What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2023-08-10 compared with 2023-05-11 · 337 added, 253 removed, 670 unchanged (47% of the section changed)

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

MANAGEMENT’S 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

1 unchanged sentence

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 10, 2023 as well as the financial statements and related notes contained

and analysis included in our Form 10-K, filed with the SEC on March 10, 2023, our first quarter Form 10-Q filed with the SEC on May 11,2023,

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

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

15 unchanged sentences

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 I, Item 1A (Risk Factors) of our Form 10-K filed with the SEC on 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 March

31, 2023 filed with the SEC on May 11, 2023, or in Part I, Item 1A (Risk Factors) of our Form 10-K filed with the SEC on March 10, 2023.

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

13 unchanged sentences

Any FDA required post-marketing studies will also be the responsibility of our Licensee.

On March 28, 2022, Antares received approval from the FDA for TLANDO as a TRT in adult males for conditions associated with

a deficiency of endogenous testosterone, also known as hypogonadism.

On May 24, 2022, Halozyme Therapeutics completed an acquisition

of Antares Pharma Inc.

through a merger of a wholly owned subsidiary of Halozyme with and into Antares, with Antares continuing as the

surviving corporation and becoming a wholly owned subsidiary of Halozyme.

On June 7, 2022, Halozyme announced the commercial launch of

TLANDO, an oral treatment indicated for testosterone replacement therapy in adult males for conditions associated with a deficiency or

absence of endogenous testosterone (primary or hypogonadotropic hypogonadism).

On March 28, 2022, Antares received approval from the FDA for TLANDO as a TRT in adult males for conditions associated with a deficiency

of endogenous testosterone, also known as hypogonadism.

On May 24, 2022, Halozyme Therapeutics completed an acquisition of Antares Pharma

through a merger of a wholly owned subsidiary of Halozyme with and into Antares, with Antares continuing as the surviving corporation

and becoming a wholly owned subsidiary of Halozyme.

On June 7, 2022, Halozyme announced the commercial launch of TLANDO, an oral treatment

indicated for testosterone replacement therapy in adult males for conditions associated with a deficiency or absence of endogenous testosterone

(primary or hypogonadotropic hypogonadism).

clinical development pipeline candidates include:

29 unchanged sentences

We continuously strive to prioritize our resources in seeking

partnerships of our pipeline assets.

partnerships for our pipeline assets.

We are currently exploring partnering (i) LPCN 1144, our candidate for treatment of non-cirrhotic

4 unchanged sentences

Development Pipeline Product Candidates

pipeline of clinical development candidates includes LPCN 1154 for PPD, LPCN 2101 for epilepsy,

and LPCN 1148, an androgen therapy for the management of cirrhosis.

We will continue to explore other product development candidates

targeting CNS indications with a significant unmet need.

We will also continue efforts to enter into partnership arrangements for the

continued development and/or marketing of LPCN 1144, LPCN 1148, LPCN 1111, LPCN 1107 and TLANDO outside of the United States.

pipeline of clinical development candidates includes LPCN 1154 for PPD, LPCN 2101 for epilepsy, and LPCN 1148, an androgen therapy for

the management of cirrhosis.

We will continue to explore other product development candidates targeting CNS indications with a significant

We will also continue efforts to enter into partnership arrangements for the continued development and/or marketing of LPCN

1144, LPCN 1148, LPCN 1111, LPCN 1107 and TLANDO outside of the United States.

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

25 unchanged sentences

to an approved IV infusion brexanolone via a 505(b)(2) NDA filing.

Based on feedback from the FDA, the company has initiated a pilot

PK bridge study of LPCN 1154, a prelude to a pivotal study required for NDA filing, and results from the pilot PK bridge study are expected

in the second quarter of 2023.

Based on feedback from the FDA, the company conducted a pilot

PK bridge study of LPCN 1154, a prelude to a pivotal study required for NDA filing, and positive topline results from the pilot PK bridge

study were released in May of 2023.

Results from the pilot PK study will enable identification of the dosing regimen to be used in a

single confirmatory pivotal PK study to establish efficacy for PPD and support NDA submission.

We expect to dose the first patient in

the pivotal PK study in the fourth quarter of 2023.

We have previously completed an oral PK study and a food effect study with LPCN 1154.

14 unchanged sentences

It has been hypothesized that the rapid perinatal decrease in circulating levels of endogenous NASs may be involved in the development

The first and only approved treatment option for PPD is an injectable containing endogenous NAS.

The first approved treatment option for PPD is an injectable containing endogenous NAS.

may persist long after child delivery.

