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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

___________________________________________________

FORM 10-K

___________________________________________________



x	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2019



o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM _____ TO_____

Commission File No. 001-36395

https://cdn.kscope.io/cdb27edfb151248aca205c2b1f7c97ce-darebioinlinefullcolorrgba04.jpg

DARÉ BIOSCIENCE, INC.

(Exact Name of Registrant as Specified in its Charter)



Delaware	20-4139823
(State or other jurisdiction of incorporation)	(IRS Employer Identification No.)
3655 Nobel Drive, Suite 260 San Diego, CA (Address of Principal Executive Offices)	92122 (Zip Code)

Registrant’s telephone number, including area code: (858) 926-7655



Securities registered under Section 12(b) of the Act:
Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, Par Value $0.0001 Per Share	DARE	Nasdaq Capital Market

Securities registered under Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o No x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes o No x

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.



Large Accelerated Filer	o	Accelerated filer	o
Non-accelerated filer	x	Smaller reporting company	x
		Emerging growth company	o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act [ ]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o No x

The aggregate market value of the registrant’s common stock held by non-affiliates of the registrant on the last business day of the registrant’s most recently completed second fiscal quarter (June 28, 2019), was approximately $12,232,000 based on the closing price as reported on the Nasdaq Capital Market. This excludes shares of common stock held by affiliates on such date. Exclusion of shares held by any person should not be construed to indicate that such person possesses the power directly, or indirectly, to direct or cause the direction of the management or policies of the registrant, or that such person is controlled by or under common control with the registrant. The determination of affiliate status for this purpose may not be conclusive for other purposes.

As of March 26, 2020, there were 24,690,404 shares of the registrant’s common stock, par value $0.0001 per share, outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the registrant’s definitive proxy statement relating to its 2020 annual meeting of stockholders are incorporated by reference into Part III of this report where indicated. Such proxy statement will be filed with the U.S. Securities and Exchange Commission within 120 days after the end of the fiscal year to which this report relates.

Daré Bioscience, Inc. and Subsidiaries

Form 10-K – ANNUAL REPORT

For the Fiscal Year Ended December 31, 2019

Table of Contents



		Page
	PART I	1

ITEM 1.	Business	4
ITEM 1A.	Risk Factors	25
ITEM 1B.	Unresolved Staff Comments	56
ITEM 2.	Properties	56
ITEM 3.	Legal Proceedings	56
ITEM 4.	Mine Safety Disclosures	56

	PART II	57

ITEM 5.	Market for Common Equity and Related Stockholder Matters and Issuer Purchases of Equity Securities	57
ITEM 6.	Selected Consolidated Financial Data	57
ITEM 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	57
ITEM 7A.	Quantitative and Qualitative Disclosures about Market Risk	64
ITEM 8.	Financial Statements and Supplementary Data	64
ITEM 9.	Changes in and Disagreement With Accountants on Accounting and Financial Disclosure	65
ITEM 9A.	Controls and Procedures	65
ITEM 9B.	Other Information	65

	PART III	66

ITEM 10.	Directors, Executive Officers and Corporate Governance	66
ITEM 11.	Executive Compensation	66
ITEM 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	66
ITEM 13.	Certain Relationships and Related Transactions and Director Independence	66
ITEM 14.	Principal Accountant Fees and Services	66

	PART IV	67

ITEM 15.	Exhibits, Financial Statement Schedules	67
ITEM 16.	Form 10-K Summary	72
	Signatures	73
	Financial Statements	F-1

PART I

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Annual Report on Form 10-K, in particular “Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations,” and the information incorporated by reference herein contains forward-looking statements that involve substantial risks and uncertainties. All statements, other than statements of historical facts, contained in this report, including statements regarding our strategy, future operations, future financial position, projected costs, prospects, plans and objectives of management, are forward-looking statements. Forward-looking statements, in some cases, can be identified by terms such as “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “design,” “intend,” “expect,” “could,” “plan,” “potential,” “predict,” “seek,” “should,” “would,” “contemplate,” project,” “target,” “tend to,” or the negative version of these words and similar expressions.

Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements, including those factors described in Part I, Item IA, “Risk Factors,” in this report, and elsewhere in this report. Given these uncertainties, you should not place undue reliance on any forward-looking statement. The following factors are among those that may cause such differences:


•	Inability to continue as a going concern;


•	Inability to raise additional capital, under favorable terms or at all, including as a result of the effects of the COVID-19 pandemic;


•	Inability to successfully attract partners and enter into collaborations on acceptable terms;


•	A decision by Bayer HealthCare LLC to discontinue its commercial interest in Ovaprene and/or to terminate our license agreement;


•	Failure to select or capitalize on the most scientifically, clinically or commercially promising or profitable indications or therapeutic areas for our product candidates due to limited financial resources;


•	Inability to develop and commercialize our product candidates;

•

Failure or delay in starting, conducting and completing clinical trials or obtaining United States Food and Drug Administration, or FDA, or foreign regulatory approval for our product candidates in a timely manner, including as a result of matters beyond our control such as the effects related to geopolitical actions, natural disasters, or public health emergencies or pandemics, such as the COVID-19 pandemic;


•	A change in the FDA Center assigned primary oversight responsibility for our combination product candidates;


•	A change in regulatory requirements for our product candidates, including the development pathway pursuant to Section 505(b)(2) of the Federal Food, Drug, and Cosmetic Act, or the FDA's 505(b)(2) pathway;


•	Unsuccessful clinical trial outcomes stemming from clinical trial designs, failure to enroll a sufficient number of patients, higher than anticipated patient dropout rates, failure to meet established clinical endpoints, undesirable side effects and other safety concerns;


•	Negative publicity concerning the safety and efficacy of our product candidates, or of product candidates being developed by others that share characteristics similar to our candidates;


•	Inability to demonstrate sufficient efficacy of our product candidates;


•	Loss of our licensed rights to develop and commercialize a product candidate as a result of the termination of the underlying licensing agreement;


•	Monetary obligations and other requirements in connection with our exclusive, in-license agreements covering the patents and related intellectual property related to our product candidates;


•	Developments by our competitors that make our product candidates less competitive or obsolete;


•	Dependence on third parties to conduct nonclinical studies and clinical trials of our product candidates;


•	Dependence on third parties to supply and manufacture clinical trial materials and, if any of our candidates are approved, commercial product, including components of our products as well as the finished product, in accordance with current good manufacturing practices and in the quantities needed;

•

Interruptions in, or the complete shutdown of, the operations of third parties on which we rely, including clinical sites, manufacturers, suppliers, and other vendors, from matters beyond their control, such as the effects related to geopolitical actions, natural disasters, or public health emergencies or pandemics, such as the COVID-19 pandemic, and our lack of recourse against such third parties if their inability to perform is excused under the terms of our agreements with such parties;


•	Failure of our product candidates, if approved, to gain market acceptance or obtain adequate coverage for third party reimbursement;


•	A reduction in demand for contraceptives caused by an elimination of current requirements that health insurance plans cover and reimburse FDA-cleared or approved contraceptive products without cost sharing;


•	Uncertainty as to whether health insurance plans will cover our product candidates even if we successfully develop and obtain regulatory approval for them;


•	Unfavorable or inadequate reimbursement rates for our product candidates set by the United States government and other third-party payers even if they become covered products under health insurance plans;


•	Difficulty in introducing branded products in a market made up of generic products;


•	Inability to adequately protect or enforce our, or our licensor’s, intellectual property rights;


•	Lack of patent protection for the active ingredients in certain of our product candidates which could expose those product candidates to competition from other formulations using the same active ingredients;


•	Higher risk of failure associated with product candidates in pre-clinical stages of development that may lead investors to assign them little to no value and make these assets difficult to fund;


•	Disputes or other developments concerning our intellectual property rights;


•	Actual and anticipated fluctuations in our quarterly or annual operating results;


•	Price and volume fluctuations in the stock market, and in our stock in particular, which could subject us to securities class-action litigation;


•	Failure to maintain the listing of the Company’s common stock on the Nasdaq Capital Market or another nationally recognized exchange;


•	Litigation or public concern about the safety of our potential products;


•	Strict government regulations on our business, including various fraud and abuse laws, including, without limitation, the U.S. federal Anti-Kickback Statute, the U.S. federal False Claims Act and the U.S. Foreign Corrupt Practices Act;


•	Regulations governing the production or marketing of our product candidates;


•	Loss of, or inability to attract, key personnel; and


•	Increased costs as a result of operating as a public company, and substantial time devoted by our management to compliance initiatives and corporate governance practices.

In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this report, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and investors are cautioned not to unduly rely upon these statements.

All forward-looking statements in this report are current only as of the date of this report. We do not undertake any obligation to publicly update any forward-looking statement to reflect events or circumstances after the date on which any statement is made or to reflect the occurrence of unanticipated events, except as required by law.

ITEM 1. BUSINESS

The terms “we,” “us,” “our,” “Daré” or the “Company” refer collectively to Daré Bioscience, Inc. and its wholly-owned subsidiaries, unless otherwise stated or the context otherwise requires. All information in this report is based on our fiscal year. Unless otherwise stated, references to particular years, quarters, months or periods refer to our fiscal years ending December 31 and the associated quarters, months and periods of those fiscal years.

Overview

Our Strategy

Our business strategy is to in-license or otherwise acquire the rights to differentiated product candidates in our areas of focus, some of which have existing clinical proof-of-concept data, and to take those candidates through advanced stages of clinical development, and then out-license these products to companies with sales and distribution capabilities in women's health to leverage their commercial capabilities.

We believe that there is an opportunity to fill the gap that exists in the development of innovations in women’s health between (a) non-profit organizations, small private companies and individual entrepreneurs that discover, innovate and conduct early-stage research and clinical development of product candidates, and (b) pharmaceutical companies that conduct late-stage clinical development and commercialize approved products. We believe that the development activities between these two ends of this spectrum (early pre-clinical and clinical development of product candidates on the one hand and late-stage clinical trials and commercialization of product candidates on the other) are currently underserved. In addition, we believe there are gaps in treatment options in the women's health market and there is an opportunity to provide therapies that address persistent unmet needs. We intend to fill the mid-stage development gap and to address the gaps in treatment options for women.

The dynamics of the women’s health market provide an opportunity for us to assemble a portfolio of product candidates, including clinical-stage candidates, often with published human data. Since July 2017, we have assembled a portfolio of clinical-stage and pre-clinical-stage candidates. While we will continue to assess opportunities to expand our portfolio, our current focus is on advancing our existing product candidates through mid- and late stages of clinical development or approval. Our global commercialization and development strategy involves partnering with pharmaceutical companies and regional distributors with established marketing and sales capabilities in women's health, including through co-development and promotion agreements, once we have advanced a candidate through mid- to late-stage clinical development.

Our Clinical-Stage Product Candidates and Programs

Our development strategy is two-fold:

(1)

We intend to use existing data and any data we generate to prepare Investigational New Drug applications, or INDs, or Investigational Device Exemption applications, or IDEs, to the extent these have not already been prepared, and to design and implement additional pre-clinical and clinical trials to advance our programs toward the submission of New Drug Applications, or NDAs, or Premarket Approvals, or PMAs, for regulatory approval of our product candidates in the U.S.


(2)	We intend to identify FDA-approved drugs and therapies that might benefit from a different formulation, manner of application or delivery method to enhance therapeutic outcomes and to expedite the development of these candidates under the FDA's 505(b)(2) pathway.

Our initial focus is in the areas of contraception, vaginal health, sexual health and fertility, and we have acquired, or acquired rights to, candidates in these areas with promising early clinical and/or pre-clinical testing data developed by third parties. We believe the product candidates currently in our portfolio offer innovative therapeutic approaches that may provide meaningful benefits over current treatment options. Our portfolio includes three product candidates in advanced stages of clinical development and three candidates that we believe are Phase-1 ready. The following graphic provides a snapshot of these candidates, including their targeted indications and our current expectations for their respective stages of development in 2020:



	PRE-CLINICAL		PHASE 1	PHASE 2	PHASE 3	REGULATORY FILING

DARE-BV1^					Phase 3
Bacterial Vaginosis	Bioadhesive gel, clindamycin 2%

Ovaprene®					Pivotal Study
Hormone-Free, Monthly Contraception	Intravaginal ring (IVR) designed to provide multiple weeks of contraceptive protection; self-administered

Sildenafil Cream, 3.6%^				Phase 2b
Female Sexual Arousal Disorder	Topical cream, same active ingredient as Viagra®

DARE-HRT1^			Phase 1
Hormone Replacement Therapy	IVR, combination bio-identical estradiol + bio-identical progesterone

DARE-VVA1^		Phase 1 Preparations
Vulvar and Vaginal Atrophy (HR+ Breast Cancer Population)	Proprietary formulation of tamoxifen for vaginal administration in patients with hormone receptor positive (HR+) breast cancer.

DARE-FRT1^		Phase 1 Preparations
Pregnancy Maintenance (PTB & ART)	IVR, bio-identical progesterone for the prevention of preterm birth (PTB) and for fertility support as part of an IVF treatment plan.

^ We intend to utilize the FDA's 505(b)(2) pathway for this candidate.

DARE-BV1

DARE-BV1 is a novel thermosetting bioadhesive hydrogel formulated with clindamycin phosphate 2% that we are developing as a first-line, single-administration treatment for bacterial vaginosis, or BV. Clindamycin is an antibiotic with FDA approval to treat certain bacterial infections, including BV. DARE-BV1 is designed to transition from a viscous liquid to a bioadhesive gel at body temperature following vaginal self-administration, and to release the active ingredient over a period of up to seven days. The bioadhesive properties of DARE-BV1 are expected to reduce leakage and prolong the duration of exposure of clindamycin relative to currently marketed creams, potentially improving the rate of clinical effectiveness compared to existing FDA-approved therapies, including cream formulations of clindamycin. We plan to leverage existing safety and efficacy data on clindamycin to utilize the FDA's 505(b)(2) pathway to obtain marketing approval of DARE-BV1 for BV in the U.S.

According to the Centers for Disease Control and Prevention, or the CDC, BV is the most common vaginal condition in women ages 15-44. BV is a type of vaginal inflammation caused by the overgrowth of certain bacteria naturally found in the vagina. Symptoms include vaginal discharge, vaginal odor, vaginal pain, itching or burning, and burning during urination. We believe current BV therapies are inadequate and there is a significant unmet need for better treatment. Current FDA-approved therapies have clinical cure rates (based on the Amsel criteria) ranging from 37-68%.

Prior to our involvement, DARE-BV1 was evaluated in an investigator-initiated proof-of-concept study that enrolled 30 women, ages 18 to 50, to assess its efficacy in treating BV after a single administration. The study’s primary efficacy endpoint was clinical cure based on the Amsel criteria at the test-of-cure evaluation visit, or Visit 2, which was approximately 7 to 14 days after administration of DARE-BV1. Of the 28 evaluable subjects, 24, or 86%, achieved clinical cure at Visit 2. The women were asked to return to the clinic for a third visit, or Visit 3, approximately 21 to 30 days following administration of DARE-BV1 to evaluate continued efficacy of treatment. Of the 24 subjects who completed Visit 2 and were deemed clinically cured, 23, or 96%, remained clinically cured at Visit 3. There were no reports of adverse reactions, including local reactions to DARE-BV1. We believe DARE-BV1’s unique adhesion properties and release profile led to the encouraging cure rates in the pilot study.

In August 2019, the FDA granted DARE-BV1 Qualified Infectious Disease Product (QIDP) designation for the treatment of BV in women. QIPD designation is available under Title VIII of the FDA Safety and Innovation Act, titled General Antibiotic Incentive Now (GAIN), which creates incentives for the development of antibacterial and antifungal drug products that treat serious or life-threatening infections. The primary incentive is a five-year exclusivity extension added to any exclusivity for which a QIDP qualifies upon FDA approval. Additionally, DARE-BV1's QIDP designation makes it eligible for Fast Track designation and Priority Review. In March 2020, we announced that we received Fast Track designation from the FDA for DARE-BV1 for the treatment of BV. The designation offers the opportunity for more frequent interactions with the FDA to discuss DARE-BV1's development plan and ensure collection of appropriate data needed. The Fast Track program is intended to facilitate development and expedite review of a Fast Track drug so that an approved product can reach the market expeditiously.

We are currently working on regulatory and start-up activities that are necessary to commence a Phase 3 multicenter, randomized, double-blind, placebo-controlled study of DARE-BV1 for the treatment of BV, or the DARE-BV1-001 study, and expect to initiate the study in the second half of 2020. We plan to enroll approximately 220 postmenarchal women, ages 12 and above, at approximately 40 sites in the United States. The primary efficacy endpoint of the study will be clinical cure at the evaluation visit to occur 21 to 30 days after enrollment in the study, or the Day 21-30 visit, with clinical cure defined as meeting three criteria (derived from the Amsel criteria): resolution of abnormal vaginal discharge associated with BV as confirmed by the investigator; a negative 10% potassium hydroxide (KOH) "whiff test"; and the presence of clue cells at less than 20% of total epithelial cells in a saline wet mount. If the study's initiation and rate of subject enrollment occur as we currently expect, then we anticipate having topline data from this study before year end 2020. Based on our pre-investigational new drug (PIND) communications with the FDA, in parallel with the DARE-BV1-001 clinical study and to support the new drug application, or NDA, for DARE-BV1, we will conduct nonclinical studies of certain excipients in DARE-BV1 and the clinical formulation of DARE-BV1, including reproductive toxicology studies. If the DARE-BV1-001 clinical study and the nonclinical studies are completed as anticipated and if their outcomes are successful, then we expect to be in a position to file an NDA with the FDA in early 2021. We anticipate that the aggregate costs of the DARE-BV1-001 clinical study, planned nonclinical studies, manufacturing activities for the program through filing of the NDA, and including such NDA filing, will be approximately $10.0 million. Our anticipated timelines and aggregate costs for the development of our product candidates could be delayed and could increase as a result of the COVID-19 pandemic. See "ITEM 1A.–Risk Factors–Risks Related to Clinical Development, Manufacturing and Commercialization–Delays in the commencement or completion of clinical testing of our current and any future product candidates we may seek to develop may occur due to any of a number of factors and could result in significantly increased costs and longer timelines and could impact our ability to ever become profitable," below.

Ovaprene®

We believe the need for more effective and convenient options is particularly true with contraception. While a variety of hormonal and non-hormonal options exist, there is a notable void: an effective, short-acting, hormone-free method of contraception that does not require intervention at the time of intercourse.

Ovaprene is a novel, hormone-free intravaginal ring, or IVR, for pregnancy prevention designed to be worn conveniently over multiple weeks (one menstrual cycle) and with the potential to achieve “typical use” contraceptive efficacy (which is the expected rate of pregnancy protection when the product is used widely under everyday circumstances) comparable to current non-implanted hormonal contraceptive methods (pills, patches and vaginal rings), which is approximately 91% typical use efficacy. Ovaprene features a proprietary knitted polymer barrier to physically block sperm from entering the cervical canal within a silicone-reinforced ring that releases two non-hormonal agents, ascorbic acid and ferrous gluconate, that impede sperm motility. Unlike current FDA-approved contraceptive IVRs, Ovaprene does not contain hormones, but, consistent with those IVRs, including Merck’s NuvaRing®, Ovaprene is designed to be a “one size fits most” monthly, self-administered product. If approved, Ovaprene could be the first hormone-free, monthly contraceptive option for women.

Ovaprene is a combination product and, following a request for designation process, the FDA designated the Center for Devices and Radiological Health, or CDRH, as the lead FDA program center for premarket review and product regulation. CDRH has determined that premarket approval, or PMA, will be required to market Ovaprene in the U.S.

In a postcoital test, or PCT, pilot clinical study conducted by the previous sponsor in 20 women and published in The Journal of Reproductive Medicine® in 2009, Ovaprene demonstrated the ability to immobilize sperm and prevent their progression into the cervical mucus. The study also demonstrated the acceptability of the device to both partners. No colposcopic abnormalities, no significant changes in vaginal flora and no serious adverse effects were observed.

In November 2019, we announced positive topline results of our PCT clinical trial of Ovaprene. We designed the PCT clinical trial to assess general safety and effectiveness in preventing progressively motile sperm from reaching the cervical canal following intercourse and acceptability of the product to the patient. The study evaluated 23 women over the course of five menstrual cycles, with each woman assessed over approximately 21 visits. Each woman’s cervical mucus was measured at several points during the study, including a baseline measurement at menstrual cycle 1 that excluded the use of any product. Subsequent cycles and visits included the use of a diaphragm during intercourse (menstrual cycle 2) and Ovaprene (menstrual cycles 3, 4 and 5). The primary endpoint of the study was to evaluate changes from baseline in PCT results due to device use, as represented by the proportion of women and cycles with an average of fewer than five progressively motile sperm (PMS) per high power field (HPF) in midcycle cervical mucus collected two to three hours after intercourse with Ovaprene in place.

Our PCT clinical trial met its primary endpoint: Ovaprene prevented the requisite number of sperm from reaching the cervix across all women and all cycles evaluated. Specifically, in 100% of women and cycles, an average of less than five PMS per HPF were present in the midcycle cervical mucus collected two to three hours after intercourse with Ovaprene in place. To calculate the average number of PMS, PMS were counted across each of nine HPFs and averaged. Women enrolled in the study who completed at least one Ovaprene PCT (N=26) had a mean of 27.21 PMS/HPF in their baseline cycle when no contraception was used, a mean of 0.22 PMS/HPF in their diaphragm cycle, which was anticipated based on published studies, and a mean of 0.48 PMS/HPF in their Ovaprene PCT cycles, with a median of zero PMS. No serious or severe adverse events were reported or observed.

PCT clinical trials have been used as a surrogate marker for contraceptive effectiveness. Infertility research suggests that higher rates of pregnancy are associated with PMS per HPF of from greater than one to greater than 20 sperm, and less than five PMS per HPF is considered indicative of contraceptive effectiveness.

Based on the positive results of our PCT clinical trial, we currently intend to file an IDE, with the FDA in 2020, and, pending FDA review and clearance of the IDE, to initiate a pivotal clinical study of Ovaprene in the second half of 2020. We are designing that study to evaluate the safety and efficacy of Ovaprene to prevent pregnancy when used over a period of 12 months by approximately 250 women and will seek to confirm alignment with the FDA on the study's design prior to commencement. If successful, we expect the study's data to support our PMA submission to the FDA, as well as marketing approvals of Ovaprene in Europe and other countries worldwide.

We are developing Ovaprene with ADVA-Tec, Inc. and Bayer HealthCare LLC, or Bayer, as part of two strategic collaborations announced in March 2017 and January 2020, respectively. See "License Agreements" below for discussion of the terms of each collaboration.

Sildenafil Cream, 3.6%

While numerous pharmaceutical products have been developed and approved to treat erectile dysfunction in men, women continue to lack effective options for female sexual arousal disorder, or FSAD, the most analogous condition of the various types of female sexual dysfunction disorders. We are developing Sildenafil Cream, 3.6%, a proprietary cream formulation of sildenafil, the active ingredient in the male erectile dysfunction drug Viagra®, for topical administration to the vulva and vagina for treatment of FSAD. Today, there are no FDA-approved products that specifically address the symptoms or underlying pathology of FSAD. We plan to leverage the existing data and established safety profile of sildenafil and the Viagra^® brand to utilize the FDA’s 505(b)(2) pathway to obtain marketing approval of Sildenafil Cream, 3.6% in the U.S. for the treatment of women suffering from FSAD. If approved, Sildenafil Cream, 3.6% could be the first FDA-approved FSAD treatment option for women.

FSAD is a condition characterized primarily by a persistent or recurrent inability to attain or maintain sufficient genital arousal (an adequate lubrication-swelling response) during sexual activity, frequently resulting in distress or interpersonal difficulty. This is distinct from hypoactive sexual desire disorder (HSDD) in women, which is characterized primarily by a lack of sexual desire. As with erectile dysfunction in men, FSAD in women is associated with insufficient blood flow to the genitalia. Sildenafil Cream, 3.6% is designed to increase genital blood flow and provide improvements in the female genital arousal response, while avoiding systemic side effects observed with oral formulations of sildenafil.

In a Phase 1 clinical study of three escalating doses of topical sildenafil cream (1 g cream with 35 mg sildenafil; 2 g cream with 71 mg sildenafil; and 4 g cream with 142 mg sildenafil) in 20 healthy post-menopausal women using a crossover study design, topical sildenafil demonstrated significantly lower systemic exposure compared to a 50 mg oral sildenafil dose, and topical sildenafil was safe and well tolerated at clinically relevant doses (1-2 g cream). Study subjects reported favorable product characteristics: easy to use and readily absorbed.

In a Phase 2a, single center, single-dose, double-blind, placebo-controlled, 2-way crossover study, women with FSAD, ages 21 to 60, received a single 2 g dose of Sildenafil Cream, 3.6%. Of the 35 women enrolled, 31 (15 pre-menopausal and 16 post-menopausal) completed the study. The primary objective was to evaluate the efficacy of Sildenafil Cream, 3.6% compared to placebo cream assessed by participant-reported levels of subjective cognitive sexual arousal and by physiological genital arousal response. Sildenafil Cream, 3.6% demonstrated increases in measurable blood flow to the genital tissue compared to placebo (mean change in vaginal pulse amplitude analysis) using a vaginal photoplethysmograph approximately 30 minutes post-dosing. Based on this study, it was determined that subjective cognitive sexual arousal assessments may not be concordant with genital sensations of arousal, which helped guide study design for our planned Phase 2b clinical trial.

A Phase 1, single-dose, double-blind, placebo-controlled, two-way crossover study to evaluate the feasibility of using thermography to assess the pharmacodynamics of Sildenafil Cream, 3.6% in normal healthy women was conducted at a single center. During the thermography study, genital temperature, a surrogate for genital blood flow, was captured and recorded utilizing an infrared camera capable of detecting heat patterns from blood flow in body tissues. The study, which was designed to evaluate up to 10 subjects, achieved the study objectives based on a planned interim analysis of the first six completed subjects, and thus additional subjects were not enrolled. In this study, Sildenafil Cream, 3.6% demonstrated significantly greater increases in genital temperature compared to placebo cream and no cream. Additionally, significantly greater self-reported arousal responses were reported during Sildenafil Cream, 3.6% visits compared to placebo cream visits.

In 2019, as part of our Phase 2b clinical program for Sildenafil Cream, 3.6%, we completed a non-interventional study, or the content validity study, designed to identify and document the genital arousal symptoms that will be assessed in our Phase 2b trial, in which subjects will use Sildenafil Cream, 3.6% and placebo cream in their home setting, and to demonstrate that those symptoms are the most important and relevant to our target population and are also acceptable endpoints for the FDA. Participants who met the eligibility criteria participated in one-on-one, in-depth interviews conducted by subject matter experts in the field of clinical outcome assessments and female sexual medicine. In December 2019, we announced that, following a review of the findings of the content validity study with the FDA, alignment was reached with the FDA on the design of our Phase 2b clinical trial, including the patient reported outcome, or PRO, instruments to be used to screen eligible patients with FSAD and to measure achievement of the primary efficacy endpoints, namely improvement in localized genital sensations of arousal and reduction in the distress that women with FSAD experience. We also aligned with the FDA on several exploratory efficacy endpoints that could potentially prove to be additional measurements of efficacy in a future Phase 3 program. Further, we confirmed with the FDA that no additional nonclinical or clinical data are required before initiating the Phase 2b at-home clinical trial. The Phase 2b trial is designed to evaluate Sildenafil Cream, 3.6% compared to placebo cream over 12 weeks of dosing following both a non-drug and placebo run-in period.

We plan to initiate the Phase 2b clinical trial in 2020. In addition, we will continue to actively engage with the FDA in 2020 to help ensure that any additional required studies and activities may be completed during the course of the clinical development program to support an NDA submission.

We are developing Sildenafil Cream, 3.6% with Strategic Science & Technologies-D LLC under our license and collaboration agreement announced in February 2018. See “License Agreements” below for discussion of the terms of this collaboration.

DARE-HRT1

DARE-HRT1 is a unique IVR containing bio-identical estradiol and bio-identical progesterone that is designed to be worn over multiple weeks for sustained drug delivery for the treatment of vasomotor symptoms, or VMS, associated with menopause as part of a hormone replacement therapy regimen. The IVR technology used in DARE-HRT1 was developed by Dr. Robert Langer from the Massachusetts Institute of Technology and Dr. William Crowley from Massachusetts General Hospital and Harvard Medical School. Unlike other vaginal ring technologies, ours is designed to release drugs via a solid ethylene vinyl acetate polymer matrix without the need for a membrane or reservoir to contain the active drug or control the release, allowing for sustained drug delivery over time periods ranging from weeks to months.

Hormone replacement therapy, or HRT, is considered the most effective treatment for VMS and the genitourinary syndrome of menopause and has been shown to prevent bone loss and fracture. There are currently no FDA-approved IVRs that deliver bio-identical progesterone in combination with bio-identical estradiol. As such, DARE-HRT1 has the potential to be a first-in-category product that offers monthly convenience for women. We intend to leverage the existing safety and efficacy data on the active ingredients in DARE-HRT1, estradiol and progesterone, to utilize the FDA’s 505(b)(2) pathway to obtain marketing approval of DARE-HRT1 in the U.S.

We are in the process of initiating a Phase 1 open-label, three-arm, parallel group clinical study in Australia to evaluate the pharmacokinetics, or PK, and safety of DARE-HRT1 in approximately 30 healthy, post-menopausal women. The primary objectives of the study are to describe the PK parameters of two different dose combinations (estradiol 80 µg/progesterone 4 mg IVR and estradiol 160 µg/progesterone 8 mg IVR) over 28 days, and to identify the steady state PK of each dose combination after 28 days. We expect to report topline results of this clinical study by the end of 2020.

