Dare Bioscience Inc.
11/13/2025 | Press release | Distributed by Public on 11/13/2025 15:04
Quarterly Report for Quarter Ending September 30, 2025 (Form 10-Q)
Management's Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of financial condition and results of operations should be read in conjunction with our unaudited condensed consolidated financial statements and notes thereto included in this Quarterly Report on Form 10-Q and our audited financial statements and notes thereto for the year ended December 31, 2024 included in our Annual Report on Form 10-K for the year ended December 31, 2024, or our 2024 10-K, filed with the Securities and Exchange Commission, or SEC, on March 31, 2025. Past operating results are not necessarily indicative of results that may occur in future periods.
The following discussion includes forward-looking statements. See "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. Risk Factors of our 2024 10-K, and in our subsequent filings with the SEC, including any discussed in Part II, Item 1A of this report under the heading "Risk Factors," which are incorporated herein by reference.
In this report, "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 presented 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.
Daré Bioscience®is a registered trademark of Daré Bioscience, Inc. and DARE to PLAY™, DARE to RESTORE™, and DARE to RECLAIM™ are trademarks of Daré Bioscience, Inc. with registration pending. Ovaprene®is a registered trademark licensed to Daré Bioscience, Inc. XACIATO® is a registered trademark of N.V. Organon. All other trademarks, service marks or trade names appearing in this report are the property of their respective owners. Use or display by us of other parties' trademarks, service marks or trade names is not intended to and does not imply a relationship with, or endorsements or sponsorship of, us by the trademark, service mark or trade name owners.
Business Overview
We are a purpose-driven health biotech company solely focused on closing the gap in women's health between promising science and real-world solutions. Every innovation we advance is based in advanced science and backed by rigorous, peer-reviewed research. From contraception to menopause, pelvic pain to fertility, vaginal health to infectious disease, we're closing critical gaps in care using science that serves her needs.
For decades, women have been told to "wait it out" or "live with it," while innovations that could improve their quality of life languish in the regulatory or funding pipeline.
With growing awareness around menopause, sexual health, and vaginal health, the conversation is shifting. However, access to real, evidence-based solutions continues to lag. Daréwas founded to change that. As a female-led health biotech company, we are accelerating the development of credible, science-based solutions that meet the high standards of clinical rigor - randomized, controlled trials; validated endpoints; peer-reviewed publications; and current Good Manufacturing Practice (cGMP) requirements.
We regularly hear from healthcare providers, researchers, and women themselves about the urgent need for expanded access to evidenced-based and convenient options. Our goal is to fulfill that need by bringing innovative products to market as soon as practicable, whether as FDA-approved therapies or through alternative regulatory pathways that enable earlier availability, such as Section 503B compounding. Through a pipeline of investigational products and near-commercial, alternative pathway products, we aim to close persistent gaps in care and deliver clinically meaningful advances that redefine standards in women's health.
In March 2025, we announced an expansion of our business model to include a dual-path approach to bringing new products to market. For select proprietary formulations, we are pursuing both traditional FDA approval and earlier market access via outsourcing facilities registered under Section 503B of the Federal Food, Drug, and Cosmetic Act (FDCA), which may compound and distribute certain drugs without patient-specific prescriptions. We believe this strategy allows us to respond to clinician and patient demand for timely access while continuing to generate the data necessary to seek FDA approval and support long-term value creation. In addition to prescription-based offerings - both FDA-approved products and compounded drugs- we intend to bring to market select consumer health products that do not require a physician's prescription, where appropriate based on product profile and market opportunity.
Beginning in the fourth quarter of 2025, we expect to initiate commercialization of DARE to PLAY Sildenafil Cream, which we also refer to as DARE to PLAY, a first-of-its-kind, topically applied formulation of sildenafil designed to improve female sexual arousal. The product will be made available in the United States through a Section 503B-registered outsourcing facility - a pathway that enables us to deliver clinically credible solutions directly to women through licensed prescribers and telehealth platforms. DARE to PLAY will address an area of women's health that has been historically underserved and stigmatized, and be a first-of-its-kind product in that, to our knowledge, there are no other topical cream sildenafil products manufactured in accordance with cGMP requirements and supported by clinical data demonstrating increased genital blood flow within 10-15 minutes of application and improvements in arousal sensations using clinically validated and FDA-reviewed endpoints. We believe the product's positioning - science-backed, evidence-driven, and female-focused - sets a new benchmark for credibility in the female sexual wellness category.
Following DARE to PLAY, we plan to expand our commercial portfolio with the introduction of our DARE to RESTORE product line, vaginal probiotic products designed to support vaginal microbiome balance. These offerings, which will not require a physician's prescription, align with our broader vision to integrate clinically credible, evidence-based products into women's health routines, including select consumer health products.
Our near-term commercial initiatives are designed not only to drive revenue but also to create a self-reinforcing ecosystem for growth. The commercial experience, brand awareness, and provider engagement generated through these products can position us to efficiently introduce additional pipeline candidates, including potential future FDA-approved products. By pursuing a balanced strategy that integrates short-term commercial execution with long-term R&D investment, we aim to reduce reliance on dilutive capital and build a financially sustainable model for innovation in women's health.
We are pursuing a capital-efficient path to commercialization that leverages targeted direct-to-consumer and healthcare professional marketing initiatives to build awareness of our women's health portfolio, including digital campaigns, webinars, social media education, and advocacy programs. We do not have sales, marketing or distribution infrastructure, and currently, we do not intend to build our own sales force or marketing and distribution infrastructure. However, reflecting the shift in our business model, we have been and will be allocating resources to support commercial execution activities, including third-party manufacturing, market preparation, and strategic partnerships.
Our diverse portfolio of proprietary programs, assembled through acquisitions, exclusive in-licenses, and collaborations, targets product categories we believe represent meaningful opportunities to improve women's health and quality of life. These include contraception, sexual health, pelvic pain, fertility, infectious disease, vaginal health, and menopause.
Our business is subject to a number of risks common to biopharmaceutical companies and the process of developing, obtaining regulatory approvals for, and commercializing prescription drug and drug/device products in the United States and in foreign jurisdictions, is inherently uncertain, and requires the expenditure of substantial financial resources without any guarantee of success. See our discussion of many of these risks under the section entitled "Risk Factors" in Item 1A of Part I of our 2024 10-K and Part II of this report.
Section 503B Compounding
As discussed above, we are working to bring to market select proprietary formulations via Section 503B-registered outsourcing facilities. In assessing which of our proprietary formulations are candidates for Section 503B compounding, in addition to the drug substance(s) being on the FDA's interim Category 1 list of bulk drug substances, we take into account whether we believe the formulation is ready for cGMP manufacturing at scale to meet potential demand and that the data from nonclinical and clinical studies of the formulation to date will be compelling to healthcare providers. We do not believe bringing those proprietary formulations to market via Section 503B compounding will negatively impact the regulatory process or commercial opportunity for an FDA-approved product utilizing the same proprietary formulation.
To execute our Section 503B compounding strategy, among other things, we have entered into and will need to maintain arrangements with one or more 503B-registered outsourcing facilities and other third parties with marketing, sales or distribution capabilities in the Section 503B market, and we intend to expand our collaborations, including by establishing relationships with telehealth platforms. We intend to focus our resources on provider-to-provider education about disease state and our proprietary formulations, leveraging online resources, including web-based ordering platforms and collaborations with telehealth platforms and other third parties. We do not plan to establish marketing, sales or distribution capabilities in order to bring our proprietary formulations to market under Section 503B.
When we use the term "Section 503B compounding" or "Section 503B," we refer to the production and supply of compounded drugs by Section 503B-registered outsourcing facilities without patient-specific prescriptions in accordance with Section 503B of the FDCA.