10 unchanged sentences

Selective Serotonin

Reuptake Inhibitors (“SSRIs”) have been the traditional first-line choice for women with severe PPD requiring weeks for onset

therefore, a need for an oral treatment option with a faster onset of action remains a significant unmet need in treating

PPD, especially in women with epilepsy risk wherein psychiatric comorbidity is common and PPD rates are higher than the general population.

Reuptake Inhibitors (“SSRIs”) have been the traditional first-line therapy choice for women with severe PPD and require weeks

for onset of efficacy;

therefore, a need for an oral treatment option with a faster onset of action remains a significant unmet need

in treating PPD, especially in women with epilepsy risk wherein psychiatric comorbidity is common and PPD rates are higher than the general

brexanolone (Zulresso™, Sage Therapeutics) became the first FDA-approved treatment for postpartum depression.

11 unchanged sentences

sites need significant time to become treatment ready.

believe LPCN 1154 targets the unmet need for a convenient oral treatment candidate with faster onset of action or rapid relief.

Additionally, on August 4, 2023, Sage Therapeutics, Inc.

and Biogen Inc.

announced FDA approval of Zurzuvae™

(zuranolone), an oral treatment for women with postpartum depression and stated that Zurzuvae is expected to launch and be commercially

available in the fourth quarter of 2023 following scheduling as a controlled substance by the U.S.

Drug Enforcement Administration, which

they expect within 90 days of FDA approval.

believe LPCN 1154 targets the current unmet need for a convenient oral treatment candidate with faster onset of action and rapid

NAS for Epilepsy

10 unchanged sentences

are more likely to be comorbid with other conditions, including depression and anxiety.

Patients with epilepsy have increased risk of

mortality due to direct effects of seizures (e.g., status epilepticus, car accidents) and indirect effects of seizures (e.g., suicide,

cardiovascular effects.)

with epilepsy have increased risk of mortality due to direct effects of seizures (e.g., status epilepticus, car accidents) and indirect

effects of seizures (e.g., suicide, cardiovascular effects.)

is a disorder of the brain that causes seizures, affecting the physical, mental, and social well-being of persons, and is associated

3 unchanged sentences

is the most common neurological disorder during pregnancy.

is estimated that approximately 900,000 child-bearing (“CB”) age women suffer from active epilepsy in the U.S.

is estimated that approximately 900,000 childbearing (“CB”) age women suffer from active epilepsy in the U.S.

age with epilepsy face many additional challenges due to hormonal influences on seizure activity and endocrine function throughout the

76 unchanged sentences

(“HE”), and improvement in post liver transplant survival, including outcomes and costs.

are currently conducting a Phase 2 proof of concept (“POC”) study (NCT04874350) in male subjects with cirrhosis to evaluate

the therapeutic potential of LPCN 1148 for the management of sarcopenia.

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

randomized, placebo-controlled study in male sarcopenic patients with cirrhosis.

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

are currently conducting a Phase 2 proof of concept (“POC”) study (NCT04874350) in male subjects with cirrhosis to

evaluate the therapeutic potential of LPCN 1148 for the management of sarcopenia.

The ongoing Phase 2 POC study is a prospective,

multi-center, randomized, placebo-controlled study in male sarcopenic patients with cirrhosis.

Subjects were initially randomized

1:1 to one of two arms.

The treatment arm is an oral dose of LPCN 1148, and the second arm is a matching placebo.

The primary endpoint is change in skeletal

muscle index at week 24 with key secondary endpoints including change in liver frailty index, rates of breakthrough HE, and number of

waitlist events, including all-cause mortality.

Total treatment is expected to be 52 weeks.

Enrollment in the Phase 2 study was completed

in the fourth quarter of 2022 and top-line 24-week results are expected in mid-2023.

outcomes of interest from the Phase 2 study include clinical outcomes such as overall survival and new decompensation events (including

HE and/or ascites occurrences), rates of survival to transplant, rates of hospitalizations, infections, etc., muscle changes such as

muscle mass, body composition, myosteatosis (muscle fat), functional capacity changes such as liver frailty index (“LFI”),

patient reported outcomes (“PROs”), and biochemical markers including hematocrit for anemia status, albumin, creatinine/kidney

function, etc.

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

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

The 24-week placebo-controlled treatment period of

the study is followed by a 28-week open-label extension (OLE) study where all subjects receive LPCN 1148 for the duration of the

study through week 52.