We are developing DARE-HRT1 under our license agreement with Catalent JNP, Inc. See “License Agreements” below for discussion of the terms of that agreement.

DARE-VVA1

DARE-VVA1 is a proprietary formulation of tamoxifen for vaginal administration. We are developing DARE-VVA1 as an alternative to estrogen-based therapies for the treatment of vulvar and vaginal atrophy, or VVA, in women with or at risk for hormone-receptor positive (HR+) breast cancer, including women on anti-cancer therapy, to treat the symptoms of VVA. Tamoxifen is a well-known and well-characterized selective estrogen receptor modulator, or SERM. Tamoxifen has unique properties that produce different effects in different types of tissues. In breast tissue, tamoxifen acts as an estrogen antagonist, meaning that it can inhibit estrogen's effect and hence why it may be effective in treating hormone-receptor positive (HR+) breast cancer. However, in other tissue, including vaginal tissue, tamoxifen has been reported to exert an estrogen-like response. This has the potential to have a favorable effect on vaginal cytology. VVA is an inflammation of the vaginal epithelium due to the reduction in levels of circulating estrogen, which is characterized by pain during intercourse, vaginal dryness and irritation. Commonly used therapies for VVA are estrogen-based and often contraindicated in HR+ breast cancer patients, or patients with a genetic predisposition or history of familial disease, because of the concern that estrogen use will promote recurrence of disease. Due to the prevalence of aromatase inhibitors for the treatment of HR+ breast cancer, the prevalence of VVA in post-menopausal breast cancer patients is estimated to be between 42 and 70 percent. In 2020, we plan to conduct activities that will enable us to advance DARE-VVA1 into Phase 1 clinical development during 2021. The timing and availability of additional funding will impact the timing of initiation of a Phase 1 clinical study of DARE-VVA1. We intend to leverage the existing safety and efficacy data for tamoxifen to utilize the FDA’s 505(b)(2) pathway to obtain marketing approval of DARE-VVA1 in the U.S.

DARE-FRT1

DARE-FRT1 is an IVR containing bio-identical progesterone for the prevention of preterm birth (PTB) and for fertility support as part of an in vitro fertilization, or IVF, treatment plan. DARE-FRT1 was developed from the same IVR technology platform as DARE-HRT1. In 2020, we plan to conduct activities that will enable us to advance DARE-FRT1 into Phase 1 clinical development during 2021. The timing and availability of additional funding will impact the timing of initiation of a Phase 1 clinical study of DARE-FRT1. We intend to leverage the existing safety and efficacy data for progesterone to utilize the FDA’s 505(b)(2) pathway to obtain marketing approval of DARE-FRT1 in the U.S.

Sales and Marketing

We currently have no formal internal marketing or sales infrastructure or capabilities. To commercialize our products, if and when our product candidates are approved, we expect to enter into agreements with companies with established marketing and sales capabilities in women's health in order to supplement our internal marketing or sales efforts.

In January 2020, we entered into an exclusive license agreement with Bayer for the commercialization of Ovaprene in the U.S. See “License Agreements” below for discussion of the terms of this collaboration.

Manufacturing and Suppliers

We do not own or operate, nor do we currently plan to establish, manufacturing facilities for the production of our product candidates. We rely on third-party contract manufacturers, or CMOs, to provide all the material and supplies for our nonclinical and clinical studies, and, if our product candidates receive regulatory approval, we expect to rely on CMOs to produce commercial quantities of our products, as well as the raw materials, drug substances, excipients and other supplies required to produce the finished products. These arrangements allow us to maintain a smaller and more flexible infrastructure.

We have no long-term arrangements for the production or supply of our product candidates or the materials required to produce them except with respect to Ovaprene and Sildenafil Cream, 3.6%. Under our agreements with ADVA-Tec and SST, respectively, ADVA-Tec is responsible for providing all clinical trial and commercial supplies of

Ovaprene, either directly or through a CMO, and SST is responsible for providing Sildenafil Cream, 3.6% for the planned Phase 2b clinical study. For further clinical development, we plan to utilize CMOs to produce and supply Sildenafil Cream, 3.6%. As we advance our product candidates toward regulatory approval, we intend to identify, qualify and enter into long-term arrangements with CMOs for commercial production of each approved product.

We expect that our current arrangements will meet our foreseeable needs for clinical trial materials or, generally, that alternative supply sources will be readily available. However, for some key raw materials or components of our clinical-stage product candidates, including Ovaprene and Sildenafil Cream, 3.6%, alternative supply sources may not be readily available. See “ITEM 1A. Risk Factors-Risks Related to our Business-Our success relies on third-party suppliers and manufacturers of our product candidates, including multiple single source suppliers and manufacturers," below.

License Agreements

Hammock/MilanaPharm Assignment and License Agreement

In December 2018, we entered into (a) an Assignment Agreement with Hammock Pharmaceuticals, Inc., or the Assignment Agreement, and (b) a First Amendment to License Agreement with TriLogic Pharma, LLC and MilanaPharm LLC, or the License Amendment. Both agreements relate to the Exclusive License Agreement among Hammock, TriLogic and MilanaPharm dated as of January 9, 2017, or the MilanaPharm License Agreement. Under the Assignment Agreement and the MilanaPharm License Agreement, as amended by the License Amendment, we acquired an exclusive, worldwide license under certain intellectual property to, among other things, develop and commercialize products for the diagnosis, treatment and prevention of human diseases or conditions in or through any intravaginal or urological applications. The licensed intellectual property relates to the hydrogel drug delivery platform of TriLogic and MilanaPharm known as TRI-726. In DARE-BV1, this proprietary technology is formulated with clindamycin, an antibiotic used to treat certain bacterial infections including BV, and has been engineered to produce a dual release pattern after vaginal application, providing maximum duration of exposure to clindamycin at the site of infection. In December 2019, we entered into amendments to each of the Assignment Agreement and License Amendment.

The following is a summary of other terms of the License Amendment, as amended:

License Fees. We paid MilanaPharm: (1) $25,000 in connection with the execution of the License Amendment; (2) $100,000 on December 5, 2019; and (3) $110,000 on January 31, 2020.

Milestone Payments. We will pay to MilanaPharm: (1) up to $300,000 in the aggregate upon achievement of certain clinical and regulatory development milestones; and (2) up to $1.75 million in the aggregate upon achieving certain commercial sales milestones.

Foreign Sublicense Income. We will pay MilanaPharm a low double-digit percentage of all income received by us or our affiliates in connection with any sublicense granted to a third party for use outside of the United States, subject to certain exclusions.

Royalty Payments. During the royalty term, we will pay MilanaPharm high single-digit to low double-digit royalties based on annual worldwide net sales of licensed products and processes. The royalty term, which is determined on a country-by-country basis and licensed product-by-product basis (or process-by-process basis), begins with the first commercial sale of a licensed product or process in a country and terminates on the latest of (1) the expiration date of the last valid claim of the licensed patent rights that cover the method of use of such product or process in such country, or (2) 10 years following the first commercial sale of such product or process in such country. Royalty payments are subject to reduction in certain circumstances, including as a result of generic competition, patent prosecution expenses incurred by us, or payments to third parties for rights or know-how required for us to exercise the licenses granted to it under the MilanaPharm License Agreement or that are strategically important or could add value to a licensed product or process in a manner expected to materially generate or increase sales.

Efforts. We must use commercially reasonable efforts and resources to (1) develop and commercialize at least one licensed product or process in the United States and at least one licensed product or process in at least one of Canada, the United Kingdom, France, Germany, Italy or Spain, and (2) continue to commercialize that product or process following the first commercial sale of a licensed product or process in the applicable jurisdiction.

Term. Unless earlier terminated, the license term continues until (1) on a licensed product-by-product (or process-by-process basis) and country-by-country basis, the date of expiration of the royalty term with respect to such licensed product in such country, and (2) the expiration of all applicable royalty terms under the MilanaPharm

License Agreement with respect to all licensed products and processes in all countries. Upon expiration of the term with respect to any licensed product or process in a country (but not upon earlier termination of the MilanaPharm License Agreement), the licenses granted to us under the MilanaPharm License Agreement will convert automatically to an exclusive, fully paid-up, royalty-free, perpetual, non-terminable and irrevocable right and license under the licensed intellectual property.

In addition to customary termination rights for all parties, MilanaPharm may terminate the license granted to us solely with respect to a licensed product or process in a country if, after having launched such product or process in such country, (1) we or our affiliates or sublicensees discontinue the sale of such product or process in such country and MilanaPharm notifies us of such termination within 60 days of having first been notified by us of such discontinuation, or (2) we or our affiliates or sublicensees (A) discontinue all commercially reasonable marketing efforts to sell, and discontinue all sales of, such product or process in such country for nine months or more, (B) fail to resume such commercially reasonable marketing efforts within 120 days of having been notified of such failure by MilanaPharm, (C) fail to reasonably demonstrate a strategic justification for the discontinuation and failure to resume to MilanaPharm, and (D) MilanaPharm gives 90 days’ notice to us.

The following is a summary of other terms of the Assignment Agreement, as amended.

Assignment; Technology Transfer. Hammock assigned and transferred to us all of its right, title and interest in and to the MilanaPharm License Agreement and agreed to cooperate to transfer to us all of the data, materials and the licensed technology in its possession pursuant to a technology transfer plan to be agreed upon by the parties, with a goal for us to independently practice the licensed intellectual property as soon as commercially practical in order to develop and commercialize the licensed products and processes.

Fees. We paid Hammock: (1) $250,000 in connection with the execution of the Assignment Agreement; (2) $125,000 on December 5, 2019; and (3) $137,500 on January 31, 2020.

Milestone Payments. We will pay Hammock up to $1.1 million in the aggregate upon achievement of certain clinical and regulatory development milestones.

Term. The Assignment Agreement will terminate upon the later of (1) completion of the parties’ technology transfer plan, and (2) payment to Hammock of the last of the milestone payments.

ADVA-Tec License Agreement

In March 2017, we entered into a license agreement with ADVA-Tec, Inc., under which we were granted an exclusive license under ADVA-Tec’s intellectual property rights to develop and commercialize Ovaprene for human contraceptive use worldwide. ADVA-Tec and its affiliates own issued patents or patent applications covering Ovaprene, and control proprietary trade secrets covering the manufacture of Ovaprene. As of March 29, 2020, this patent portfolio includes nine issued U.S. patents and two pending U.S. patent applications, and 60 granted patents and four pending patent applications in other major markets, all of which are exclusively licensed to us for all uses of Ovaprene as a human contraceptive device. Under this license agreement, we have a right of first refusal to license these patents and patent applications for additional indications.

The following is a summary of other terms of the ADVA-Tec license agreement:

Research and Development. ADVA-Tec will conduct certain research and development work as necessary to allow us to seek a PMA from the FDA and will provide us with clinical supplies of Ovaprene for clinical and commercial use on commercially reasonable terms. We must use commercially reasonable efforts to develop and commercialize Ovaprene, and must meet certain minimum spending amounts per year, and $5 million in the aggregate over the first three years, to cover such activities until a final PMA is filed, or until the first commercial sale of Ovaprene, whichever occurs first.

Milestone and Royalty Payments. We will pay to ADVA-Tec: (1) up to $14.6 million in the aggregate based on the achievement of specified development and regulatory milestones; and (2) up to $20 million in the aggregate based on the achievement of certain worldwide net sales milestones. The development and regulatory milestones include: the completion of a successful postcoital clinical study; the FDA’s approval to commence a pivotal clinical trial; successful completion of such pivotal clinical trial; the FDA’s acceptance of a PMA filing for Ovaprene; the FDA’s approval of the PMA for Ovaprene; CE Marking of Ovaprene in at least three designated European countries; obtaining regulatory approval in at least three designated European countries; and obtaining regulatory approval in Japan. The successful postcoital clinical study occurred during the fourth quarter of 2019 and we expect that we will obtain the FDA's approval

to commence a pivotal clinical study in the second half of 2020. Because future milestone payments depend upon the successful progress of our product development programs, we cannot estimate with certainty when these payments will occur.

Royalty Payments. After the commercial launch of Ovaprene, we will pay to ADVA-Tec royalties based on aggregate annual net sales of Ovaprene in specified regions at a royalty rate that will vary between 1% and 10% and will increase based on various net sales thresholds.

Term. Unless earlier terminated, the license we received under the agreement continues on a country-by-country basis until the later of the life of the licensed patents or our last commercial sale of Ovaprene. In addition to customary termination rights for both parties: (A) we may terminate the agreement with or without cause in whole or on a country-by-country basis upon 60 days prior written notice; and (B) ADVA-Tec may terminate the agreement if we develop or commercialize any non-hormonal ring-based vaginal contraceptive device competitive to Ovaprene or if we fail to: (1) in certain limited circumstances, commercialize Ovaprene in certain designated countries within three years of the first commercial sale of Ovaprene; (2) satisfy the annual spending obligation described above, (3) use commercially reasonable efforts to complete all necessary pre-clinical and clinical studies required to support and submit a PMA, (4) conduct clinical trials as set forth in the development plan to which we and ADVA-Tec agree, and as may be modified by a joint research committee, unless such failure is caused by events outside of our reasonable control, or (5) enroll a patient in the first non-significant risk medical device study or clinical trial as allowed by an institutional review board within six months of the production and release of Ovaprene, unless such failure is caused by events outside of the our reasonable control.

Bayer HealthCare LLC License Agreement

On January 10, 2020, we entered into a license agreement with Bayer regarding the further development and commercialization of Ovaprene in the U.S. We received a $1.0 million upfront payment from Bayer and Bayer will support us in development and regulatory activities by providing the equivalent of two experts to advise us in clinical, regulatory, preclinical, commercial, CMC and product supply matters. Bayer, in its sole discretion, has the right to make the license effective by paying us an additional $20.0 million, referred to as the Clinical Trial and Manufacturing Activities Fee. Such license would be exclusive with regard to the commercialization of Ovaprene for human contraception in the U.S. and co-exclusive with us with regard to development.

The following is a summary of the other terms of the Bayer license agreement:

Milestone Payments Paid by Bayer. We will be entitled to receive (a) a milestone payment in the low double-digit millions upon the first commercial sale of Ovaprene in the U.S. and escalating milestone payments based on annual net sales of Ovaprene during a calendar year, totaling up to $310.0 million if all such milestones, including the first commercial sale, are achieved, (b) tiered royalties starting in the low double digits based on annual net sales of Ovaprene during a calendar year, subject to customary royalty reductions and offsets, and (c) a percentage of sublicense revenue.

Efforts. We will be responsible for the pivotal trial for Ovaprene and for its development and regulatory activities and we have product supply obligations. After payment of the Clinical Trial and Manufacturing Activities Fee, Bayer will be responsible for the commercialization of Ovaprene for human contraception in the U.S.

Term. The initial term of the agreement, which is subject to automatic renewal terms, continues until the later of (a) the expiration of any valid claim covering the manufacture, use, sale or import of Ovaprene in the U.S.; or (b) 15 years from the first commercial sale of Ovaprene in the U.S. In addition to customary termination rights for both parties, Bayer may terminate the agreement at any time on 90 days’ notice and the agreement will automatically terminate if we do not receive the Clinical Trial and Manufacturing Activities Fee if and when due.

SST License and Collaboration Agreement

In February 2018, we entered into a license and collaboration agreement with Strategic Science and Technologies-D, LLC and Strategic Science Technologies, LLC, referred to collectively as SST, under which we received an exclusive, royalty-bearing, sublicensable license to develop and commercialize, in all countries and geographic territories of the world, for all indications for women related to female sexual dysfunction and/or female reproductive health, including treatment of female sexual arousal disorder, or the Field of Use, SST's topical formulation of Sildenafil Cream, 3.6% as it existed as of the effective date of this agreement, or any other topically applied pharmaceutical product

containing sildenafil or a salt thereof as a pharmaceutically active ingredient, alone or with other active ingredients, but specifically excluding any product containing ibuprofen or any salt derivative of ibuprofen, or the Licensed Products.

The following is a summary of other terms of the SST license agreement:

Invention Ownership. We retain rights to inventions made by our employees, SST retains rights to inventions made by its employees, and each party owns a 50% undivided interest in all joint inventions.

Joint Development Committee. The parties will collaborate through a joint development committee that will determine the strategic objectives for, and generally oversee, the development efforts of both parties under the agreement.

Development. We must use commercially reasonable efforts to develop the Licensed Products in the Field of Use in accordance with a development plan in the agreement, and to commercialize the Licensed Products in the Field of Use. We are responsible for all reasonable internal and external costs and expenses incurred by SST in its performance of the development activities it must perform under the agreement.

Royalty Payments. SST will be eligible to receive tiered royalties based on percentages of annual net sales of Licensed Products in the single digits to the mid double digits, subject to customary royalty reductions and offsets, and a percentage of sublicense revenue.

Milestone Payments. SST will be eligible to receive payments (1) ranging from $0.5 million to $18.0 million in the aggregate upon achieving certain clinical and regulatory milestones in the U.S. and worldwide, and (2) between $10.0 million to $100 million in the aggregate upon achieving certain commercial sales milestones. If we enter into strategic development or distribution partnerships related to the Licensed Products, additional milestone payments would be due to SST.

License Term. Our license continues on a country-by-country basis until the later of 10 years from the date of the first commercial sale of such Licensed Product or the expiration of the last valid claim of patent rights covering the Licensed Product in the Field of Use. Upon expiration (but not termination) of the agreement in a particular country, we will have a fully paid-up license under the licensed intellectual property to develop and commercialize the applicable Licensed Products in the applicable country on a non-exclusive basis.

Termination. In addition to customary termination rights for both parties: (1) prior to receipt of approval by a regulatory authority necessary for commercialization of a Licensed Product in the corresponding jurisdiction, including NDA approval, we may terminate the agreement without cause upon 90 days prior written notice; (2) following receipt of approval by a regulatory authority necessary for commercialization of a Licensed Product in the corresponding jurisdiction, including NDA approval, we may terminate the agreement without cause upon 180 days prior written notice; and (3) SST may terminate the agreement with respect to the applicable Licensed Product(s) in the applicable country(ies) upon 30 days’ notice if we fail to use commercially reasonable efforts to perform development activities in substantial accordance with the development plan and do not cure such failure within 60 days of receipt of SST's notice thereof.

Catalent JNP License Agreement

In April 2018, we entered into an exclusive license agreement with Catalent JNP, Inc. (formerly known as Juniper Pharmaceuticals, Inc., and which we refer to as Catalent in this report), under which Catalent granted us (a) an exclusive, royalty-bearing worldwide license under certain patent rights, either owned by or exclusively licensed to Catalent, to make, have made, use, have used, sell, have sold, import and have imported products and processes; and (b) a non-exclusive, royalty-bearing worldwide license to use certain technological information owned by Catalent to make, have made, use, have used, sell, have sold, import and have imported products and processes. We are entitled to sublicense the rights granted to us under this agreement.

The following is a summary of other terms of the Catalent license agreement:

Upfront Fee. We paid a $250,000 non-creditable upfront license fee to Catalent in connection with the execution of the agreement.

Annual Maintenance Fee. We will pay an annual license maintenance fee to Catalent on each anniversary of the date of the agreement, the amount of which will be $50,000 for the first two years, and $100,000 thereafter, and which will be creditable against royalties and other payments due to Catalent in the same calendar year but may not be carried forward to any other year. We made the first of these payments in April 2019.

Milestone Payments. We must make potential future development and sales milestone payments of (1) up to $13.5 million in the aggregate upon achieving certain clinical and regulatory milestones, and (2) up to $30.3 million in the aggregate upon achieving certain commercial sales milestones for each product or process covered by the licenses granted under the agreement.

Royalty Payments. During the royalty term, we will pay Catalent mid-single-digit to low double-digit royalties based on worldwide net sales of products and processes covered by the licenses granted under the agreement. In lieu of such royalty payments, we will pay Catalent a low double-digit percentage of all sublicense income we receive for the sublicense of rights under the agreement to a third party. The royalty term, which is determined on a country-by-country basis and product-by-product basis (or process-by-process basis), begins with the first commercial sale of a product or process in a country and terminates on the latest of (1) the expiration date of the last valid claim within the licensed patent rights with respect to such product or process in such country, (2) 10 years following the first commercial sale of such product or process in such country, and (3) when one or more generic products for such product or process are commercially available in such country, except that if there is no such generic product by the 10th year following the first commercial sale in such country, then the royalty term will terminate on the 10-year anniversary of the first commercial sale in such country.

Efforts. We must use commercially reasonable efforts to develop and make at least one product or process available to the public, which efforts include achieving specific diligence requirements by specific dates specified in the agreement.

Term. Unless earlier terminated, the term of the agreement will continue on a country-by-country basis until the later of (1) the expiration date of the last valid claim within such country, or (2) 10 years from the date of first commercial sale of a product or process in such country. Upon expiration (but not early termination) of the agreement, the licenses granted thereunder will convert automatically to fully-paid irrevocable licenses. Catalent may terminate the agreement (1) upon 30 days’ notice for our uncured breach of any payment obligation under the agreement, (2) if we fail to maintain required insurance, (3) immediately upon our insolvency or the making of an assignment for the benefit of our creditors or if a bankruptcy petition is filed for or against us, which petition is not dismissed within 90 days, or (4) upon 60 days’ notice for any uncured material breach by us of any of our other obligations under the agreement. We may terminate the agreement on a country-by-country basis for any reason by giving 180 days’ notice (or 90 days’ notice if such termination occurs prior to receipt of marketing approval in the United States). If Catalent terminates the agreement for the reason described in clause (4) above or if we terminate the agreement, Catalent will have full access including the right to use and reference all product data generated during the term of the agreement that is owned by us.

Microchips Acquisition

In November 2019, we acquired Microchips Biotech, Inc., or Microchips, via a merger transaction in which a wholly owned subsidiary we formed for purposes of this transaction merged with and into Microchips, and Microchips survived as our wholly owned subsidiary. Microchips is developing a proprietary, microchip-based, implantable drug delivery system designed to store and precisely deliver numerous therapeutic doses over months and years on a schedule determined by the user and controlled via wireless remote. Microchips’ lead product candidate is a pre-clinical stage contraceptive application of the technology that utilizes levonorgestrel.

At the closing of the merger, we issued an aggregate of approximately 3.0 million shares of our common stock to the holders of shares of Microchips’ capital stock outstanding immediately prior to the effective time of the merger. Such shares were in consideration of Microchips' cash and cash equivalents, less liabilities, at closing. Microchips' cash and cash equivalents at closing were approximately $5.9 million after taking into account payment of transaction-related expenses.

We agreed to pay the following contingent consideration to the former Microchips stockholders: (1) up to $46.5 million contingent upon the achievement of specified funding, product development and regulatory milestones; up to $2.3 million of which we may elect to pay in shares of our common stock, subject to approval of our stockholders to the extent necessary to comply with Nasdaq Listing Rule 5635; (2) up to $55.0 million contingent upon the achievement of specified amounts of aggregate net sales of products incorporating the intellectual property we acquired in the merger; (3) tiered royalty payments ranging from low single-digit to low double-digit percentages of annual net sales of such products, subject to customary provisions permitting royalty reductions and offset; and (4) a percentage of sublicense revenue related to such products.

The shares issued in connection with the Microchips merger will be held in escrow for a period of eighteen months to satisfy the indemnification obligations of the Microchips stockholders under the merger agreement. We agreed to register the shares of our common stock issued at the closing as well as any shares issuable after the closing as

contingent consideration to the former Microchips stockholders for resale under the Securities Act of 1933 within 180 days of closing.

Intellectual Property

We actively seek to protect the proprietary technology that we consider important to our business in the United States and other jurisdictions internationally. We also rely upon trade secrets and contracts to protect our proprietary information.

Patents

The medical device and pharmaceutical industries are characterized by the existence of a large number of patents and frequent litigation based on allegations of patent infringement. Patent litigation can involve complex factual and legal questions, and its outcome is uncertain. Any claim relating to infringement of third party patents that is successfully asserted against us or our licensors may require us to pay substantial damages or may limit our or our licensors' ability to rely on such patent protection. Any third party claim successfully alleging the invalidity or unenforceability of the patents may also limit our or our licensors' ability to rely on such patent protection. Even if we, or our licensors were to prevail in any such action, any litigation could be costly and time-consuming and would divert the attention of management and key personnel from our business operations. Also, if our product candidates or any future products are found to infringe the patents of others, our development, manufacture, and sale of these potential products could be severely restricted or prohibited. In addition, there can be no assurance that any patent applications filed by us or our licensors will result in the grant of a patent either in the United States or elsewhere, or that any patents granted will be valid and enforceable, or that any patents will provide a competitive advantage or afford protection against competitors with similar technologies. Because of the importance of the patents underlying our product candidates, our business and our prospects may be harmed if we fail to maintain existing or obtain new patent rights or if we and our licensors fail to protect key intellectual property rights.

Under the terms of the Assignment Agreement with Hammock Pharmaceuticals, Inc. and the License Amendment with TriLogic Pharma, LLC and MilanaPharm, LLC, we are the exclusive licensee of four issued U.S. Patents, two with patent terms until December 2028, one with a patent term until June 2031 not including any patent term adjustment, one with a patent term until October 2037, and five foreign patents that have patent terms until December 2028. In addition, we have rights to five pending foreign patent applications and two pending U.S patent applications. If issued the patent term for these patents would be between 2036 and 2037 not including any patent term adjustment.

Under the terms of the ADVA-Tec license agreement, we are the exclusive licensee of nine granted U.S. patents and two pending U.S. patent applications, and 60 granted patents and four pending patent applications in other major markets. Two of the patents that are particularly important to the protection of Ovaprene have terms until August 2028, including patent term adjustment, and a third patent has a term until July 2027, including patent term adjustment.

Under the terms of the SST license agreement, we are the exclusive licensee in the Field of Use of sixteen issued patents worldwide (seven U.S. patents and thirteen foreign patents), along with one pending U.S. patent application that has received a Notice of Allowance and four pending worldwide patent applications, including tone that has received a Notice of Allowance. The issued U.S. patents have a patent term until June 2029, including any patent term adjustment, and may be eligible for patent exclusivity under the Hatch-Waxman Act.

Under the terms of the Catalent license agreement, we are the exclusive licensee of four issued U.S. patents with patent terms until April 2024, November 2024, and September 2027, including patent term adjustment, six issued foreign patents with patent terms until April 2024, one pending U.S. application and two pending foreign applications that if granted will have patent terms until May 2038.

We filed two provisional applications in 2019 related to DARE-HRT1. We plan to file a non-provisional application or applications related to the provisional applications in 2020.

When we acquired Pear Tree Pharmaceuticals, Inc. in April 2018, we obtained the rights to three U.S. patents and one Japan patent. The patent term for two of the U.S. patents will expire in June 2027 and one will expire in May 2035 not including any patent term adjustment. The Japan patent has a term until June 2027.

We also rely upon trade secret rights to protect our product candidates as well as other technologies that may be used to discover, validate and commercialize our current or any future product candidates. We presently seek protection, in part, through confidentiality and proprietary information agreements.

Trademarks

We hold a domestic registration for the trademark Daré Bioscience. In accordance with the terms of the ADVA-Tec license agreement, we are the exclusive licensee of the Ovaprene registered trademark.

Market Access

We intend to create a comprehensive global commercialization strategy in combination with established pharmaceutical partners and regional distributors.

Pre-Clinical Programs

In addition to our clinical-stage product candidates, we have licenses or other rights to the following pre-clinical stage product candidates in women’s health that meet our selection criteria of technology or product candidates with potential to expand options and improve outcomes, and that are easy and convenient to use:


•	A microchip-based, implantable drug delivery system and a contraceptive application of that technology utilizing levonorgestrel that is designed to provide user-controlled, long-acting reversible contraception;


•	ORB-204 and ORB-214, 6-month and 12-month formulations of injectable etonogestrel for contraception; and


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

Competition

The industries in which we operate (biopharmaceutical, specialty pharmaceutical, biotechnology and medical device) are highly competitive and subject to rapid and significant change. We may not compete successfully against organizations with competitive products, particularly large pharmaceutical companies. Many of our potential competitors have greater clinical, regulatory, manufacturing, marketing, distribution, compliance and financial resources and experience than we do. See “ITEM 1A. RISK FACTORS—Risks Related to our Business—We face intense competition from other medical device, biotechnology and pharmaceutical companies and our operating results will suffer if we fail to compete effectively,” below.

Over the longer term, our ability, independently or otherwise, to successfully develop, manufacture, market, distribute and sell any approved products, expand their usage or bring additional new products to the marketplace will depend on many factors, including, but not limited to, FDA and foreign regulatory agency approval of new products and of new indications for existing products, the efficacy and safety of our products (alone and relative to other treatment options), the degree of patent or other protection afforded to particular products, and reimbursement for use of those products.

Many other organizations are developing drug products and other therapies intended to treat the same diseases and conditions for which our product candidates are in development, and the success of others may render potential application of our product candidates obsolete or noncompetitive, even prior to completion of its development.

Government Regulation

Governmental authorities in the U.S. and other countries extensively regulate the testing, manufacturing, labeling and packaging, storage, recordkeeping, advertising, promotion, import, export, marketing, and distribution, among other things, of pharmaceutical, medical device, and combination products. In the U.S., the FDA, under the Federal Food, Drug and Cosmetic Act, or FDCA, and other federal statutes and regulations, subject pharmaceutical and other regulated products to rigorous review. If we do not comply with applicable requirements, we may be fined, the government may send us a warning letter, refuse to approve our marketing applications or allow us to manufacture or market our products, our products may be seized, the government may seek injunctions against us, and we may be criminally prosecuted.

