Dare Bioscience Inc (DARE) 2018 Q3 法說會逐字稿

Welcome to the conference call hosted by Daré Bioscience to provide financial results for the quarter ended September 30, 2018 and the general business update. This call is being recorded. My name is Joelle, and I will be your operator today.

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

Thank you. Welcome to our 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 and upcoming milestones.

Before we begin, I'd like to remind you that today's discussion will include forward-looking statements within the meaning of federal securities laws, which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Any statements made during this call that are not statements of historical fact should be considered forward-looking statements. Actual results or events could differ materially from those anticipated or implied by these statements due to known and unknown risks and uncertainties. You should not place undue reliance on forward-looking statements. Forward-looking statements are qualified in their entirety by the cautionary statements in the company's SEC filings, including its annual report on Form 10-K for the year ended December 31, 2017 and its quarterly report on Form 10-Q that was filed today.

I'd also like to point out that the content of this call includes time-sensitive information that is current only as of today, November 13, 2018. Daré undertakes no obligation to update any forward-looking statements to reflect new information or developments after this call except as required by law.

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, driven by a mission to accelerate innovation by identifying, developing and bringing to market a diverse portfolio of differentiated therapies that expand treatment options, improve outcomes and facilitate convenience for women, primarily in the areas of contraception, vaginal health, sexual health and fertility.

Our business strategy is to license or otherwise acquire the rights to differentiated women's health product candidates that address persistent unmet needs. And some of the product candidates have existing clinical proof-of-concept data, and we take those candidates through advanced stages of clinical development of regulatory approval.

Many of you know that women's health encompasses significant growing global markets. According to Global Market Insights, by 2023, contraception alone is expected to grow to $32 billion. According to BCC Research, women's health is anticipated to reach $22 billion this year. And according to Visiongain, by 2019, male and female sexual dysfunction is expected to grow to $8 billion. Many differentiated products in these market segments have each delivered sales and revenues ranging from $500 million to $1 billion in the U.S. alone.

2017 was a year of transformative growth for Daré as we established a strong foundation for our goal of building a preeminent women's health company. And in 2018, it has been a year of execution against that vision, setting the stage for important milestones in 2019. Our core programs include 2 clinical development-stage products, each having the potential to deliver a first-in-category product.

Ovaprene, a novel vaginal ring that has the potential to disrupt the contraceptive space by being the first nonhormonal woman-initiated contraceptive approved by the U.S. Food and Drug Administration, or FDA, that is not in the moment or daily and rather can be used on a cycle-by-cycle basis, giving women greater flexibility and control, with the potential for efficacy approaching that of hormones.

And Sildenafil Cream, 3.6%. Sildenafil is the active ingredient in Viagra. Topical Sildenafil is the proprietary cream formulation, specifically 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 or FSAD. 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 difficulty. It's the closest analog to erectile dysfunction in women. While increased attention has focused on female sexual dysfunctions over the past several years, no pharmacologic options have yet been FDA approved for FSAD. Topical Sildenafil has been shown to increase blood flow to the vaginal tissue in both pre- and postmenopausal women with FSAD.

In 2018 to date, we've achieved important milestones for these 2 programs. We commenced the Ovaprene postcoital test, or PCT, clinical trial in May of this year. Top line data are expected in the second half of 2019. If Ovaprene demonstrates effectiveness in preventing most sperm from progressing into the cervical canal in the PCT clinical trial, we intend to prepare and file an investigational device exemption, or IDE, with the FDA to commence a pivotal clinical trial to support marketing approvals of Ovaprene in the United States, Europe and other countries worldwide.

We received notice of award for a non-dilutive NIH SBIR Award for the first $224,665 of an anticipated $1.9 million in grant funding to support the Ovaprene PCT. That's offsetting the overall cost of the clinical trial with non-dilutive funding from the NIH. The balance of the award is contingent upon, among other matters, assessment of the results of the first phase of the research and availability of funds.