DARE to PLAY™ Sildenafil Cream
Our proprietary topical cream formulation of sildenafil will be our first product to market under Section 503B. The compounded drug will be branded as DARE to PLAY Sildenafil Cream. We expect to have DARE to PLAY Sildenafil Cream to become available by prescription in the U.S. in December 2025 and to begin recording revenue from sales thereof in the fourth quarter of 2025, however, we do not expect the amount of such revenue, if any, to be material during 2025. Because we are in the early stages of executing against our Section 503B compounding strategy and, as an organization, we have no experience in or infrastructure for commercializing products, the amount of potential revenue we may generate during 2026 remains uncertain. We anticipate needing to invest no more than $1.0 million to launch DARE to PLAY Sildenafil Cream in 2025, which has been and will be utilized to support a 503B-registered outsourcing facility with technology-transfer activities specific to DARE to PLAY Sildenafil Cream, activate an awareness campaign, and facilitate access to DARE to PLAY Sildenafil Cream as an option for providers and women.
DARE to RECLAIM™ estradiol progesterone intravaginal ring
We are also taking action to bring our estradiol progesterone intravaginal ring to market under Section 503B. The compounded product will be branded as DARE to RECLAIM estradiol progesterone intravaginal ring. We are targeting to have DARE to RECLAIM estradiol progesterone intravaginal ring available, and to begin recording revenue from sales thereof, in early 2027. Because we are in the early stages of executing against our Section 503B compounding strategy and, as an organization, we have no experience in or infrastructure for commercializing products, the amount of potential revenue we may generate during 2027 remains uncertain. There are no FDA-approved products that provide estradiol and progesterone together in a non-oral monthly form.
Consumer Health Products - DARE to RESTORE™
We are also working to bring to market a line of consumer health products branded as the DARE to RESTORE family of products, designed to support vaginal microbiome balance. We have sourced vaginal probiotics from Europe that we are targeting to make available in the U.S. in the first quarter of 2026.
When we use the term "consumer health products," we refer to consumer health products that can be obtained without a physician's prescription, unless the context otherwise requires.
Similar to our plans with respect to our Section 503B business strategy, we do not plan to establish marketing, sales or distribution capabilities in order to commercialize consumer health products, but rather we plan to pursue a capital-efficient path to market that leverages targeted direct-to-consumer and healthcare professional marketing initiatives to build awareness, including digital campaigns, webinars, social media education, and advocacy programs, as well as identify and enter into strategic agreements and collaborations with third parties with marketing, sales or distribution capabilities in the consumer health products market.
Product Candidates
Our product candidates are in various stages of development, from pre-clinical through a pivotal Phase 3 clinical study, and will require review and approval from the FDA, or a comparable foreign regulatory authority, prior to being marketed and sold. The most clinically advanced product candidates we are developing are: Ovaprene®, an investigational, hormone-free, monthly intravaginal contraceptive currently being evaluated in a pivotal Phase 3 clinical study, whose U.S. commercial rights are under a license agreement with Bayer HealthCare LLC, or Bayer; Sildenafil Cream, 3.6%, or Sildenafil Cream, an investigational cream formulation of sildenafil, the active ingredient in Viagra®, for topical administration for the treatment of female sexual arousal disorder, or FSAD; DARE-HRT1, an intravaginal ring designed to deliver combination menopausal hormone therapy, bio-identical 17β-estradiol and progesterone together, continuously over a 28-day period for the treatment of moderate to severe vasomotor symptoms, also known as hot flashes; DARE-VVA1, an investigational formulation of tamoxifen in a soft gelatin capsule for intravaginal administration as a hormone-free alternative to estrogen-based therapies for the treatment of moderate-to-severe dyspareunia, or pain during sexual intercourse; and DARE-HPV, an investigational, proprietary fixed-dose formulation of lopinavir and ritonavir in a soft gel vaginal insert for the treatment of genital human papillomavirus (HPV) infection in women as well as treatment of cervical intraepithelial neoplasia (also known as cervical dysplasia), and other HPV-related pathologies. See ITEM 1. BUSINESS in Part I of our 2024 10-K and "-Recent Events-Product Candidate Updates," below, for additional information regarding our product candidates.
XACIATO®
The first FDA-approved product to emerge from our portfolio is XACIATO® (clindamycin phosphate) vaginal gel 2%, or XACIATO (pronounced zah-she-AH-toe). We achieved FDA approval of XACIATO three years after acquiring rights to the program. XACIATO was approved by the FDA in December 2021 as a single-dose prescription medication for the treatment of bacterial vaginosis in females 12 years of age and older. In 2022, we licensed exclusive worldwide rights to develop, manufacture and commercialize XACIATO to an affiliate of Organon & Co., Organon International GmbH, or Organon. In January 2024, Organon announced that XACIATO was available nationwide in the U.S. In April 2024, we sold our rights to all royalty and potential milestone payments based on net sales of XACIATO under our agreement with Organon, net of our obligations to certain third parties, to XOMA (US) LLC, or XOMA, until XOMA receives a specified return on its investment, after which we will share equally in the royalty and milestone payments earned on net sales of XACIATO from Organon. See Note 3 "Strategic Agreements" and Note 8 "Royalty Purchase Agreements" to the condensed consolidated financial statements included in this report for information regarding our exclusive license agreement with Organon and our royalty purchase agreements with XOMA, respectively.
Recent Events
Product Candidate Updates
Ovaprene®
Enrollment is ongoing in our pivotal Phase 3 multi-center, single arm, non-comparative clinical study of Ovaprene to evaluate its effectiveness as a contraceptive along with its safety and acceptability (ClinicalTrials.gov ID: NCT06127199). We intend to maintain active recruitment at five study sites, supported by grant funding we received in November 2024. We currently anticipate enrollment will be completed in 2026, and plan to provide further updates regarding anticipated enrollment and study completion targets next year.
In July 2025, the study's data safety monitoring board (DSMB), an independent group of experts which evaluates the safety and integrity of the study, conducted a planned interim analysis and recommended the study continue without modification. No new safety or tolerability concerns were identified. At the time of the interim analysis, approximately 9% of the women treated in the study had experienced a pregnancy. Approximately 17% of participants discontinued the study due to vaginal odor, the most commonly reported product-related adverse event. No serious safety concerns were identified, and overall tolerability was favorable. As of the interim analysis, approximately 115 participants were ongoing or had completed the study. The target enrollment is approximately 250 participants completing approximately 12 months of use. The primary objective of the study is to assess the typical use pregnancy rate over 13 menstrual cycles, or the estimated Pearl Index for Ovaprene. Secondary objectives are to assess Ovaprene's 13-cycle use cumulative pregnancy rate, safety, acceptability, product fit/ease of use, and assessments of vaginal health.
The Phase 3 study is being conducted, in part, under our Cooperative Research and Development Agreement, or CRADA, with the U.S. Department of Health and Human Services (HHS), as represented by the Eunice Kennedy Shriver National Institute of Child Health and Human Development's (NICHD), part of the U.S. National Institutes of Health (NIH), and within the Contraceptive Clinical Trials Network (CCTN). In the first quarter of 2025, due to uncertainty regarding the future NICHD budget for the CRADA following U.S. federal policy changes and executive orders, we and NICHD agreed to pause recruitment of new participants at all 15 of the CCTN study sites then following enrolled participants to help ensure the CCTN sites would remain active for continued follow-up with those participants. We will not resume recruitment of participants at the CCTN sites. CCTN sites with ongoing subjects are expected to remain open to complete follow-up visits with those participants.
