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

Welcome to the conference call hosted by Daré Bioscience to review the company's financial results for the quarter ended March 31, 2023, and to provide a general business update. This call is being recorded. My name is Melary, and I will be your operator today. With us today are Sabrina Martucci Johnson, Daré's President and Chief Executive Officer; John Fair, Daré's Chief Commercial Officer; and Lisa Walters-Hoffert, Daré's Chief Financial Officer. Ms. Johnson, please proceed.

Thank you. Good afternoon and welcome to the financial results and business update call for the quarter ended March 31, 2023, for Daré Bioscience. Our plan today is to review our first quarter results, discuss development since our recent call in March and highlight some important objectives and milestones anticipated in 2023. Before we begin, I'd like to remind you that today's discussion will include 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 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 our Form 10-Q for the quarter ended March 31, 2023, which 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, May 11, 2023. Daré undertakes no obligation to update any forward-looking statements to reflect new information or developments after this call, except as required by law. As a reminder, Daré's diversified portfolio, which includes 1 FDA-approved product and 12 development stage candidates, 3 of which are in or nearing Phase III clinical development is focused solely and squarely on women's health and is built upon the following core principles: Each product candidate must address a meaningful market opportunity in the form of a persistent unmet need. Each product candidate must have the potential to be first line or first in category or both because we seek to deliver a clear improvement over the standard of care. And ideally, each product candidate has demonstrated proof of concept and/or uses well-characterized active pharmaceutical ingredients, which can mitigate development time, cost and even risk. Our current innovation efforts are focused in contraception, vaginal health, reproductive health, menopause, sexual health and fertility. On our recent 2022 financial results and update call, we discussed the key milestones anticipated for the year 2023. Phase IIb RESPOND, steady top line results for our investigational Sildenafil Cream for female sexual arousal disorder, the U.S. launch of XACIATO with Organon, the initiation of the Phase III clinical study of Ovaprene, our investigational potential first-in-category hormone-free, monthly intravaginal contraceptive whose U.S. commercial rights are under a license agreement with Bayer, which we expect will be the single pivotal study to support Ovaprene's premarket application, IND-related activities for DARE-HRT1, which is our investigational 28-day intravaginal ring for hormone therapy for the vasomotor symptoms a menopause and IND-related activities for DARE-VVA1, our investigational hormone-free intravaginal administered treatment for vulvar and vaginal atrophy as well as our Phase III related clinical study plans for the candidate DARE-HRT1 and Phase II clinical study plans for DARE-VVA1. And additionally, DARE-PDM1, which is our investigational vaginal hydrogel formulation of diclofenac to treat primary dysmenorrhea or menstrual cramps, the Phase I study conduct and the top line data this year. On today's call, Lisa will review our first quarter 2023 financial results shortly. But we will otherwise focus on our anticipated milestones for this quarter, this second quarter of 2023. So namely, we'll spend our time today on the Sildenafil Cream, 3.6% Phase IIb RESPOND study top line results and the commercial launch of XACIATO in the U.S. by Organon. We'll start with the Sildenafil Cream update. And we will review both the exploratory Phase IIb RESPOND study objectives to provide context for the anticipated upcoming top line data readout. And as importantly, we'll talk about the market dynamics for female sexual arousal disorder, which will highlight why we're so excited to be conducting this Phase IIb study for this yet unserved indication, that's analogous to rectal dysfunction in men. I'll then turn the call over to John, who will provide an update on Organon XACIATO launch activities. With Sildenafil Cream, 3.6%, we're looking to address the lack of physical genital arousal response in sensations and the associated distress that are the hallmark of female sexual arousal disorder or FSAD. As I mentioned upfront, FSAD is analogous to erectile dysfunction, or ED, in men. Both in terms of the pathophysiology of the condition as well as the target pharmacology and the addressable markets are also quite comparable in size. As we approach the Phase IIb top line data readout expected this quarter, we wanted to give you a sense of what you can expect. First, by way of refresher, previously conducted studies by Daré and our licensor SST, demonstrated that this cream formulation of Sildenafil, which is the same active ingredient is in Viagra, increased blood flow to the female genital tissue, both when assessed via an internal vaginal probe and when assessed via an external temperature-sensing camera. These data provide a proof of concept that the formulation is achieving its target activity in the tissue, increasing blood flow. Obviously, vaginal probes and general temperature sensors are not practical endpoints for a Phase III program. Thus, the exploratory Phase IIb study was designed to evaluate the performance of the Sildenafil Cream and to evaluate a number of different potential ways to ask women questions about their general sensations and improvements, which you referred to as patient-reported outcomes in their at-home setting. So this way, we could identify and select the appropriate patient-reported outcomes to take forward into the Phase III program. So that's what we're expecting in the Phase IIb readout. So as we wait for the Phase IIb RESPOND data readout, it's a great time to also remind everyone why we're so excited about the FSAD opportunity. We've mentioned on numerous calls that it's our belief that the FSAD market could be as large or larger in terms of potential patients as the ED market. We've also mentioned that our product candidates