Daré Bioscience, Inc. (DARE) Earnings Call Transcript & Summary

Good day, ladies and gentlemen, and welcome to the 2020 Annual Meeting of Stockholders of Daré Bioscience, Inc. It is now my pleasure to hand the call over to Sabrina Johnson, Chief Executive Officer and Director of Daré. Ms. Johnson, the floor is yours.

Thank you. Good morning, ladies and gentlemen. It's 9:00 a.m. Pacific Time and the 2020 Annual Meeting of Stockholders of Daré Bioscience will now come to order. I'm Sabrina Johnson, the Chief Executive Officer and a Director of Daré. I welcome you to this year's annual meeting and express our thanks for joining us. Today's virtual meeting is a live audio webcast. We believe in engaging our stockholders and maximizing their ability to meaningfully engage with us. Virtual meetings are one of the many ways we engage with our stockholders. And today's session enables our stockholders to participate in the meeting regardless of their location around the world. After the formal meeting is adjourned, we will provide a brief corporate update. Please note that this meeting is being recorded. However, no one attending via the webcast is permitted to use any audio recording device. Our director nominees, our executive officers and a representative from our registered public accounting firm, Mayer Hoffman McCann are attending today's meeting through the webcast. I'll act as Chairman of the meeting. Cynthia Skoglund of American Election Services has been appointed to act as the inspector of election to examine and tabulate proxies and ballots for this meeting. This concludes our introduction. The polls have been open since the beginning of this meeting and will remain open until I announce their closure following a brief review of each item to be voted on today. Any stockholder who has not yet voted or wishes to change his or her vote may do so by clicking on the Vote Here button at the bottom right corner of the webcast screen and follow the instructions. Any stockholder who has sent in a proxy or voted via the telephone or Internet and does not want to change his or her vote does not need to take any further action. Ms. Skoglund, do you have the list of the stockholders entitled to vote at the meeting?

Yes, I do. The list of stockholders of record of the company as of April 28, 2020, shows that as of that date, 24,991,167 shares of common stock were entitled to vote at this meeting. I have in my hand an affidavit of distribution from Broadridge Financial Solutions, Inc., indicating that on or about May 5, 2020, a notice of this meeting, along with related proxy materials, were mailed or made available on the Internet to all stockholders of record.

Thank you. The list of stockholders will remain available for inspection during the meeting. After the meeting, it will be filed with the records of the company. Ms. Skoglund, do we have a quorum?

Yes. A preliminary count of the shares represented in person or by proxy at this meeting indicates that the holders of a majority of the outstanding shares of common stock as of the record date are present at the meeting in person or by proxy constituting a quorum.

Thank you. We'll now briefly review the matters to be voted on today, following which the polls will close. Under the company's bylaws, the only matters properly before our stockholders today are those set forth in the notice of annual meeting and proxy statement. Each proposal is more fully described in our proxy statement. The first proposal is the election of 2 Class III Directors to serve until the 2023 Annual Meeting of Stockholders and until their successors are duly elected and qualified. Our Board, upon the recommendation of its Nominating and Corporate Governance Committee, nominated Dr. Blanchard and myself for election, and our Board recommends that stockholders vote for the election of each of these nominees. Information concerning each nominee, their service with Daré and other matters that may be of interest are contained in the proxy statement. The second proposal is to ratify the appointment of Mayer Hoffman McCann as the company's independent registered public accounting firm for the fiscal year ending December 31, 2020. Our Board approved the appointment of Mayer Hoffman and recommends that stockholders vote for this proposal. The third proposal gives stockholders the opportunity to approve on an advisory basis the compensation of our named executive officers for 2019 as disclosed in the proxy statement for this meeting. Our Board recommends that stockholders vote for this proposal. The fourth and final proposal gives stockholders the opportunity to approve on an advisory basis, the preferred frequency of holding an advisory vote on the compensation of our named executive officers. Stockholders may indicate a preference for every year, every 2 years or every 3 years. Our Board recommends that stockholders vote for every year on this proposal. This concludes the review of matters to be voted on. As I previously mentioned, the polls have been open since the beginning of the meeting. Any stockholder who has not yet voted or wishes to change his or her vote may do so by clicking on the Vote Here button at the bottom right corner of the webcast screen and following the instructions. We will provide approximately 10 seconds more for stockholders to do this starting now. Any stockholder who has sent in a proxy or voted via the telephone or Internet and does not want to change his or her vote does not need to take any further action. [Voting]

