Daré Bioscience, Inc. (DARE) Q3 2020 Earnings Report, Transcript and Summary

Welcome to the conference call hosted by Daré Bioscience to review the Company's Financial Results for the Quarter Ended September 30, 2020, and to provide a general business update. This call is being recorded. My name is Chris, and I will be your operator today. With us today are Sabrina Martucci Johnson, Daré's President and Chief Executive Officer; John Fair, Daré's Chief Strategy Officer; and Lisa Walters-Hoffert, Daré's Chief Financial Officer. Miss. Johnson, please proceed.

Thank you, and welcome to our financial results and business update call for Daré Bioscience. We are looking forward to discussion our third quarter results reflecting on some important achievements to date in 2020 highlighting anticipated developments and milestones for the remainder of 2020 and providing some perspective regarding our plans for 2021.

Thank you, Sabrina. Strategic partnerships are core to our model, particularly when it comes to how we plan to unlock value for shareholders, and achieve commercialization objectives for our portfolio. The level of interest in our portfolio has been and continues to be strong, both from well-established large pharmaceutical companies, as well as mid-sized and emerging companies, both U.S. and global. We are actively advancing partnership discussions that we believe will allow us to maximize downstream commercial execution and provide access to the broadest patient population in the respective therapeutic categories. By being good stewards of these products and partnerships, we believe we can have a positive impact on the lives of women, while at the same time delivering shareholder value. For those of you familiar with the women's health category, you will appreciate that health care provider dynamics create commercial efficiencies and allow for a targeted call point across multiple indications. There are a number of established and emerging entities meaning commercial companies in the category, looking for opportunities to enhance their portfolios and amortize their field Salesforce costs, which we expect will give us a lot of flexibility in terms of partnerships, partnership structures, timing of partnerships, and also finding the best fit opportunity to create value for our shareholders, and especially as we transition from a commercial -- from a development portfolio to a commercial portfolio. As an example, we believe our agreement with Bayer for investigational monthly hormone free vaginal ring Ovaprene provides us with a robust commercial economic structure in the form of milestones and royalties, while at the same time gives Ovaprene the maximum commercial opportunity by putting the launch and commercialization in the hands of our partner, Bayer as they look to expand their billion dollar contraceptive franchise beyond Mirena and beyond the long acting market segment. But we also have the flexibility to look for partnership opportunities for our other product candidates, which may include elements such as co-promotion, strategic cost sharing, risk sharing and commercial structures where Daré takes more of an active role without bearing the burden of the commercialization, infrastructure and associated expenses. Given our portfolio of potential first-in-line and first-in-category product candidates and the underlying commercial potential of these candidates, we have the flexibility to consider structures that range from directly managing commercial capability to partnering or co-promoting our products or to fully licensing the commercial rights. And this essentially means we can do what we believe is best for Daré and our shareholders in every case. We are fortunate to have such unique and diversified portfolio because it allows us to be in a position to consider all of these structures, which we are currently doing with DARE-BV1. And for DARE-BV1, we are specifically interested in opportunities that we believe will prioritize the product in a way that will allow us to unlock the most value for health care providers, for patients and for payors as well as shareholders. So we look forward to providing you with additional insights on the DARE-BV1 partnership and commercialization strategy following the top line data announcement later this year. And with that, I'm going to turn the call over to Lisa for a financial update.

