Daré Bioscience, Inc.
Q3 2018 Earnings Call Transcript

Published: 13 Nov 2018

[Operator:]

Welcome to the conference call hosted by Daré Bioscience to provide Financial Results For the Quarter Ended September 30, 2018, and a General Business Update. This call is being recorded. My name is Joele, and I’ll be your operator today. With us today are Sabrina Johnson, Daré’s Chief Executive Officer; Lisa Hoffert, Daré’s Chief Financial Officer; and John Fair, Daré’s Chief Business Officer. Miss Johnson, please proceed.

[Sabrina Johnson:]

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 would like to remind you that today's discussion will include forward-looking statements within the meaning of federal securities laws, which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Any statements made during this call that are not statements of historical facts should be considered forward-looking statements. Actual results or events could differ materially from those anticipated or implied by these statements due to known and unknown risks and uncertainties. You should not place undue reliance on forward-looking statements. Forward-looking statements are qualified in their entirety by the cautionary statements in the company’s SEC filings, including 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 would 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 life and wellbeing 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 and regulatory approval. Many of you know that women’s health encompass 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 up to $8 billion. Many differentiated products in these markets segments have each delivered sales and revenues ranging from $500 million to $1 billion in the US 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 two 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 non-hormonal, women-initiated contraceptive approved by the US 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 specially 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 because of distress or interpersonal difficulty. It is 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 post-menopausal women with FSAD. In 2018 today we have achieved important milestones for these two programs. We commenced the Ovaprene postcoital test, or PCT, clinical trial in May of this year. Topline 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 thus 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 2b program for topical Sildenafil. The objective of this meeting was to align with the agency on key aspects of the Phase 2b and the overall clinical program to support the plan to new drug application, or NDA, including the patient reported outcome or PRO assessment 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 will commence the Phase 2b related activities for topical Sildenafil with the initiation of a content validity PRO study to demonstrate that the general arousal symptoms we plan to assess in our Phase 2b 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 have 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 are exploring grants, partnerships with nonprofits and other mechanisms that create opportunities to advance these assets with the 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-GYN, obstetricians and gynecologists, which we believe creates both operational and commercial efficiencies and positions the portfolio well for strategic partnerships, with John will address shortly. Specifically in addition to the two clinical stage assets we have been discussing Ovaprene and Sildenafil cream, our portfolio of women's health product candidates include novel IVR, or intra-vaginal ring technology originally developed from Dr. Robert Langer from MIT and Dr. William Crowley from Massachusetts General Hospital and Harvard Medical School. Including Daré HRT1, a combination estradiol and progesterone ring for hormone replacement therapy, and Daré FRT1, a natural progesterone ring for the prevention of pre-term birth and for fertility support as part of an IVF treatment plan. Both have demonstrated the target PK profile in animal studies. Daré 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 non-hormonal contraceptives for both men and women. Upcoming development milestones for the portfolio in 2019 include Ovaprene postcoital test clinical trial topline 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 2b program, where women will have an opportunity to use the investigational product in their home setting. We are also exploring the opportunity to initiate and report out in 2019 a Phase 1/2a study with Daré 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 this study in Australia, we can leverage our existing subsidiary and its opportunity for cash rebate of over 40% of the research expenses incurred in Australia. Also taking advantage of the generally lower trial costs there, which together would result in lower Phase 1/2a research expenses than would be expected for a similar study in the United States. In addition, we intend to pursue formulation activities with Daré 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, and FRT1, our pregnancy maintenance IVR design 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 would now like to turn the call over to Lisa Hoffert, our CFO.

[Lisa Hoffert:]

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, 2017, 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 consists 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 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.

[John Fair:]

Thanks Lisa. As Sabrina mentioned, strategic partnerships are core to Daré business model. Our internal innovation process allows us to focus on four 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 will 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 parnterable 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 our personalized delivery of our product candidates in a way that is more convenient for women and allow 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 four pillars of our innovation strategy, which our partnerability, product profile, data package and personalization and why we believe our portfolio is poised to drive near and long-term value. I will turn the call back over to Sabrina.

[Sabrina Johnson:]

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

[Operator:]

[Operator Instructions] Our first question comes from Yasmeen Rahimi with ROTH Capital. Your line is now open.

[Unidentified Analyst:]

Hi, [Paul O'brien] for Yasmeen Rahimi. Thanks for taking my question. As much as you can could you give more color on the content validity study, part of the Phase 2b study?

[Sabrina Johnson:]

Absolutely. Hi, this is Sabrina. So the content validity study – I think the simplest way [indiscernible] 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 is really a means to understand and ask people with the condition that you are 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 their most problematic symptoms. And so in the context of Sildenafil and the Sildenafil cream program, you know, what we really want to do is understand from these women that the questions we have selected and have been discussing with the FDA, which are very much general arousal specific questions about their sensation for general 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 are capturing the symptoms that are most bothersome for them because those are the symptoms and they are 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 is 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 enrolment – otherwise enrolment criteria for our Phase 2b investigational product, a portion of the study. So these are very much our target demographics and target patients for this study. So those 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 2b program. So it is a relatively small study. It is a small subset of women, but it is a great way to ensure that the questions that we are going to be asking them are both relevant and clinically meaningful.

[Unidentified Analyst:]

Thanks.

[Operator:]

Thank you. Our next question comes from Caroline Palomeque with Maxim Group. Your line is now open.

[Caroline Palomeque:]

Good morning. Thanks for taking the question. So just if you can switch a little bit over to the financial side, I just wondered 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 two things?

