Dare Bioscience, Inc. Q2 FY2024 Earnings Call

Welcome to the conference call hosted by Daré Bioscience to review the company's second quarter financial results and to provide a general business update. This call is being recorded. My name is Leonardo, and I will be your operator today. With us today from Daré are Sabrina Martucci Johnson, President and Chief Executive Officer; and MarDee Haring-Layton, Chief Accounting Officer. Ms. Haring-Layton, please proceed.

Good afternoon, and welcome to the Daré Bioscience financial results and business update call for the quarter ended June 30, 2024. Today, we will review our second quarter results and discuss developments and expectations for our pipeline and portfolio. I'd like to remind you that today's discussion will include forward-looking statements within the meaning of federal securities laws, which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Any statements made during this call that are not statements of historical facts should be considered forward-looking statements. Actual results or events could differ materially from those anticipated or implied by these statements due to known and unknown risks and uncertainties. You should not place undue reliance on forward-looking statements. Forward-looking statements are qualified in their entirety by the cautionary statements in the company's SEC filings, including on Form 10-Q for the quarter ended June 30, 2024, which was filed today. I would also like to point out that the content of this call includes time-sensitive information that is current as of today, August 12, 2024. Daré undertakes no obligation to update any forward-looking statements to reflect new information or developments after this call, except as required by law. I will now turn it over to Sabrina.

Thank you. I always like to start our quarterly calls by taking a minute to remind those of you who may be newer to the Daré story of our purpose and our mission. We believe Daré is the only publicly traded company focused solely on women's health, pharmaceutical product development broadly and we remain dedicated to advancing disruptive products for the health and well-being of women through clinical development, regulatory review and ultimately to market. Our commitment and focus is to improve health outcomes and the lives of women by leveraging the basic science and pharmacology that is understood about certain active pharmaceutical ingredients or marketed products to accelerate innovative treatments that women want and need by boldly addressing existing therapeutic gaps. We seek to optimize these treatments for our target indications to enhance outcomes, convenience and side effect profile or to address a novel indication, where the pharmacology is well suited, but has not previously been applied to the indication in question for women. We believe we have the broadest portfolio of potential high-impact first-in-category product candidates to improve the health and well-being of women, many of which have already demonstrated proof-of-concept and that our robust pipeline positions us well for the short, medium and long term. During our last update call, we discussed the strides we made last year to advance innovative therapies for women and the key milestones anticipated for 2024. In addition to the continued commercialization of XACIATO, clindamycin phosphate vaginal gel 2%, the first FDA-approved product to emerge from our portfolio and a treatment for bacterial vaginosis in females aged 12 and older, that became available nationwide by prescription earlier this year via our collaborator Organon. We also discussed anticipated milestones focused on our first-in-category product candidates related to continuing to progress toward a Phase 3 trial of Sildenafil Cream, 3.6%, which has the potential to be the first FDA-approved treatment for female sexual arousal disorder, for which there are no FDA-approved treatments and continuing to enroll in our Phase 3 study of Ovaprene, our potentially first-in-category hormone-free, monthly intravaginal contraceptive candidate. Today, we'll review our progress against the anticipated milestones for Ovaprene and Sildenafil Cream with a focus on providing context and metrics that are important to understanding the potential impact of these programs. We'll also highlight today the status of and what comes next for our two product candidates in the menopause space, our monthly vaginal hormone therapy for hot flashes and our hormone-free vaginal insert for sexual pain. Before I do, I'm going to first turn the call back over to our Chief Accounting Officer, MarDee, to review our second quarter financial results.

