What changed in this filing

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Item 1A. Risk Factors

2021-11-10 compared with 2021-08-05 · 129 added, 152 removed, 85 unchanged (77% of the section changed)

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in the Company’s Annual Report filed on Form 10-K for the year ended December 31, 2020 filed with the SEC on March 11, 2021, risk

factors discussed in Item 1A of the Form 10-Q for the quarter ended March 31, 2021 filed with the SEC on May 6, 2021 and the risk factors

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

described in the aforementioned report are not the only risks facing the Company.

Additional risks and uncertainties not currently known

to the Company or that it currently deems to be not material also may materially adversely affect the Company’s business, financial

condition and or operating results.

factors discussed in Item 1A of the Form 10-Q for the quarter ended March 31, 2021 filed with the SEC on May 6, 2021, risk factors discussed

in Item 1A of the Form 10-Q for the quarter ended June 30, 2021 filed with the SEC on August 5, 2021 and the risk factors discussed in

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

The risks described in

the aforementioned report are not the only risks facing the Company.

Additional risks and uncertainties not currently known to the Company

or that it currently deems to be not material also may materially adversely affect the Company’s business, financial condition

and or operating results.

following are the risk factors that have materially changed from our risk factors included in our Form 10-K for the year ended December

31, 2020 filed with the SEC on March 11, 2021 and from our risk factors included in our Form 10-Q for the quarter ended March 31, 2021

filed with the SEC on May 6, 2021:

31, 2020 filed with the SEC on March 11, 2021, from our risk factors included in our Form 10-Q for the quarter ended March 31, 2021 filed

with the SEC on May 6, 2021, and from our risk factors included in our Form 10-Q for the quarter ended June 30, 2021 filed with the SEC

on August 4, 2021.

Relating to Our Business and Industry

research and development programs and processes are at an early stage of development, which makes it difficult to evaluate our business

and prospects, or predict if or when we will successfully commercialize our product candidates.

operations to date have primarily been limited to conducting research and development activities under license and collaboration agreements.

Our current portfolio consists of our most advanced product candidate TLANDO as well as five additional earlier stage clinical candidates,

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

We have never marketed or commercialized a drug product.

Consequently, any

predictions about our future performance may not be as accurate as they could be if we were further along our commercialization path.

In addition, as a pre-commercial stage business, we may encounter unforeseen expenses, difficulties, complications, delays and other

unknown factors.

clinical product candidates are at an early stage of development and will require significant further investment and regulatory approvals

prior to marketing and commercialization.

As such, our product development processes for TLANDO, LPCN 1144, TLANDO XR, LPCN 1148, LPCN

1154 and LPCN 1107 are very risky and uncertain, and our product candidates may fail to advance beyond the current study.

obtain required financing, we cannot ensure successful product development or that we will obtain regulatory approval or successfully

commercialize any of our product candidates and generate product revenues.

will not be able to successfully commercialize our product candidates without establishing sales, marketing and market access capabilities

internally or through collaborators.

currently do not have a sales, marketing and market access staff.

If and when any of our product candidates are commercialized, we may

not be able to find suitable sales and marketing staff and collaborators for our product candidates.

The outside collaborators we work

with, including Antares under the Antares License Agreement with respect to TLANDO, may not be adequate or successful and any collaborators

could terminate or materially reduce the effort they direct to our products.

The development of collaborations or an internal sales force

and marketing, market access and sales capability will require significant capital, management resources and time.

The cost of establishing

such a sales force may exceed any potential product revenues and our marketing, market access and sales efforts may be unsuccessful.

If we are unable to develop an internal marketing, market access and sales capability or if we are unable to enter into a marketing and

sales arrangement with a third party on acceptable terms, we may be unable to successfully commercialize our product candidates.

will need to grow our Company, and we may encounter difficulties in managing this growth, which could disrupt our operations.

of June 30, 2021, we had 13 employees.

of September 30, 2021, we had 13 employees.

To manage our anticipated future growth, we must continue to implement and improve our managerial,

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our product candidates and compete effectively will depend, in part, on our ability to effectively manage any future growth.

may have to dedicate resources to the defense and resolution of litigation.

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

This can lead to frivolous lawsuits which take substantial

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

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

of its securities.

Biotechnology and pharmaceutical companies, including the Company, have experienced significant stock price volatility

in recent years, increasing the risk of such litigation.