We and our third-party manufacturers, distributors and contract research organizations, or CROs, may also be subject to regulations under other federal, state, and local laws, including the Occupational Safety and Health Act, the Environmental Protection Act, the Clean Air Act, the Health Insurance Portability and Accountability Act, privacy laws and import, export and customs regulations, as well as the laws and regulations of other countries.

FDA Approval Process for Prescription Drugs

To obtain approval of a new drug product from the FDA, we must, among other requirements, submit data supporting its safety and efficacy, as well as detailed information on the manufacture and composition of the drug and proposed product labeling. The testing and collection of data and the preparation of necessary applications are expensive and time-consuming. The FDA may not act quickly or favorably in reviewing these applications, and we may encounter significant difficulties or costs in our efforts to obtain FDA approvals that could delay or preclude us from marketing our product candidates.

The process required by the FDA before a new drug may be marketed in the U.S. generally involves some or all of the following key steps:


•	completion of nonclinical studies performed in compliance with FDA regulations;


•	design of a clinical protocol and its submission to the FDA as part of an IND, which must become effective before human clinical trials may begin;


•	performance of adequate and well-controlled human clinical trials to establish the safety and efficacy of the product candidate for its intended use;


•	submission of an NDA after completion of pivotal clinical trials and FDA acceptance of that NDA;


•	satisfactory completion of an FDA pre-approval inspection of the manufacturing facilities at which the active pharmaceutical ingredient, or API, and finished drug product are produced and tested to assess compliance with current good manufacturing practices, or cGMP;


•	possible inspection of selected clinical study sites to confirm compliance with good clinical practices, or GCP, requirements and data integrity; and


•	FDA review and approval of the NDA prior to any commercial marketing or sale of the drug product in the U.S.

The clinical investigation of an investigational new drug is divided into three phases that typically are conducted sequentially but may overlap. The three phases are as follows:

Phase 1. Phase 1 includes initial clinical trials introducing an investigational new drug into humans and may be conducted in subjects with the target disease or normal volunteers. These trials are designed to determine the metabolism and pharmacologic actions of the drug in humans, the side effects associated with increasing doses, and, if possible, to gain early evidence on effectiveness.

Phase 2. Phase 2 includes the controlled clinical trials conducted to evaluate the effectiveness of the drug for a particular indication or indications in subjects with the disease or condition under study and to determine the common short-term side effects and risks associated with the drug. Phase 2 trials are typically well controlled, closely monitored, and conducted in a relatively small number of subjects.

Phase 3. Phase 3 trials are typically large trials performed after preliminary evidence suggesting effectiveness of the drug has been obtained. They are intended to gather additional information about the effectiveness and safety that is needed to evaluate the overall benefit-risk relationship of the drug and to provide an adequate basis for physician labeling and product marketing approval. Phase 3 trials usually are conducted at geographically dispersed clinical study sites.

A clinical trial may combine the elements of more than one phase and the FDA often requires more than one Phase 3 trial to support marketing approval of a product candidate. A company’s designation of a clinical trial as being of a particular phase is not necessarily indicative that the study will be sufficient to satisfy the FDA requirements of that phase because this determination cannot be made until the protocol and data have been submitted to and reviewed by the FDA.

A pivotal trial is a clinical trial that is believed to satisfy FDA requirements for the evaluation of a product candidate’s safety and efficacy such that it can be used, alone or with other pivotal or non-pivotal trials, to support regulatory approval. Generally, pivotal trials are Phase 3 trials, but they may be Phase 2 trials if the design provides a well-controlled and reliable assessment of clinical benefit, particularly in an area of unmet medical need.

Clinical trials must be conducted in accordance with the FDA’s GCP requirements. The FDA may order the temporary or permanent discontinuation of a clinical trial at any time, known as a "clinical hold," or impose other sanctions if it believes that the clinical trial is not being conducted in accordance with FDA requirements or that the subjects are being exposed to an unacceptable health risk. Occasionally, clinical holds are imposed due to manufacturing

issues that may present safety issues for the clinical study subjects. An institutional review board, or IRB, is responsible for ensuring that human subjects in clinical studies are protected from inappropriate study risks. An IRB must approve the clinical trial design and process for obtaining subject informed consent at study sites that the IRB oversees and also may halt a study, either temporarily or permanently, for failure to comply with GCP or the IRB’s requirements.

As a product candidate moves through the clinical testing phases, manufacturing processes are further defined, refined, controlled and validated. The level of control and validation required by the FDA increases as clinical development progresses. We and the third-party manufacturers on which we rely for the manufacture of our product candidates and their respective components (including API) are subject to requirements that drugs be manufactured, packaged, tested, and labeled in conformity with cGMP. To comply with cGMP requirements, manufacturers must continue to spend time, money and effort to meet requirements relating to personnel, facilities, equipment, production and process, labeling and packaging, quality control, recordkeeping and other requirements.

Assuming successful completion of all required testing in accordance with all applicable regulatory requirements, detailed information on the product candidate is submitted to the FDA in the form of an NDA requesting approval to market the drug for one or more indications, together with payment of a significant user fee, unless waived. An NDA includes all relevant data available from pertinent nonclinical studies and clinical trials, including negative or ambiguous results as well as positive findings, together with detailed information on the product candidate’s chemistry, manufacturing, and controls, or CMC, and proposed labeling, among other things. To support marketing approval, the data submitted must be sufficient in quality and quantity to establish the safety and efficacy of the product candidate for its intended use to the satisfaction of the FDA.

Most innovative drug products (other than biological products) obtain FDA marketing approval pursuant to an NDA submitted under Section 505(b)(1) of the FDCA, commonly referred to as a "full NDA." Another alternative is a special type of NDA submitted under Section 505(b)(2) of the FDCA, commonly referred to as a 505(b)(2) NDA, which enables the applicant to rely, in part, on the FDA’s prior findings of safety and efficacy data for an existing product, or published literature, in support of its application. Section 505(b)(2) NDAs may provide an alternate path to FDA approval for new or improved formulations or new uses of previously approved products.

Section 505(b)(2) permits the filing of an NDA in which the applicant relies, at least in part, on information from studies made to show whether a drug is safe or effective that were not conducted by or for the applicant and for which the applicant has not obtained a right of reference or use. A Section 505(b)(2) applicant may eliminate or reduce the need to conduct certain pre-clinical or clinical studies, if it can establish that reliance on studies conducted for a previously-approved product is scientifically appropriate. The FDA may also require companies to perform additional studies or measurements, including nonclinical and clinical studies, to support the change from the approved product. The FDA may then approve the new product candidate for all or some of the labeled indications for which the referenced product has been approved, as well as for any new indication for which the Section 505(b)(2) NDA applicant has submitted data.

The FDA reviews all NDAs, whether 505(b)(1) or 505(b)(2) applications, submitted to ensure that they are sufficiently complete for substantive review before it accepts them for filing. It may request additional information rather than accept an NDA for filing. In this event, the application must be resubmitted with the additional information. The resubmitted application also is subject to review before the FDA accepts it for filing. The FDA has 60 days after submission of an NDA to conduct an initial review to determine whether it is sufficient to accept for filing.

If an NDA submission is accepted for filing, the FDA begins an in-depth review of the NDA. Under the Prescription Drug User Fee Act, or PDUFA, the FDA sets a goal date by which it plans to complete its review. For a standard review, this goal date typically is ten months from the date of submission of the NDA application. If the NDA application relates to an unmet medical need in a serious or life-threatening indication and is designated for priority review, the FDA’s goal date typically is six (6) months from the date of NDA submission. However, PDUFA goal dates are not legal mandates and FDA response often occurs several months beyond the original PDUFA goal date. Further, the review process and the target response date under PDUFA may be extended if the FDA requests, or the NDA sponsor otherwise provides, additional information or clarification regarding information already provided in the NDA. As a result, the NDA review process can be very lengthy. During its review of an NDA, the FDA may refer the application to an advisory committee of independent experts for a recommendation as to whether the application should be approved. The FDA is not bound by the recommendation of an advisory committee, but it typically follows such recommendations. Data from clinical trials are not always conclusive, and the FDA or its advisory committee may interpret data differently than the NDA sponsor.

After evaluating the NDA and inspecting manufacturing facilities where the drug product or its API will be produced, the FDA will either approve commercial marketing of the drug product for specific indications of use or

issue a complete response letter, or CRL, indicating that the application is not ready for approval and stating the conditions that must be met in order to secure approval of the NDA. If the CRL requires additional data and the applicant subsequently submits that data, the FDA nevertheless may ultimately decide that the NDA does not satisfy its criteria for approval. The FDA could also approve the NDA with a Risk Evaluation and Mitigation Strategy, or REMS, which could include medication guides, physician communication plans, or elements to assure safe use, such as restricted distribution methods, patient registries or other risk minimization tools. The FDA also may condition drug approval on, among other things, changes to proposed labeling, development of adequate controls and specifications, or a commitment to conduct post-marketing testing. Such post-marketing testing may include Phase 4 clinical trials and surveillance to further assess and monitor the product’s safety and efficacy after approval.

If the FDA approves any of our product candidates, we will be required to comply with a number of ongoing post-marketing regulatory requirements. We would be required to report, among other things, certain adverse reactions and production problems to the FDA, and to comply with requirements concerning advertising and promotional labeling for any of our prescription drug products, including submitting all of our advertising and promotional labeling to the FDA at the time those are publicly disseminated. Also, quality control and manufacturing procedures must continue to conform to cGMP after approval, and the FDA periodically inspects manufacturing facilities to assess compliance with cGMP, which imposes extensive procedural, substantive and record keeping requirements. If we seek to make certain changes to an approved product, such as certain manufacturing changes, we typically will need FDA approval before the change can be implemented. For example, if we change the manufacturer of a product or its API, the FDA may require stability or other data such as a bioequivalence study from the new manufacturer to assure the agency that the prior and new formulations are interchangeable, which data will take time and is costly to generate, and the delay associated with generating this data may cause interruptions in our ability to meet commercial demand, if any. Moreover, although physicians may use products for indications that have not been approved by the FDA, we may not label or promote the product for an indication that has not been approved pursuant to an NDA. Securing FDA approval for new indications is similar to the process for approval of the original indication and requires, among other things, submitting data from adequate and well-controlled clinical trials to demonstrate the product’s safety and efficacy in the new indication. Even if such trials are conducted, the FDA may not approve any expansion of the labeled indications for use in a timely fashion, or at all.

We rely on third parties for the manufacture of our clinical trial material and we expect to rely on third-party manufacturers to produce commercial quantities of our drugs and devices, should they receive regulatory approval in the future. Future FDA, state, or foreign governmental agency inspections may identify compliance issues at these third-party facilities that may disrupt production or distribution or require substantial resources to correct. In addition, discovery of previously unknown problems with a product or the failure to comply with applicable requirements may result in restrictions on a product, manufacturer or holder of an approved NDA, including withdrawal or recall of the product from the market or other voluntary, FDA-initiated, or judicial action that could delay or prohibit further marketing. Newly discovered or developed safety or efficacy data may require changes to a product’s approved labeling, including the addition of new warnings and contraindications, and also may require the implementation of other risk management measures. Many of the foregoing could limit the commercial value of a product or require us to commit substantial additional resources in connection with the approval of an investigational drug. Also, new government requirements, including those resulting from new legislation, may be established, or the FDA’s policies may change, which could delay or prevent regulatory approval of our products under development.

Pharmaceutical Pricing and Reimbursement

Sales of our drug products, if approved, will depend, in part, on the extent to which the costs of our products will be covered by third-party payors, such as government health care programs, private health insurers, managed health care providers, and other organizations. These third-party payors are increasingly challenging drug prices and examining the medical necessity and cost-effectiveness of medical products and services, in addition to their safety and efficacy. If these third-party payors do not consider our products to be cost-effective compared to other therapies, they may not cover our products after approval as a benefit under their plans or, even if they do, the level of payment may not be sufficient to allow us to sell our products on a profitable basis.

Significant uncertainty exists as to the reimbursement status for newly approved drug products, including coding, coverage and payment. Sales of any products for which we obtain marketing approval will depend in part on coverage and adequate payment from third-party payors. There is no uniform policy requirement for coverage and reimbursement for drug products among third-party payors in the United States; therefore coverage and reimbursement for drug products can differ significantly from payor to payor. The coverage determination process is often a time-consuming and costly process that will require us to provide scientific and clinical support for the use of our products to each payor separately, with no assurance that coverage and adequate payment will be applied consistently or obtained. The process for determining whether a payor will cover and how much it will reimburse a product may be separate from

the process of seeking approval of the product or for setting the price of the product. Even if reimbursement is provided, market acceptance of our products may be adversely affected if the amount of payment for our products proves to be unprofitable for health care providers or less profitable than alternative treatments or if administrative burdens make our products less desirable to use.

Additionally, the containment of health care costs has become a priority of federal and state governments and the prices of drug products have been a focus in this effort. For example, there have been several recent U.S. Congressional inquiries and proposed bills designed to, among other things, bring more transparency to drug pricing, review the relationship between pricing and manufacturer patient programs, and reform government program reimbursement methodologies for drugs. We expect that federal, state and local governments in the U.S. will continue to consider legislation directed at lowering the total cost of health care. In addition, in certain foreign markets, the pricing of drug products is subject to government control and reimbursement may in some cases be unavailable or insufficient.

The Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010, collectively referred to as the ACA, enacted in March 2010, has had and is expected to continue to have a significant impact on the health care industry. The ACA, among other things, imposes a significant annual fee on certain companies that manufacture or import branded prescription drug products. The ACA also increased the Medicaid rebate rate and the volume of rebated drugs has been expanded to include beneficiaries in Medicaid managed care organizations. The ACA also expanded the 340B drug discount program (excluding orphan drugs), including a 50% discount on brand name drugs for Medicare Part D participants in the coverage gap, and revised the definition of “average manufacturer price” for reporting purposes, which could increase the amount of the Medicaid drug rebates paid to states. It also contains substantial provisions intended to broaden access to health insurance, reduce or constrain the growth of health care spending, enhance remedies against health care fraud and abuse, add new transparency requirements for the health care industry, impose new taxes and fees on pharmaceutical manufacturers, and impose additional health policy reforms, any or all of which may affect our business.

Since its enactment there have been judicial and congressional challenges to certain aspects of the ACA, and we expect there will be additional challenges and amendments to the ACA in the future. The current Presidential administration and certain members of the U.S. Congress have indicated that they may continue to seek to modify, repeal or otherwise invalidate all, or certain provisions of, the ACA. President Trump has signed two Executive Orders and other directives designed to delay the implementation of certain provisions of the ACA or otherwise circumvent some of the requirements for health insurance mandated by the ACA. Concurrently, Congress has considered legislation that would repeal or repeal and replace all or part of the ACA. While Congress has not passed comprehensive repeal legislation, two bills affecting the implementation of certain taxes under the ACA have been signed into law. For example, the Tax Cuts and Jobs Act of 2017 repealed the tax-based shared responsibility payment imposed by the ACA on certain individuals who fail to maintain qualifying health coverage for all or part of a year that is commonly referred to as the "individual mandate." In December 2019, the Fifth Circuit Court of Appeals upheld a district court's finding that the individual mandate in the ACA is unconstitutional following removal of the penalty provision from the law. However, the Fifth Circuit reversed and remanded the case to the district court to determine if other reforms enacted as part of the ACA, but not specifically related to the individual mandate or health insurance, could be severed from the rest of the ACA so as not to have the law declared invalid in its entirety. It is unclear how this decision, subsequent appeals including potentially to the U.S. Supreme Court, and other efforts to repeal and replace the ACA will affect the implementation of that law and our business. We continue to evaluate the potential impact of the ACA and its possible repeal or replacement on our business.

Other legislative changes have also been proposed and adopted since the ACA was enacted. For example, in August 2011, the President signed into law the Budget Control Act of 2011, which, among other things, created the Joint Select Committee on Deficit Reduction to recommend to Congress proposals in spending reductions. The Joint Select Committee did not achieve a targeted deficit reduction of at least $1.2 trillion for the years 2013 through 2021, triggering the legislation's automatic reduction to several government programs. This includes reductions to Medicare payments to providers of 2% per fiscal year, which went into effect in April 2013 and, due to subsequent legislative amendments, will remain in effect through 2027 unless additional congressional action is taken. Additionally, in January 2013, the President signed into law the American Taxpayer Relief Act of 2012, which, among other things, reduced Medicare payments to several providers and increased the statute of limitations period for the government to recover overpayments to providers from three to five years.

It is uncertain whether and how future legislation, whether domestic or abroad, could affect prospects for our product candidates or what actions federal, state, or commercial payors for pharmaceutical products may take in response to any such health care reform proposals or legislation. Adoption of price controls and cost-containment measures, and adoption of more restrictive policies in jurisdictions with existing controls and measures reforms may prevent or limit our ability to generate revenue, attain profitability or commercialize our product candidates.

FDA Approval Process for Combination Products and Medical Devices

A combination product is a product composed of a combination of two or more FDA-regulated product components or products, e.g., drug-device or biologic-device. A combination product can take a variety of forms, such as a single entity made by physically or chemically combining components, or a single unit made of separately packaged products. Each combination product is assigned a lead FDA Center, which has jurisdiction for the premarket review and regulation, based on which constituent part of the combination product provides the primary mode of action, i.e., the mode of action expected to make the greatest contribution to the overall intended therapeutic effect of the product. If the classification as a combination product or the lead Center assignment is unclear or in dispute, a sponsor may request a meeting, submit a Request for Designation or RFD, and the FDA will issue a designation letter within 60 calendar days of the filing of the RFD. Depending on the type of combination product, the FDA may require a single application for approval, clearance, or licensure of the combination product, or separate applications for the constituent parts. During the review of marketing applications, the lead Center may consult or collaborate with other FDA Centers.

In 2017, the FDA released final documents addressing the application of cGMP requirements and classification issues relating to combination products. The 21st Century Cures Act, or the Cures Act, which became law in December 2016 and, among other things, amended provisions of the FDCA, sets forth a number of provisions pertaining to combination products, such as procedures for negotiating disagreements between sponsors and the FDA and requirements intended to streamline FDA premarket reviews of combination products that contain an already-approved component. For drug-device combination products, comprised of an FDA-approved drug and device primary mode of action, the Cures Act applies Hatch-Waxman requirements to the premarket review process such that a patent dispute regarding the listed drug may result in the delay of the 510(k) clearance or PMA approval of the combination product. Furthermore, the Cures Act applies exclusivity provisions (e.g., new chemical entity and orphan drug exclusivities) to the device clearance and approval process for combination products with a device primary mode of action.

Because the FDA has different centers responsible for assessing and approving devices, drugs, and biologics, the FDA’s response to an RFD submitted by a sponsor will assign a lead center for the combination product. The CDRH has oversight responsibility for medical devices, while the Center for Drug Evaluation and Research, or CDER, has responsibility for drug products. Because combination products involve components that would normally be regulated under different types of regulatory regimes, and frequently by different FDA Centers, they raise challenging regulatory, policy, and review management challenges. Differences in regulatory pathways for each component can impact the regulatory processes for all aspects of product development and management, including pre-clinical testing, clinical investigation, marketing applications, manufacturing and quality control, adverse event reporting, promotion and advertising, and post-approval modifications.

The development and approval process for combination products designated as having a drug-primary mode of action and assigned to CDER generally will follow the procedures set forth above for pharmaceutical products. Similarly, medical devices and combination products with a device-primary mode of action may also be subject to FDA approval and extensive regulation under the FDCA. Medical devices are classified into one of three classes: Class I, Class II, or Class III. A higher class indicates a greater degree of risk associated with the device and a greater amount of control needed to ensure safety and effectiveness.

All devices, unless exempt by FDA regulation, must adhere to a set of general controls, including compliance with the applicable portions of the FDA's Quality System Regulation, or QSR, which sets forth good manufacturing practice requirements for medical devices, including stringent design controls; facility registration and product listing; reporting of adverse medical events; truthful and non-misleading labeling; and promotion of the device consistent with its cleared or approved intended uses. Class II devices are subject to additional special controls and may require FDA clearance of a premarket notification (510(k)). Class III devices, which involve those posing the greatest health risk, require approval of a premarket approval application, or PMA.

Most Class I devices are exempt from FDA premarket review or approval. Class II devices, with some exceptions, must be “cleared” by the FDA through the 510(k) process, which requires a company to show that the device is “substantially equivalent” to certain devices already on the market. Class III devices, again with some exceptions, must be approved through a PMA. A PMA generally requires data from clinical trials that establish the safety and effectiveness of the device. A 510(k) application also sometimes requires clinical data. The Cures Act requires the FDA to establish a program that would expedite access to devices that provide more effective treatment or diagnosis of life-threatening or irreversibly debilitating diseases or conditions, for which no approved or cleared treatment exists or which offer significant advantages over existing approved or cleared alternatives; in 2018, the FDA published its final guidance on this “breakthrough” devices pathway.

Clinical trials for medical devices are subject to similar requirements as clinical trials with pharmaceutical products. Clinical trials involving significant risk devices (e.g., devices that present a potential for serious risk to the health, safety, or welfare of human subjects) are required to obtain both FDA approval of an investigational device exemption, or IDE, application and IRB approval before study initiation; clinical trials involving non-significant risk devices are not required to submit an IDE for FDA approval but must obtain IRB approval before study initiation.

The FDA has broad regulatory and enforcement powers with respect to medical devices, similar to those for pharmaceutical products. The FDA requires medical device manufacturers to comply with detailed requirements regarding device design and manufacturing practices, labeling and promotion, record keeping, and adverse event reporting. As with pharmaceutical products, states also impose regulatory requirements on medical device manufacturers and distributors. Failure to comply with the applicable federal or state requirements could result in, among other things: (1) fines, injunctions, and civil penalties; (2) recall or seizure of products; (3) operating restrictions, partial suspension or total shutdown of manufacturing; (4) refusing requests for approval of new products; (5) withdrawing approvals already granted; and (6) criminal prosecution.

The FDA also administers certain controls over the import and export of medical devices to and from the United States. Additionally, each foreign country subjects medical devices to its own regulatory requirements. In the European Union, a single regulatory approval process has been created, and approval is represented by the CE Mark, which requires conformity to a Medical Device Regulation, or MDR, that went into effect in 2017 and imposed significant new requirements.

Other Health Care Laws and Compliance Requirements

In addition to FDA requirements, several other types of state and federal laws apply and will apply to our operations. These laws include, among others, health care information and data privacy protection laws, transparency laws, and fraud and abuse laws, such as anti-kickback and false claims laws.

The federal health care program anti-kickback statute prohibits, among other things, knowingly and willfully offering, paying, soliciting or receiving remuneration, directly or indirectly, overtly or covertly, in cash or in kind, to induce or in return for purchasing, leasing, ordering or arranging for the purchase, lease or order of any health care item, good, facility or service reimbursable under Medicare, Medicaid or other federally financed health care programs. This statute has been interpreted to apply to arrangements between pharmaceutical manufacturers on the one hand and prescribers, purchasers and formulary managers on the other. Although there are a number of statutory exceptions and regulatory safe harbors protecting certain common activities from prosecution or other regulatory sanctions, the exceptions and safe harbors are drawn narrowly, and practices that involve remuneration intended to induce prescribing, purchases, or recommendations may be subject to scrutiny if they do not qualify for an exception or safe harbor.

Federal false claims laws and civil monetary penalties laws prohibit, among other things, any person or entity from knowingly presenting, or causing to be presented, a false claim for payment to the federal government, or knowingly making, or causing to be made, a false statement to have a false claim paid. Pharmaceutical and other health care companies have been prosecuted under these laws for, among other things, allegedly promoting their products for uses for which they were not approved and causing the submission of claims for payment for such use under federal health care programs.

The Health Insurance Portability and Accountability Act of 1996, or HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act and its implementing regulations, imposes obligations, including mandatory contractual terms, on certain types of individuals and entities, with respect to safeguarding the privacy, security and transmission of individually identifiable health information.

The ACA also includes federal transparency requirements that apply to certain manufacturers of drug products, medical devices, biologics and medical supplies and require them to annually report to the Department of Health and Human Services information related to payments and other transfers of value to physicians and teaching hospitals and physician ownership and investment interests. Compliance with such "Sunshine Act" reporting requirements may be costly for us once we have a drug product in commercial distribution and it is reimbursed by Medicaid.

The majority of states also have statutes or regulations similar to the aforementioned federal anti-kickback and false claims laws, which apply to items and services reimbursed under Medicaid and other state programs, or, in several states, apply regardless of the payor. We may be subject to state laws governing the privacy and security of health information in certain circumstances, many of which differ from each other in significant ways and often are not preempted by HIPAA, thus complicating compliance efforts. In addition, we may be subject to reporting requirements

under state transparency laws, as well as state laws that require pharmaceutical companies to comply with the industry’s voluntary compliance guidelines and the applicable compliance guidance promulgated by the federal government that otherwise restricts certain payments that may be made to health care providers and entities.

Because we intend to commercialize products that could be reimbursed under federal and other governmental health care programs, we expect to develop a compliance program that establishes internal controls to facilitate adherence to the rules and health care program requirements. Although compliance programs and adherence thereto may mitigate the risk of violation of and subsequent investigation and prosecution for violations of the laws described above, the risks cannot be eliminated entirely. In addition, due to the breadth of these laws and the narrowness of available statutory and regulatory exceptions, it is possible that some of our business activities could be subject to challenge under one or more of such laws. If we or our operations are found to be in violation of any of the laws described above or any other governmental regulations that apply to us, we may be subject to penalties, including civil and criminal penalties, damages, fines, individual imprisonment, disgorgement, exclusion of products from reimbursement under U.S. federal or state health care programs, contractual damages, reputational harm, administrative burdens, diminished profits and future earnings and/or the curtailment or restructuring of our operations.

Government Regulation Outside the U.S.

In addition to regulations in the U.S., we may be subject to a variety of regulations in foreign jurisdictions that govern, among other things, clinical trials and any commercial sales and distribution of our products. Whether or not we obtain FDA approval for a product candidate, we must obtain the requisite approvals from regulatory authorities in foreign jurisdictions prior to the commencement of clinical trials or marketing and sale of the product in those countries. The foreign regulatory approval process includes all of the risks associated with the FDA approval described above. Some foreign jurisdictions have a drug product approval process similar to that in the U.S., which requires the submission of a clinical trial application much like the IND prior to the commencement of clinical studies. In Europe, for example, a clinical trial application, or CTA, must be submitted to each country’s national health authority and an independent ethics committee, much like the FDA and IRB, respectively. Once the CTA is approved in accordance with a country’s requirements, clinical trial development may proceed.

To obtain regulatory approval of a product candidate under European Union regulatory systems, we would be required to submit a Marketing Authorisation Application, which is similar to the NDA, except that, among other things, there are country-specific document requirements. For countries outside of the European Union, such as countries in Eastern Europe, Latin America or Asia, the requirements governing the conduct of clinical trials, product approval, pricing and reimbursement vary from country to country. And, some nations may not accept clinical studies performed for U.S. approval to support approval in their countries or require that additional studies be performed on natives of their countries. In addition, regulatory approval of prices is required in most countries other than the U.S. We face the risk that the resulting prices would be insufficient to generate an acceptable return to us or any future partner of ours. If we fail to comply with applicable foreign regulatory requirements, we may be subject to, among other things, fines, suspension or withdrawal of regulatory approvals, product recalls, seizure of products, operating restrictions, and criminal prosecution.

Employees

As of December 31, 2019, we had fifteen full-time and three part-time employees, ten in research and development and eight in general and administrative. Given the differing characteristics of our product candidates, our approach is to engage consultants with experience in varying specialties to help us develop such candidates. Our numerous consultants serve as an extension to our full-time employee base. We believe this approach will enable us to access the expertise needed in a cost-efficient manner and without the need to rapidly increase the number of full-time employees and their associated costs.

Company Information

We were incorporated in Delaware in December 2005. Until July 2017, our corporate name was Cerulean Pharma Inc., or Cerulean. In July 2017, Cerulean completed a business combination with Daré Bioscience Operations, Inc., at which time we changed our name to “Daré Bioscience, Inc.” We and our wholly owned subsidiaries operate in one business segment.

Available Information

Our website is located at http://www.darebioscience.com. Information found on our website is not incorporated by reference into this report. We make our filings with the U.S. Securities and Exchange Commission, or SEC, including our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and any

amendments and exhibits to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, or the Exchange Act, available free of charge on or through our website, as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC. The SEC maintains a website that contains reports, proxy and information statements, and other information regarding our filings at http://www.sec.gov.

ITEM 1A. RISK FACTORS

Investment in our securities involves a high degree of risk and uncertainty. Our business, operating results, growth prospects and financial condition are subject to various risks, many of which are not exclusively within our control, that may cause actual performance to differ materially from historical or projected future performance. We urge investors to consider carefully the risks described below, together with all of the information in this report and our other public filings, before making investment decisions regarding our securities. Each of these risk factors, as well as additional risks not presently known to us or that we currently deem immaterial, could adversely affect our business, operating results, growth prospects or financial condition, as well as the trading price of our common stock, in which case you may lose all or part of your investment.

Risks Related to Our Business

We will need to raise additional capital to continue our operations.