Thanks, Sabrina, and thanks, everyone, for joining us today. I would now like to summarize Daré's financial results for the quarter ended June 30, 2024, which I will refer to as the second quarter. As Sabrina mentioned, Daré's business strategy is to assemble and advance a portfolio of differentiated product candidates that address meaningful unmet needs we've identified in women's health and then to monetize the value of our portfolio's clinical and regulatory advances over the near and long term. The investment required to build and advance a portfolio includes corporate overhead portfolio acquisition and maintenance costs and ongoing research and development or R&D expenses. During the second quarter of 2024, our general and administrative expenses, or G&A, were approximately $2.4 million, which is a 16% decrease compared to Q2 2023 due primarily to reduced head count and reduced professional services expense. Our R&D expenses, which vary from period to period based on clinical, preclinical manufacturing, regulatory and other activities across our entire portfolio were approximately $4.9 million for the second quarter, which is a 19% decrease compared to Q2 2023. As we guided previously this year, we continue to anticipate our full year 2024 R&D expenses will be less than our 2023 R&D expenses. Our comprehensive income for the second quarter was approximately $12.9 million driven by proceeds from the royalty monetization transaction we closed in April. We ended the second quarter with approximately $16.4 million in cash and cash equivalents and had approximately 8.5 million shares of common stock outstanding as of August 9, which reflects the reverse stock split that was implemented on July 1, 2024. In April, we announced and closed a royalty monetization transaction with XOMA in which Daré received $22 million in gross proceeds and following a prespecified total return to XOMA, XOMA will make upside sharing milestone payments to Daré equal to 50% of all remaining cash flows for XOMA under the transaction. This monetization of future net royalty and net milestone payments accelerates potential cash flows from the future commercial success of XACIATO and ensures that Daré and our shareholders have the opportunity to participate meaningfully in XACIATO economics, as commercialization progresses. This nondilutive financing provides Daré with significant capital to help achieve our objectives and importantly, allows us to focus on advancing our late-stage potential first-in-category investigational products, Ovaprene and Sildenafil Cream, both of which represent large market opportunities. The structure of this transaction also underscores the significant potential of Ovaprene and Sildenafil Cream, with Daré retaining the significant majority of future economics and the ability to achieve attractive margins through retained net sales and all commercial milestones. In the second quarter, we also received $1 million as the latest installment under our grant agreement with a foundation in support of our investigational contraceptive, DARE-LARC1. Under the terms of the grant agreement, Daré may receive a total of up to approximately $49 million to support nonclinical development of DARE-LARC1. This funding will allow us to advance the development of DARE-LARC1 through nonclinical proof of principle studies and other work to prepare for the submission of an investigational new drug application with the FDA, approval of which is required to begin testing in humans. To date, Daré has received approximately $29.3 million under the DARE-LARC1 grant agreement. Together, the royalty financing and latest installment in grant funding represent our commitment to being creative, collaborative and opportunistic in seeking capital needed to meet our objectives and to build shareholder value. We encourage investors to review the more detailed discussion of our financials, our financial condition, liquidity, capital resources and Risk Factors in our Form 10-Q for the quarter ended June 30, 2024, which we filed this afternoon as well as our annual Form 10-K for the year ended December 31, 2023, which was filed on March 28, 2024. I'd now like to return the call back over to Sabrina.

