Lipocine Inc. (Form: 10-Q, Received: 11/10/2021 08:01:52)

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

☒	Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For Quarterly Period ended September 30, 2021

☐	Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from _____________to _____________.

Commission File Number: 001-36357

LIPOCINE INC.

(Exact name of registrant as specified in its charter)

Delaware		99-0370688
(State or Other Jurisdiction of Incorporation or Organization)		(IRS Employer Identification No.)

675 Arapeen Drive, Suite 202, Salt Lake City, Utah		84108
(Address of Principal Executive Offices)		(Zip Code)

801-994-7383

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common Stock, par value $0.0001 per share		LPCN		The NASDAQ Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act:

Large accelerated filer	☐
Accelerated filer	☐
Non-accelerated filer	☒
Smaller reporting company	☒
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Outstanding Shares

As of November 9, 2021, the registrant had 88,290,650 shares of common stock outstanding.

TABLE OF CONTENTS

		Page

PART I—FINANCIAL INFORMATION

Item 1.	Financial Statements	3

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21

Item 3.	Quantitative and Qualitative Disclosures About Market Risks	39

Item 4.	Controls and Procedures	39

PART II—OTHER INFORMATION

Item 1.	Legal Proceedings	39

Item 1A.	Risk Factors	40

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	43

Item 3.	Defaults Upon Senior Securities	43

Item 4.	Mine Safety Disclosures	43

Item 5.	Other Information	43

Item 6.	Exhibits	44

PART I—FINANCIAL INFORMATION

ITEM 1.

FINANCIAL STATEMENTS

LIPOCINE INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(Unaudited)

	September 30,			December 31,
	2021			2020
Assets
Current assets:
Cash and cash equivalents	$	4,517,105		$	19,217,382
Restricted cash		-			5,000,000
Marketable investment securities		34,145,380			449,992
Accrued interest income		159,230			391
Prepaid and other current assets		1,543,641			661,258
Total current assets		40,365,356			25,329,023

Other assets		23,753			23,753
Total assets	$	40,389,109		$	25,352,776
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	725,552		$	1,597,220
Accrued expenses		1,571,012			1,653,178
Debt - current portion		3,135,979			3,333,333
Litigation settlement liability - current portion		1,000,000			-
Total current liabilities		6,432,543			6,583,731

Debt - non-current portion		-			2,257,075
Warrant liability		645,478			1,170,051
Litigation settlement liability - non-current portion		500,000			-
Total liabilities		7,578,021			10,010,857

Commitments and contingencies (notes 5, 7, 8 and 10)		-

Stockholders’ equity:
Preferred stock, par value $0.0001 per share, 10,000,000 shares authorized; zero issued and outstanding		-			-
Common stock, par value $0.0001 per share, 100,000,000 shares authorized; 88,296,360 and 70,041,967 issued and 88,290,650 and 70,036,257 outstanding		8,830			7,005
Additional paid-in capital		218,136,818			187,407,634
Treasury stock at cost, 5,710 shares		(40,712	)		(40,712	)
Accumulated other comprehensive loss		(3,420	)		-
Accumulated deficit		(185,290,428	)		(172,032,008	)
Total stockholders’ equity		32,811,088			15,341,919
Total liabilities and stockholders’ equity	$	40,389,109		$	25,352,776

See accompanying notes to unaudited condensed consolidated financial statements

LIPOCINE INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Operations and Comprehensive Loss

(Unaudited)


	Three Months Ended September 30,						Nine Months Ended September 30,
	2021			2020			2021			2020

Revenues:
License revenue	$	54,994		$	-		$	54,994		$	-
Total revenues		54,994			-			54,994			-

Operating expenses:
Research and development	$	2,366,521		$	2,487,861		$	5,411,748		$	7,268,599
General and administrative		1,222,146			1,887,195			4,281,690			5,925,991
Total operating expenses		3,588,667			4,375,056			9,693,438			13,194,590

Operating loss		(3,533,673	)		(4,375,056	)		(9,638,444	)		(13,194,590	)

Other income (expense):
Interest and investment income		17,264			5,614			45,257			72,729
Interest expense		(44,839	)		(84,293	)		(171,241	)		(305,485	)
Unrealized gain (loss) on warrant liability		479,951			140,477			506,208			(3,025,997	)
Litigation settlement		-			-			(4,000,000	)		-
Total other income (expense), net		452,376			61,798			(3,619,776	)		(3,258,753	)
Loss before income tax expense		(3,081,297	)		(4,313,258	)		(13,258,220	)		(16,453,343	)

Income tax expense		-			-			(200	)		(200	)
Net loss	$	(3,081,297	)	$	(4,313,258	)	$	(13,258,420	)	$	(16,453,543	)

Basic loss per share attributable to common stock	$	(0.03	)	$	(0.07	)	$	(0.15	)	$	(0.32	)
Weighted average common shares outstanding, basic		88,290,650			64,833,714			86,477,640			52,030,431
Diluted loss per share attributable to common stock	$	(0.03	)	$	(0.07	)	$	(0.15	)	$	(0.32	)
Weighted average common shares outstanding, diluted		88,290,650			64,833,714			86,477,640			52,030,431

Comprehensive loss:
Net loss	$	(3,081,297	)	$	(4,313,258	)	$	(13,258,420	)	$	(16,453,543	)
Net unrealized gain (loss) on available-for-sale securities		(3,234	)		579			(3,420	)		513
Comprehensive loss	$	(3,084,531	)	$	(4,312,679	)	$	(13,261,840	)	$	(16,453,030	)

See accompanying notes to unaudited condensed consolidated financial statements

LIPOCINE INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Changes in Stockholders’ Equity

For the Three and Nine Months Ended September 30, 2021 and 2020

(Unaudited)


	Common Stock				Treasury Stock					Additional		Accumulated Other						Total
	Number of Shares		Amount		Number of Shares		Amount			Paid-In Capital		Comprehensive Loss			Accumulated Deficit			Stockholders’ Equity
Balances at June 30, 2020		61,377,306	$	6,138		5,710	$	(40,712	)	$	176,327,120	$	(104	)	$	(163,207,474	)	$	13,084,968

Net loss		-		-		-		-			-		-			(4,313,258	)		(4,313,258	)

Unrealized net gain on marketable investment securities		-		-		-		-			-		579			-			579

Stock-based compensation		-		-		-		-			351,623		-			-			351,623
Option exercises
Option exercises, shares
Costs associated with ATM offering
Vesting of restricted stock units
Vesting of restricted stock units, shares
Common stock sold through equity offering
Common stock sold through equity offering, shares

Common stock issued for warrant exercises		1,478,844		148		-		-			760,570		-			-			760,718

Settlement of warrant liability on warrant exercises		-		-		-		-			721,976		-			-			721,976

Common stock sold through ATM offering		2,830,000		283		-		-			3,901,412		-			-			3,901,695

Balances at September 30, 2020		65,686,150	$	6,569		5,710	$	(40,712	)	$	182,062,701	$	475		$	(167,520,732	)	$	14,508,301

	Common Stock				Treasury Stock					Additional			Accumulated Other						Total
	Number of Shares		Amount		Number of Shares		Amount			Paid-In Capital			Comprehensive Loss			Accumulated Deficit			Stockholders’ Equity

Balances at December 31, 2019		37,649,465	$	3,766		5,710	$	(40,712	)	$	157,391,969		$	(38	)	$	(151,067,189	)	$	6,287,796

Net loss		-		-		-		-			-			-			(16,453,543	)		(16,453,543	)

Unrealized net gain on marketable investment securities		-		-		-		-			-			513			-			513

Stock-based compensation		-		-		-		-			1,138,594			-			-			1,138,594

Vesting of restricted stock units		25,000		2		-		-			(2	)		-			-			-

Common stock sold through equity offering		10,084,034		1,008		-		-			5,652,132			-			-			5,653,140

Common stock issued for warrant exercises		15,097,651		1,510		-		-			7,673,366			-			-			7,674,876

Settlement of warrant liability on warrant exercises		-		-		-		-			6,313,338			-			-			6,313,338

Common stock sold through ATM offering		2,830,000		283		-		-			3,893,304			-			-			3,893,587

Balances at September 30, 2020		65,686,150	$	6,569		5,710	$	(40,712	)	$	182,062,701		$	475		$	(167,520,732	)	$	14,508,301

	Common Stock				Treasury Stock					Additional			Accumulated Other						Total
	Number of Shares		Amount		Number of Shares		Amount			Paid-In Capital			Comprehensive Gain (Loss)			Accumulated Deficit			Stockholders’ Equity

Balances at June 30, 2021		88,290,650	$	8,830		5,710	$	(40,712	)	$	217,986,752		$	(186	)	$	(182,209,131	)	$	35,745,553

Net loss		-		-		-		-			-			-			(3,081,297	)		(3,081,297	)

Unrealized net loss on marketable investment securities		-		-		-		-			-			(3,234	)		-			(3,234	)

Stock-based compensation		-		-		-		-			154,998			-			-			154,998

Costs associated with ATM offering		-		-		-		-			(4,932	)		-			-			(4,932	)

Balances at September 30, 2021		88,290,650	$	8,830		5,710	$	(40,712	)	$	218,136,818		$	(3,420	)	$	(185,290,428	)	$	32,811,088

	Common Stock				Treasury Stock					Additional		Accumulated Other						Total
	Number of Shares		Amount		Number of Shares		Amount			Paid-In Capital		Comprehensive Gain (Loss)			Accumulated Deficit			Stockholders’ Equity

Balances at December 31, 2020		70,036,257	$	7,005		5,710	$	(40,712	)	$	187,407,634	$	-		$	(172,032,008	)	$	15,341,919

Net loss		-		-		-		-			-		-			(13,258,420	)		(13,258,420	)

Unrealized net loss on marketable investment securities		-		-		-		-			-		(3,420	)		-			(3,420	)

Stock-based compensation		-		-		-		-			449,311		-			-			449,311

Option exercises		4,584		-		-		-			6,693		-			-			6,693

Common stock sold through equity offering		16,428,571		1,643		-		-			26,838,814		-			-			26,840,457

Common stock issued for warrant exercises		10,000		1		-		-			4,999		-			-			5,000

Settlement of warrant liability on warrant exercises		-		-		-		-			18,365		-			-			18,365

Common stock sold through ATM offering		1,811,238		181		-		-			3,411,002		-			-			3,411,183

Balances at September 30, 2021		88,290,650	$	8,830		5,710	$	(40,712	)	$	218,136,818	$	(3,420	)	$	(185,290,428	)	$	32,811,088

See accompanying notes to unaudited condensed consolidated financial statements

LIPOCINE INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(Unaudited)


	Nine Months Ended September 30,
	2021			2020

Cash flows from operating activities:

Net loss	$	(13,258,420	)	$	(16,453,543	)

Adjustments to reconcile net loss to cash used in operating activities:

Depreciation expense		-			2,397
Stock-based compensation expense		449,311			1,138,594
Non-cash interest expense		45,571			87,134
Non-cash loss (gain) on change in fair value of warrant liability		(506,208	)		3,025,997
Amortization of premium (discount) on marketable investment securities		358,959			(5,946	)

Changes in operating assets and liabilities:
Accrued interest income		(158,839	)		5,306
Prepaid and other current assets		(882,383	)		(369,688	)
Accounts payable		(871,668	)		(134,512	)
Accrued expenses		(82,166	)		1,085,192
Litigation settlement liability		1,500,000			-

Cash used in operating activities		(13,405,843	)		(11,619,069	)

Cash flows from investing activities:

Purchases of marketable investment securities		(37,307,767	)		(6,315,297	)
Maturities of marketable investment securities		3,250,000			4,800,000

Cash used in investing activities		(34,057,767	)		(1,515,297	)

Cash flows from financing activities:

Debt repayments		(2,500,000	)		(1,111,111	)
Proceeds from debt		-			233,537
Net proceeds from common stock offering		26,840,457			5,653,140
Net proceeds from ATM		3,411,183			3,893,587
Proceeds from stock option exercises		6,693			-
Net proceeds from exercise of warrants		5,000			7,674,876

Cash provided by financing activities		27,763,333			16,344,029

Net increase (decrease) in cash, cash equivalents, and restricted cash		(19,700,277	)		3,209,663

Cash, cash equivalents, and restricted cash at beginning of period		24,217,382			14,728,523

Cash, cash equivalents, and restricted cash at end of period	$	4,517,105		$	17,938,186

Supplemental disclosure of cash flow information:
Interest paid	$	125,670		$	217,319
Income taxes paid		200			200

Supplemental disclosure of non-cash investing and financing activity:
Settlement of warrant liability on warrant exercises	$	18,365		$	6,313,338
Net unrealized gain (loss) on available-for-sale securities		(3,420	)		513
Accrued final payment charge on debt		45,571			87,134
Other accrued interest		-			1,032

See accompanying notes to unaudited condensed consolidated financial statements

LIPOCINE INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(1)

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements included herein have been prepared by Lipocine Inc. (“Lipocine” or the “Company”) in accordance with the rules and regulations of the United States Securities and Exchange Commission (“SEC”). The unaudited condensed consolidated financial statements are comprised of the financial statements of Lipocine and its subsidiaries, collectively referred to as the Company. In management’s opinion, the interim financial data presented includes all adjustments (consisting solely of normal recurring items) necessary for fair presentation. All intercompany accounts and transactions have been eliminated. Certain information required by U.S. generally accepted accounting principles has been condensed or omitted in accordance with rules and regulations of the SEC. Operating results for the three and nine months ended September 30, 2021 are not necessarily indicative of the results that may be expected for any future period or for the year ending December 31, 2021.

These unaudited condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and the notes thereto for the year ended December 31, 2020.

The preparation of the unaudited condensed consolidated financial statements requires management to make estimates and assumptions relating to reporting of the assets and liabilities and the disclosure of contingent assets and liabilities to prepare these condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period in conformity with U.S. generally accepted accounting principles. Actual results could differ from these estimates.

The Company believes that its existing capital resources, together with interest thereon, will be sufficient to meet its projected operating requirements through at least September 30, 2022 which includes planned and on-going clinical studies for LPCN 1144 and LPCN 1148, future clinical studies for LPCN 1107 and LPCN 1154 and compliance with regulatory requirements. The Company has based this estimate on assumptions that may prove to be wrong, and the Company could utilize its available capital resources sooner than it currently expects if additional activities are performed by the Company including new clinical studies for LPCN 1144, TLANDO XR, LPCN 1148, LPCN 1154 and LPCN 1107. While the Company believes it has sufficient liquidity and capital resources to fund our projected operating requirements through at least September 30, 2022, the Company will need to raise additional capital at some point through the equity or debt markets or through out-licensing activities, before or after September 30, 2022, to support its operations. If the Company is unsuccessful in raising additional capital, its ability to continue as a going concern will become a risk. Further, the Company’s operating plan may change, and the Company may need additional funds to meet operational needs and capital requirements for product development, regulatory compliance and clinical trial activities sooner than planned. In addition, the Company’s capital resources may be consumed more rapidly if it pursues additional clinical studies for LPCN 1144, TLANDO XR, LPCN 1148, LPCN 1154 and LPCN 1107. Conversely, the Company’s capital resources could last longer if it reduces expenses, reduces the number of activities currently contemplated under our operating plan or if it terminates, modifies the design or suspends on-going clinical studies or if the Company receives more revenue under the license agreement (the “Antares License Agreement”) with Antares Pharma, Inc. (“Antares”) than planned.

(2)

Earnings (Loss) per Share

Basic earnings (loss) per share is calculated by dividing net income (loss) available to common shareholders by the weighted average number of common shares outstanding during the period. Diluted earnings (loss) per share is based on the weighted average number of common shares outstanding plus, where applicable, the additional potential common shares that would have been outstanding related to dilutive options, warrants and, unvested restricted stock units to the extent such shares are dilutive.

The following table sets forth the computation of basic and diluted earnings (loss) per share of common stock for the three and nine months ended September 30, 2021 and 2020:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2021			2020			2021			2020
Basic loss per share attributable to common stock:
Numerator
Net loss	$	(3,081,297	)	$	(4,313,258	)	$	(13,258,420	)	$	(16,453,543	)

Denominator
Weighted avg. common shares outstanding		88,290,650			64,833,714			86,477,640			52,030,431

Basic loss per share attributable to common stock	$	(0.03	)	$	(0.07	)	$	(0.15	)	$	(0.32	)

Diluted loss per share attributable to common stock:
Numerator
Net loss	$	(3,081,297	)	$	(4,313,258	)	$	(13,258,420	)	$	(16,453,543	)
Denominator
Weighted avg. common shares outstanding		88,290,650			64,833,714			86,477,640			52,030,431

Diluted loss per share attributable to common stock	$	(0.03	)	$	(0.07	)	$	(0.15	)	$	(0.32	)

The computation of diluted loss per share for the nine months ended September 30, 2021 and 2020 does not include the following stock options and warrants to purchase shares or unvested restricted stock units in the computation of diluted loss per share because these instruments were antidilutive:

	September 30,
	2021		2020
Stock options		3,913,705		2,958,485
Unvested restricted stock units		-		605,682
Warrants		1,934,366		1,944,366

(3) Marketable Investment Securities

The Company has classified its marketable investment securities as available-for-sale securities, all of which are debt securities. These securities are carried at fair value with unrealized holding gains and losses, net of the related tax effect, included in accumulated other comprehensive income (loss) in stockholders’ equity until realized. Gains and losses on investment security transactions are reported on the specific-identification method. Dividend income is recognized on the ex-dividend date and interest income is recognized on an accrual basis. The amortized cost, gross unrealized holding gains, gross unrealized holding losses, and fair value for available-for-sale securities by major security type and class of security at September 30, 2021 and December 31, 2020 were as follows:

September 30, 2021	Amortized Cost		Gross unrealized holding gains		Gross unrealized holding losses			Aggregate fair value

Corporate bonds, notes and commercial paper	$	34,148,800	$	-	$	(3,420	)	$	34,145,380

	$	34,148,800	$	-	$	(3,420	)	$	34,145,380

December 31, 2020	Amortized Cost		Gross unrealized holding gains		Gross unrealized holding losses		Aggregate fair value

Commercial paper	$	449,992		-		-	$	449,992

	$	449,992	$	-	$	-	$	449,992

Maturities of debt securities classified as available-for-sale securities at September 30, 2021 are as follows:

September 30, 2021	Amortized Cost		Aggregate fair value
Due within one year	$	34,148,800	$	34,145,380
	$	34,148,800	$	34,145,380

There were no sales of marketable investment securities during the three and nine months ended September 30, 2021 and 2020 and therefore no realized gains or losses. Additionally, $2.8 million and $450,000 marketable investment securities matured during the three months ended September 30, 2021 and 2020, respectively and $3.3 million and $4.8 million of marketable investment securities matured during the nine months ended September 30, 2021 and 2020, respectively. The Company determined there were no other-than-temporary impairments for the three and nine months ended September 30, 2021 and 2020.

(4)

Fair Value

The Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible. The Company determines fair value based on assumptions that market participants would use in pricing an asset or liability in the principal or most advantageous market. When considering market participant assumptions in fair value measurements, the following fair value hierarchy distinguishes between observable and unobservable inputs, which are categorized in one of the following levels:

	●	Level 1 Inputs: Quoted prices for identical instruments in active markets.

	●	Level 2 Inputs: Quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-derived valuation in which all significant inputs and significant value drivers are observable in active markets.

	●	Level 3 Inputs: Valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.

All of the Company’s financial instruments are valued using quoted prices in active markets or based on other observable inputs. For accrued interest income, prepaid and other current assets, accounts payable, and accrued expenses, the carrying amounts approximate fair value because of the short maturity of these instruments. The following table presents the placement in the fair value hierarchy of assets and liabilities that are measured at fair value on a recurring basis at September 30, 2021 and December 31, 2020:

Schedule of Fair Value, Assets Measured on Recurring Basis

			Fair value measurements at reporting date using
	September 30, 2021		Level 1 inputs		Level 2 inputs		Level 3 inputs

Assets:
Cash equivalents - money market funds	$	4,080,187	$	4,080,187	$	-	$	-
Commercial Paper		11,193,493		-		11,193,493		-
Corporate bonds and notes		22,951,887		-		22,951,887		-

	$	38,225,567	$	4,080,187	$	34,145,380	$	-

Liabilities:
Warrant liability	$	645,478		-		-		645,478
	$	38,871,045	$	4,080,187	$	34,145,380	$	645,478

			Fair value measurements at reporting date using
	December 31, 2020		Level 1 inputs		Level 2 inputs		Level 3 inputs

Assets:
Cash equivalents - money market funds	$	18,399,585	$	18,399,585	$	-	$	-

Commercial paper		449,992		-		449,992		-

	$	18,849,577	$	18,399,585	$	449,992	$	-

Liabilities:
Warrant liability	$	1,170,051		-		-		1,170,051
	$	20,019,628	$	18,399,585	$	449,992	$	1,170,051

The following methods and assumptions were used to determine the fair value of each class of assets and liabilities recorded at fair value in the balance sheets:

Cash equivalents: Cash equivalents primarily consist of highly-rated money market funds and treasury bills with original maturities to the Company of three months or less and are purchased daily at par value with specified yield rates. Cash equivalents related to money market funds and treasury bills are classified within Level 1 of the fair value hierarchy because they are valued using quoted market prices or broker or dealer quotations for similar assets.