July 2023 we announced that the Phase 2 study met the study primary endpoint, increased skeletal muscle index (L3-SMI) relative to

placebo (P<.01), in patients with cirrhosis.

The study also demonstrated improvements in clinical outcomes such as prevention of

new decompensation events including HE, rates of hospitalizations, and patient reported outcomes (“PROs”).

LPCN 1148 was well-tolerated, with adverse event (AE) rates and severities similar to placebo and no mortality was

noted in the LPCN 1148 treatment group, nor were there any cases of drug-induced liver injury.

Overview – Cirrhosis

9 unchanged sentences

cirrhosis is defined as the histological development of regenerative nodules surrounded by fibrous bands.

Cirrhotic patients typically

have a years-long silent, asymptomatic phase (compensated cirrhosis) until decreasing liver function and increasing portal pressure move

the patient into the symptomatic phase (decompensated cirrhosis).

Transition to decompensated cirrhosis is marked by clinical events

including ascites, encephalopathy, jaundice, and/or variceal hemorrhage.

Decompensated subjects survive on average less than 2 years.

Common causes of liver cirrhosis include alcoholic liver disease, nonalcoholic fatty liver disease (“NAFLD”), chronic hepatitis

B and C, primary biliary cirrhosis (“PBC”), and primary sclerosing cholangitis (“PSC”) and some patients have

liver disease of unknown cause (cryptogenic).

complications in cirrhotic patients may include:

compromised liver function, portal hypertension, varices in GI tract with internal bleeding,

edema, ascites, hepatic encephalopathy, compromised immunity with post-transplant acute rejection risk, high sodium levels, increased

bilirubin, low albumin level, insulin resistance with impaired peripheral uptake of glucose, depression, accelerated muscle disorder

in the form of sarcopenia, myosteatosis, and frailty with compromised energetics, bone diseases (e.g., osteoporosis), high alkaline phosphatase

(“ALP”), cachexia, malnutrition, weight loss (>5%), symptoms of hypogonadism such as abnormal hair distribution, anemia,

sexual dysfunction, testicular atrophy, muscle wasting, fatigue, osteoporosis, gynecomastia, inflammation with elevated cytokines, and

infection risk leading to hospital admissions and possibly death.

Patients with

cirrhosis typically have a years-long silent, asymptomatic phase (compensated cirrhosis) until decreasing liver function and

increasing portal pressure move the patient into the symptomatic phase (decompensated cirrhosis).

Transition to decompensated

cirrhosis is marked by clinical events including ascites, encephalopathy, jaundice, and/or variceal hemorrhage.

Decompensated

subjects survive on average less than 2 years.

Common causes of liver cirrhosis include alcoholic liver disease, nonalcoholic fatty

liver disease (“NAFLD”), chronic hepatitis B and C, primary biliary cirrhosis (“PBC”), and primary

sclerosing cholangitis (“PSC”) and some patients have liver disease of unknown cause (cryptogenic).

complications in patients with cirrhosis may include:

compromised liver function, portal hypertension, varices in GI tract

with internal bleeding, edema, ascites, hepatic encephalopathy, compromised immunity with post-transplant acute rejection risk, high

sodium levels, increased bilirubin, low albumin level, insulin resistance with impaired peripheral uptake of glucose, depression,

accelerated muscle disorder in the form of sarcopenia, myosteatosis, and frailty with compromised energetics, bone diseases (e.g.,

osteoporosis), high alkaline phosphatase (“ALP”), cachexia, malnutrition, weight loss (>5%), symptoms of hypogonadism

such as abnormal hair distribution, anemia, sexual dysfunction, testicular atrophy, muscle wasting, fatigue, osteoporosis,

gynecomastia, inflammation with elevated cytokines, and infection risk leading to hospital admissions and possibly death.

a significant decompensation event in patients with cirrhosis, is a brain dysfunction caused by liver insufficiency and/or portal systemic

36 unchanged sentences

TLANDO was commercially launched on June 7, 2022.

the year ended December 31, 2022, we incurred royalty expense of approximately $12,000 resulting from the commercial launch of TLANDO

in 2022 and during the three months ended March 31, 2023, we incurred royalty expense of $4,000.

the three and six months ended June 30, 2023, we incurred royalty expense of approximately $9,000 and $13,000, respectively.

of the three and six months ended June 30, 2022 we incurred royalty expense of approximately $17,000.

the Pediatric Research Equity Act (“PREA”), since TLANDO received full FDA approval under the Antares Licensing Agreement,

52 unchanged sentences

necro-inflammatory state that can lead to scarring, also known as fibrosis, and, for some, can progress to cirrhosis and liver failure.