Thank you, John. And thanks to all of you for joining us today. I would now like to summarize Daré financial results for the quarter ended September 30, 2020. As you know Daré business model is to assemble, advanced and monetize a portfolio of novel product candidates in women's health. As a result, our expenses consist of corporate overhead, portfolio acquisition and maintenance costs, and research and development activities to generate the clinical and other data necessary to advance our candidates through regulatory milestones including approval. For the quarter just ended September 30, 2020 Daré General and Administrative expenses were approximately $1.4 million, license expenses were approximately $25,000 and research and development or R&D expenses were approximately $6.2 million. In addition to the personnel costs of our R&D team, this quarters R&D expenses primarily reflect costs of the on-going DARE-BV1 Phase 3 study activities related to Ovaprene and preclinical development activities for DARE-LARC1 with the DARE-LARC1 program supported by our grants from the Bill and Melinda Gates Foundation. Our comprehensive loss for the quarter was approximately $7.6 million. Net cash provided by financing activities for the nine months ended September 30 2020 was approximately $16.7 million. Such proceeds were generated primarily from sales of stock under our ATM or at-the-market facility and equity line, the exercise of warrants and loan proceeds. We ended the quarter with approximately $5.4 million in cash and cash equivalents. Now there were several developments over the past few months, worth highlighting given their current and anticipated impact on our cash burn and operating expenses. As Sabrina discussed earlier, in August, we announced the receipt of a notice of award of the $300,000 grant from the Eunice Kennedy Shriver National Institute of Child Health and Human Development in support of a Phase 1 clinical study of DARE-FRT1. She also noted Daré maybe eligible to receive an additional 2 million award in further support in that Phase 1 study of DARE-FRT1 for a total of up to 2.3 million in funding based on the grant application submitted. In September, we announced the receipt of 900,000 of funding that remained under the pre-existing grants and the Bill and Melinda Gates Foundation to support DARE-LARC1 development activities, and this brings total funding from the foundation for that program to approximately $20.5 million. Recall the grant proceeds are recognized in our financial statements as a rejection or an offset to allowable costs associated with the DARE-LARC1 development program. Also in September, we announced an agreement with Avomeen, under which Avomeen will provide contract product development laboratory services with a team of specifically assembled -- with the team specifically assembled to support the advancement of a very innovative pipeline in a manner that is both time and cost efficient. In July, we commenced our Phase 1 study of DARE-HRT1 in Australia, and we intend to apply to the maximum refundable cash credit then available under Australia's R&D tax incentive program. Currently, the program allows for eligible companies to receive upto 43.5% of their eligible R&D expenses in the form of a cash payment the following year. So in summary, based on these activities, we believe the Australian R&D tax incentive program or NIH grant for DARE-FRT1, the Bill and Melinda Gates Foundation grant for DARE-LARC1 and our partnerships with Avomeen as well as health decisions, which we discussed during our previous earnings calls will collectively serve to reduce our cost of development in the months ahead and help us to manage our resources efficiently. Now subsequent to the quarters end, or for us, it's the period October 1 through November 11, we took steps to further strengthen our cash position by raising approximately $4.5 million net of fees from sales of our common stock under our ATM and equity line. Following these activities and as of yesterday, November 11, shares of our common stock outstanding were approximately 38 million. We will continue to explore ways to access additional capital to advance our product candidates and to satisfy our working capital needs. Since our inception, we have raised cash through the sale of our equity securities, M&A transactions, warrant and option exercises, non-dilutive grants, and license fees. We will endeavour to be creative and opportunistic and seeking capital that we need to not only maintain but to build value as we advance our candidates, and to be highly efficient in the use of such capital. In terms of COVID-19, and as Sabrina touched on, we are continuing to monitor the pandemic, its associated restrictions and their potential impact on our business, our financial condition, results of operation, including their potential to adversely affect our on-going implant clinical trials, and our ability to raise additional capital when needed. Due to the many uncertainties surrounding the pandemic, including governmental responses, we are unable to predict with any reasonable accuracy the full financial and business impact on our company at this time. We encourage investors to review the more detailed discussion of our financials and financial condition, liquidity and capital resources and the risk factors in the 10-Q that we filed today. And to also review our audited financial statements and related notes and risk factors included in our 10-K that was filed on March 27 2020. I would now like to turn the call over to Chris, our operator for Q&A.

Thank you. And our first question comes from a line of Dora with Roth Capital Partners. Your line is now open.

