Dare Bioscience Inc (DARE) 2017 Q4 法說會逐字稿

Welcome to the conference call hosted by Daré to provide fiscal year-end 2017 financial results and general business update. This call is being recorded. My name is Hilary, and I'll be your operator today.

With us today are Sabrina Martucci Johnson, Daré's Chief Executive Officer; and Lisa Walters-Hoffert, Daré's Chief Financial Officer. Ms. Johnson, please proceed.

Thank you, and welcome to our fiscal year-end 2017 financial results and business update call for Daré Bioscience. It's a pleasure to have the opportunity to talk about our results to date and our company highlights as well as our 2018 milestones.

Today's discussion will include forward-looking statements, and as such, I would like to start with a comment about those forward-looking statements. I'd like to remind you that we will be making statements during this call that includes forward-looking statements within the meaning of the federal securities laws, which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Any statements contained in this call that are not statements of historical fact should be deemed to be forward-looking statements. These statements involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated or implied by the forward-looking statements. Accordingly, you should not place undue reliance on these statements. Factors that might cause such a difference include those set forth from time to time in our SEC filings, including our report on Form 10-K for the year ended December 31, 2017.

Daré is a biopharmaceutical company squarely focused on improving the lives and well-being of women. In fact, we're a pure-play women's health company identifying and addressing gaps in women's reproductive and sexual health. Many of you know that women's health encompasses significant growing global markets. Contraception alone is expected to grow to $32 billion, women's health to $22 billion and male and female sexual dysfunction to $8 billion. Many differentiated products in these market segments have achieved -- have each delivered sales and revenues ranging from $500 million to $1 billion in the U.S.

2017 was a year of transformative growth for Daré as we established a strong foundation for our goal of building a preeminent company in women's reproductive health. Our core programs include 2 clinical development stage products, each having the potential to deliver a first-in-category product: Ovaprene, our novel vaginal ring that has the potential to be the first approved nonhormonal, woman-initiated contraceptive that can be used on a nondaily, cycle-by-cycle basis, giving women greater flexibility and control with the potential for efficacy approaching that of hormones; and Topical Sildenafil. Sildenafil is the active ingredient in Viagra. Topical Sildenafil is a proprietary cream formulation that is especially designed to locally increase blood flow to the vulvar-vaginal tissue in women, leading to a potential improvement in genital arousal response and overall sexual experience. Topical Sildenafil has the potential to be the first product approved for female sexual arousal disorder. Unlike other aspects of female sexual dysfunction, arousal disorder is characterized primarily by an inability to attain or maintain sufficient physical sexual arousal that causes distress or interpersonal difficulties. While increased attention has been focused on female sexual dysfunctions, over the past several years, no pharmacologic options have yet been FDA approved for female sexual arousal disorder, a condition which significantly compromises a woman's ability to have a pleasurable sexual experience due to the lack of sufficient physical arousal response. Topical Sildenafil has been shown to increase blood flow to the vaginal tissue in both pre- and postmenopausal women with female sexual arousal disorder.

As I mentioned, each of our 2 lead development programs has the potential to deliver a first-in-category product, addressing an unmet need in women's reproductive health. Also of note, each would be prescribed by the same provider specialty group, the OB/GYN, creating both operational and commercial efficiencies and positioning the portfolio well for strategic partnerships.

2018 milestones for these 2 programs include commencing enrollment in the Ovaprene postcoital test clinical trial in the second quarter of 2018, we intend to communicate with the U.S. Food and Drug Administration in mid-2018 regarding the Phase IIb study of Topical Sildenafil; and pending these discussions, we anticipate commencing a Phase IIb study of Topical Sildenafil in the fourth quarter of 2018. Our current capital is sufficient to advance these programs through clinical and regulatory value-inflection events: Ovaprene through the postcoital trial results and Topical Sildenafil through the pre-Phase IIb regulatory discussions and into the Phase IIb.

In addition to our core programs, we have identified several additional value drivers that are aligned with our core business and our portfolio strategy. These represent opportunities to expand our portfolio to include optionality on other similar first-in-class assets via transactions that have minimal impact on our capital requirements and that further position Daré for strategic partnerships and nondilutive funding. The first such opportunity is our collaboration with Orbis Biosciences. We recently entered into a worldwide development and option agreement with Orbis that will enable us to explore the viability of 6- and 12-month contraceptive injectable technology. If successful, the 6- and 12-month injectable forms will create a new opportunity in the market. These longer-acting, rapidly reversible product forms dovetail nicely with women's desire to have something that is nondaily, yet doesn't compromise on effectiveness. The initial development on Orbis' long-acting injectable contraceptive program was carried out under a subcontract funded by Family Health International, or FHI 360, through a grant from the Bill & Melinda Gates Foundation. The Bill & Melinda Gates Foundation and FHI 360 are world leaders in the funding and development of novel contraceptive products and programs, and we are pleased to have an option on one of the promising technologies they identified.

In addition to our option agreement with Orbis, we are actively engaging in discussions to identify additional product candidates that provide strategic optionality on similar first-in-class assets with minimal impact on capital requirements. We look forward to keeping you updated on the multiple milestones and value drivers expected between mid-2018 and late 2019 from our Ovaprene and Topical Sildenafil programs, each of which has the potential to deliver a first-in-category product, addressing unmet need in women's reproductive health and, together with our preclinical injectable contraceptive program, constitute a differentiated portfolio that we believe is well positioned to drive significant value in both the short and long term.