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

The LiFT clinical

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

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

The LiFT clinical study enrolled 56 biopsy confirmed NASH male subjects.

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

The LiFT clinical study

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

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

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).

A was a twice daily oral dose of 142 mg testosterone equivalent, Treatment B was a twice daily oral dose of 142 mg testosterone equivalent

formulated with 217 mg of d-alpha tocopherol equivalent, and the third arm was a twice daily matching placebo).

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

29 unchanged sentences

Key results from the OLE study are as follows:

LPCN 1144 was well tolerated

over 72-week exposure with no observed safety signals;

Liver injury markers were

reduced and maintained with extended LPCN 1144 treatment;

Observed liver histology

improvements support further development.

LPCN 1144 was well tolerated over 72-week exposure

with no observed safety signals;

Liver injury markers were reduced and maintained with

extended LPCN 1144 treatment;

Observed liver histology improvements support further

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

17 unchanged sentences

A Next-Generation Long-Acting Oral Product Candidate for TRT

are in the process of scaling up the manufacturing process and generation of supplies of LPCN 1111 to enable potential partners to conduct

pivotal studies for registration.

We are exploring the possibility of partnering LPCN 1111 to a third party, although no partnering 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 terms favorable to us.

have commenced the process of scaling up the manufacturing process and generation of supplies of LPCN 1111 to enable potential

partners to conduct pivotal studies for registration.

We are exploring the possibility of partnering LPCN 1111 with a third party,

although no partnering 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 terms favorable to us.

1111 is a next-generation, novel ester prodrug of testosterone comprised of testosterone tridecanoate (“TT”) which uses our

100 unchanged sentences

fees, royalty and milestone payments and research support from our licensees.

Since our inception through March 31, 2023, we have generated

Since our inception through June 30, 2023, we have generated

$44.8 million in revenue under our various license and collaboration arrangements and from government grants.

4 unchanged sentences

the terms of our license agreement, based on net sales of TLANDO in 2022.

We estimate that, in the second quarter of 2023, we will not

receive a payment for royalties based on estimated first quarter 2023 net sales of TLANDO.

We may never generate revenues from any of

our clinical or pre-clinical development programs other than TLANDO, as we may never succeed in obtaining regulatory approval or commercializing

We anticipate that we will receive a payment of $772,000 in

the third quarter of 2023 in accordance with the terms of the license agreement.

We may never generate revenues from any of our clinical

or pre-clinical development programs other than TLANDO, and we may never succeed in obtaining regulatory approval or commercializing

any of these product candidates.

8 unchanged sentences

We expense research and development expenses as incurred.

our inception, we have spent approximately $140.2 million in research and development expenses through March 31, 2023.

our inception, we have spent approximately $142.7 million in research and development expenses through June 30, 2023.

expect to continue to incur significant costs as we develop our other product candidates, including our CNS product candidates and the

2 unchanged sentences

including, among others:

the number of sites included

in the trials;

the length of time required

to enroll suitable subjects;

the duration of subject

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.

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.

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

the timing and outcome

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

our 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;

the 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;

the effect on our product

development activities of actions taken by the FDA or other regulatory authorities.

the timing and outcome of regulatory filings and FDA

reviews and actions for product candidates;

our 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

the 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;

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 our product development candidates could mean a substantial

32 unchanged sentences

services and enhanced business and accounting systems, litigation costs, professional fees and other costs.

if we are unable

However, if we are unable

to raise additional capital, we may need to reduce general and administrative expenses in order to extend our ability to continue as

5 unchanged sentences

of Operations

of the Three Months Ended March 31, 2023 and 2022

following table summarizes our results of operations for the three months ended March 31, 2023 and 2022:

Three Months Ended March 31,

of the Three Months Ended June 30, 2023 and 2022

following table summarizes our results of operations for the three months ended June 30, 2023 and 2022:

Three Months Ended June 30,

Research and development expenses

2 unchanged sentences

Interest expense

(Gain) loss on warrant liability

Gain on litigation settlement

Gain on warrant liability

did not recognize any revenue during the three months ended June 30, 2023.

