Daré Bioscience Secures $12 million in Royalty-backed Investment Structure
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Insights
The agreement between Daré Bioscience and its investor introduces a non-dilutive financing mechanism that provides the company with immediate liquidity of $5 million and an option for an additional $7 million in funding. This capital injection is earmarked for advancing Daré's late-stage product candidates, which are positioned as first-in-category within women's health, a sector with growing market potential.
The structure of the deal, which involves a share of royalties and milestones from the XACIATO™ license with Organon, is capped at a 12% internal rate of return (IRR) for the investor. This arrangement allows Daré to retain future profits beyond the investor's targeted return, potentially maximizing long-term shareholder value while minimizing equity dilution in the short term.
Furthermore, the issuance of warrants at a 10% premium to the prior day's closing price could suggest confidence in the company's future performance. However, if exercised, these warrants could lead to future dilution of existing shareholders. Investors should weigh the immediate benefits of non-dilutive capital against the long-term implications of potential equity dilution.
Royalty-backed financing agreements are increasingly popular in the biotech industry, allowing companies to fund their operations without sacrificing equity at a crucial development phase. In the context of Daré Bioscience, securing such funding underscores the strategic focus on their late-stage portfolio, which includes products like XACIATO™, a treatment in the women's health arena.
Given the specificity of the agreement to one product and the finite IRR, this deal exemplifies a targeted financing approach. It suggests a calculated risk on the part of the investor, banking on the commercial success of XACIATO™. For Daré, it provides a runway to potentially bring their product to market without the immediate pressure of repaying a traditional loan or diluting capital through equity financing.
However, the success of this financial strategy hinges on the commercial viability of XACIATO™ and the broader portfolio. Stakeholders should monitor the product's progress and market reception closely, as these will directly impact Daré's financial health and its ability to meet the obligations of this agreement.
The contractual elements of the financing agreement, such as the optionality of additional tranches, the stipulated IRR and the right to terminate the agreement by repaying the advanced amounts plus IRR, provide Daré with flexibility. This flexibility is crucial for biotech firms that face uncertain regulatory and market landscapes.
It is also important to note the legal obligation Daré has to disclose the details of such transactions in its Current Report on Form 8-K filed with the Securities and Exchange Commission (SEC). This filing ensures transparency for investors and is a regulatory requirement that helps maintain market integrity.
The potential impact of the warrants on the company's share structure should not be overlooked. Legal disclosures in future SEC filings will be essential for tracking the implications of these warrants on shareholder equity, especially if the warrants are exercised.
SAN DIEGO, Dec. 26, 2023 (GLOBE NEWSWIRE) -- Daré Bioscience, Inc. (NASDAQ: DARE), a leader in women’s health innovation, today announced it has entered into a royalty-backed financing agreement that provides Daré with
“This advance against a percentage of future net payments we receive under our license agreement for XACIATO provides us with capital at an opportune time to drive shareholder value through the continued advancement of our late-stage portfolio of product candidates,” stated Sabrina Martucci Johnson, Daré’s President and Chief Executive Officer. “This financing exemplifies our commitment to being creative, collaborative and opportunistic in seeking capital at an attractive cost to advance our late-stage candidates – all of which represent a first-in-category opportunity – while seeking to continue to deliver value for all Daré stakeholders.”
Terms of the Agreement
Daré received
In connection with the closing, Daré issued to the investor a five-year warrant to purchase an aggregate of 5 million shares of Daré’s common stock at an exercise price of
Additional information regarding the transaction is available in Daré’s Current Report on Form 8-K filed with the Securities and Exchange Commission today.
About Daré Bioscience
Daré Bioscience is a biopharmaceutical company committed to advancing innovative products for women’s health. The company’s mission is to identify, develop and bring to market a diverse portfolio of differentiated therapies that prioritize women's health and well-being, expand treatment options, and improve outcomes, primarily in the areas of contraception, vaginal health, reproductive health, menopause, sexual health and fertility.
Daré’s first FDA-approved product, XACIATO™ (clindamycin phosphate) vaginal gel
Daré Bioscience leadership has been named on the Medicine Maker’s Power List and Endpoints News’ Women in Biopharma 2022. In 2023, Daré's CEO was honored as one of Fierce Pharma’s Most Influential People in Biopharma for Daré’s contributions to innovation and advocacy in the women’s health space. Daré Bioscience placed #1 in the Small Company category of the San Diego Business Journal’s 2023 Best Places to Work Awards.
