Company: DARE
Filing Date: 2025-03-31
Form Type: 10-K
Source: 0001401914-25-000012
Chunk: 18

Company: Dare Bioscience, Inc.
Filing Date: 2025-03-31
Form: 10-K
Item: Item 7
Chunk 18
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 cost of revenue) associated with our XACIATO product supply arrangement, which is recorded in other income in our consolidated statements of operations and comprehensive loss. In connection with the transfer of the NDA for XACIATO to Organon in December 2023, that arrangement was terminated and we will not recognize product supply revenue associated with that arrangement in the future. 

Stock-Based Compensation

The compensation cost for all stock-based awards is measured at the grant date, based on the fair value of the award (determined using a Black-Scholes option pricing model), and is recognized as an expense over the requisite service period (generally the vesting period of the award). Determining the fair value of stock-based awards at the grant date requires significant estimates and judgments, including estimating the market price volatility of our common stock, future stock option exercise behavior and requisite service periods. Due to our limited history of stock option exercises, we applied the simplified method prescribed by SEC Staff Accounting Bulletin 110, Share-Based Payment: Certain Assumptions Used in Valuation Methods - Expected Term, to estimate expected life.

Stock options or stock awards with performance conditions issued to non-employees who are not directors are measured on the grant date and recognized when the performance is complete. Refer to Note 10 to our consolidated financial statements included in this report for more information.

Sale of Future Payments

On April 29, 2024, we entered into and closed a traditional royalty purchase agreement and a synthetic royalty purchase agreement with XOMA (US) LLC (“XOMA”) pursuant to which we sold our right, title and interest in the following to XOMA (i) all future net royalty and potential net milestone payments we would otherwise receive from Organon based on net sales of XACIATO, (ii) a portion of future net sales of Ovaprene and a portion of a potential future milestone payment we may receive under our license agreement with Bayer related to Ovaprene, and (iii) a portion of future net sales of Sildenafil Cream. We received $22.0 million from XOMA in connection with entering into the royalty purchase agreements. Under the terms of the royalty purchase agreements, if XOMA receives total payments under the royalty purchase agreements equal to an amount that exceeds $88.0 million, XOMA will pay $11.0 million to us for each successive $22.0 million XOMA receives under the royalty purchase agreements. If we earn any such payments, they