During the third quarter of 2018, we had a Type C Meeting with the FDA regarding the Phase IIb program for Topical Sildenafil. The objective of this meeting was to align with the agency on key aspects of the Phase IIb and the overall clinical program to support the plan to new drug application, or NDA, including the patient-reported outcome, or PRO, assessments used to accurately diagnose FSAD; the PRO instruments to be used as primary efficacy endpoints for pivotal clinical studies; the study duration; and the target patient population to be studied.

Based on the outcome of this meeting, in the fourth quarter of 2018, we'll commence the Phase IIb-related activities for Topical Sildenafil with the initiation of a content validity PRO study to demonstrate that the genital arousal symptoms we plan to assess in our Phase IIb and our pivotal studies are the most important and relevant to our target population and are also acceptable endpoints for the FDA.

In addition to our core programs, we've identified and executed on opportunities to expand our portfolio to include a variety of other novel assets, addressing unmet needs in large markets. Rather than develop these assets entirely with our own resources, we're exploring grants, partnerships with nonprofits and other mechanisms that create opportunities to advance these assets with a minimal impact on our capital requirements. We believe each product in our development portfolio has the potential to deliver a first-in-category product, addressing a persistent unmet need in women's health.

Also of note, each would be prescribed by the same provider specialty group, OB/GYNs, obstetricians and gynecologists, which we believe creates both operational and commercial efficiencies and positions the portfolio well for strategic partnerships, which John will address shortly. Specifically, in addition to the 2 clinical-stage assets we've been discussing, Ovaprene and Sildenafil Cream, our portfolio of women's health product candidates include:

novel IVR intravaginal ring technology originally developed by Dr. Robert Langer from MIT and Dr. William Crowley from Massachusetts General Hospital and Harvard Medical School, including DARE-HRT1, a combination estradiol and progesterone ring for hormone replacement therapy; and DARE-FRT1, a natural progesterone ring for the prevention of preterm birth and for fertility support as part of an IVF treatment plan. Both have demonstrated the target PK profile in animal studies;

DARE-VVA1, a proprietary vaginal tamoxifen tablet to treat vulvar and vaginal atrophy in a hormone-receptor-positive breast cancer population; a 6- and 12-month injectable contraceptive product candidate; and CatSper, a novel target for nonhormonal contraceptives for both men and women.

Upcoming development milestones for the portfolio in 2019 include: Ovaprene postcoital test clinical trial top line data in the second half of 2019; completion of the content validity study and the Type C Meeting with the FDA for Topical Sildenafil, followed by commencement of the at-home portion of the Phase IIb program, where women will have an opportunity to use the investigational product in their home setting.

We're also exploring the opportunity to initiate and report out in 2019 a Phase I/IIa study with DARE-HRT1 in Australia, our combination IVR providing conveniently both estradiol and progesterone together in one vaginal ring intended to be left in place for 28 days. By conducting the study in Australia, we can leverage our existing subsidiary and its opportunity for a cash rebate of over 40% of the research expenses incurred in Australia, also taking advantage of the generally lower trial cost there, which together would result in lower Phase I/IIa research expenses than would be expected for a similar study in the United States.

In addition, we intend to pursue formulation activities with DARE-VVA1, our vaginal tamoxifen for hormone-receptor-positive breast cancer women with vaginal atrophy and to prepare it to advance to human studies; and activities to prepare for human studies DARE-FRT1, our pregnancy maintenance IVR designed to deliver progesterone via a vaginal ring that can be left in place for several days as an alternative to daily progesterone injections or vaginal gel.

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

Thank you, Sabrina, and thanks to all of you for participating on this call this morning. I would like to summarize Daré's results for the quarter ended September 30, 2018.

As of September 30, 2018, we had cash of approximately $9.5 million. As we are currently developing a portfolio of clinical-stage candidates, our financials do not yet include revenues but consist primarily of overhead and development expenses.