Now that everyone has had the opportunity to vote, it is now 9:07 a.m. Pacific Time, and I declare the polls closed. We will now hear from the inspector of election, who will read the preliminary report of the inspector of election. The preliminary report reflects only those votes that were received by the company prior to 11:59 p.m. Eastern Time on June 24, 2020. Any votes that have been cast after that time will be reflected in the final report of the inspector of election and in the permanent records of the company. The final vote of the results will be reported on a Form 8-K to be filed with the SEC. Ms. Skoglund, please read the preliminary report.

The preliminary report of the inspector of election shows that with regard to proposal 1, the stockholders elected Dr. Blanchard and Ms. Johnson as Class III directors. With regard to proposal 2, the stockholders ratified the appointment of Mayer Hoffman McCann P.C. as the independent registered public accounting firm of the company for the fiscal year ending December 31, 2020. With regard to proposal 3, the stockholders approved on an advisory basis, the compensation of the company's named executive officers for 2019 as disclosed in the proxy statement. With regard to proposal 4, the preferred frequency of holding an advisory vote on the compensation of the company's named executive officers that received the greatest number of votes was every year.

Thank you. This now closes the formal portion of today's meeting, and I declare the meeting adjourned at 9:08 a.m. Pacific Time. At this time, I'd like to take a few minutes to provide an update on the recent activities of the company. Before I do, please be aware that this portion of the meeting may include forward-looking statements about our expectations or predictions about the future. Because these statements are based on current assumptions and factors that involve risks and uncertainties, our actual performance and results may differ materially from what is said here today. Please refer to our 2019 Annual Report on Form 10-K filed with the SEC on March 27, 2020, and to our subsequent SEC filings for a discussion of the risks and uncertainties that could cause such differences. Now please turn your attention to the PowerPoint presentation on your screen. As I believe you're all aware, Daré is focused solely and squarely on women's health and specifically on accelerating innovation in women's health. We focus specifically on products that have an opportunity to expand treatment options often because they have the ability to improve outcomes and facilitate convenience for women, which I will describe. And specifically right now, we are focused on 4 different therapeutic areas: contraception, fertility, sexual health and vaginal health. And the portfolio also spans a variety of development stages, as you will see, across those different categories. We have built the portfolio primarily through partnerships, and we accelerate the portfolio through partnerships as well. We do that, as I mentioned, so that we can accelerate these exciting new products and importantly, drive this new innovation forward and have developed a portfolio that we believe has solutions that can address some of the most persistent unmet needs in women's health. And by developing and forming and creating that portfolio, it allows us, Daré to become a pipeline resource for the large and emerging commercial companies that have a commitment to women's health and our partnership with Bayer, which I will touch on is a great example of that. And as we built the portfolio, we have specifically looked for products that have attractive market opportunities because they are highly differentiated, and they are addressing these persistent unmet needs. From a risk perspective, we work hard to identify products that have a proof of concept, meaning they have evidence of their likely effectiveness in that persistent unmet need. And often have the ability to leverage the 505(b)(2) regulatory pathway. The reason that is important is that products that leverage that pathway by definition have been approved for other indications or other dosage forms, which means they've already gone through that very early riskiest stage in a product's development life cycle. And we're able to leverage that pathway of taking a product that is already well-known and understood and take it forward as a highly differentiated, often first-line, first-in-category product opportunity because most of our products are delivered in a way that personalize that product for her. And often that means it's nonsystemic delivery, and we're taking advantage of the unique female biology to deliver products in a way that can have the opportunity for enhanced convenience, enhanced outcomes for women. And when we think about partnerships, as I mentioned, we clearly partner with companies that have the ability to help us commercialize our products, such as our partnership with Bayer on our product Ovaprene that we'll talk about. But partnerships are really important across the development spectrum and come in many forms, and we work hard to leverage partnerships across a variety of forms that they can take. So for instance, we have partnered with the Bill & Melinda Gates Foundation and in the -- with the NIH as support with funding for some of our development programs and collaborators to help us