in Sildenafil Cream, 3.6% is the only development stage program to our knowledge that is specifically designed to address the lack of general arousal symptoms associated with FSAD. As I mentioned, Sildenafil is the active ingredient in Viagra. And our innovative topical cream formulation for women is designed to be used on demand prior to sexual activity and to deliver Sildenafil directly to the general tissue to facilitate vasodilation and increased blood flow directly where needed to improve the physical arousal response to address the lack of those general arousal sensations commonly associated with FSAD. The Sildenafil Cream has the potential to be the first FDA-approved product to treat FSAD and create an entirely new market of comparable addressable market size as ED. To put some of the market dynamics into context, we only need to look back to the launch of Viagra in 1998. According to an article published at that time in CNN Money, there were 2.7 million prescriptions filled for Viagra in its first full quarter on the market. And at that time, that was the most prescriptions ever for any pharmaceutical product in its first quarter on the market. According to the same source, more than 160,000 physicians prescribed the product during that period of time, making it one of the most successful product launches in history and helping to double Pfizer's market cap. It can be challenging to be first as a drug developer, raising a new path as we are with our exploratory Phase IIb study, where, as I mentioned, we need to evaluate a number of different potential ways to ask women questions about their general sensations and improvements in order to identify and select the appropriate patient-reported outcomes to take forward into the Phase III program. But that level of uptakes that I described in the Viagra launch from both providers and patients is incredibly impressive. And we see a number of similarities between ED and FSAD markets. So principally in ED, a lack of viable pharmaceutical intervention created a situation where before Viagra, men had a significant condition, which often led to depression, isolation and frustration. As is now the case with women with FSAD without a viable intervention, for ED like Viagra, men were reluctant to have a conversation or ask their provider for help for information. According to a 2004 study conducted by the British Medical Journal, the authors noted that men reported that ED affected their personal relationships, often less than feeling embarrassed. And they generally suffered in silence as many men felt unable to talk to their partners or friends about their condition. The authors also noted that once Viagra became available and when it provided symptom relief, men reported feeling happy and awaiting -- awaited as well as great improvements in their well-being. These findings near the insights that we have uncovered about FSAD. We know that women are similarly reluctant to speak about their condition with their partners and often report feeling dissatisfaction with their sex lives, unhappiness and general frustration due to their sexual problems. We also believe that without an FDA-approved intervention, women are left alone to suffer in silence and are often affected by a feeling of shame or embarrassment. Given the similarities of ED and FSAD in terms of the pathophysiology of the condition as well as the psychological and emotional impact that we've been discussing, we believe there is enormous unmet need. And we see the potential for a large amount of pent-up demand for a product like Sildenafil Cream. Therefore, we are excited to bring our exploratory Phase IIb study to conclusion. This quarter, we plan as the first step to report the top line data for a number of the assessment tools that we utilized in the study. Subsequent to reporting the top line results, when we have the full data set from the study, we will formalize our proposals to the FDA regarding the patient population to study and the endpoints to evaluate in the Phase III program. In addition to the Phase IIb study where the product was used at home, we recently announced the initiation of a supplemental thermography study in a clinical study in a clinical setting. This Phase I demography study of Sildenafil Cream is expected to enroll around 15 women and to be completed this year. These data are an important part of our comprehensive clinical development and regulatory plan for Sildenafil. And they'll add to our existing clinical and nonclinical data package to support the ongoing development program. These data are expected to complement the forthcoming clinical findings from our Phase IIb RESPOND trial in preparation for a Phase III program. Our goal is to bring a much-needed solution to the women estimated to be 10 million in the United States alone who are distressed and seek treatment for low or no sexual arousal. And with no FDA-approved option to address the condition, our goal is for Sildenafil Cream to be the first FDA-approved product for women with FSAD as Viagra wise for men with ED. Now we're not planning on providing detailed updates on the other development programs today. But I do want to note that we've been enjoying working with our collaborator NICHD of the NIH on the Ovaprene pivotal study start planned for later this year. And we continue to expect to commence patient enrollment in mid-2023 and what we expect to be the single pivotal contraceptive clinical study required to support the PMA submission for registration. I also want to mention that we are thrilled with the interest in our DARE-PDM1 study that is underway in Australia. And as a reminder, this is our investigational product to treat primary dysmenorrhea or menstrual cramps by delivering the non-steroidal anti-inflammatory drug diclofenac vaginally using our proprietary hydrogel formulation, that same formulation technology that is used in XACIATO. The top line data are expected this year and recent market research suggests that the global market for dysmenorrhea treatment was estimated to be valued at $13 billion in 2022. And that the size of this market is expected to increase to $28 billion by 2029. So with those updates on the development programs, I will now turn it over to John to provide a commercial update on the XACIATO launch activities.