Sildenafil Cream, 3.6%
We seek to advance Sildenafil Cream into the first of two anticipated Phase 3 clinical studies to support a new drug application to the FDA for the indication of treatment of female sexual arousal disorder (FSAD) in premenopausal women utilizing the 505(b)(2) regulatory pathway.
In April 2025, we received additional input and information requests from the FDA regarding our patient reported outcomes (PRO) psychometrics for the Phase 3 study. The PRO psychometrics analysis has bearing on efficacy endpoint selection and the statistical analysis plan for the Phase 3 study. We submitted additional requested information to the FDA in the second quarter of 2025. Pending additional feedback from the FDA, the timing of which is uncertain, and alignment with the FDA on the protocol and statistical analysis plan, we cannot determine whether our prior estimate of capital required to conduct the Phase 3 studies is appropriate. As a result, we do not anticipate initiating the first Phase 3 study in 2025 and cannot at this time reasonably predict when the study will commence.
Other Development Programs
We continue to work on the development of our other clinical and preclinical-stage programs, including conducting activities necessary to enable submission of an investigational new drug, or IND, application to the FDA for a pivotal Phase 3 clinical study of DARE-HRT1, activities in preparation for a Phase 2 randomized, double-blinded, placebo-controlled, dose-finding clinical study of DARE-VVA1 based on our FDA-cleared IND relating to DARE-VVA1 and the anticipated study, and activities necessary to enable submission of an IND application to the FDA for a Phase 2 clinical study of DARE-HPV in the United States.
Recent Events
Receipt of Payments Under 2021 DARE-LARC1 Grant Agreement
In July and October 2025, we received payments of $6.0 million and $4.0 million, respectively, from the Gates Foundation, or the Foundation, under the agreement we entered into in June 2021 to support the development of DARE-LARC1, our preclinical-stage long-acting reversible personal contraceptive system, through nonclinical proof-of-principle studies and other IND-enabling work to allow for the submission of an IND application with the FDA. For a discussion of this agreement, see Note 10 "Grant Awards" to the accompanying condensed consolidated financial statements. Taking into account these payments, we have received a cumulative total of approximately $41.8 million of the up to approximately $49.0 million in potential funding under the grant agreement.
Nasdaq Listing
On July 24, 2025, we received a letter from the Nasdaq Office of General Counsel confirming that we had demonstrated compliance with the stockholders' equity requirement in Nasdaq Listing Rule 5550(b)(1), or the Stockholders' Equity Rule, and that we are therefore in compliance with the Nasdaq Capital Market's continued listing requirements. We are subject to a mandatory monitoring period of one-year from July 24, 2025, and if, within that one-year period, the Nasdaq Listing Qualifications Staff determines that we are out of compliance with the Stockholders' Equity Rule, the Staff will issue a delist determination letter and we will have an opportunity to request a new hearing with Nasdaq's Hearing Panel. Notwithstanding Nasdaq Listing Rule 5810(c)(2), we will not be permitted to provide a plan of compliance to the Staff with respect to such non-compliance, the Staff will not be permitted to grant additional time for us to regain compliance, and we will not be afforded a cure period pursuant to Nasdaq Listing Rule 5810(c)(3). See the risk factor titled, There is no assurance that we will continue satisfying the listing requirements of the Nasdaq Capital Market,in Item 1A of Part II of this report. Until we regained compliance with the Stockholders Equity Rule, we had not been in compliance with Nasdaq Listing Rule 5550(b) since August 2024.
Macroeconomic, Political, and Regulatory Uncertainty
Our business, financial condition, operating results, and our ability to raise additional capital may be adversely affected by evolving U.S. and global economic, political, and regulatory developments and conditions, such as inflation, trade disruptions and restrictive measures, including tariffs, high interest rates, slowed economic growth or recession, uncertainty with respect to the federal budget and debt ceiling, potential or prolonged U.S. government shutdowns,volatility in financial markets, changes in the regulatory landscape in the U.S., including due to significant reductions in funding and staffing of federal agencies and changes in leadership, and geopolitical factors. Unstable and unfavorable market and economic conditions may make it more difficult, more costly, and more dilutive to our stockholders to raise additional capital to fund our operations and execute against our business strategy, as well as adversely impact market demand for the women's health solutions we bring to market. Further, the service providers, manufacturers, vendors, and collaborators on which we rely may be adversely affected by the foregoing risks, which could directly impact our ability to achieve our operating goals within planned timelines and budgets.
There may be significant future effects on the women's health sector and the pharmaceutical and biopharmaceutical industries as a result of federal policy and regulatory changes under the current U.S. presidential administration, including in areas relating to regulatory framework and oversight, research and development funding, drug pricing reform, global trade policy and tariffs, and others. Recent initiatives have resulted in significant reductions in staffing levels at the FDA and NIH and could impact the agencies' ability to retain remaining key personnel and hire additional personnel, which may disrupt their ability to perform routine activities or function in the normal course. A prolonged federal government shutdown with additional agency staff furloughed or laid off could exacerbate these risks. With respect to the FDA, this may result in delays or limitations on our ability to obtain guidance from agency staff, slow review times for applications we submit to commence clinical studies and obtain requisite regulatory approvals in the future, and consequently, negatively impact the cost and timelines for developing and obtaining regulatory approval of our product candidates. Moreover, our business strategy has included seeking non-dilutive sources of funding and collaborations to support product development, and we have benefited significantly from federal government funding through grants and other agreements in support of several of our development programs, including Ovaprene and DARE-HPV. See Note 10 "Grant Awards" to the accompanying condensed consolidated financial statements and our 2024 10-K for additional information. In early 2025, the U.S. presidential administration took actions to freeze or terminate more than $1.0 billion in NIH grants and the future of the NIH's budget and research funding remains highly uncertain. Our business, financial condition and operating results may be significantly adversely affected if existing grants or other arrangements supporting our development programs are frozen or terminated or we are unable to secure additional grants or other federal government funding in the future. Given the high level of uncertainty regarding federal policy and enforcement and regulatory changes and that circumstances are rapidly evolving, including as a result of legal challenges to recent federal government actions, we are not able to reasonably predict the potential impact on our business at this time. We continue to monitor these evolving developments and conditions and their potential impacts of our business, financial condition, and results of operations, and will attempt to adjust our plans, as appropriate, to mitigate risks. For additional information, see the risk factors described in Part II, Item 1A, Risk Factors in this report and Part I, Item 1A. Risk Factors in our 2024 10-K.
Financial Overview
Revenue
Our revenue reflects payments earned under our license agreement with Organon to commercialize XACIATO. Pursuant to our traditional royalty purchase agreement with XOMA, from and after April 1, 2024, all of the royalties and potential milestone payments we would otherwise have the right to receive under our license agreement with Organon based on net sales of XACIATO will be paid to XOMA, net of payments made under our exclusive license agreement with third-party licensors TriLogic Pharma, LLC and MilanaPharm LLC and under our royalty interest financing agreement with United in Endeavour, LLC, or UiE. Accordingly, from and after April 1, 2024, any revenue we recognize under our license agreement with Organon based on net sales of XACIATO will be payable to UiE and recognized as non-cash royalty revenue. Generally, because the royalties are required to be paid more than 45 days after the end of each quarter other than with respect to the fourth quarter, we estimate the non-cash royalty revenue we will recognize for a particular quarter based on our analysis of historical experience and interim data provided by Organon including its publicly announced sales. Differences between actual and estimated royalty revenue will be adjusted for in the quarter in which the actual amount becomes known, which is generally expected to be the following quarter. For information regarding potential payments to upstream licensors, see Note 3 "Strategic Agreements" to the accompanying condensed consolidated financial statements. For information regarding our contractual obligations to XOMA and UiE, see Note 8 "Royalty Purchase Agreements" and Note 7 "Royalty Interest Financing," respectively, to the accompanying condensed consolidated financial statements.