[Sabrina Johnson:]

Thank you. Great questions. I will start – this is Sabrina, and then I will turn it over 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 that 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 is not a terribly capital-intensive and 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 I2 grant go, it was part of a phase I2 grant submission which is not to be confused with clinical development stages, it's nomenclature that NIH uses. So, it is released in two parts. And so, as we have updates on that, we will absolutely make everyone aware of those that today we're 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 say?

[Lisa Hoffert:]

Yes. I want to say and the only thing to add to that is, you're right we press release that we have received the first phase of that to approximately 225,000 of the up to 1.9. And in our current financials, the way it works we obviously incur those expenses document and then submit them for reimbursement. So, we've used about 213,000 of it, received cash already in our check-in account of a 144,000 and then we booked 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 it's to bring its said then we get issued in tranches.

[Caroline Palomeque:]

Great, thank you.

[Operator:]

Thank you. Our next question comes from Carol Werther with Dawson James. Your line is now open.

[Carol Werther:]

Well, thanks for taking my question. Just a follow-up on the grant. Do you anticipate that you'll be using all of that money in 2019?

[Sabrina Johnson:]

Yes. So, basically as we -- this is Sabrina, as Lisa mentioned way that grant funding works as 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 this data in 2019. It's absolutely a reasonable expectation that we will draw down against this fund as aggressively as we can during that period.

[Carol Werther:]

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

[Lisa Hoffert:]

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

[Carol Werther:]

And if you could just talk a little bit about the Ovaprene study. How far long you are with enrolment?

[Sabrina Johnson:]

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 site around the United States. And enrolment is progressing as planned. We haven’t released specific enrolment numbers. As we would say we remain on track to have that topline data second half of 2019 throughout the study. As you may recall, the study involve following women for five 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 get 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 a past postcoital study 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, now are very few motile sperm in the cervical mucus. And those products have all gone on to show 88% effectiveness in typical use which is that low end of the hormonal range which is 91% typical use. So, there is one cycle where the women and the partner would use the diaphragm for their postcoital assessment. And then there is three cycles on Ovaprene. One of which is really a safety study where there are no sexes 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 is two post coital cycles with Ovaprene. So, the study is well underway, we've been actively enrolling and recruiting and women are actively going through. They are five cycles of assessment which is why we're on track for that topline data second half of next year.

[Carol Werther:]

Okay. Thank you, very much.

[Sabrina Johnson:]

Absolutely.

[Operator:]

Thank you. Our next question comes from Brian Marckx with Zacks Investment Research. Your line is now open.

[Brian Marckx:]

Good morning. 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 and the data?

[Sabrina Johnson:]

Yes. I mean, that's we're targeting when we put out that projection. That's where that topline on our anticipated objectives which are about 25 couples completing. We're enroling around 50 couples to get about 25 couples to complete the study and dropout rates in contraceptive studies. They're typically in that kind of 50% range and we don’t expect to be any different. And then, and so yes. Those topline data timelines reflect having the 25 couples.

[Brian Marckx:]

Okay. And then on the content validity study, you talked about your 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 the -- what questions are geared towards arousal?

[Sabrina Johnson:]

Yes. It's really more geared and so we're very purposefully and specifically have selected pro where patient will put it out from 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 hyperactive desire disorder and female sexual arousal disorder are two very different things. Desire disorder really is manifested, is 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 inability to maintain or attain sufficient sexual, genital sexual arousal, physical arousal sensation 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 is 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 problems and bothersome symptoms. And naturally the goal of a content validity study. These types of studies are done any time, you are evaluating a new outcome measure to be used in 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 question correctly before they're exposed to your investigational product so that you can make sure that you're again capturing this 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 distressed sort of interpretations from your patient population before you even get to your investigational drug study were so important.

[Brian Marckx:]

Okay. And the pro that you're using in the content validity study, the expectation where 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.

[Sabrina Johnson:]

That's exactly right. One of the reasons that we felt 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 2b program is reflective of the phase III program. So that the phase 2b 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 and their most validation symptoms and that the women understand the question uses [in our phase 2b] and then that becomes really the basis of what we used going forward in the phase III program.

[Brian Marckx:]

And then, relative to the pro again. The design of the pro that as it is today was that developed in consult 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 I guess --?

[Sabrina Johnson:]

Yes. That so, 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's 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 those aspects of them these 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've 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, while Pfizer was doing some of that early work in women. And so, we've been 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 question for a product like Topical Sildenafil that it's expected to increased blood flow in the genital tissues and enhanced those general 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 to go with them that those would be the matrix that we would take forward in to this content validity study. And then meet with them again once we have those data to ensure [alignment]. And hopefully that helps clarify where they came from and why we're interested in those question.

[Brian Marckx:]

Okay. Yes, and I appreciate all the detail. Was that your sense that the Type C meeting if this content validity study comes back a “successful” that it could be a pretty seamless transition between, I guess the design of that home study is pretty seamless at that point or would they potentially need to be a lot of modifications I guess to the pro or anything else?

[Sabrina Johnson:]

Yes. Now that is currently 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 have the opportunity first second Type C meeting with them after we do the content validity study. I think that really speaks to the FDA's interest in the work we're doing in the space with their desire to work collaboratively with the sponsor. We certainly feel that way in wanting to work collaboratively with the FDA to design the clinical trial framework for this in a very interesting condition that we look forward to addressing the Topical Sildenafil. So, the tone of the meeting was one where there was a great exchange of information and absolutely the one of the things that we did with that meeting purposefully was to go over a number of aspects of the designs and not only the patient reported outcomes but also the duration of the study and the enrolment 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 described.

[Brian Marckx:]

Okay, great, thanks Sabrina. And I appreciate it.

[Sabrina Johnson:]

Thank you.

[Operator:]

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

[Sabrina Johnson:]

Thank you. And 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.

[Operator:]

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.