As we defend the class action lawsuits or future patent infringement actions

should they be filed, or if we are required to defend additional actions brought by other shareholders, we may be required to pay substantial

litigation costs and managerial attention and financial resources may be diverted from business operations even if the outcome is in

In addition, while our insurance carrier may cover the costs of settling claims, the Company’s capital resources are

critical to its continued operations, and the payment of litigation settlements and associated legal fees diverts these capital resources

away from our operations, even if such amounts do not have a material impact on our financial statements.

November 14, 2019, the Company and certain of its officers were named as defendants in a purported shareholder class action lawsuit,

Solomon Abady v.

Lipocine Inc.

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

The complaint

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

the FDA contained deficiencies and as a result the defendants’ statements about our business and operations were false and misleading

and/or lacked a reasonable basis in violation of federal securities laws.

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

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

amount, and unspecified equitable or injunctive relief.

We have insurance that covers claims of this nature.

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

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

and directors and the Company.

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

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

and 6,923,988.

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

We answered Clarus’s counterclaims

on April 29, 2019.

On February 11, 2020, we voluntarily dismissed allegations of patent infringement for expired U.S.

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

The Court held a scheduling conference on August

15, 2019, a claim construction hearing on February 11, 2020 and a summary judgment hearing on January 15, 2021.

In May 2021, the Court

granted Clarus’ motion for Summary Judgment, finding the asserted claims of Lipocine’s U.S.

patents 9,034,858;

and 9,757,390 invalid for failure to satisfy the written description requirement of 35 U.S.C.

Clarus still had

remaining claims before the Court.

On July 13, 2021, we entered into a Global Agreement with Clarus which resolved all outstanding claims

of this litigation.

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.

The payment of this and other settlement payments diverts capital resources

away from our operations, which may adversely affect our business.

Related to Our Dependence on Third Parties

may enter into collaborations with third parties for the development and commercialization of our drug candidates.

If those collaborations,

including, without limitation, our license arrangement with Antares for the development and commercialization of TLANDO, are not successful,

we may not be able to capitalize on the market potential of these drug candidates and may have to alter our development and commercialization

plans for our products.

drug development programs for our product candidates will require substantial additional cash to fund expenses.

We have not yet established

any collaborative arrangements relating to the development or commercialization of LPCN 1144, TLANDO XR, LPCN 1148, LPCN 1154, or LPCN

We have entered into the Antares License Agreement for TLANDO with respect to TRT in the U.S.

We intend to continue to develop

our product candidates in the United States without a partner although our ability to advance these product candidates will depend on

our capital resources.

However, in order to commercialize our product candidates in the United States, we have partnered with Antares

with respect to TLANDO and we will likely look to establish a partnership or co-promotion arrangement with an established pharmaceutical

company that has a sales force, collaborate on the establishment of an internal sales force or build an internal sales force on our own

with respect to other product candidates.

We may also seek to enter into collaborative arrangements to develop and commercialize our

product candidates outside the United States.

We will face significant competition in seeking appropriate collaborators and these collaborations

are complex and time-consuming to negotiate and document.

We may not be able to negotiate collaborations on acceptable terms or in a

timely manner, or at all.

If that were to occur, we may have to curtail the development or delay commercialization of our product candidates

in certain geographies, reduce the scope of our sales or marketing activities, reduce the scope of our commercialization plans, or increase

our expenditures and undertake development or commercialization activities at our own expense.

If we elect to increase our expenditures

to fund development or commercialization activities either inside or outside of the United States on our own, we may need to obtain additional

capital, which may not be available to us on acceptable terms, or at all.

the extent we have, and if we do enter into any further such arrangements with any third parties, we will likely have limited control

over the amount and timing of resources that our collaborators dedicate to the development or commercialization of our drug candidates.

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.

Consequently, our ability to generate any revenues from TLANDO with respect to TRT in the U.S.

depends on our ability to maintain our collaborations with Antares, as well as the efforts of Antares to commercialize TLANDO, once final

FDA approval is obtained.

We have limited control over the amount and timing of resources that Antares will dedicate to these efforts.

ability to generate revenues from this and other collaborative arrangements will depend on our collaborators’ abilities and efforts

to successfully perform the functions assigned to them in these arrangements.