Research and Development Expenses
Research and development, or R&D, represents a core operational focus. We are actively advancing multiple product candidates through preclinical and clinical development, supported in part by significant non-dilutive grant funding from governmental and non-governmental organizations.
Although our R&D activities remain substantial, as explained in more detail below, grant funding and other financial awards offset a significant portion of our R&D expenses. As a result, our reported operating expenses may appear to be weighted more heavily toward general and administrative, or G&A, expenses. However, this reflects the reduction to R&D expenses (contra R&D expense) as a result of grant funding and other financial awards, rather than a reduction in our commitment to or investment in R&D activities.
We expect our R&D expenses will continue to represent the majority of our operating expenses, on a pre-contra R&D expenses basis, for at least the next twelve months. R&D expenses consist primarily of:
•direct program costs, including:
◦expenses incurred under agreements with clinical research organizations (CROs), investigative sites and other third parties that assist in the conduct of our clinical trials and nonclinical studies and conduct other R&D and regulatory affairs activities on our behalf,
◦contract manufacturing expenses, primarily for the production of materials for use in our clinical trials and nonclinical studies;
◦expenses related to production of select proprietary formulations by 503B-registered outsourcing facilities prior to commercial launch of the product via Section 503B compounding;
◦transaction costs related to acquisitions of companies, technologies and related intellectual property, and other assets, and
◦milestone payments due to third parties under acquisition and in-licensing arrangements based on our product candidates' achievement of R&D and regulatory milestones specified therein, and
•indirect costs, including:
◦personnel-related costs, including salaries, bonuses, benefits, payroll taxes, and stock-based compensation expenses for employees engaged in R&D functions,
◦the costs of services performed by third parties, including consulting services,
◦facilities-related costs, including rent and maintenance costs, and insurance, depreciation, supplies, and miscellaneous expenses, and
◦costs related to travel, conference participation, service contracts, information technology, dues and subscriptions.
We recognize R&D expenses as they are incurred. External expenses are recognized based on our evaluation of the progress to completion of specific tasks using information provided to us by our service providers or our estimate of the amount of services that has been performed at each reporting date. Nonrefundable payments we make prior to the receipt of goods or services to be used in R&D are recognized as an expense as the related goods are delivered or services are performed. Milestone payments to third parties under acquisition, license, and option agreements are recognized as they are incurred or when we deem their incurrence to be probable.
We generally track direct R&D costs on a specific basis and present direct costs for our key development programs on a program-by-program basis. We present direct costs for all other programs on a consolidated basis generally by stage of development. Specifically, we present consolidated direct costs for (a) such programs that are in (i) advanced clinical development (Phase 2-ready to Phase 3), (ii) Phase 1 clinical development or that we believe are Phase 1-ready, and (iii) preclinical stage, and (b) other development programs. We do not track indirect costs on a program-by-program basis because those costs generally are deployed across multiple development programs.
Until the first commercial sale of XACIATO, we recognized contract manufacturing expenses associated with producing commercial supplies of XACIATO and costs of regulatory affairs activities related to XACIATO as R&D expenses. Following the first commercial sale of XACIATO, and during the interim period when we were the NDA holder of XACIATO and provided commercial supplies of XACIATO to Organon, those expenses were recognized as general and administrative expenses.
We recognize the Australian Research and Development Tax Incentive Program, or the Tax Incentive, as a reduction of R&D expenses (contra R&D expense). The amounts are determined based on our eligible R&D expenditures and are non-refundable, provided that in order to qualify for the Tax Incentive the filing entity must have revenue of less than AUD $20.0 million during the tax year for which a reimbursement claim is made and cannot be controlled by an income tax exempt entity. The Tax Incentive is recognized when there is reasonable assurance that the Tax Incentive will be received, the relevant expenditure has been incurred, and the amount can be reliably measured or reliably estimated.
We have received, and may in the future receive, funding through grants and other financial awards from governmental entities, private foundations and other organizations that support activities related to the development of certain of our product candidates. As we incur eligible expenses under those grants or awards, we recognize grant funding in the statements of operations as a reduction to R&D expenses (contra R&D expense). For more information, see Note 2 "Basis of Presentation and Summary of Significant Accounting Policies-Grant Funding" to our consolidated financial statements contained in our 2024 10-K and Note 10 "Grant Awards" to the accompanying condensed consolidated financial statements. We recognized contra R&D expense of approximately $5.0 million and $12.6 million for the three and nine months ended September 30, 2025, respectively, and $1.5 million and $6.6 million for the three and nine months ended September 30, 2024, respectively.
At any one time, we are working on multiple programs at various stages of development. We anticipate that we will make determinations as to which product candidates to pursue and how much funding to direct to each development program on an ongoing basis based on our cash position and capital resources and in response to the results of ongoing and future clinical trials and preclinical studies, regulatory developments, and our ongoing assessments as to the commercial potential of each product candidate.
Investment in the development of and seeking regulatory approval for our clinical-stage and Phase 1-ready product candidates and the development of any other potential product candidates we may advance into and through clinical trials in the pursuit of regulatory approvals, will increase our R&D expenses. Activities associated with the foregoing 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 R&D expenses due to, among other factors, 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 or cost-effective basis, or at all. Our future R&D expenses and the probability of success of our product candidates may be affected by numerous factors, including the number, scope, rate of progress, expense, and results of our clinical trials and nonclinical R&D activities, the countries in which our clinical trials are conducted, the phase of clinical development of our product candidates, the cost and timing of manufacturing our product candidates, our ability to scale up manufacturing as needed to support later-stage clinical trials and, if approved, commercialization of our product candidates, the extent of changes in government regulation and regulatory guidance relating to development and approval of our product candidates, the timing, receipt, and terms of any clearances to conduct clinical trials and any marketing approvals from applicable regulatory authorities, competition and commercial viability of our product candidates, the extent to which we establish and maintain intellectual property rights, the extent to which we establish and maintain license, collaboration, or other arrangements. As a result, we cannot accurately determine the duration and completion costs of development projects or if, when and to what extent we will generate revenue from any products we develop.
License Fee Expenses
License fee expenses consist of up-front license fees and annual license fees due under our in-licensing arrangements.
Royalty Expenses
Royalty expenses consist of product sales-based payments we owe to upstream licensors. For information regarding potential payments to upstream licensors, see Note 3 "Strategic Agreements" to the accompanying condensed consolidated financial statements.
General and Administrative Expenses
General and administrative expenses consist of personnel costs, facility expenses, expenses for outside professional services, including legal, audit and accounting services, commercial-readiness expenses, including for Section 503B compounded drug products and consumer health products, and milestone expenses. Personnel costs consist of salaries, benefits and stock-based compensation. Facility expenses consist of rent and other related costs. Commercial-readiness expenses consist of consultant and advisor costs. Milestone expenses consist of amounts that become due to third parties under our in-license or other agreements under which we acquired rights to technology or other intellectual property we use in a product based on the product's achievement of commercial milestones specified therein.
Critical Accounting Policies and Estimates
Management's discussion and analysis of financial condition and results of operations is based on our interim condensed consolidated financial statements, that we prepared in accordance with accounting principles generally accepted in the United States, or GAAP. 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. For a description of critical accounting policies that affect our significant judgments and estimates used in the preparation of our accompanying condensed consolidated financial statements, refer to Item 7 in Management's Discussion and Analysis of Financial Condition and Results of Operations in our 2024 10-K. Since December 31, 2024, there have been no material changes to our critical accounting policies or the methodologies or assumptions we apply under them.