During the three months ended June 30, 2022, we recognized

revenue related to a non-refundable cash fee of $500,000 received from Antares for consideration of a 90-day extension for Antares to

exercise its option to license LPCN 1111.

and Development Expenses

decrease in research and development expenses during the three months ended June 30, 2023, as compared to the three months ended

June 30, 2022 consists of a $229,000 decrease in costs related to our LPCN 1154 clinical studies, a $222,000 decrease in lab

supplies, small equipment and other research and development costs, a $146,000 decrease in contract research organization expense

and outside consulting costs related to the completion of our LPCN 1144 LiFT study in 2022,

an $82,000 decrease related to our completed PK and food effect studies for LPCN 1107, and a $32,000 decrease in LPCN 1111 scale up

These decreases were offset by a $113,000 increase in contract research organization expense related to the Phase 2 POC study

in male subjects with cirrhosis with LPCN 1148, a $109,000 increase in personnel related costs and a $106,000 increase in TLANDO

related costs.

and Administrative Expenses

increase in general and administrative expenses during the three months ended June 30, 2023 as compared to the three months ended

June 30, 2022 was primarily due to a $120,000 increase in professional and legal fees related to our reverse stock split and other

general and administrative expenses, a $91,000 increase in estimated franchise taxes resulting from our reverse stock split, an

$82,000 increase in business development fees, a $58,000 increase in personnel salaries and benefits, a $42,000 increase in market

research activities, and a $36,000 increase in director fees.

These increases were offset by an $82,000 decrease from professional

fees incurred in our recruitment of two additional directors in 2022 and a $36,000 decrease in corporate insurance

and Investment Income

increase in interest and investment income during the three months ended June 30, 2023 compared to interest and investment income during

the three months ended June 30, 2022 was due to higher interest rates despite declining cash and marketable investment securities balances,

in addition to imputed interest on the Antares License Agreement asset in 2023.

Loan and Security Agreement with SVB was paid in full in June of 2022, thus the Company did not recognize any interest expense during

the three months ended June 30, 2023.

Interest expense for the three months ended June 30, 2022, was entirely related to that Loan Agreement.

(Loss) on Warrant Liability

We recorded a gain of approximately $27,000 and $583,000 on warrant liability

during the three months ended June 30, 2023, and 2022, respectively, related to the change in the fair value of outstanding common stock

warrants issued in the November 2019 Offering.

The gain in 2023 was mainly attributable to a decrease in the value of warrants outstanding

as of June 30, 2023 as compared to March 31, 2023, primarily due the decrease in our stock price at the end of the second quarter of 2023

as compared to the stock price at the end of the first quarter of 2023 in addition to higher interest rates, and the gain in 2022 was

mainly attributable to the decrease in the value of the warrants outstanding as of June 30, 2022 compared to March 31, 2022 due to the

lower stock price at the end of the second quarter of 2022 as compared to the stock price at the end of the first quarter of 2022.

common stock warrants from the November 2019 Offering were exercised during either the three months ended June 30, 2023 or the three months

ended June 30, 2022.

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.

the three months ended June 30, 2022, we recorded a gain on the settlement of litigation liability of $250,000 as a result of the April

2022 Amendment to the Global Agreement with Clarus (the “Amended Settlement Agreement”).

Under the terms of the original

Global Agreement, we had agreed to pay Clarus $4.0 million payable as follows:

$2.5 million which was paid in July 2021, $1.0 million

which was to be paid on July 13, 2022, and $500,000 to be paid on July 13, 2023.

The Amended Settlement Agreement settled the payments

due in July 2022 and 2023 for $1,250,000 rather than the $1,500,000 total future payments due under the terms of the original Global

Agreement agreed to in 2021.

No future royalties are owing from either party under the Amendment to the Global Agreement.

of the Six Months Ended June 30, 2023 and 2022

following table summarizes our results of operations for the six months ended June 30, 2023 and 2022:

Six months ended June 30,

Research and development expenses

General and administrative expenses

Interest and investment income

Interest expense

Gain on warrant liability

Gain on litigation settlement

Income tax expense

recognized license revenue for payments receivable from Spriaso, a related party.

under a licensing agreement in the cough and cold field

of approximately $55,000 during the three months ended March 31, 2023.

We did not recognize any revenue during the three months ended

March 31, 2022.

recognized license revenue of approximately $55,000 for payments receivable from Spriaso, a related party, under a licensing agreement

in the cough and cold field during the six months ended June 30, 2023.

We recognized revenue related to a non-refundable cash fee of

$500,000 received from Antares for consideration of a 90-day extension for Antares to exercise its option to license LPCN 1111 during

the six months ended June 30, 2022.

and Development Expenses

increase in research and development expenses during the three months ended March 31, 2023, as compared to the three months ended March

31, 2022 consisted of a $680,000 increase in contract research organization expense related to the Phase 2 POC study in male subjects

with cirrhosis with LPCN 1148, a $513,000 increase in costs related to our LPCN 1154 clinical studies, a $158,000 increase in personnel

costs resulting from the recruiting and hiring of additional personnel, and $154,000 increase in lab supplies, small equipment and other

research and development costs.