Thank you, Sabrina. As a reminder, XACIATO, clindamycin phosphate vaginal gel is lincosamide antibacterial for single-dose vaginal administration indicated for the treatment of bacterial vaginosis in female patients 12 years of age and older in the United States. The XACIATO story is a great validation of our portfolio candidate selection and development strategy. Bacterial vaginosis is the most common vaginal condition in women of reproductive age estimated to affect approximately 23 million women in the U.S. alone. However, a large number of women with the condition are underserved by currently available products. We believe that we could deliver a novel option. Understanding that differentiation drives value, we designed a Phase III study capable of generating the data necessary to support a compelling label. We believe that if we were successful in our clinical development planning, we would be able to create an opportunity for commercialization collaboration that could drive value. And in regard to securing a collaborator capable of maximizing value, we believe we have been very successful. We are thrilled that the women's health company, Organon is launching XACIATO and that they will leverage their established NEXPLANON sales team to accelerate XACIATO uptake. With the manufacturing validation activities required to support the commercial launch completed, commercial launch activities are progressing given that the sales team for NEXPLANON will be launching XACIATO, we expect that the XACIATO sales team will -- we expect that XACIATO will benefit from Organon's track record of commercial success in the branded women's health category. Organon believes there's a roughly 90% overlap of health care providers, or HCPs, who prescribe NEXPLANON and have the potential to be prescribers of XACIATO based on provider treatment patterns. Because of the strong relationships the sales team has with these HCPs in the women's health space, we expect Organon to be well positioned to inform these HCPs about XACIATO, ultimately providing benefits for their patients. As I mentioned on our last update call, Organon has what we believe to be a truly integrated go-to-market plan, targeting all of the key stakeholders, HCPs, payers and patients in order to quickly drive interest and awareness in XACIATO. With a strong product label and a powerful commercial partner, we are excited about the launch of XACIATO expected this quarter. And Organon has been working on launch activities. They're taking a holistic approach to the product's introduction, including ongoing work in the areas of non-salesforce related promotional activities and utilization of key symposia and conference events. Organon had a very prominent presence at a recent payer-focused industry conference called AMCP, which stands for the Academy of Managed Care Pharmacy. This annual event is one of the key conferences where payers and manufacturers can interact and share key pharmacoeconomic insights and learnings across a broad range of products and therapeutic areas. Organon shared important insights into the pharmacoeconomic and socioeconomic impact of a bacterial vaginosis diagnosis. And I attended this conference personally. And I really believe this information was very well received by many of the key stakeholders attending the conference as well. In addition to their presence at AMCP and their ongoing work with payers, Organon is planning activities in support of the physician community, including their branded exhibit at the Marquee Conference in women's health, the American College of Obstetricians and Gynecologists annual clinical and scientific meeting commonly referred to in our field as the ACOG meeting. The upcoming ACOG meeting, which takes place later this month, provides unique opportunities to interact with key HCPs focused in women's health, which is critical given the role that OB/GYN offices play in treating patients with bacterial vaginosis. And finally, I know we touched on this earlier. But it feels worth repeating, Organon will leverage its established NEXPLANON sales team, which currently focuses on contraception to maximize XACIATO uptake at launch. And because the vast majority of sufferers of bacterial vaginosis are also women of reproductive age, the NEXPLANON salesforce is well positioned to leverage their existing relationships with HCPs in women's health. So in summary, we believe that XACIATO should be well positioned for commercial success, given the knowledge and experience Organon's NEXPLANON sales team, coupled with Organon's payer outreach provider and patient-centered initiatives. We are working towards the first commercial sale before the end of the second quarter. And with that, I will now turn the call over to Lisa to provide a financial update.

