LPCN: First Quarter 2022 Financial and Operational Results

By John Vandermosten, CFA

NASDAQ:LPCN

READ THE FULL LPCN RESEARCH REPORT

On May 9, 2022 Lipocine (NASDAQ:LPCN) filed its Form 10-Q and posted its earnings release for the quarter ending March 31, 2022.

Highlights for the first quarter 2022 and to-date include:

➢ TLANDO US commercialization licensing agreement with Antares Pharma – October 2021

➢ FDA grants Fast Track Designation to LPCN 1144 – November 2021

➢ First patient dosed in Phase II, LPCN 1148 in liver cirrhosis – December 2021

Presentations at 2022 NASH-TAG Conference – January 2022

Publication of Phase III results for TLANDO – January 2022

➢ Licensee Antares TLANDO NDA resubmission accepted – February 2022

➢ Regulatory guidance on LPCN 1144 in non-cirrhotic NASH – March 2022

Lipocine generated no revenues in the first quarter. It reported net loss of ($3.5) million, or ($0.04) per diluted share.

For the quarter ending March 31, 2022 and versus the same ending March 31, 2021:

➢ Revenues were zero in both periods;

➢ Research & Development expense totaled $1.9 million, up 19% from $1.6 million, driven by higher contract research organization (CRO) expenses for LPCN 1148, pharmacokinetic and food effect studies for LPCN 1107 and 1154, greater manufacturing scale-up costs for LPCN 1111 and higher personnel expenses;

➢ General & Administrative expenses were $1.2 million, falling 19% from $1.5 million primarily due to lower legal costs relating to the Clarus lawsuit, and lower personnel costs, partially offset by higher professional fees, consulting fees, proxy solicitation expenses and corporate insurance costs;

➢ Total other net expense was ($0.4) million, compared to ($0.3) million, as increases in interest and investment income were more than offset by an increase in unrealized loss on the warrant liability;

➢ Net loss was ($3.5) million or ($0.04) per share compared with net loss of ($3.4) million or ($0.04) per share, respectively.

At quarter’s end, marketable securities, cash and equivalents totaled $42.0 million. Cash burn for 1Q:22 was ($3.9) million, compared with ($4.1) million in 1Q:21. During the three month period, Lipocine repaid $0.8 million of debt and received $0.2 million from option exercises for a net cash change vs. year end 2021 of ($2.8) million.

TLANDO Licensing Agreement with Antares Pharma

On October 18th of last year Lipocine announced that it had entered into a licensing agreement with Antares Pharma. The agreement is for commercialization of TLANDO in the US and includes the following terms:

➢ Up to $21 million in licensing fees;

◦ $11 million payable immediately;

◦ $10 million in future payments subject to certain conditions;

➢ Commercial sales payments based on milestones up to $160 million;

➢ Tiered royalties on net sales from mid-teens up to 20%;

➢ Antares responsible for all commercialization, post-marketing studies, and sourcing of TLANDO in US;

➢ Also included is Antares option to license TLANDO XR; if exercised

◦ Antares gains license to develop and commercialize TLANDO XR in the US;

◦ Lipocine would receive $4 million in license fees;

◦ Up to $35 million in clinical and regulatory milestone payments;

◦ Tiered royalties on net sales from mid-teens to 20%

◦ Antares responsible for all clinical development costs, regulatory filings, commercialization and post-marketing activities.

On April 1, 2022, Lipocine and Antares amended the Tlando XR option agreement, extending it by three months to June 30, 2022 from the original March 31 date. Tlando XR is the next generation of Tlando which allows for once daily dosing for the TRT therapy. In return for the extension, Antares paid Lipocine $500,000 which will be credited towards the $4 million license fee required if Antares wishes to execute the license.

Lipocine retains all rights to rest of world and non-testosterone replacement therapy indications for both TLANDO and TLANDO XR. We update our model to reflect the terms of this arrangement and assume that Antares will exercise its option to advance TLANDO XR.