Corporate bonds, notes, and commercial paper: The Company uses a third-party pricing service to value these investments. Corporate bonds, notes and commercial paper are classified within Level 2 of the fair value hierarchy because they are valued using broker/dealer quotes, bids and offers, benchmark yields and credit spreads and other observable inputs.

Warrant liability: The warrant liability (which relates to warrants to purchase shares of common stock) is marked-to-market each reporting period with the change in fair value recorded to other income (expense) in the accompanying statements of operations until the warrants are exercised, expire or other facts and circumstances lead the warrant liability to be reclassified to stockholders’ equity. The fair value of the warrant liability is estimated using a Black-Scholes option-pricing model. The significant assumptions used in preparing the option pricing model for valuing the warrant liability as of September 30, 2021, include (i) volatility of 59.69%, (ii) risk free interest rate of 0.53%, (iii) strike price of $0.50, (iv) fair value of common stock of $1.09, and (v) expected life of 3.13 years. The significant assumptions used in preparing the option pricing model for valuing the warrant liability as of December 31, 2020, include (i) volatility of 88.46%, (ii) risk free interest rate of 0.27%, (iii) strike price of $0.50, (iv) fair value of common stock of $1.36, and (v) expected life of 3.9 years.

The Company’s accounting policy is to recognize transfers between levels of the fair value hierarchy on the date of the event or change in circumstances that caused the transfer. There were no transfers into or out of Level 1, Level 2, or Level 3 for the three and nine months ended September 30, 2021.

(5)

Loan and Security Agreements and Other Liabilities

Silicon Valley Bank Loan

On January 5, 2018, the Company entered into a Loan and Security Agreement (the “Loan and Security Agreement”) with Silicon Valley Bank (“SVB”) pursuant to which SVB agreed to lend the Company $10.0 million. The principal borrowed under the Loan and Security Agreement bears interest at a rate equal to the Prime Rate, as reported in the money rates section of The Wall Street Journal or any successor publication representing the rate of interest per annum then in effect, plus one percent per annum (4.25% as of September 30, 2021), which interest is payable monthly. Additionally on April 1, 2020, the Company entered into a Deferral Agreement with SVB. Under the Deferral Agreement, principal repayments were deferred by six months and the Company was only required to make monthly interest payments. The loan matures on June 1, 2022. Previously, the Company only made monthly interest payments until December 31, 2018, following which the Company also made equal monthly payments of principal and interest until the signing of the Deferral Agreement. The Company will also be required to pay an additional final payment at maturity equal to $650,000 (the “Final Payment Charge”). The Final Payment Charge will be due on the scheduled maturity date and to date approximately $636,000 has been recognized as an increase to the principal balance with a corresponding charge to interest expense with the remaining final payment charge to be recognized over the term of the facility using the effective interest method. At its option, the Company may prepay all amounts owed under the Loan and Security Agreement (including all accrued and unpaid interest and the Final Payment Charge).

In connection with the Loan and Security Agreement, the Company granted to SVB a security interest in substantially all of the Company’s assets now owned or hereafter acquired, excluding intellectual property and certain other assets. On September 9, 2021, SVB consented to the Antares Licensing Agreement which among other things provides Antares a license to certain intellectual property as well as assigns Antares the TLANDO® trademark. In addition, as TLANDO was not approved by the United States Food and Drug Administration (“FDA”) prior to May 31, 2018, the Company maintained $5.0 million of cash collateral at SVB as required under the Loan and Security Agreement until such time as TLANDO is approved by the FDA. However on February 16, 2021, the Company amended the Loan and Security Agreement with SVB to, among other things, remove the financial trigger and financial trigger release event provisions requiring the Company to maintain a minimum cash collateral value and collateral pledge thereof.

While any amounts are outstanding under the Loan and Security Agreement, the Company is subject to a number of affirmative and negative covenants, including covenants regarding dispositions of property, business combinations or acquisitions, incurrence of additional indebtedness and transactions with affiliates, among other customary covenants. The credit facility also includes events of default, the occurrence and continuation of which could cause interest to be charged at the rate that is otherwise applicable plus 5.0% and would provide SVB, as collateral agent, with the right to exercise remedies against the Company and the collateral securing the credit facility, including foreclosure against the property securing the credit facilities, including its cash. These events of default include, among other things, any failure by the Company to pay principal or interest due under the credit facility, a breach of certain covenants under the credit facility, the Company’s insolvency, a material adverse change, and one or more judgments against the Company in an amount greater than $100,000 individually or in the aggregate.

Future maturities of principal payments on the Loan and Security Agreement at September 30, 2021 (excluding accrued final payment fee) are as follows:

Schedule of Maturities of Debt

Years Ending December 31,	Amount (in thousands)
2021	$	833
2022		1,667
Thereafter		—
	$	2,500

Other

Effective June 15, 2020 and through December 31, 2020, the Company deferred Federal Insurance Contributions Act (“FICA”) taxes under the CARES Act Section 2302. Payment of these tax deferrals are delayed to December 31, 2021 and December 31, 2022. As of September 30, 2021 the tax deferrals totaled $36,000 and are included in accrued liabilities.

(6)

Income Taxes

The tax provision for interim periods is determined using an estimate of the Company’s effective tax rate for the full year adjusted for discrete items, if any, that are taken into account in the relevant period. Each quarter the Company updates its estimate of the annual effective tax rate, and if the estimated tax rate changes, the Company makes a cumulative adjustment.

At September 30, 2021 and December 31, 2020, the Company had a full valuation allowance against its deferred tax assets, net of expected reversals of existing deferred tax liabilities, as it believes it is more likely than not that these benefits will not be realized.

(7)

Contractual Agreements

(a)

Abbott Products, Inc.

On March 29, 2012, the Company terminated its collaborative agreement with Solvay Pharmaceuticals, Inc. (later acquired by Abbott Products, Inc.) for TLANDO. As part of the termination, the Company reacquired the rights to the intellectual property from Abbott. All obligations under the prior license agreement have been completed except that Lipocine will owe Abbott a perpetual 1% royalty on net sales. Such royalties are limited to $1.0 million in the first two calendar years following product launch, after which period there is not a cap on royalties and no maximum aggregate amount. If generic versions of any such product are introduced, then royalties are reduced by 50%. The Company did not incur any royalties expense during the three and nine months ended September 30, 2021 and 2020.

(b)

Contract Research and Development

The Company has entered into agreements with various contract organizations that conduct preclinical, clinical, analytical and manufacturing development work on behalf of the Company as well as a number of independent contractors and primarily clinical researchers who serve as advisors to the Company. The Company incurred expenses of $1.8 million in each of the three months ended September 30, 2021 and 2020 and $3.4 million and $5.1 million, respectively, for the nine months ended September 30, 2021 and 2020 under these agreements and has recorded these expenses in research and development expenses.

(8)

Leases

On August 6, 2004, the Company assumed a non-cancelable operating lease for office space and laboratory facilities in Salt Lake City, Utah. On May 6, 2014, the Company modified and extended the lease through February 28, 2018. On February 8, 2018, the Company extended the lease through February 28, 2019, on January 2, 2019, the Company extended the lease through February 29, 2020, on February 24, 2020, the Company extended the lease through February 28, 2021 and on March 3, 2021, the Company extended the lease through February 28, 2022.

Future minimum lease payments under non-cancelable operating leases as of September 30, 2021 are:

	Operating
	leases
Year ending December 31:
2021		82,596
2022		55,064

Total minimum lease payments	$	137,660

The Company’s rent expense was $83,000 for each of the three months ended September 30, 2021 and 2020 and was $248,000 for each of the nine months ended September 30, 2021 and 2020.

(9)

Stockholders’ Equity

(a)

Issuance of Common Stock

On January 28, 2021, the Company completed a public offering of securities registered under an effective registration statement filed pursuant to the Securities Act of 1933, as amended (“January 2021 Offering”). The gross proceeds from the January 2021 Offering were approximately $28.7 million, before deducting underwriter fees and other offering expenses of $1.9 million. In the January 2021 Offering, the Company sold 16,428,571 shares of its common stock.

On February 27, 2020, the Company completed a registered direct offering of securities registered under an effective registration statement filed pursuant to the Securities Act of 1933, as amended (“February 2020 Offering”). The gross proceeds from the February 2020 Offering were approximately $6.0 million, before deducting placement agent fees and other offering expenses of $347,000. In the February 2020 Offering, the Company sold 10,084,034 Class A Units at an offering price of $0.595 per unit, with each Class A Unit consisting of one share of its common stock and one-half of a common warrant to purchase one share of common stock at an exercise price of $0.53 per share of common stock. Additionally, the common stock warrants were immediately exercisable and expire on February 27, 2025. By their terms, however, the common stock warrants cannot be exercised at any time that the common stock warrant holder would beneficially own, after such exercise, more than 4.99% (or, at the election of the holder, 9.99%) of the shares of common stock then outstanding after giving effect to such exercise.

On November 18, 2019, the Company completed a public offering of securities registered under an effective registration statement filed pursuant to the Securities Act of 1933, as amended (“November 2019 Offering”). The gross proceeds from the November 2019 Offering were approximately $6.0 million, before deducting placement agent fees and other offering expenses of $404,000. In the November 2019 Offering, the Company sold (i) 10,450,000 Class A Units, with each Class A Unit consisting of one share of its common stock and a common warrant to purchase one share of its common stock, and (ii) 1,550,000 Class B Units, with each Class B Unit consisting of one pre-funded warrant to purchase one share of its common stock and a common warrant to purchase one share of its common stock, at a price of $0.50 per Class A Unit and $0.4999 per Class B Unit. The pre-funded warrants, which were exercised for common stock in December 2019, were issued in lieu of common stock in order to ensure the purchaser did not exceed certain beneficial ownership limitations. The pre-funded warrants were immediately exercisable at an exercise price of $.0001 per share, subject to adjustment. Additionally, the common stock warrants were immediately exercisable at an exercise price of $0.50 per share, subject to adjustment, and expire on November 17, 2024. By their terms, however, neither the pre-funded warrants nor the common stock warrants can be exercised at any time that the pre-funded warrant holder or the common stock warrant holder would beneficially own, after such exercise, more than 4.99% (or, at the election of the holder, 9.99%) of the shares of common stock then outstanding after giving effect to such exercise. On the date of the November 2019 Offering, the Company allocated approximately $768,000 and $4.8 million to common stock/additional paid-in capital and warrant liability, respectively.

On March 6, 2017, the Company entered into the Sales Agreement with Cantor Fitzgerald & Co. (“Cantor”) pursuant to which the Company may issue and sell, from time to time, shares of its common stock having an aggregate offering price of up to the amount the Company registered on an effective registration statement pursuant to which the offering is being made. The Company currently has registered up to $50.0 million for sale under the Sales Agreement, pursuant to the Registration Statement on Form S-3 (File No. 333-250072) through Cantor as the Company’s sales agent. Cantor may sell the Company’s common stock by any method permitted by law deemed to be an “at the market offering” as defined in Rule 415(a)(4) of the Securities Act, including sales made directly on or through the Nasdaq Capital Market or any other existing trade market for our common stock, in negotiated transactions at market prices prevailing at the time of sale or at prices related to prevailing market prices, or any other method permitted by law. Cantor uses its commercially reasonable efforts consistent with its normal trading and sales practices and applicable law and regulations to sell these shares. The Company pays Cantor 3.0% of the aggregate gross proceeds from each sale of shares under the Sales Agreement. In addition, the Company has also provided Cantor with customary indemnification rights.

The shares of the Company’s common stock sold under the Sales Agreement are sold and issued pursuant to the Registration Statement on Form S-3 (File No. 333-250072) (the “Form S-3”), which was previously declared effective by the Securities and Exchange Commission, and the related prospectus and one or more prospectus supplements.

The Company is not obligated to make any sales of its common stock under the Sales Agreement. The offering of common stock pursuant to the Sales Agreement will terminate upon the termination of the Sales Agreement as permitted therein. The Company and Cantor may each terminate the Sales Agreement at any time upon ten days’ prior notice.

As of September 30, 2021, we had sold an aggregate of 15,023,073 shares at a weighted-average sales price of $2.19 per share under the Sales Agreement for aggregate gross proceeds of $32.9 million and net proceeds of $31.7 million, after deducting sales agent commission and discounts and our other offering costs. During the three months ended September 30, 2021, the Company did not sell any shares of our common stock pursuant to the current Registration Statement on Form S-3 (File No. 333-250072). During the nine months ended September 30, 2021, the Company sold 1,811,238 shares of our common stock pursuant to the current Registration Statement on Form S-3 (File No. 333-250072) at a weighted-average sales price of $1.95 per share, resulting in net proceeds of approximately $3.4 million under the Sales Agreement which is net of $112,000 in expenses. During the three and nine months ended September 30, 2020, the Company sold 2,830,000 shares at a weighted average sales price of $1.43 per share under the ATM for aggregate gross proceeds of $4.0 million and net proceeds of $3.9 million pursuant to the prior Registration Statement on Form S-3 (File No. 333-220942). As of September 30, 2021, the Company had $41.2 million available for sale under the Sales Agreement.

(b)

Rights Agreement

On November 13, 2015, the Company and American Stock Transfer & Trust Company, LLC, as Rights Agent, entered into a Rights Agreement. Also on November 12, 2015, the board of directors of the Company authorized and the Company declared a dividend of one preferred stock purchase right (each a “Right” and collectively, the “Rights”) for each outstanding share of common stock of the Company. The dividend was payable to stockholders of record as of the close of business on November 30, 2015 and entitles the registered holder to purchase from the Company one one-thousandth of a fully paid non-assessable share of Series A Junior Participating Preferred Stock of the Company at a price of $63.96 per one-thousandth share (the “Purchase Price”). The Rights will generally become exercisable upon the earlier to occur of (i) 10 business days following a public announcement that a person or group of affiliated or associated persons has become an Acquiring Person (as defined below) or (ii) 10 business days (or such later date as may be determined by action of the board of directors prior to such time as any person or group of affiliated or associated persons becomes an Acquiring Person) following the commencement of, or announcement of an intention to make, a tender offer or exchange offer the consummation of which would result in the beneficial ownership by a person or group of 15% or more of the outstanding common stock of the Company. Except in certain situations, a person or group of affiliated or associated persons becomes an “Acquiring Person” upon acquiring beneficial ownership of 15% or more of the outstanding shares of common stock of the Company.

In general, in the event a person becomes an Acquiring Person, then each Right not owned by such Acquiring Person will entitle its holder to purchase from the Company, at the Right’s then current exercise price, in lieu of shares of Series A Junior Participating Preferred Stock, common stock of the Company with a market value of twice the Purchase Price. In addition, if after any person has become an Acquiring Person, (a) the Company is acquired in a merger or other business combination, or (b) 50% or more of the Company’s assets, or assets accounting for 50% or more of its earning power, are sold, leased, exchanged or otherwise transferred (in one or more transactions), proper provision shall be made so that each holder of a Right (other than the Acquiring Person, its affiliates and associates and certain transferees thereof, whose Rights became void) shall thereafter have the right to purchase from the acquiring corporation, for the Purchase Price, that number of shares of common stock of the acquiring corporation which at the time of such transaction would have a market value of twice the Purchase Price.

The Company will be entitled to redeem the Rights at $0.001 per Right at any time prior to the time an Acquiring Person becomes such. The terms of the Rights are set forth in the Rights Agreement, which is summarized in the Company’s Current Report on Form 8-K dated November 13, 2015. The rights plan was originally set to expire on November 12, 2018; however, on November 5, 2018 our Board of Directors approved an Amended and Restated Rights Agreement pursuant to which the expiration date was extended to November 5, 2021 and again on November 1, 2021, the Company adopted a Second Amended and Restated Rights Agreement pursuant to which the expiration date was extended to November 1, 2024, unless the rights are earlier redeemed or exchanged by the Company.

(c)

Share-Based Payments

The Company recognizes stock-based compensation expense for grants of stock option awards, restricted stock units and restricted stock under the Company’s Incentive Plan to employees, nonemployees and nonemployee members of the Company’s board of directors based on the grant-date fair value of those awards. The grant-date fair value of an award is generally recognized as compensation expense over the award’s requisite service period. In addition, the Company has granted performance-based stock option awards and restricted stock units, which vest based upon the Company satisfying certain performance conditions. Potential compensation cost, measured on the grant date, related to these performance options will be recognized only if, and when, the Company estimates that these options or units will vest, which is based on whether the Company considers the performance conditions to be probable of attainment. The Company’s estimates of the number of performance-based options or units that will vest will be revised, if necessary, in subsequent periods.

The Company uses the Black-Scholes model to compute the estimated fair value of stock option awards. Using this model, fair value is calculated based on assumptions with respect to (i) expected volatility of the Company’s common stock price, (ii) the periods of time over which employees and members of the board of directors are expected to hold their options prior to exercise (expected term), (iii) expected dividend yield on the Common Stock, and (iv) risk-free interest rates. Stock-based compensation expense also includes an estimate, which is made at the time of grant, of the number of awards that are expected to be forfeited. This estimate is revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. Stock-based compensation cost that has been expensed in the statements of operations amounted to approximately $155,000 and $352,000, respectively, for the three months ended September 30, 2021 and 2020, and amounted to $449,000 and $1.1 million, respectively, for the nine months ended September 30, 2021 and 2020, and is allocated as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020

Research and development	$	70,911	$	150,435	$	207,280	$	484,876
General and administrative		84,087		201,188		242,031		653,718

	$	154,998	$	351,623	$	449,311	$	1,138,594

The Company did not issue any stock options during each of the three months ended September 30, 2021 and 2020 and issued 376,000 and 739,000 stock options, respectively, during the nine months ended September 30, 2021 and 2020.

Key assumptions used in the determination of the fair value of stock options granted are as follows:

Expected Term: The expected term represents the period that the stock-based awards are expected to be outstanding. Due to limited historical experience of similar awards, the expected term was estimated using the simplified method in accordance with the provisions of Staff Accounting Bulletin (“SAB”) No. 107, Share-Based Payment, for awards with stated or implied service periods. The simplified method defines the expected term as the average of the contractual term and the vesting period of the stock option. For awards with performance conditions, and that have the contractual term to satisfy the performance condition, the contractual term was used.

Risk-Free Interest Rate: The risk-free interest rate used was based on the implied yield currently available on U.S. Treasury issues with an equivalent remaining term.

Expected Dividend: The expected dividend assumption is based on management’s current expectation about the Company’s anticipated dividend policy. The Company does not anticipate declaring dividends in the foreseeable future.

Expected Volatility: The volatility factor is based solely on the Company’s trading history.

For options granted during the nine months ended September 30, 2021 and 2020, the Company calculated the fair value of each option grant on the respective dates of grant using the following weighted average assumptions:

	2021			2020
Expected term		5.79 years			5.81 years
Risk-free interest rate		53.56	%		1.33	%
Expected dividend yield		—			—
Expected volatility		101.68	%		99.52	%

FASB ASC 718, Stock Compensation, requires the Company to recognize compensation expense for the portion of options that are expected to vest. Therefore, the Company applied estimated forfeiture rates that were derived from historical employee termination behavior. If the actual number of forfeitures differs from those estimated by management, additional adjustments to compensation expense may be required in future periods.

As of September 30, 2021, there was $941,000 of total unrecognized compensation cost related to unvested share-based compensation arrangements granted under the Company’s stock option plan. That cost is expected to be recognized over a weighted average period of 2.0 years and will be adjusted for subsequent changes in estimated forfeitures.