Results of Operations
Comparison of Three Months Ended September 30, 2025 and 2024 (Unaudited)
The following table summarizes our condensed consolidated results of operations for the periods indicated, together with the changes in those items in terms of dollars and percentage:
| Three Months Ended September 30, | Change | ||||||||||||||||||||||
| 2025 | 2024 | $ | % | ||||||||||||||||||||
| Revenues: | |||||||||||||||||||||||
| Royalty revenue | $ | 2,262 | $ | 41,691 | $ | (39,429) | (95) | % | |||||||||||||||
| Total revenue | 2,262 | 41,691 | (39,429) | (95) | % | ||||||||||||||||||
| Operating expenses: | |||||||||||||||||||||||
| General and administrative | 2,499,242 | 2,041,268 | 457,974 | 22 | % | ||||||||||||||||||
| Research and development | 1,175,168 | 2,681,772 | (1,506,604) | (56) | % | ||||||||||||||||||
| Total operating expenses | 3,674,410 | 4,723,040 | (1,048,630) | (22) | % | ||||||||||||||||||
| Loss from operations | (3,672,148) | (4,681,349) | 1,009,201 | (22) | % | ||||||||||||||||||
|
Other income (expense)
|
109,382 | (21,152) | 130,534 | (617) | % | ||||||||||||||||||
|
Net loss
|
$ | (3,562,766) | $ | (4,702,501) | $ | 1,139,735 | (24) | % | |||||||||||||||
| Other comprehensive loss | |||||||||||||||||||||||
| Foreign currency translation adjustments | 6,860 | 22,935 | (16,075) | (70) | % | ||||||||||||||||||
|
Comprehensive loss
|
$ | (3,555,906) | $ | (4,679,566) | $ | 1,123,660 | (24) | % | |||||||||||||||
Revenues
Revenues for the three months ended September 30, 2025 and September 30, 2024 are non-cash royalty revenues related to our license agreement with Organon to commercialize XACIATO. From and after April 1, 2024, any revenue we recognize under such license agreement will be recognized as non-cash royalty revenue. See "-Financial Overview-Revenue," above for information.
General and administrative expenses
The increase of approximately $0.5 million in G&A expenses for the three months ended September 30, 2025 as compared to the three months ended September 30, 2024 was primarily attributable to increases in professional services and commercial-readiness expenses driven by execution against our expanded business strategy.
Research and development expenses
The following table summarizes our R&D expenses for the periods indicated, together with the changes in those items in terms of dollars and percentage:
|
Three Months Ended September 30, |
Change | |||||||||||||||||||||||||
| 2025 | 2024 | $ | % | |||||||||||||||||||||||
| Direct program costs: | ||||||||||||||||||||||||||
|
Ovaprene (1)
|
$ | 1,458,054 | $ | 1,940,537 | $ | (482,483) | (25) | % | ||||||||||||||||||
|
Sildenafil Cream (2)
|
417,543 | (60,905) | 478,448 | (786) | % | |||||||||||||||||||||
|
Other advanced clinical stage programs (1)
|
699,866 | 164,351 | 535,515 | 326 | % | |||||||||||||||||||||
|
Phase 1 and Phase 1-ready clinical stage programs (1)
|
269,641 | 91,847 | 177,794 | 194 | % | |||||||||||||||||||||
|
Preclinical stage programs (1)
|
2,111,045 | 554,677 | 1,556,368 | 281 | % | |||||||||||||||||||||
| Other development programs | - | 1,206 | (1,206) | (100) | % | |||||||||||||||||||||
|
Contra R&D expenses (3)
|
(4,314,481) | (1,152,437) | (3,162,044) | 274 | % | |||||||||||||||||||||
| Total direct program costs | 641,668 | 1,539,276 | (897,608) | (58) | % | |||||||||||||||||||||
| Indirect costs: | ||||||||||||||||||||||||||
|
Personnel-related (including stock-based compensation)
|
1,168,085 | 1,429,180 | (261,095) | (18) | % | |||||||||||||||||||||
| Outside services (including consulting) | 10,682 | (4,022) | 14,704 | (366) | % | |||||||||||||||||||||
| Facilities-related (including depreciation) | 18,677 | 16,711 | 1,966 | 12 | % | |||||||||||||||||||||
| Other indirect R&D costs | 9,489 | 45,547 | (36,058) | (79) | % | |||||||||||||||||||||
| Contra R&D expenses | (673,433) | (344,920) | (328,513) | 95 | % | |||||||||||||||||||||
| Total indirect R&D costs | 533,500 | 1,142,496 | (608,996) | (53) | % | |||||||||||||||||||||
| Total R&D expenses | $ | 1,175,168 | $ | 2,681,772 | $ | (1,506,604) | (56) | % | ||||||||||||||||||
|
1.The applicable program(s) receive grant funding and/or the Tax Incentive. The amount of R&D expense for the period indicated is shown on a gross basis (i.e., without deducting the amount of contra R&D expense for the applicable program(s). See footnote (3) below.
2.For the three months ended September 30, 2025, amount also includes expenses for DARE to PLAY Sildenafil Cream.
3.These contra R&D expenses were recognized as follows for the three months ended September 30, 2025 and 2024: (a) Ovaprene, $1.0 million, and $0, respectively; (b) other advanced clinical stage programs, $0.7 million and $0 respectively, (c) Phase 1 and Phase 1-ready clinical stage programs, $0.1 million and $0.1 million, respectively; and (d) preclinical stage programs, $2.6 million and $1.0 million, respectively.
|
||||||||||||||||||||||||||
The decrease of approximately $1.5 million in R&D expenses for the three months ended September 30, 2025 as compared to the three months ended September 30, 2024 was primarily attributable to (i) an increase in contra R&D expenses in both direct program costs and indirect costs, (ii) a decrease in manufacturing costs related to Ovaprene, and (iii) a decrease in personnel costs, partially offset by increases in costs related to development activities for (A) our preclinical stage programs - primarily attributable to our DARE-LARC1 program, (B) our other advanced clinical stage programs - primarily attributable to our DARE-HPV program, (C) Sildenafil Cream and DARE to PLAY Sildenafil Cream, and (D) our Phase 1 and Phase 1-ready clinical stage programs - primarily attributable to our DARE-PTB1 program. Contra R&D expenses for the three months ended September 30, 2025 primarily offset direct program costs for DARE-LARC1, Ovaprene and DARE-HPV. Contra R&D expenses for the three months ended September 30, 2024 primarily offset direct program costs for DARE-LARC1.
Other income (expense)
The increase of $0.1 million in other income (expense) for the three months ended September 30, 2025 as compared to the three months ended September 30, 2024 was primarily due to an increase on interest earned on cash balances in the current period.