We expect that our net losses will continue for the foreseeable future as we develop our existing product candidates and seek to acquire, license or develop additional product candidates. Developing pharmaceutical products, including conducting pre-clinical studies and clinical trials, is expensive. We expect our research and development expenses to substantially increase in connection with our ongoing activities, particularly as we advance our product candidates towards or through clinical trials. Our ability to continue as a going concern depends on our ability to raise additional capital through financings, government or other grant funding, collaborations and strategic alliances or other similar types of arrangements, to successfully execute our current operating plan and to continue the development of our current product candidates. This report includes disclosures and an opinion from our independent registered public accounting firm stating that our recurring losses and negative cash flows from operations raise substantial doubt about our ability to continue as a going concern. Our financial statements as of December 31, 2019 were prepared under the assumption that we will continue as a going concern and do not include any adjustments that might result from the outcome of this uncertainty.

Our capital needs have been and will continue to depend highly on the product development programs we choose to pursue, the progress of these programs, including the number, size, timing, rate of patient recruitment, duration of patient treatment and follow-up and the results of our clinical trials and pre-clinical studies, the cost and timing of development and supply of material for our clinical trials and pre-clinical studies, the cost, timing and outcomes of regulatory submissions and decisions regarding a potential approval for any one or more of our current or future product candidates we may choose to develop, and the terms of our contracts with service providers and license partners. In addition, the development of our clinical-stage candidates, DARE-BV1, Ovaprene, Sildenafil Cream, 3.6%, and DARE-HRT1, and the advancement of our pre-clinical product candidates will depend on results of ongoing and upcoming clinical trials and our financial resources at the time of such results. Should our product development efforts succeed, we will need to develop a commercialization plan for each product developed, which would also require significant resources to develop and implement.

At December 31, 2019, our cash and cash equivalents were $4.8 million and our accumulated deficit was approximately $44.0 million. We incurred a net loss of approximately $14.3 million for the year ended December 31, 2019. We may never become profitable. We expect negative cash flows from our operations to continue for the foreseeable future. Based on our current operating plan estimates, we do not have sufficient cash to satisfy our working capital needs and other liquidity requirements over the next 12 months from the date of issuance of the accompanying consolidated financial statements unless we raise additional capital or significantly curtail our operations. See also “We expect to be heavily reliant on our ability to raise capital through capital market transactions. Due to our low public float, low market capitalization, limited operating history and lack of revenue, it may be difficult and expensive for us to raise additional capital” below.

If we raise capital through collaborations, strategic alliances or other similar types of arrangements, we may have to relinquish, on terms that are not favorable to us, rights to some of our technologies or product candidates we would otherwise seek to develop or commercialize. In addition, we may enter into collaborations, such as our license agreement with Bayer, that do not provide significant near-term or guaranteed funding, thus requiring that we continue to seek to raise additional capital to fund product development through other means. See also “-We may not receive any additional payments under our license agreement with Bayer, and Bayer may terminate the agreement at any time without cause upon limited prior notice,” below.

There can be no assurance that we can raise capital when needed or on terms favorable to us and our stockholders, particularly in light of the effects that the COVID-19 pandemic has had on the capital markets and investor sentiment, and the restrictions on travel and meetings resulting therefrom which may prohibit or limit our ability to engage with potential investors in face-to-face meetings and conferences. If we cannot raise capital when needed,

on favorable terms or at all, we will not be able to continue development of our product candidates as currently planned or at all, will need to reevaluate our planned operations and may need to delay, scale back or eliminate some or all of our development programs, reduce expenses or cease operations, any of which would have a significant negative impact on our prospects and financial condition, as well as the trading price of our common stock. See also "Our ability to raise capital may be limited by laws and regulations," below. Moreover, if we are unable to obtain additional funds on a timely basis, there will be an increased risk of insolvency and up to a total loss of investment by our stockholders.

We have a limited operating history, have incurred significant losses since our inception and expect to continue to incur losses for the foreseeable future, which, together with our limited financial resources, makes it difficult to assess our prospects. We must raise additional capital to finance our operations and remain a going concern.

We are a clinical-stage biopharmaceutical company with a limited operating history upon which to evaluate our business and prospects. Drug development is a highly speculative undertaking and involves substantial risk. To date, we have not obtained any regulatory approvals for any of our product candidates, commercialized any of our product candidates or generated any product revenue. We have not been profitable since we commenced operations and may never achieve profitability. We have devoted significant resources to acquiring our portfolio of product candidates and to research and development activities for our product candidates. Since inception, we have incurred significant operating losses. See also "We will need to raise additional capital to continue our operations," above.

We may not receive any additional payments under our license agreement with Bayer, and Bayer may terminate the agreement at any time without cause upon limited prior notice.

In January 2020, we entered into an exclusive license agreement with Bayer for the commercialization of Ovaprene in the U.S. Under our agreement, Bayer will have no future payment obligations to us, unless, after reviewing the results of our pivotal clinical trial of Ovaprene, it elects, in its sole discretion, to make the license grant under our agreement effective. Should Bayer elect to do so, it must pay us an additional $20.0 million (the “Clinical Trial and Manufacturing Activities Fee”). If we do not successfully complete clinical development of Ovaprene in a timely manner, the license grant may never become effective, and we may not receive any additional payments from Bayer. Bayer may decide not to pay the Clinical Trial and Manufacturing Activities Fee regardless of the outcome of the pivotal clinical trial. Further, Bayer may elect to terminate the license agreement without cause at any time upon 90 days’ prior notice. If the license grant does not become effective or if Bayer terminates the agreement, our ability to complete development of and commercialize Ovaprene may be significantly impaired and it could have material adverse effect on our business and prospects in general and on our stock price.

If Bayer elects to make the license grant effective, it will obtain exclusive rights to commercialize Ovaprene in the U.S. In this case, Ovaprene's value to us will be generated through royalties on net sales and achievement of commercial milestones. If Bayer is not successful or has limited success in commercializing Ovaprene, Ovaprene’s value to us will be significantly impaired. We may realize only a small fraction of the potential value of the license agreement. Other than the upfront fee, the Clinical Trial and Manufacturing Activities Fee and a milestone payment in the low double-digit millions upon the first commercial sale of Ovaprene in the U.S., Bayer’s milestone and royalty payment obligations are based on annual net sales of Ovaprene. Successful commercialization of a contraceptive product is subject to many risks and uncertainties, including factors outside of our control or Bayer’s. We may never receive the full amount of potential milestone payments under the agreement, and royalty and sublicense payments, if any, may be far less than projected. Failure to realize significant value under our license agreement with Bayer could have a material adverse effect on our business, results of operations and financial condition.

Our ability to raise capital may be limited by laws and regulations.

In 2019 and through March 26, 2020, we raised approximately $11.2 million in gross proceeds through the sale of equity securities under a Form S-3 “shelf” registration statement. Using a shelf registration statement to raise capital generally takes less time and is less expensive than other means, such as conducting an offering under a Form S-1 registration statement. We currently have a shelf registration statement effective, however, our ability to raise capital under this registration statement currently is, and may continue to be, limited by, among other things, current and future SEC rules and regulations impacting the eligibility of smaller companies to use Form S-3 for primary offerings of securities. For example, we currently are subject to the "baby shelf rule" because the market value of our outstanding shares of common stock held by non-affiliates, or public float, was less than $75.0 million at the time we filed our shelf registration statement on Form S-3 and has been less than $75.0 million since such time. This means that we may use our currently effective shelf registration statement to raise additional funds only to the extent that the aggregate market value of securities sold by us or on our behalf pursuant to Instruction I.B.6. of Form S-3 during the 12 calendar months immediately prior to, and including, the intended sale does not exceed one-third of the aggregate

market value of our public float, calculated in accordance with the instructions to Form S-3. As an example, as of March 26, 2020, we could not offer or sell more than approximately $1.7 million of new securities under our shelf registration statement. If our ability to offer securities under our shelf registration statement is limited, including by the baby shelf rule, we may choose to conduct such an offering under an exemption from registration under the Securities Act of 1933 or under a Form S-1 registration statement. We would expect either alternative to increase the cost of raising additional capital relative to using our shelf registration statement.

In addition, under SEC rules and regulations, our common stock must be listed and registered on a national securities exchange in order to use a Form S-3 registration statement (1) for a primary offering, if our public float is not at least $75.0 million as of a date within 60 days prior to the date of filing the Form S-3 or a re-evaluation date, whichever is later, and (2) to register the resale of our securities by persons other than us (i.e., a resale offering). While our common stock is currently listed on the Nasdaq Capital Market, there can be no assurance that we can maintain such listing. See, “Risks Related to Our Securities-There is no assurance that we will continue satisfying the listing requirements of the Nasdaq Capital Market,” below.

Our ability to raise capital on a timely basis through the issuance and sale of equity securities may also be limited by Nasdaq’s stockholder approval requirement for any transaction that is not a public offering (as defined in Nasdaq listing rules). For transactions other than public offerings, Nasdaq requires stockholder approval prior to the issuance or potential issuance of common stock (or securities convertible into or exercisable for common stock) at a price per share that is less than the "Minimum Price" if the issuance (together with sales by our officers, directors and substantial shareholders (as defined in Nasdaq listing rules)) would equal 20% or more of our common stock outstanding before the issuance. Under Nasdaq rules, the "Minimum Price" means a price that is the lower of (i) the Nasdaq official closing price immediately preceding the signing of the binding agreement; or (ii) the average Nasdaq official closing price of the common stock for the five trading days immediately preceding the signing of the binding agreement. In addition, certain prior sales of securities by us may be aggregated with any offering we may propose at a price that is less than the Minimum Price and which is not considered a public offering by Nasdaq, further limiting the amount we could raise in the offering. Under Nasdaq rules, stockholder approval is also required prior to the issuance of securities when the issuance or potential issuance will result in a change of control of our company.

Obtaining stockholder approval is a costly and time-consuming process. If we must obtain stockholder approval for a potential transaction, we would expect to spend substantial additional money and resources. In addition, seeking stockholder approval would delay our receipt of otherwise available capital, which may materially and adversely affect our ability to execute our business plan, and there is no guarantee our stockholders ultimately would approve a proposed transaction.

In addition, although a public offering under Nasdaq rules is not subject to the 20% limitation described above, it may involve publicly announcing the proposed transaction before it is completed, which often has the effect of depressing a company's stock price. Accordingly, our existing investors may suffer greater dilution if we seek to raise additional capital through such a public offering of our securities.

Due in part to our limited financial resources, we may fail to select or capitalize on the most scientifically, clinically or commercially promising or profitable indications or therapeutic areas for our product candidates, we may be unable to pursue and complete the clinical trials we would like to pursue and complete, and we may be unable to commence or complete clinical trials in accordance with our current timeline expectations.

Our current financial and technical resources are limited and not sufficient to develop all of the product candidates to which we hold licenses or options to license. This may affect the development efforts of our key portfolio candidates and any future candidates we may choose to develop. Due to our limited resources, we may be required to curtail clinical development programs and activities that might otherwise have led to more rapid progress of our product candidates, or product candidates that we may in the future choose to develop, through the regulatory and development processes. We may make determinations with regard to the indications and clinical trials on which to focus our resources that result in our realization of less than the full potential value of a product candidate. The decisions to allocate our research, management and financial resources toward particular indications may not lead to positive clinical milestones or to the development of viable commercial products and may divert resources from better opportunities. Similarly, our decisions to delay or terminate development programs may also cause us to miss valuable opportunities, including the potential for some of our product candidates to be first-in-category products.

See also “Delays in the commencement or completion of clinical testing of our current and any future product candidates we may seek to develop may occur due to any of a number of factors and could result in significantly increased costs and longer timelines and could impact our ability to ever become profitable” below.

We are heavily reliant on our ability to raise capital through capital market transactions. Due to our low public float, low market capitalization, limited operating history and lack of revenue, it may be difficult and expensive for us to raise additional capital.

We are heavily reliant on our ability to raise additional capital by selling shares of our common stock or securities linked to our common stock. Our ability to raise capital will depend on several factors, many of which may not be favorable for raising capital, including the low trading volume and volatile trading price of our common stock, our low public float, our potential inability to continue to satisfy the listing requirements of the Nasdaq Capital Market, unfavorable market conditions or other market factors outside of our control, and the risk factors described elsewhere in this report, including those related to warrants we issued in February 2018. See “Our ability to raise capital may be limited by laws and regulations,” above, and the risk factors under “-Risks Related to Our Securities,” below. Even if we are able to raise additional capital, it will likely be dilutive to existing stockholders and the cost of such capital may be substantial and may be more expensive than the cost of capital for larger public companies. The terms of any funding we obtain may not be favorable to us and may be highly dilutive to our stockholders, and debt financing, if available, may involve restrictive covenants. There can be no assurance that we can raise additional capital when needed. Failing to raise additional capital when needed would have a material adverse effect on our business.

We have been actively adding product candidates to our portfolio of innovative products for women’s health, but we currently are not adequately capitalized to advance these product candidates through development.

Our business strategy is to license or otherwise acquire the rights to differentiated health product candidates primarily in the areas of contraception, fertility and sexual and vaginal health and to take those candidates through advanced stages of clinical development and regulatory approval. Advancing product candidates through late stages of clinical development will require substantial investment. We currently do not have the capital necessary to advance all of the product candidates to which we hold licenses and options to license through development and regulatory approval. Executing our business strategy requires us to obtain additional capital to advance our portfolio and maintain our rights to our product candidates through clinical development and eventually to commercialization or strategic partnership, as well as to license or otherwise acquire rights to additional product candidates and to similarly advance any such future product candidates. Additional capital may not be available to us, or even it is, the cost of such capital may be high. See “-We will need to raise additional capital to continue our operations,” above. Should we add additional product candidates to our portfolio, should our existing product candidates require testing or other capital-intensive development activities that we did not anticipate, or should the duration of our planned and ongoing clinical trials be longer than anticipated due to difficulties in patient recruitment or otherwise, our cash resources will be further strained. We may be forced to obtain additional capital before reaching clinical and/or regulatory milestones, when our stock price or trading volume or both are low, or when the general market for biopharmaceutical, medical device, or other life sciences companies is weak. Raising capital under any of these or similar scenarios, if we can raise any at all, may lead to significant dilution to our existing stockholders. If we cannot raise additional capital when required or on acceptable terms, we will not be able to advance our product candidates or add additional product candidates to our portfolio, we may relinquish rights under our license agreements with third parties relating to our product candidates, and we will have to delay, scale back or eliminate some or all of our development programs or cease operations. See also “-We depend highly on our license agreements for our clinical-stage product candidates and the loss or impairment of our rights under any license could have a materially adverse effect on our business prospects, operations and viability” below.

We intend to seek collaborations with partners to develop and commercialize our product candidates and, if we enter into such collaborations, we may not have control over several key elements relating to the development and commercialization of our product candidates.

A key aspect of our strategy is to seek collaborations with partners, such as large pharmaceutical companies, that are willing to conduct later-stage clinical trials and further develop and commercialize our product candidates. We face significant competition in seeking these types of partners. Collaborations are complex and time-consuming arrangements to negotiate and document. To date, our license agreement with Bayer is our only such collaboration. We may not be able to enter into other collaborations on acceptable terms, or at all.

By entering into a strategic collaboration with a partner, we may rely on the partner for financial resources and for development, regulatory and commercialization expertise. Even if we are successful in entering into a strategic collaboration for one of our product candidates, our partner may fail to develop or effectively commercialize the product candidate because such partner:


•	does not have sufficient resources or decides not to devote adequate resources due to internal constraints such as limited cash or human resources;


•	decides to pursue a competitive potential product developed outside of the collaboration;


•	cannot obtain the necessary regulatory approvals;


•	changes its business strategy and areas of focus;


•	determines that the market opportunity is not attractive;


•	cannot obtain sufficient quantities of our products or product candidates at a reasonable cost; or


•	elects to terminate our strategic collaboration for any reason.

Our success in entering into a definitive agreement for any collaboration will depend upon, among other things, our assessment of the prospective collaborator’s resources and expertise, the terms of the proposed collaboration and the proposed collaborator’s evaluation of several factors. Those factors may include the design and outcomes of our clinical studies, the likelihood of approval by regulatory authorities, the potential market for the product, the costs and complexities of manufacturing and delivering such product to customers, the potential of competing products, the strength of the intellectual property, other potential sources of market exclusivity for such product, and industry and market conditions generally. The collaborator may also consider alternative products or technologies for similar indications that may be available to collaborate on and whether such collaboration could be more attractive than the one with us for our products or product candidates.

We also face competition in our search for collaborators from other biotechnology and pharmaceutical companies worldwide, many of which are larger and able to offer more attractive deals in terms of financial commitments, contribution of human resources, or development, manufacturing, regulatory or commercial expertise and support. Inadequate capitalization of our company, or the perception thereof, could negatively affect our negotiating leverage in transactions.

Any potential collaboration agreement into which we might enter may call for licensing or cross-licensing of potentially blocking patents, know-how or other intellectual property. Due to the potential overlap of data, know-how and intellectual property rights, there can be no assurance that a collaborator will not dispute its right to use, license or distribute such data, know-how or other intellectual property rights, and this may lead to disputes, liability or termination of the collaboration.

If we elect to fund development or commercialization activities on our own, we will need to obtain significant additional capital, which may not be available to us when needed on acceptable terms or at all.

If we are not successful in attracting collaborators and entering into collaborations on acceptable terms for our product candidates or otherwise monetizing our product candidates, we may not complete development of or obtain regulatory approval for such product candidates. In such event, our ability to generate revenues from such products and achieve or sustain profitability would be significantly hindered which would materially harm our business and financial condition.

The product candidates we are developing or may develop are likely to face significant competition. If we receive regulatory approval for any of our product candidates, their ability to compete will be impacted by the efficacy and safety outcomes of our clinical trials.

Today, there are a variety of hormonal and non-hormonal contraceptive options available to women, including oral contraceptive pills and intrauterine devices, newer hormonal contraceptive products including implants, injectables, vaginal rings, patches, and hormonal intrauterine systems, and non-hormonal methods such as female condoms, novel diaphragms, and new methods of female sterilization. In surveys, women have said that the features they consider most important when selecting a contraceptive method are efficacy, ease-of-use and side effects. To have significant revenue potential as a new contraceptive product option, Ovaprene may need to have a typical use efficacy outcome (which is the expected rate of pregnancy protection once the product is used widely under everyday circumstances) comparable to current non-implanted hormonal contraceptive methods (pills, patches and vaginal rings), which is approximately 91% typical use efficacy. Clinical testing will also need to demonstrate that the device can be safely worn for multiple weeks. Should Ovaprene fail to generate the safety and efficacy data expected, the license grant under our agreement with Bayer may never become effective, or, if Bayer elects to make the license grant effective, Ovaprene’s commercial success may be limited, and our business prospects could be materially damaged.

Today’s available options for treating FSAD consist primarily of over-the-counter products for vaginal lubrication. Although no products have been approved by the FDA specifically for the treatment of FSAD, we believe new product candidates will likely be developed by others. Sexual arousal can be influenced by many emotional and physiological factors and hence, our clinical trials must anticipate such factors in order to produce efficacious outcomes. Sildenafil Cream, 3.6%, is designed to increase local blood flow to the genital tissue. Even if we are successful in

increasing blood flow, the product may not lead to an increase in arousal or an improvement in the overall sexual experience in some women. If we fail to generate compelling clinical results from our trials, we may not receive regulatory approval to market Sildenafil Cream, 3.6%, or, if approved, many physicians may not prescribe and/or many women suffering from sexual arousal disorder may opt not to try Sildenafil Cream, 3.6%. If we fail to produce strong clinical outcomes, our ability to build a commercial market for Sildenafil Cream, 3.6% will be materially adversely impacted.

There are several FDA-approved products in oral and vaginal forms currently available for treating bacterial vaginosis, or BV, and, if approved, DARE-BV1 will compete with those products. Current therapies for the treatment of BV primarily consist of oral and vaginal formulations of antibiotics delivered as a single dose or through multiple doses over consecutive days. Two of the most common antibiotics used today are generic clindamycin and metronidazole. In clinical studies, DARE-BV1 will need to demonstrate that it is both safe and effective in order to complete with existing and future products approved for the treatment of BV. In particular, DARE-BV1 will likely be compared with Clindesse® (clindamycin phosphate) Vaginal Cream, 2% as this treatment is a vaginally administered, single dose cream formulation of clindamycin. If we fail to generate compelling clinical outcomes, including clinical cure rates and continued clinical response rates following a single dose of DARE-BV1 that are better than existing products, physicians may opt to continue to prescribe currently available treatments rather than recommend or prescribe our product to their patients. In addition, women may prefer orally delivered options to our vaginally delivered product unless our product demonstrates significantly superior efficacy and/or safety.

See also “The patents and the patent applications covering Sildenafil Cream, 3.6% and DARE-BV1 are limited to specific topical formulations, processes and uses of sildenafil and clindamycin, and our market opportunity may be limited by the lack of patent protection for the active ingredient itself and other formulations and delivery technology and systems that may be developed by competitors,” below.

Treatments to address the vasomotor symptoms associated with menopause, including hot flashes, include combinations of prescription hormones, some of which are FDA-approved and others which are prepared in compounding pharmacies. Numerous products already exist, and this number is likely to expand with time. In addition, there has been an emerging preference among some women and providers for bio-identical hormones that are chemically identical to those the body produces. DARE-HRT1 will be designed to offer a convenient vaginal ring that continuously delivers a combination of bio-identical estradiol and progesterone over 28 days. Until recently, no FDA-approved bio-identical hormone treatments existed. In 2018, Bijuva® estradiol and progesterone capsules, which are to be taken daily, received the first such approval. Studies have failed to demonstrate that bio-identical hormones are safer than other hormones, so DARE-BV1 will need to compete with many types of hormone replacement options in terms of convenience, safety and efficacy in managing vasomotor symptoms.

Today, a variety of options are available for the delivery of hormones to assist in the maintenance of pregnancy or to treat the symptoms of menopause. If approved, our intravaginal ring, or IVR, candidates will compete with pills, patches and other hormonal delivery methods, and competing with those products may prove difficult given the current marketplace and established clinical practices. We believe our clinical trials for these candidates must demonstrate efficacy comparable to or better than existing products and also prove that the candidates would be more convenient. Some women may be uncomfortable with using an IVR and may never try our IVR products. If we fail to generate compelling clinical results from clinical trials, we may lack the data to generate a commercially viable product, which would harm our business.

Today’s treatments for vulvar and vaginal atrophy, or VVA, primarily consist of hormones, including localized estrogen. However, this therapeutic approach is often contraindicated for women diagnosed with, or at risk of recurrence of, hormone receptor positive breast cancer. The American College of Obstetricians and Gynecologists recommends a local non-hormonal approach for treating chronic conditions like VVA in these women. Although many women may be contraindicated for hormone use, particularly with respect to estrogen use, and there are no FDA-approved VVA treatments that have been specifically studied in these hormone receptor positive women, and therefore many doctors continue to prescribe, and many women continue to use, hormone-based treatments. If approved, our tamoxifen candidate for the treatment of VVA will compete with branded pills, vaginal inserts and other delivery methods for hormones. We believe our clinical trials must demonstrate comparable efficacy and safety with existing products currently used in VVA, including those that have not been studied in, but are nonetheless used in, breast cancer survivors. If we fail to generate compelling clinical results or if patients and physicians fail to appreciate the value of a therapy that is not based on estrogen, we may not have a commercially viable product, which would harm our business.

We have a relatively small number of employees to manage and operate our business.

As of March 26, 2020, we had 19 employees, of which 15 were full-time and four were part-time. Our focus on limiting cash utilization requires us to manage and operate our business in a highly efficient manner, relying

on external consultants for needed product development and operational expertise, and to limit full-time personnel resources. With a small number of employees, our ability to supervise the external consultants and vendors we engage may be constrained, which may impact the timing and quality of services we receive. No assurance can be given that we will be able to run our operations or accomplish all of the objectives we otherwise would seek to accomplish with the limited personnel resources we currently have.

In March 2020, we implemented work-from-home and restricted travel policies and, subsequently, the governors of California and Massachusetts, states in which we have operations, issued statewide stay-at-home orders to help combat the spread of COVID-19. In addition, many, if not all, of our consultants, partners and vendors on which we rely heavily have implemented similar policies, are subject to similar orders, and/or may re-allocate resources otherwise intended for our activities to activities intended to address the COVID-19 pandemic. The duration of these policies and of the California and Massachusetts stay-at-home orders currently is indefinite. In addition, we and our consultants, partners and vendors may experience high rates of employee leave during the COVID-19 pandemic due to increased rates of worker or family member illness, school and child care center closures and recent amendments to the Family and Medical Leave Act that, subject to limited exceptions for small employers, allow workers to take up to 12 weeks of job-protected leave through December 2020 if unable to work or telework due to a need to care for children under 18 years of age because that child's school or place of care has closed or child care provider is unavailable due to the COVID-19 pandemic. While we have systems and technologies in place that enable our employees to work from home, state and local stay-at-home orders, work-from-home policies and travel restrictions and employee leaves may adversely affect our ability to effectively manage and operate our business, increase our expenses and may result in delays in our anticipated development program timelines.

If we fail to attract and retain management and other key personnel, we may not successfully complete development of, obtain regulatory approval for or commercialize our product candidates, or otherwise implement our business plan.

Our ability to compete in the highly competitive pharmaceutical, biotechnology and medical device industries depends upon our ability to attract and retain highly qualified managerial and key personnel. We depend highly on our senior management. Losing the services of any of our senior management employees could impede, delay or prevent the development and commercialization of our product candidates, hurt our ability to raise additional funds and negatively impact our ability to implement our business plan. If we lose the services of any of our senior management employees, we might not find suitable replacements on a timely basis or at all, and our business could be materially harmed. We do not maintain “key man” insurance policies on the lives of any of our senior management employees.

We might not attract or retain qualified management and other key personnel in the future due to the intense competition for qualified personnel among biotechnology, medical device, pharmaceutical and other businesses, particularly in the San Diego area where we are headquartered. In addition, our limited personnel and financial resources may result in greater workloads for our employees compared to those at companies with which we compete for personnel, which may lead to higher levels of employee burnout and turnover. As a result, we may have to expend significant financial resources in our employee recruitment and retention efforts. Many of the other companies within the women’s health products industry with whom we compete for qualified personnel have greater financial and other resources, different risk profiles and longer histories in the industry than we do. They also may provide more diverse opportunities and better chances for career advancement. If we cannot attract and retain the necessary personnel to accomplish our business objectives, we may experience constraints that will harm our ability to implement our business strategy and achieve our business objectives.

New legal precedent, laws and regulations could make it costlier or more difficult for us to obtain certain types of insurance, including director and officer liability insurance, and we may be forced to accept reduced policy limits and coverage or incur substantially higher costs to obtain the coverage that is the same or similar to our current coverage. The impact of these events could also make it more difficult for us to attract or retain qualified persons to serve as our senior management or on our board of directors.

Our business development strategy has included, and will likely continue to include, acquiring products, product licenses or other businesses. We may not successfully manage such activities.

We may engage in strategic transactions that could cause us to incur additional liabilities, commitments or significant expense. During the year ending December 31, 2019, we acquired Microchips, and during the year ended December 31, 2018, we entered into license agreements with each of SST and Catalent and a collaboration and option agreement with Orbis Biosciences Inc.; completed the acquisition of Pear Tree Pharmaceuticals, Inc. and the acquisition of assets from Hydra Biosciences, Inc.; and entered into assignment and license agreements with Hammock

Pharmaceuticals, Inc., Trilogic Pharma, LLC and MilanaPharm LLC. All of these transactions could subject us to several risks, including, but not limited to:


•	our inability to appropriately evaluate the potential risks and uncertainties associated with a transaction;


•	our inability to effectively integrate a new technology, product and/or business, personnel, intellectual property or business relationships; and


•	our inability to generate milestones or revenues from a strategic transaction sufficient to meet our objectives in undertaking the transaction.

We may underestimate development costs, timelines, regulatory approval challenges and commercial market opportunity for a strategic transaction that would cause us to fail to realize the anticipated value of the transaction. Any strategic transaction we may pursue may not produce the outcomes and benefits we originally anticipated, may result in costs that outweigh the benefits, and may adversely impact our financial condition and be detrimental to our company in general.

Our current or future employees, principal investigators, consultants and commercial partners may engage in misconduct or other improper activities, including non-compliance with regulatory standards.

We may become exposed to the risk of employees, independent contractors, principal investigators, consultants, suppliers, commercial partners or vendors engaging in fraud or other misconduct. Misconduct by employees, independent contractors, principal investigators, consultants, suppliers, commercial partners and vendors could include intentional failures such as failures to: (1) comply with FDA or other regulators’ requirements, (2) provide accurate information to such regulators, (3) comply with manufacturing standards established by us and/or required by law, or (4) comply with SEC rules and regulations. In particular, sales, marketing and business arrangements in the health care industry are subject to extensive laws, regulations and industry guidance intended to prevent fraud, misconduct, kickbacks, self-dealing and other abusive practices. These laws and regulations may restrict or prohibit a wide range of pricing, discounting, marketing and promotion, sales commission, customer incentive programs and other business arrangements. Misconduct by current or future employees, independent contractors, principal investigators, consultants, suppliers, commercial partners and vendors could also involve the improper use of information obtained in the course of clinical trials, which could result in regulatory or civil sanctions and serious harm to our reputation. It is not always possible to identify and deter misconduct by employees, independent contractors, principal investigators, consultants, suppliers, commercial partners and vendors, and the precautions we take to detect and prevent this activity may not be effective in controlling unknown or unmanaged risks or losses, or in protecting us from governmental investigations or other actions or lawsuits stemming from a failure to comply with such laws or regulations. If any such actions are instituted against us, and we are not successful in defending or asserting our rights, those actions could have a significant adverse effect on our business, including the imposition of significant fines or other sanctions, and our reputation.