Great. Thank you, MarDee. I'm now going to talk through our 2024 accomplishments to date and anticipated milestones with a focus on our late-stage candidates, Sildenafil Cream and Ovaprene. But first, I'll provide an update on our on-market asset, XACIATO. So as a reminder, XACIATO or clindamycin phosphate 2% vaginal gel is indicated for the treatment of bacterial vaginosis in females aged 12 years and older. It's a colorless single-dose vaginal gel that can be applied at any time of day and it's formulated with the goal of limiting leakage and increasing vaginal retention time, not as time spent in place. In the first quarter of 2024 through our commercialization agreement with Organon, XACIATO became available by prescription across the United States. The Organon women's health sales team continues to see steady month-over-month increases in total prescriptions of XACIATO and new prescriber volumes in line with the opportunity for a new branded entrant in the category. There are positive signals related to strong clinical acceptance among early adopters with multiple uses among trialists paired with a positive patient reception, and the team continues to unlock access channels for a frictionless fulfillment experience for both patients and providers. I'd now like to provide an update on Sildenafil Cream 3.6%. So during the second quarter, we continued our interactions with the FDA on the development program for Sildenafil Cream as a treatment for female sexual arousal disorder, including with respect to the proposed efficacy endpoints to take forward into Phase 3 development. The patient population and the endpoints we proposed to the FDA for Phase 3 clinical development were those where our post-hoc analyses for the Phase 2b study data showed that Sildenafil Cream demonstrated statistically significant and meaningful patient improvements. During the second quarter, we provided responsive materials to queries from the FDA regarding patient-reported outcomes and the qualitative assessment of within patient clinically meaningful improvement that we saw in the Phase 2b study based on the participant exit interviews. While the FDA had indicated an anticipated providing additional feedback during the second quarter on the Phase 3 design, which would be the first ever Phase 3 pivotal study of a therapeutic candidate for the treatment of arousal disorder in women, its review is ongoing, and we look forward to providing updates on the FDA's feedback, the Phase 3 study design and plans as well as any relevant updates on our collaboration strategy as they become available. In preparation for Phase 3 initiation during the second quarter, we completed the bid defense meetings with the CROs being considered for the Phase 3 studies and launched the manufacturing campaign to support Phase 3. In terms of market and revenue potential, there are currently no FDA-approved treatments for any form of sexual arousal disorder in women, meaning Sildenafil Cream has the potential to be the first. Sildenafil is the active ingredient in tablet form for oral administration currently marketed under the brand name Viagra for the treatment of erectile dysfunction in men, which was undoubtedly one of the most successful prescription products ever launched, and market research suggests that approximately 20 million women in the US experience symptoms of low or no sexual arousal. In terms of probability of success, we've already demonstrated that Sildenafil Cream increased genital blood tissue flow in quantitative studies, and as we previously shared, we've completed all of the study analysis and data from the exploratory Phase 2b RESPOND clinical trial of Sildenafil Cream, and identified the patient population that received the greatest benefit from Sildenafil Cream in their general arousal response. The efficacy findings and details regarding this patient population were published in the Journal of Obstetrics and Gynecology, which is the official journal of the American College of Obstetrics and Gynecology or ACOG and were available open access online in June, and our publication was featured as a featured article in July in the green room, which is the ACOG podcast. Our study was also spotlighted in an editorial in the journal. It's a distinct honor to be featured and we are pleased to see the medical community still engaged in these first of its kind data translational to a significant unmet need. We look forward to providing additional updates on the development program as they are available. In terms of Ovaprene, we also want to provide an update on the advancement of the Phase 3 study of Ovaprene, which is our novel investigational hormone-free monthly intravaginal contraceptive whose US commercial rights are under a license agreement with Bayer. Non-hormonal contraception represents a significant commercial market opportunity as there are no currently monthly hormone-free contraceptive approved by the FDA. Ovaprene has potential to be a disruptive product in the contraceptive category and an important option for women who cannot use hormone-based birth control products or prefer not to do so. Based on market research, approximately 35 million women in the US are potential candidates for Ovaprene. Working with study collaborators at the Eunice Kennedy Shriver National Institute of Child Health and Human Development or NICHD of the National Institutes of Health or NIH, we commenced patient enrollment in the Ovaprene pivotal Phase 3 clinical study in December of 2023. Recruitment is currently underway at 20 sites across the United States and is supported by a central advertising campaign for the study that launched in March of this year, March 2024. You can see the campaign materials by visiting our website homepage. While there are 20 sites currently recruiting, it's clear that a subset of approximately half of those sites are the most successful in translating into study participants that considerable interest we have seen from women in response to the central advertising campaign. As a result, we have a range of enrollment projection that varies considerably based on the enrollment rates at the most successful sites versus those that are not enrolling at a similar pace. As a reminder, the study aims to enroll sufficient participants across the study sites to have approximately 250 participants complete approximately 12 months, which is 13 menstrual cycles of product use. Based on the current average enrollment rate across all of the 20 sites, we anticipate that approximately 125 women, which is half of our target number of participants to complete the study, will complete approximately six months of product use by the end of the second quarter in 2025. We are, of course, looking at strategies to ensure that all of the study sites are equally successful and productive and look forward to providing updates on enrollment projections and rates as enrollment progresses in the coming quarters. Based on communications to date with the FDA, if successful, we believe that just the single registration study will be required to support a premarket approval application submission with the FDA. I'd now like to turn to DARE-HRT1 and DARE-VVA1. Because lastly, given the unveiling earlier this year of the bipartisan Senate bill that would authorize $275 million to boost research training and public awareness around menopause and midlife women's health issues, an area that has often been too stigmatized, overlooked and underfunded, we've been getting lots of questions about our menopause-related programs. There, HRT1 is a potential first vaginal monthly therapy for the vasomotor symptoms of menopause. This is a program we are preparing for the single Phase 3 clinical study, we believe will be required for approval via the FDA's 505 (b) (2) pathway. In addition, DARE-VVA1, which is our hormone-free vaginal candidate for sexual pain due to vulvovaginal atrophy or VVA associated with menopause is Phase 2 ready, and we're actively exploring opportunities to move this program forward. We're looking forward to seeing continued progress in the menopause space and potential progress of this new bill, and will provide updates on our DARE-HRT1 and DARE-VVA1 programs as available. In summary, we continue to progress our portfolio of potential first-in-category product candidates and look forward to providing more updates this year as we work to advance some of the most potentially disruptive candidates for the health and well-being of women in decades, collaborating with leading companies, including Organon for XACIATO and Bayer for Ovaprene to commercialize and deliver these treatments to as many women as possible. I'd now like to turn the call over to the operator for Q&A.

Your first question comes from the line of Catherine Novack of Jones Research. Please go ahead.

Hi, good afternoon. Congrats on all the progress this quarter. I wanted to ask again for Ovaprene. With the timing updates that you gave today can you give us a sense of what implications this has for top line readout? And then given that this is a single arm, do you have any plans for an interim look so we can see data a little bit sooner?

Yeah, absolutely. Those are great questions. You don't have timing yet for top line. As I mentioned in the prepared remarks, there's a difference in enrollment rate between some of the sites. And I want to be clear, there's not a difference in demand. So the central advertising campaign has been quite successful in terms of generating patient interest in the study, quite equitably across the sites. It's just a difference in terms of how successful some of the sites are translating those women into study participants from that considerable interest. And so we feel comfortable at this time, projecting when we'll have, right? Half of the subjects having completed about halfway through, right, six months of their assessment. We definitely look forward to giving more updates, including an opportunity to do an interim analysis at that point, but we're not prepared yet to give exact timing on final top line. We really want to get a little further in enrollment. And a little further in looking at some of these strategies we've been implementing to help all the sites be equally successful and productive in pulling those patients that have expressed interests forward.