Comparison of Nine Months Ended September 30, 2025 and 2024 (Unaudited)
The following table summarizes our condensed consolidated results of operations for the periods indicated, together with the changes in those items in terms of dollars and percentage:
| Nine Months Ended September 30, | Change | ||||||||||||||||||||||
| 2025 | 2024 | $ | % | ||||||||||||||||||||
| Revenues: | |||||||||||||||||||||||
| Royalty revenue | $ | 6,517 | $ | 73,431 | $ | (66,914) | (91) | % | |||||||||||||||
| Total revenue | 6,517 | 73,431 | (66,914) | (91) | % | ||||||||||||||||||
| Operating expenses: | |||||||||||||||||||||||
| General and administrative | 7,186,272 | 7,159,979 | 26,293 | - | % | ||||||||||||||||||
| Research and development | 4,901,311 | 10,969,066 | (6,067,755) | (55) | % | ||||||||||||||||||
|
Royalty expense
|
- | 7,674 | (7,674) | (100) | % | ||||||||||||||||||
| Total operating expenses | 12,087,583 | 18,136,719 | (6,049,136) | (33) | % | ||||||||||||||||||
| Loss from operations | (12,081,066) | (18,063,288) | 5,982,222 | (33) | % | ||||||||||||||||||
| Other income (expense) | |||||||||||||||||||||||
| Sale of royalty and milestone rights, net | - | 20,379,376 | (20,379,376) | (100) | % | ||||||||||||||||||
| Other income (expense), net | 123,510 | (863,289) | 986,799 | (114) | % | ||||||||||||||||||
|
Net (loss) income
|
$ | (11,957,556) | $ | 1,452,799 | $ | (13,410,355) | (923) | % | |||||||||||||||
|
Other comprehensive (loss) income:
|
|||||||||||||||||||||||
| Foreign currency translation adjustments | 32,843 | (1,729) | 34,572 | (2000) | % | ||||||||||||||||||
|
Comprehensive (loss) income
|
$ | (11,924,713) | $ | 1,451,070 | $ | (13,375,783) | (922) | % | |||||||||||||||
Revenues
Revenues for the nine months ended September 30, 2025 and September 30, 2024 are related to our license agreement with Organon to commercialize XACIATO. From and after April 1, 2024, any revenue we recognize under such license agreement will be recognized as non-cash royalty revenue. See "-Financial Overview-Revenue," above for information.
General and administrative expenses
For each of the nine months ended September 30, 2025 and 2024, G&A expenses were approximately $7.2 million. The current period's G&A expenses include decreases in stock-based compensation expense and personnel costs, offset by increases in professional services, general corporate overhead, and commercial-readiness expenses driven by execution against our expanded business strategy.
Research and development expenses
The following table summarizes our R&D expenses for the periods indicated, together with the changes in those items in terms of dollars and percentage:
|
Nine Months Ended September 30, |
Change | |||||||||||||||||||||||||
| 2025 | 2024 | $ | % | |||||||||||||||||||||||
| Direct program costs: | ||||||||||||||||||||||||||
|
Ovaprene (1)
|
$ | 4,270,154 | $ | 7,103,894 | $ | (2,833,740) | (40) | % | ||||||||||||||||||
|
Sildenafil Cream (2)
|
678,813 | 1,105,605 | (426,792) | (39) | % | |||||||||||||||||||||
|
Other advanced clinical stage programs (1)
|
2,165,918 | 1,009,655 | 1,156,263 | 115 | % | |||||||||||||||||||||
|
Phase 1 and Phase 1-ready clinical stage programs (1)
|
1,394,982 | 526,291 | 868,691 | 165 | % | |||||||||||||||||||||
|
Preclinical stage programs (1)
|
4,878,104 | 3,232,899 | 1,645,205 | 51 | % | |||||||||||||||||||||
| Other development programs | - | 24,132 | (24,132) | (100) | % | |||||||||||||||||||||
|
Contra R&D expenses (3)
|
(10,713,647) | (5,799,795) | (4,913,852) | 85 | % | |||||||||||||||||||||
| Total direct program costs | 2,674,324 | 7,202,681 | (4,528,357) | (63) | % | |||||||||||||||||||||
| Indirect costs: | ||||||||||||||||||||||||||
|
Personnel-related (including stock-based compensation)
|
3,869,767 | 4,394,329 | (524,562) | (12) | % | |||||||||||||||||||||
| Outside services (including consulting) | 21,130 | 543 | 20,587 | 3791 | % | |||||||||||||||||||||
| Facilities-related (including depreciation) | 55,391 | 60,344 | (4,953) | (8) | % | |||||||||||||||||||||
| Other indirect R&D costs | 161,523 | 157,526 | 3,997 | 3 | % | |||||||||||||||||||||
| Contra R&D expenses | (1,880,824) | (846,357) | (1,034,467) | 122 | % | |||||||||||||||||||||
| Total indirect R&D costs | 2,226,987 | 3,766,385 | (1,539,398) | (41) | % | |||||||||||||||||||||
| Total R&D expenses | $ | 4,901,311 | $ | 10,969,066 | $ | (6,067,755) | (55) | % | ||||||||||||||||||
|
1.The applicable program(s) receive grant funding and/or the Tax Incentive. The amount of R&D expense for the period indicated is shown on a gross basis (i.e., without deducting the amount of contra R&D expense for the applicable program(s). See footnote (3) below.
2.For the nine months ended September 30, 2025, amount also includes expenses for DARE to PLAY Sildenafil Cream.
3.These contra R&D expenses were recognized as follows for the nine months ended September 30, 2025 and 2024: (a) Ovaprene, $1.9 million, and $0, respectively; (b) other advanced clinical stage programs, $2.2 million and $0 respectively, (c) Phase 1 and Phase 1-ready clinical stage programs, $0.3 million and $0.7 million, respectively; and (d) preclinical stage programs, $6.4 million and $5.1 million, respectively.
|
||||||||||||||||||||||||||
The decrease of approximately $6.1 million in R&D expenses for the nine months ended September 30, 2025 as compared to the nine months ended September 30, 2024 was primarily attributable to (i) an increase in contra R&D expenses, (ii) a decrease in manufacturing costs related to Ovaprene, (iii) a decrease in costs related to development activities for Sildenafil Cream, (iv) a decrease in costs related to development activities for DARE-HRT1, and (v) a decrease in personnel costs, partially offset by increases in costs related to development activities for (A) our other advanced clinical stage programs -primarily attributable to our DARE-HPV program, (B) our pre-clinical and other development programs - primarily attributable to DARE-LARC1, and (C) our Phase 1 and Phase 1-ready clinical stage programs -primarily attributable to our DARE-PTB1 program. Contra R&D expenses for the nine months ended September 30, 2025 and 2024 primarily offset direct program costs for DARE-LARC1.
Royalty expenses
Royalty expenses for the nine months ended September 30, 2024 related to our license agreement with MilanaPharm and our royalty interest financing agreement with UiE.
Other income (expense)
Sale of royalty and milestone rights, net
The decrease of $20.4 million in other income for the nine months ended September 30, 2025 as compared to the nine months ended September 30, 2024 was due to the proceeds we received in April 2024 under the Royalty Purchase Agreements we entered into with XOMA, $22.0 million of which was recorded as income, net of approximately $1.6 million in transaction costs. See Note 8 "Royalty Purchase Agreements" to the accompanying condensed consolidated financial statements.
Other income (expense), net
The increase of $1.0 million in other income for the nine months ended September 30, 2025 as compared to the nine months ended September 30, 2024 was primarily due to a loss on the disposal of a fixed asset of $0.6 million recorded in the prior year period, the receipt in the current year of approximately $0.3 million of employee retention credits for applications filed during 2023, and an increase on interest earned on cash balances in the current period.
Liquidity and Capital Resources
Plan of Operations and Future Funding Requirements
In the near term, we plan to focus primarily on: (a) our ongoing Ovaprene Phase 3 study; (b) executing against our Section 503B compounding and consumer health products business strategies, with a focus on DARE to PLAY Sildenafil Cream, DARE to RECLAIM estradiol progesterone intravaginal ring and DARE to RESTORE vaginal probiotics; and (c) advancing the development of product candidates for which the costs are being supported by non-dilutive grant or other award funding, in particular DARE-LARC1 and DARE-HPV. We will also continue engagement with the FDA to align on the Phase 3 program for Sildenafil Cream and will continue to work on the development of our other clinical and preclinical-stage programs. For additional information, see "Business Overview" and "Recent Events" above and Note 10 "Grant Awards" to the accompanying condensed consolidated financial statements.