We expect to continue to incur increased costs as a result of operating as a public company, and our management will have to devote substantial time to compliance initiatives and corporate governance practices.

We incur and expect to continue to incur significant legal, accounting and other expenses as a public reporting company. We expect that these expenses will increase if and when we become an “accelerated filer,” as defined in rules adopted by the SEC under the Securities Exchange Act of 1934. Under recently adopted SEC rules, generally, we will become an accelerated filer if our public float as of the last business day of June is $75 million or more and we reported annual revenues of $100 million or more for our most recently completed fiscal year. Regardless of whether we become an accelerated filer, we may need to hire additional accounting, finance and other personnel in connection with our continuing efforts to comply with the requirements of being a public company. Even while we have non-accelerated filer status, our management and other personnel will need to continue to devote substantial time towards maintaining compliance with the requirements of being a public company. The Sarbanes-Oxley Act of 2002 and rules and regulations subsequently implemented by the SEC and Nasdaq imposed various requirements on public companies, including establishment and maintenance of effective disclosure and financial controls and corporate governance practices. Our management and other personnel, of whom we have a small number, devote substantial time to these compliance initiatives. Moreover, if and when we become an accelerated filer, our compliance costs will increase.

For example, pursuant to Section 404 of the Sarbanes-Oxley Act of 2002, we must furnish a report annually by our management on the effectiveness of our internal control over financial reporting, and performing the system and process documentation and evaluation necessary to issue that report requires us to incur substantial expense and expend significant management time. If and when we are an accelerated filer, we will also have to obtain

an attestation report on our internal control over financial reporting by our independent registered public accounting firm, which may substantially increase compliance costs.

Security breaches, loss of data and other disruptions could compromise sensitive information related to our business, prevent us from accessing critical information or expose us to liability, which could adversely affect our business and our reputation.

We utilize information technology systems and networks to process, transmit and store electronic information in connection with our business activities. As the use of digital technologies has increased, cyber incidents, including deliberate attacks and attempts to gain unauthorized access to computer systems and networks, have increased in frequency and sophistication. These threats pose a risk to the security of our systems and networks and the confidentiality, availability and integrity of our data, all of which are vital to our operations and business strategy. There can be no assurance we will succeed in preventing cyber-attacks or successfully mitigate their effects.

Despite implementing security measures, any of the internal computer systems belonging to us or our third-party service providers are vulnerable to damage from computer viruses, unauthorized access, natural disasters, terrorism, war, and telecommunication and electrical failure. Any system failure, accident, security breach or data breach that causes interruptions in our own or in third-party service vendors’ operations could result in a material disruption of our product development programs. For example, losing clinical study data from future clinical studies could result in delays in our or our partners’ regulatory approval efforts and significantly increase our costs in order to recover or reproduce the lost data. Further, our information technology and other internal infrastructure systems, including firewalls, servers, leased lines and connection to the Internet, face the risk of systemic failure, which could disrupt our operations. If any disruption or security breach results in a loss or damage to our data or applications, or inappropriate disclosure of confidential or proprietary information, we may incur resulting liability, including liability under laws that protect the privacy of personal information, our product development programs and competitive position may be adversely affected, and the further development of our products may be delayed. Furthermore, we may incur additional costs to remedy the damage caused by these disruptions or security breaches.

Risks Related to Clinical Development, Manufacturing and Commercialization

We depend heavily on the success of our clinical-stage product candidates, DARE-BV1, Ovaprene and Sildenafil Cream, 3.6%. Clinical development is a lengthy and expensive process with an inherently uncertain outcome. Failure to successfully develop and obtain regulatory approval to market and sell any of these product candidates would likely adversely affect our business.

Our business depends on the successful clinical development and regulatory approval of our clinical trial stage product candidates, which may never occur. All of our product candidates will require substantial clinical testing to demonstrate that they are safe and effective. For example, we will need to demonstrate that DARE-BV1 is a safe and effective vaginal gel option for women with BV, that Ovaprene is a safe and effective non-hormonal contraceptive option, that Sildenafil Cream, 3.6% is a safe and effective option for women seeking treatment of FSAD and that DARE-HRT1 is a convenient to use IVR that provides safe and effective relief from vasomotor symptoms associated with menopause. Clinical testing is expensive, difficult to design and implement, can take many years to complete and its outcome is inherently uncertain. A failure of one or more clinical trials could occur at any stage of testing. The outcome of preclinical testing and early clinical trials may not be predictive of success of later clinical trials, and interim results of a particular clinical trial do not necessarily predict final results of that trial. Accordingly, while there have been positive results from prior clinical studies of DARE-BV1, Ovaprene and Sildenafil Cream, 3.6%, this does not guarantee successful outcomes in future studies of these product candidates. Further, the fact that the active pharmaceutical ingredients in certain of our product candidates, including DARE-BV1 and Sildenafil Cream, 3.6%, have received regulatory approval in other formulations and/or for other indications does not guarantee successful development of our product candidates. Clinical trials may never demonstrate sufficient safety and effectiveness to obtain the requisite regulatory approvals for our product candidates.

We have never received a regulatory approval for any product. Even if we can conduct and complete clinical trials for these product candidates, we may not obtain regulatory approval to market and sell any of them, which would have a material adverse effect on our business and operations.

We depend highly on our license agreements for our clinical-stage product candidates and the loss or impairment of our rights under any license could have a materially adverse effect on our business prospects, operations and viability.

Our rights to our four clinical-stage product candidates arise from license agreements with third parties, and the loss or impairment of our licensed rights to develop and commercialize these product candidate, including as a result of our inability or other failure to meet our obligations under any one of such license agreements, could have a substantial negative effect on our company’s prospects.

We entered into a license agreement with ADVA-Tec for the exclusive worldwide rights to develop and commercialize Ovaprene that became effective in July 2017. In addition to standard termination rights, ADVA-Tec may terminate the license agreement if we (1) fail to make significant scheduled investments in product development activities over the course of the agreement, (2) fail to commercialize Ovaprene within 6 months of obtaining a PMA from the FDA, (3) with respect to the license in any particular country, fail to commercialize Ovaprene in that particular country within 3 years of the first commercial sale, (4) develop or commercialize a non-hormonal ring-based vaginal contraceptive device other than Ovaprene, (5) fail to conduct certain clinical trials, or (6) fail to make certain milestone, sublicense and/or royalty payments to ADVA-Tec including a milestone payment due upon the FDA's approval to commence a pivotal human clinical trial of Ovaprene, which we expect to occur in the second half of 2020. See "ITEM 1. BUSINESS-Overview-License Agreements-ADVA-Tec License Agreement," above.

In February 2018, we entered into a world-wide license and collaboration agreement with SST for the exclusive worldwide rights to develop and commercialize Sildenafil Cream, 3.6% for all indications for women related to female sexual dysfunction and/or female reproductive health, including treatment of the female sexual arousal disorder FSAD. The SST license agreement provides that each party will have customary rights to terminate the agreement in the event of material uncured breach by the other party and under certain other circumstances. The SST license agreement provides SST with the right to terminate it with respect to the applicable SST licensed products in specified countries upon 30 days’ notice if we fail to use commercially reasonable efforts to perform development activities in substantial accordance with the development plan contained in the SST license agreement, or any updated development plan approved by the joint development committee, and do not cure such failure within 60 days of receipt of SST’s notice thereof. See “ITEM 1. BUSINESS-Overview-License Agreements-SST License and Collaboration Agreement,” above.

In April 2018, we entered into the Catalent license agreement under which we acquired exclusive global rights to Catalent's IVR technology platform, including the product candidates we now call DARE-HRT1, DARE-FRT1 and DARE-OAB1. Under this agreement, we must use commercially reasonable efforts to develop and make at least one product or process available to the public, which efforts include achieving specific diligence requirements by specific dates specified in the agreement, and Catalent may terminate the agreement upon 60 days’ notice for any uncured material breach by us of any of our other obligations under the agreement. See “ITEM 1. BUSINESS-Overview-License Agreements-Catalent JNP License Agreement,” above.

In December 2018, we entered into definitive agreements with Hammock Pharmaceuticals, Inc., TriLogic Pharma LLC and MilanaPharm LLC under which we acquired exclusive global rights to DARE-BV1 for the treatment of BV, as well as the rights to utilize the underlying proprietary hydrogel drug delivery technology for any vaginal or urological application in humans. Under the license agreement with TriLogic Pharma and MilanaPharm, we must use commercially reasonable efforts and resources consistent with those we undertake in pursuing development and commercialization of other pharmaceutical products, taking into account program-specific factors, (a) to develop and commercialize at least one licensed product or process in the United States and at least one licensed product or process in at least one of Canada, the United Kingdom, France, Germany, Italy or Spain, and (b) following the first commercial sale of a licensed product or process in any jurisdiction, to continue to commercialize that product or process in that jurisdiction. MilanaPharm may terminate our license if, after having launched such product or process in such country, we, or our affiliates or sublicensees, as applicable, discontinue the sale of, or commercially reasonable marketing efforts to sell, such product or process in such country, and fail to resume such efforts or to reasonably demonstrate a strategic justification for the discontinuation and failure. See “ITEM 1. BUSINESS-Overview-License Agreements-Hammock/MilanaPharm Assignment and License Agreement,” above.

If any of our license agreements with ADVA-Tec, SST, Catalent, or Hammock Pharmaceuticals/MilanaPharm are terminated, impaired, or limited, we could lose the ability to develop and commercialize Ovaprene, Sildenafil Cream, 3.6%, DARE-BV1, or any of our IVR product candidates, including DARE-HRT1, as applicable, any of which could have a materially adverse effect on our business prospects and operations.

We may seek to license the product and technology rights to additional product candidates in women’s health, but there can be no assurance we will be able to do so on favorable terms or at all. There are risks, uncertainties

and costs associated with identifying, licensing and advancing product candidates through successful clinical development. Even if we obtained the rights to additional product candidates, there can be no assurance these candidates will ever be advanced successfully through clinical development.

Delays in the commencement or completion of clinical testing of our current and any future product candidates we may seek to develop may occur due to any of a number of factors and could result in significantly increased costs and longer timelines and could impact our ability to ever become profitable.

The tests and clinical trials of our current and any future product candidates we may seek to develop may not commence, progress or be completed as expected, and delays could significantly impact our product development costs and timelines, as well as a product candidate’s market potential, if ultimately approved. The timing of initiation, conduct and completion of clinical trials and other testing of our product candidates may vary dramatically due to factors within and outside of our control and is difficult to predict accurately. We may make statements regarding anticipated timing for commencement, completion of enrollment, and/or availability of results from our clinical studies, but such predictions are subject to a number of significant assumptions and actual timing may differ materially for a variety of reasons.

In 2020, we intend to commence and complete a pivotal Phase 3 clinical study of DARE-BV1 and a Phase 1 clinical study of DARE-HRT1, and to commence a pivotal clinical study of Ovaprene and a Phase 2b clinical study of Sildenafil Cream, 3.6%. We currently do not have adequate capital to conduct all of these clinical studies in 2020. In addition to lack of adequate capital, commencement and/or completion of these studies may be delayed, terminated or suspended as a result of the occurrence of any of a number of other factors, including the need to obtain authorizations from the FDA and the institutional review boards, or IRBs, of prospective clinical study sites, delayed or inadequate supply of our product candidates or other clinical trial material, slower than expected rates of patient recruitment or enrollment, other factors described below, and unforeseen events. In addition, among other factors, our ability to commence our planned pivotal clinical study of Ovaprene is subject to the FDA’s review and clearance of an IDE application.

The commencement of clinical trials of our product candidates can be delayed for many reasons, including delays in:


•	obtaining required funding;


•	obtaining guidance or authorizations from the FDA or foreign regulatory authorities;


•	finalizing the trial design as a result of discussions with the FDA, other regulatory authorities or prospective clinical trial investigators or sites;


•	reaching agreement on acceptable terms with prospective CROs and clinical trial sites;


•	obtaining sufficient quantities of our product candidates and other clinical trial material; or


•	obtaining IRB approval to conduct a clinical trial at a prospective site.

In addition, once a clinical trial has begun, it may experience unanticipated delays or be suspended or terminated by us, the FDA or other regulatory authorities due to several factors, all of which could impact our ability to complete our trials in a timely and cost-efficient manner, including:


•	lack of adequate funding;


•	failure to conduct the clinical trial in accordance with regulatory or IRB requirements;


•	slower than expected rates of participant recruitment and enrollment;


•	higher than anticipated participant drop-out rates;


•	failure of clinical trial participants to use the product as directed or to report data as per trial protocols;


•	inspection of the clinical trial operations or clinical trial site by the FDA or other regulatory authorities resulting in the imposition of a clinical hold;


•	failure to achieve certain efficacy and/or safety standards;


•	participants experiencing severe side effects or other adverse events related to the investigational treatment;


•	delayed or insufficient supply of clinical trial material or inadequate quality of such materials;


•	failure of our CROs or other third-party contractors to meet their contractual obligations to us in a timely manner, or at all; or


•	delays quality control/quality assurance procedures necessary for study database lock and analysis of unblinded data.

An emerging and uncertain risk to our timelines for commencement and completion of our clinical trials is the COVID-19 pandemic. Our prospective or contracted clinical trial sites may temporarily suspend activities

at their sites to help secure the safety of their employees or to adhere to government recommendations or orders related to social distancing and limiting public gatherings, or they may experience resource constraints stemming from the pandemic and become unable to allocate adequate resources to reach agreements necessary to commence our clinical trials at their facilities or, even if agreements are in place, to conduct our clinical trials. For clinical trials that we are able to initiate, we may experience lower than anticipated subject enrollment and completion rates, including because individuals may avoid medical settings due to concerns related to the pandemic or they may become subject to governmental orders or recommendations that impose curfews or that ask individuals to leave their homes only if essential. In addition, increased rates of worker illness and implementation of work-from-home and restricted travel policies due to the COVID-19 pandemic may delay any regulatory authority and/or IRB approvals necessary for our clinical trials and/or prevent our CROs and other third-party contractors who are necessary for the conduct of our clinical trials from meeting their contractual obligations to us in a timely manner, any of which could delay commencement and completion of our clinical trials.

Significant clinical trial delays also could jeopardize our ability to meet obligations under agreements under which we license our rights to our product candidates, allow other companies to bring competitive products to market before we do, shorten any period of market exclusivity we may otherwise have under our patent rights, and weaken our negotiating position in discussions with potential collaborators, any of which could impair our ability to successfully commercialize our product candidates, if ultimately approved. Any significant delays in commencement or completion of clinical trials of our product candidates, or the suspension or termination of a clinical trial, could materially harm our business, financial condition and results of operations.

DARE-BV1 is a new vaginal formulation of clindamycin being developed for a bacterial infection known for being difficult to treat and cure. Encouraging results from a proof-of-concept study may fail to be replicated.

DARE-BV1 is a novel hydrogel formulation of clindamycin, a popular antibiotic currently available in other formulations for treating BV. BV effects over 20 million women and is known for being a difficult vaginal infection to cure. Our formulation is designed to provide extended release of the drug at the site of infection over multiple days and require no intervention by the patient beyond the initial application, which we believe will improve outcomes. However, other pharmaceutical companies have employed a similar approach, with clindamycin and other antibiotics, and have generated only marginally improved outcomes. To date DARE-BV1 has been studied in only 30 women in an investigator-sponsored study. We cannot predict whether our formulation will produce a successful therapeutic outcome and meet the endpoints required for regulatory approval.

We plan to commence a Phase 3 clinical study of DARE-BV1 for BV in 2020. Based on discussions with the FDA, we believe that if this study is successful, the FDA will not require additional clinical studies to support the NDA for DARE-BV1. However, the FDA may determine that the results of the Phase 3 study are not sufficiently robust or convincing and require additional clinical and/or nonclinical studies prior to approval of DARE-BV1 to treat BV. Additionally, in parallel with the Phase 3 clinical study and to support the NDA, we will conduct nonclinical studies of certain excipients in DARE-BV1 and the clinical formulation of DARE-BV1, including reproductive toxicology studies. If these studies are not completed on schedule or if they provide results that we or the FDA determine to be concerning, this may cause a delay or failure in filing the NDA or obtaining approval for DARE-BV1. If DARE-BV1 receives FDA approval, it will face significant competition from existing and potentially new therapies. Failure to generate compelling outcome data will hurt our ability to partner the asset and significantly decrease the asset’s value. See also “-The commercial success of DARE-BV1 will depend on the availability of alternative products for BV and women’s preferences, in addition to the market’s acceptance of our vaginal gel therapy” below.

Ovaprene is a drug/device combination and the process for obtaining regulatory approvalin the United States will require compliance with more complex requirements of the FDA applicable to combination products. A change in the FDA’s prior determination that Ovaprene has a device-primary mode of action and re-assignment of primary oversight responsibility to CDER would adversely impact our timeline and significantly raise our costs to complete clinical development and obtain regulatory approval for Ovaprene.

Ovaprene is composed of both device and drug components and is considered a combination product by the FDA. It is a contraceptive intravaginal ring that releases locally acting spermiostatic agents and has a permeable mesh in its center designed to create a partial barrier to sperm. The barrier seeks to block the progression of sperm into the cervical mucus while the agents seek to create an environment inhospitable to sperm. Ovaprene previously underwent a request for designation, or RFD, process with the FDA that determined that the product had a device-primary mode of action and CDRH would lead the review of a PMA for the product. If the designation were to be changed to drug-primary mode of action and assigned to CDER, or if either division were to institute additional requirements for the approval of Ovaprene, we could be required to complete clinical studies with more patients and over longer periods of time than is currently anticipated. This would significantly increase the anticipated cost and

timeline to completion of Ovaprene’s development and require us to raise additional funds. For example, we plan to commence a contraceptive effectiveness and safety study of Ovaprene in 2020. Based on discussions with the FDA, we believe that if this study is successful, the FDA will not require additional clinical studies to support the PMA for Ovaprene. However, the FDA may determine that the results of the study are not sufficiently robust or convincing and require additional clinical and/or nonclinical studies prior to approval of Ovaprene. Because Ovaprene is one of our lead product candidates currently in development, the impact of either a change in the lead FDA review center or the imposition of additional requirements for approval would be significant to us and could have a material adverse effect on the prospects for developing Ovaprene, our business and our financial condition. See also “-The commercial success of Ovaprene will depend on market acceptance of a monthly, hormone-free vaginal ring product, availability of alternative contraceptive products and women's preferences, as well as the success of Bayer’s marketing and sales efforts” below.

The factors contributing to Female Sexual Dysfunction, including genital arousal disorders, are complex making the design and implementation of a successful clinical trial of Sildenafil Cream, 3.6% challenging.

Female Sexual Dysfunction disorders in women vary in nature and may be the result of a variety of physiological and psychological factors. Given the variability of factors contributing to the underlying condition, clinical studies to evaluate effectiveness in any subset of the condition under the umbrella of Sexual Dysfunction, such as female sexual arousal disorder, or FSAD, are complex. Sildenafil Cream, 3.6% is designed to work primarily by increasing blood flow to the genital tissue. Therefore, it will be critical for us to identify and enroll patients in our clinical trials of Sildenafil Cream, 3.6% for whom inadequate blood flow to the genital tissue is the primary contributor to their arousal disorder. If we fail to screen properly, and instead enroll patients with different contributing factors, the results of our clinical trials are unlikely to demonstrate effectiveness of Sildenafil Cream, 3.6%. Even if we can identify women for whom inadequate blood flow to the genital tissue is the primary contributing factor to their sexual arousal difficulties, there is no guaranty that the use of Sildenafil Cream, 3.6% will improve their general feelings of arousal or that we can utilize a patient reported outcome measure that adequately captures their genital arousal response. Given the factors contributing to arousal disorders, we may be forced to run clinical trials in large patient populations, extending the timelines and increasing the cost of product development.

Today, there are no FDA-approved treatments for FSAD, and we lack a precedent program to assist in the design of our clinical trials. These factors increase our development risk and the chance of failure. While we have worked with experts to develop novel patient reported outcome, or PRO, instruments for our planned Phase 2b study of Sildenafil Cream, 3.6%, tested the proposed PRO instruments in a content validity study, reviewed the results of that study with the FDA and aligned with the FDA on the Phase 2b study design, the Phase 2b study may nevertheless fail to demonstrate effectiveness of Sildenafil Cream, 3.6% in treating FSAD. Our failure to design and implement a successful clinical trial for Sildenafil Cream, 3.6% would have materially adverse effect on our business and our financial condition.

DARE-HRT1 utilizes a vaginal ring technology never tested in women; even if it successfully advances through clinical testing, it will likely face significant commercial competition.

DARE-HRT1 represents the earliest of our clinical-stage assets and the upcoming Phase 1 study in Australia represents the first human testing of this novel intravaginal ring technology. To date, all studies have been in vitro studies or animal studies. The risks associated with earlier stage technologies tend to be higher and the rate of failure tends to be greater. While the IVR technology has generated promising results in pre-clinical studies, there can be no assurance these results will be replicated when tested in human subjects. Even if successful, many approved therapies exist for treating the vasomotor symptoms associated with menopause, including hot flashes. There is no guaranty that women will prefer the convenience of a monthly vaginal ring over pills, patches and creams. Failure of DARE-HRT1 could have a meaningful effect on the likelihood of the IVR technology being applied to another indication. These developments would materially impact the value of this technology platform to our stockholders.

Our success relies on third-party suppliers and manufacturers of our product candidates, including multiple single source suppliers and manufacturers.

We have a small number of employees and no personnel dedicated to marketing, manufacturing or sales and distribution. We rely on third parties to supply and manufacture our product candidates and other materials necessary to commence and complete pre-clinical testing, clinical trials and other activities required for regulatory approval of our product candidates. If we receive the requisite regulatory approvals for one or more products, we expect to rely on third parties for commercial manufacture such products, and as such we will be subject to inherent uncertainties related to product safety, availability and security. For example, our agreement with ADVA-Tec limits our ability to engage a manufacturing source for Ovaprene other than ADVA-Tec following regulatory approval. If ADVA-

Tec fails to produce sufficient ring quantities to meet commercial demand, our ability to become profitable could be adversely impacted. To date, ADVA-Tec has only produced a small number of rings for clinical testing. Furthermore, for some of the key raw materials and components of Ovaprene, we have only a single source of supply, and alternate sources of supply may not be readily available.

Under the terms of the SST license agreement, SST will be responsible for obtaining supplies of Sildenafil Cream, 3.6% for the Phase 2 clinical trials expected to be conducted in the United States. Thereafter, we will be responsible for obtaining pre-clinical, clinical and commercial supplies of Sildenafil Cream, 3.6%. Under the terms of the license arrangements for our other clinical-stage candidates; DARE-BV1 and DARE-HRT1, we will be responsible for sourcing the supply of the active ingredients and arranging for the manufacture of the hydrogel and IVRs. The supply of all of our product candidates, including Ovaprene and Sildenafil Cream, 3.6%, will rely on third party sources and suppliers.

We are responsible for obtaining supplies of DARE-BV1 for the Phase 3 trial to be conducted in the United States. While we believe we will be able to obtain sufficient supplies of raw materials required to produce the clinical trial material, future supplies may be more difficult and costly to obtain. For example, our current supplier of the active ingredient, clindamycin, is located in China. Should this supplier slow its production or shut down its factory in light of the COVID-19 pandemic, or for any reason, we may not be able to obtain an adequate supply. If this were to occur, we would be forced to source clindamycin from a different supplier, which could lead to higher costs and delays in development and regulatory approval of DARE-BV1.

Moreover, we do not expect to control the manufacturing processes for the production of any current or future products or product candidates, all of which must be made in accordance with relevant regulations, and includes, among other things, quality control, quality assurance, compliance with cGMP and the maintenance of records and documentation. In the future, it is possible that our suppliers or manufacturers may fail to comply with FDA regulations, the requirements of other regulatory bodies or our own requirements, any of which would result in suspension or prevention of commercialization and/or manufacturing of our products or product candidates, delay or suspension of ongoing research, including clinical trials, disqualification of data or other enforcement actions such as product recall, injunctions, civil penalties or criminal prosecutions against us. Furthermore, we may be unable to replace any supplier or manufacturer with an alternate supplier or manufacturer on a commercially reasonable or timely basis, or at all. If we are unable to obtain the product quantities needed for our clinical trials, and if approved, for commercial launch, our business will be materially adversely affected.

If we were to experience an unexpected loss of supply, or if any supplier or manufacturer were unable to meet its demand for our product candidates, including due to geopolitical actions, natural disasters or public health emergencies or pandemics, such as the COVID-19 pandemic, we could experience delays in research, planned or ongoing clinical trials or commercialization. We might not find alternative suppliers or manufacturers with FDA approval, of acceptable quantity, in the appropriate volumes and at an acceptable cost. The long transition periods necessary to switch manufacturers and suppliers would significantly delay our timelines, which would materially adversely affect our business, financial conditions, results of operations and prospects.

Third-party suppliers, manufacturers, distributors or regulatory service providers may not perform as agreed or may terminate their agreements with us, including due to the effects related to geopolitical actions, natural disasters, public health emergencies or pandemics, such as the COVID-19 pandemic, or force majeure events that affect their facilities or ability to perform. Any significant problem that our suppliers, manufacturers, distributors or regulatory service providers experience could delay or interrupt our supply of materials or product candidates until the supplier, manufacturer, distributor or regulatory service provider cures the problem, until the event that resulted in the delay or interruption is adequately addressed, or until we locate, negotiate for, validate and receive FDA approval for an alternative provider (when necessary), if one is available, and we may not have recourse against the party who did not perform or terminated their agreement with us if such non-performance or termination is excused under our agreements with such party. Failure to obtain the needed quantities of our products would have a material and adverse effect on our business, financial condition, results from operations and prospects.

We rely on, and intend to continue to rely on, third parties for the execution of significant aspects of our development programs. Failure of these third parties to successfully carry out their contractual duties, comply with regulatory requirements and applicable law, or meet expected deadlines may cause significant delays in our product development timelines and/or failure of our programs.

Our business model relies on the outsourcing of certain functions, tests and services to CROs, medical institutions and other specialist providers. We rely on these third parties to run all aspects of our clinical trials and related programs, and for quality assurance, clinical monitoring, clinical data management and regulatory expertise related to these clinical development programs. For example, we engaged a CRO to run all aspects of the PCT clinical

trial for Ovaprene, and we intend to engage one or more CROs for all future clinical trial requirements needed to file for regulatory approvals. We expect to rely on third parties and CROs to perform similar functions for Sildenafil Cream, 3.6%, DARE-BV1, DARE-HRT1 and any future product candidates in clinical development. There is no assurance that such organizations or individuals will be able to provide the functions, tests or services as agreed upon, including the agreed upon price and timeline, or to our requisite quality standards, including due to geopolitical actions, natural disasters, or public health emergencies or pandemics, such as the COVID-19 pandemic. We will rely on the efforts of these organizations and individuals and if they fail to perform as expected, we could suffer significant delays in the development of one or more of our product candidates.

There is also no assurance these third parties will not make errors in the design, management or retention of our data or data systems. Any failures by such third parties could lead to a loss of data, which in turn could lead to delays in clinical development and obtaining regulatory approval. Third parties may not pass FDA or other regulatory audits, which could delay or prohibit regulatory approval. In addition, the cost of such services could significantly increase over time. If these third parties do not successfully carry out their contractual duties or meet expected deadlines, regulatory approval of current and future product candidates, may be delayed, prevented or cost significantly more than expected, all of which would have a material adverse effect on our business, financial condition, results of operations and prospects.

Interim, topline and preliminary data from our clinical trials that we announce or publish from time to time may change as more patient data become available and are subject to audit and verification procedures that could result in material changes in the final data, and others, including regulatory authorities, may not agree with our interpretation of study data.

From time to time, we may publicly disclose interim, preliminary or topline data from our clinical studies, which is based on a preliminary analysis of then-available data, and the results and related findings and conclusions are subject to change following a more comprehensive review of the data related to the particular study or trial. We also make assumptions, estimations, calculations and conclusions as part of our analysis of data, and we may not have received or had the opportunity to fully and carefully evaluate all data. As a result, the topline results that we report may differ from future results of the same studies, or different conclusions or considerations may qualify such results, once additional data have been received and fully evaluated. Topline data also remain subject to audit and verification procedures that may result in the final data being materially different from the preliminary data we previously published. As a result, topline data should be viewed with caution until the final data are available.

Interim data from clinical trials are subject to the risk that one or more of the clinical outcomes may materially change as patient enrollment continues and more patient data become available. Adverse differences between preliminary or interim data and final data could significantly harm our business prospects. There can be no guarantee that a favorable futility analysis will result in a favorable final result at the completion of the clinical trial.

Further, others, including regulatory authorities, may not accept or agree with our assumptions, estimates, calculations, conclusions or analyses or may interpret or weigh the importance of study data differently, which could impact the value of the particular program, the approvability or commercialization of the particular product candidate or product and our company in general. In addition, the information we choose to publicly disclose regarding a particular study or clinical trial is based on what is typically extensive information, and you or others may not agree with what we determine is the material or otherwise appropriate information to include in our disclosure, and any information we determine not to disclose may ultimately be deemed significant with respect to future decisions, conclusions, views, activities or otherwise regarding a particular drug, drug candidate or our business. If the topline data that we report differ from actual results, or if others, including regulatory authorities, disagree with the conclusions reached, our ability to obtain approval for, and commercialize, our product candidates may be harmed, which could harm our business, operating results, prospects or financial condition.