(d)

Stock Option Plan

In April 2014, the board of directors adopted the 2014 Stock and Incentive Plan (“2014 Plan”) subject to shareholder approval which was received in June 2014. The 2014 Plan provides for the granting of nonqualified and incentive stock options, stock appreciation rights, restricted stock units, restricted stock and dividend equivalents. An aggregate of 1,000,000 shares were authorized for issuance under the 2014 Plan. Additionally, 271,906 remaining authorized shares under the 2011 Equity Incentive Plan (“2011 Plan”) were issuable under the 2014 Plan at the time of the 2014 Plan adoption. Upon receiving shareholder approval in June 2016, the 2014 Plan was amended and restated to increase the authorized number of shares of common stock of the Company issuable under all awards granted under the 2014 Plan from 1,271,906 to 2,471,906. Additionally, upon receiving shareholder approval in June 2018, the 2014 Plan was further amended and restated to increase the authorized number of shares of common stock of the Company issuable under all awards granted under the 2014 Plan from 2,471,906 to 3,221,906. Finally, upon receiving shareholder approval in June 2020, the 2014 Plan was further amended and restated to increase the authorized number of shares of common stock of the Company issuable under all awards granted under the 2014 Plan from 3,221,906 to 5,721,906. The board of directors, on an option-by-option basis, determines the number of shares, exercise price, term, and vesting period for options granted. Options granted generally have a ten-year contractual life. The Company issues shares of common stock upon the exercise of options with the source of those shares of common stock being either newly issued shares or shares held in treasury. An aggregate of 5,721,906 shares are authorized for issuance under the 2014 Plan, with 1,586,959 shares remaining available for grant as of September 30, 2021.

A summary of stock option activity is as follows:

Schedule of Stock Option Activity

	Outstanding stock options
	Number of shares			Weighted average exercise price
Balance at December 31, 2020		3,564,458		$	3.36
Options granted		376,000			1.44
Options exercised		(4,584	)		1.46
Options forfeited		-			-
Options cancelled		(22,169	)		6.41
Balance at September 30, 2021		3,913,705			3.16

Options exercisable at September 30, 2021		2,606,227			4.14

The following table summarizes information about stock options outstanding and exercisable at September 30, 2021:

Options outstanding								Options exercisable
Number outstanding		Weighted average remaining contractual life (Years)		Weighted average exercise price		Aggregate intrinsic value		Number exerciseable		Weighted average remaining contractual life (Years)		Weighted average exercise price		Aggregate intrinsic value

	3,913,705		6.14	$	3.16	$	382,749		2,606,227		4.69	$	4.14	$	217,335

The intrinsic value for stock options is defined as the difference between the current market value and the exercise price. There were zero and 4,584, respectively, stock options exercised during the three and nine months ended September 30, 2021, and no stock options exercised during the three and nine months ended September 30, 2020.

(e)

Common Stock Warrants

The Company accounts for its common stock warrants under ASC 480, Distinguishing Liabilities from Equity, which requires any financial instrument, other than an outstanding share, that, at inception, embodies an obligation to repurchase the issuer’s equity shares, or is indexed to such an obligation, and requires or may require the issuer to settle the obligation by transferring assets, to be classified as a liability. In accordance with ASC 480, the Company’s outstanding warrants from the November 2019 Offering are classified as a liability. The liability is adjusted to fair value at each reporting period, with the changes in fair value recognized as gain (loss) on change in fair value of warrant liability in the Company’s consolidated statements of operations. The warrants issued in the November 2019 Offering allow the warrant holder, if certain change in control events occur, the option to receive an amount of cash equal to the value of the warrants as determined in accordance with the Black-Scholes option pricing model with certain defined assumptions upon a fundamental transaction.

As of September 30, 2021, the Company had 1,094,030 common stock warrants outstanding from the November 2019 Offering to purchase an equal number of shares of common stock. The fair value of these warrants on September 30, 2021 and on December 31, 2020 was determined using the Black-Scholes option pricing model with the following Level 3 inputs (as defined in the November 2019 Offering):

Schedule of Fair Value of Warrants

	September 30, 2021			December 31, 2020
Expected life in years		3.13			3.88
Risk-free interest rate		0.53	%		0.27	%
Dividend yield		—			—
Volatility		59.69	%		88.46	%
Stock price	$	1.09		$	1.36

During the three and nine months ended September 30, 2021, the Company recorded a non-cash gain of $480,000 and $506,000, respectively, from the change in fair value of the November 2019 Offering warrants. During the three and nine months ended September 30, 2020, the Company recorded a non-cash gain of $140,000 and a non-cash loss of $3.0 million from the change in fair value of the November 2019 Offering warrants. The following table is a reconciliation of the warrant liability measured at fair value using level 3 inputs:

	Warrant Liability
Balance at December 31, 2020	$	1,170,051
Settlement of liability on warrant exercise		(18,365	)
Change in fair value of common stock warrants		(506,208	)
Balance at September 30, 2021	$	645,478

Additionally, in the February 2020 Offering, the Company issued 5,042,017 common stock warrants, however, because these warrants do not provide the warrant holder the option to put the warrant back to the Company, the warrants are classified as equity.

The following table summarizes the number of common stock warrants outstanding and the weighted average exercise price:

	Warrants			Weighted Average Exercise Price
Outstanding at December 31, 2020		1,944,366		$	0.51
Issued		-			-
Exercised		(10,000	)		0.50
Expired		-			-
Cancelled		-			-
Forfeited		-			-
Balance at September 30, 2021		1,934,366		$	0.51

During the three and nine months ended September 30, 2021, zero and 10,000 common stock warrants to purchase one share of our common stock were exercised, respectively, resulting in proceeds of zero and $5,000, respectively. Additionally, during the three and nine months ended September 30, 2020, 1,478,844 and 15,097,651 common stock warrants to purchase one share of our common stock were exercised, respectively, resulting in proceeds of approximately $761,000 and $7.7 million, respectively.

The following table summarizes information about common stock warrants outstanding at September 30, 2021:

Warrants outstanding
Number exercisable		Weighted average remaining contractual life (Years)		Weighted average exercise price		Aggregate intrinsic value

	1,934,366		3.25	$	0.51	$	1,116,066

(10)

Commitments and Contingencies

Litigation

The Company is involved in various lawsuits, claims and other legal matters from time to time that arise in the ordinary course of conducting business. The Company records a liability when a particular contingency is probable and estimable.

On April 2, 2019, the Company filed a lawsuit against Clarus in the United States District Court for the District of Delaware alleging that Clarus’s JATENZO® product infringes six of Lipocine’s issued U.S. patents: 9,034,858; 9,205,057; 9,480,690; 9,757,390; 6,569,463; and 6,923,988. However on February 11, 2020, the Company voluntarily dismissed allegations of patent infringement for expired U.S. Patent Nos. 6,569,463 and 6,923,988 in an effort to streamline the issues and associated costs for dispute. Clarus has answered the complaint and asserted counterclaims of non-infringement, inequitable conduct and invalidity. The Company answered Clarus’s counterclaims on April 29, 2019. The Court held a scheduling conference on August 15, 2019, a claim construction hearing on February 11, 2020 and a Summary Judgement Hearing on January 15, 2021. In May 2021, the Court granted Clarus’ motion for Summary Judgment, finding the asserted claims of Lipocine’s U.S. patents 9,034,858; 9,205,057; 9,480,690; and 9,757,390 invalid for failure to satisfy the written description requirement of 35 U.S.C. § 112. Clarus still had remaining counterclaims before the Court. On July 13, 2021, Clarus and the Company entered into a global settlement agreement (“Global Agreement’) which resolved all outstanding claims of this litigation as well as the on-going United States Patent and Trademark Office (“USPTO”) Interference No. 106,128 between the parties. Under the terms of the Global Agreement, the Company agreed to pay Clarus $4.0 million payable as follows: $2.5 million immediately, $1.0 million on July 13, 2022 and $500,000 on July 13, 2023. No future royalties are owing from either party. On July 15, 2021, the Court dismissed with prejudice the Company’s claims and Clarus’ counterclaims.

On November 14, 2019, the Company and certain of its officers were named as defendants in a purported shareholder class action lawsuit, Solomon Abady v. Lipocine Inc. et al., 2:19-cv-00906-PMW, filed in the United District Court for the District of Utah. The complaint alleges that the defendants made false and/or misleading statements and/or failed to disclose that our filing of the NDA for TLANDO to the FDA contained deficiencies and as a result the defendants’ statements about our business and operations were false and misleading and/or lacked a reasonable basis in violation of federal securities laws. The lawsuit seeks certification as a class action (for a purported class of purchasers of the Company’s securities from March 27, 2019 through November 8, 2019), compensatory damages in an unspecified amount, and unspecified equitable or injunctive relief. The Company has insurance that covers claims of this nature. The retention amount payable by the Company under our policy is $1.25 million. The Company filed a motion to dismiss the class action lawsuit on July 24, 2020. In response, the plaintiffs filed their response to the motion to dismiss the class action lawsuit on September 22, 2020 and the Company filed its reply to its motion to dismiss on October 22, 2020. A hearing on the motion to dismiss has been scheduled for January 12, 2022. The Company intends to vigorously defend itself against these allegations and has not recorded a liability related to this shareholder class action lawsuit as the outcome is not probable nor can an estimate be made of loss, if any.

On March 13, 2020, the Company filed U.S. patent application serial number 16/818,779 (“the Lipocine ‘779 Application”) with the USPTO. On October 16 and November 3, 2020, Lipocine filed suggestions for interference with the USPTO requesting that a patent interference be declared between the Lipocine ‘779 Application and US patent application serial number 16/656,178 to Clarus Therapeutics, Inc. (“the Clarus ‘178 Application”). Pursuant to the Company’s request, the Patent Trial and Appeal Board (“PTAB”) at the USPTO declared the interference on January 4, 2021 to ultimately determine, as between the Company and Clarus, who is entitled to the claimed subject matter. The interference number is 106,128, and the Company was initially declared Senior Party. A conference call with the PTAB was held on January 25, 2021 to discuss proposed motions. On February 1, 2021, the PTAB issued an order authorizing certain motions and setting the schedule for the preliminary motions phase. On July 13, 2021, Clarus and the Company entered into the Global Agreement to resolve interference No. 106,128 among other items. On July 26, 2021, the PTAB granted the Company’s request for adverse judgment in interference No. 106,128 in accordance with the Global Agreement.

Guarantees and Indemnifications

In the ordinary course of business, the Company enters into agreements, such as lease agreements, licensing agreements, clinical trial agreements, and certain services agreements, containing standard guarantee and / or indemnification provisions. Additionally, the Company has indemnified its directors and officers to the maximum extent permitted under the laws of the State of Delaware.

(11)

Agreement with Spriaso, LLC

On July 23, 2013, the Company entered into an assignment/license and a services agreement with Spriaso, a related-party that is majority-owned by certain current and former directors of Lipocine Inc. and their affiliates. Under the license agreement, the Company assigned and transferred to Spriaso all of the Company’s rights, title and interest in its intellectual property to develop products for the cough and cold field. In addition, Spriaso received all rights and obligations under the Company’s product development agreement with a third-party. In exchange, the Company will receive a royalty of 20 percent of the net proceeds received by Spriaso, up to a maximum of $10.0 million. Spriaso also granted back to the Company an exclusive license to such intellectual property to develop products outside of the cough and cold field. Under the service agreement, the Company provided facilities and up to 10 percent of the services of certain employees to Spriaso for a period of 18 months which expired January 23, 2015. Effective January 23, 2015, the Company entered into an amended services agreement with Spriaso in which the Company agreed to continue providing up to 10 percent of the services of certain employees to Spriaso at a rate of $230/hour for a period of six months. The agreement was further amended on July 23, 2015, on January 23, 2016, on July 23, 2016, on January 23, 2017, on July 23, 2017, on January 23, 2018, on July 23, 2018 and again on January 23, 2019 to extend the term of the agreement for an additional six months. The agreement was further amended on July 23, 2019 and again on July 23, 2020 to extend the term of the agreement for an additional twelve months. The agreement may be reinstated upon written agreement of Spriaso and the Company. The Company did not receive any reimbursements during the three and nine months ended September 30, 2021 or 2020. Additionally, during the three and nine months ended September 30, 2021 and 2020, the Company received $55,000 and zero, respectively, in licensing payments from Spriaso. Spriaso filed its first NDA and as an affiliated entity of the Company, it used up the one-time waiver for user fees for a small business submitting its first human drug application to the FDA. Spriaso is considered a variable interest entity under the FASB ASC Topic 810-10, Consolidations, however the Company is not the primary beneficiary and has therefore not consolidated Spriaso.

(12)

Recent Accounting Pronouncements

Accounting Pronouncements Issued Not Yet Adopted

In 2016, the FASB issued Accounting Standards Update (“ASU”) 2016-13, Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). This standard replaces the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses on instruments within its scope, including trade receivables, and requires entities to measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions and reasonable and supportable forecasts. The original effective date for ASU 2016-13 was for annual and interim periods beginning after December 15, 2019.

However, in October 2019, the FASB issued ASU 2019-10, Financial Instruments - Credit Losses, Derivatives and Hedging, and Leases: Effective Dates, which deferred the effective date of ASU 2016-13 for certain entities, including those that are eligible to be smaller reporting companies. A company’s determination about whether it is eligible for the deferral is a one-time assessment as of November 15, 2019 based on its most recent determination of its small reporting company eligibility as of the last business day of the most recently completed second quarter. Based on this determination, the Company qualifies as a smaller reporting entity and is therefore eligible for the deferral of adoption of ASU 2016-13, resulting in a new effective date of January 1, 2023. The Company has historically not had credit losses on financial instruments and is currently evaluating the impact the adoption of ASU 2016-13 will have on its consolidated financial statements.

(13)

Subsequent Event

On October 14, 2021, the Company entered into the Antares License Agreement with Antares, pursuant to which the Company granted to Antares an exclusive, royalty-bearing, sublicensable right and license to develop and commercialize, upon final approval of TLANDO® from the U.S. Food and Drug Administration (“FDA”), the Company’s TLANDO product with respect to testosterone replacement therapy in males for conditions associated with a deficiency or absence of endogenous testosterone, as indicated in NDA No. 208088, treatment of Klinefelter syndrome, and pediatric indications relating to testosterone replacement therapy in males for conditions associated with a deficiency or absence of endogenous testosterone (the “Field”), in each case within the United States. The Antares License Agreement also provides Antares with an option, exercisable on or before March 31, 2022, to license TLANDO XR, the Company’s potential once-daily oral product candidate for testosterone replacement therapy. Upon execution of the Antares License Agreement, Antares paid to the Company an initial payment of $11.0 million. Antares will also make additional payments of $5.0 million to the Company on each of January 1, 2025, and January 1, 2026, provided that certain conditions are satisfied. The Company is also eligible to receive milestone payments of up to $160.0 million in the aggregate, depending on the achievement of certain sales milestones in a single calendar year with respect to all products licensed by Antares under the Antares License Agreement. In addition, upon commercialization, the Company will receive tiered royalty payments at rates ranging from percentages in the mid-teens to up to 20% of net sales of TLANDO in the United States, subject to certain minimum royalty obligations. If Antares exercises its option to license TLANDO XR, the Company will be entitled to an additional payment of $4.0 million, as well as development milestone payments of up to $35.0 million in the aggregate and tiered royalty payments at rates ranging from percentages in the mid-teens to 20% of net sales of TLANDO XR in the United States. The Company retains development and commercialization rights in the rest of the world, and with respect to applications outside of the Field inside or outside the United States. Antares will also purchase certain existing inventory of licensed products from the Company, subject to testing and acceptance procedures. Finally, pursuant to the terms of the Antares License Agreement, Antares is generally responsible for expenses relating to the development (including the conduct of any clinical trials) and commercialization of licensed products in the Field in the United States, while the Company is generally responsible for expenses relating to development activities outside of the Field and/or the United States.

ITEM 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion of our financial condition and results of operations should be read in conjunction with our unaudited condensed consolidated financial statements and the related notes thereto and other financial information included elsewhere in this report. For additional context with which to understand our financial condition and results of operations, see the management’s discussion and analysis included in our Form 10-K, filed with the U.S. Securities and Exchange Commission (“SEC”) on March 11, 2021, our first quarter Form 10-Q filed with the SEC on May 6, 2021, our second quarter Form 10-Q filed with the SEC on August 5, 2021, as well as the financial statements and related notes contained therein.

As used in the discussion below, “we,” “our,” and “us” refers to Lipocine.

Forward-Looking Statements

This section and other parts of this report contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, that involve risks and uncertainties. Forward-looking statements provide current expectations of future events based on certain assumptions and include any statement that does not directly relate to any historical or current fact. Forward-looking statements may refer to such matters as products, product benefits, pre-clinical and clinical development timelines, clinical and regulatory expectations and plans, expected responses to regulatory actions, anticipated financial performance, future revenues or earnings, business prospects, projected ventures, new products and services, anticipated market performance, expected research and development and other expenses, future expectations for liquidity and capital resources needs and similar matters. Such words as “may”, “will”, “expect”, “continue”, “estimate”, “project”, and “intend” and similar terms and expressions are intended to identify forward looking statements. Forward-looking statements are not guarantees of future performance and our actual results may differ significantly from the results discussed in the forward-looking statements. Factors that might cause such differences include, but are not limited to, those discussed in Part II, Item 1A (Risk Factors) of this Form 10-Q, or in Part II, Item 1A (Risk Factors) of our Form 10-Q for the quarter ended June 30, 2021 filed with the SEC on August 5, 2021, or in Part II, Item 1A (Risk Factors) of our Form 10-Q for the quarter ended March 31, 2021 filed with the SEC on May 6, 2021 or in Part I, Item 1A (Risk Factors) of our Form 10-K filed with the SEC on March 11, 2021. Except as required by applicable law, we assume no obligation to revise or update any forward-looking statements for any reason.

Overview of Our Business

We are a clinical-stage biopharmaceutical company focused on applying our oral drug delivery technology for the development of pharmaceutical products focusing on metabolic and endocrine disorders. Our proprietary delivery technologies are designed to improve patient compliance and safety through orally available treatment options. Our primary development programs are based on oral delivery solutions for poorly bioavailable drugs. We have a portfolio of proprietary product candidates designed to produce favorable pharmacokinetic (“PK”) characteristics and facilitate lower dosing requirements, bypass first-pass metabolism in certain cases, reduce side effects, and eliminate gastrointestinal interactions that limit bioavailability.

Our most advanced product candidate, TLANDO®, is an oral testosterone replacement therapy (“TRT”) comprised of testosterone undecanoate (“TU”). On December 8, 2020, we received tentative approval from the United States Food and Drug Administration (“FDA”) regarding our new drug application (“NDA”) filed in February 2020 for TLANDO as a TRT in adult males for conditions associated with a deficiency of endogenous testosterone, also known as hypogonadism. In granting tentative approval, the FDA concluded that TLANDO has met all required quality, safety and efficacy standards necessary for approval. However, TLANDO has not received final approval and is not eligible for final approval to market in the U.S. until the expiration of the exclusivity period previously granted to Clarus Therapeutics, Inc. (“Clarus”) with respect to Jatenzo®, which expires on March 27, 2022. The FDA has affirmed that the resubmission of the NDA for TLANDO will be a Class 1 resubmission. A Class 1 NDA resubmission includes a two-month FDA review goal period. On October 14, 2021, we entered into a license agreement (the “Antares License Agreement”) with Antares Pharma, Inc. (“Antares”), pursuant to which we granted to Antares an exclusive, royalty-bearing, sublicensable right and license to develop and commercialize, upon final approval of TLANDO from the FDA, our TLANDO product with respect to TRT in the U.S. We and Antares remain committed to taking appropriate actions with the goal of receiving final approval to permit the launch of TLANDO. The FDA has also required us to conduct certain post-marketing studies to (i) assess patient understanding of key risks relating to TLANDO and (ii) evaluate development of adrenal insufficiency with chronic TLANDO therapy which will be conducted and paid for by Antares.

Additional pipeline candidates include LPCN 1144, an oral prodrug of bioidentical testosterone comprised of TU for the treatment of non-cirrhotic non-alcoholic steatohepatitis (“NASH”) which is currently in Phase 2 testing, TLANDO® XR, a next generation oral TRT product comprised of testosterone tridecanoate (“TT”) with the potential for once daily dosing which has completed Phase 2 testing, LPCN 1148 comprising a novel prodrug of bioidentical testosterone, testosterone laurate (“TL”), for the management of symptoms associated with cirrhosis, LPCN 1154, an oral neuro-steroid targeted for the treatment of postpartum depression (“PPD”), and LPCN 1107, potentially the first oral hydroxy progesterone caproate (“HPC”) product indicated for the prevention of recurrent preterm birth (“PTB”), which has completed a dose finding Phase 2 clinical study and has been granted orphan drug designation by the FDA.