Thank you, John, and thanks, everyone, for joining us today. I would now like to summarize Daré's financial results for the quarter ended March 31, 2023, which I will refer to as the current quarter or first quarter. As you know, Daré's business model is to assemble and advance a portfolio of differentiated product candidates that address meaningful unmet needs that we've identified in women's health, and then to monetize the value of those -- our portfolio's clinical and regulatory advances over both the near and long term. The investment required to build and advance the portfolio include corporate overhead, portfolio acquisition and maintenance costs and ongoing research and development or R&D expenses. So during the first quarter of 2023, our general and administrative expenses or G&A were approximately $3.3 million. Our R&D expenses, which vary from period to period based on clinical, preclinical, manufacturing, regulatory and other activities across our entire portfolio were approximately $5 million and primarily reflected the cost of 2 of our later-stage programs, including the ongoing Sildenafil Cream, 3.6% Phase IIb RESPOND clinical trial and manufacturing and regulatory affairs activities related to Ovaprene. Our comprehensive loss for the quarter was approximately $8 million. We ended the first quarter with approximately $19.8 million in cash and cash equivalents. And we had approximately 86.3 million shares of common stock outstanding as of May 10. In terms of upcoming milestones and future sources of cash under our license agreement with Organon to commercialize XACIATO, we are entitled to receive $2.5 million following first commercial sale. Thereafter, we will be eligible to receive potential additional milestone payments of up to $180 million as well as tiered double-digit royalties based on XACIATO's net sales. We are continuing to explore a variety of options to fund our operations, advance our candidates, monetize the value of our assets and build shareholder value. As a reminder, these alternatives include, but are not limited to, non-dilutive grants, equity sales, license agreement, structured financing, strategic collaborations and alliances. As we've noted previously, we will endeavor to be creative, collaborative and opportunistic in seeking the capital needed to meet our objectives and build shareholder value. We also encourage investors to review the more detailed discussion of our financials, our financial condition, liquidity, capital resources and risk factors in our Form 10-Q for the quarter ended March 31, 2023, which we filed this afternoon as well as our annual report on Form 10-K for the year ended December 31, 2022, which was filed on March 30, 2023. I would now like to turn the call back over to Melary, the operator.

[Operator Instructions] Your first question comes from the line of Catherine Novack with Jones Research.

Congrats on the quarter. My first question is about Sildenafil Cream. Just thinking about the RESPOND study, look at endpoints that are important for efficacy study that specifically directed at arousal. And to that point, how are arousal and desire differentiated from the FDA's perspective, when you're thinking about a product that's directed specifically at FSAD versus hypoactive desire?

