2021.

Without sufficient shares available for issuance, our ability to raise capital through

sales of equity, including under the Sales Agreement, is limited.

There are numerous risks and uncertainties associated with the development

and, subject to approval by the FDA, commercialization of our product candidates.

There are numerous risks and uncertainties impacting

our ability to enter into collaborations with third parties to participate in the development and potential commercialization of our

product candidates, and the potential benefits to us of such arrangements, including the Antares License Agreement.

Licensees of our

product candidates, including Antares, may not successfully commercialize our products and, as a result, we may not receive anticipated

royalty or other payments under such arrangements.

Additionally, TLANDO is not eligible for final FDA approval until March 2022 and,

therefore, we do not expect to receive any royalty or milestone payments until after such time, if any such payments will be received

We are unable to precisely estimate the amounts of increased capital outlays and operating expenditures associated with our anticipated

or unanticipated clinical studies and ongoing development efforts.

All of these factors affect our need for additional capital resources.

future operations, we will need to ultimately raise additional capital and our requirements will depend on many factors, including the

further clinical development requirements or other

requirements of the FDA related to approval of TLANDO;

the cost and timing of pre-commercialization and commercialization

activities in support of TLANDO;

the scope, rate of progress, results and cost of our

clinical studies, preclinical testing and other related activities for all of our product candidates, including LPCN 1144, TLANDO

XR, LPCN 1148, LPCN 1154 and LPCN 1107;

the cost of manufacturing clinical supplies, and establishing

commercial supplies, of our product candidates and any products that we may develop;

the cost and timing of establishing sales, marketing

and distribution capabilities, if any;

the terms and timing of any collaborative, licensing,

settlement and other arrangements that we may establish;

the number and characteristics of product candidates

that we pursue;

the cost, timing and outcomes of regulatory approvals;

the timing, receipt and amount of sales, profit sharing

or royalties, if any, from our potential products;

the cost of preparing, filing, prosecuting, defending

and enforcing any patent claims and other intellectual property rights;

the extent to which we acquire or invest in businesses,

products or technologies, although we currently have no commitments or agreements relating to any of these types of transactions;

the extent to which we grow significantly in the number

of employees or the scope of our operations.

To fund future operations, we will need to ultimately raise additional capital and our requirements will depend on many factors, including

the following:

scope, rate of progress, results and cost of our clinical studies, preclinical testing and other related activities for all of our

product candidates, including LPCN 1144, TLANDO XR, LPCN 1148, LPCN 1154 and LPCN 1107;

cost of manufacturing clinical supplies, and establishing commercial supplies, of our product candidates and any products that we

cost and timing of establishing sales, marketing and distribution capabilities, if any;

terms and timing of any collaborative, licensing, settlement and other arrangements that we may establish;

number and characteristics of product candidates that we pursue;

cost, timing and outcomes of regulatory approvals;

timing, receipt and amount of sales, profit sharing or royalties, if any, from our potential products;

cost of preparing, filing, prosecuting, defending and enforcing any patent claims and other intellectual property rights;

extent to which we acquire or invest in businesses, products or technologies, although we currently have no commitments or agreements

relating to any of these types of transactions;

extent to which we grow significantly in the number of employees or the scope of our operations.

may not be available to us on favorable terms, or at all.

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and Uses of Cash

following table provides a summary of our cash flows for the six months ended June 30, 2021 and 2020:

Six Months Ended June 30,

following table provides a summary of our cash flows for the nine months ended September 30, 2021 and 2020:

Nine Months Ended September 30,

Cash used in operating activities

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Cash From Operating Activities

the six months ended June 30, 2021 and 2020, net cash used in operating activities was $6.4 million and $7.5 million, respectively.

cash used in operating activities during the six months June 30, 2021 and 2020 was primarily attributable to cash outlays to support

the nine months ended September 30, 2021 and 2020, net cash used in operating activities was $13.4 million and $11.6 million, respectively.

cash used in operating activities during the nine months September 30, 2021 and 2020 was primarily attributable to cash outlays to support

ongoing operations, including research and development expenses and general and administrative expenses.

During 2021 and 2020, we were

performing activities related to the LPCN 1144 LiFT Phase 2 paired biopsy clinical study as well as preparing for future trials

with LPCN 1154 in 2021.