Hi guys. This is from Roth. Just had a couple of questions here and thanks again for the update. I think the first one just has to do with what everyone probably is focused on here. The Daré for DARE-BV1 is expected before the end of the year, if that is really encouraging and supportive of a filing, just kind of want to know, how you're thinking about partnership, what you're looking for. I think you said, John was going to provide some, some details on that. So what are you looking for in a partner? Could you take this part alone, or you definitely plan to have this partnered?

Yes, and maybe I'll take this opportunity to and this is Sabrina speaking, of course, to reinforce some of the comments that John made to, to really kind of point out how we're addressing that question for you. So one of the things about Daré in our portfolio, as we both touched on is that it's a very diverse, diversified portfolio. We have a number of candidates in various stages and phases of development. And so that really does allow us to consider a number of types of different transaction structures, right. So on the one hand, you have the type of transaction that we did with Daré for Ovaprene, which we felt was definitely the right transaction for that product with a partner like Daré that has demonstrated they can build over a billion dollar contraceptive brand and with that opportunity, that's the right thing for shareholders to take it. With other aspects of our portfolio and products like DARE-BV1, we have a lot of flexibilities to consider a variety of structures for a few reasons. One, there are a variety of structures that can continue to be accretive for shareholders. And there's a lot of ways you can take product to commercialization. And they can include different structures that range from co-promotion to out partnering to fully licensing to managing commercial infrastructures, there's a variety of approaches that we can take. And with a product like DARE-BV1 specifically, we can really actually contemplate all of those approaches. So it is intended to be and we think has the potential to be a first line product, which is obviously a really great opportunity for anyone in the women's health category, whether they have a commercial infrastructure in the category in bacterial vaginosis or not. It’s a great addition to any women's health portfolio. But also, unlike Ovaprene, we're not looking for someone who can actually build a brand new therapeutic category. Ovaprene is so unique that a partnership like Daré is so important to build that category. So hopefully what you heard from John's comments, and I'm reinforcing is that we are talking to a number of potential partners around BV1 and we are looking at a full range of structures and possibilities as it pertains to that. And in the end, we are going to select the structure that we think best fits with Daré strategic objectives and shareholder value. And the beauty is that we have a lot of flexibility in what we select, because of how we're structured today.

Yes, and I would just echo that's exactly what I wrote down actually, when you're asked the question. So it's really about maintaining our optionality, really creating value for shareholders and making sure we're maximizing the opportunity, and then really finding that best fit opportunity, that best fit partnership structure. So, that's to be determined. Obviously, we never announced anything until we have something to announce, but know that we're working hard on the back end to make that happen.

Thank you. And then another thing, I was just wondering in terms of structuring of the deal, is it possible that you could throw into denovo into that deal? Because that's progressing very well. And I think there's some synergies there.

Yes. So thank you, first of all, for recognizing that we have a portfolio of products. And it does give me an opportunity to say I mean, one of the beauties of having a portfolio and I touched on this in my comments, and I want to take this opportunity to reinforce that. That fact that we have a variety of programs that they're diversified across indications and development stages, not only does it give us the opportunity, as I mentioned, to deploy our resources in very creative ways, and deploy investment in creative ways, and create opportunities to advance things simultaneously, that have very different risk profiles and timeline profiles, even in a challenging environment. But the other thing it allows us to do, frankly, is always be in front of all of the players in the women's health space. And also continue to look at a variety of creative structures that Daré is uniquely suited to do in the women's health category. To our knowledge, we're the only company that has a portfolio of this nature of these kind of first and category opportunities across therapeutic indications. And as you noted, that uniqueness of our portfolio can provide unique partnership opportunities. So we are always, always exploring, what is going to make the most sense. And as John noted, partnerships, it's about who's the other party, what structure makes sense, but sometimes it’s also timing. So we're, weighing all of those variables as we look at. And for DARE-BV1 for instance, we specifically purposely made a decision as I mentioned up front to partner after Phase 3 top line readout because that puts us in the strongest potential for that program. But as you noted, other programs provide different types of partnership opportunities, and we will explore those fully.