LPCN 1144 is currently being tested in an open label extension (“OLE”) study to the Liver Fat intervention with oral Testosterone (“LiFT “) proof-of-concept (“POC”) Phase 2 clinical study, a paired-biopsy study in confirmed non-cirrhotic NASH subjects. Positive top-line primary endpoint results after 12 weeks of treatment in the LiFT clinical study were released in January 2021. Treatments with LPCN 1144 resulted in robust liver fat reduction, assessed by magnetic resonance imaging, proton density fat fraction (“MRI-PDFF”) technique, and showed improvement of liver injury markers with no observed tolerability issues. Additionally, key secondary endpoint results after 36 weeks of treatment in the LiFT clinical study were released in August 2021. Treatments with LPCN 1144 met the non-alcoholic steatohepatitis (“NASH”) resolution regulatory endpoint, showed positive effects in appendicular lean mass and whole-body fat mass and continued to show substantial reductions in markers of liver injury compared to placebo.

To date, we have funded our operations primarily through the sale of equity securities, debt and convertible debt and through up-front payments, research funding and royalty and milestone payments from our license and collaboration arrangements. We have not generated any revenues from product sales and we do not expect to generate revenue or royalties from product sales unless and until we obtain regulatory approval of TLANDO or other products.

We have incurred losses in most years since our inception. As of September 30, 2021, we had an accumulated deficit of $185.3 million. Income and losses fluctuate year to year, primarily depending on the nature and timing of research and development occurring on our product candidates. Our net loss was $13.3 million for the nine months ended September 30, 2021, compared to $16.5 million for the nine months ended September 30, 2020. Substantially all of our operating losses resulted from expenses incurred in connection with our product candidate development programs, our research activities and general and administrative costs, including recently settled litigation, associated with our operations.

We expect to continue to incur significant expenses and operating losses for the foreseeable future as we:

	●	complete the OLE clinical study with LPCN 1144;

	●	conduct further development of our other product candidates, including LPCN 1144, LPCN 1148, LPCN 1154 and LPCN 1107;

	●	continue our research efforts;

	●	research new product candidates or new uses for our existing products candidates;

	●	maintain, expand and protect our intellectual property portfolio; and

	●	provide general and administrative support for our operations.

To fund future long-term operations, including the potential commercialization of our products, we will need to raise additional capital. The amount and timing of future funding requirements will depend on many factors, including capital market conditions, regulatory requirements related to our other product development programs, the timing and results of our ongoing development efforts, the potential expansion of our current development programs, potential new development programs, our ability to license our products to third parties, the pursuit of various potential commercial activities and strategies associated with our development programs and related general and administrative support. We anticipate that we will seek to fund our operations through public or private equity or debt financings or other sources, such as potential license, partnering and collaboration agreements. We cannot be certain that anticipated additional financing will be available to us on favorable terms, in amounts sufficient to fund our operations or at all. Although we have previously been successful in obtaining financing through public and private equity securities offerings and our license and collaboration agreements, there can be no assurance that we will be able to do so in the future.

Our Product Candidates

Our current portfolio includes our most advanced product candidate, TLANDO, an oral TRT product candidate, which received tentative approval from the FDA on December 8, 2020. Additionally, we are in the process of establishing our pipeline of other clinical candidates including an oral androgen therapy for the treatment of non-cirrhotic NASH, LPCN 1144, a next-generation potential once daily oral TRT, TLANDO XR, an androgen therapy for the management symptoms associated with cirrhosis, LPCN 1148, an oral neuro-steroid targeted for the treatment of PPD, LPCN 1154, an oral therapy for the prevention of recurrent PTB, LPCN 1107, and we continue to explore other product candidates targeting indications with a significant unmet need. On October 14, 2021, we entered into the Antares License Agreement with Antares, pursuant to which we granted to Antares an exclusive, royalty-bearing, sublicensable right and license to develop and commercialize, upon final approval of TLANDO from the FDA, our TLANDO product with respect to TRT in the U.S. The Antares License Agreement also provides Antares with an option, exercisable on or before March 31, 2022, to license TLANDO XR.

These products are based on our proprietary Lip’ral drug delivery technology platform. Lip’ral technology is a patented technology based on lipidic compositions which form an optimal dispersed phase in the gastrointestinal environment for improved absorption of insoluble drugs. The drug loaded dispersed phase presents the solubilized drug efficiently at the absorption site (gastrointestinal tract membrane) thus improving the absorption process and making the drug less dependent on physiological variables such as dilution, gastro-intestinal pH and food effects for absorption. Lip’ral based formulation enables improved solubilization and higher drug-loading capacity, which can lead to improved bioavailability, reduced dose, faster and more consistent absorption, reduced variability, reduced sensitivity to food effects, improved patient compliance, and targeted lymphatic delivery where appropriate.

Our Development Pipeline

TLANDO: An Oral Product Candidate for Testosterone Replacement Therapy

Our most advanced product, TLANDO, is an oral formulation of the chemical, TU, which is an eleven-carbon side chain attached to testosterone (“T”). TU is an ester prodrug of T. An ester is chemically formed by bonding an acid and an alcohol. Upon the cleavage, or breaking, of the ester bond, T is formed. TU has been approved for use outside the United States for many years for delivery via intra-muscular injection and in oral dosage form and more recently TU has received regulatory approval in the United States for delivery via intra-muscular injection and in oral dosage form. We are using our proprietary technology to facilitate steady gastrointestinal solubilization and absorption of TU. Proof-of-concept was initially established in 2006, and subsequently TLANDO was licensed in 2009 to Solvay Pharmaceuticals, Inc. which was then acquired by Abbott Products, Inc. (“Abbott”). Following a portfolio review associated with the spin-off of AbbVie Inc. by Abbott in 2011, the rights to TLANDO were reacquired by us. All obligations under the prior license agreement have been completed except that Lipocine will owe Abbott a perpetual 1% royalty on net sales. Such royalties are limited to $1 million in the first two calendar years following product launch, after which period there is not a cap on royalties and no maximum aggregate amount. If generic versions of any such product are introduced, then royalties are reduced by 50%.

NDA PDUFA Outcome

Under the Pediatric Research Equity Act (“PREA”), if TLANDO receives full approval, under the terms of the Antares Licensing Agreement, Antares will need to address the PREA requirement to assess the safety and effectiveness of TLANDO in pediatric patients. The FDA has also required us to conduct certain post-marketing studies including: (i) conduct an appropriately designed label comprehension and knowledge study that assesses patient understanding of key risk messages in the Medication Guide for TLANDO and (ii) conduct an appropriately designed one-year trial to evaluate development of adrenal insufficiency with chronic TLANDO therapy which will be conducted and paid for by Antares. The timetables for these post-marketing requirements will be established at the time of full approval of TLANDO.

Upon execution of the Antares License Agreement, Antares paid to us an initial payment of $11.0 million. Antares will also make additional payments of $5.0 million to us on each of January 1, 2025 and January 1, 2026, provided that certain conditions are satisfied. We are also eligible to receive milestone payments of up to $160.0 million in the aggregate, depending on the achievement of certain sales milestones in a single calendar year with respect to all products licensed by Antares under the Antares License Agreement. In addition, upon commercialization, we will receive tiered royalty payments at rates ranging from percentages in the mid-teens to up to 20% of net sales of TLANDO in the United States, subject to certain minimum royalty obligations. If Antares exercises its option to license TLANDO XR, we will be entitled to an additional payment of $4.0 million, as well as development milestone payments of up to $35.0 million in the aggregate and tiered royalty payments at rates ranging from percentages in the mid-teens to 20% of net sales of TLANDO XR in the United States.

Recent Competition Update

On March 27, 2019, Clarus’ product JATENZO®, an oral TU product, was approved by the FDA and also received three years of data exclusivity. On February 10, 2020, Clarus announced that JATENZO® has been launched and is commercially available. Based on the FDA’s tentative approval of TLANDO, we will not be able to begin marketing TLANDO until receiving final approval no earlier than March 27, 2022, the expiration of the exclusivity period granted to Clarus with respect to JATENZO®.

Additionally, our competitors may introduce other TRTs. For example, on January 5, 2021 Marius submitted a NDA to the FDA seeking approval of KYZATREX®, its novel oral TU soft gelatin capsule for the treatment of primary and secondary hypogonadism in adult men. According to Marius, it has been assigned a PDUFA date of October 31, 2021 for KYZATREX®.

We are also aware of other pharmaceutical companies that have TRTs or testosterone therapies in development that may be approved for marketing in the United States or outside of the United States.

Based on publicly available information, we believe that several other TRTs that would be competitive with TLANDO are in varying stages of development, some of which may be approved, marketed and/or commercialized prior to TLANDO. These therapies include T-gels, oral-T, an aromatase inhibitor, a new class of drugs called Selective Androgen Receptor Modulators and hydroalcoholic gel formulations of dihydrotestosterone (“DHT”).

LPCN 1144: An Oral Prodrug of Bioidentical Testosterone Product Candidate for the Treatment of NASH

We are currently evaluating LPCN 1144, an oral prodrug of bioidentical testosterone comprised of TU, for the treatment of non-cirrhotic NASH. NASH is a more advanced state of non-alcoholic fatty liver disease (“NAFLD”) and can progress to a cirrhotic liver and eventually hepatocellular carcinoma/ liver cancer. Twenty to thirty percent of the U.S. population is estimated to suffer from NAFLD and fifteen to twenty percent of this group progress to NASH, which is a substantially large population that lacks effective therapy. Currently, there are no FDA approved treatments for NASH, a silent killer that affects approximately 30 million Americans. Approximately 50% of NASH patients are in adult males. NAFLD/NASH is becoming more common due to its strong correlation with obesity and metabolic syndrome, including components of metabolic syndrome such as diabetes, cardiovascular disease and high blood pressure. In men, especially with comorbidities associated with NAFLD/NASH, testosterone deficiency has been associated with an increased accumulation of visceral adipose tissue and insulin resistance, which could be factors contributing to NAFLD/NASH. There is currently no approved therapy for the treatment of NASH although there are several drug candidates currently under development with many having clinical failures to date.

History of Liver Disease

The liver is the largest internal organ in the human body and its proper function is indispensable for many critical metabolic functions, including the regulation of lipid and sugar metabolism, the production of important proteins, including those involved in blood clotting, and purification of blood. There are over 100 described diseases of the liver, and because of its many functions, these can be highly debilitating and life-threatening unless effectively treated. Liver diseases can result from injury to the liver caused by a variety of insults, including hepatitis C virus, hepatitis B virus, obesity, chronic excessive alcohol use or autoimmune diseases. Regardless of the underlying cause of the disease, there are important similarities in the disease progression including increased inflammatory activity and excessive liver cell apoptosis, which if unresolved leads to fibrosis. Fibrosis, if allowed to progress, will lead to cirrhosis, or excessive scarring of the liver, and eventually reduced liver function. Some patients with liver cirrhosis have a partially functioning liver and may appear asymptomatic for long periods of time, which is referred to as decompensated liver disease. Decompensated liver disease is when the liver is unable to perform its normal functions. Many people with active liver disease remain undiagnosed largely because liver disease patients are often asymptomatic for many years.

Markers of Liver Cell Death

Alanine aminotransferase (“ALT”) is an enzyme that is produced in liver cells and is naturally found in the blood of healthy individuals. In liver disease, liver cells are damaged and as a consequence, ALT is released into the blood, increasing ALT levels above the normal range. Physicians routinely test blood levels of ALT to monitor the health of a patient’s liver. ALT level is a clinically important biochemical marker of the severity of liver inflammation and ongoing liver disease. Elevated levels of ALT represent general markers of liver cell death and inflammation without regard to any specific mechanism. Aspartate aminotransferase (“AST”)is a second enzyme found in the blood that is produced in the liver and routinely measured by physicians along with ALT. As with ALT, AST is often elevated in liver disease and, like ALT, is considered an overall marker of liver inflammation.

Relationship between Hypogonadism and NAFLD

Preclinical and clinical studies in the NAFLD/NASH literature have shown the prevalence of testosterone deficiency across the NAFLD/NASH histological spectrum wherein low testosterone was independently associated with NAFLD/NASH with an inverse relationship between testosterone and NAFLD/NASH symptom severity. A recent National Institute of Diabetes and Digestive Kidney Diseases report suggests that 75% of biopsy confirmed NASH subjects have less than 372 ng/dL of total testosterone and that the degree of fibrosis severity is inversely related to free testosterone levels; thus, providing a good rationale for testing LPCN 1144 in adult NASH patients regardless of their hypogonadal status. We have received clearance from the FDA to clinically investigate LPCN 1144 in an expanded target population of adult male NASH patients. Specifically, the FDA waived the limitation of only testing LPCN 1144 in NASH subjects with total testosterone levels below 300 ng/dL (threshold for hypogonadism).

Current Status

We have recently completed the LiFT Phase 2 clinical study in confirmed non-cirrhotic NASH subjects. The LiFT clinical study was a prospective, multi-center, randomized, double-blind, placebo-controlled multiple-arm study in biopsy-confirmed hypogonadal or eugonadal male NASH subjects with grade F1/F3 fibrosis and a NAFLD Activity Score ≥ 4 with a 36-week treatment period. The LiFT clinical study enrolled 56 biopsy confirmed NASH male subjects. Subjects were randomized 1:1:1 to one of three arms (Treatment A is a twice daily oral dose of 142 mg testosterone equivalent, Treatment B is a twice daily oral dose of 142 mg testosterone equivalent formulated with 217 mg of d-alpha tocopherol equivalent, and the third arm is twice daily matching placebo).

The primary endpoint of the LiFT clinical study was change in hepatic fat fraction via MRI-PDFF and exploratory liver fat/marker end points post 12 weeks of treatment. Additionally, key secondary endpoints post 36 weeks of treatment included assessment of histological change for NASH resolution and/or fibrosis improvement as well as liver fat data. The LiFT clinical study was not powered to assess statistical significance of any of the secondary endpoints. Other important endpoints included the following: change in liver injury markers, anthropomorphic measurements, lipids, insulin resistance and inflammatory/fibrosis markers; as well as patient reported outcomes.

Additionally, subjects have access to LPCN 1144 through an OLE study. The extension study will enable the collection of additional data on LPCN 1144 for up to a total of 72 weeks of therapy. The OLE is currently on-going and has enrolled 25 subjects. We expect topline results from the OLE study mid-2022.

Treatments with LPCN 1144 post 12 weeks of treatment resulted in robust liver fat reduction, assessed by MRI-PDFF, and showed improvement of liver injury markers with no observed tolerability issues. Inclusion of d-alpha tocopherol formulated with the testosterone prodrug resulted in additional liver benefits, notably improved key liver markers without compromising tolerability.

Key results are presented in the following tables:

Mean absolute liver fat using MRI-PDFF in all subjects (n=56)* at Week 12.

Change from baseline (CBL)

Placebo-adjusted CBL

Treatment

p-value

p value

A (n = 18)

-7.7

<0.0001

-6.1

0.0001

B (n = 19)

-9.2

<0.0001

-7.5

<0.0001

Placebo (n = 19)

-1.7

n/a

* Missing data was obtained using Multiple Imputation

NS: Not significant (p > 0.05)

Mean relative liver fat using MRI-PDFF at Week 12 in subjects (n=52) with liver fat ≥ 5% at baseline.*

Change from baseline (CBL)

Placebo-adjusted CBL

Treatment

p value

A (n = 17)

-40.0

<0.0001

-30.0

0.0002

B (n = 17)

-46.9

<0.0001

-37.0

<0.0001

Placebo (n = 18)

-9.9

n/a

* Based on available data.

Responders with > 30% Relative Reduction in Liver Fat at Week 12, Intent to Treat Dataset (n=56)*.

Treatment	Responder (% of subjects)	p value vs Placebo
A (n = 18)	66.7	0.0058
B (n = 19)	63.2	0.0026
Placebo (n = 19)	15.8

* Subjects with missing data are considered non-responders

Liver biopsies were performed at baseline (“BL”) and after 36 weeks of treatment (“EOS”). Prespecified biopsy analyses included NASH Clinical Research Network (“CRN”) scoring as well as a continuous paired (“Paired Technique”) and digital technique (“Digital Technique-Fibronest”). All biopsy analyses were performed on the same slides and the reads for the three techniques were done independently. Analysis sets included the NASH Resolution Set (all subjects that have BL and EOS biopsy with NASH at BL [NAS ≥4 with lobular inflammation score ≥ 1 and hepatocyte ballooning score ≥1 at BL] (n=37)), the Biopsy Set (all subjects with baseline and EOS biopsies (n=44)), and the Safety Set (all randomized subjects (n=56)).

Both LPCN 1144 treatment arms met with statistical significance the pre-specified accelerated approval regulatory endpoint of NASH resolution with no worsening of fibrosis based on NASH CRN scoring. Additionally, both treatment arms showed substantial improvement of the observed NASH activity in steatosis, inflammation and ballooning.

Key results are presented in the following table:

Histology NASH CRN Scoring Outcomes1

Placebo

(n = 11)

Treatment

A (n=13)

Treatment

B (n=13)

NASH Resolution responders, n (%) ²

1 (9%)

7 (54%)³

9, (69%)⁴

NASH Resolution with No Worsening of Fibrosis responders, n (%)

0 (0%)

6 (46%)³

9 (69%)⁵

¹NASH Resolution Set

²Improvement in NASH defined as improvement in ballooning or inflammation, and no worsening of ballooning or inflammation

³p < 0.05 vs placebo

⁴p < 0.01 vs placebo

⁵p < 0.001 vs placebo

Both LPCN 1144 treatment arms showed significant improvement in NASH without worsening of fibrosis using Paired Technique, which concurred with the NASH CRN scoring findings (per Biopsy Set; NASH Improvement responders: Placebo – 13%, Treatment A – 60%, Treatment B – 57%; NASH Improvement with No Worsening of Fibrosis responders: Placebo – 13%, Treatment A – 60%, Treatment B – 57%).

The treatment effects on fibrosis improvement need confirmation in a larger study.

In both treatment arms substantial reductions in markers of liver injury compared to placebo were observed post four weeks of treatment and were sustained through EOS. Using all available Safety Set data, ALT decreased up to a mean of 23.4 U/L at EOS from all group mean baseline of 51.5 U/L and AST decreased up to a mean of 13.3 U/L at EOS from all group mean baseline of 31.9 U/L.

Positive effects in appendicular lean mass and whole-body fat mass, an indicator overall tissue quality, based on dual-energy X-ray absorptiometry scans were noted in both LPCN 1144 treatment arms.

During the 36 weeks of treatment, LPCN 1144 was well tolerated with an overall safety profile comparable to placebo. Frequency and severity of treatment emergent adverse events (“TEAEs”) in both treatment arms were comparable to placebo. Study drug related TEAEs were mild to moderate. Four subjects discontinued due to TEAEs in the placebo arm vs one subject in total across the treatment arms. Cardiovascular events were balanced among groups with hematocrit increases averaging <2% in the treatment arms, no observed thromboembolic events, and comparable blood pressure changes in both treatment arms to placebo.

There were no reported cases of hepatocellular carcinoma or Drug Induced Liver Injury (“DILI”). Weight change from baseline, GI adverse events and prostate-specific antigens (“PSA”) changes were small and comparable among groups. Additionally, no clinically meaningful changes in lipids in treatment groups were noted compared to placebo, and rates of pedal edema were low and similar in all arms.

We have requested a meeting with the FDA to discuss the clinical development path forward with LPCN 1144. We anticipate that the meeting will occur in the first quarter of 2022.

During November 2021, the FDA granted Fast Track Designation to LPCN 1144 as a treatment for non-cirrhotic NASH. The Fast Track program is designed to accelerate the development and expedite the review of products, such as LPCN 1144, which are intended to treat serious diseases and for which there is an unmet medical need.

Previous to the LiFT clinical study, we completed a 16-week POC liver imaging clinical study to assess liver fat changes in hypogonadal men at risk of developing NASH using MRI-PDFF technique. Treatment results from the POC liver imaging study demonstrated that 48% of the treated NAFLD subjects, defined as baseline liver fat of at least 5%, had NAFLD resolution, defined as liver fat <5% post treatment. Additionally, 100% of the subjects experiencing NAFLD resolution had at least a 35% relative liver fat reduction from baseline with a relative mean liver fat reduction of 55% in this group.