These increases were offset by a $171,000 decrease in LPCN 1111 scale up costs, a $71,000 decrease in

contract research organization expense and outside consulting costs related to the completion of our LPCN 1144 LiFT Phase 2 clinical

study in NASH subjects in 2022, and a $44,000 decrease as we completed our PK and food effect studies for LPCN 1107 and LPCN 1154 in

increase in research and development expenses during the six months ended June 30, 2023, as compared to the six months ended June

30, 2022 consisted of a $793,000 increase in contract research organization expense related to the Phase 2 POC study in male

subjects with cirrhosis with LPCN 1148, a $284,000 increase in costs related to our LPCN 1154 clinical studies, a $268,000 increase

in personnel salaries and benefits resulting primarily from the hiring of additional personnel, and a $99,000 increase in TLANDO.

These increases were offset by a $217,000 decrease in contract research organization expense and outside consulting costs related to

the completion of our LPCN 1144 LiFT study in 2022, a $203,000 decrease related to LPCN 1111 scale up costs in 2022, a

$120,000 decrease related to the completion of our LPCN 1107 PK and food effect studies in 2022 and a $68,000 decrease in lab

supplies, small equipment and other research and development activities.

and Administrative Expenses

increase in general and administrative expenses during the three months ended March 31, 2023 was primarily due to a $63,000 increase

in corporate legal fees partially due to strategic advice and planning, a $52,000 increase in business development consulting fees, a

$32,000 increase in director fees, and a $13,000 increase in other various professional fees, offset by $57,000 decrease in professional

fees related to the recruitment of additional directors to our Board in 2022, a $36,000 decrease in corporate insurance expense, and

a $23,000 decrease other general and administrative expenses.

increase in general and administrative expenses during the six months ended June 30, 2023 as compared to the six months ended June

30, 2022 was primarily due to a $185,000 increase in professional and legal fees related to our reverse stock split and other

general and administrative expenses, a $134,000 increase in business development fees, a $92,000 increase in estimated franchise

taxes, a $68,000 increase in director fees, a $49,000 increase in personnel salaries and benefit costs, and a $40,000 increase in

market research activities.

These increases were offset by a $140,000 decrease resulting from professional fees incurred in our

recruitment of two additional directors in 2022 and a $73,000 decrease in corporate insurance expense.

and Investment Income

increase in interest and investment income during the three months ended March 31, 2023 compared to interest and investment income during

the three months ended March 31, 2022 was due to higher interest rates despite declining cash and marketable investment securities balances,

in addition to interest earned on the Antares licensing contract asset in 2023.

increase in interest and investment income during the six months ended June 30, 2023 compared to interest and investment income during

the six months ended June 30, 2022 was due to higher interest rates despite declining cash and marketable investment securities balances,

in addition to imputed interest on the Antares licensing contract asset in 2023.

Loan and Security Agreement with SVB was paid in full in June of 2022, thus the Company did not recognize any interest expense during

the three months ended March 31, 2023.

Interest expense for the three months ended March 31, 2022 was entirely related to that Loan Agreement.

the six months ended June 30, 2023.

Interest expense for the six months ended June 30, 2022 was entirely related to that Loan and Security

Loss on Warrant Liability

recorded a gain of $98,000 and a loss $378,000, respectively, on warrant liability during the three months ended March 31, 2023, and

2022, respectively, related to the change in the fair value of outstanding common stock warrants issued in the November 2019 Offering.

The gain in 2023 was mainly attributable to a decrease in the value of warrants outstanding as of March 31, 2023 as compared to December

31, 2022, primarily due to the lower stock price, despite higher interest rates.

The loss in 2022 was mainly attributable to an increase

in the value of warrants outstanding as of March 31, 2022, due to significantly higher stock price on March 31, 2022 compared to the

stock price on December 31, 2021.

There were zero common stock warrants from the November 2019 Offering exercised during the three months

ended March 31, 2023, or March 31, 2022, 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.

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

recorded a gain of approximately $126,000 and $205,000 on warrant liability during the six months ended June 30, 2023,

and 2022, respectively, related to the change in the fair value of outstanding common stock warrants issued in the November 2019 Offering.