Our business depends on obtaining the approval of regulatory authorities, and in particular, FDA approval, for our product candidates in a timely manner, and the requirements for obtaining approval may change over time, requiring more financial resources and development time than we currently anticipate.

Our product candidates and the activities associated with their development and commercialization, including their design, testing, manufacture, release, safety, efficacy, regulatory filings, recordkeeping, labeling, storage, approval, advertising, promotion, sale and distribution, are subject to comprehensive regulation by the FDA, other regulatory authorities in the U.S., and comparable authorities in other countries or jurisdictions where we seek to test or market our product candidates. The process of obtaining marketing approvals, in the U.S. and elsewhere, is expensive, may take many years and can vary substantially based upon a variety of factors, including the type, complexity and novelty of the product candidates involved. In addition, requirements for approval may change over

time and our current development plans may not accurately anticipate all applicable requirements for marketing approval by the FDA or comparable regulatory authorities for jurisdictions outside the U.S.

Our success depends on our ability to obtain regulatory approvals for our product candidates in a timely and cost-efficient manner. We have not submitted a marketing application or received approval to market any of our product candidates from any regulatory authority. Even if we successfully complete clinical studies, we may experience delays in our efforts to obtain marketing approvals for any of our product candidates. Due to our relatively small number of employees, we expect to rely on CROs and other vendors and consultants to assist us in preparing, submitting and supporting the applications necessary to gain marketing approvals. We do not control these third parties and they may not devote sufficient time and resources to our projects, or their performance may be substandard, resulting in submission delays or failure of a regulatory authority to accept our application for filing. We cannot assure you that we will ever obtain any marketing approvals in any jurisdiction.

We may change the development plan for a product candidate as a result of changes during the development period in the FDA’s marketing approval policies or the amendment or enactment of additional statutes or regulations, or following our review of outcomes of other similar product candidates under development. This could significantly lengthen our development timelines and cost. Further, the FDA and comparable authorities in other countries have substantial discretion in the approval process and may refuse to accept any application or may decide that our data is insufficient for approval and require additional preclinical or other studies, changes in the manufacturing process or facilities or clinical trials, even if we had previously aligned with the FDA on such data and other requirements. In addition, the announcement of new requirements by the FDA, the failure of a competitive product to receive regulatory approval, or the receipt of a CRL from the FDA by another company pursuing the FDA's 505(b)(2) pathway that may have implications for our proposed pathway could impact how investors and potential strategic parties view the development risks associated with our product candidates. Changing testing or manufacturing requirements for us or for others deemed to be comparable to us may adversely impact our financial resources, our development timelines and may harm the perception held by others of our business.

Successful challenges to the FDA’s interpretation of Section 505(b)(2) could impact the clinical development of DARE-BV1, Sildenafil Cream, 3.6%, DARE-HRT1, DARE-VVA1, other IVR product candidates and future candidates we may license or acquire and materially harm our business.

We intend to develop and seek approval for DARE-BV1, Sildenafil Cream, 3.6%, our IVR product candidates, including DARE-HRT1, DARE-VVA1 and other candidates we may license or acquire, including ORB-204 and ORB-214, pursuant to the FDA’s 505(b)(2) pathway. If the FDA determines that we may not use that pathway for the development of any of these candidates, then we would have to seek regulatory approval via a “full” or “stand-alone” NDA under Section 505(b)(1). This would require us to conduct additional clinical trials, provide additional data and information, and meet additional standards for regulatory approval including possibly pre-clinical data. If this were to occur, the time and financial resources required to obtain FDA approval for these candidates, and the complications and risks associated with the respective product candidate or candidates, would likely substantially increase and would have a material adverse effect on our business and financial condition.

The Drug Price Competition and Patent Term Restoration Act of 1984, also known as the Hatch-Waxman Act, added Section 505(b)(2) to the FDCA. As described above, Section 505(b)(2) permits the filing of an NDA where at least some of the information required for approval comes from studies and information that were not conducted by or for the applicant and for which the applicant has not obtained a right of reference. Section 505(b)(2), if applicable to us under the FDCA, would allow an NDA we submit to the FDA to rely in part on data in the public domain or the FDA’s prior conclusions regarding the safety and effectiveness of approved compounds, which could expedite the development programs for DARE-BV1, Sildenafil Cream, 3.6%, our IVR product candidates, including DARE-HRT1, DARE-VVA1, ORB-204 and ORB-214.

Although the FDA’s longstanding position has been that it may rely upon prior findings of safety or effectiveness to support approval of a 505(b)(2) application, this policy has been controversial and subject to challenge. In addition, notwithstanding the approval of an increasing number of products by the FDA under Section 505(b)(2) over the last few years, certain brand-name pharmaceutical companies and others have objected to the FDA’s interpretation of Section 505(b)(2). If the FDA’s interpretation of Section 505(b)(2) is successfully challenged, the FDA may change its 505(b)(2) policies and practices, which could delay or even prevent the FDA from approving any NDA we submit under Section 505(b)(2). In addition, the pharmaceutical industry is highly competitive, and Section 505(b)(2) NDAs are subject to special requirements designed to protect the patent rights of sponsors of previously approved drugs referenced in a Section 505(b)(2) NDA. Even if we are able to utilize the Section 505(b)(2) regulatory pathway for one or more of our candidates, there is no guarantee this would ultimately lead to faster product development or earlier approval.

Moreover, any delay resulting from our inability to pursue the FDA's 505(b)(2) pathway could result in new competitive products reaching the market more quickly than our product candidates, which would likely materially adversely impact our competitive position and prospects. Even if we are allowed to pursue the FDA's 505(b)(2) pathway, we cannot assure you that our product candidates will receive the requisite approvals for commercialization.

Even if we receive regulatory approvals for our product candidates, they may not gain acceptance among physicians, consumers or the medical community, thereby limiting our potential to generate revenue, which will undermine our growth prospects.

Even if our product candidates are approved for commercial sale by the FDA or other regulatory authorities, the degree of market acceptance of any new product by consumers, physicians, other health care professionals and third-party payors will depend on several factors, including:


•	demonstrated evidence of efficacy and safety;


•	sufficient third-party insurance coverage or reimbursement;


•	effectiveness of our or our collaborators’ sales and marketing strategy;


•	the willingness of uninsured consumers to pay for the product;


•	the willingness of pharmacy chains to stock the products;


•	the prevalence and severity of any adverse side effects;


•	availability of alternative products; and


•	the convenience and comfort level to consumers provided by our product compared to alternative products.

If our products fail to provide a benefit over then currently available options, we are unlikely to generate sufficient revenues to achieve profitability.

The commercial success of DARE-BV1 will depend on the availability of competitive products for BV and women’s preferences, in addition to the market’s acceptance of our vaginal gel therapy.

Today, there are many approved products for BV, and most are generic. Should DARE-BV1 receive marketing approval, its commercial success will depend on many factors:


•	strength of the efficacy data supporting the cure and clinical cure rates;


•	patient satisfaction and willingness to use it again and refer it to others;


•	the success or failure of other branded therapies;


•	preference by women for a vaginally administered therapy;


•	price pressure given today’s high level of generic treatments; and


•	approval of new entrants, including alternative, non-antibiotic treatment options.

Additionally, our current commercialization strategy for DARE-BV1 is to partner with one or more pharmaceutical companies with an established commercial infrastructure and expertise. If we are not successful in attracting an acceptable commercialization partner or entering into an agreement with acceptable terms on a timely basis or at all, commercial launch of DARE-BV1 could be significantly delayed. Further, any future collaboration may not be successful, in which case our ability to realize the full market potential of our product could be harmed.

Any of these factors could reduce the commercial potential for DARE-BV1 and place pressure on our business, financial condition, results of operation and prospects.

The commercial success of Ovaprene will depend on market acceptance of a monthly, hormone-free vaginal ring product, availability of alternative contraceptive products and women's preferences, as well as the success of Bayer’s marketing and sales efforts.

If we receive regulatory approval to market Ovaprene, its commercial success, or the success of any other future contraceptive product candidate we may seek to develop, including our current pre-clinical candidates, will depend upon the contraceptive market and market acceptance of an alternative method. Risks related to market acceptance include:


•	minimum acceptable contraceptive efficacy rates;


•	perceived safety differences of hormonal and/or non-hormonal contraceptive options;


•	changes in health care laws and regulations, including the ACA, and its effect on pharmaceutical coverage, reimbursement and pricing, and the birth control mandate;


•	competition from new lower dose hormonal contraceptives with more favorable side effect profiles; and


•	new generic contraceptive options including a generic version of the hormone-containing intravaginal product NuvaRing®.

If one or more of these risks occur, it could reduce the market potential for Ovaprene, or any future contraceptive product we may seek to develop, and place pressure on our business, financial condition, results of operations and prospects.

Under our license agreement with Bayer, provided the license grant becomes effective, Bayer will have exclusive rights to market and sell Ovaprene in the U.S. Accordingly, the potential value of Ovaprene to our company is highly dependent on the efforts and activities of Bayer, and Bayer has significant discretion in determining the resources that it will allocate to commercialization of Ovaprene.

The commercial success of Sildenafil Cream, 3.6% will depend on the availability of alternative products for Female Sexual Disorders and women's preferences, in addition to the market's acceptance of our topical cream.

Today, there are no FDA-approved products to treat FSAD. While our goal is for Sildenafil Cream, 3.6% to be the first product to receive such approval, other competitive products may obtain an approval before us. Even if we achieve that goal, the costs associated with introducing a new product into the women’s health market would likely be significant, and regardless of the amount spent, there is no guarantee that our new product will be broadly adopted. Our commercial success with Sildenafil Cream, 3.6% will depend, in large part, on our ability to educate doctors and women about the need to diagnose and treat FSAD and to demonstrate the merits of Sildenafil Cream, 3.6%.

Women may be hesitant to use Sildenafil Cream, 3.6% for many reasons, including the lack of experience with any product designed to treat FSAD, the lack or perceived lack of clinical evidence supporting its benefits, and the out-of-pocket cost of Sildenafil Cream, 3.6%, particularly if it is not covered by insurance.

The commercial success of DARE-HRT1 will depend on the availability of alternative products for managing the vasomotor symptoms of menopause and women's preferences, in addition to the market's acceptance of our IVR.

Risks related to market acceptance of DARE-HRT1, if approved for hormone replacement therapy, include:


•	preference for a vaginal ring delivery of hormone replacement therapy over pills, patches and creams by menopausal women;


•	data regarding symptom relief of DARE-HRT1 over other hormonal treatments for vasomotor symptoms associated with menopause;


•	preference for bio-identical hormones by women and health care providers; positive or negative news and research regarding bio-identicals;


•	the success or failure of Bijuva®, the first FDA-approved bio-identical product;


•	new information supportive or against the use of hormones in menopause; and


•	availability of insurance reimbursement for DARE-HRT1.

Depending upon the direction of the factors above, a commercial market for DARE-HRT1 may develop more slowly than expected, or not at all, and our business, financial condition, results of operation and prospects could be hurt as a result.

If we suffer negative publicity concerning the safety or efficacy of our products in development, our reputation could be harmed, and we may be forced to cease development of such products.

If concerns should arise about the actual or anticipated clinical outcomes regarding the safety of any of our product candidates, such concerns could adversely affect the market’s perception of these candidates, which could lead to a decline in investors’ expectations and a decline in the price of our common stock.

Our clinical product candidates have only been tested in a small number of women over short periods of use and no data exists regarding a potential increase in fetal abnormalities in pregnant women.

If DARE-BV1, Ovaprene, or Sildenafil Cream, 3.6% are successful in their clinical development, we expect that women of child-bearing age will use them, and potentially for many months or years. To date, human clinical studies of these product candidates have been for relatively short periods of time and these product candidates lack safety data over longer periods of use. For example, while we believe the risk of adverse fetal development from using these product candidates is low, the impact of these product candidates on fetal development has not been studied and there are no adequate or well-controlled studies of these product candidates in pregnant women. Thus, the risk

of adverse fetal development from any one or more of these product candidates may be greater than expected. Should any of these product candidates be shown to increase the risk of adverse fetal development, our ability to develop those or other product candidates would be substantially impaired, our business prospects and operations would be materially harmed, and we could also be subject to potential claims and lawsuits.

Our Sildenafil Cream, 3.6% product candidate may pose a greater risk to older or elderly women.

FSAD is a condition that impacts women of many ages, including older and elderly populations. Sildenafil, the active ingredient in Sildenafil Cream, 3.6%, has not been tested over long periods of time in older or elderly women. Older or elderly women may react differently and adversely to Sildenafil Cream, 3.6% and we have not yet thoroughly studied the topical or clinical pharmacology of this drug candidate in different patient populations. Should Sildenafil Cream, 3.6% show increased risk of adverse reactions, or signs thereof, in older or elderly women, our business prospects could be harmed.

We face intense competition from other medical device, biotechnology and pharmaceutical companies and our operating results will suffer if we fail to compete effectively.

The medical device, biotechnology and pharmaceutical industries are intensely competitive. Significant competition exists among contraceptive products, therapies to treat BV and products for managing the vasomotor symptoms associated with menopause. We anticipate new products will be developed and introduced by others in the future. Existing products have name recognition, are marketed by companies with established commercial infrastructures and with greater financial, technical and personnel resources than us. To compete and gain market share, any new product will need to demonstrate advantages in efficacy, convenience, tolerability or safety. In addition, new products developed by others could emerge as competitors to our product candidates and offer advantages and benefits over our product candidates. If we cannot compete effectively against our competitors, our business will not grow, and our financial condition and operations will suffer.

Our potential competitors include large, well-established pharmaceutical companies and specialty pharmaceutical companies, many of which have a robust product portfolio and strong franchises in women’s health. These companies include Merck & Co., Inc., AMAG, Inc., TherapeuticsMD, Inc., Cooper Surgical, Inc., AbbVie, Inc., Allergan, Inc., Bayer AG, Johnson & Johnson, and Pfizer Inc. Additionally, several generic manufacturers currently market and continue to introduce new contraceptive and other products in women's health including Sandoz International GmbH, Glenmark Pharmaceuticals Ltd., Lupin Pharmaceuticals, Inc., Mylan, Inc., Perrigo Company, PLC and Amneal Pharmaceuticals LLC. Other product candidates in development, if approved, could compete with our products.

Any of our current or future product candidates for which we pursue clinical development, may cause serious adverse events or undesirable side effects which may delay or prevent marketing approval, or, if approval is received, require our product to be taken off the market, require it to include safety warnings or otherwise limit our sales.

Serious adverse events or undesirable side effects from our current product candidates and any future product candidates we may seek to develop, could arise either during clinical development or, if approved, after approval and commercialization. The results of future clinical trials may show that a product candidate causes serious adverse events or undesirable side effects, which could interrupt, delay, or cause the termination of clinical trials, resulting in delay of, or failure to obtain, marketing approval from the FDA and other regulatory authorities. If such serious adverse events or undesirable side effects occur:


•	during the clinical development phase, regulatory authorities may impose a clinical hold which could result in substantial delays and adversely impact our ability to continue development of the product;


•	during the commercial or post-marketing phase regulatory authorities may require the addition of specific warnings or contraindications to product labeling or field alerts to physicians and pharmacies;


•	we may have to change the way the product is administered or the labeling of the product;


•	we may have to conduct additional clinical trials with more patients or over longer periods of time than anticipated;


•	we may have to implement a risk minimization action plan, which could result in substantial cost increases and have a negative impact on our ability to commercialize the product;


•	we may have to limit the patients who can receive the product;


•	we may be subject to promotional and marketing limitations on the product;


•	sales of the product may decrease significantly;


•	regulatory authorities may require us to take an approved product off the market;


•	we may be subject to litigation or product liability claims; and


•	our reputation may suffer.

Any of these events could prevent us or a commercial partner from achieving or maintaining market acceptance of current or future product candidates, or could substantially increase commercialization costs and expenses, which in turn could delay or prevent us from generating significant revenues from product sales or receiving royalties and other payments based on sales by a commercial partners.

The women's health market includes many generic products and the growth in generics is expected to continue, making the introduction of a branded product for contraception, BV and hormone replacement therapy difficult and expensive.

The proportion of the U.S. market made up of generic products has been increasing. In 2017, approximately 86% of the prescription volume consisted of unbranded generic products (source: IQVIA, Global Generic and Biosimilars Trends and Insights, February 13, 2018). If this trend continues, it may be more difficult for us or a commercial partner to introduce a new branded product, if approved, at a price that will maximize our revenue and profits. Generic competition is particularly strong in the areas of contraception and the treatment of bacterial vaginosis. In order for Ovaprene and DARE-BV-1 to develop commercial markets, they must demonstrate better patient compliance and a clinical benefit in their trials in order for insurers to cover these higher cost products.

There may be additional marketing and educational efforts required to introduce a new product in order to overcome the trend towards generics and to gain access to reimbursement by payors. If we or a commercial partner cannot introduce a product, if approved, at our desired price or gain reimbursement from payors for an approved product, or if patients opt for a lower cost generic product and are unwilling to pay out-of-pocket or a co-pay, our revenues or royalties and other license fees, as applicable, will be limited.

Changes in health care laws and regulations may eliminate current requirements that health insurance plans cover and reimburse FDA-cleared or approved contraceptive products without cost sharing, which could reduce demand for branded products such as Ovaprene and lead to a preference for generic options. If the out-of-pocket costs for Ovaprene are deemed by women to be high, a commercial market may never develop.

If approved, we cannot be certain that third-party reimbursement will be available for Ovaprene, and even if reimbursement is available, the amount of any such reimbursement. The ACA and subsequent regulations enacted by the Department of Health and Human Services, or DHHS, require health plans to provide coverage for women’s preventive care, including all forms of FDA-cleared or approved contraception, without imposing any cost sharing on the plan beneficiary. These regulations ensure that women who wish to use an approved form of contraception may request it from their doctors and their health insurance plan must cover all costs associated with such products. These regulations have been, and may be further, modified, repealed, or otherwise invalidated, in whole or in part. For example, certain members of the U.S. Federal Government have attempted and are continuing to attempt to repeal the ACA and corresponding regulations, which would likely eliminate the requirement for health plans to cover women’s preventive care without cost sharing. Even if the ACA is not repealed, the DHHS regulations to specifically enforce the preventive health coverage mandate could be repealed or modified under the Trump Administration, which in 2017 altered the mandate to allow certain employers and insurers to opt out of birth control coverage for religious or moral reasons. We cannot predict the timing or impact of any future rulemaking, court decisions or other changes in the law. Any repeal or elimination of the preventive care coverage rules would mean that women seeking to use prescribed forms of contraceptives may have to pay some portion of the cost for such products out-of-pocket, which could deter some women from using prescription contraceptive products, such as Ovaprene, at all. As a result, we expect that our success will depend on the willingness of patients to pay out-of-pocket for Ovaprene in the event that either they do not have insurance or their insurance requires payment of a portion of Ovaprene by the patient, thus increasing the patient’s overall cost to use Ovaprene. This could reduce market demand for Ovaprene or any other contraceptive candidates we may seek to develop, such as our Microchips contraceptive program, ORB 204, ORB 214 and DARE-RH1, if and when they receive FDA approval, which would have a material adverse effect on our business, financial condition, and prospects.

As no FDA-approved treatments for FSAD currently exist, there is no precedent to help assess whether health insurance plans will cover Sildenafil Cream, 3.6%.

We cannot be certain that third-party reimbursement will be available for Sildenafil Cream, 3.6%. Even if reimbursement becomes available, the amount of such reimbursement may not make our product affordable to women and profitable to us. Insurers may deem Sildenafil Cream, 3.6% to be a life-style drug and decide not to provide

reimbursement. Today, many health insurance plans provide reimbursement for male sexual arousal medications. However, we cannot predict whether they will continue to do so or whether they will do so for female sexual arousal treatments as well. In addition, the safety and efficacy data from our clinical trials may impact whether Sildenafil Cream, 3.6% will become eligible for insurance coverage, and if it does, the level of such reimbursement. In an environment of rapidly rising health care costs, insurers have been looking for ways to reduce costs, which could make it difficult for new therapies to gain coverage if they are not deemed medically critical or essential. If Sildenafil Cream, 3.6% fails to obtain insurance coverage, or if the patient’s share of the cost is deemed to be expensive, a market may never develop for Sildenafil Cream, 3.6%, which would have a material adverse effect on our financial condition and prospects.

Even if we obtain regulatory approval in the United States or elsewhere to market any of our products, the reimbursement environment at the time of approval may hurt our financial prospects.

Third-party payers and administrators, including state Medicaid programs, Medicare, and the Veterans Health Administration, have recently been challenging the prices charged for pharmaceutical and medical device products. The United States government and other third-party payers are increasingly limiting both coverage and the level of reimbursement for new drugs and medical devices. Third-party insurance coverage may not be available to patients for the products we seek to commercialize. If such government and other third-party payers do not provide adequate coverage and reimbursement, health care providers may not prescribe our products or patients may ask their health care providers to prescribe competing products with more favorable reimbursement.

Managed care organizations and other private insurers frequently adopt their own payment or reimbursement reductions. Consolidation among managed care organizations has increased the negotiating power of these entities. Private third-party payers, as well as governments, increasingly employ formularies to control costs by negotiating discounted prices in exchange for formulary inclusion. Failure by us or a commercial partner to obtain timely or adequate pricing or formulary placement for the products we seek to commercialize or obtaining such pricing or placement at unfavorable pricing levels, could materially adversely affect our business, financial conditions, results of operations and prospects.

The pharmaceutical and medical device industries are highly regulated and subject to various fraud and abuse laws, including, without limitation, the U.S. federal Anti-Kickback Statute, the U.S. federal False Claims Act and the U.S. Foreign Corrupt Practices Act.

Health care fraud and abuse regulations are complex, and even minor irregularities can give rise to claims that a statute or prohibition has been violated. The laws that may affect our ability to operate include:

•

the federal health care programs’ anti-kickback law (and comparable state laws), which prohibits, among other things, persons from knowingly and willfully soliciting, receiving, offering or paying remuneration, directly or indirectly, in exchange for or to induce either the referral of an individual for, or the purchase, order or recommendation of, any good or service for which payment may be made under federal health care programs such as the Medicare, Medicaid and Veterans Health programs;


•	federal and state false claims laws which prohibit, among other things, individuals or entities from knowingly presenting, or causing to be presented, false or fraudulent claims for payment from Medicare, Medicaid, Veterans Affairs, or other third-party payers;


•	HIPAA (and similar state laws), which mandates, among other things, the adoption of standards to enhance the efficiency and simplify the administration of the health care system, as well as to protect the confidentiality of protected health information and electronic protected health information;


•	The ACA’s reporting requirements for pharmaceutical, biologic and device manufacturers regarding payments or other transfers of value made to physicians and teaching hospitals, including investment interests in such manufacturers held by physicians and their immediate family members during the preceding calendar year; and


•	the U.S. Foreign Corrupt Practices Act, which prohibits corrupt payments, gifts or transfers of value to non-U.S. officials.

The scope and enforcement of these laws is uncertain and subject to rapid change in the current environment of health care reform, especially in light of the lack of applicable precedent and regulations. Regulatory authorities might challenge our current or future activities, or those of a commercial partner, under these laws. Any such challenge could have a material adverse effect on our reputation, business, results of operations and financial

condition. In addition, efforts to ensure that our business arrangements with third parties will comply with these laws will involve substantial costs. Any investigation of us or the third parties with whom we contract, including a commercial partner, regardless of the outcome, would be costly and time consuming, and may negatively affect our results of operations and financial condition.

We have no internal sales, marketing or distribution capabilities and our model is to partner with companies with existing sales franchises to sell and distribute our products, if approved. Any failure by such third parties could negatively impact our business and our ability to develop and market any approved products.

We currently do not intend to directly sell or distribute our products into the market and instead intend to enter into agreements with third parties to sell and distribute our products. Failure to timely enter into such agreements could delay commercial launch of a product candidate that has received marketing approval. This reliance on third parties will also subject us to uncertainties related to these services including the quality of such services. Further, we would depend on these distributors and partners to ensure that the distribution process accords with relevant regulations, which includes, among other things, compliance with current good documentation practices, the maintenance of records and documentation, and compliance with applicable state laws that govern the licensure of distributors of prescription medical products. Failure to comply with these requirements could result in significant remedial action, including improvement of facilities, suspension of distribution or recall of product. Furthermore, we may be unable to replace any such partner or distributor with an alternate party on a commercially reasonable or timely basis, or at all.

Additionally, any failure by us to forecast demand for a finished product, and failure by us to ensure our distributors and marketing partners have appropriate capacity to distribute and sell such quantities of finished product, could result in an interruption in the supply of certain products and a decline in sales of that product.

The commercial success of our current product candidates and any future product candidates will significantly depend on the label claims that the FDA or other regulatory authorities approve for the product.

The commercial success of any of our product candidates will significantly depend upon our ability to obtain approval from the FDA or other regulatory authorities of product labeling containing adequate information regarding a product candidate’s expected features or benefits. Failure to achieve such approval will prevent or substantially limit our ability to advertise and promote such features and benefits in order to differentiate DARE-BV1, Ovaprene, Sildenafil Cream, 3.6%, DARE-HRT1, the other product candidates currently in our portfolio or any future product candidate from competing products. This failure would have a materially adverse effect on our business, financial condition, results of operations and prospects.

Even if we receive marketing approval from the FDA for our product candidates, we may fail to receive similar approval outside the United States, which could substantially limit the value of such products.

To market a new product outside the United States, we must obtain separate marketing approvals in each jurisdiction and comply with numerous and varying regulatory requirements of other countries, including clinical trials, commercial sales, pricing, manufacturing, distribution and safety requirements. The time required to obtain approval in other countries might differ from, and be longer than, that required to obtain FDA approval. Approval by the FDA or a comparable foreign authority does not ensure approval by regulatory authorities in any other countries or jurisdictions, but a failure to obtain marketing approval in one jurisdiction may adversely impact the likelihood of approval in other jurisdictions. The marketing approval process in other countries may include all of the risks associated with obtaining FDA approval in the United States, as well as other risks. Further, we may not obtain rights to the necessary clinical data in other countries and may have to develop our own. In addition, in many countries outside the United States, a new product must receive pricing and reimbursement approval prior to commercialization. This can result in substantial delays in these countries. Additionally, the product labeling requirements outside the United States may be different and inconsistent with the United States labeling requirements, negatively affecting our ability to market our products in countries outside the United States.

In addition, we may be subject to fines, suspension or withdrawal of marketing approvals, product recalls, seizure of products, operating restrictions and criminal prosecution if we fail to comply with applicable foreign regulatory requirements. In such an event, our ability to market to our full target market will be reduced and our ability to realize the full market potential of our product candidates will be harmed, which could have a materially adverse effect on our business, financial condition, results of operations and prospects.

Many of our product candidates are in pre‑clinical stages of development and may never advance to clinical development.

Pre-clinical studies refer to a stage of research that begins before clinical trials (testing in humans) can begin, and during which important feasibility, iterative testing and drug safety data are collected. Because of their early nature, pre-clinical product candidates tend to carry a higher risk of failure as compared with clinical-stage assets. Pre-clinical candidates must generate sufficient safety and efficacy data through in vitro studies, animal studies and a variety of tests before they can be considered appropriate for testing in humans. The development risks, timeline and cost of pre-clinical assets can be high because of the unknowns and absence of data. It can be difficult to identify relevant tests and animal models for pre-clinical studies. Even if the results from our pre-clinical studies are favorable, we still may not be able to advance the candidates into clinical trials. If pre-clinical studies of product candidates do not generate strong data, our pre-clinical stage programs may never progress to clinical development and may prove to be worthless.

Our business may be adversely affected by unfavorable or unanticipated macroeconomic conditions.

Various macroeconomic factors could adversely affect our business, our results of operations and financial condition, including changes in inflation, interest rates and overall economic conditions and uncertainties, including those resulting from political instability (including workforce uncertainty) or a global health emergency, and the current and future conditions in the global financial markets.

Interest rates and the ability to access credit markets could also adversely affect the ability of patients, payers and distributors to purchase, pay for and effectively distribute our products, if and when approved. Similarly, these macroeconomic factors could affect the ability of our current or potential future third-party manufacturers, sole source or single source suppliers, licensors or licensees to remain in business, or otherwise manufacture or supply our clinical trial material and products or commercialize our products, if and when approved. Failure by any of them to remain in business could have a material adverse effect on our ability to develop and obtain regulatory approvals for our current and any future product candidates, and, if approved, market and sell our products or provide sufficient quantities of our products to meet market demand.

Risks Related to Our Intellectual Property

Our failure to adequately protect or enforce our and our licensors’ intellectual property rights could materially harm our proprietary position in the marketplace or prevent or impede the commercialization of our current and potential future products.

Our success depends in part on our ability, and the ability of our licensors, to obtain and maintain protection in the United States and other countries for the intellectual property covering or incorporated into our technologies and products. The patents and patent applications relied upon by us are licensed to us by third parties. Our ability, or the ability of our licensors, to protect our product candidates from unauthorized use or infringement by third parties depends substantially on our abilities and the abilities of such licensors to obtain and maintain, or license, valid and enforceable patents. Due to evolving legal standards relating to the patentability, validity and enforceability of patents covering pharmaceutical inventions and the scope of claims made under these patents, our ability, and that of our licensors, to obtain or enforce patents is uncertain and involves complex legal and factual questions for which important legal principles are unresolved. As a result, the validity and enforceability of patents cannot be predicted with certainty. In addition, we do not know whether we or our licensors were the first to make the inventions covered by each of our issued patents and pending patent applications. We or our licensors may not have been the first to file patent applications for these inventions.