TLANDO XR: A Next-Generation Long-Acting Oral Product Candidate for TRT

TLANDO XR is a next-generation, novel ester prodrug of testosterone comprised of TT which uses the Lip’ral technology to enhance solubility and improve systemic absorption. We completed a Phase 2b dose finding study in hypogonadal men in the third quarter of 2016. The primary objectives of the Phase 2b clinical study were to determine the starting Phase 3 dose of TLANDO XR along with safety and tolerability of TLANDO XR and its metabolites following oral administration of single and multiple doses in hypogonadal men. The Phase 2b clinical trial was a randomized, open label, two-period, multi-dose PK study that enrolled hypogonadal males into five treatment groups. Each of the 12 subjects in a group received treatment for 14 days. Results of the Phase 2b study suggest that the primary objectives were met, including identifying the dose expected to be tested in a Phase 3 study. Good dose-response relationship was observed over the tested dose range in the Phase 2b study. Additionally, the target Phase 3 dose met primary and secondary end points. Overall, TLANDO XR was well tolerated with no drug-related severe or serious adverse events reported in the Phase 2b study.

Additionally in October 2014, we completed a Phase 2a POC study in hypogonadal men. The Phase 2a open-label, dose-escalating single and multiple dose study enrolled 12 males. Results from the Phase 2a clinical study demonstrated the feasibility of a once daily dosing with TLANDO XR in hypogonadal men and a good dose response. Additionally, the study confirmed that steady state is achieved by day 14 with consistent inter-day performance observed on day 14, 21 and 28. No subjects exceeded Cmax of 1500 ng/dL at any time during the 28-day dosing period on multi-dose exposure. Overall, TLANDO XR was well tolerated with no serious adverse events (“AE’s”) reported.

We have also completed a preclinical toxicology study with TLANDO XR in dogs.

In February 2018 we had a meeting with the FDA to discuss these pre-clinical results and to discuss the Phase 3 clinical study and path forward for TLANDO XR. Based on the results of the FDA meeting and additional pre-clinical trials conducted after the FDA meeting, we have proposed a Phase 3 protocol for TLANDO XR and have solicited FDA feedback. Based on initial FDA feedback, we expect the Phase 3 clinical trial design to follow the International Council for Harmonisation of Technical Requirements for Pharmaceuticals for Human Use (“ICH”) guidelines and will include a three-month efficacy treatment period and a one-year safety component for up to 100 subjects. We continue to refine the Phase 3 protocol and plan to request FDA approval of the protocol once it is finalized. Additionally, the FDA previously requested that a food effect study needs to be completed, and that ambulatory blood pressure monitoring (“ABPM”) be included as part of the Phase 3 clinical study. We are currently transferring the manufacturing of TLANDO XR to a third-party contract manufacturer and scaling up the formulation. After that is complete, we anticipate the next steps in developing TLANDO XR will be to conduct a food effect/phlebotomy study with TLANDO XR. Under the terms of the Antares License Agreement, Antares has been granted an option, exercisable on or before March 31, 2022, to license TLANDO XR to develop and commercialize upon approval..

LPCN 1148: An Oral Prodrug of Bioidentical Testosterone Product Candidate for the Management of Cirrhosis

Cirrhosis is end-stage NAFLD for which there is no FDA approved drug treatment. Liver cirrhosis is estimated to affect in excess of 600,000 Americans, with men affected at twice the rate of women, and results in approximately 45,000 deaths every year. Due to a lack of available organs, only a third of waitlisted patients are getting liver transplants, and patients that do receive a transplant are increasingly being described as frail. Low testosterone affects up to 90% of cirrhotic men, and is a predictor of mortality and increased adverse events including ascites, hepatic encephalopathy, and clinically significant portal hypertension. We are targeting LPCN 1148 for the management of symptoms associated with liver cirrhosis. We believe LPCN 1148 targets unmet needs for cirrhosis subjects including improvement in the quality of life of patients while on the liver transplant waiting list, prevention or reduction in the occurrence of decompensation events and improvement in post liver transplant survival, including outcomes and costs.

LPCN 1148 comprises a novel prodrug of bioidentical testosterone,TL We are currently making preparations to initiate a Phase 2 POC study (NCT04874350) in male cirrhotic subjects to evaluate the therapeutic potential of LPCN 1148 for the management of cirrhotic subjects. The planned Phase 2 POC study is a prospective, multi-center, randomized, placebo-controlled study in approximately 48 to 60 male cirrhotic patients that are on the liver transplant list. Subjects will be randomized 1:1 to one of two arms. The treatment arm is an oral dose of a testosterone ester and the second arm is matching placebo. The primary endpoint is change in skeletal muscle index at week 24 with key secondary endpoints including change in liver frailty index and number of waitlist events, including all-cause mortality. Total treatment is expected to be 52 weeks. We currently expect the first subject will be dosed in the fourth quarter of 2021.

LPCN 1154: An Oral Neuro-Steroid Candidate for the Treatment of Postpartum Depression

PPD, a major depressive disorder that is under diagnosed in the U.S., impacts approximately 1 in 7 women after giving birth. PPD can lead to devastating consequences for a woman, her newborn and her family. Currently, there is no oral therapy approved for the treatment of PPD. The active moiety in LPCN 1154 is an endogenous positive allosteric modulator of γ-aminobutyric acid (“GABA_A”) receptor. LPCN 1154 is expected to be an “at home” treatment with easier treatment access than the current standard of care invasive option that requires hospitalization with significant limitations. Moreover, LPCN 1154 is expected to provide the required level of privacy for a mother, avoiding bonding/breast feeding interruptions due to the required hospitalizations for the current option.

On June 14, 2021, we announced that the FDA has cleared the Company’s Investigational New Drug Application (“IND”) to initiate a Phase 2 study to evaluate the therapeutic potential of LPCN 1154 for the treatment of PPD in adults. We have completed a PK study to assess dose proportionality with LPCN 1154 in which dose proportionality was observed. Pending further PK analyses, we plan to conduct a proof-of-concept study to evaluate the safety, tolerability, and efficacy of LPCN 1154 in adult female subjects diagnosed with PPD in the future.

LPCN 1107: An Oral Product Candidate for the Prevention of Preterm Birth

We believe LPCN 1107 has the potential to become the first oral HPC product indicated for the reduction of risk of PTB (delivery less than 37 weeks) in women with singleton pregnancy who have a history of singleton spontaneous PTB. Prevention of PTB is a significant unmet need as approximately 11.7% of all U.S. pregnancies result in PTB, a leading cause of neonatal mortality and morbidity.

We have completed a multi-dose PK dose selection study in pregnant women. The objective of the multi-dose PK selection study was to assess HPC blood levels in order to identify the appropriate LPCN 1107 Phase 3 dose. The multi-dose PK dose selection study was an open-label, four-period, four-treatment, randomized, single and multiple dose, PK study in pregnant women of three dose levels of LPCN 1107 and the IM HPC (Makena®). The study enrolled 12 healthy pregnant women (average age of 27 years) with a gestational age of approximately 16 to 19 weeks. Subjects received three dose levels of LPCN 1107 (400 mg BID, 600 mg BID, or 800 mg BID) in a randomized, crossover manner during the first three treatment periods and then received five weekly injections of HPC during the fourth treatment period. During each of the LPCN 1107 treatment periods, subjects received a single dose of LPCN 1107 on Day 1 followed by twice daily administration from Day 2 to Day 8. Following completion of the three LPCN 1107 treatment periods and a washout period, all subjects received five weekly injections of HPC. Results from this study demonstrated that average steady state HPC levels (Cavg0-24) were comparable or higher for all three LPCN 1107 doses than for injectable HPC. Additionally, HPC levels as a function of daily dose were linear for the three LPCN 1107 doses. Also, unlike the injectable HPC, steady state exposure was achieved for all three LPCN 1107 doses within seven days. We have also completed a POC Phase 1b clinical study of LPCN 1107 in healthy pregnant women in January 2015 and a POC Phase 1a clinical study of LPCN 1107 in healthy non-pregnant women in May 2014. These studies were designed to determine the PK and bioavailability of LPCN 1107 relative to an IM HPC, as well as safety and tolerability.

A traditional PK/PD based Phase 2 clinical study in the intended patient population is not expected to be required prior to entering into Phase 3. Therefore, based on the results of our multi-dose PK study we had an End-of-Phase 2 meeting and subsequent guidance meetings with the FDA to define a pivotal Phase 2b/3 development plan for LPCN 1107. However, these discussions will need to be updated based on recent developments with Covis’ Makena®. We plan to resume our interactions with the FDA to discuss our pivotal clinical trial design and better understand next steps to advance LPCN 1107 after completion of the planned food-effect study.

We do not anticipate the initiation of a pivotal study with LPCN 1107 to occur until the required food effect study is complete. We are exploring the possibility of licensing LPCN 1107 to a third party, although no licensing agreement has been entered into by the Company. No assurance can be given that any license agreement will be completed, or, if an agreement is completed, that such an agreement would be on acceptable terms.

The FDA has granted orphan drug designation to LPCN 1107 based on a major contribution to patient care. Orphan designation qualifies Lipocine for various development incentives, including tax credits for qualified clinical testing, and a waiver of the prescription drug user fee when we file our NDA.

Recent Competition Update

On October 5, 2020, the FDA’s CDER proposed that Makena be withdrawn from the market because the PROLONG trial failed to verify the clinical benefit of Makena and concluded that the available evidence does not show Makena is effective for its approved use.

CDER issued AMAG, the NDA holder at the time, a Notice of Opportunity for Hearing to withdraw approval of Makena, for which AMAG Pharmaceuticals responded by requesting a hearing and providing detail on the company’s position, recognizing clinicians’ decade-long use of Makena’s treatment and the public health implications of withdrawing approval. The FDA Commissioner has recently granted Covis a public hearing although the date of that hearing is not publicly known. During this time, Makena and the approved generics of Makena will remain on the market until the FDA makes a final decision about these products.

Currently, Makena and the approved generics of Makena are the only products approved for the prevention of recurrent preterm birth.

The FDA also indicated that it intends to hold a meeting with experts in obstetrics, neonatal care, and clinical trial design to discuss how to facilitate development of effective and safe therapies to treat preterm birth.

Financial Operations Overview

Revenue

To date, we have not generated any revenues from product sales and do not expect to do so until one of our product candidates receives approval from the FDA. Revenues to date have been generated substantially from license fees, royalty and milestone payments and research support from our licensees. Since our inception through September 30, 2021, we have generated $28.1 million in revenue under our various license and collaboration arrangements and from government grants. We may never generate revenues from TLANDO or any of our other clinical or preclinical development programs or licensed products as we or our licensees may never succeed in obtaining regulatory approval or commercializing any of these product candidates.

Research and Development Expenses

Research and development expenses consist primarily of salaries, benefits, stock-based compensation and related personnel costs, fees paid to external service providers such as contract research organizations and contract manufacturing organizations, contractual obligations for clinical development, clinical sites, manufacturing and scale-up for late-stage clinical trials, formulation of clinical drug supplies, and expenses associated with regulatory submissions. Research and development expenses also include an allocation of indirect costs, such as those for facilities, office expense, and depreciation of equipment based on the ratio of direct labor hours for research and development personnel to total direct labor hours for all personnel. We expense research and development expenses as incurred. Since our inception, we have spent approximately $126.3 million in research and development expenses through September 30, 2021.

On December 8, 2020 we received tentative approval from the FDA regarding our NDA filed in February 2020 for TLANDO as a TRT in adult males for conditions associated with a deficiency of endogenous testosterone, also known as hypogonadism. In granting tentative approval, the FDA concluded that TLANDO has met all required quality, safety and efficacy standards necessary for approval. However, TLANDO has not received final approval and is not eligible for final approval to market in the U.S. until the expiration of the exclusivity period previously granted to Clarus with respect to Jatenzo®, which expires on March 27, 2022. On October 14, 2021, we entered into the Antares License Agreement with Antares, pursuant to which we granted to Antares an exclusive, royalty-bearing, sublicensable right and license to develop and commercialize, upon final approval of TLANDO from the FDA, our TLANDO product with respect to TRT in the U.S. The Antares License Agreement also provides Antares with an option, exercisable on or before March 31, 2022, to license TLANDO XR. Under the terms of the Antares License Agreement, all future research and development activities for TLANDO will be conducted and paid for by Antares. Any further expenditures, if needed, are subject to numerous uncertainties regarding timing and cost to completion.

We expect to continue to incur significant costs as we develop our other product candidates, including the ongoing LiFT Phase 2 OLE clinical study with LPCN 1144 and the planned Phase 2 study with LPCN 1148.

In general, the cost of clinical trials may vary significantly over the life of a project as a result of uncertainties in clinical development, including, among others:

	●	the number of sites included in the trials;

	●	the length of time required to enroll suitable subjects;

	●	the duration of subject follow-ups;

	●	the length of time required to collect, analyze and report trial results;

	●	the cost, timing and outcome of regulatory review; and

	●	potential changes by the FDA in clinical trial and NDA filing requirements.

We have also incurred significant manufacturing costs to prepare launch supplies for TLANDO. However, any additional expenditures required to prepare for a commercial launch of TLANDO, should it be approved, will be paid by Antares.

Future research and development expenditures are subject to numerous uncertainties regarding timing and cost to completion, including, among others:

	●	the timing and outcome of regulatory filings and FDA reviews and actions for product candidates;

	●	our dependence on third-party manufacturers for the production of satisfactory finished product for registration and launch should regulatory approval be obtained on any of our product candidates;

	●	the potential for future license or co-promote arrangements for our product candidates, when such arrangements will be secured, if at all, and to what degree such arrangements would affect our future plans and capital requirements; and

	●	the effect on our product development activities of actions taken by the FDA or other regulatory authorities.

A change of outcome for any of these variables with respect to our product development candidates could mean a substantial change in the costs and timing associated with these efforts, will require us to raise additional capital, and may require us to reduce operations.

Given the stage of clinical development and the significant risks and uncertainties inherent in the clinical development, manufacturing and regulatory approval process, we are unable to estimate with any certainty the time or cost to complete the development of LPCN 1144, TLANDO XR, LPCN 1148, LPCN 1154, LPCN 1107 and other product candidates. Clinical development timelines, the probability of success and development costs can differ materially from expectations and results from our clinical trials may not be favorable. If we are successful in progressing LPCN 1144, TLANDO XR, LPCN 1148, LPCN 1154, LPCN 1107 or other product candidates into later stage development, we will require additional capital. The amount and timing of our future research and development expenses for these product candidates will depend on the preclinical and clinical success of both our current development activities and potential development of new product candidates, as well as ongoing assessments of the commercial potential of such activities.

Summary of Research and Development Expense

We are conducting on-going clinical and regulatory activities with most of our product candidates. Additionally, we incur costs for our other research programs. The following table summarizes our research and development expenses:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
External service provider costs:
TLANDO	$	5,446	$	471,874	$	114,697	$	679,351
LPCN 1144		404,676		1,223,863		1,721,948		4,284,302
TLANDO XR		80,300		-		80,300		71,898
LPCN 1154		805,722		-		907,794		-
LPCN 1148		383,597		-		383,597		-
LPCN 1107		6,000		1,500		61,381		3,860
Total external service provider costs		1,685,741		1,697,237		3,269,717		5,039,411
Internal personnel costs		524,599		561,461		1,609,571		1,736,167
Other research and development costs		156,181		229,163		532,460		493,021
Total research and development	$	2,366,521	$	2,487,861	$	5,411,748	$	7,268,599

We expect research and development expenses to increase in the future as we complete on-going clinical studies, including the LiFT Phase 2 OLE clinical study with LPCN 1144, and as we conduct future clinical studies with LPCN 1148, LPCN 1154 and LPCN 1107. However, if we are unable to raise additional capital, we may need to reduce research and development expenses in order to extend our ability to continue as a going concern.

General and Administrative Expenses

General and administrative expenses consist primarily of salaries and related benefits, including stock-based compensation related to our executive, finance, business development, and support functions. Other general and administrative expenses include rent and utilities, travel expenses, professional fees for auditing, tax and legal services, litigation settlement and market research and market analytics.

General and administrative expenses also include expenses for the cost of preparing, filling and prosecuting patent applications and maintaining, enforcing and defending intellectual property-related claims, including the patent interference and patent infringement lawsuits against Clarus.

We expect that general and administrative expenses will decrease in the future as we expect to incur decreased legal fees due to the global settlement agreement (“Global Agreement”) with Clarus. We expect that such decreases will be offset by other increases as we mature as a public company, including legal and consulting fees, accounting and audit fees, director fees, increased directors’ and officers’ insurance premiums, fees for investor relations services and enhanced business and accounting systems, litigation costs, professional fees and other costs. However, if we are unable to raise additional capital, we may need to further reduce general and administrative expenses in order to extend our ability to continue as a going concern.

Other Expense (Income), Net

Other expense (income), net, consists primarily of interest income earned on our cash, cash equivalents and marketable investment securities, interest expense incurred on our outstanding Loan and Security Agreement, losses (gains) on our warrant liability and litigation settlement accruals.

Results of Operations

Comparison of the Three Months Ended September 30, 2021 and 2020

The following table summarizes our results of operations for the three months ended September 30, 2021 and 2020:

	Three Months Ended September 30,
	2021			2020			Variance
License revenue	$	54,994		$	-			54,994
Research and development expenses		2,366,521			2,487,861			(121,340	)
General and administrative expenses		1,222,146			1,887,195			(665,049	)
Interest and investment income		(17,264	)		(5,614	)		11,650
Interest expense		44,839			84,293			(39,454	)
Gain on warrant liability		(479,951	)		(140,477	)		339,474

Revenue

We recognized license revenue of $55,000 during the three months ended September 30, 2021, compared to no license revenue recognized during the three ended September 30, 2020. License revenue in 2021 relates to payments received from Spriaso LLC (“Spriaso”) under a licensing agreement in the cough and cold field.

Research and Development Expenses

The decrease in research and development expenses during the three months ended September 30, 2021 was primarily due to a $819,000 decrease in contract research organization expense and outside consulting costs related to the LPCN 1144 LiFT Phase 2 clinical study in NASH subjects, a $466,000 decrease in costs associated with TLANDO, a $37,000 decrease in personnel expense, net decreases in other R&D expenses of $68,000. The decreases were offset by a $806,000 increase in costs related to LPCN 1154, a $384,000 increase in costs related to LPCN 1148, and a $80,000 increase in costs for TLANDO XR.

General and Administrative Expenses

The decrease in general and administrative expenses during the three months ended September 30, 2021 was primarily due to a $552,000 decrease in legal costs in 2021 as compared to 2020 relating to a decrease the following legal activities: lawsuit filed against Clarus for patent infringement in April 2019 and the on-going class action lawsuit defense; and a $122,000 decrease in personnel costs, which was mainly due to a decrease in stock compensation expense. These decreases were offset mainly by a $31,000 increase in corporate insurance expenses.

Interest and Investment Income

The increase in interest and investment income during the three months ended September 30, 2021 was due to higher cash and marketable investment securities balances in 2021 compared to 2020.

Interest Expense

The decrease in interest expense during the three months ended September 30, 2021 was due to a decrease in interest expense on our Loan and Security Agreement with Silicon Valley Bank (“SVB”), as a result of lower principal balances in 2021 compared to 2020.

Loss (Gain) on Warrant Liability

We recorded a gain of $480,000 and $140,000, respectively, on warrant liability during the three months ended September 30, 2021 and 2020 related to the change in the fair value of outstanding common stock warrants issued in the November 2019 Offering. The gain in 2021 was attributable to a decrease in the value of warrants outstanding as of September 30, 2021 as compared to June 30, 2021 due to a decrease in our stock price. The gain in 2020 was mainly due to a decrease in the value of warrants outstanding as of September 30, 2020 as compared to June 30, 2020 primarily attributable to a decrease in the value of warrants exercised during the period, offset by an increase in the value of warrants outstanding as of September 30, 2020 as compared to June 30, 2020 due to an increase in our stock price. There were no common stock warrants from the November 2019 Offering (as defined below) exercised during the three months ended September 30, 2021 and 2020, respectively. The warrants are classified as a liability due to a provision contained within the warrant agreement which allows the warrant holder the option to elect to receive an amount of cash equal to the value of the warrants as determined in accordance with the Black-Scholes option pricing model with certain defined assumptions upon a change of control. The warrant liability will continue to fluctuate in the future based on inputs to the Black-Scholes model including our current stock price, the remaining life of the warrants, the volatility of our stock price, the risk-free interest rate and the number of common stock warrants outstanding.