Collaborations involving our drug candidates, such as our

collaborations with Antares, pose numerous risks to us, including the following:

collaborators

have significant discretion in determining the efforts and resources that they will apply to these collaborations and may not perform

their obligations as expected;

collaborators

may de-emphasize or not pursue development and commercialization of our drug candidates or may elect not to continue or renew development

or commercialization programs based on clinical trial results, changes in the collaborators’ strategic focus, including as

a result of a sale or disposition of a business unit or development function, or available funding or external factors such as an

acquisition that diverts resources or creates competing priorities;

collaborators

may delay clinical trials, provide insufficient funding for a clinical trial program, stop a clinical trial or abandon a drug candidate,

repeat or conduct new clinical trials or require a new formulation of a drug candidate for clinical testing;

collaborators

could independently develop, or develop with third parties, products that compete directly or indirectly with our products or drug

candidates if the collaborators believe that competitive products are more likely to be successfully developed or can be commercialized

under terms that are more economically attractive than ours;

collaborator with marketing and distribution rights to multiple products may not commit sufficient resources to the marketing and

distribution of our product relative to other products;

collaborators

may not properly obtain, maintain, defend or enforce our intellectual property rights or may use our proprietary information and

intellectual property in such a way as to invite litigation or other intellectual property related proceedings that could jeopardize

or invalidate our proprietary information and intellectual property or expose us to potential litigation or other intellectual property

related proceedings;

may arise between the collaborators and us that result in the delay or termination of the research, development or commercialization

of our products or drug candidates or that result in costly litigation or arbitration that diverts management attention and resources;

collaborations

may be terminated and, if terminated, may result in a need for additional capital to pursue further development or commercialization

of the applicable drug candidates;

collaboration

agreements may not lead to development or commercialization of drug candidates in the most efficient manner or at all;

a collaborator of ours were to be involved in a business combination, the continued pursuit and emphasis on our product development

or commercialization program could be delayed, diminished or terminated.

our license arrangements with Antares, or any future license or collaboration we may enter into, if any, is not successful, our business,

financial condition, results of operations, prospects and development and commercialization efforts may be adversely affected.

Any termination

or expiration of the Antares License Agreement, or any future license or collaboration we may enter into, if any, could adversely affect

us financially or harm our business reputation, development and commercialization efforts.

Related to Ownership of Our Common Stock

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

At June 30, 2021, the aggregate fair value

of the warrant liability included in the Company’s consolidated balance sheet was $1.1 million.

At September 30, 2021, the aggregate fair

value of the warrant liability included in the Company’s consolidated balance sheet was $645,000.

We use the Black-Scholes option

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management and directors will be able to exert influence over our affairs.

of June 30, 2021, our executive officers and directors beneficially owned approximately 4.9% of our common stock.

of September 30, 2021, our executive officers and directors beneficially owned approximately 5.0% of our common stock.

These stockholders,

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price of our common stock may adversely affect investors’ ability to purchase or sell shares of our common stock.

Relating to Our Intellectual Property

may incur substantial costs as a result of litigation or other proceedings relating to patent and other intellectual property rights,

and we may be unable to protect our rights to our products and technology.

we or our collaborators choose to go to court to stop a third party from using the inventions claimed in our owned or licensed patents,

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

These lawsuits

are expensive and would consume time and other resources, including financial resources, even if we were successful in stopping the infringement

of these patents.

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

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

is also the risk that, even if the validity of these patents is not challenged or is upheld, the court will refuse to stop the third

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

In addition, the U.S.

Supreme Court has changed some standards relating to the granting of patents and assessing the validity of patents.

As a consequence,

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

Some of our owned or licensed patents

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

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

our in-licensed patents and applications are not currently used in our product candidates, should we develop other product candidates

that are covered by this intellectual property, we will rely on our licensor to file and prosecute patent applications and maintain patents

and otherwise protect the intellectual property we license from them.

Our licensor has retained the first right, but not the obligation

to initiate an infringement proceeding against a third-party infringer of the intellectual property licensed to us, and enforcement of

our in-licensed patents or defense of any claims asserting the invalidity or unenforceability of these patents would also be subject

to the control or cooperation of our licensor.

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

had we conducted the defense ourselves.

also license our patent portfolio, including U.S.

and foreign patents and patent applications that cover our TLANDO and our other product

candidates, to third parties for their respective products and product candidates.