I'd now like to turn the call over to Lisa Walters-Hoffert, our CFO.

Thank you, Sabrina, and thanks to all of you participating on this call. So I would like to take a brief moment and summarize Daré's highlights over the last 9 months as well as our anticipated 2018 milestones, some of which Sabrina has touched on. On July 19, 2017, Daré Bioscience Operations and Cerulean Pharma completed a stock purchase transaction, and the company's name was subsequently changed to Daré Bioscience, Inc. In February of 2018, Daré entered into a worldwide licensing development agreement for a clinical Phase stage IIb asset, Topical Sildenafil, for the treatment of female sexual arousal disorder. As Sabrina mentioned, we intend to communicate with the U.S. Food and Drug Administration, or the FDA, in mid-2018 regarding the Phase IIb topical study -- excuse me, study of Topical Sildenafil. Pending the outcome of these interactions, we anticipate commencing a Phase IIb study of Topical Sildenafil in the fourth quarter of 2018. In March of 2018, we also entered into a worldwide development and option agreement for novel injectable formulations of etonogestrel, seeking to provide contraceptive protection for periods ranging from 6 to 12 months. And then finally, we expect to commence the enrollment of our Ovaprene postcoital test clinical trial in the second quarter of 2018, which is actually this quarter.

In terms of the full year 2017 financial summary, let me walk you through that. As of December 31, 2017, we had approximately $7.56 million in cash. We believe this existing cash balances plus approximately $10.4 million of net proceeds received from the sale of equity securities in February 2018 will be sufficient for Daré to commence and complete the postcoital test trial of Ovaprene and to advance Topical Sildenafil into the Phase IIb clinical development program. Our general and administrative expenses for the full year ended December 31, 2017, were about $2.7 million. Research and development expenses for the full year ended December 31, 2017, were approximately $985,000 due primarily to Ovaprene development costs.

The July 2017 stock purchase transaction resulted in the creation of goodwill on our balance sheet. Goodwill represents the excess of the purchase price over the assets acquired and the liabilities assumed. Based on our annual impairment test conducted as of year-end, it was determined that the book value of our net assets exceeded the fair value of our company. Hence, in 2017, we incurred a noncash impairment charge of $7.49 million. Now a charge to goodwill is a balance sheet adjustment that does not affect our cash position or our cash flow from operating activities and that will not have any impact on future operations.

The net loss for the full year ended December 31, 2017, was approximately $11.5 million or that translates to about $3.57 per share.

As a general comment, we'd like to note that our 2017 financial statements represent our operations as a public company following the completion of the stock purchase transaction in July of 2017 as compared with our 2016 financial statements, which represent Daré Bioscience operations when the company was private. Hence, we call this out because making a comparison between 2016 and 2017 is difficult.

Back to you, Sabrina.

Thank you, Lisa. We'll now turn it over to the operator who'll open the lines for some Q&A.

(Operator Instructions) And our first question comes from Yasmeen Rahimi with Roth Capital Partners.

A number of questions on the upcoming communication with the FDA. So maybe some insight on as you're going for an -- with the FDA, what sort of a trial design are you proposing? What are the key discussion points? And what could be a best-case scenario and the worst-case scenario coming out of those communications?

Great. Yasmeen, thank you for the questions. This is Sabrina. In October of 2016, the FDA issued a draft guidance document that covers the indication for female sexual arousal disorder. As I mentioned in my comments, there's nothing currently approved for the indication, which is why we're so interested in pursuing Topical Sildenafil for it. What that does mean is that we have an opportunity to help lay that path with the FDA around that trial design, as you outlined. And so in terms of our main objectives for that communication, it's really around framing that IIb program, and importantly also, the Phase III program that will follow that and making sure that we're aligned on expectations around really primarily a few factors. One would be the inclusion criteria, female sexual arousal disorder, making sure there is agreement on how we would intend to screen the subjects and the instruments that we would propose utilizing for that, that is in use in other studies and how we're going to use those. Second would be making sure there's alignment on the actual questionnaire. This is -- while it's blood flow to the region that is what allows that arousal response in a clinical study setting and in at-home trial, we would need to rely on women reporting about their experience. And so second is making sure there's alignment with the FDA based on the very broad guidance they provided in their document on the specifics around the end points that we would be selecting, the frequency of asking those questions, the specific questions selected about arousal disorder that we would be asking. And then third is really around the duration of the study. So the guidance document does speak to, for Phase III program, needing to look at subjects for 6 months. We want to understand if that expectation is the same for a IIb program and also related to that sort of duration of use is also number of arms to include in the subject -- in the study for each subject. Is it placebo and 1 dose? Or will it be multiple doses that need to be evaluated? So in terms of best case and worst case, they're all designed to maybe be very comfortable with. Obviously, the larger the study, the number of arms and the longer duration does have an impact on the time frame for reporting those results and, of course, the size of the study.

(Operator Instructions) At this time, I'm showing no further questions. I would like to turn the call back over to you, Ms. Johnson, for closing remarks.

Well, thank you. I want to thank everyone for taking the time this afternoon. We always appreciate an opportunity to share the story and provide the updates, and we absolutely look forward to keeping you updated on our progress over the next several months. Thank you.

Ladies and gentlemen, thank you for your participation in today's conference. This does conclude the program. You may now disconnect. Everyone, have a great day.