Comparison of the Nine Months Ended September 30, 2021 and 2020

The following table summarizes our results of operations for the nine months ended September 30, 2021 and 2020:

	Nine months ended September 30,
	2021			2020			Variance
License revenue	$	54,994		$	-			54,994
Research and development expenses		5,411,748			7,268,599			(1,856,851	)
General and administrative expenses		4,281,690			5,925,991			(1,644,301	)
Interest and investment income		(45,257	)		(72,729	)		(27,472	)
Interest expense		171,241			305,485			(134,244	)
Loss (gain) on warrant liability		(506,208	)		3,025,997			3,532,205
Litigation settlement		4,000,000			—			4,000,000
Income tax expense		200			200			-

Revenue

We recognized license revenue of $55,000 during the nine months ended September 30, 2021, compared to no license revenue recognized during the nine ended September 30, 2020. License revenue in 2021 relates to payments received from Spriaso under a licensing agreement in the cough and cold field.

Research and Development Expenses

The decrease in research and development expenses during the nine months ended September 30, 2021 was primarily due to a $2.6 million decrease in contract research organization expense and outside consulting costs related to the LPCN 1144 LiFT Phase 2 clinical study in NASH subjects, a $565,000 decrease in costs associated with TLANDO and a $127,000 net decrease in personnel expense which was mainly due to a decrease in stock compensation expense offset by increases in salaries partially due to headcount increases. These decreases were offset by a $908,000 increase in costs related to LPCN 1154, a $384,000 increase in costs associated with LPCN 1148 and a $58,000 increase in costs for LPCN 1107, as well as increases in other R&D expenses of $48,000.

General and Administrative Expenses

The decrease in general and administrative expenses during the nine months ended September 30, 2021 was primarily due to a $1.4 million decrease in legal costs in 2021 as compared to 2020 relating to a decrease the following legal activities: lawsuit filed against Clarus Therapeutics Inc. for patent infringement in April 2019 and the on-going class action lawsuit defense; and, a decrease of $410,000 in personnel costs mainly due a reduction in stock compensation expense. These decreases were offset by a $131,000 increase in corporate insurance expenses and a $35,000 increase in other general and administrative expenses.

Interest and Investment Income

The decrease in interest and investment income during the nine months ended September 30, 2021 was due to lower interest rates in 2021 compared to 2020, despite higher cash and marketable investment securities balances.

Interest Expense

The decrease in interest expense during the nine months ended September 30, 2021 was due to a decrease in interest expense on our Loan and Security Agreement with SVB, mainly as a result of lower principal balances 2021 compared to 2020.

Loss (Gain) on Warrant Liability

We recorded a gain of $506,000 and a loss of $3.0 million, respectively, on warrant liability during the nine months ended September 30, 2021 and 2020 related to the change in the fair value of outstanding common stock warrants issued in the November 2019 Offering. The gain in 2021 was attributable to a decrease in the value of warrants outstanding as of September 30, 2021 as compared to December 31, 2020 due to a small decrease in the number of warrants outstanding, a decrease in our volatility, and a shorter term remaining on the outstanding warrants. The loss in 2020 was mainly due to an increase in the value of warrants outstanding as of September 30, 2020 as compared to December 31, 2019 due to an increase in our stock price. There were 10,000 and 10,127,000 common stock warrants from the November 2019 Offering exercised during the nine months ended September 30, 2021 and 2020, respectively. The warrants are classified as a liability due to a provision contained within the warrant agreement which allows the warrant holder the option to elect to receive an amount of cash equal to the value of the warrants as determined in accordance with the Black-Scholes option pricing model with certain defined assumptions upon a change of control. The warrant liability will continue to fluctuate in the future based on inputs to the Black-Scholes model including our current stock price, the remaining life of the warrants, the volatility of our stock price, the risk-free interest rate and the number of common stock warrants outstanding.

Litigation Settlement

We recorded an expense of $4.0 million and zero, respectively, on litigation settlement during the nine months ended September 30, 2021 and 2020 related to the Global Agreement with Clarus to resolve all outstanding claims in the on-going intellectual property litigation between the two companies as well as the on-going interference proceeding between the two companies. Under the terms of the settlement, we agreed to pay Clarus $4.0 million payable as follows: $2.5 million immediately, $1.0 million on July 13, 2022 and $500,000 on July 13, 2023. No future royalties are owing from either party. Under the terms of the Global Agreement, Lipocine and Clarus have agreed to dismiss the Lipocine Inc. v Clarus Therapeutics, Inc., No 19-cv-622 (WCB) litigation presently pending in the U.S. District Court for the District of Delaware. Also, both parties have reached an agreement on the interference proceedings captioned Clarus Therapeutics, Inc. v. Lipocine Inc., Interference No. 106,128 presently pending in the U.S. Patent and Trademark Office.

Liquidity and Capital Resources

Since our inception, our operations have been primarily financed through sales of our equity securities, debt and payments received under our license and collaboration arrangements. We have devoted our resources to funding research and development programs, including discovery research, preclinical and clinical development activities. We have incurred operating losses in most years since our inception and we expect to continue to incur operating losses into the foreseeable future as we advance clinical development of LPCN 1144, TLANDO XR, LPCN 1148, LPCN 1154, LPCN 1107 and any other product candidate, including continued research efforts.

As of September 30, 2021, we had $38.7 million of unrestricted cash, cash equivalents and marketable investment securities compared to $19.7 million at December 31, 2020. Additionally, as of December 31, 2020 we had $5.0 million of restricted cash, which was required to be maintained as cash collateral under the SVB Loan and Security Agreement until TLANDO is approved by the FDA. However on February 16, 2021, we amended the Loan and Security Agreement with SVB to, among other things, remove the cash collateral requirement.

On October 14, 2021, we entered into the Antares License Agreement with Antares, pursuant to which we granted to Antares an exclusive, royalty-bearing, sublicensable right and license to develop and commercialize, upon final approval of TLANDO from the FDA, our TLANDO product with respect to TRT in the U.S. The Antares License Agreement also provides Antares with an option, exercisable on or before March 31, 2022, to license TLANDO XR. Upon execution of the Antares License Agreement, Antares paid to us an initial payment of $11.0 million. Antares will also make additional payments of $5.0 million to us on each of January 1, 2025 and January 1, 2026, provided that certain conditions are satisfied. We are also eligible to receive milestone payments of up to $160.0 million in the aggregate, depending on the achievement of certain sales milestones in a single calendar year with respect to all products licensed by Antares under the Antares License Agreement. In addition, upon commercialization, we will receive tiered royalty payments at rates ranging from percentages in the mid-teens to up to 20% of net sales of TLANDO in the United States, subject to certain minimum royalty obligations. If Antares exercises its option to license TLANDO XR, we will be entitled to an additional payment of $4.0 million, as well as development milestone payments of up to $35.0 million in the aggregate and tiered royalty payments at rates ranging from percentages in the mid-teens to 20% of net sales of TLANDO XR in the United States. Our ability to realize benefits from the Antares License Agreement, including milestone and royalty payments, is subject to a number of risks. We may not realize milestone or royalty payments in anticipated amounts, or at all.

On January 28, 2021, we completed a public offering of securities registered under an effective registration statement filed pursuant to the Securities Act of 1933, as amended (“January 2021 Offering”). The gross proceeds from the January 2021 Offering were approximately $28.7 million, before deducting underwriter fees and other offering expenses of $1.9 million. In the January 2021 Offering, we sold 16,428,571 shares of our common stock.

On April 21, 2020, we entered into a loan (the “Loan”) from SVB in the aggregate amount of $234,000, pursuant to the Paycheck Protection Program (the “PPP”) under Division A, Title I of the CARES Act, which was enacted March 27, 2020. The Loan, which was in the form of a note dated April 21, 2020, originally matured on April 21, 2022 and bears interest at a rate of 1.0% per annum, payable monthly commencing on November 21, 2020. Under the terms of the PPP, certain amounts of the Loan may be forgiven if they are used for qualifying expenses as described in the CARES Act. On November 2, 2020, we were notified by the Small Business Administration that our PPP Loan had been forgiven.

On February 27, 2020, we completed a registered direct offering of securities registered under an effective registration statement filed pursuant to the Securities Act of 1933, as amended (“February 2020 Offering”). The gross proceeds from the February 2020 Offering were approximately $6.0 million, before deducting placement agent fees and other offering expenses of $347,000. In the February 2020 Offering, the Company sold 10,084,034 Class A Units, with each Class A Unit consisting of one share of common stock and a one-half of one common warrant to purchase one share of common stock, at a price of $0.595 per Class A Unit. The common stock warrants were immediately exercisable at an exercise price of $0.53 per share, subject to adjustment, and expire on February 27, 2025. By their terms, however, the common stock warrants cannot be exercised at any time that the common stock warrant holder would beneficially own, after such exercise, more than 4.99% (or, at the election of the holder, 9.99%) of the shares of common stock then outstanding after giving effect to such exercise.

On January 5, 2018, we entered into the Loan and Security Agreement with SVB pursuant to which SVB agreed to lend us $10.0 million. The principal borrowed under the Loan and Security Agreement bears interest at a rate equal to the Prime Rate, as reported in money rates section of The Wall Street Journal or any successor publication representing the rate of interest per annum then in effect, plus one percent per annum, which interest is payable monthly. Additionally on April 1, 2020, we entered into a Deferral Agreement with SVB. Under the Deferral Agreement, principal repayments were deferred by six months and we were only required to make monthly interest payments during the deferral period. The Loan matures on June 1, 2022. Previously, we were only required to make monthly interest payments until December 31, 2018, following which we also made equal monthly payments of principal and interest until the signing of the Deferral Agreement. We will also be required to pay an additional final payment at maturity equal to $650,000 (the “Final Payment Charge”). At our option, we may prepay all amounts owed under the Loan and Security Agreement (including all accrued and unpaid interest and the Final Payment Charge). In connection with the Loan and Security Agreement, we granted to SVB a security interest in substantially all of our assets now owned or hereafter acquired, excluding intellectual property and certain other assets. In addition, as TLANDO was not approved by the FDA by May 31, 2018, we were required to maintain $5.0 million of cash collateral at SVB until such time as TLANDO is approved by the FDA. However on February 16, 2021, we amended the Loan and Security Agreement with SVB to, among other things, remove the financial trigger and financial trigger release event provisions requiring us to maintain a minimum cash collateral value and collateral pledge thereof. While any amounts are outstanding under the Loan and Security Agreement, we are subject to a number of affirmative and negative covenants, including covenants regarding dispositions of property, business combinations or acquisitions, incurrence of additional indebtedness and transactions with affiliates, among other customary covenants. The credit facility also includes events of default, the occurrence and continuation of which could cause interest to be charged at the rate that is otherwise applicable plus 5.0% and would provide SVB, as collateral agent, with the right to exercise remedies against us and the collateral securing the credit facility, including foreclosure against the property securing the credit facilities, including our cash. These events of default include, among other things, any failure by us to pay principal or interest due under the credit facility, a breach of certain covenants under the credit facility, the Company’s insolvency, a material adverse change, and one or more judgments against us in an amount greater than $100,000 individually or in the aggregate.

On March 6, 2017, we entered into the Sales Agreement with Cantor Fitzgerald & Co. (“Cantor”) pursuant to which we may issue and sell, from time to time, shares of our common stock having an aggregate offering price of up to the amount we have registered on an effective registration statement pursuant to which the offering is being made. We currently have registered up to $50.0 million for sale under the Sales Agreement, pursuant to our Registration Statement on Form S-3 (File No. 333-250072) (the “Form S-3”), through Cantor as our sales agent. Cantor may sell our common stock by any method permitted by law deemed to be an “at the market offering” as defined in Rule 415(a)(4) of the Securities Act of 1933, as amended, including sales made directly on or through the NASDAQ Capital Market or any other existing trade market for our common stock, in negotiated transactions at market prices prevailing at the time of sale or at prices related to prevailing market prices, or any other method permitted by law. Cantor uses its commercially reasonable efforts consistent with its normal trading and sales practices and applicable law and regulations to sell these shares. We pay Cantor 3.0% of the aggregate gross proceeds from each sale of shares under the Sales Agreement. We have also provided Cantor with customary indemnification rights.

The shares of our common stock sold under the Sales Agreement are sold and issued pursuant to our Form S-3, which was previously declared effective by the Securities and Exchange Commission, and the related prospectus and one or more prospectus supplements.

We are not obligated to make any sales of our common stock under the 2020 Sales Agreement. The offering of our common stock pursuant to the 2020 Sales Agreement will terminate upon the termination of the 2020 Sales Agreement as permitted therein. We and Cantor may each terminate the 2020 Sales Agreement at any time upon ten days’ prior notice.

During the three months ended September 30, 2021, we did not sell any shares of our common stock our current Registration Statement on Form S-3 (File No. 333-250072). As of September 30, 2021, we had $41.2 million available for sale under the Sales Agreement.

We believe that our existing capital resources, together with interest thereon, will be sufficient to meet our projected operating requirements through at least September 30, 2022 which include planned and on-going clinical studies for LPCN 1144 and LPCN 1148, future clinical studies for TLANDO XR, LPCN 1154 and LPCN 1107, compliance with regulatory requirements, and satisfaction of our obligations under the settlement agreement with Clarus. We have based this estimate on assumptions that may prove to be wrong, and we could utilize our available capital resources sooner than we currently expect if additional activities are performed by us including new clinical studies for LPCN 1144, TLANDO XR, LPCN 1148, LPCN 1154 and LPCN 1107. While we believe we have sufficient liquidity and capital resources to fund our projected operating requirements through at least September 30, 2022, we will need to raise additional capital at some point through the equity or debt markets or through additional out-licensing activities, either before or after September 30, 2022, to support our operations. If we are unsuccessful in raising additional capital, our ability to continue as a going concern will be limited. Further, our operating plan may change, and we may need additional funds to meet operational needs and capital requirements for product development, regulatory compliance and clinical trial activities sooner than planned. In addition, our capital resources may be consumed more rapidly if we pursue additional clinical studies for LPCN 1144, TLANDO XR, LPCN 1148, LPCN 1154 and LPCN 1107. Conversely, our capital resources could last longer if we reduce expenses, reduce the number of activities currently contemplated under our operating plan or if we terminate, modify or suspend on-going clinical studies. We can raise capital pursuant to the Sales Agreement but may choose not to issue common stock if our market price is too low to justify such sales in our discretion. In addition, we currently have 1,586,959 unissued and unreserved shares available for issuance at September 30, 2021. Without sufficient shares available for issuance, our ability to raise capital through sales of equity, including under the Sales Agreement, is limited. There are numerous risks and uncertainties associated with the development and, subject to approval by the FDA, commercialization of our product candidates. There are numerous risks and uncertainties impacting our ability to enter into collaborations with third parties to participate in the development and potential commercialization of our product candidates, and the potential benefits to us of such arrangements, including the Antares License Agreement. Licensees of our product candidates, including Antares, may not successfully commercialize our products and, as a result, we may not receive anticipated royalty or other payments under such arrangements. Additionally, TLANDO is not eligible for final FDA approval until March 2022 and, therefore, we do not expect to receive any royalty or milestone payments until after such time, if any such payments will be received at all. We are unable to precisely estimate the amounts of increased capital outlays and operating expenditures associated with our anticipated or unanticipated clinical studies and ongoing development efforts. All of these factors affect our need for additional capital resources. To fund future operations, we will need to ultimately raise additional capital and our requirements will depend on many factors, including the following:

	●	the scope, rate of progress, results and cost of our clinical studies, preclinical testing and other related activities for all of our product candidates, including LPCN 1144, TLANDO XR, LPCN 1148, LPCN 1154 and LPCN 1107;

	●	the cost of manufacturing clinical supplies, and establishing commercial supplies, of our product candidates and any products that we may develop;

	●	the cost and timing of establishing sales, marketing and distribution capabilities, if any;

	●	the terms and timing of any collaborative, licensing, settlement and other arrangements that we may establish;

	●	the number and characteristics of product candidates that we pursue;

	●	the cost, timing and outcomes of regulatory approvals;

	●	the timing, receipt and amount of sales, profit sharing or royalties, if any, from our potential products;

	●	the cost of preparing, filing, prosecuting, defending and enforcing any patent claims and other intellectual property rights;

	●	the extent to which we acquire or invest in businesses, products or technologies, although we currently have no commitments or agreements relating to any of these types of transactions; and

	●	the extent to which we grow significantly in the number of employees or the scope of our operations.

Funding may not be available to us on favorable terms, or at all. Also, market conditions may prevent us from accessing the debt and equity capital markets, including sales of our common stock through the Sales Agreement. If we are unable to obtain adequate financing when needed, we may have to delay, reduce the scope of or suspend one or more of our clinical studies, research and development programs or, if any of our product candidates receive approval from the FDA, commercialization efforts. We may seek to raise any necessary additional capital through a combination of public or private equity offerings, including the Sales Agreement, debt financings, collaborations, strategic alliances, licensing arrangements and other marketing and distribution arrangements. These arrangements may not be available to us or available on terms favorable to us. To the extent that we raise additional capital through marketing and distribution arrangements, other collaborations, strategic alliances or licensing arrangements with third parties, we may have to relinquish valuable rights to our product candidates, future revenue streams, research programs or product candidates or grant licenses on terms that may not be favorable to us. If we do raise additional capital through public or private equity offerings, the ownership interest of our existing stockholders will be diluted, and the terms of these securities may include liquidation or other preferences, warrants or other terms that adversely affect our stockholders’ rights or further complicate raising additional capital in the future. If we raise additional capital through debt financing, we may be subject to covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. If we are unable, for any reason, to raise needed capital, we will have to reduce costs, delay research and development programs, liquidate assets, dispose of rights, commercialize products or product candidates earlier than planned or on less favorable terms than desired or reduce or cease operations.

Sources and Uses of Cash

The following table provides a summary of our cash flows for the nine months ended September 30, 2021 and 2020:

	Nine Months Ended September 30,
	2021			2020
Cash used in operating activities	$	(13,405,843	)	$	(11,619,069	)
Cash used in investing activities		(34,057,767	)		(1,515,297	)
Cash provided by financing activities		27,763,333			16,344,029

Net Cash From Operating Activities

During the nine months ended September 30, 2021 and 2020, net cash used in operating activities was $13.4 million and $11.6 million, respectively.

Net cash used in operating activities during the nine months September 30, 2021 and 2020 was primarily attributable to cash outlays to support ongoing operations, including research and development expenses and general and administrative expenses. During 2021 and 2020, we were performing activities related to the LPCN 1144 LiFT Phase 2 paired biopsy clinical study. During 2021, we were also preparing for a future trial with LPCN 1154 and we entered into the Global Agreement with Clarus. During 2020, we were also performing activities around the submission of the TLANDO NDA.

Net Cash From Investing Activities

During the nine months ended September 30, 2021 and 2020, net cash used in investing activities was $34.1 million and $1.5 million, respectively.

Net cash used in investing activities during the nine months ended September 30, 2021 and 2020, was primarily the result of purchasing marketable investment securities, net, of $34.1 million and $1.5 million, respectively. There were no capital expenditures for the nine months ended September 30, 2021 and 2020.

Net Cash From Financing Activities

During the nine months ended September 30, 2021 and 2020 net cash provided by financing activities was $27.8 million and $16.3 million, respectively.

Net cash provided by financing activities during the nine months ended September 30, 2021 was attributable to the net proceeds from the sale of 16,428,571 shares of common stock pursuant to January 2021 Offering resulting in net proceeds of $26.8 million and $3.4 million in proceeds from the sale of 1,811,238 shares of common stock pursuant to the Sales Agreement with Cantor, offset by $2.5 million in debt principal repayments under the SVB Loan and Security Agreement.

Net cash provided by financing activities during the nine months ended September 30, 2020 was attributable to the net proceeds from the sale of 10,084,034 shares of common stock pursuant to the February 2020 Offering resulting in net proceeds of $5.7 million, to $7.7 million in proceeds from the exercise of warrants, $3.9 million in proceeds from the sale of 2,830,000 shares of common stock pursuant to the ATM and $234,000 in loan proceeds under the Payment Protection Program, offset by $1.1 million in debt principal repayments under the SVB Loan and Security Agreement.

Contractual Commitments and Contingencies

Long-Term Debt Obligations and Interest on Debt

On January 5, 2018, we entered into a Loan and Security Agreement with SVB pursuant to which SVB agreed to lend us $10.0 million. The principal borrowed under the Loan and Security Agreement bears interest at a rate equal to the Prime Rate plus one percent per annum, which interest is payable monthly. The loan matures on June 1, 2022 and we were required to make equal monthly payments of principal and interest for the remaining term of the loan beginning on January 1, 2019 although there was a principal deferment period of six months beginning on April 1, 2020 due to COVID-19. We will also be required to pay the Final Payment Charge at maturity.