Great questions. Thank you for them. And it's a good reminder of some of the things that maybe we should have also talked about in our prepared comments because they're great questions to kind of get everyone ready, right, for the day to read out. So in terms of the kind of questions that one can ask about general sensations of arousal. They are as the name implies. Their questions about what someone might be feeling, right, literally a sensation, a physical sensation as part of their sexual activity and part of that arousal response to activity. And you may remember that and we've talked about this in past calls that we utilized both the combination of already validated questionnaires about sexual functioning that have a lot of domains, questions about orgasms, questions about lubrication, questions about arousal sensations, questions about cognition even, right, and questions about desire, right, things that you talked about. So we used some the kind of relevant parts of some validated questionnaires like that. And then we also included what we're referring to as our exploratory endpoints. And those really came out of interviews with women who have the condition to understand what bothers them, what are they not feeling physically, what are the words they use to describe it and what would they like to see improved? And so those are the type of things that we included in our study. And to your question, too, about the difference between those kinds of questions versus desire disorder, think about what Sildenafil does, Sildenafil increases blood flow, right? That is what it does, right, through its mechanism. And so we're really focusing on questions about what Sildenafil does and what someone is likely going to feel as a result of that. And that's very different from desire. Desire is its interest, right? It's emotional. It's are you interested in having a sexual activity? Do you have sexual fantasies, right? It's more -- it's more of that thought aspect of it. And so we do ask questions about that in the trial because I think it's important for us to understand our patients, both the subjects in the study, both before we enroll them in the study and to understand all the benefits, right, that a product like Sildenafil could potentially have. But the focus is really on those general sensations, right -- these physical manifestations as opposed to how interested they are or how much they fantasized.

That's helpful. So understanding the FDA does not have separate draft guidance for arousal and the arousal disorders that they're kind of lumped together?

Yes. So what they did, it's one guidance document. But it is very, very clear that the conditions are different. So what they've done is they have one guidance document that covers both as discrete conditions, female sexual arousal disorder and hypoactive desire disorder. But they are all part of one guidance document. And I think part of that came out of the fact that the desired products, there are 2 products no FDA approved for desired disorder. They came before us in terms of approaching the FDA and talking about studies and talking about indications that really led to ultimately the FDA putting out that draft guidance document in 2016 to very clearly try to distinguish the 2 disorders. They are different. And they certainly don't want, for instance, a product that only demonstrates improvement in one aspect, like desire to get labeling to imply that they improve arousal because those are 2 very different things. And so that's what the guidance document was really intended to do with that. They're both aspects of sexual dysfunction, but they're different. And to give examples for sponsors on what the pathway to approval is. And it gives a lot of leeway. That's why we did all this work to align on our exploratory endpoints and aligned with the FDA that the Phase IIb really is the validation study for those exploratory endpoints so that we really have an opportunity to take the best most responsive questions forward into the Phase III. And maybe one other point on that, too, that might be helpful to just again help frame it for people that are going to be watching for the top line data. In any clinical trial, your primary outcome measures that you declare as the primary. They have to be if you're using a patient-reported outcome. It has to be an already validated questionnaire. So we were not able to use some of the questions, those very specific questions that women with the condition helped us developed. We were not able to use any of those as our primary or secondary endpoints. So those are all our exploratory end points. So the primary endpoint really came out of an already validated questionnaire, sexual function questionnaire of 28 questions. And then we used this particular arousal domain of it and then an already established and validated questionnaire around distress and we used one question out of that. So that's how we came up with the primary endpoints using those already validated questionnaires. And then the exploratory endpoints used all of the new questions and new way of asking the questions and new descriptive words, they came out of our patient interviews. Those are our exploratory endpoints. And that's why our top line data readout will be a little atraditional, right? A traditional top line data readout usually just has the primary endpoint. But these exploratory endpoints are just as interesting. We can't do all of it for the top line data readout because that would just be a little bit much to do quickly, which is why we made the comment that we'll end up having to look at the whole fulsome database before we can decide what goes into Phase III. But at least for top line, we'll be able to share a combination about the primary secondary as well as some of these exploratory end points, the fun of being first.