During 2020, we also were performing activities around the submission of the TLANDO NDA.

performing activities related to the LPCN 1144 LiFT Phase 2 paired biopsy clinical study.

During 2021, we were also preparing

for a future trial with LPCN 1154 and we entered into the Global Agreement with Clarus.

During 2020, we were also performing activities

around the submission of the TLANDO NDA.

Cash From Investing Activities

the six months ended June 30, 2021 and 2020, net cash used in investing activities was $35.4 million and $117,000, respectively.

cash used in investing activities during the six months ended June 30, 2021 and 2020, was primarily the result of purchasing marketable

investment securities, net, of $35.4 million and $117,000, respectively.

There were no capital expenditures for the six months ended

June 30, 2021 and 2020.

the nine months ended September 30, 2021 and 2020, net cash used in investing activities was $34.1 million and $1.5 million, respectively.

cash used in investing activities during the nine months ended September 30, 2021 and 2020, was primarily the result of purchasing marketable

investment securities, net, of $34.1 million and $1.5 million, respectively.

There were no capital expenditures for the nine months ended

September 30, 2021 and 2020.

Cash From Financing Activities

the six months ended June 30, 2021 and 2020 net cash provided by financing activities was $28.6 million and $11.7 million, respectively.

cash provided by financing activities during the six months ended June 30, 2021 was attributable to the net proceeds from the sale of

16,428,571 shares of common stock pursuant to January 2021 Offering resulting in net proceeds of $26.8 million and $3.4 million in proceeds

from the sale of 1,811,238 shares of common stock pursuant to the Sales Agreement with Cantor, offset by $1.7 million in debt principal

repayments under the SVB Loan and Security Agreement.

cash provided by financing activities during the six months ended June 30, 2020 was attributable to the net proceeds from the sale of

10,084,034 shares of common stock pursuant to February 2020 Offering resulting in net proceeds of $5.7 million, to $6.9 million in proceeds

from the exercise of warrants and to $234,000 in loan proceeds under the Payment Protection Program offset by $1.1 million in debt principal

repayments under the SVB Loan and Security Agreement.

the nine months ended September 30, 2021 and 2020 net cash provided by financing activities was $27.8 million and $16.3 million, respectively.

cash provided by financing activities during the nine months ended September 30, 2021 was attributable to the net proceeds from the sale

of 16,428,571 shares of common stock pursuant to January 2021 Offering resulting in net proceeds of $26.8 million and $3.4 million in

proceeds from the sale of 1,811,238 shares of common stock pursuant to the Sales Agreement with Cantor, offset by $2.5 million in debt

principal repayments under the SVB Loan and Security Agreement.

cash provided by financing activities during the nine months ended September 30, 2020 was attributable to the net proceeds from the sale

of 10,084,034 shares of common stock pursuant to the February 2020 Offering resulting in net proceeds of $5.7 million, to $7.7 million

in proceeds from the exercise of warrants, $3.9 million in proceeds from the sale of 2,830,000 shares of common stock pursuant to the

ATM and $234,000 in loan proceeds under the Payment Protection Program, offset by $1.1 million in debt principal repayments under the

SVB Loan and Security Agreement.

Commitments and Contingencies

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is payable monthly.

The loan matures on June 1, 2022 and we are required to make equal monthly payments of principal and interest for

the remaining term of the loan beginning on November 1, 2020 although there was a principal deferment period of six months beginning

on April 1, 2020 due to COVID-19.

The loan matures on June 1, 2022 and we were required to make equal monthly payments of principal and interest for

the remaining term of the loan beginning on January 1, 2019 although there was a principal deferment period of six months beginning on

April 1, 2020 due to COVID-19.

We will also be required to pay the Final Payment Charge at maturity.

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There have been no significant

and material changes in our critical accounting policies during the six months ended June 30, 2021, as compared to those disclosed

and material changes in our critical accounting policies during the nine months ended September 30, 2021, as compared to those disclosed

in “Management’s Discussion and Analysis of Financial Condition and Results of Operations-Critical Accounting Policies and

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not yet adopted.

Sheet Arrangements

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 2. Management’s Discussion and Analysis