During the quarter ended September 30, 2018, our general and administrative expenses were $1.2 million, and our research and development expenses were $1.4 million. I would also like to note that a comparison of our financial results for the 3 and 9 months ended September 30, 2018 to those for the same periods in 2017 is difficult. We completed our business combination with Cerulean last year and private Daré -- with private Daré in July of 2017, so hence, the financial statements for certain periods in 2017 represent the operations of a private company, private Daré.

Our primary operations have consisted of and are expected to continue to consist of the product research and development of advancing our portfolio of product candidates through late-stage clinical development for regulatory approval. Based on our current operating plan, we believe our existing cash balances will satisfy our working capital needs and other liquidity requirements associated with our planned operations for at least the next 12 months.

As Sabrina mentioned, we will continue to explore a variety of ways to advance our portfolio of assets in a manner that is efficient in our use of capital and to evaluate financing options that will enable us to successfully execute our operating and development plans.

At this time, I would like to turn the call over to my colleague, John Fair, who is our Chief Business Officer.

Thanks, Lisa. As Sabrina mentioned, strategic partnerships are core to Daré's business model. Our internal innovation process allows us to focus on 4 key pillars of innovation, designed to ensure optimal internal and external stakeholder alignment. The formalization and implementation of our process allows us to focus our pipeline expansion and development efforts in a way intended to maximize value-creation opportunities, and our process begins with our first key pillar, which is partnerability.

Given our collective clinical and commercial backgrounds, our team understands the needs and preferences of large- and mid-stage pharmaceutical commercial partners, and importantly, there has been a recent expansion into the women's health category by emerging and mid-stage pharmaceutical companies. These companies have in place or are actively building commercial capabilities in women's health, and they'll be looking for new and novel product candidates to continue to grow their commercial portfolios. When evaluating new product candidates, we apply our commercial acumen and insights to identify and select opportunities we believe are highly partnerable and can deliver upside market potential.

The next pillar in our innovation strategy focuses on the data package. We look for product candidates that have a relevant data package, either in the form of a human proof of concept or the ability to leverage a 505(b)(2) pathway, or both. We believe this serves as a derisking step in the earliest stages of the development process.

The third pillar in our strategy focuses on the product profile. We carefully screen product opportunities against areas where we know there are persistent unmet needs and select those that we believe are capable of delivering against those unmet needs in a clinically meaningful way.

Finally, we are interested in tailoring or personalizing delivery of our product candidates in a way that is more convenient for women and allows women to better address individual health and wellness needs, regardless of lifestyle or life stage. We believe our vaginal ring technology is an example of this idea as it allows for convenient dosing and delivery options that cannot be achieved in other routes of administration.

I hope that gives you a better appreciation for the 4 pillars of our innovation strategy, which are partnerability, product profile, data package and personalization, and why we believe our portfolio is poised to drive near- and long-term value.

I'll turn the call back over to Sabrina.

Thank you, John. We look forward to keeping you all updated on the multiple milestones and value drivers expected in 2019 from our Ovaprene and Sildenafil Cream programs, each of which has the potential to deliver a first-in-category product, addressing a persistent unmet need in women's health; as well as from our IVR programs in hormone replacement and pregnancy maintenance, vaginal tamoxifen for VVA and hormone-receptor-positive breast cancer population, our long-acting injectable contraceptive program and the CatSper contraceptive target. Together, these programs constitute arguably the most differentiated portfolio in women's health and one that we believe is well positioned to drive significant value in both the short and long term.

We'll now turn it over to the operator, who will open the lines for Q&A.

(Operator Instructions) Our first question comes from Yasmeen Rahimi with Roth Capital.

[Paul O'Brien] for Yasmeen Rahimi. As much as you can, could you give more color on the content validity study part of the Phase IIb study?