Thanks, guys looking forward to the data.

Yes, don’t worry.

Thank you. Our next question comes from a line of Jason Kolbert with Dawson James. Your line is now open.

Hi, guys, congratulations on a lot of fronts. Preservation of capital on the balance sheet, I see that as positive and keeping your options open when it comes to partnering. In terms of BV1, I think it would be helpful for me and maybe for others, if you could just remind us of that trial powering and the therapy assumptions so that we can just re familiarize ourselves with the probabilities of, of hitting the primary endpoint and what would be perceived as great data. Thanks.

Thank you for that question, and that opportunity to highlight that. So let's start with the current standard of care today. So the current standard of care has curates in the mid-30s to the mid-60s. So that's all your FDA approved products for bacterial vaginosis, and that includes oral as well as vaginosis. The challenge with bacterial vaginosis treatments is that many of the treatments on the market require administration every several days, which is often challenging, both in terms of compliance and then outcomes. So on top of the curates, you have the challenges and just how those many of those products are administered. And so, but however, they tend to rely upon two of the same antibiotics predominantly metronidazole or clindamycin. So in the case of BV1, we are using 2% clindamycin. It's a dosage form. And a antibiotic that has been previously studied in bacterial vaginosis, has a cure rate in that range that I talked about. The challenge, and physicians typically and patients prefer a vaginal administration in this indication because of the types of symptoms she's experiencing, there's benefits to delivering something vaginally, given also that it's a highly recurrent condition. So you want to avoid as much as possible recurrent administration of oral antibiotics. The challenge with vaginal administration is frankly just keeping the product where it needs to be. So products tend to leak out that vaginally, and that is likely what has negatively impacted the cure rates of antibiotics like clindamycin, that really are time cord, they need to be present, you need to have the resident to fight the infection. So the innovation in DARE-BV1 is that drug delivery platform, it's the hydro gel thermosetting hydro gel formulation, it's quite viscous and bio adhesive and thermo settings, it becomes more so once it's heated to her body temperature, and that one and done delivery. So it's just one administration of the product. So she only has to do it once. In terms of nominate turn to the cure rate in the trial design. So the nice thing about bacterial vaginosis, in terms of clinical studies is that pretty much we've across time, essentially, as products have been developed in bacterial vaginosis, they're looking at some permutation, where they looking at two or three or four. But it's always been kind of the same sort of clinical signs and symptoms that distinguish the condition and become part of the cure, calculation. And in the recent years, the FDA actually in 2019, finalize their guidance. So typically, you're looking and now you're specifically looking at whether there's resolution in a very distinctive vaginal odor that is present, a very distinctive vaginal discharge that is present with bacterial vaginosis, and then you're looking for a reduction, a specific percent reduction down to below 20% in a type of cell called cells that are associated with this sort of inflammatory sort of response. So that that is how you determine cure. And like I said that that same array of symptoms and sometimes pH is looked at as well has been looked at kind of across time of the products that have been approved for bacterial vaginosis. So with our program, given that the range right now of the approved treatments is mid-30s to mid-60s, most of them with few exceptions or multiple dose administration's there are one time vaginal and one time oral but most of the products are multiple dose administration's. Frankly, a cure rate in that high end of that range is great because this is a onetime administration. It's a very clean formulation. It's aesthetically because of how bio-adhesive it is, there are some features and benefits that are attractive to a potential user. And this is all data by the way, there were also, encaptured in the Phase 3 is around that acceptability and her perception of the product. The investigator initiated pilot study using that same criteria, but it is 7 to 14. I'm going to talk about the time points in a second, show that 86% cure rate, and it maintained in that 80 range, even today, 21 to 30. And so, we'd love to see curate in that range. But your question of like, what do we need, we don't need that range, we'd love to see it, you know, anything that shows an improvement over the standard today of the mid-30s to mid-60s. And given that this is a onetime vaginal clear gel formulation is definitely very attractive. In terms of the trial design and what you should expect. So we announced in the queue that there were a total of just over 300 patients that we ended up enrolling in the study, a little bit higher than we expected. And so one thing I'll say is that, you're hearing a lot about COVID and impact of COVID on studies. We did not see any impact on enrollment in this study. And in fact, we ended up over our enrollment target because of how fast enrollment was going and you know what we need to do to support that. And so we ended up a little higher than what we had expected, which is fine. It's two to one, ask it to placebo. The primary endpoint is that test of cure assessment that I talked about, that vaginal odor, discharge and clue cells returning to non BV state at day 21, to 30. So I'll also highlight that of our clinical programs, this was a, if you're going to pick two clinical programs to run during COVID, I would say BV1. And our HRT1 programs, at least out of our portfolio were the obvious choices for us. They're both 30 day studies. So they're fairly quick for the patient, in terms of duration of commitment. And they allowed us frankly, to get a lot of really valuable information that we are now using as we're planning for Sildenafil Cream and Ovaprene studies which are which are longer, which are longer than a month. So in terms of what you should expect, when we when we announced top line, it's really around that primary endpoint, which is test of cure in the active arm versus placebo. And we're looking for statistical separation between the two.