Under our agreements with our licensees, we have the

right, but not the obligation, to enforce our current and future licensed patents against infringers of our licensees.

In certain cases,

our licensees may have primary enforcement rights and we have the obligation to cooperate.

In the event of an enforcement action against

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

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

no patent protection for TLANDO and our other product candidates.

may be subject to a third-party pre-issuance submission of prior art to the PTO, or become involved in opposition, derivation, reexamination,

inter partes review, post-grant review or interference proceedings challenging our owned or licensed patent rights or the patent rights

An adverse determination in any such submission, proceeding or litigation could reduce the scope of, or invalidate, our owned

or licensed patent rights, allow third parties to commercialize our technology or products and compete directly with us, without payment

to us, or result in our inability to manufacture or commercialize products without infringing third party patent rights.

if the breadth or strength of protection provided by our patents and patent applications is threatened, it could dissuade companies from

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

we are required to defend patent infringement actions brought by other third parties, or if we sue to protect our own patent rights or

otherwise to protect our proprietary information and to prevent its disclosure, we may be required to pay substantial litigation costs

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

Relating to Our Financial Position and Capital Requirements

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incurred losses in most years since our inception.

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

Substantially all of our operating losses resulted from costs incurred in connection with our research and development programs and

from general and administrative costs associated with our operations.

These losses, combined with expected future losses, have had

and will continue to have an adverse effect on our stockholders’ equity and working capital.

We expect our research and

development expenses to significantly increase in connection with clinical trials associated with LPCN 1144, TLANDO XR, LPCN 1148,

LPCN 1154 and LPCN 1107, if initiated.

In addition, if we eventually obtain final marketing approval for TLANDO and its not

out-licensed, we may incur significant sales, marketing and commercialization expenses.

As a result, we expect to continue to incur

significant operating losses for the foreseeable future as we evaluate our options with TLANDO and further clinical development of

LPCN 1144, TLANDO XR, LPCN 1148, LPCN 1154, LPCN 1107 and our other programs and continued research efforts.

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

Substantially

all of our operating losses resulted from costs incurred in connection with our research and development programs and from general and

administrative costs associated with our operations.

These losses, combined with expected future losses, have had and will continue to

have an adverse effect on our stockholders’ equity and working capital.

We expect our research and development expenses to significantly

increase in connection with clinical trials associated with LPCN 1144, TLANDO XR, LPCN 1148, LPCN 1154and LPCN 1107, if initiated.

a result, we expect to continue to incur significant operating losses for the foreseeable future as we evaluate further clinical development

of LPCN 1144, TLANDO XR, LPCN 1148, LPCN 1154, LPCN 1107 and our other programs and continued research efforts.

Because of the numerous

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we have 100,000,000 authorized shares of common stock.

As of June 30, 2021, we had 88,290,650 shares of common stock outstanding.

taking into account the 3,915,790 shares reserved for issuance upon the exercise of outstanding options and 1,934,366 reserved for issuance

upon the exercise of outstanding warrants, as of June 30, 2021, we have a limited number of shares available for issuance.

not able to increase the number of shares of common stock available for issuance, including, for example, through an amendment to our

certificate of incorporation or a reverse stock split, we will have limited shares available for issuance to raise capital to fund our

operations, make grants of stock-based incentive awards, or take such other actions requiring available capital stock needed to operate

our business.

As of September 30, 2021, we had 88,290,650 shares of common stock outstanding.

After taking into account the 3,915,790 shares reserved for issuance upon the exercise of outstanding options and 1,934,366 reserved

for issuance upon the exercise of outstanding warrants, as of September 30, 2021, we have a limited number of shares available for issuance.

If we are not able to increase the number of shares of common stock available for issuance, including, for example, through an amendment

to our certificate of incorporation or a reverse stock split, we will have limited shares available for issuance to raise capital to

fund our operations, make grants of stock-based incentive awards, or take such other actions requiring available capital stock needed

to operate our business.

Further delays in securing, or the failure to secure, shareholder approval of such actions, if needed, may prevent

us from executing a capital raising transaction, which may have a material adverse effect on our business and financial condition.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

DEFAULTS UPON SENIOR SECURITIES

MINE SAFETY DISCLOSURES

SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

UPON SENIOR SECURITIES

SAFETY DISCLOSURES

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

What changed 10-Q

Item 1A. Risk Factors