Coverage Initiated on Company with a Pipeline of Womens Health Products

A Maxim Group report provided the investment thesis for this company and the reasons it offers upside.

In an Aug. 17 research note, analyst Caroline Palomeque reported that Maxim Group initiated coverage on Daré Bioscience Inc. (DARE:NASDAQ) with a Buy rating and a $3 per share price target. The stock is currently trading at around $1.10 per share.

Palomeque summarized that Daré has two clinical-stage assets, each of which “represents a large market opportunity” in women’s reproductive health. One is Ovaprene, a nonhormonal vaginal ring contraceptive. The other is SST-6007, topical Viagra for female sexual arousal disorder (FSAD). Also, the company has a pipeline of other products for various conditions, including overactive bladder and vulvar and vaginal atrophy.

Hormone-free Ovaprene could provide the roughly 90% efficacy rate of other types of contraception, from diaphragms to pills, patches and rings, without the adverse effects that often result from the included hormones, Palomeque indicated. Such an alternative, “sought by as many as 85% of contraception users,” would be quite attractive to women. Today, more than 27 million women in the United States use hormonal contraception.

Two current options that include hormones, the NuvaRing ring and the Mirena, together have generated $1.75 billion, capturing about 2% of the market. Were Ovaprene to take 20% of NuvaRing and Mirena’s market share, that would equal about $350 million.

Palomeque explained that the monthly product works by “creating a spermiostatic environment through a silicon matrix (releasing ascorbic acid and ferrous gluconate), effectively ‘cutting off the tail’ of the sperm and a nonbraided, multifilament mesh barrier designed to block sperm attempting to enter the cervical canal.”

Ovaprene is regulated as a device on the premarket approval pathway. As such, trial design and timing could mirror that of the now approved Caya diaphragm. An Ovaprene Phase 2 postcoital trial is underway, with data expected in 2019.

With SST-6007, Daré aims to fill an unmet need, as no approved therapies exist today for FSAD. “Topical sildenafil may act locally to relax the vaginal muscles in order to increase blood flow to produce the lubrication-swelling response that is necessary for proper sexual arousal,” wrote Palomeque. FSAD affects more than 25 million women in the U.S., about 10 million of whom seek treatment for it. “Recall that Viagra for men was a multibillion dollar product for Pfizer,” with more than $2 million in annual sales, the analyst added.

The regulatory route for SST-6007 is the 505(b)(2) pathway. A Phase 2 study for the asset is scheduled to start in H2/18, with a data release in 2020.

As for its financial status, the company ended Q2/18 with $12.4 million in cash, “which should give the company sufficient runway into H2/19 with a cash burn rate of $3.6M per quarter,” said Palomeque.

“With two products, underserved large markets and a current valuation of $12M, we see upside,” she concluded.

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Disclosures from Maxim Group, Daré Bioscience Inc., August 17, 2018

I, Caroline Palomeque, attest that the views expressed in this research report accurately reflect my personal views about the subject security and issuer. Furthermore, no part of my compensation was, is, or will be directly or indirectly related to the specific recommendation or views expressed in this research report.

I, Jason McCarthy, Ph.D., attest that the views expressed in this research report accurately reflect my personal views about the subject security and issuer. Furthermore, no part of my compensation was, is, or will be directly or indirectly related to the specific recommendation or views expressed in this research report.

I, Anthony Vendetti, attest that the views expressed in this research report accurately reflect my personal views about the subject security and issuer. Furthermore, no part of my compensation was, is, or will be directly or indirectly related to the specific recommendation or views expressed in this research report.

The research analyst(s) primarily responsible for the preparation of this research report have received compensation based upon various factors, including the firm’s total revenues, a portion of which is generated by investment banking activities.

Maxim Group makes a market in Daré Bioscience, Inc.

Maxim Group expects to receive or intends to seek compensation for investment banking services from Daré Bioscience, Inc. in the next 3 months.


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