At September 30, 2025, our cash and cash equivalents were approximately $23.1 million, and our working capital was approximately $3.8 million. A majority of our cash and cash equivalents at September 30, 2025 represented funds received under grant agreements that may be applied solely toward direct costs for the funded project under those grant agreements, other than an approximately 5% to 22% indirect cost allowance, and as of September 30, 2025, our deferred grant funding liability was approximately $14.6 million, substantially all of which consisted of funds intended to support the DARE-LARC1 program, the Ovaprene Phase 3 clinical study, and the DARE-HPV program. For more information about these grant agreements, see "-Contractual Obligations and Other Commitments-Grant Agreements" below, Note 2 "Basis of Presentation and Summary of Significant Accounting Policies-Grant Funding" to our consolidated financial statements in our 2024 10-K, and Note 10 "Grant Awards-Other Non-Dilutive Grant Funding" to the accompanying condensed consolidated financial statements.
We will require additional capital to advance the development programs in our pipeline that are not currently being supported by non-dilutive grant or other award funding, to enable further investment across our entire portfolio of product candidates, and to support our long-term operating plans. We will continue to evaluate and may pursue various capital raising options, including sales of equity, debt financings, government or other grant funding, collaborations, structured financings, and commercial collaborations or other strategic transactions. Our ability to obtain additional capital, and the timing and terms thereof, depend on various factors, many aspects of which are not entirely within our control, and there can be no assurance that capital will be available when needed or, if available, on terms favorable to us and our stockholders. Raising additional capital may cause substantial dilution to our stockholders, restrict our operations or require us to relinquish rights in our technologies or product candidates and their future revenue streams. If we cannot raise capital when needed, on favorable terms or at all, we will need to reevaluate our planned operations and may need to delay, scale back or eliminate some or all of our product candidate programs and/or reduce expenses.
At September 30, 2025, our accumulated deficit was approximately $187.2 million, and we had a net loss of approximately $12.0 million and negative cash flows from operations of approximately $11.3 million for the nine months ended September 30, 2025. Because we are in the early stages of executing against our Section 503B compounding and consumer health products business strategies and, as an organization, we have no experience in or infrastructure for commercializing products, both the timing and amount of potential revenue we may generate remain uncertain. As a result, we may continue to incur significant losses from operations and negative cash flows from operations for the next several years, and may never generate sufficient revenues to finance our operations or achieve profitability. Based on our current analysis of the conditions described above, there is substantial doubt about our ability to continue as a going concern within the 12-month period from the issuance date of the accompanying condensed consolidated financial statements. The accompanying condensed consolidated financial statements were prepared on a going concern basis, which assumes that we will realize our assets and satisfy our liabilities in the normal course of business. The accompanying condensed consolidated 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.
We expect our operating expenses will increase substantially in the future as we continue to develop and seek FDA approval for our product candidates and expand our capabilities to support our 503B compounding and consumer health business strategies. Our future capital requirements are difficult to predict because they will depend on many factors that are highly variable and difficult to predict, including, but not limited to, those discussed in the risk factors in Part I, Item 1A of our 2024 10-K under "Risks Related to Our Financial Position and Capital Needs."
Capital Resources
Historically, the cash used to fund our operations has come from a variety of sources and predominantly from sales of shares of our common stock. We have also received a significant amount of cash through non-dilutive grants, strategic collaborations and royalty monetization transactions.
We have a sales agreement with Stifel, Nicolaus & Company, Incorporated, or Stifel, to sell shares of our common stock from time to time through an ATM offering under which Stifel acts as our agent. We sold 4,329,116 shares of our common stock under this agreement during the nine months ended September 30, 2025 and received net proceeds of approximately $17.6 million. Shares of our common stock sold under the sales agreement were offered and sold under a shelf registration statement on Form S-3. Because the market value of our outstanding shares of common stock held by non-affiliates, or our public float, is less than $75.0 million, our use of a shelf registration statement is currently limited by what is known as the SEC's "baby shelf rule" to one-third of our public float in any 12-month period. Because of the "baby shelf rule" and based on sales of shares of our common stock under our ATM sales agreement, we do not expect to sell any additional shares under our ATM sales agreement during the approximately 12-month period from July 2025, unless and until our public float exceeds approximately $54.0 million, as determined in accordance with SEC rules.
We have a purchase agreement with Lincoln Park under which, subject to the conditions thereof, we have the right, but not the obligation, to sell to Lincoln Park, and Lincoln Park is obligated to purchase, up to $15.0 million in shares of our common stock. Such sales of our common stock to Lincoln Park, if any, will be subject to certain limitations, and may occur from time to time, at our sole discretion, over the 24-month period commencing on November 27, 2024. See Note 5 "Stockholders' Equity-Equity Line" to the accompanying condensed consolidated financial statements for additional information. We sold 900,000 shares of our common stock under this purchase agreement during the nine months ended September 30, 2025 and received net proceeds of approximately $2.0 million. We sold 360,000 shares of our common stock under this agreement subsequent to September 30, 2025 and received net proceeds of approximately $0.7 million.
As previously announced and discussed above, we are pursuing new business strategies to bring our proprietary formulations and consumer health products to market. We expect to begin recording revenue from sales thereof in the fourth quarter of 2025, however, we do not expect the amount of such revenue, if any, to be material during 2025, and because we are in the early stages of executing against these expanded business strategies and, as an organization, we have no experience in or infrastructure for commercializing products, the amount of potential revenue we may generate during 2026 remains uncertain.
Our royalty purchase agreements with XOMA may be a source of future capital; however, whether we receive any future payments from XOMA will depend on whether XOMA first receives total payments under those agreements equal to an amount that exceeds $88.0 million, which may not occur and will depend, in part, on the commercial success of XACIATO, which is outside of our control.
Our license agreement with Bayer regarding the further development and commercialization of Ovaprene in the U.S., if approved, may be a future source of capital; however, whether we receive any future payments from Bayer will depend on whether Bayer, in its sole discretion, exercises its right to make the license effective by paying us $20.0 million after we complete the ongoing pivotal Phase 3 clinical study of Ovaprene. For an update regarding the Phase 3 study of Ovaprene, see above under "-Recent Events-Product Candidate Updates-Ovaprene." In addition, a portion of that potential $20.0 million payment from Bayer would be payable to XOMA as discussed under "-Contractual Obligations and Other Commitments-Royalty Purchase Agreements with XOMA," below.
Cash Flows
The following table shows a summary of our cash flows for the periods indicated:
| Nine months ended September 30, | |||||||||||
| 2025 | 2024 | ||||||||||
| Net cash (used in) provided by operating activities | $ | (11,330,134) | $ | 167,637 | |||||||
| Net cash used in investing activities | (178,637) | (10,197) | |||||||||
| Net cash provided by financing activities | 18,853,015 | 565,842 | |||||||||
| Effect of exchange rate changes on cash and cash equivalents | 32,843 | (1,729) | |||||||||
|
Net increase in cash and cash equivalents
|
$ | 7,377,087 | $ | 721,553 | |||||||
Net cash (used in) provided by operating activities
Net cash used in operating activities of $11.3 million for the nine months ended September 30, 2025 was primarily due to our net loss of $12.0 million and changes in operating assets and liabilities, offset by non-cash items such as depreciation and amortization expense, stock-based compensation expense, and our operating lease right-of-use asset. Net cash used by changes in operating assets and liabilities resulted primarily from decreases of $2.0 million in our deferred grant funding liability, $1.0 million in accrued expenses, and $0.4 million in operating lease liability, offset by increases of $0.6 million in prepaid expenses, $0.4 million in accounts payable, and $0.4 million in interest payable.