Absolutely. This is Sabrina. So the content validity study that -- I think the simplest way sometimes for people to understand what a content validity study is, which is a really important part of any program that includes a patient-reported outcome, is it's really a means to understand and ask people with the condition that you're going to be studying whether they understand the questions that are going to form the basis of the primary endpoint and whether those questions, also importantly, address what might be the very most problematic symptoms. And so in the context of Sildenafil and the Sildenafil Cream program, what we really want to do is understand from these women that the questions we've selected and have been discussing with the FDA, which are very much genital arousal-specific questions about their sensations of genital arousal that they might be experiencing when using a product like Sildenafil Cream that they understand the actual wording in those questions and that we're capturing the symptoms that are most bothersome for them because those are the symptoms that they're going to be much more attuned to in terms of improvement. And those improvements, therefore, are going to be clinically meaningful. And in terms of the size and nature of the study, therefore, these are relatively small studies. It really is like a market research format. It's a one-on-one interview with the subject. The women that will be enrolled in the content validity study are women who meet the criteria enrollment -- otherwise enrollment criteria for our Phase IIb investigational product portion of the study. So these are very much our target demographics and target patients for the study. So they'll otherwise meet those criteria. And we are enrolling them at sites that are actually going to be a subset of the sites for the at-home portion of the Phase IIb program. So it's a relatively small study. It's a small subset of women, but it's a great way to ensure that the questions that we're going to be asking them are both relevant and clinically meaningful.

Our next question comes from Caroline Palomeque with Maxim Group.

So I just hope we can switch a little bit over to the financial side. Just wondering if you can give any kind of guidance as to the cost of the trials that are ongoing. And then also, if you could speak a little bit about the grant funding. Is there any update from the NIH grant funding for Ovaprene, the one that you announced back in April? Just wondering about those 2 things.

Yes, so thank you. Great questions. I'll start, this is Sabrina, and then I'll turn it over for Lisa -- to Lisa for a little more color. What I would say in general about the development programs, with the exception of Ovaprene, where in past guidance we have given a sense for the overall cost of the postcoital test clinical study and related development activities around manufacturing during that time period as being in the $3 million to $5 million range. With the exception of that disclosure, we haven't otherwise disclosed specifics about the cost of our research programs. The content validity study, because it is a market research-type study, it's not a terribly capital-intensive activity. Once we have that second Type C Meeting with the FDA next year and really finalize the plans, we'll give a little more guidance about the overall cost of the upcoming Sildenafil program. And in terms of that NIH, before I turn it to Lisa, what I would add is that the way those Phase I/II grants go, it was part of a Phase I/II grant submission, which is not to be confused with clinical-development stages, it's just nomenclature the NIH uses. So it is released in 2 parts. And so as we have updates on that, we will absolutely make everyone aware of those. But to date, we've obviously been on track with the program in terms of the clinical activities that have been underway, which, by definition, means we've been on track with the activities that are part of that grant process. And Lisa, anything you want to...

Yes. I would just say the only thing to add to that is, you're right, we press released that we had received the first phase of that, to approximately $225,000 of the up to $1.9 million. And in our current financials, the way it works, we obviously incurred those expenses and document them and then submit them for reimbursement. So we've used about $213,000 of it; received cash already in our checking account of $144,000; and then we booked a receivable of $69,000, simply because it's a timing issue. So that money -- basically, we've received about $213,000 under the existing $225,000. And as Sabrina said, then it gets issued in tranches.

Our next question comes from Carol Werther with Dawson James.

Just a follow-up on the grant. Do you anticipate that you'll be using all of that money in 2019?

Yes. So basically, as Lisa -- this is Sabrina. As Lisa mentioned, the way that grant funding works is we are able to draw against it as we incur the expenses. And it is for the postcoital test study. And since we expect to report those data in 2019, it's absolutely a reasonable expectation that we will draw down against those funds as aggressively as we can during that period.

Okay. And then I just wanted to ask, do you still have the ATM in place? And do you plan to use that?