The gain in 2023 was mainly attributable to a decrease in the value of warrants outstanding as of June 30, 2023 as compared to December

31, 2022, primarily due to the lower stock price at the end of the second quarter of 2023 compared to the stock price at

the end of 2022 and the gain in 2022 was mainly attributable to the decrease in the value of the warrants

outstanding as of June 30, 2022 compared to December 31, 2021 due to the lower stock price at the end of the second quarter of 2022 compared

to the stock price at the end of 2021.

No common stock warrants from the November 2019 Offering were exercised during either of the six

months ended June 30, 2023, or June 30, 2022.

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.

the six months ended June 30, 2022, we recorded a gain on the settlement of litigation liability of $250,000 as a result of the April

2022 Amendment to the Global Agreement with Clarus (the “Amended Settlement Agreement”).

Under the terms of the original

Global Agreement, we had agreed to pay Clarus $4.0 million payable as follows:

$2.5 million which was paid in

July 2021, $1.0 million which was to be paid on July 13, 2022, and $500,000 to be paid on July 13, 2023.

The Amended Settlement Agreement

settled the payments due in July 2022 and 2023 for $1,250,000 rather than the $1,500,000 total future payments due under the terms of

the original Global Agreement agreed to in 2021.

No future royalties are owing from either party under the Amendment to the Global Agreement.

and Capital Resources

6 unchanged sentences

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

of March 31, 2023, we had $28.9 million of unrestricted cash, cash equivalents and marketable investment securities compared to $32.5

of June 30, 2023, we had $25.8 million of unrestricted cash, cash equivalents and marketable investment securities compared to $32.5

million at December 31, 2022.

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.

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

also agreed to make certain minimum royalty payments in the future and, since these future minimum royalties are variable consideration

deemed to be probable, $4.0 million in revenue was recognized in 2021 for the minimum royalties to be received in the future.

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.

In addition, we 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.

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.

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.

Upon execution of the Antares License Agreement, Antares paid to us an initial

payment of $11.0 million.

Antares has also agreed to make certain minimum royalty payments in the future and, since these future

minimum royalties are variable consideration deemed to be probable, approximately $4.0 million in revenue was recognized in 2021 for

the minimum royalties to be received in the future.

In addition, 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.

In addition, we 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.

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

32 unchanged sentences

Agreement at any time upon ten days’ prior notice.

the three months ended March 31, 2023, and 2022, we did not sell any shares of our common stock under the Sales Agreement.

31, 2023, we had sold $8,802,419 of our common stock pursuant to the Sales Agreement, and had approximately $41.2 million available for

sale under the Sales Agreement.

However, as of April 3, 2023, we are now subject to General Instruction I.B.6 of Form S-3 which limits

the amounts that we may sell under the registration statement.

As a result of such limitations, we have currently registered the offer

and sale of shares of our common stock pursuant to the Sales Agreement having an aggregate offering price of up to $15.7 million.

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

requirements through at least the next twelve months which include on-going clinical studies for LPCN 1154, an on-going study for

LPCN 1148, and research and development activities and compliance with regulatory requirements.

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, LPCN 1111, and LPCN 1107.

While we believe

we have sufficient liquidity and capital resources to fund our projected operating requirements through at least the next twelve

months, we will need to raise additional capital at some point through the equity or debt markets or through additional

out-licensing activities to support our operations.

If we are unsuccessful in raising additional capital as necessary,

our ability to continue as a going concern will be limited.

Further, 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.

In addition, our capital resources may be consumed more rapidly if we pursue additional clinical studies for

LPCN 1154, LPCN 2101, LPCN 1148, LPCN 1144, LPCN 1111, and/or LPCN 1107.

Conversely, our capital resources could last longer if we

reduce expenses, reduce the number of activities currently contemplated under our operating plan or if we terminate, modify or

suspend on-going clinical studies.

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.

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 efforts.

these factors affect our need for additional capital resources.

To fund future operations, we will need to ultimately raise

additional capital and our requirements will depend on many factors, including the following:

the scope, rate of progress,

results and cost of our clinical studies, pre-clinical testing and other related activities for all of our product candidates, including

LPCN 1154 and LPCN 2101, LPCN 1148, LPCN 1111, LPCN 1144, LPCN 1107 and;

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, milestones 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.

the three and six months ended June 30, 2023, and 2022, we did not sell any shares of our common stock under the Sales Agreement.

of June 30, 2023, we had sold shares of our common stock for $8,802,419 pursuant to the Sales Agreement and had approximately $41.2 million

available for sale under the Sales Agreement.

However, as of April 3, 2023, we are now subject to General Instruction I.B.6 of Form S-3

which limits the amounts that we may sell under the registration statement.