Your next question comes from Kumar Raja with ROTH Capital.

Congratulations on the progress. Continuing with the Sildenafil Cream, what is the expectation in terms of when you will have the full data set?

That's a great question. We are trying to work as quickly as we can, right? So as you know, the way the process works is you have the database locked. And then there's -- we'll fairly quickly in short order from that had the top line data, which obviously we will announce very quickly upon getting this top line data. But then typically, it does take -- we're not talking days. It's more time, right, before you actually get the full -- the complete data set and really have an opportunity to go through all of it very carefully and ultimately compile your clinical study report. That, as you probably well know from other corporate experiences can take weeks to months, right, for that to happen. So obviously, we're motivated to work very quickly. It's something we pride ourselves on in terms of being a smaller company, you can work quickly, but there -- this is a very rich data set. I cannot stress that enough. We are asking these women who participated in the study. They were asked a lot of different questions, a lot of different ways, a lot of different times, and we collect a lot of information about them. And so we don't want to rush this analysis because we are going to blaze the path, right, hopefully, for the Phase III. And what's going to happen in Phase III and not just for us, but who comes potentially after us in a program like this, if it's successful as we hope it can be. We want to make sure that what we request from the FDA in the Phase III is very our formulation favorable as well, right? So that's a long way of me saying, it's going to take some time, know that the time is thoughtful and purposeful and well spent with the shared objective of making sure we take something forward ultimately to the FDA, obviously, as quickly as we can. We want to move the data as we hope we want to move this forward as fast as we possibly can. But we also know we only get -- you get that one opportunity to present this to the FDA and what we want to take forward. So we're going to want to make sure we're thoughtful on that.

Okay. And with regarding to the thermography study, how many sites will you be conducting that study in? And how will that be kind of like viewed in with this complete data before you present it to the FDA?

Yes, so great question. So it's one site that we're working with. And these studies are very specific in their conduct. So they're only actually in the whole world, less than a handful of sites that can do these kinds of sexual health demography studies because they're very specific in types in terms of the type of equipment you use, in terms of the type of setup you need to have in order to do the study and the conduct. So we worked with one site for the first demography study that we did. And we're working with one of the other sites that had the capacity to do this for this particular study. And what they can be very helpful in is helping you understand time to effect and what that time to affect curve looks like. Obviously, we did one of them purposely before the Phase IIb study and that's what determined our dosing regimen. And in the Phase IIb, we gave a window of 10 to 20 minutes. When the woman would need to dose the product and advance in the sexual activity. So having some additional data around that is very helpful and also data in terms of how quickly it separates from placebo is very helpful for us. And so we had that great -- some of that great data going into the Phase IIb. But we think it's very powerful to have a more fulsome data set, again, on that as we prepare for discussions with the FDA for the ultimate Phase III plan. But that's what we're really looking at. We're looking at whether it's the placebo curve and vehicle curve, and active curve, what -- no product, right? What does that all look like? And what is that time when you're seeing kind of that maximum the separation. So that as we plan our go-forward program, we're really making sure we're taking a lot of very specific data into consideration, particularly before going it to FDA.

And maybe finally, in terms of Ovaprene, maybe just provide some highlights like is everything going as expected for the mid-'23 trial start?

Yes. No, we're super excited. So the NICHD has been fantastic to work with. They started doing work and prepping the core sites that we're going to have in the study, which are part of their contraceptive clinical trials network. You may remember back in December of last year, which was super helpful because they also gave great kind of insights on the protocol in terms of operationally and conduct. And then obviously, manufacturing activities, as Lisa talked about in terms of things we've been spending on, obviously, pivotal study supplies, right, all of that, which is important to have for the study. So things have been shaping up nicely. As you know, part of the time we have said was also regulatory time. You may be remember that the ID approval from the FDA came with some comments and things that wanted to comment on things we might want to consider for the pivotal study to help really make sure it's that one pivotal study for registration. So we've been working on all of that and are feeling really good about where we are now. And the site is excitement and enthusiasm for the study as well as the NIH's enthusiasm for working with us on that. So we're feeling like we're in really good shape and everything is moving forward as planned right now.