bring those programs forward. We have partnered with organizations, such as Health Decisions that can help us advance our development programs in a cost-efficient and effective way through their clinical research services that we can leverage in very dedicated support that we can leverage to move the programs forward. And it's these types of partnerships that have allowed us to both build the robust portfolio that we've built, but also to be as capital-efficient as we have been and look forward to continue to be as a company. So now I want to take a moment to highlight our pipeline for you. I am not going to spend time in depth going through each of the programs. I'm going to mention briefly a little bit about each program very quickly. And then I'll highlight really the 3 programs that are in the latest stages of clinical development and that have very important value inflection potential milestones over the next 3 years. The first of which, which I'll spend the most of our time on today, we call DARE-BV1. It's a product that we are taking forward for bacterial vaginosis. Bacterial vaginosis is the most common vaginal infection that a woman can expect to experience. It is not only a very bothersome infection for her because of the symptoms in the vaginal infection, but it's also a very clinically meaningful and important infection to manage because it can lead to infertility and preterm birth. As a result, the FDA has granted us qualified infectious disease product status and fast-track designation, recognizing the importance of this medical condition and the importance of novel treatments, like DARE-BV1 has the potential to be to treat it. Why are we so interested in taking DARE-BV1 forward? One, it's because it is a onetime vaginal administration. In that theme of enhancing convenience and outcome, a onetime vaginal administration enhances compliance and convenience for her, but also because of the unique formulation here. It's designed to deliver the drug very effectively, be very bioadhesive and keep the product in place so that we have the potential to see clinical cures at a higher level than have been seen currently with the standard of care. Current standard of care of FDA-approved products have a cure rate of 37% to 68%. And in an investigator-initiated proof-of-concept study of the DARE-BV1 technology, the cure rate was 86%. We are very excited because we announced earlier just this month that we have initiated our Phase III trial for this program. I am going to talk a little bit more about that in a moment and give a little more highlights on what we expect with that program. So hold on that. I do want to spend a minute also sharing a little bit more about Ovaprene. Ovaprene is a hormone-free once-a-month contraceptive. There is currently nothing like it available today that has that potential to be a once-a-month product without hormones. Once-a-month dosing and contraception has been one of the most popular dosage forms from a market perspective. NuvaRing is the only product that has delivered that today, which is a hormonal product, and it is an over $900 million brand. So clearly, we are very much looking forward to continuing to advance Ovaprene. We were also thrilled with 2 collaborations around this program. The first was with the NIH, where we have collaborated from a funding perspective. They provided a grant that helped us fund a study that reported out last year, which was a very important pre-pivotal study for Ovaprene, demonstrating its proof-of-concept as a highly effective contraceptive method. And earlier this year, we announced our partnership with Bayer, wherein they have licensed the rights to become our commercial partner for Ovaprene. And what that means is that Bayer has the right to engage with us to take Ovaprene forward once it is approved by the FDA and be that commercial entity behind Ovaprene. That partnership is a wonderful opportunity for Ovaprene because Bayer is actually the only company in the contraceptive category that has built over a $1 billion contraceptive brand. So we are thrilled to be working with them closely. Earlier this year, we did disclose the aspects of that partnership in terms of the milestone payments, the overall deal value of the commercial milestones and the royalty structures. Put simply, there's a $20 million milestone that they would owe and would need to remit in order to maintain their commercial rights to this program, and that's after a pivotal study completion, which is the next phase with Ovaprene. In addition, there are $310 million in commercial milestones and an opportunity for double-digit tiered royalties. On the next slide, I will be giving an update on where we are with Ovaprene in terms of the time line and next steps. And sildenafil is one of the other programs that I wanted to spend a little more time on today. Sildenafil Cream is a product that we are advancing for female sexual arousal disorder. Sildenafil may be a name you've heard before, it is the active ingredient in the very popular erectile dysfunction drug, Viagra. Female sexual arousal disorder is her version of erectile dysfunction. It is an inability to attain or maintain sufficient general arousal. And it is mediated by a similar pathway to that in erectile dysfunction. And so you do want the same drug mechanism of action to address female sexual arousal disorder and the