Daré may announce material information about its finances, product and product candidates, clinical trials and other matters using the Investors section of its website (http://ir.darebioscience.com), SEC filings, press releases, public conference calls and webcasts. Daré will use these channels to distribute material information about the company and may also use social media to communicate important information about the company, its finances, product and product candidates, clinical trials and other matters. The information Daré posts on its investor relations website or through social media channels may be deemed to be material information. Daré encourages investors, the media, and others interested in the company to review the information Daré posts in the Investors section of its website and to follow these X (formerly Twitter) accounts: @SabrinaDareCEO and @DareBioscience. Any updates to the list of social media channels the company may use to communicate information will be posted in the Investors section of Daré’s website.
Forward-Looking Statements
Daré cautions you that all statements, other than statements of historical facts, contained in this press release, are forward-looking statements. Forward-looking statements, in some cases, can be identified by terms such as “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “design,” “intend,” “expect,” “could,” “plan,” “potential,” “predict,” “seek,” “should,” “would,” “contemplate,” “project,” “target,” “objective,” or the negative version of these words and similar expressions. In this press release, forward-looking statements include, but are not limited to, statements relating to the continued advancement of Daré’s late-stage portfolio of product candidates and Daré’s ability to deliver value for all Daré stakeholders. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause Daré’s actual results, performance or achievements to be materially different from future results, performance or achievements expressed or implied by the forward-looking statements in this press release, including, without limitation, risks and uncertainties related to: Daré’s ability to raise additional capital when and as needed to advance its product candidates, execute its business strategy and continue as a going concern; Daré’s ability to develop, obtain FDA or foreign regulatory approval for, and commercialize its product candidates and to do so on communicated timelines; failure or delay in starting, conducting and completing clinical trials of a product candidate; Daré’s ability to design and conduct successful clinical trials, to enroll a sufficient number of patients, to meet established clinical endpoints, to avoid undesirable side effects and other safety concerns, and to demonstrate sufficient safety and efficacy of its product candidates; Daré’s dependence on third parties to conduct clinical trials and manufacture and supply clinical trial material and commercial product; the risk that positive findings in early clinical and/or nonclinical studies of a product candidate may not be predictive of success in subsequent clinical and/or nonclinical studies of that candidate; the risk that the FDA, other regulatory authorities, members of the scientific or medical communities or investors may not accept or agree with Daré’s interpretation of or conclusions regarding data from clinical studies of its product candidates; the risk that development of a product candidate requires more clinical or nonclinical studies than Daré anticipates; the loss of, or inability to attract, key personnel; the effects of macroeconomic conditions, geopolitical events, public health emergencies, and major disruptions in government operations on Daré’s operations, financial results and condition, and ability to achieve current plans and objectives; the risk that developments by competitors make Daré’s product or product candidates less competitive or obsolete; difficulties establishing and sustaining relationships with development and/or commercial collaborators; failure of Daré’s product or product candidates, if approved, to gain market acceptance or obtain adequate coverage or reimbursement from third-party payers; Daré’s ability to retain its licensed rights to develop and commercialize a product or product candidate; Daré’s ability to satisfy the monetary obligations and other requirements in connection with its exclusive, in-license agreements covering the critical patents and related intellectual property related to its product and product candidates; Daré’s ability to adequately protect or enforce its, or its licensor’s, intellectual property rights; the lack of patent protection for the active ingredients in certain of Daré’s product candidates which could expose its products to competition from other formulations using the same active ingredients; product liability claims; governmental investigations or actions relating to Daré’s product or product candidates or the business activities of Daré, its commercial collaborators or other third parties on which Daré relies; the impact of pharmaceutical industry regulation and health care legislation in the United States and internationally; global trends toward health care cost containment; cybersecurity incidents or similar events that compromise Daré’s technology systems or those of third parties on which it relies and/or significantly disrupt Daré’s business; and disputes or other developments concerning Daré’s intellectual property rights. Daré’s forward-looking statements are based upon its current expectations and involve assumptions that may never materialize or may prove to be incorrect. All forward-looking statements are expressly qualified in their entirety by these cautionary statements. For a detailed description of Daré’s risks and uncertainties, you are encouraged to review its documents filed with the SEC including Daré’s recent filings on Form 8-K, Form 10-K and Form 10-Q. You are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date on which they were made. Daré undertakes no obligation to update such statements to reflect events that occur or circumstances that exist after the date on which they were made, except as required by law.
Contacts:
Media and Investors on behalf of Daré Bioscience, Inc:
Camilla White / Simona Kormanikova
Dentons Global Advisors
DareBioscience@dentonsglobaladvisors.com / 1.212.466.6450
Source: Daré Bioscience, Inc.
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