Your next question comes from the line of Kemp Dolliver with Brookline Capital.

I'm going to ask about XACIATO.

Thank you. Very excited about XACIATO.

Yes. So your milestones dependent upon the first commercial sale, which is a pretty low bar in the grand scheme of things. And I have -- it does appear to be getting some formulary coverage. And I think the real heart of my question is, given all this talk about launch and the fact that you haven't say -- aren't saying that you had the first sale yet. That tells me that there's a question about the timing of when Organon is actually detailing it. Have they started detailing the product or a few weeks away?

Yes, it's a great question for us to clarify. So as John mentioned, right, in his comments, there's -- and we've been talking about, right? And as you just noted, right, in terms of formulary and payer and all that, there are activities that started last year, frankly, right, around those activities that we would all characterized as launch activities right? So launch activities have been underway. Obviously, there is a big important marquee conference, as John noted, in the women's health space happening in May. And as John also noted, there were and we've mentioned on past calls, there were manufacturing validation activities that had to happen before you could put product in the channel, right? So with the manufacturing validation activities required to support that commercial launch now completed, that really allows us into that next phase of the commercial launch activities that to your point, achieve that low bar of that first commercial sale. And that's why we're guiding that with everything that's happening with obviously ACOG being a very important big branded right, branded exhibit event for this product. Obviously, that's happening this month in May, that's what we're saying, look, the anticipation is second quarter.

Okay. Super. And the product is in licensed and I think you have to share the economics with the licensor and -- or licensee. And so that applies to the milestones on the royalties?

Yes. So taking a step back in terms of just in general, right, at Daré, because I think its important thing to understand. Our portfolio is built, right, of products in women's health that we selected based on that indication we wanted to treat, right, that we identified as having that kind of going back to the beginning of the call, the 3 things I talked about that are so important to us in terms of making sure we're bringing ultimately to market very differentiated products that have considerable market opportunities so you start with the need, you identify that, you designed that sort of target product profile and you go look for the product. And what that means, therefore, by design, is that in our portfolio, someone else has likely invented it, right? And so there are financial obligations that we owe to a third party. But we've built our company knowing that was our strategy and that we would not, as a company, find ourselves in a place where we have to bear the expense of commercialization, right? You heard Lisa talk about our burn. Our burn is so low despite the fact that we have 12 products in active development and it stays low relatively, right, because we have been able to enter into commercialization partnerships. So knowing that we are going to do that upfront. All of our transactions, all of our in-license transactions are designed to support exactly what you talked about. That we're going to get money from someone and we are likely going to owe money right, to someone else. But ultimately, that has to make sense for our shareholders, right? Because ultimately, that's who we are working for, right? And so we look at all of that. Our deals are all very different. Every transaction is different depending on the indication, the opportunity, the likely downstream transaction that we're going to have and the nature of the product. So in this case, but generally, to your point, they do include some milestones in royalties to the other party. In this transaction, we have $180 million, as Lisa talked about in terms of milestones that we're eligible to receive from Organon on top of the double-digit tiered royalties. In this case, our licensor, the milestones are quite low. And I can let Lisa talk to them specifically because we've disclosed them. So they're no way near the $180 million.

Yes. No. And thank you, Sabrina. And exactly what she was describing each deal is different. But with our license, so this is to obtain the rights to the product, our license agreement with MilanaPharm. We will only owe them one commercial milestone and we've disclosed that that's $1 million when the net sales are over $50 million. And then just Sabrina and so that said, on commercial milestones and everything else is a low royalty based on net sales.

Yes. And then there is the $500,000 on the first commercial sale.

The way to think about how the royalty works is in a way you're keeping, for lack of a better term, spread between what you're getting, you're getting from where we'll get from Organon and versus what you'll pay out?

Yes, absolutely. There's -- obviously, there's a spread on just the royalty part and then there's a spread as we were just talking about, specifically on the milestones, which are 2 different, right, those are 2 different revenue streams coming into Daré.