Of course, thank you that was really, really helpful and that was a great reminder for me. Good luck. Thanks.

Thank you so much. Yes, we are we're obviously, really excited about it. As always, the first Phase 3 is super exciting when you have a company.

And this concludes today's question-and-answer session. I will now turn the call back to Sabrina Martucci Johnson for any closing remarks.

Yes, thank you, we went a little longer than anticipated. So thank you with your patience, and sorry to have to start the Q&A a little earlier than we hoped. But thank you all for attending the conference call. We really appreciate you taking the time this afternoon. So I do want to take a couple minutes. Sorry, leave one leave a couple minutes just to summarize what we talked about. So as I mentioned, we're really looking forward to wrapping up 2020 with that Phase 3 top line data readout for DARE-BV1, and we're looking for the milestone events that we planned in 2021. And to get to move forward on those. So specifically, I just want to close the call with a reminder of what we're expecting in terms of those key milestones for our mid and late stage programs for the remainder of this year. And then like I said, going into 2021. So as we've been discussing, for DARE-BV1, we've got that Phase 3 top line data readout before the end of this year, assuming a positive outcome, the data from this study would lead to a series of regulatory activities to support that NDA submission in the first half of 2021, which is our target. And as we've been talking about, as well, that strategic partnership to support the commercialization in the United States. So that so for our arousal disorder program, as I mentioned, we intend to plan to start that Phase 2b study in the first quarter of 2021. We expect that should support a top line data readout by the end of 2021 for that Phase 2b. And then as I mentioned also Ovaprene activities to support the pivotal study start by year end 2021 are certainly something we're working on, and that we believe would continue to allow for a top line data readout by the end of 2022. As I touched on briefly, but want to remind be on the lookout for the DARE-HRT1 Phase 1 top line data readout in the first half of 2021 and then as I mentioned, we also expect to be making announcements in 2021 about the Phase 1 related activities for both the DAREFRT1 program under that NIH grant, as well as DARE-VBA1 in that breast cancer population. And as John noted, in addition to the clinical and regulatory milestones, and as we've been discussing in the Q&A, we will of course continue to focus on our on-going partnering activities and opportunities to monetize our pipeline of potential first in categories women's health products across the entire portfolio as we've been discussing, and across geographies, as John mentioned. So we look forward to keeping you updated on our progress. And we're grateful, certainly, obviously, to our team, but importantly to our shareholders, for their commitment and dedication to our mission. So thank you for taking the time today.

Thank you. Well ladies and gentlemen; this concludes today's conference call. Thank you for participating. You may now disconnect.