We cannot be certain if any of the patents that cover our product candidates will be eligible to be listed in the FDA’s compendium of “Approved Drug Products with Therapeutic Equivalence Evaluation" (the “Orange Book"). The advantage of being listed in the Orange Book is that, under the Hatch-Waxman Act, any future generic applicant for any of our approved products needs to include a patent certification in their generic application with respect to each patent listed in the Orange Book for an approved product (referred to as the “listed drug”) for which they are seeking approval. If the generic applicant believes that any of the patents in the Orange Book on the listed drug is invalid, unenforceable, or not infringed by their product, the generic applicant usually will file a “Paragraph IV” certification on that patent if they plan to challenge the patent. When a generic applicant files a Paragraph IV certification, they must provide the listed drug application (and the patent owner if different) a notice that they filed a generic application with the Paragraph IV certification. If, in reply to that notice, the listed drug holder files a patent lawsuit against the generic applicant within 45 days of the Paragraph IV notice, a 30-month automatic stay is imposed by the Hatch-Waxman Act on FDA during which FDA may not approve the generic application (unless the patent litigation is resolved in the generic applicant’s favor). These 30-month stays are major protection available in the Hatch-Waxman Act for innovative drug

makers. However, if our products are approved, but one or more of our patents are not listed in the Orange Book, generic firms that might seek approval of a generic version of our product would not have to “certify” in their generic drug applications as to any such unlisted patent. This could result in the absence of a 30-month stay and thus faster approval of some generic applications for our products.

Other companies or individuals may independently develop similar or alternative technologies or duplicate our technologies.

The laws of some foreign countries do not protect our proprietary rights to the same extent or in the same manner as U.S. laws, and we may encounter significant problems in protecting and defending our proprietary rights in these countries. We will be able to protect our proprietary rights from unauthorized use by third parties only to the extent that our proprietary technologies, product candidates and any future products are covered by valid and enforceable patents or are effectively maintained as trade secrets.

Our patent strategy for protecting DARE-BV1 includes in-licensing a patent family from TriLogic Pharma and MilanaPharm whose last claim expires in the fourth quarter of 2028 in the United States and Europe, with additional patent applications pending that could have terms into 2036. MilanaPharm has the first right to prepare, file, prosecute and maintain all such patents, at MilanaPharm’s sole cost and expense. MilanaPharm and TriLogic must keep us informed regarding the preparation, filing, prosecution, and maintenance of the licensed patents, provide us with reasonable opportunity to review and comment on material communications to and from the applicable patent authorities and take all reasonable comments made by, and otherwise act in accordance with instructions provided by, us on matters related to prosecution, maintenance and enforcement related to the licensed patents. If MilanaPharm decides not to prepare, file, prosecute, or maintain any licensed patent, we have the option, in our sole discretion, to assume the control and direction of the preparation, filing, prosecution, and maintenance of such patent at our expense, and we may deduct some or all of such patent expenses from amounts payable to MilanaPharm under our license agreement.

Our patent strategy for protecting Ovaprene includes in-licensing a patent family from ADVA-Tec, whose last claim expires in August 2028, but which could be extended to August 2033 in the United States and Europe. Patent prosecution for the intellectual property incorporated into Ovaprene is entirely controlled by ADVA-Tec and we have little, if any, influence or control over such patent prosecution.

Our patent strategy for protecting Sildenafil Cream, 3.6% includes in-licensing a patent family from SST, whose last U.S. claim expires in June 2029, but which could be eligible for three-year market exclusivity under the Hatch-Waxman Act in the United States. However, if granted 3-year exclusivity, generic applicants can still submit an abbreviated application during the 3-year period and FDA is required to review the application, but will defer any approval until the end of the 3-year period. Three-year exclusivity differs from 5-year exclusivity under the Hatch-Waxman Act, which bars the submission of a generic application during the 5-year period, with the exception that a generic application can be filed after 4 years if it contains a Paragraph IV certification challenging an Orange Book-listed patent for the brand drug.

With respect to patents related to Sildenafil Cream, 3.6%, SST has the sole right, but not the obligation, to prepare, file, prosecute and maintain such patents. We will be responsible for the costs incurred to maintain and prosecute all such patents and we will be kept informed of all strategies. However, we will have little if any, influence or control over implementing the patent strategy.

With respect to patent rights related to our IVR product candidates, including DARE-HRT1, The General Hospital Corporation (known as MGH) has the sole right to prosecute and maintain its patent rights, and we have the right to prosecute and maintain Catalent's patent rights. We will be responsible for the costs incurred by MGH to maintain and prosecute such patents and we will be kept informed of all strategies. However, we will have little, if any, influence or control over MGH’s implementation of the patent strategy.

With respect to patents related to DARE-VVA1, we have the right and obligation, at our expense, to prosecute and maintain the in-licensed patent rights in certain major markets, if possible.

There is a substantial backlog of patent applications at the United States Patent and Trademark Office. There can be no assurance that any patent applications relating to our products or methods will be issued as patents or, if issued, that the patents will not be challenged, invalidated or circumvented or that the rights granted thereunder will provide a competitive advantage. We and our licensors may not obtain patent rights on products, treatment methods or manufacturing processes that we may develop or to which we may obtain license or other rights. Even if patents are issued to us and our licensors, rights under any issued patents may not provide us with sufficient protection for our product candidates or provide sufficient protection to afford us a commercial advantage against our competitors or their competitive products or processes. It is possible that no patents will be issued from any pending or future

patent applications owned by us or licensed to us. Others may challenge, seek to invalidate, infringe or circumvent any patents we own or license, including the patents we have licensed to date and any other patents we may license in the future. Conversely, in the future we may have to initiate litigation against third parties to enforce our intellectual property rights. The defense and prosecution of patent and intellectual property claims are both costly and time consuming, even if the outcome is favorable to us. Any adverse outcome could subject us to significant liabilities, require us to license disputed rights from others or require us to cease selling our future products.

In addition, many other organizations are engaged in research and product development efforts that may overlap with our products. Such organizations may currently have, or may obtain in the future, legally blocking proprietary rights, including patent rights, in one or more products or methods we are developing or considering for development. These rights may prevent us from commercializing technology, or they may require us to obtain a license from the organizations to use the technology. We may not obtain any such licenses that may be required on reasonable financial terms, if at all, and there can be no assurance that the patents underlying any such licenses will be valid or enforceable. As with other companies in the pharmaceutical industry, we are subject to the risks that persons located in other countries will engage in development, marketing or sales activities of products that would infringe our intellectual property rights if such activities were conducted in the United States and enforcing our intellectual property rights against such persons may be difficult or not possible.

Our patents and other intellectual property also may not afford protection against competitors with similar technology. We may not have identified all patents, published applications or published literature that affect our business either by blocking our ability to commercialize our product candidates, by preventing the patentability of our products or by covering the same or similar technologies that may affect our ability to market or license our product candidates. Many companies have encountered difficulties in protecting and defending their intellectual property rights in foreign jurisdictions. If we encounter such difficulties or are otherwise precluded from effectively protecting our intellectual property rights in either the United States or foreign jurisdictions, our business prospects could be substantially harmed.

In addition, because of funding limitations and our limited cash resources, we may not be able to devote the resources that we might otherwise desire to prepare or pursue patent applications, either at all or in all jurisdictions in which we might desire to obtain patents, or to maintain already-issued patents.

The patents and the patent applications covering Sildenafil Cream, 3.6% and DARE-BV1 are limited to specific formulations, processes and uses of sildenafil and clindamycin, and our market opportunity may be limited by the lack of patent protection for the active ingredient itself and other formulations and delivery technology and systems that may be developed by competitors.

The active ingredient in our product candidate for FSAD, Sildenafil Cream, 3.6%, is sildenafil and the active ingredient in our product candidate for the treatment of BV, DARE-BV1, is clindamycin. Patent protection for these ingredients has expired and generic products are available. As a result, a competitor that obtains the requisite regulatory approvals could offer products with the same active ingredient in a different formulation so long as the competitor does not infringe any process, use or formulation patents that we have developed, or that may not be barred by any three-year Waxman-Hatch Act exclusivity we might enjoy upon approval of our products.

Competitors may seek to develop and market competing formulations that may not be covered by our patents and patent applications. The commercial opportunity for Sildenafil Cream, 3.6% and DARE-BV1 could be significantly harmed if competitors are able to develop and commercialize alternative formulations using these ingredients.

The patents and the patent applications covering our IVR product candidates cover the method of delivery and the device and our market opportunity may be limited by the lack of patent protection for the active ingredients themselves and other formulations, delivery technology and systems that may be developed by competitors.

The active ingredients in our IVR product candidates include bio-identical progesterone, estrogen and oxybutynin, and none of those ingredients are proprietary to us. As a result, we must compete with currently available products and any future products developed by competitors using same active ingredients in a different formulation or via a different delivery system. The commercial opportunity for our IVR product candidates, including DARE-HRT1 for hormone replacement therapy, could be significantly harmed if competitors develop and commercialize alternative formulations or better delivery approaches.

The patents and the patent applications covering the use and delivery of DARE-VVA1 and our market opportunity may be limited by the lack of patent protection for the active ingredient itself and other formulations, delivery technology and systems that may be developed by competitors.

The active ingredient in DARE-VVA1, tamoxifen, is not proprietary to us. As a result, we must compete with currently available products and any future products developed by competitors using the same active ingredient in a different formulation or via a different delivery system. The commercial opportunity for our product candidate for the treatment of vulvar and vaginal atrophy could be significantly harmed if competitors develop and commercialize alternative formulations or better delivery approaches.

We may become involved in patent litigation or other intellectual property proceedings relating to our future product approvals, which could result in liability for damages or delay or stop our development and commercialization efforts.

The pharmaceutical industry has been characterized by significant litigation and other proceedings regarding patents, patent applications, trademarks and other intellectual property rights. The situations in which we may become party to such litigation or proceedings may include any third parties initiating litigation claiming that our products infringe their patent or other intellectual property rights, or that one of our trademarks or trade names infringes the third party’s trademark rights; in such case, we would need to defend against such proceedings. The costs of resolving any patent litigation or other intellectual property proceeding, even if resolved in our favor, could be substantial. Many of our potential competitors will be able to sustain the cost of such litigation and proceedings more effectively than us because of their substantially greater resources. Uncertainties resulting from the initiation and continuation of patent litigation or other intellectual property proceedings could have a material adverse effect on our ability to compete in the marketplace, our financial condition and our stock price. Patent litigation and other intellectual property proceedings may also consume significant management time.

If a competitor infringes upon our patent or other intellectual property rights, including any rights licensed by us, enforcing those rights may be costly, difficult and time-consuming. Even if successful, litigation to enforce our intellectual property rights or to defend our patents against challenge could be expensive and time-consuming and could divert our management’s attention. We may not have sufficient resources to enforce our intellectual property rights or to defend our patent or other intellectual property rights against a challenge. If we were unsuccessful in enforcing and protecting our intellectual property rights and protecting our products, it could materially harm our business.

With respect to DARE-BV1, we have the initial right to enforce patents we license from TriLogic and MilanaPharm against third parties whose activities infringe such patents in a manner that could affect our exercise of the licenses granted to us, and TriLogic and MilanaPharm must reasonably cooperate with in any such suit, including, if necessary, by being joined as a party to any such suit. In some cases, MilanaPharm may assume the defense of a claim initiated by a third-party alleging infringement of a third party’s intellectual property rights as a result of the manufacture or sale of a product we develop under our license agreement with TriLogic/MilanaPharm. While our license agreement would require MilanaPharm to indemnify us for certain losses arising from these third-party claims, this indemnification may not be sufficient to adequately compensate us for any related losses or the potential loss of our ability to manufacture and sell DARE-BV1.

With respect to Ovaprene, ADVA-Tec has the right, in certain instances, to control the defense against any infringement litigation arising from the manufacture or development (but not the sale) of Ovaprene. While our license agreement with ADVA-Tec requires ADVA-Tec to indemnify us for certain losses arising from these claims, this indemnification may not be sufficient to adequately compensate us for any related losses or the potential loss of our ability to manufacture and develop Ovaprene. Additionally, our license agreement with Bayer requires that we indemnify Bayer from and against all liabilities, damages, losses and expenses arising from or occurring as a result of development, manufacture, use or commercialization of Ovaprene by us or any licensee of ours, including without limitation, product liability claims, except in limited circumstances. As a result of our indemnification obligations to Bayer and limitations on ADVA-Tec’s obligations to indemnify us, any patent infringement litigation relating to Ovaprene could subject us to significant liabilities that may have a material adverse effect on our business, results of operations and financial condition.

With respect to Sildenafil Cream, 3.6%, we have the initial right to enforce the applicable licensed patents against infringers in the field of use where a third party is exploiting a topically applied pharmaceutical product that contains at least one of the same active pharmaceutical ingredients as a licensed product, and SST will provide us with reasonable assistance (excluding financial assistance), at our expense. We also have the initial right to defend any claim initiated by any third-party alleging that a licensed product developed or commercialized under the SST license agreement has infringed any third party intellectual property rights. While the SST license agreement requires

SST to indemnify us for certain losses arising from these claims, this indemnification may not be sufficient to adequately compensate us for any related losses or the potential loss of our ability to manufacture and develop Sildenafil Cream, 3.6%.

With respect to our IVR product candidates, including DARE-HRT1, we have the first right to enforce the applicable licensed patents against third party infringers in the fields of pharmaceutical, therapeutic, preventative, diagnostic and palliative uses.

With respect to DARE-VVA1, we have the first right to enforce the applicable licensed patents against third party infringers in all fields.

Our exclusive, in-license agreements covering the critical patents and related intellectual property related to our product candidates impose significant monetary obligations and other requirements that may adversely affect our ability to execute our business plan. The termination of any of these in-license agreements could prevent us from developing and commercializing our product candidates and may harm our business.

Our license agreements with Hammock/MilanaPharm, ADVA-Tec, SST and Catalent include intellectual property rights to DARE-BV1, Ovaprene, Sildenafil Cream, 3.6%, and our IVR product candidates, including DARE-HRT1, respectively. These agreements, as well as our merger agreements with Pear Tree and Microchips, require us, as a condition to the maintenance of our license and other rights, and as merger consideration in the case of the agreement with Pear Tree, to make milestone and royalty payments and satisfy certain performance obligations. Our obligations under these in-license and merger agreements impose significant financial and logistical burdens upon our ability to carry out our business plan. Furthermore, if we do not meet such obligations in a timely manner, and, in the case of milestone payment requirements, if we were unable to obtain an extension of the deadlines for meeting such payment requirements, we could lose the rights to these proprietary technologies, which would have a material adverse effect on our business, financial condition and results of operations.

Further, there is no assurance that the existing license agreements covering the rights related to DARE-BV1, Ovaprene, Sildenafil Cream, 3.6%, and the IVR product candidates, or license agreements we enter into or acquire the rights to in the future, will not be terminated due to a material breach of the underlying agreements. With regard to the agreement covering Ovaprene, this would include a failure on our part to make milestone and royalty payments, our failure to obtain applicable approvals from governmental authorities, or the loss of rights to the underlying intellectual property by any such licensors. With regard to the agreement covering Sildenafil Cream, 3.6%, this would include a failure to assume responsibility for suspended development activities within the requisite period, our failure to use commercially reasonable efforts in performing development activities, or the failure on our part to make milestone and royalty payments. With regards to the agreement covering DARE-BV1, this would include failure to use commercially reasonable efforts and resources to develop and commercialize at least one licensed product or process in the United States and at least one licensed product or process in at least one of Canada, the United Kingdom, France, Germany, Italy or Spain, our failure to make milestone and royalty payments, or our failure to continue, or to resume, using commercially reasonable marketing efforts to sell a licensed product or process in a country after having launched such product or process in that country. With regard to the agreement covering our IVR product candidates, this would include a failure on our part to make milestone and royalty payments, our failure to obtain applicable approvals from governmental authorities or the loss of rights to the underlying intellectual property by any such licensors. With regard to the merger agreement with Pear Tree, this would include our failure to use commercially reasonable efforts to bring a product to market.

Moreover, because some of our rights to DARE-BV1, Ovaprene, Sildenafil Cream, 3.6% and the IVR product candidates are sublicensed pursuant to underlying agreements, there is no assurance that the existing license agreements covering the rights related to DARE-BV1, Ovaprene, Sildenafil Cream, 3.6%, and DARE-HRT1 will not be terminated due to termination of the underlying agreements, or due to the loss of rights to the underlying intellectual property by Hammock's, ADVA-Tec’s, SST’s or Catalent's licensors. There is no assurance that we will be able to renew or renegotiate license agreements on acceptable terms if our license agreements with Hammock, ADVA-Tec, SST, TriLogic/MilanaPharm or Catalent, or the underlying agreements are terminated. We cannot guarantee that any license agreement will be enforceable. The termination of these license agreements or our inability to enforce our rights under these license agreements would materially and adversely affect our ability to develop and commercialize DARE-BV1, Ovaprene, Sildenafil Cream, 3.6% and our IVR product candidates, including DARE-HRT1.

We may also rely on trade secrets to protect some of our technology, especially where we do not believe patent protection is appropriate or obtainable. However, trade secrets are difficult to maintain. While we use reasonable efforts to protect our trade secrets, we or any of our collaborators’ employees, consultants, contractors or scientific and other advisors may unintentionally or willfully disclose our proprietary information to competitors and we may not have adequate remedies in respect of that disclosure. Enforcement of claims that a third party has illegally

obtained and is using trade secrets is expensive, time consuming and uncertain. In addition, foreign courts are sometimes less willing than U.S. courts to protect trade secrets. If our competitors independently develop equivalent knowledge, methods and know-how, we would not be able to assert our trade secrets against them and our business could be harmed.

Risks Related to Our Securities

The price of our common stock may be volatile and could subject us to securities litigation, including class-action lawsuits.

The stock market in general, and the market for biopharmaceutical companies in particular, have experienced volatility that has often been unrelated to the operating performance of particular companies. The stocks of small cap and microcap companies in the biotechnology sector like ours tend to be highly volatile. We expect that the price of our common stock will be highly volatile for the next several years as we undertake studies and trials to obtain regulatory approval for our product candidates. The market price for our common stock may be influenced by many factors, including:


•	failure or discontinuation of any of our research programs;


•	actual or anticipated changes to our product development and approval timelines, results from any clinical trial, and communications or decisions from regulator authorities relating to a review of or decisions on applications we submit for our product candidates, in each case particularly those related to our clinical-stage product candidates;


•	the amount of our unrestricted cash;


•	the level of expenses related to development of our current and future product candidates, and in particular our clinical-stage development programs;


•	commencement or termination of any collaboration or licensing arrangement;


•	the results of our efforts to discover, develop, acquire or in-license product candidates or products, if any;


•	disputes or other developments relating to proprietary rights, including patents, litigation matters and our ability to obtain patent protection for our technologies;


•	announcements by us or our competitors of significant acquisitions, strategic partnerships, joint ventures and capital commitments;


•	additions or departures of key scientific or management personnel;


•	variations in our financial results or those of companies perceived to be similar to us;


•	new products, product candidates or new uses for existing products introduced or announced by our competitors, and the timing of these introductions or announcements;


•	results of clinical trials of product candidates of our competitors;

•

general economic and market conditions and other factors that may be unrelated to our operating performance or the operating performance of our competitors, including changes in market valuations of similar companies and effects from geopolitical actions, including war and terrorism, or natural disasters such as earthquakes, typhoons, floods and fires or public health emergencies or pandemics, such as the COVID-19 pandemic;


•	regulatory or legal developments in the United States and other countries;


•	changes in the structure of health care payment systems;


•	conditions or trends in the biotechnology and biopharmaceutical industries;


•	recommendations or reports issued by securities research analysts;


•	announcement or expectation of additional financing efforts;


•	sales of common stock by us or our stockholders in the future, as well as the overall trading volume of our common stock; and


•	the other factors described in this “Risk Factors” section.

In the past, following periods of volatility in companies’ stock prices, securities class-action litigation has often been instituted against such companies. Such litigation, if instituted against us, could result in substantial costs and diversion of management’s attention and resources, which could materially and adversely affect our business and financial condition.

There is no assurance that we will continue satisfying the listing requirements of the Nasdaq Capital Market.

Our common stock is listed on the Nasdaq Capital Market. To maintain our listing we are required to satisfy continued listing requirements, including the requirements commonly referred to as the minimum bid price rule and with either the stockholders’ equity rule or the market value of listed securities rule. The minimum bid price rule requires that the closing bid price of our common stock be at least $1.00 per share, and the stockholders’ equity rule requires that our stockholders' equity be at least $2.5 million, or, alternatively, that the market value of our listed securities be at least $35 million or that we have net income from continuing operations of $500,000 in the most recently completed fiscal year or in two of the three most recently completed fiscal years. There can be no assurance we will continue to satisfy applicable continued listing requirements. For example, in both 2018 and 2019, we received letters from the Listing Qualifications Department (the “Nasdaq Staff”) of the Nasdaq Stock Market (“Nasdaq”) notifying us that we were not in compliance with the minimum bid price requirement in Nasdaq Listing Rule 5550(a)(2) because the closing bid price for our common stock was less than $1.00 for the last 30 consecutive business days. Additionally, in November 2019, we received a letter from the Nasdaq Staff notifying us that we were not in compliance with the stockholders’ equity rule because we reported less than $2.5 million in stockholders’ equity as of September 30, 2019 and did not satisfy the alternative standards under Nasdaq Listing Rule 5550(b). We were notified by the Nasdaq Staff in January 2020 that we regained compliance with the minimum bid price rule and, in February 2020, that we regained compliance with the stockholders’ equity rule, but there can be no assurance that we will continue to satisfy these or other continued listing standards and maintain the listing of our common stock with Nasdaq.

The suspension or delisting of our common stock, or the commencement of delisting proceedings, for whatever reason could, among other things, substantially impair our ability to raise additional capital; result in the loss of interest from institutional investors, the loss of confidence in our company by investors and employees, and in fewer financing, strategic and business development opportunities; and result in potential breaches of agreements under which we made representations or covenants relating to our compliance with applicable listing requirements. Claims related to any such breaches, with or without merit, could result in costly litigation, significant liabilities and diversion of our management’s time and attention and could have a material adverse effect on our financial condition, business and results of operations. In addition, the suspension or delisting of our common stock, or the commencement of delisting proceedings, for whatever reason may materially impair our stockholders’ ability to buy and sell shares of our common stock and could have an adverse effect on the market price of, and the efficiency of the trading market for, our common stock.

Pre-clinical product candidates may not be valued by investors and may be difficult to fund.

Given their early stage of development and the lack of data, many pre-clinical assets are often perceived as having low valuations by investors and potential strategic partners, such as pharmaceutical companies. Our investment of time and resources in such assets may not be appreciated or valued. As a result, it may be difficult for us to fund such programs. Additionally, past receipt of grant funding may not be predictive of our ability to secure additional grants to fund further development of a program. If our IVR product candidates, DARE-VVA1, the Microchips program, DARE-RH1 or the injectable etonogestrel product candidates we may license from Orbis fail to be valued, our stock price may be adversely affected.

A significant portion of our total outstanding shares of common stock may be sold into the public market at any point, which could cause the market price of our common stock to drop significantly, even if our business is doing well.

Sales of a substantial number of shares of our common stock in the public market could occur at any time, either by us or our stockholders. For example, since January 1, 2020 and through March 26, 2020, we sold an aggregate of 3.3 million shares of our common stock in at-the-market offerings, we issued approximately 3.0 million shares of our common stock to the former stockholders of Microchips in connection with our acquisition of that company in November 2019, we sold approximately 5.3 million shares of our common stock in an underwritten public offering that closed in April 2019, and we sold 5.0 million shares of our common stock and warrants to purchase up to 3.72 million shares of our common stock in an underwritten public offering that closed in February 2018. These sales, or the perception in the market that we or holders of a large number of shares intend to sell shares, could reduce the market price of our common stock. Our outstanding shares of common stock may be freely sold in the public market

at any time to the extent permitted by Rules 144 and 701 under the Securities Act or to the extent such shares have already been registered under the Securities Act and are held by non-affiliates.

As of December 31, 2019, there were 1.9 million shares of our common stock subject to outstanding options, almost all of which have been registered under the Securities Act on Form S-8. The shares so registered can be freely sold in the public market after being issued to the option holder upon exercise, except to the extent they are held by an affiliate of ours, in which case such shares will become eligible for sale in the public market as permitted by Rule 144 under the Securities Act. Furthermore, as of March 26, 2020, there were approximately 2.0 million shares of our common stock subject to outstanding warrants to purchase common stock, virtually all of which currently have an exercise price of $0.98 per share. To the extent these warrants are exercised, the shares underlying these warrants may be immediately sold in the public market.

The sale of our common stock through our ATM sales agreement may cause substantial dilution to our existing stockholders, and such sales, or the anticipation of such sales, may cause the price of our common stock to decline.

In January 2018, we entered into a common stock sales agreement with H.C. Wainwright & Co., LLC, in connection with an “at the market” offering, under which, from time to time, we may offer and sell shares of our common stock. We refer to this agreement as our “ATM sales agreement.” Although we have the right to control whether we sell any shares, if at all, under the ATM sales agreement, and the timing and amount of sales of our shares thereunder, we are subject to certain restrictions, including, without limitation, our inability to sell, during any 12-month period, securities having an aggregate market value of not more than one-third of our public float, pursuant to General Instruction I.B.6 to Form S-3. Accordingly, we may not be able to sell shares of our common stock under the ATM sales agreement when we desire. However, to the extent we do sell shares of our common stock under the ATM sales agreement, such sales may result in substantial dilution to our existing stockholders, and such sales, or the anticipation of such sales, may cause the trading price of our common stock to decline.

The exercise of our outstanding options and warrants may result in significant dilution to our stockholders.

As of December 31, 2019, we had outstanding options to purchase up to 1.9 million shares of our common stock and, and as of March 26, 2020, we had outstanding warrants to purchase up to approximately 2.0 million shares of our common stock. The exercise of a significant portion of our outstanding options and/or warrants may result in significant dilution to our stockholders.

The warrants issued in February 2018 contain price protection in the form of anti-dilution provisions that could harm trading in our shares and make it difficult for us to obtain additional financing.

The warrants we issued and sold in the underwritten public offering that closed in February 2018 (the “February 2018 Warrants”) include price-based anti-dilution provisions. As of March 26, 2020, February 2018 Warrants to purchase up to approximately 2.0 million shares of our common stock were outstanding and the exercise price of those warrants was $0.98 per share. Under the terms of the February 2018 warrants, subject to certain limited exceptions, their exercise price will be reduced each time we issue or sell (or are deemed to issue or sell) any securities, including under the ATM sales agreement, for a consideration per share less than a price equal to the exercise price of the February 2018 Warrants in effect immediately prior to such issuance or sale (or deemed issuance or sale). If we issue shares of our common stock for cash, the consideration received therefor will be deemed to be the net amount of consideration we received therefor. In addition, if we issue, sell or enter into any agreement to issue or sell securities at a price which varies or may vary with the market price of the shares of our common stock, the holders of the February 2018 Warrants will have the right to substitute such variable price for the exercise price of the February 2018 Warrants then in effect.

The overhang represented by the February 2018 warrants, coupled with the anti-dilution provisions of such warrants, may make it more difficult for us to raise additional capital, because of the possible substantial dilution to any new purchaser of our securities and the ability of holders of the warrants to enter into short sales of our stock. Any potential new purchaser of our securities may choose to value our common stock in such a manner that takes into account the number of shares of our common stock that would be outstanding immediately following the exercise of all the outstanding February 2018 Warrants.

We may issue preferred stock with terms that could dilute the voting power or reduce the value of our common stock.

Our certificate of incorporation authorizes us to issue, without stockholder approval, one or more series of preferred stock having such designation, powers, privileges, preferences, including preferences over our common

stock respecting dividends and distributions, terms of redemption and relative participation, optional, or other rights, if any, of the shares of each such series of preferred stock and any qualifications, limitations or restrictions thereof, as our Board of Directors may determine. The terms of one or more series of preferred stock could dilute the voting power or reduce the value of our common stock. For example, the repurchase or redemption rights or liquidation preferences we could assign to holders of preferred stock could affect the residual value of our common stock.

We are a smaller reporting company and a non-accelerated filer and the reduced disclosure requirements available to such companies may make our common stock less attractive to investors.

The SEC established the smaller reporting company, or SRC, category of companies in 2008, and expanded it in 2018, in an effort to provide general regulatory relief for smaller companies. SRCs may choose to comply with scaled financial and non-financial disclosure requirements in their annual and quarterly reports and registration statements relative to non-SRCs. In addition, companies that are not “accelerated filers” can take advantage of additional regulatory relief. Whether a company is an accelerated filer or a SRC is determined on an annual basis. For so long as we qualify as a non-accelerated filer and/or a SRC, we will be permitted to and we intend to rely on some or all of the accommodations available to such companies. These accommodations include:


•	not being required to provide an auditor’s attestation of management’s assessment of internal control over financial reporting required by Section 404(b) of the Sarbanes-Oxley Act of 2002;


•	reduced financial disclosure obligations, including that SRCs need only provide two years of financial statements rather than three years; a maximum of two years of acquiree financial statements are required rather than three years; fewer circumstances under which pro forma financial statements are required; and less stringent age of financial statements requirements;


•	reduced non-financial disclosure obligations, including regarding the description of their business, management’s discussion and analysis of financial condition and results of operations, market risk, executive compensation, transactions with related persons, and corporate governance; and


•	later deadlines for the filing of annual and quarterly reports compared to accelerated filers.