lack of arousal response in women. Unfortunately, the oral form of sildenafil has some systemic side effects that are for this indication, and for women, in particular, problematic in terms of the incidence of headache and flushing. And so we are advancing a topical form of the product. So it is a cream that she can apply on demand to the genital area to elicit that arousal response. The product's been through a couple different successful proof-of-concept studies that have demonstrated the ability to deliver that increased blood flow, which is the mediator of that arousal response to women. We spent a significant amount of very collaborative time working with the FDA to align on what the development path is going forward for this indication because we right now are the first sponsor, working with the FDA on this indication for women and have defined that path forward and have aligned with the FDA importantly on what that Phase IIb clinical trial design is, and importantly, what the right endpoint is to assess these arousal responses in women. And so at this point, we have the go-ahead to proceed, and we are working on the start-up related activities to start that Phase IIb study. And I'll give a little bit more on that time line as well in a moment. Before I move on, I wanted to just say some quick words about the rest of the portfolio. As you can see, we have a few programs that are -- what we would view as sort of Phase I ready or nearly Phase I ready, where that is the next step for that program. HRT1 and FRT1 are 2 very related programs. They are both vaginal ring technologies that came out of Dr. Bob Langer's lab at MIT. It's a very innovative technology to deliver drugs vaginally to women when you need drug delivery over an extended period of time. And these 2 particular products are in development for HRT1 for hormone replacement therapy. It is the first product in development that's actually delivering hormone replacement therapy in the way that is recommended by the North American Menopause Society, which is nonsystemic and both estradiol and progesterone together in one form. So it's a 28-day delivery. So 1 ring every 28 days for women, and that is prepared to go into a Phase I. And then FRT1 is that same ring technology, but delivering only progesterone. Any of you who have been through an in vitro fertilization procedure, anyone who's needed luteal phase support or has had challenges with risk of preterm growth knows the importance of administering progesterone. Right now, it's through injections or vaginal delivery several times a day, and this technology looks to create a onetime over 14 days of vaginal ring technology. So it takes that convenience and that inconvenience out of the hands of the women. And VVA1 is an important therapy that we're advancing for women who are hormone receptor positive breast cancer patients and survivors. Vaginal atrophy is a very common condition in this population because of the drugs they're on, the aromatase inhibitors, which deplete estrogen and create a very challenging situation in terms of vaginal atrophy, which can cause a significant disruption to the women's life, both in terms of the painful effects of the condition and also disruption in terms of her intimacy. Unfortunately, it's typically treated with estrogen-based compounds, which are not appropriate in this population. And so we're looking to advance a vaginal form of tamoxifen to address this. So a nonhormonal treatment that could be an option for this population. And then finally, in our preclinical portfolio, there are 3 programs. What we now refer to as DARE-LARC1, which is a long-acting reversible contraception. It's a user-controlled form of long-acting reversible contraception and -- where we have been receiving grant funding from the Bill & Melinda Gates Foundation to support that development program. It has potential to deliver drugs over 10 years and be turned on and off by the women on demand. And then RH1 is a potential nonhormonal form of contraception that could be a male or female form of contraception. And ORB 204 and 214 are long-acting injectables, 6 and 12 months. Now as promised, I wanted to just spend a moment on what's next in terms of time line and the value inflection time line for the portfolio. As I mentioned, we have 3 late-stage programs right now in development. And the way those time lines line up is as follow. I will talk a little bit more about the DARE-BV1 Phase III in a moment, but based on that study design and the initiation we've already made, we expect top line data before the end of this year from that Phase III. That Phase III, based on discussions with the FDA is meant to support registration. So what that would mean then is the ability to file that NDA, which does have fast-track status with the FDA in 2021. Sildenafil Cream, as I mentioned, we are prepared from a regulatory perspective to advance into that Phase IIb study. We are preparing right now our start-up activities for that study. And we are, obviously, closely monitoring world situation and COVID situation to determine exactly the right time to get that study going. We have a lot of flexibility on that. And based on our anticipated time lines for that study, we would expect top line data before the end of 2021. And similarly, we're going through that same process with Ovaprene right now for contraception, where