Net cash provided by operating activities of $0.2 million for the nine months ended September 30, 2024 was primarily due to our net income of $1.5 million and non-cash items such as stock-based compensation expense and loss on disposal of property and equipment, offset by changes in operating assets and liabilities. Our net income for the nine months ended September 30, 2024 was positively impacted by the approximately $20.4 million of net proceeds we received from the sale in April 2024 of our rights to future royalty and milestone payments and revenue to XOMA. See Note 8 "Royalty Purchase Agreements" to the accompanying condensed consolidated financial statements. Net cash used by changes in operating assets and liabilities resulted primarily from decreases of $4.0 million in our deferred grant funding liability, $2.3 million in accounts payable, $1.2 million in accrued expenses, and $0.4 million operating lease liability, offset by increases of $2.9 million in prepaid expenses, $0.4 million in other receivables, and $0.4 million in interest payable.
Net cash used in investing activities
Net cash used in investing activities for the nine months ended September 30, 2025 and 2024 related to purchases of property and equipment.
Net cash provided by financing activities
Net cash provided by financing activities for the nine months ended September 30, 2025 resulted primarily from (i) approximately $17.6 million in net proceeds from sales of our common stock under our ATM sales agreement, (ii) approximately $2.0 million of net proceeds from sales of our common stock under our purchase agreement with Lincoln Park, and (iii) approximately $0.5 million in proceeds from the financing of certain director and officer and other liability insurance premiums, partially offset by (A) approximately $0.9 million in payments on our facility financing lease and (B) approximately $0.4 million in payments on the insurance premium financing note payable.
Net cash provided by financing activities for the nine months ended September 30, 2024 resulted primarily from (i) approximately $0.6 million in proceeds from the financing of certain director and officer and other liability insurance premiums and (ii) approximately $0.4 million in net proceeds from the sales of our common stock under our ATM sales agreement, partially offset by approximately $0.4 million in payments on the insurance premium financing note payable.
Contractual Obligations and Other Commitments
License and Royalty Agreements
We have assembled our pipeline primarily through acquisitions, in-license agreements, and other collaborations. We agreed to make royalty and milestone payments, and in some cases annual license fee payments, under the license and development agreements under which we acquired rights to intellectual property from third parties. For information about these obligations see Note 3 "Strategic Agreements-Strategic Agreements for Pipeline Development" to the accompanying condensed consolidated financial statements. The amount and timing of most of these payments are difficult to predict because the timing of milestone payments for pre-commercial programs generally depends on the progress of and success in development of a particular program, which is subject to many risks and uncertainties as discussed elsewhere in this report and difficult to predict, and the timing and amount of royalty and milestone payments related to commercial products generally depends on their commercial success, which may, as it is with XACIATO, be out of our control.
During the remainder of 2025, based on our current expectations regarding the progress of development of our product candidates and sales of XACIATO and DARE to PLAY Sildenafil Cream, we expect such payments to upstream licensors to be immaterial. With respect to our license agreement relating to XACIATO, royalties payable by us to upstream licensors will be funded by royalty payments made by our licensee, Organon. For further discussion of these potential payments, see Note 3 "Strategic Agreements-Strategic Agreements for Pipeline Development" to the accompanying condensed consolidated financial statements. With respect to DARE to PLAY Sildenafil Cream, for at least the first twelve months following its market introduction, we anticipate a mid single-digit royalty payment obligation to our upstream licensor on annual net sales.
Grant Agreements
For information regarding our grant agreements with the Foundation, see "-Deferred Grant Funding," above, Note 2 "Basis of Presentation and Summary of Significant Accounting Policies-Grant Funding" to our consolidated financial statements in our 2024 10-K, and Note 10 "Grant Awards-Other Non-Dilutive Grant Funding" to the accompanying condensed consolidated financial statements.
Royalty Purchase Agreements with XOMA
In April 2024, we entered into a traditional royalty purchase agreement and a synthetic royalty purchase agreement with XOMA (which, together, we refer to as the Royalty Purchase Agreements) pursuant to which we sold our right, title and interest in the following to XOMA: (a) all of the royalties and potential milestone payments we would otherwise have the right to receive from and after April 1, 2024 under our exclusive license agreement with Organon based on net sales of XACIATO, net of our obligations to upstream licensors and UiE (such net amount we refer to as the Purchased Receivables); (b) a portion of a potential future $20.0 million payment from Bayer under our license agreement relating to Ovaprene and a portion of future net sales of Ovaprene; and (c) a portion of future net sales of Sildenafil Cream and DARE to PLAY Sildenafil Cream (such amounts described in the foregoing clauses (b) and (c) we collectively refer to as the Revenue Participation Right). We received $22.0 million from XOMA in connection with entering into the Royalty Purchase Agreements. If XOMA receives total payments equal to an amount that exceeds $88.0 million, XOMA will pay $11.0 million to us for each successive $22.0 million XOMA receives under the Royalty Purchase Agreements.
Pursuant to the traditional royalty purchase agreement, XOMA, at its sole cost and discretion, may repay in full and retire all of our payment obligations to UiE under our royalty interest financing agreement with UiE. If XOMA does so, no further amounts in respect of that agreement will be deducted from the net royalties and net milestone payments that XOMA is entitled to receive. We cannot elect to receive any additional funding from UiE under our royalty interest financing agreement with UiE without XOMA's prior written consent.
In connection with the synthetic royalty purchase agreement, we granted to XOMA a security interest in certain product assets related to the Revenue Participation Right. The Royalty Purchase Agreements include covenants that limit or restrict our ability to incur indebtedness or liens related to the Purchased Receivables, the Revenue Participation Right, and certain product assets related to the Revenue Participation Right (except pursuant to a suitable intercreditor agreement).
For more information regarding our contractual obligations to XOMA, see Note 8 "Royalty Purchase Agreements" to the accompanying condensed consolidated financial statements.
Royalty Interest Financing Agreement
In December 2023, we entered into a royalty interest financing agreement with UiE pursuant to which we sold an interest in the royalty and milestone payments we are entitled to receive in respect of net sales of XACIATO under our license agreement with Organon and received a payment of $5.0 million from UiE. We have not elected to receive any of the up to $7.0 million in potential additional payments from UiE under the agreement, and we cannot do so without XOMA's prior written consent. In exchange for any payments to us from UiE under the agreement, we agreed to make payments to UiE out of royalty and milestone payments earned on net sales of XACIATO from Organon, net of our obligations to upstream licensors, until UiE receives a specified return on its investment, or using our other sources of assets or income to complete such payments if UiE has not received the specified return on its investment by the end of 2035. As described above, XOMA, at its sole cost and discretion, may pay in full and retire all of our payment obligations to UiE under the royalty interest financing agreement, and, in addition, we have the right to make prepayments on or pay in full and retire all of our payment obligations to UiE.
For more information regarding our contractual obligations to UiE, see Note 7 "Royalty Interest Financing" to the accompanying condensed consolidated financial statements.
Leases
We have two operating leases for our laboratory and office spaces that expire in 2026 and 2027, respectively. As of September 30, 2025, we had future minimum lease payments under these leases of $1.0 million, $0.6 million of which is classified as current and $0.3 million of which is classified as long-term, the remainder of which represents future interest payments. We have one finance lease for our clean room space that expires in 2026. As of September 30, 2025, we had future minimum lease payments under this lease of $2.1 million, $1.9 million of which is classified as current and $0.2 million of which is classified as long-term, the remainder of which represents future interest payments. For additional information on our lease obligations, See Note 6 "Leases" to the accompanying condensed consolidated financial statements.
Other Contractual Obligations
We enter into contracts in the normal course of business with various third parties for research studies, clinical trials, testing and other services. These contracts generally provide for termination upon notice, and we do not believe that our non-cancelable obligations under these agreements are material.
For descriptions of additional contractual obligations and commitments, see Note 9 "Commitments and Contingencies" to the accompanying condensed consolidated financial statements.
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.
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