Great. Can you remind us of the typical use Pearl Index that would make this a commercially compelling asset?

It's a great question. The Pearl Index is how the FDA evaluates contraceptive methods, using a metric that applies to both hormonal and non-hormonal products. FDA-approved products have a wide range of Pearl indices. The most effective method is an intrauterine device, which has a Pearl Index of 1, while the least effective options, like spermicides or vaginal gel, have indices around 27 to 28. In the non-hormonal category, there aren't many options. Besides the copper IUD, which has a good index, the other alternatives tend to fall within the higher Pearl Index range. Ovaprene would be unique as the first monthly non-hormonal product, unlike others that are pericoital, such as condoms. The pre-pivotal study data indicates that it could achieve effectiveness comparable to short-acting hormonal methods, but it's important to note that the bar is relatively low for non-hormonal methods given the current approved products. This suggests that there's a wide range of efficacy that could be acceptable for a product like Ovaprene due to its added convenience, which other non-hormonal methods lack. Overall, the non-hormonal methods have a wide effectiveness range, highlighting that the focus should be on creating contraceptive methods that women will use, which is why the FDA has approved such a varied range of effectiveness.

Great. That's helpful. Looking forward to getting more updates on the program down the line.

Absolutely. Thank you.

Your next question comes from the line of Douglas Tsao of H.C. Wainwright & Co. Please go ahead.

Hi, good afternoon. Thanks for taking my questions. Sabrina, in terms of your interactions with the FDA for the Sildenafil Cream program, I guess, I'm just curious, are you anticipating another meeting being needed to sort of get this final alignment or do you think your interactions are sufficient to get this settled?

Yeah, that's a great question. It's definitely clear that, which we know, right, this is the first-in-category indication and a first-in-category product. And there's a lot of data for the FDA to go through. And there's also a lot of key opinion leader support that we have provided to the FDA historically right, in terms of understanding of the indication, understanding of the outcome measures. So there may be questions or circumstances where that's helpful. Not clear at this time. Right now, the questions have really been straightforward in terms of kind of the typical things. We're providing a lot of, as I said, information around those outcome measures and what's a clinically meaningful improvement, and there's a whole very specialized assessment in the patient-reported outcome world called the psychometric analysis and assessment that was done. So a lot of the information we're providing is really providing that color. But to be determined, we'll definitely be open to that. We, to date, have had a number of meetings with the FDA. And when we've had them in the past, they've definitely been super productive. So we're definitely open to that. But at this point, nothing definitive in that front.

Okay. You clearly have a rich pipeline with many opportunities. How are you prioritizing in light of your balance sheet and what you are currently able to afford?

Yeah. Another great question. So as we've really been trying to highlight Ovaprene and Sildenafil as our two either in Phase 3 as Ovaprene is or getting Phase 3 ready as Sildenafil is, those have really been our priorities, both operationally in terms of where we put our bandwidth, but also obviously, financially as well. And those really remain the priority. However, to your point, we have a very deep pipeline, in particular, with a lot of the noise around menopause lately. We've been getting a lot of questions and interest broadly around our menopause programs that we have, the two that I highlighted today. So we're also doing everything we can to make sure that we are advancing those programs as much as possible operationally by being very capital responsible and really focusing our priorities around Ovaprene and Sildenafil right now responsibly with our capital.

Okay, great. Thank you so much.

Absolutely.

That concludes our question-and-answer session. I would like to turn the call back over to Sabrina Martucci Johnson for any additional or closing remarks.

Great. Well, thank you all for taking the time this afternoon to hear about our recent updates and our ongoing commitment to drive value for all of our Daré stakeholders by identifying and advancing potential new therapies to provide additional choices, enhanced outcomes and ease of use for women. As you heard today, we continue to make great progress and are excited for what the rest of this year holds for Daré. As we look ahead to the rest of 2024, we expect several milestones this year, including more of a pre-pivotal study updates as they indicate, as we work to complete what we expect to be that single registration study, and as we've just been talking about, updates on our discussions with the FDA and the activities that we're doing to commence that Phase 3 for a potential first-in-category treatment option for women with sexual arousal disorder, Sildenafil Cream. And as we also touched at the end of the call, our unique model really also has deep pipeline in support of commercial collaborators. And therefore, we believe we're well positioned to accelerate innovation for women everywhere while also driving value for all of Daré stakeholders. We look forward to keeping you updated on our progress towards the milestones we discussed today. Thank you.

This concludes today's call. Thank you all for joining. You may now disconnect.