I can answer that one. So yes, we do have the ATM in place. It was related to an S3 that we had inherited through the merger. So in August, the underlying S-3 expired. We put a new S-3 in place and sort of re-upped the ATM. It's there for our use. We don't have any current plans to use it right now.

Okay. And if you could just talk a little bit about the Ovaprene study, how far along you are with enrollment?

Yes. So the Ovaprene -- this is Sabrina. Thanks for the question. The Ovaprene study is, as I mentioned, it's actively underway. We're actively recruiting sites around the United States, and enrollment is progressing as planned. We haven't released specific enrollment numbers, other than to say we remain on track to have that top line data second half of 2019. Throughout the study -- as you may recall, this study involves following women for 5 cycles. So they'll first go through a baseline assessment, where we make sure that in this kind of a study that everything's operating as one would expect it to in terms of the amount of sperm that we would see in the cervical mucus postcoitus without the use of any products. They then go through one cycle with the Caya diaphragm, which is a very well-understood diaphragm. As you may recall, one of the reasons that we are so excited about Ovaprene is that in the past postcoital studies that's been published, it has performed equivalently to what we've seen with postcoital studies with diaphragms, which is typically one would expect to see no or very few motile sperm in the cervical mucus. And those products have all gone on to show 88% effectiveness in typical use, which is at the low end of the hormonal range, which is 91% in typical use. So there is one cycle where the woman and her partner would use the diaphragm for their postcoital assessment. And then there's 3 cycles on Ovaprene, one of which is really a safety study, where there are no sex acts per se, and we're really just monitoring the use of the product over the course of the month, both for safety and acceptability. And then there's 2 postcoital cycles with Ovaprene. So the study is well underway. We've been actively enrolling and recruiting, and women are actively going through their 5 cycles of assessment, which is why we're on track for that top line data second half of next year.

Our next question comes from Brian Marckx with Zacks Investment Research.

Sabrina, relative to the postcoital study, the results that you expect in the second half of 2019, will that include all of the 25 patients in the data?

Yes. Yes. I mean, that's what we're targeting. When we've put out that projection, that's for the top line on our anticipated objectives, which are about 25 couples completing. We're enrolling around 50 couples to get about 25 couples to complete the study. Dropout rates in contraceptive studies are typically in that kind of 50% range, and we don't expect to be any different than that. And so yes, those top line data time lines reflect having the 25 couples.

Okay. And then on the content validity study, you talked about the answer to the first caller's question regarding explaining the PRO, I believe. How much of that -- is it largely geared towards explaining the difference between desire and arousal and to make sure that the participants know that -- what questions are geared towards arousal?

It's really more geared at -- so we have very purposely and specifically have selected PRO, or patient-reported outcome, assessments for the primary endpoint that are very much geared towards sensations of genital arousal. And you raise a really good and important point, which is very important for people to understand, which is hypoactive desire disorder and female sexual arousal disorder are 2 very, very different things. Desire disorder really is manifested as a lack of a woman's interest in the activity and engaging in any kind of sexual activity that causes her distress, whereas arousal disorder is characterized by a lack of an ability or an inability to maintain or attain sufficient sexual -- genital sexual arousal, physical arousal sensations that, in turn, cause her distress. And so the endpoints that we're targeting in our Topical Sildenafil program are very much, therefore, arousal-related. And the questions are very specific around genital sensations of arousal. And so the goal of the content validity is to make sure, for instance, if there's a question that refers to engorgement, for instance. Does she understand what that means? Does that word have a meaning for her? And is that capturing one of her most problemsome, bothersome symptoms? And that's really the goal of a content validity study. These types of studies are done anytime you're evaluating a new outcome measure to be used in an investigational drug setting. It's a really great way to help prepare yourself as a sponsor for success because you get a chance to really make sure that people are interpreting your questions correctly before they're exposed to your investigational product so that you can make sure that you're, again, capturing those important symptoms and that the terminology that you're using to describe those symptoms is understandable and meaningful to that subject. So you're removing any of that ambiguity or disparate sort of interpretations from your patient population before you even get to your investigational drug study, where it's so important.