We will continue to qualify as a SRC and non-accelerated filer for so long as (a) our public float is less than $75 million as of the last day of our most recently completed second fiscal quarter or (b) our public float is $75 million or more but less than $700 million and we reported annual revenues of less than $100 million for our most recently completed fiscal year.

We may choose to take advantage of some, but not all, of the available accommodations. We cannot predict whether investors will find our common stock less attractive if we rely on these accommodations. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and the price of our common stock may be more volatile.

We do not anticipate paying any cash dividends on our common stock in the foreseeable future; capital appreciation, if any, will be your sole source of gain as a holder of our shares.

We have never declared or paid cash dividends on any shares of our capital stock. We currently plan to retain all of our future earnings, if any, and all cash received from the sale of securities, the sale of assets or a strategic transaction to finance the growth and development of our business. Accordingly, capital appreciation, if any, of our common stock will be the sole source of gain for our common stockholders for the foreseeable future.

Provisions in our certificate of incorporation, our by-laws or Delaware law might discourage, delay or prevent a change in control of our company or changes in our management and, therefore, depress the trading price of our common stock.

Provisions in our certificate of incorporation, our bylaws or Delaware law may discourage, delay or prevent a merger, acquisition or other change in control that our stockholders may consider favorable, including transactions in which our stockholders might otherwise receive a premium for their shares. These provisions could also limit the price that investors might be willing to pay in the future for shares of our common stock, thereby depressing the market price of our common stock. In addition, because our board of directors is responsible for appointing the members of our management team, these provisions might frustrate or prevent any attempts by our stockholders to replace or remove the current management by making it more difficult for stockholders to replace members of our board of directors. Among other things, these provisions:


•	establish a classified board of directors such that all members of the board are not elected at one time;


•	allow the authorized number of directors to be changed only by resolution of the board of directors;


•	limit the manner in which stockholders can remove directors from the board;


•	establish advance notice requirements for nominations for election to the board or for proposing matters that can be acted on at stockholder meetings;


•	require that stockholder actions must be effected at a duly called stockholder meeting and prohibit actions by stockholders by written consent;


•	limit who may call a special meeting of stockholders;


•	authorize the board to issue preferred stock without stockholder approval, which could be used to institute a “poison pill” that would work to dilute the stock ownership of a potential hostile acquirer, effectively preventing acquisitions that have not been approved by the board; and


•	require the approval of the holders of at least 75% of the votes that all stockholders would be entitled to cast to amend or repeal certain provisions of the charter or bylaws.

In addition, we are governed by Section 203 of the Delaware General Corporate Law, which prohibits a publicly-held Delaware corporation from engaging in a business combination with an interested stockholder, generally a person which together with its affiliates owns, or within the last three years has owned, 15% of its voting stock, for a period of three years after the date of the transaction in which the person became an interested stockholder, unless the business combination is approved in a prescribed manner. This could discourage, delay or prevent someone from acquiring or merging with us, whether or not it is desired by, or beneficial to, our stockholders.

If we fail to attract securities analysts to publish research on our business or if they publish or convey negative evaluations of our business, the price of our stock could decline.

The trading market for our common stock relies in part on the research and reports that industry or financial analysts publish about us or our business. We do not have any control over these analysts. If one or more of the analysts covering our business downgrade their evaluations of our stock, the price of our common stock could decline. In addition, if one or more of these analysts cease coverage or fail to regularly publish reports on our business, we could lose visibility in the financial markets, which in turn could cause our common stock price or trading volume to decline.

ITEM 1B. UNRESOLVED STAFF COMMENTS

None.

ITEM 2. PROPERTIES

We lease real property to support our business. The office space for our corporate headquarters, which is in good operating condition, is in San Diego, California. We believe that the real property we lease meets our current needs and that we will be able to renew our lease when needed on acceptable terms or find alternative facilities.

ITEM 3. LEGAL PROCEEDINGS

From time to time, we may become involved in various claims and legal proceedings. Regardless of outcome, litigation and other legal proceedings can have an adverse impact on us because of defense and settlement costs, diversions of management resources and other factors. As of the date of filing this report, there is no material pending legal proceeding to which we are a party or to which any of our property is subject, and management is not aware of any contemplated proceeding by any governmental authority against us.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

PART II

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Market Information

Our common stock is listed on the Nasdaq Capital Market under the symbol “DARE.”

Holders of Common Stock

As of March 26, 2020, we had approximately 59 stockholders of record.

The number of stockholders of record is based upon the actual number of holders registered on our books at such date and does not include holders of shares in "street names" or persons, partnerships, associations, corporations or other entities identified in security position listings maintained by depository trust companies.

Recent Sales of Unregistered Securities

We did not sell any unregistered securities during the period covered by this report that were not previously reported in a Quarterly Report on Form 10-Q or Current Report on Form 8-K.

Issuer Purchases of Equity Securities

Not applicable.

ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA

Under SEC rules and regulations, as a smaller reporting company we are not required to provide the information required by this item.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion should be read in conjunction with our consolidated financial statements and the notes thereto included in Part II, Item 8 of this report. This following discussion includes forward-looking statements. See “PART 1—CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS,” above. Forward-looking statements are not guarantees of future performance and our actual results may differ materially from those currently anticipated and from historical results depending upon a variety of factors, including, but not limited to, those discussed in Part I, Item 1A of this report under the heading “Risk Factors,” which are incorporated herein by reference.

Business Overview

We are a clinical-stage biopharmaceutical company committed to the acceleration of innovative products for women’s health. We are driven by a mission to identify, acquire and develop a diverse portfolio of differentiated therapies that expand treatment options, improve outcomes and facilitate convenience for women, primarily in the areas of contraception, fertility, and sexual and vaginal health. Our business strategy is to in-license or otherwise acquire the rights to differentiated product candidates in our areas of focus, some of which have existing clinical proof-of-concept data, and to take those candidates through advanced stages of clinical development, and then out-license these products to companies with sales and distribution capabilities in women's health to leverage their commercial capabilities. We and our wholly owned subsidiaries operate in one business segment.

Since July 2017, we have assembled a portfolio of clinical-stage and pre-clinical-stage candidates. While we will continue to assess opportunities to expand our portfolio, our current focus is on advancing our existing product candidates through mid- and late stages of clinical development or approval. Our global commercialization and development strategy involves partnering with pharmaceutical companies and regional distributors with established marketing and sales capabilities in women's health, including through co-development and promotion agreements, once we have advanced a candidate through mid- to late-stage clinical development.

Our portfolio includes three product candidates in advanced clinical development:


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


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


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

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


•	DARE-HRT1, a combination bio-identical estradiol and progesterone intravaginal ring for the treatment of vasomotor symptoms (VMS) as part of a hormone replacement therapy, or HRT, following menopause;


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


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

See “ITEM 1. BUSINESS-Our Clinical-Stage Product Candidates and Programs,” in Part I of this report for additional information regarding our product candidates.

Our primary operations have consisted of, and are expected to continue to consist of, product research and development and advancing our portfolio of product candidates through clinical development and regulatory approval. We expect that the majority of our development expenses over the next two years will support the advancement of DARE-BV1, Ovaprene and Sildenafil Cream, 3.6%.

To date, we have not obtained any regulatory approvals for any of our product candidates, commercialized any of our product candidates or generated any revenue. We are subject to several risks common to clinical-stage biopharmaceutical companies, including dependence on key individuals, competition from other companies, the need to develop commercially viable products in a timely and cost-effective manner, and the need to obtain adequate additional capital to fund the development of product candidates. We are also subject to several risks common to other companies in the industry, including rapid technology change, regulatory approval of products, uncertainty of market acceptance of products, competition from substitute products and larger companies, compliance with government regulations, protection of proprietary technology, dependence on third parties, and product liability.

In addition, the COVID-19 pandemic continues to rapidly evolve. We do not yet know the full extent of its potential effects on our business, including the anticipated aggregate costs for development of our product candidates, on our anticipated timelines for the development of our product candidates, or on the supply chain for our clinical supplies. However, these effects could have a material adverse impact on our business and financial condition.

Recent Events

Microchips Acquisition

On November 20, 2019, we acquired Microchips Biotech, Inc. via a merger. We issued an aggregate of approximately 3.0 million shares of our common stock to the holders of shares of Microchips’ capital stock outstanding immediately prior to the effective time of the merger and we agreed to pay them: (1) contingent consideration of up to $46.5 million upon the achievement of specified funding, product development and regulatory milestones; (2) contingent consideration of up to $55.0 million upon the achievement of specified amounts of aggregate net sales of products incorporating the intellectual property we acquired in the merger; (3) tiered royalty payments based on annual net sales of such products; and (4) a percentage of sublicense revenue related to such products. We expect that approximately $1.0 million of the contingent consideration may become payable through 2021. For additional information regarding this transaction, see “ITEM 1. BUSINESS-Microchips Acquisition” in Part I of this report.

License Agreement with Bayer HealthCare

On January 10, 2020 we entered into a license agreement with Bayer HealthCare LLC regarding the further development and commercialization of Ovaprene in the U.S. We received a $1.0 million upfront payment from Bayer and Bayer will support us in development and regulatory activities by providing the equivalent of two experts to advise us in clinical, regulatory, preclinical, commercial, CMC and product supply matters. Bayer, in its sole discretion, has the right to make the license effective by paying us an additional $20.0 million, referred to as the “Clinical Trial and Manufacturing Activities Fee” Such license would be exclusive with regard to the commercialization of Ovaprene for human contraception in the U.S. and co-exclusive with us with regard to development. We will also be entitled to receive (a) milestone payments totaling up to $310.0 million if all such milestones are achieved, (b) tiered royalties starting in the low double digits based on annual net sales of Ovaprene during a calendar year, subject to customary royalty reductions and offsets, and (c) a percentage of sublicense revenue. For additional information regarding the Bayer license agreement, see “ITEM 1. BUSINESS-License Agreements-Bayer HealthCare License Agreement” in Part I of this report.

Financial Overview

Revenue

To date we have not generated any revenue. In the future, and if we are successful in advancing our product candidates through late stages of clinical development, we may generate revenue from license fees, milestone payments, research and development payments in connection with strategic partnerships, as well as royalties and commercial milestones resulting from the sale of products. Our ability to generate such revenue will depend on the successful clinical development of our product candidates, the receipt of regulatory approvals to market such products and the eventual successful commercialization of product candidates. If we fail to complete the development of product candidates in a timely manner, or to receive regulatory approval for such product candidates, our ability to generate future revenue and our results of operations would be materially adversely affected.

Research and Development Expenses

Research and development expenses include research and development costs for our product candidates and transaction costs related to our acquisitions. We recognize all research and development expenses as they are incurred. Research and development expenses consist primarily of:


•	expenses incurred under agreements with consultants and clinical trial sites that conduct research and development activities on our behalf;


•	laboratory and vendor expenses related to the execution of nonclinical studies and clinical trials;


•	contract manufacturing expenses, primarily for the production of clinical supplies;


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


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

In 2019, our research and development expenses consisted primarily of costs associated with continued development of DARE-BV1, Ovaprene, Sildenafil Cream 3.6% and DARE-HRT1. We expect research and development expenses to increase in the future as we continue to invest in the development of our clinical-stage product candidates and as any other potential product candidates we may develop are advanced into and through clinical trials in the pursuit of regulatory approvals. Such activities will require a significant increase in investment in regulatory support, clinical supplies, inventory build-up related costs, and the payment of success-based milestones to licensors. In addition, we continue to evaluate opportunities to acquire or in-license other product candidates and technologies, which may result in higher research and development expenses due to, among other factors, license fee and/or milestone payments.

Conducting clinical trials necessary to obtain regulatory approval is costly and time consuming. We may not obtain regulatory approval for any product candidate on a timely and cost-effective basis or at all. The probability of success of our product candidates may be affected by numerous factors, including clinical results and data, competition, intellectual property rights, manufacturing capability and commercial viability. As a result, we cannot accurately determine the duration and completion costs of development projects or when and to what extent we will generate revenue from the commercialization of any of our product candidates.

General and Administrative Expense

General and administrative expenses consist of personnel costs, facility expenses, expenses for outside professional services, including legal, audit and accounting services. Personnel costs consist of salaries, benefits and stock-based compensation. Facility expenses consist of rent and other related costs.

Recently Issued Accounting Standards

See Note 1, "Organization and Summary of Significant Accounting Policies," of the Notes to Consolidated Financial Statements appearing in this report for a description of significant recent accounting standards. Other accounting standards have been issued or proposed by the Financial Accounting Standards Board or other standards-setting bodies that do not require adoption until a future date and are not expected to have a material impact on our consolidated financial statements upon adoption.

Critical Accounting Policies and Estimates

Management’s discussion and analysis of financial condition and results of operations is based on our financial statements that we prepared in accordance with accounting principles generally accepted in the United States. Preparing these financial statements requires management to make estimates and judgments that affect the reported amounts of assets, liabilities and expenses, and related disclosures. On an ongoing basis, we evaluate these estimates and judgments. We base our estimates on historical experience and on various assumptions we believe to be reasonable under the circumstances. These estimates and assumptions form the basis for making judgments about the carrying values of assets and liabilities and the recording of expenses that are not readily apparent from other sources. Actual results may differ materially from these estimates. Historically, revisions to our estimates have not resulted in a material change to the financial statements. The items in our financial statements requiring significant estimates and judgments are as follows: the fair value of stock-based compensation, goodwill impairment and purchase accounting.

Stock-Based Compensation

The compensation cost for all stock-based awards is measured at the grant date, based on the fair value of the award (determined using a Black-Scholes option pricing model), and is recognized as an expense over the requisite service period (generally the vesting period of the equity award). Determining the fair value of stock-based awards at the grant date requires significant estimates and judgments, including estimating the market price volatility of our common stock, future employee stock option exercise behavior and requisite service periods. Due to our limited history of stock option exercises we applied the simplified method prescribed by SEC Staff Accounting Bulletin 110, Share-Based Payment: Certain Assumptions Used in Valuation Methods - Expected Term, to estimate expected life.

The fair value of non-employee stock options or stock awards are remeasured as the awards vest, and the resulting increase or decrease in fair value, if any, is recognized as an increase or decrease to compensation expense in the period the related services are rendered. Stock options or stock awards issued to non-employees who are not directors with performance conditions are measured and recognized when the performance is complete or is expected to be met.

Refer to Note 8 to our consolidated financial statements included in this report for more information.

Goodwill

Goodwill is recorded when the consideration paid for an acquisition exceeds the fair value of the identified net tangible and intangible assets of the acquired businesses. The allocation of purchase price for acquisitions require extensive use of accounting estimates and judgments to allocate the purchase price to the identifiable tangible and intangible assets acquired and liabilities assumed based on their respective fair values. Additionally, we must determine whether an acquired entity is considered a business or a set of net assets as a portion of the purchase price can only be allocated to goodwill in a business combination. Goodwill and intangible assets deemed to have indefinite lives are not amortized but are subject to annual impairment tests. The amounts and useful lives assigned to intangible assets that have finite useful lives require the use of estimates and the exercise of judgment. These judgments can significantly affect our net operating results. Goodwill is considered to have an indefinite life and is carried at cost.

We test goodwill at least annually, as of December 31, and between annual tests if we become aware of an event or change in circumstance that would indicate the carrying value of our goodwill may be impaired. The impairment test is performed assuming that we operate in a single operating segment and reporting unit. A goodwill impairment is the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying

amount of goodwill. When impaired, the carrying value of goodwill is written down to fair value. Any excess of the reporting unit goodwill carrying value over the fair value is recognized as impairment loss.

We assessed goodwill at December 31, 2017, determined there was an impairment and recognized an impairment charge of approximately $7.5 million in the consolidated statement of operations and comprehensive loss for the year ended December 31, 2017, and reduced our goodwill carrying value from approximately $12.7 million to $5.2 million on our consolidated balance sheet as of December 31, 2017. See Note 2, “Acquisitions,” of the Notes to Consolidated Financial Statements appearing in this report for a discussion of our goodwill analysis.

We assessed goodwill at March 31, 2018, determined there was an impairment and recognized an impairment charge of approximately $5.2 million in the interim consolidated statement of operations and comprehensive loss for the three months ended March 31, 2018. As of March 31, 2018, the goodwill carrying value on our consolidated balance sheet was written off in its entirety.

Business Combinations

Assets acquired and liabilities assumed as part of a business acquisition are recorded at their estimated fair value at the date of acquisition. The excess of the total purchase consideration over the fair value of assets acquired and liabilities assumed is recorded as goodwill. Determining fair value of identifiable assets, particularly intangibles, and liabilities acquired also requires management to make estimates, which are based on all available information and, in some cases, assumptions with respect to the timing and amount of future revenue and expenses associated with an asset.

Acquired In-Process Research and Development Expense

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

Results of Operations

Comparison of the Years ended December 31, 2019 and 2018

The following table summarizes our consolidated results of operations for the years ended December 31, 2019 and 2018, together with the changes in those items in dollars:



	Years Ended December 31,						Dollar
	2019			2018			Change
Operating expenses:
General and administrative	$	5,265,438		$	4,655,837		$	609,601
Research and development	8,546,108			6,413,956			2,132,152
License expenses	533,334			625,000			(91,666		)
Impairment of goodwill	—			5,187,519			(5,187,519		)
Loss from operations	(14,344,880		)	(16,882,312		)	(2,537,432		)
Other income	81,050			143,497			(62,447		)
Net loss	$	(14,263,830	)	$	(16,738,815	)	$	(2,474,985	)

Revenues

We did not recognize any revenue for the years ended December 31, 2019 or 2018.

General and administrative

The increase of $609,601 in general and administrative expenses from 2018 to 2019 was primarily attributable to: (i) an increase in personnel costs of approximately $482,000 reflecting the hiring of additional employees which resulted in increased salary, benefit and bonus expenses , (ii) an increase in stock-based compensation expense of approximately $241,000, (iii) an increase in insurance costs of approximately $102,000, (iv) an increase in rent expense of approximately $79,000 due to the addition of two leases acquired in conjunction with the acquisition of Microchips, (v) an increase of approximately $38,000 of advertising and marketing expenses, and (vi) an increase of approximately $48,000 in expense related to conferences and seminars. Those increases were partially offset by a decrease of approximately $410,000 in expenses for accounting, legal, and professional services.

Research and development

The increase of approximately $2.1 million in research and development expenses from 2018 to 2019 was primarily attributable to (i) an increase in costs related to development activities of approximately $2.3 million for DARE-BV1, Ovaprene, DARE-HRT1, DARE-FRT1 and Sildenafil Cream, 3.6%, (ii) an increase in personnel costs of approximately $875,000 reflecting the hiring of additional employees which resulted in increased salary, benefit and bonus expenses, and (iii) an increase in stock-based compensation expense of approximately $82,000. Those increases were partially offset by (x) an increase in grant funding recorded as a reduction to research and development expense related to Ovaprene of approximately $894,000, (y) a decrease in costs related to development activities of approximately $285,000 for DARE-VVA1, and (z) a decrease in costs related to pre-clinical development activities of approximately $40,000. We expect research and development expense to increase significantly in 2020 as we continue to develop our product candidates and as we achieve development milestones for which we have related payment obligations.

License expenses

The $91,666 decrease in license expenses from 2018 to 2019 was attributable to a decrease in license fees paid. During 2018, we paid $625,000 in connection with entering into license agreements for DARE-HRT1, Sildenafil Cream, 3.6% and DARE-BV1. During 2019, we accrued or paid $533,334 of license fees due under our license agreements related to DARE-BV1 and DARE-HRT1.

Goodwill impairment expense

The goodwill impairment expense for the year ended December 31, 2018 was due to our determination that the carrying amount of our goodwill exceeded its estimated fair value. See Note 2, “Acquisitions,” of the Notes to Consolidated Financial statements appearing in this report for a discussion of our goodwill analysis.

Other income

The decrease of $62,447 in interest income from 2018 to 2019 was primarily due to a decrease in interest earned on cash balances in the current year.

Liquidity and Capital Resources

Plan of Operations and Future Funding Requirements

We prepared the accompanying consolidated financial statements on a going concern basis, which assumes that we will realize our assets and satisfy our liabilities in the normal course of business. In addition, we have a history of losses from operations, we expect negative cash flows from our operations to continue for the foreseeable future, and we expect that our net losses will continue for at least the next several years as we develop our existing product candidates and seek to acquire, license or develop additional product candidates. These circumstances raise substantial doubt about our ability to continue as a going concern. The accompanying financial statements do not include any adjustments to reflect the possible future effects on the recoverability and reclassification of assets or the amounts and classifications of liabilities that may result from the outcome of the uncertainty of our ability to remain a going concern.

At December 31, 2019, our accumulated deficit was approximately $44.0 million, our cash and cash equivalents were approximately $4.8 million, and our working capital was approximately $0.8 million. For the year ended December 31, 2019, we incurred a net loss of $14.3 million and had negative cash flow from operations of approximately $13.3 million.

The cash used to fund our operations comes from a variety of sources. In April 2019, we received gross proceeds of approximately $5.8 million, and net proceeds of approximately $5.2 million after deducting underwriting

discounts and offering expenses, in an underwritten public offering. In November 2019, we received approximately $6.1 million in cash and cash equivalents in connection with our acquisition of Microchips. During 2019, we received approximately $1.0 million under an existing grant from the National Institutes of Health that funded a portion of the postcoital clinical study costs of Ovaprene. From January 1, 2020 and through March 26, 2020, we received approximately $8.1 million in gross cash proceeds: (1) a $1.0 million upfront payment under our license agreement with Bayer HealthCare, LLC, (2) approximately $5.4 million from the sales of an aggregate of 3,308,003 shares of our common stock in at-the-market offerings; and (3) approximately $1.7 million upon the exercise of warrants to purchase 1.7 million shares of our common stock.

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

We expect our expenses to increase significantly in 2020 as we continue the development of our product candidates, in particular as we conduct activities in preparation for and commence and conduct our planned pivotal clinical study of DARE-BV1, Phase 2b clinical study of Sildenafil Cream, 3.6%, pivotal contraceptive effectiveness and safety study of Ovaprene, and a Phase 1 clinical study of DARE-HRT1, as discussed above, and as we incur license expenses associated therewith.

To date, we have not obtained any regulatory approvals for any of our product candidates, commercialized any of our product candidates or generated any product revenue, and we cannot anticipate if, and when we will generate any revenue. We have devoted significant resources to acquiring our portfolio of product candidates and to research and development activities for our product candidates. We must obtain regulatory approvals to sell any of our products in the future. We will need to generate sufficient safety and efficacy data on our product candidates for them to be attractive assets for potential strategic partners to license or for pharmaceutical companies to acquire, and for us to generate cash and other license fees related to such product candidates.

Based on our current operating plan estimates, we do not have sufficient cash to satisfy our working capital needs and other liquidity requirements over at least the next 12 months from the date of issuance of the accompanying financial statements.

We will need to raise substantial additional capital to continue to fund our operations and to successfully execute our current operating plan, including the development of our current product candidates. We are currently evaluating a variety of capital raising options, including financings, government or other grant funding, collaborations and strategic alliances or other similar types of arrangements to cover our operating expenses, including the development of our product candidates and any future product candidates we may license or otherwise acquire. The amount and timing of our capital needs have been and will continue to depend highly on many factors, including the product development programs we choose to pursue and the pace and results of our clinical development efforts. If we raise capital through collaborations, strategic alliances or other similar types of arrangements, we may have to relinquish, on terms that are not favorable to us, rights to some of our technologies or product candidates we would otherwise seek to develop or commercialize. There can be no assurance that capital will be available when needed or that, if available, it will be obtained on terms favorable to us and our stockholders, particularly in light of the effects that the COVID-19 pandemic has recently had on the capital markets and investor sentiment. In addition, equity or debt financings may have a dilutive effect on the holdings of our existing stockholders. If we cannot raise capital when needed, on favorable terms or at all, we will not be able to continue development of our product candidates, will need to reevaluate our planned operations and may need to delay, scale back or eliminate some or all of our development programs, reduce expenses file for bankruptcy, reorganize, merge with another entity, or cease operations. If we become unable to continue as a going concern, we may have to liquidate our assets, and might realize significantly less than the values at which they are carried on our financial statements, and stockholders may lose all or part of their investment in our common stock. See “ITEM 1A. RISK FACTORS—Risks Related to Our Business—We will need to raise additional capital to continue our operations,” above.

Cash Flows

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



	Years Ended December 31,
	2019			2018
Net cash used in operating activities	$	(13,315,480	)	$	(10,268,425	)
Net cash provided by (used in) investing activities	6,143,893			(518,836		)
Net cash provided by financing activities	5,151,702			10,111,952
Effect of exchange rate changes on cash and cash equivalents	(5,897		)	(78,648		)
Net increase (decrease) in cash	$	(2,025,782	)	$	(753,957	)

Operating activities

Cash used in operating activities during the year ended December 31, 2019 included a net loss of $14.3 million, decreased by non-cash stock-based compensation expense of $462,239. Components providing operating cash were a $621,618 increase in accrued expenses, an increase of $608,650 in accounts payable, and an increase of $237,937 in other non-current assets and deferred charges. Components reducing operating cash were a $322,482 increase in prepaid expenses, a $238,109 increase in deferred grant funding, and a $201,423 increase in other receivables.

Cash used in operating activities during the year ended December 31, 2018 included a net loss of $16.7 million, decreased by non-cash impairment of goodwill of $5.2 million acquired in-process research and development expense of approximately $507,000 and non-cash stock-based compensation expense of $139,348. Components providing operating cash were a $253,169 decrease in other receivables, an increase of $151,486 in accounts payable, a decrease of $193,495 in other current assets, and a decrease of $145,223 in other non-current assets and deferred charges. A component reducing operating cash was an increase of $91,526 in prepaid expenses.

Investing activities

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

Cash used in investing activities during the year ended December 31, 2018 consisted primarily of approximately $500,000 of transaction costs associated with our acquisition of Pear Tree.

Financing activities

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

Cash provided by financing activities during the year ended December 31, 2018 consisted of $10.1 million of net proceeds from the underwritten offering completed in February 2018 and sales under the common stock sales agreement completed in January and February of 2018.

Off-Balance Sheet Arrangements

We did not have during the periods presented, and we do not currently have, any off-balance sheet arrangements, as defined under applicable SEC rules.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Under SEC rules and regulations, as a smaller reporting company we are not required to provide the information required by this item.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Our consolidated financial statements required to be included in this Item 8 are set forth in a separate section of this report commencing on page F-1.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

ITEM 9A. CONTROLS & PROCEDURES

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures (as defined in Rule 13a-15(e) of the Exchange Act) that are designed to provide reasonable assurance that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can only provide reasonable assurance of achieving the desired control objectives, and in reaching a reasonable level of assurance, management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

At the conclusion of the year ended December 31, 2019, we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures (as defined in Rule 13a-15(e) of the Exchange Act) were effective as of December 31, 2019 at the reasonable assurance level.

Management’s Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as such term is defined in Rule 13a-15(f) of the Exchange Act). Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with generally accepted accounting principles. Because of its inherent limitations, internal controls over financial reporting may not prevent or detect misstatements. In addition, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Our management conducted an assessment of the effectiveness of our internal control over financial reporting based on the criteria set forth in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework). Based on our assessment, management has concluded that our internal control over financial reporting was effective as of December 31, 2019 to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with generally accepted accounting principles in the United States.

Under SEC rules, because we are a non-accelerated filer, we are not required to provide an auditor attestation report on internal control over financial reporting, nor did we engage our independent registered public accounting firm to perform an audit of our internal control over financial reporting.

Changes in Internal Control Over Financial Reporting

There was no change in our internal control over financial reporting identified in connection with the evaluation required by Rules 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the fourth quarter ended December 31, 2019 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

ITEM 9B. OTHER INFORMATION

None.

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

The information required by this item and not set forth below will be contained in the sections titled “Board of Directors,” “Corporate Governance,” and “Executive Officers” in our definitive proxy statement for our 2019 Annual Meeting of Stockholders (the Proxy Statement) to be filed with the SEC within 120 days after the conclusion of our fiscal year ended December 31, 2019 and is incorporated in this report by reference.

ITEM 11. EXECUTIVE COMPENSATION

The information required by this item will be contained in the sections titled “Board of Directors" and "Executive Compensation” in our Proxy Statement and is incorporated in this report by reference.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The information required by this item will be contained in the section titled “Security Ownership of Certain Beneficial Owners and Management” and “Equity Compensation Plan Information” in our Proxy Statement and is incorporated in this report by reference.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE

The information required by this item will be contained in the sections titled "Board of Directors" and “Certain Relationships and Related Transactions” and “Corporate Governance” in our Proxy Statement and is incorporated in this report by reference.

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

The information required by this item will be contained in the section titled “Ratification of Independent Auditor” in our Proxy Statement and is incorporated in this report by reference.

PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES

(a) The following documents are filed as part of this annual report on Form 10-K:

(1) Financial Statements

See “Index to Consolidated Financial Statements” on page F-1.

(2) Financial Statement Schedules

All financial statement schedules have been omitted, since the required information is not applicable or is not present in amounts sufficient to require submission of the schedule, or because the information required is included in the consolidated financial statements and notes thereto included in this report.

(3) Exhibits