8-K: Dare Bioscience Secures $22 Million in Royalty Financing to Advance Women's Health Pipeline

Dare Bioscience has secured $22 million in non-dilutive financing through a royalty monetization agreement with XOMA to advance its Phase 3 women's health product candidates.

Summary

• Dare Bioscience entered into royalty purchase agreements with XOMA, receiving $22 million upfront.
• XOMA will make additional payments to Dare if total payments to XOMA exceed $88 million, with Dare receiving $11 million for each subsequent $22 million received by XOMA.
• Dare sold its rights to future royalties and milestone payments from XACIATO sales, a portion of a potential payment from Bayer related to Ovaprene, and synthetic royalties on future sales of Ovaprene and Sildenafil Cream.
• The synthetic royalty rates are 4% on Ovaprene and 2% on Sildenafil Cream, which will decrease to 2.5% and 1.25% respectively once XOMA achieves a certain return threshold.
• XOMA may also repay Dare's obligations to United in Endeavour, LLC, under a previous royalty agreement.
• Dare retains the majority of future economics from Ovaprene and Sildenafil Cream, including all commercial milestones.

Sentiment

Score: 7

Explanation: The sentiment is positive due to the non-dilutive financing secured, which will help advance the company's pipeline. However, the sale of future royalties and the potential reduction in royalty rates temper the overall positive outlook.

Positives

• The $22 million in non-dilutive financing provides significant capital to advance Dare's Phase 3 product candidates.
• The structure of the agreement allows Dare to participate in the upside of its products through milestone payments and retained economics.
• The transaction allows Dare to focus on advancing Ovaprene and Sildenafil Cream through key catalysts.
• Dare retains the majority of future economics and the ability to achieve attractive margins through retained net sales and all commercial milestones.
• The deal does not restrict Dare's ability to out-license any of its products or product candidates.

Negatives

• Dare has sold a portion of its future revenue streams, including royalties and potential milestone payments.
• The synthetic royalty rates on Ovaprene and Sildenafil Cream will decrease after XOMA achieves a certain return threshold.
• Dare cannot elect to receive additional funding from UiE without XOMA's prior written consent.

Risks

• Dare's ability to raise additional capital when needed is a risk.
• There are risks associated with the development, regulatory approval, and commercialization of product candidates.
• Clinical trials may fail or be delayed.
• There is a risk that competitors may develop more competitive products.
• The company is dependent on third parties for clinical trials and manufacturing.
• There are risks related to intellectual property protection and enforcement.

Future Outlook

Dare expects the proceeds from the transaction to provide sufficient capital to advance Ovaprene and Sildenafil Cream through key catalysts. The company anticipates potential ongoing milestone payments from XOMA and lower effective synthetic royalty rates on net sales of Ovaprene and Sildenafil Cream after XOMA achieves certain return thresholds.

Management Comments

• Sabrina Martucci Johnson, President and CEO of Dare Bioscience, stated that the transaction accelerates potential cash flows from the future commercial success of XACIATO and such product candidates.
• She also noted that the transaction ensures that Dare and its shareholders have the opportunity to participate meaningfully in XACIATO economics as commercialization progresses.
• She emphasized the significant potential of Ovaprene and Sildenafil Cream, with Dare retaining the significant majority of future economics and the ability to achieve attractive margins.

Industry Context

This announcement is relevant to the broader trend of biotech companies seeking non-dilutive financing to fund clinical development. The focus on women's health aligns with increasing attention and investment in this sector. The deal structure, involving royalty monetization and synthetic royalties, is a common approach in the biotech industry to secure funding while retaining upside potential.

Comparison to Industry Standards

• Royalty monetization is a common financing strategy in the biotech industry, with companies like Royalty Pharma and Healthcare Royalty Partners being active players.
• The deal structure, involving upfront payments and milestone payments based on future sales, is similar to other royalty financing agreements in the sector.
• The synthetic royalty rates of 4% and 2% for Ovaprene and Sildenafil Cream, respectively, are within the typical range for early-stage biotech assets.
• The reduction of royalty rates after a certain return threshold is also a common feature in these types of agreements.
• Compared to companies like Myovant Sciences, which was acquired for its women's health portfolio, Dare is taking a different approach by monetizing future royalties to fund its pipeline.

Stakeholder Impact

• Shareholders will benefit from the non-dilutive financing and the potential for future milestone payments.
• The transaction allows Dare to continue advancing its product candidates, which could lead to new treatment options for women.
• Employees will benefit from the company's continued growth and development.
• Customers may benefit from the potential availability of new and innovative women's health products.

Next Steps

• Dare will use the proceeds to advance Ovaprene and Sildenafil Cream through key catalysts.
• The company will continue to develop and commercialize its women's health product candidates.
• Dare intends to file the agreements as an exhibit to its quarterly report on Form 10-Q for the quarter ending June 30, 2024.

Key Dates

Keywords

royalty financing, non-dilutive capital, womens health, XACIATO, Ovaprene, Sildenafil Cream, milestone payments, synthetic royalty, licensing agreement, clinical trials