Your last question comes from Doug Tsao with H.C. Wainwright.

Just curiosity with XACIATO, do you know will this be available at the pharmacy? Or will this be distributed through a specific pharmaceutical -- specialty pharmacy?

Yes. At the pharmacy and I don't know, John, if you want to say any comments on that?

Yes, just like every kind of broad women's health product that's going to be available through the pharmacy. So the retail outlet is where you'll see the product show up.

I was going to ask as a follow-up. Do we have a sense of the tech transfer and the timing for Organon taking on the manufacturing?

Yes, great question. So as and just for the benefit of others, so, our agreement with Organon does have us today. Daré is still overseeing the manufacturing activity and then as the holder of the marketing authorization. But it does contemplate that at some time, Organon will take over those manufacturing responsibilities. And we've obviously, together have been working on that. These things take time. So XACIATO as part of what we love XACIATO because it's part of in addition to intellectual property, Partner Protect, the brand. It's a very specific technology in order to make that hydrogel technology. It does require you see certain equipment and certain processes and all of that good steps. So we have obviously started the tech transfer process. But just mechanistically, there's time in terms of things that are needed, right, equipment that is needed, that is specialized in order to make XACIATO. And then there's also just the regulatory piece of, right, the process of switching manufacturers, so both parties are working hard at this. But this is not a -- just to set everyone's expectations appropriately a tech transfer for something like this, in this manner, right, where it's not just a CDMO, where it's truly going to transfer hands from a regulatory perspective as well is a process that takes time. This is not a tomorrow thing. This is something that takes time and effort from both parties. And we are working diligently together on it.

There are no further questions at this time.

Great. Well, thanks, first of all, for the great questions. We really appreciate the opportunity to share our thoughts on some of the upcoming milestones this quarter and spending some time on that in this year. And thanks, everyone, for taking the time this afternoon to hear about the recent updates and our ongoing commitment to drive value for all of Daré's stakeholders. We've talked about the shareholders today, but obviously, the women and the health care providers. And with our diverse portfolio, we really seek to bring to market differentiated prescription therapies that prioritize women's health and well-being that expand the treatment options where none exist, enhanced outcomes where current standard of care has meaningful shortcomings and improve ease of use for women where a more compelling form factor can drive adoption primarily in the areas we've been talking about and some that we haven't touched on today, the contraception, vaginal health, reproductive health, menopause, sexual health and fertility. So we very much look forward to keeping you updated on our progress and the milestones anticipated this year that I outlined earlier, which includes the XACIATO product launch and first commercial sale and milestones associated also with our 3 candidates end or nearing Phase III clinical development. And so to list all the milestones again for 2023 that we've talked about. We have the Phase IIb RESPOND, top line study results for the Sildenafil Cream, study for female sexual arousal disorder. So this quarter is what we're targeting on that, similarly, this quarter, the U.S. first commercial sale of XACIATO by Organon. In addition, as we've talked about, the initiation of that Phase III clinical study of Ovaprene, which is, our investigational potential first in category hormone-free, monthly intravaginal contraceptive and its U.S. commercial rights surrender license agreement with Bayer. And again, as we talked about, we expect that to be a single pivotal study to support Ovaprene's premarket application. We didn't, other than to mention them talk about these in detail today. But as we mentioned, the IND-related activities for DARE-HRT1, which is our investigational 28-day intravaginal ring for hormone therapy for the vasomotor symptoms in menopause and DARE-VVA1, our investigational hormone-free intravaginal administered treatment for vulvar and vaginal atrophy. So Phase III and Phase II activities respectively, for those and clinical study initiation plans for those candidates. And then mentioned PDM1, which is our investigational vaginal hydrogel formulation of diclofenac for menstrual cramps. I'm very much looking forward to that Phase I study completion, which is underway right now and then the top line data this year. So that's all just for 2023. So thank you again for your time today. And we look forward to keeping you updated.

This concludes today's conference call. You may now disconnect.