As a result of such limitations, we have currently registered

the offer and sale of shares of our common stock pursuant to the Sales Agreement having an aggregate offering price of up to $15.7 million.

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

through at least the next twelve months which include on-going clinical studies for LPCN 1154, an on-going study for LPCN 1148, and research

and development activities and compliance with regulatory requirements.

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, LPCN 1111, and LPCN 1107.

While we believe we have sufficient liquidity and capital

resources to fund our projected operating requirements through at least the next twelve months, we will need to raise additional capital

at some point through the equity or debt markets or through additional out-licensing activities to support our operations.

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

Further, 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.

In addition, our capital resources may be consumed more rapidly if we pursue

additional clinical studies for LPCN 1154, LPCN 2101, LPCN 1148, LPCN 1144, LPCN 1111, and/or LPCN 1107.

Conversely, our capital resources

could last longer if we reduce expenses, reduce the number of activities currently contemplated under our operating plan or if we terminate,

modify or suspend on-going clinical studies.

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.

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 efforts.

All of these factors affect our need for additional

capital resources.

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

many factors, including the following:

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

clinical studies, pre-clinical testing and other related activities for all of our product candidates, including LPCN 1154 and LPCN

2101, LPCN 1148, LPCN 1111, LPCN 1144, LPCN 1107 and;

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,

milestones 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.

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

22 unchanged sentences

and Uses of Cash

following table provides a summary of our cash flows for the three months ended March 31, 2023, and 2022:

Three Months Ended March 31,

following table provides a summary of our cash flows for the six months ended June 30, 2023, and 2022:

Six Months Ended June 30,

Cash used in operating activities

4 unchanged sentences

Cash from Operating Activities

each of the three months ended March 31, 2023 and 2022 net cash used in operating activities was $3.9 million.

cash used in operating activities during the three months ended March 31, 2023, and 2022 was primarily attributable to cash outlays to

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

the six months ended June 30, 2023 and 2022, net cash used in operating activities was $7.2 million and $6.9 million, respectively.

cash used in operating activities during the six months ended June 30, 2023, and June 30, 2022, was primarily attributable to cash outlays

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

During 2023, we performed

3 unchanged sentences

Cash from Investing Activities

the three months ended March 31, 2023, net cash provided by investing activities was $5.6 million compared to net cash used in investing

activities of $7.3 million during the three months ended March 31, 2022.

cash provided by investing activities during the three months ended March 31, 2023, was primarily the result of the maturity of marketable

investment securities of $12.0 million offset by purchase of marketable securities of $6.4 million.

Net cash provided by investing activities

during the three months ended March 31, 2022, was primarily the result of the net maturities of marketable investment securities of $7.3

There were $4,000 and $27,000 in capital expenditures during the three months ended March 31, 2023, and 2022, respectively.

the six months ended June 30, 2023 and 2022, net cash provided by investing activities was $9.1 million and $11.1 million, respectively.

cash provided by investing activities during the six months ended June 30, 2023, and June 30, 2022, was primarily the result of

the maturity of marketable investment securities, net of $9.1 million and $11.1 million, respectively.

There were approximately $4,000

and $37,000 in capital expenditures during the six months ended June 30, 2023, and 2022, respectively.

Cash from Financing Activities

the three months ended March 31, 2023, net cash used in financing activities was approximately $6,000 and during the three months ended March

31, 2022, net cash provided by financing activities was $627,000.

cash used in financing activities during the three months ended March 31, 2022, was due to $833,000 in debt principal repayments under

the SVB Loan and Security Agreement, offset by $206,000 cash provided by proceeds from stock option exercises.

the six months ended June 30, 2023 and 2022, net cash used in financing activities was approximately $11,000 and $2.1 million, respectively.

cash used in financing activities during the six months ended June 30, 2023, related to costs associated with our ATM registration.

cash used in financing activities during the six months ended June 30, 2022, was due to loan repayments of $1.7 million and payment of

the Final Payment Charge of $650,000 related to the SVB Loan and Security Agreement, offset by $206,000 cash provided by proceeds from

stock option exercises.

Commitments and Contingencies

24 unchanged sentences

There have been no significant

and material changes in our critical accounting policies during the three months ended March 31, 2023, as compared to those disclosed

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

Significant Judgments and Estimates” in our Form 10-K filed March 10, 2023.

and material changes in our critical accounting policies during the six months ended June 30, 2023, as compared to those disclosed in

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

Judgments and Estimates” in our Form 10-K filed March 10, 2023.

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