Okay. And the PRO that you're using in the content validity study, the expectation or the hope is that this will be the same PRO that you use in the at-home study and then eventually, in the pivotal study. Is that right?

That's exactly right. One of the reasons that we felt it was really important to take these steps with the FDA and have these Type C Meetings with the FDA is that we really want to ensure that what we do in this Phase IIb program is reflective of the Phase III program. So that the Phase IIb really becomes predictive of what one would expect to see in the Phase III program and that we're having that opportunity to utilize the endpoints in that matter. So you're absolutely right. The objective here is to go through the content validity study, get comfortable ourselves and with the FDA that the endpoints we've selected really are reflective of their most bothersome symptoms and that the women understand the questions used in our Phase IIb, and then that becomes really the basis of what we'd use going forward in the Phase III program.

And then relative to the PRO, again, the design of the PRO that -- as it is today, was that developed in concert, or at least in consultation, with FDA? Or was that something that you developed and then presented to FDA at your prior meeting? How did...

Yes. It's -- so there has been a lot of outstanding work done in female sexual dysfunction and sexual health. While there hasn't been necessarily, for instance, in the case of arousal disorder, work done with investigational products, there has actually been a lot of wonderful underlying work done in female sexual health. And therefore, there are a number of outstanding questionnaires that have already been utilized and sometimes even validated in other forms and formats that ask and have as aspects of them, this kind of general sensation of arousal questions. So the good news for us is that we did not have to literally create a new questionnaire. We have been very fortunate, in fact, in our development program to also be working with some of the people that had worked on, actually, the Viagra program in women at Pfizer when women was doing some of that early -- when Pfizer was doing some of that early work in women. And so we've really been able to leverage work that the field has done historically, and we took that work and selected from that body of work what we felt were the most representative and relevant questions for a product like Topical Sildenafil that is expected to increase blood flow in the genital tissues and enhance those genital sensations of arousal and then presented those to the FDA in the Type C Meeting that we had in the third quarter of this year already and proposed those to the FDA and reached agreement with them that those would be the metrics that we would take forward into this content validity study and then meet with them again once we have those data to ensure alignment. So hopefully, that helps clarify where they came from and why we're interested in those questions.

Yes. And I appreciate all the detail. Was it your sense that the Type C Meeting, if this content validity study comes back "successful" that it could be a pretty seamless transition between the design -- or I guess, the design of the at-home study is pretty seamless at that point? Or would there be potentially need to be a lot of modifications, I guess, to the PRO or anything else?

Yes. No, that is certainly our hope. I mean, I will say it was -- we were very honored and appreciative to have the time with the FDA for a Type C Meeting and to have the opportunity for a second Type C Meeting with them after we did the content validity study. I think that really speaks to the FDA's interest in the work we're doing in this space with their desire to work collaboratively with a sponsor. We certainly feel that way in wanting to work collaboratively with the FDA to define the clinical trial framework for this very interesting condition that we look forward to addressing with Topical Sildenafil. So the tone of the meeting was one where there was a great exchange of information. And absolutely, one of the things that we did with that meeting purposely was to go over a number of aspects of the design so not only the patient-reported outcomes, but also the duration of the study and the enrollment criteria for the study to really reach alignment on all of the factors related to it. So our hope is that we come out of this content validity, and we'll have another meeting with the FDA. And our hope is that we proceed seamlessly as you have described.

I am not showing any further questions at this time. I would now like to turn the call back over to Sabrina Martucci Johnson for any closing remarks.

Thank you. In closing, I really just want to say thank you all for taking the time this morning. We really appreciate it, and we look forward to keeping you updated on our progress. Thank you.

Ladies and gentlemen, thank you for participating in today's conference. This does conclude today's program, and you may all disconnect. Everyone, have a great day.