LPCN 1144 for Treatment of Non-Cirrhotic NASH

With the commercialization of TLANDO underway with Antares, LPCN 1144 moves into pole position at Lipocine. The company will shift its primary attention towards LPCN 1144 and an upcoming End of Phase II (EoP2) meeting with the FDA to determine trial design. We anticipate that a clear path forward for LPCN 1144 will be provided to stakeholders later this year.

Regulatory Guidance on LPCN 1144

On March 1, 2022, Lipocine provided an update on its Type C meeting with the FDA regarding LPCN 1144’s development. The FDA provided written response acknowledging that LPCN 1144’s NDA would be submitted via 505(b)(2) regulatory pathway, that no additional nonclinical studies are needed to support the submission, and that Lipocine’s Phase II LiFT study’s multicomponent primary surrogate endpoint is acceptable for seeking approval under accelerated approval. The FDA recommended Lipocine either conduct a separate dose-ranging study prior to Phase III or evaluate multiple doses in the Phase III study and that the aforementioned multicomponent primary surrogate endpoint is acceptable. The FDA recommended Phase III study duration of 72 weeks. The FDA also recommended that Lipocine submit an updated Phase III protocol and discuss details further in an EoP2 which is expected to take place in 3Q:22.

Next Steps

Now that selected 36-week biopsy data has been presented to stakeholders and with the Fast Track Designation in its back pocket, Lipocine’s next steps are to prepare a presentation for a scientific and medical conference and complete the extension study. With feedback from its Type C meeting with the FDA, Lipocine is now charged with redesigning and submitting an updated Phase III protocol to the FDA, and scheduling an EoP2 meeting with the FDA. In response to FDA guidance, Lipocine must decide whether it wishes to conduct a preliminary dose-ranging study, or to incorporate dose-ranging into the design of its Phase III trial. Management has voiced its desire to seek a partner to advance LPCN 1144 into a registrational study.

Clarus Settlement

In mid-2021, Lipocine settled its claims related to the patent infringement litigation with Clarus for $4.0 million as described in our August 6, 2021 report. $2.5 million was paid immediately, followed by a promised $1.0 million payment in July 2022 and $500,000 in July 2023. On April 29, 2022, Lipocine modified the agreement in its favor by consenting to pay Clarus $1.25 million in May 2022, with no additional payments required thereafter. This provides non-discounted savings of $250,000 over the original agreement and settles the financial aspect of this matter.

Milestones

➢ TLANDO

◦ NDA filed for TLANDO – February 2020

◦ Tentative approval of TLANDO – December 2020

◦ TLANDO licensing agreement with Antares – October 2021

◦ TLANDO full approval – March 28, 2022

◦ First sales – late 2Q:22

➢ LPCN 1144

◦ Presentation of 36-week LiFT study, biopsy data to investors – August 2021

◦ End of Phase II meeting with FDA – 2H:21

◦ Grant of Fast Track Designation for LPCN 1144 – November 2021

◦ Type C meeting results for LPCN 1144 – March 2022

◦ LPCN 1144 End-of-Phase II meeting request – April 2022

◦ Open Label Extension (OLE) topline results – May 2022

◦ LPCN 1144 End-of-Phase II meeting – 3Q:22

◦ Explore business development partnering – 2022/2023

➢ LPCN 1148

◦ IND clearance for Phase II study of LPCN 1148 – May 2020

◦ Male cirrhosis trial first subject dosed for LPCN 1148 – 4Q:21

◦ Enrollment completion – 3Q:22

◦ Topline 24-week results – 1Q:23

➢ LPCN 2101 IND in epilepsy – 2022

➢ Topline announcement for PK study for LPCN 1154 – 4Q:21/1Q:22

➢ Launch Phase IIa proof of concept Post-Partum Depression (PPD) trial – 4Q:21

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1. Lipocine Corporate Presentation January 2022

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