On April 21, 2020, we were granted a Loan from SVB in the aggregate amount of approximately $234,000, pursuant to the PPP under Division A, Title I of the CARES Act, which was enacted March 27, 2020. The PPP Loan, which was in the form of a Note dated April 21, 2020, originally matured on April 21, 2022 and bears interest at a rate of 1.0% per annum, payable monthly commencing on November 21, 2020. Under the terms of the PPP, certain amounts of the PPP Loan may be forgiven if they are used for qualifying expenses as described in the CARES Act. On November 2, 2020, we were notified by the Small Business Administration that our PPP Loan had been forgiven.

Purchase Obligations

We enter into contracts and issue purchase orders in the normal course of business with clinical research organizations for clinical trials and clinical and commercial supply manufacturing and with vendors for preclinical research studies, research supplies and other services and products for operating purposes. These contracts generally provide for termination on notice and are cancellable obligations.

Operating Leases

In August 2004, we entered into an agreement to lease our facility in Salt Lake City, Utah consisting of office and laboratory space which serves as our corporate headquarters. On March 3, 2021, we modified and extended the lease through February 28, 2022.

Critical Accounting Policies and Significant Judgments and Estimates

Our management’s discussion and analysis of our financial condition and results of operations is based on our financial statements which we have prepared in accordance with U.S. generally accepted accounting principles. In preparing our financial statements, we are required to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Our estimates are based on our historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. There have been no significant and material changes in our critical accounting policies during the nine months ended September 30, 2021, as compared to those disclosed in “Management’s Discussion and Analysis of Financial Condition and Results of Operations-Critical Accounting Policies and Significant Judgments and Estimates” in our Form 10-K filed March 11, 2021.

New Accounting Standards

Refer to Note 12, in “Notes to Unaudited Condensed Consolidated Financial Statements” for a discussion of accounting standards not yet adopted.

ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to various market risks, which include potential losses arising from adverse changes in market rates and prices, such as interest rates. We do not enter into derivatives or other financial instruments for trading or speculative purposes.

Interest Rate Risk. Our interest rate risk exposure results from our investment portfolio. Our primary objectives in managing our investment portfolio are to preserve principal, maintain proper liquidity to meet operating needs and maximize yields. The securities we hold in our investment portfolio are subject to interest rate risk. At any time, sharp changes in interest rates can affect the fair value of the investment portfolio and its interest earnings. After a review of our marketable investment securities, we believe that in the event of a hypothetical ten percent increase in interest rates, the resulting decrease in fair value of our marketable investment securities would be insignificant to the consolidated financial statements. Currently, we do not hedge these interest rate exposures. We have established policies and procedures to manage exposure to fluctuations in interest rates. We place our investments with high quality issuers and limit the amount of credit exposure to any one issuer and do not use derivative financial instruments in our investment portfolio. We invest in highly liquid, investment-grade securities and money market funds of various issues, types and maturities. These securities are classified as available-for-sale and, consequently, are recorded on the balance sheet at fair value with unrealized gains or losses reported as accumulated other comprehensive income as a separate component in stockholders’ deficit unless a loss is deemed other than temporary, in which case the loss is recognized in earnings.

Additionally in January 2018, we entered into the Loan and Security Agreement with SVB for $10.0 million. A one percent increase in the prime rate would result in a $10,000 increase in interest expense, while a one percent decrease in the prime rate would result in a $11,000 decrease in interest expense.

ITEM 4.

CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

We maintain “disclosure controls and procedures” within the meaning of Rule 13a-15(e) of the Securities Exchange Act of 1934, as amended, or the Exchange Act. Our disclosure controls and procedures, or Disclosure Controls, are designed to ensure that information required to be disclosed by us in the reports we file or submit under the Exchange Act, such as this Quarterly Report on Form 10-Q, is recorded, processed, summarized and reported within the time periods specified in the U.S. Securities and Exchange Commission’s rules and forms. Our Disclosure Controls include, without limitation, controls and procedures designed to ensure that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

As of the end of the period covered by this Quarterly Report on Form 10-Q, we evaluated the effectiveness of the design and operation of our Disclosure Controls, which was done under the supervision and with the participation of our management, including our Chief Executive Officer and our Chief Financial Officer. Based on the controls evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our Disclosure Controls were effective as of September 30, 2021.

Changes in Internal Control over Financial Reporting

There have been no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) during the most recent fiscal quarter covered by this report, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II—OTHER INFORMATION

ITEM 1.

LEGAL PROCEEDINGS

On April 2, 2019, we filed a lawsuit against Clarus in the United States District Court for the District of Delaware alleging that Clarus’s JATENZO® product infringes six of Lipocine’s issued U.S. patents: 9,034,858; 9,205,057; 9,480,690; 9,757,390; 6,569,463; and 6,923,988. However on February 11, 2020, we voluntarily dismissed allegations of patent infringement for expired U.S. Patent Nos. 6,569,463 and 6,923,988 in an effort to streamline the issues and associated costs for dispute. Clarus answered the complaint and asserted counterclaims of non-infringement and invalidity. We answered Clarus’s counterclaims on April 29, 2019. The Court held a scheduling conference on August 15, 2019, a claim construction hearing on February 11, 2020 and a summary judgment hearing on January 15, 2021. In May 2021, the Court granted Clarus’ motion for Summary Judgment, finding the asserted claims of Lipocine’s U.S. patents 9,034,858; 9,205,057; 9,480,690; and 9,757,390 invalid for failure to satisfy the written description requirement of 35 U.S.C. § 112. Clarus still had remaining claims before the Court. On July 13, 2021, we entered into the Global Agreement with Clarus which resolved all outstanding claims of this litigation as well as the on-going United States Patent and Trademark Office (“USPTO”) Interference No. 106,128 between the parties. Under the terms of the Global Agreement, Lipocine agreed to pay Clarus $4.0 million payable as follows: $2.5 million immediately, $1.0 million on July 13, 2022 and $500,000 on July 13, 2023. No future royalties are owing from either party. On July 15, 2021, the Court dismissed with prejudice Lipocine’s claims and Clarus’ counterclaims.

On November 14, 2019, we and certain of our officers were named as defendants in a purported shareholder class action lawsuit, Solomon Abady v. Lipocine Inc. et al., 2:19-cv-00906-PMW, filed in the United District Court for the District of Utah. The complaint alleges that the defendants made false and/or misleading statements and/or failed to disclose that our filing of the NDA for TLANDO to the FDA contained deficiencies and as a result the defendants’ statements about our business and operations were false and misleading and/or lacked a reasonable basis in violation of federal securities laws. The lawsuit seeks certification as a class action (for a purported class of purchasers of the Company’s securities from March 27, 2019 through November 8, 2019), compensatory damages in an unspecified amount, and unspecified equitable or injunctive relief. We have insurance that covers claims of this nature. The retention amount payable by us under our policy is $1.25 million. We filed a motion to dismiss this class action lawsuit on July 24, 2020. In response, the plaintiffs filed their response to the motion to dismiss the class action lawsuit on September 22, 2020 and we filed our reply to our motion to dismiss on October 22, 2020. A hearing on the motion to dismiss has been scheduled for January 12, 2022. We intend to vigorously defend ourselves against these allegations and have not recorded a liability related to this shareholder class action lawsuit as the outcome is not probable nor can an estimate be made of loss, if any.

On March 13, 2020, we filed U.S. patent application serial number 16/818,779 (the “Lipocine ‘779 Application”) with the USPTO. On October 16 and November 3, 2020, we filed suggestions for interference with the USPTO requesting that a patent interference be declared between the Lipocine ‘779 Application and US patent application serial number 16/656,178 to Clarus Therapeutics, Inc. (the “Clarus ‘178 Application”). Pursuant to our request, the Patent Trial and Appeal Board (“PTAB”) at the USPTO declared the interference on January 4, 2021 to ultimately determine, as between us and Clarus, who is entitled to the claimed subject matter. The interference number is 106,128, and we were initially declared Senior Party. A conference call with the PTAB was held on January 25, 2021 to discuss proposed motions. On February 1, 2021, the PTAB issued an order authorizing certain motions and setting the schedule for the preliminary motions phase. On July 13, 2021, we entered into the Global Agreement with Clarus to resolve interference No. 106,128 among other items. On July 26, 2021, the PTAB granted our request for adverse judgment in interference No. 106,128 in accordance with the Global Agreement.

ITEM 1A.

RISK FACTORS

In addition to the other information set forth in this Report, consider the risk factors discussed in Part 1, “Item 1A. Risk Factors” in the Company’s Annual Report filed on Form 10-K for the year ended December 31, 2020 filed with the SEC on March 11, 2021, risk factors discussed in Item 1A of the Form 10-Q for the quarter ended March 31, 2021 filed with the SEC on May 6, 2021, risk factors discussed in Item 1A of the Form 10-Q for the quarter ended June 30, 2021 filed with the SEC on August 5, 2021 and the risk factors discussed in Item 1A of this Form 10-Q, which could materially affect our business, financial condition or future results. The risks described in the aforementioned report are not the only risks facing the Company. Additional risks and uncertainties not currently known to the Company or that it currently deems to be not material also may materially adversely affect the Company’s business, financial condition and or operating results.

The following are the risk factors that have materially changed from our risk factors included in our Form 10-K for the year ended December 31, 2020 filed with the SEC on March 11, 2021, from our risk factors included in our Form 10-Q for the quarter ended March 31, 2021 filed with the SEC on May 6, 2021, and from our risk factors included in our Form 10-Q for the quarter ended June 30, 2021 filed with the SEC on August 4, 2021.

Risks Relating to Our Business and Industry

We will not be able to successfully commercialize our product candidates without establishing sales, marketing and market access capabilities internally or through collaborators.

We currently do not have a sales, marketing and market access staff. If and when any of our product candidates are commercialized, we may not be able to find suitable sales and marketing staff and collaborators for our product candidates. The outside collaborators we work with, including Antares under the Antares License Agreement with respect to TLANDO, may not be adequate or successful and any collaborators could terminate or materially reduce the effort they direct to our products. The development of collaborations or an internal sales force and marketing, market access and sales capability will require significant capital, management resources and time. The cost of establishing such a sales force may exceed any potential product revenues and our marketing, market access and sales efforts may be unsuccessful. If we are unable to develop an internal marketing, market access and sales capability or if we are unable to enter into a marketing and sales arrangement with a third party on acceptable terms, we may be unable to successfully commercialize our product candidates.

We will need to grow our Company, and we may encounter difficulties in managing this growth, which could disrupt our operations.

As of September 30, 2021, we had 13 employees. To manage our anticipated future growth, we must continue to implement and improve our managerial, operational and financial systems, expand our facilities and continue to recruit and train additional qualified personnel. Also, our management may need to divert a disproportionate amount of its attention away from our day-to-day activities and devote a substantial amount of time to managing these growth activities. Due to our limited resources, we may not be able to effectively manage the expansion of our operations or recruit and train additional qualified personnel. This may result in weaknesses in our infrastructure, give rise to operational mistakes, loss of business opportunities, loss of employees and reduced productivity among remaining employees. The physical expansion of our operations may lead to significant costs and may divert financial resources from other projects. If our management is unable to effectively manage our future growth, our expenses may increase more than expected, our ability to generate revenue could be reduced and we may not be able to implement our business strategy. Our future financial performance and our ability to commercialize our product candidates and compete effectively will depend, in part, on our ability to effectively manage any future growth.

Risks Related to Our Dependence on Third Parties

We may enter into collaborations with third parties for the development and commercialization of our drug candidates. If those collaborations, including, without limitation, our license arrangement with Antares for the development and commercialization of TLANDO, are not successful, we may not be able to capitalize on the market potential of these drug candidates and may have to alter our development and commercialization plans for our products.

Our drug development programs for our product candidates will require substantial additional cash to fund expenses. We have not yet established any collaborative arrangements relating to the development or commercialization of LPCN 1144, TLANDO XR, LPCN 1148, LPCN 1154, or LPCN 1107. We have entered into the Antares License Agreement for TLANDO with respect to TRT in the U.S. We intend to continue to develop our product candidates in the United States without a partner although our ability to advance these product candidates will depend on our capital resources. However, in order to commercialize our product candidates in the United States, we have partnered with Antares with respect to TLANDO and we will likely look to establish a partnership or co-promotion arrangement with an established pharmaceutical company that has a sales force, collaborate on the establishment of an internal sales force or build an internal sales force on our own with respect to other product candidates. We may also seek to enter into collaborative arrangements to develop and commercialize our product candidates outside the United States. We will face significant competition in seeking appropriate collaborators and these collaborations are complex and time-consuming to negotiate and document. We may not be able to negotiate collaborations on acceptable terms or in a timely manner, or at all. If that were to occur, we may have to curtail the development or delay commercialization of our product candidates in certain geographies, reduce the scope of our sales or marketing activities, reduce the scope of our commercialization plans, or increase our expenditures and undertake development or commercialization activities at our own expense. If we elect to increase our expenditures to fund development or commercialization activities either inside or outside of the United States on our own, we may need to obtain additional capital, which may not be available to us on acceptable terms, or at all.

To the extent we have, and if we do enter into any further such arrangements with any third parties, we will likely have limited control over the amount and timing of resources that our collaborators dedicate to the development or commercialization of our drug candidates. On October 14, 2021, we entered into the Antares License Agreement with Antares, pursuant to which we granted to Antares an exclusive, royalty-bearing, sublicensable right and license to develop and commercialize, upon final approval of TLANDO from the FDA, our TLANDO product with respect to TRT in the U.S. The Antares License Agreement also provides Antares with an option, exercisable on or before March 31, 2022, to license TLANDO XR. Consequently, our ability to generate any revenues from TLANDO with respect to TRT in the U.S. depends on our ability to maintain our collaborations with Antares, as well as the efforts of Antares to commercialize TLANDO, once final FDA approval is obtained. We have limited control over the amount and timing of resources that Antares will dedicate to these efforts.

Our ability to generate revenues from this and other collaborative arrangements will depend on our collaborators’ abilities and efforts to successfully perform the functions assigned to them in these arrangements. Collaborations involving our drug candidates, such as our collaborations with Antares, pose numerous risks to us, including the following:

	●	collaborators have significant discretion in determining the efforts and resources that they will apply to these collaborations and may not perform their obligations as expected;

	●	collaborators may de-emphasize or not pursue development and commercialization of our drug candidates or may elect not to continue or renew development or commercialization programs based on clinical trial results, changes in the collaborators’ strategic focus, including as a result of a sale or disposition of a business unit or development function, or available funding or external factors such as an acquisition that diverts resources or creates competing priorities;

	●	collaborators may delay clinical trials, provide insufficient funding for a clinical trial program, stop a clinical trial or abandon a drug candidate, repeat or conduct new clinical trials or require a new formulation of a drug candidate for clinical testing;

	●	collaborators could independently develop, or develop with third parties, products that compete directly or indirectly with our products or drug candidates if the collaborators believe that competitive products are more likely to be successfully developed or can be commercialized under terms that are more economically attractive than ours;

	●	a collaborator with marketing and distribution rights to multiple products may not commit sufficient resources to the marketing and distribution of our product relative to other products;

	●	collaborators may not properly obtain, maintain, defend or enforce our intellectual property rights or may use our proprietary information and intellectual property in such a way as to invite litigation or other intellectual property related proceedings that could jeopardize or invalidate our proprietary information and intellectual property or expose us to potential litigation or other intellectual property related proceedings;

	●	disputes may arise between the collaborators and us that result in the delay or termination of the research, development or commercialization of our products or drug candidates or that result in costly litigation or arbitration that diverts management attention and resources;

	●	collaborations may be terminated and, if terminated, may result in a need for additional capital to pursue further development or commercialization of the applicable drug candidates;

	●	collaboration agreements may not lead to development or commercialization of drug candidates in the most efficient manner or at all; and

	●	if a collaborator of ours were to be involved in a business combination, the continued pursuit and emphasis on our product development or commercialization program could be delayed, diminished or terminated.

If our license arrangements with Antares, or any future license or collaboration we may enter into, if any, is not successful, our business, financial condition, results of operations, prospects and development and commercialization efforts may be adversely affected. Any termination or expiration of the Antares License Agreement, or any future license or collaboration we may enter into, if any, could adversely affect us financially or harm our business reputation, development and commercialization efforts.

Risks Related to Ownership of Our Common Stock

The value of our warrants outstanding from the November 2019 Offering is subject to potentially material increases and decreases based on fluctuations in the price of our common stock.

In November 2019, we completed a public offering of common stock and warrants to purchase common stock (the “November 2019 Offering”). Gross proceeds from the November 2019 Offering were approximately $6.0 million. In the November 2019 Offering, the Company sold (i) 10,450,000 Class A Units, with each Class A Unit consisting of one share of common stock and a common stock warrant to purchase one share of common stock, and (ii) 1,550,000 Class B Units, with each Class B Unit consisting of one pre-funded warrant to purchase one share of a common stock and one common stock warrant to purchase one share of common stock at a price of $0.50 per Class A Unit and $0.4999 per Class B Unit. The pre-funded warrants were issued in lieu of common stock in order to ensure the purchaser did not exceed certain beneficial ownership limitations. The pre-funded warrants were immediately exercisable at an exercise price of $.0001 per share, subject to adjustment. Additionally, the common stock warrants were immediately exercisable at an exercise price of $0.50 per share and expire on November 17, 2024.

We account for the common stock warrants as a derivative instrument, and changes in the fair value of the warrants are included under other income (expense) in the Company’s statements of operations for each reporting period. At September 30, 2021, the aggregate fair value of the warrant liability included in the Company’s consolidated balance sheet was $645,000. We use the Black-Scholes option pricing model to determine the fair value of the warrants. As a result, the option-pricing model requires the input of several assumptions, including the stock price volatility, share price and risk-free interest rate. Changes in these assumptions can materially affect the fair value estimate. While the liability may only result from a change of control at that point in time, we ultimately may incur amounts significantly different than the carrying value.

Our management and directors will be able to exert influence over our affairs.

As of September 30, 2021, our executive officers and directors beneficially owned approximately 5.0% of our common stock. These stockholders, if they act together, may be able to influence our management and affairs and all matters requiring stockholder approval, including significant corporate transactions. This concentration of ownership may have the effect of delaying or preventing a change in control and might affect the market price of our common stock.

The market price of our common stock has been volatile over the past year and may continue to be volatile.

The market price and trading volume of our common stock has been volatile over the past year and it may continue to be volatile. Over the past year, our common stock has traded as low as $1.08 and as high as $2.28 per share. We cannot predict the price at which our common stock will trade in the future and it may decline. The price at which our common stock trades may fluctuate significantly and may be influenced by many factors, including our financial results; developments generally affecting our industry; general economic, industry and market conditions; the depth and liquidity of the market for our common stock; investor perceptions of our business; reports by industry analysts; announcements by other market participants, including, among others, investors, our competitors, and our customers; regulatory action affecting our business; and the impact of other “Risk Factors” discussed herein and in our Annual Report. In addition, changes in the trading price of our common stock may be inconsistent with our operating results and outlook. The volatility of the market price of our common stock may adversely affect investors’ ability to purchase or sell shares of our common stock.

Risks Relating to Our Financial Position and Capital Requirements

We have incurred significant operating losses in most years since our inception and anticipate that we will incur continued losses for the foreseeable future.

We have focused a significant portion of our efforts on developing TLANDO and more recently on LPCN 1144. We have funded our operations to date through sales of our equity securities, debt and payments received under our license and collaboration arrangements. We have incurred losses in most years since our inception. As of September 30, 2021, we had an accumulated deficit of $185.3 million. Substantially all of our operating losses resulted from costs incurred in connection with our research and development programs and from general and administrative costs associated with our operations. These losses, combined with expected future losses, have had and will continue to have an adverse effect on our stockholders’ equity and working capital. We expect our research and development expenses to significantly increase in connection with clinical trials associated with LPCN 1144, TLANDO XR, LPCN 1148, LPCN 1154and LPCN 1107, if initiated. As a result, we expect to continue to incur significant operating losses for the foreseeable future as we evaluate further clinical development of LPCN 1144, TLANDO XR, LPCN 1148, LPCN 1154, LPCN 1107 and our other programs and continued research efforts. Because of the numerous risks and uncertainties associated with developing pharmaceutical products, we are unable to predict the extent of any future losses or when we will become profitable, if at all.