we are in our pre-pivotal activities associated with regulatory, manufacturing, study planning, et cetera, and we'll continue to make announcements as appropriate on our time lines. But right now, based on our time lines, we're expecting that top line data from that pivotal study by the end of 2022. So 3 very important corporate milestones over the next few years just on those programs alone. The next slide gives you a little more perspective on the BV1 study, which, obviously, has an ongoing Phase III, is quite relevant. One of the reasons that we were able, frankly, to start this study in an environment like this with the global pandemic, where people are limiting their health care visits to conditions that are essential is because of the nature of this condition. As I mentioned, it's a vaginal infection. It's a very bothersome vaginal infection. The symptoms are quite notable to the woman and any partners that she may have, are quite disruptive to her life and do have the implications of potential serious outcomes. And so this is a condition where women are actively seeking treatment even in our current world environment right now. And further, the nature of this particular study, because it's such an acute indication, is also one that is quite conducive to conducting in this environment. Essentially, there's really only 3 visits that the woman would need to make to her health care provider over the course of 1 month. The first of which being the visit she would be making anyhow because of her symptoms of bacterial vaginosis. So that first visit is her baseline visit where the diagnosis is confirmed and where all the consenting is done, and she can be enrolled in the study. She'll then be randomized 2:1, either to our active drive DARE-BV1 or to placebo. And then there are 2 more visits where basically she comes in for an assessment of resolution of those clinical signs and symptoms. The first time is sometime between day 7 to 14 after she's received the product to see how she's doing at that point in time. And then she comes in for the primary endpoint assessment sometime between day 21 to 30. So really, for her, it's about 30 days of time in the study and only 2 additional visits to what you would normally be making. And in terms of size, it's around 220, 240 subjects is what we're estimating at this point in time for the start of the study. And as I mentioned, based on our expectations, study has initiated and based on our expectations, we do continue to expect that we will report top line data before the end of this year. This next slide just gives a high-level overview of our financials. I really only intend to highlight a couple of things on this slide, which, first and foremost, is something that those of you who've been following us know is a theme for the company. We work very hard to be quite capital efficient. We worked very, very hard to also look at a variety of sources of capital to fund our program. And this highlight slide in summary is really a great illustration of that. Obviously, we work with our shareholders, we work hard to create value for our shareholders. And to allow shareholders to participate in an investment in our company at the right time and in ways that enhance value. We also look hard at opportunities for nondilutive funding and our grant that I've talked about with the NIH, our relationship with the Bill & Melinda Gates Foundation are great examples of that as of the announcement we've made this year in terms of the $730,000 through the NIH that came in for our Ovaprene program and the $1.5 million that we announced just this month from the Bill & Melinda Gates Foundation and the opportunity for an additional million under that same grant supplement with them. And then in addition, as you look at some of our first quarter highlights and second quarter highlights, you'll continue to see that efficiency in terms of how we work with our shareholders to also look at equity capital, partnering capital through license fees and also strategic relationships with shareholders, such as our $15 million line of equity that we put in place earlier this year. And the last slide that I want to highlight is really just to give an overview of the team. Obviously, doing the things that we do and the work that we do, it takes a team and it takes a team, both on the management side and on the side of the Board of Directors that have experience, experience developing products, developing from preclinical through late stage, but importantly, given our business model, has a track record of partnerships both in-licensing and out-licensing and mergers and acquisitions and creating value in that way. And specifically, as it pertains to our development program, have deep expertise in women's health. And that really is the team that we've built, both from the management team perspective and on the part of the Board of Directors. And that is my last slide. And so with that, I want to, again, thank you on the behalf of the entire management team of Daré. I would like to thank you, our directors and our stockholders, for your support during the last year, and we look forward to your continued support. Thank you very much.

Thank you, ladies and gentlemen. This does conclude today's meeting. You may disconnect your phone lines at this time, and have a wonderful day. Thank you for your participation.