We have limited shares available for issuance to raise capital to fund our operations and grant stock-based incentive awards to employees, directors, and consultants. If we are unable to increase the number of shares of common stock available for issuance, our business will be adversely affected.

Currently, we have 100,000,000 authorized shares of common stock. As of September 30, 2021, we had 88,290,650 shares of common stock outstanding. After taking into account the 3,915,790 shares reserved for issuance upon the exercise of outstanding options and 1,934,366 reserved for issuance upon the exercise of outstanding warrants, as of September 30, 2021, we have a limited number of shares available for issuance. If we are not able to increase the number of shares of common stock available for issuance, including, for example, through an amendment to our certificate of incorporation or a reverse stock split, we will have limited shares available for issuance to raise capital to fund our operations, make grants of stock-based incentive awards, or take such other actions requiring available capital stock needed to operate our business. Further delays in securing, or the failure to secure, shareholder approval of such actions, if needed, may prevent us from executing a capital raising transaction, which may have a material adverse effect on our business and financial condition.

ITEM 2.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3.

DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4.

MINE SAFETY DISCLOSURES

None.

ITEM 5.

OTHER INFORMATION

None.

ITEM 6.

EXHIBITS

INDEX TO EXHIBITS

Exhibit		Incorporation By Reference
Number	Exhibit Description	Form	SEC File No.	Exhibit	Filing Date

3.1	Amended and Restated Certificate of Incorporation	8-K	333-178230	3.2	7/25/2013

3.2	Certificate of Designation of Series A Junior Participating Preferred Stock.	8-K	001-36357	3.1	12/1/2015

3.3	Certificate of Increase of Series A Junior Participating Preferred Stock.	8-K	001-36357	3.1	11/1/2021

4.1	Second Amended and Restated Stockholder Rights Plan	8-K	001-36357	4.1	11/1/2021

10.1*+	License Agreement, dated October 14, 2021, by and between Lipocine Inc. and Antares Pharma, Inc.

10.2*+	Amendment No. 1 to Commercial Manufacturing Services and Supply Agreement between Lipocine Inc. and MW Encap Ltd. dated October 13, 2021

31.1*	Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2*	Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002


32.1*	Certification of Principal Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. 1350 (1)

32.2*	Certification of Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. 1350 (1)

101.INS^*	XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

101.SCH^*	Inline XBRL Taxonomy Extension Schema Document

101.CAL^*	Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF^*	Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB^*	Inline XBRL Taxonomy Extension Labels Linkbase Document

101.PRE^*	Inline XBRL Taxonomy Extension Presentation Linkbase Document

104	Cover Page Interactive Data File––the cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

*	Filed herewith

+	Certain portions of this exhibit have been omitted pursuant to Item 601(b)(10) of Regulation S-K. The Registrant hereby undertakes to furnish to the SEC, upon request, copies of any such instruments.

(1)	This certification accompanies the Form 10-Q to which it relates, is not deemed filed with the Securities and Exchange Commission and is not to be incorporated by reference into any filing of the Registrant under the Securities Act, or the Exchange Act (whether made before or after the date of the Form 10-Q), irrespective of any general incorporation language contained in such filing.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	Lipocine Inc.
	(Registrant)

Dated: November 10, 2021	/s/ Mahesh V. Patel
	Mahesh V. Patel, President and Chief Executive Officer (Principal Executive Officer)

Dated: November 10, 2021	/s/ Morgan R. Brown
	Morgan R. Brown, Executive Vice President and Chief Financial Officer (Principal Financial and Accounting Officer)

Exhibit 10.1

CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***], HAS BEEN OMITTED BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) IS OF THE TYPE THAT THE REGISTRANT TREATS AS PRIVATE OR CONFIDENTIAL.

LICENSE AGREEMENT

This License Agreement (the “Agreement”) is executed as of October 14, 2021 (the “Effective Date”) by and between Lipocine Inc., a corporation organized under the laws of Delaware and having a place of business at 675 Arapeen Drive, Suite 202, Salt Lake City, UT 84108 (“Lipocine”) and Antares Pharma, Inc., a corporation organized under the laws of Delaware and having a place of business at 100 Princeton South, Suite 300, Ewing, NJ 08628 (“Licensee”). Lipocine and Licensee are each referred to herein by name or, individually, as a “Party” or, collectively, as “Parties.”

BACKGROUND

WHEREAS, Lipocine has rights to certain data, regulatory filings, patent rights and know- how related to TLANDO® (a BID oral testosterone product) and TLANDO® XR (a QD oral testosterone product);

WHEREAS, Lipocine has received tentative approval for TLANDO® from the FDA (as defined below);

WHEREAS, Lipocine has completed a Phase 2b clinical study of TLANDO® XR;

WHEREAS, Licensee desires to obtain certain rights to develop, manufacture and commercialize Licensed Products (as defined below) in the Field in the Territory as set forth herein; and

WHEREAS, Lipocine desires to grant such rights to Licensee, all in accordance with the terms and conditions herein.

NOW, THEREFORE, in consideration of the mutual covenants and agreements provided herein below and other consideration, the receipt and sufficiency of which is hereby acknowledged, Lipocine and Licensee hereby agree as follows:

ARTICLE 1

DEFINITIONS

As used in this Agreement, capitalized terms shall have the meanings indicated in this Article 1:

1.1 “AbbVie Agreement” means the Amendment and Termination Agreement by and between Lipocine and Abbott Products, Inc., dated March 29, 2012, and the side-letter between Lipocine and Abbott Laboratories, dated July 3, 2012.

1.2 “AB Rated” means “therapeutically equivalent” as determined by the FDA, applying the definition of “therapeutically equivalent” set forth in the preface to the then-current edition of the FDA publication “Approved Drug Products with Therapeutic Equivalence Evaluations.”

1.3 “Additional Domain Names” has the meaning set forth in Section 5.10(b).

1.4 “Additional Trademarks” has the meaning set forth in Section 5.9(b).

1.5 “Affiliate” means, with respect to a Person, any Person that is controlled by, controls, or is under common control with such first Person, as the case may be. For purposes of this Section 1.5, the term “control” means (a) direct or indirect ownership of fifty percent (50%) or more of the voting interest in the entity in question (or, where ownership of fifty percent (50%) or more of such voting interest is prohibited by law, ownership of the maximum amount legally permitted) or (b) possession, directly or indirectly, of the power to direct or cause the direction of management or policies of the entity in question (whether through ownership of securities or other ownership interests, by contract or otherwise).

1.6 “Agreement” has the meaning set forth in the introductory paragraph.

1.7 “API” means any substance or mixture of substances to be used in the manufacture of a drug product and that, when used in the production of a drug product, becomes an active ingredient in such drug product. Such substance or mixture of substances are designed to furnish pharmacological activity or other direct effect in the diagnosis, cure, mitigation, treatment or prevention of disease or to affect the structure and function of the body. For avoidance of doubt, the API for the First Product is testosterone undecanoate and the API for the Second Product is testosterone tridecanoate.

1.8 “Applicable Law” means the applicable provisions of any and all laws, ordinances, treaties, statutes, orders, administrative codes, guidances, ordinances, injunctions, rules, rulings, decrees, permits, directives and regulations of or from any court, arbitrator, Regulatory Authority or Governmental Entity having jurisdiction over or related to the relevant subject item that may be in effect from time to time during the Term, including Data Security and Privacy Laws and GCP, GLP, and GMP.

1.9 “Assigned Agreement(s)” means those agreement(s) listed in Exhibit 1 of the Assignment and Assumption Agreement.

1.10 “Assigned Domain Name(s)” means those domain name(s) listed in Exhibit 2 of the Assignment and Assumption Agreement.

1.11 “Assigned Trademark(s)” means those trademark(s) and trademark application(s) listed in Exhibit 2 of the Assignment and Assumption Agreement.

1.12 “Assignment and Assumption Agreement” means (a) that certain Assignment and Assumption Agreement entered into by the Parties as of the Effective Date and attached hereto as Exhibit 1, or (b) in the event of early termination of this Agreement pursuant to Section 9.2, that certain Assignment and Assumption Agreement by and between the Parties, held in escrow to become effective as of the effective date of such termination of this Agreement and attached hereto as Exhibit 2, as applicable.

1.13 “Authorized Generic Product” means, with respect to a Licensed Product, any oral pharmaceutical product Commercialized by Licensee, its Affiliates or Sublicensees that (a) contains the same API as such Licensed Product, (b) is marketed in the Territory pursuant to the NDA for such Licensed Product, and (c) for the First Product, is not marketed under TLANDO® (or any replacement trademark thereof) and for the Second Product is not marketed under TLANDO® XR or a trademark used by Licensee at such time in its marketing of the Second Product.

1.14 “Bankruptcy Code” has the meaning set forth in Section 2.11.

1.15 “Bankruptcy Rejection” has the meaning set forth in Section 2.11.

1.16 [***]

1.17 “Calendar Quarter” means the respective periods of three consecutive calendar months ending on March 31, June 30, September 30 or December 31, during the Term, or the applicable part thereof during the first or last calendar quarter of the Term.

1.18 “Calendar Year” means any calendar year ending on December 31, or the applicable part thereof during the first or last year of the Term.

1.19 “Challenge” means if Licensee, its Affiliates or any Sublicensee: (a) institutes, or causes its counsel to institute, any interference, opposition, re-examination, inter partes review or similar proceeding with respect to any Licensed Patent with the U.S. Patent and Trademark Office; (b) makes any filing or institutes any legal proceeding, or causes its counsel to make any filing or institute any legal proceeding, with a court or other governmental body (including, the U.S. Patent and Trademark Office) in which one or more claims or allegations challenges the validity or enforceability of any Licensed Patent; or (c) makes any filing with or certification to, or causes its representative to make any filing with or certification to, the FDA pursuant to 21 U.S.C. § 355(b)(2)(A)(iv) or 21 U.S.C. § 355(j)(2)(A)(vii)(IV) with respect to any Licensed Patent.

1.20 “Change of Control” means, with respect to a Party, (a) a merger or consolidation of such Party with a Third Party which results in the stockholders or equity holders of such Party not owning at least fifty percent (50%) of the combined voting power of the surviving entity immediately after such merger or consolidation, or (b) except in the case of bona fide public equity or debt financings, in which a Party issues new shares of its capital stock or securities convertible into shares of such Party, a transaction or series of related transactions in which a Third Party, together with its Affiliates, becomes the beneficial owner of fifty percent (50%) or more of the combined voting power of the outstanding securities of such Party, or (c) the sale or other transfer to a Third Party of all or substantially all of such Party’s business to which the subject matter of this Agreement relates.

1.21 “Change of Control Party” has the meaning set forth in Section 2.8(c).

1.22 [***]

1.23 [***]

1.24 [***]

1.25 “Clinical Trial” means any of Phase 1 Trial, Phase 2 Trial, Phase 3 Trial, or Phase 4 Trial.

1.26 “CMC” means chemistry-manufacturing-and-controls.

1.27 “COGS” means, with respect to an Authorized Generic Product, the cost of goods sold consistently determined and calculated in accordance with GAAP [***].

1.28 “Combination Product” has the meaning set forth in the definition of “Net Sales.”

1.29 “Commercialize”, “Commercialized” or “Commercialization” means any and all activities directed to the preparation for sale of, offering for sale of or sale of a Licensed Product, including activities related to marketing, promoting, distribution and detailing (as well as importing and exporting activities in connection therewith), but excluding activities directed to Development and Manufacturing.

1.30 “Commercial Launch” means, with respect to a Licensed Product, Generic Product or Generic Competing TU Product, the availability of such Licensed Product, Generic Product or Generic Competing TU Product (as applicable) for commercial sale to the public, [***].

1.31 “Commercialization Plan” means, with respect to any Licensed Product(s) approved or reasonably expected to be approved for commercial sale in the Territory pursuant to a Regulatory Approval, a reasonably detailed written plan setting forth the significant Commercialization activities (including timelines and plans for Commercial Launch and related detailing, marketing, branding, advertising, and distribution) and the projected annual sales forecast, as further set forth in Section 4.10.

1.32 “Commercially Reasonable Efforts” means with respect to the efforts to be expended by a Party with respect to any objective or activity under this Agreement, [***].

1.33 “Competitive Activities” has the meaning set forth in Section 2.8(c).

1.34 “Confidential Information” means any information of a confidential or proprietary nature, including know-how and any intellectual property (including invention disclosures, patent applications, proprietary materials or technologies), technical, scientific, economic (including financial and marketing), business, research strategies, trade secrets (including material embodiments thereof), and other information, disclosed by, or on behalf of, a Party to the other Party, regardless of whether such information is specifically designated as confidential or proprietary and regardless of whether such information is in written, oral, electronic, or other form.

1.35 “Control” or “Controlled” means, with respect to any information, material or intellectual property right (including Know-How, Patents, Data, and Regulatory Documentation), that a Party owns or has a license to such information, material or intellectual property right, as applicable, and has the ability to grant to the other Party a license, covenant not to use, sublicense, access, or right to use (as applicable) under, such information, material or intellectual property right as provided under the terms of this Agreement, in each case without violating any obligations of the granting Party owed to a Third Party, breaching the terms of any agreement with a Third Party, or subjecting the granting Party to any additional fee or charge (but excluding royalty and milestone payments with respect to intellectual property rights that are already licensed to such Party as of the Effective Date). Notwithstanding the foregoing, a Party and its Affiliates will not be deemed to “Control” any information, material or intellectual property right that, (a) prior to the consummation of a Change of Control of such Party, is owned or in-licensed by a Third Party that becomes an Affiliate of such Party after the Effective Date as a result of such Change of Control or (b) is generated or discovered after such Change of Control independent of this Agreement by employees or consultants of the Third Party that becomes an Affiliate of a Party and who conduct no activities under this Agreement and who have no access to the Confidential Information disclosed or generated under this Agreement, unless (i) prior to the consummation of such Change of Control, such Party or any of its Affiliates also Controlled such information, material or intellectual property right, or (ii) after the consummation of such Change of Control, such acquired Party or any of its Affiliates determines to use or uses any such information, material or intellectual property right in the performance of its obligations or exercise of its rights under this Agreement, in each of which cases ((i) and (ii)), such information, material or intellectual property right, as applicable, will be “Controlled” by such Party for purposes of this Agreement.

1.36 “Convicted Individual” or “Convicted Entity” has the meaning set forth in Section 7.5(d).

1.37 “Cover” or “Covering” means, with respect to any Licensed Product, Improvement or Invention, that the making, use, sale, offer for sale or importation of such Licensed Product, Improvement or Invention, or the practice of a method with respect to the manufacture or use of such Licensed Product, Improvement or Invention, would infringe a Valid Claim of a Patent, but for the ownership of such Patent or the licenses granted under such Patent in this Agreement.

1.38 “Data” means any and all data, including preclinical data, pharmacology data, chemistry data (including analytical, product characterization, Manufacturing, and stability data), toxicology data, data arising from any Clinical Trial (including investigator reports (both preliminary and final), statistical analyses, expert opinions and reports, safety and other electronic databases), together with supporting data, in each case, that is necessary or reasonably useful for the Development, Manufacture or Commercialization of the Licensed Products.

1.39 “Data Generating Party” has the meaning set forth in Section 4.5(b).

1.40 “Data Security and Privacy Laws” means any and all laws, legal requirements and self-regulatory guidelines related to data protection and privacy, including, to the extent applicable, the Health Insurance Portability and Accountability Act of 1996, as amended by the Health Information Technology for Economic and Clinical Health Act, and any supranational, federal, state, or national legislation relating to Personally Identifiable Information or privacy that is applicable to a Party relating to the receipt, collection, compilation, use, storage, processing, sharing, safeguarding, security (both technical and physical), disposal, destruction, disclosure or transfer (including cross-border) of Personally Identifiable Information.

1.41 “Debarred Entity” has the meaning set forth in Section 7.5(b).

1.42 “Debarred Individual” has the meaning set forth in Section 7.5(a).

1.43 “Defending Party” has the meaning set forth in Section 5.6(b).

1.44 “Develop”, “Developed” or “Development” means, with respect to each Licensed Product, all research, non-clinical, pre-clinical and clinical development activities, including toxicology and other development efforts, stability testing, process development, formulation development, delivery system development, quality assurance and quality control development, statistical analysis, clinical pharmacology, clinical studies (including Clinical Trials), regulatory affairs, and Regulatory Approval and clinical study regulatory activities (including pre-and post- marketing studies).

1.45 “Development Plan” means, with respect to the Second Product, a reasonably detailed written plan for the Second Product, including a description of all significant Development activities and the projected timelines for achieving such activities, including design and conduct of Clinical Trials.

1.46 “Effective Date” has the meaning set forth in the introductory paragraph.

1.47 “Enforceable IP” has the meaning set forth in Section 5.4(a).

1.48 “Excluded Individual” or “Excluded Entity” has the meaning set forth in Section 7.5(c).

1.49 “Executive” means for Lipocine, the Chief Executive Officer of Lipocine (or such individual’s designee; provided that such designee is an executive officer of Lipocine), and, for Licensee, the Chief Executive Officer of Licensee (or such individual’s designee; provided that such designee is an executive officer of Licensee). If either position is vacant or either position does not exist, then the person having the most nearly equivalent position (or such individual’s designee) shall be deemed to be the Executive of the relevant Party.

1.50 “Existing Inventory” has the meaning set forth in Section 4.8.

1.51 “FCPA” has the meaning set forth in Section 7.4(b).

1.52 “FD&C Act” means the U.S. Federal Food, Drug, and Cosmetic Act (21 U.S.C. §301, et seq.), including any amendments or supplements thereto.

1.53 “FDA” means the U.S. Food and Drug Administration, or any successor agency thereto.

1.54 “FDA’s Disqualified/Restricted List” has the meaning set forth in Section 7.5(e).

1.55 “Field” means (a) testosterone replacement therapy in males for conditions associated with a deficiency or absence of endogenous testosterone, as indicated in NDA No. 208088, (b) treatment of Klinefelter syndrome, and (c) all pediatric indications relating to testosterone replacement therapy in males for conditions associated with a deficiency or absence of endogenous testosterone.

1.56 “First Commercial Sale” means, with respect to a Licensed Product, the first sale of such Licensed Product in the Territory by or on behalf of Licensee or its Affiliates or Sublicensees to a Third Party for end use or consumption of such Licensed Product, after Regulatory Approval has been received.

1.57 “First Product” means the testosterone undecanoate product described in NDA No. 208088 (which, as of the Effective Date, has the proposed brand name TLANDO®) including all forms, compounds, formulations, presentations, specifications, manner of delivery, dosage strengths, line extensions, modifications, developments and Improvements of such product. For clarity, an Authorized Generic Product of the First Product is also a First Product.

1.58 “Force Majeure Event” means any acts or events beyond a Party’s reasonable control, including strikes, lockouts or other labor disturbances (whether involving the workforce of the affected Party or of any other Person), insurrections, riots, civil commotion, quarantines, epidemics, pandemics and other communicable disease outbreaks (including COVID-19 and any variants thereof), government actions, acts of God, omissions or delays in acting by any Governmental Entity (except to the extent such delay results from the affected Party’s or any of its Affiliates’ breach of any term or condition of this Agreement) embargoes, wars, acts of war (whether war be declared or not), acts of terrorism, fires, earthquakes, floods or storms, or failures of Third Party suppliers, or impossibility to obtain materials, components, drug substance, drug product, utilities, equipment, supplies, fuel or other required materials.

1.59 “GCP” means all applicable current good clinical practice standards for the design, conduct, performance, monitoring, auditing, recording, analyses and reporting of Clinical Trials, including, as applicable, (a) as set forth in the International Conference on Harmonisation of Technical Requirements for Registration of Pharmaceuticals for Human Use (ICH) E6 and any other guidelines for good clinical practice for trials on medicinal products in the Territory, (b) the Declaration of Helsinki (2004) as last amended at the 52nd World Medical Association in October 2000 and any further amendments or clarifications thereto, (c) 21 C.F.R Parts 50, 54, 56, 312 and 314, as may be amended from time to time, and (d) the equivalent Applicable Laws in the Territory, each as may be amended and applicable from time to time and in each case, that provide for, among other things, assurance that the clinical data and reported results are credible and accurate and protect the rights, integrity, and confidentiality of trial subjects.

1.60 “Generic Competing TU Product” means an oral testosterone undecanoate product in the Field in the Territory that (a) contains only the same API at the same dosage strength as a Branded Oral TU Product, (b) is sold by a Third Party that is not a Sublicensee and did not purchase such product in a chain of distribution that included Licensee or its Affiliates, or any of its or their sublicensees, and (c) is approved in part in reliance on the prior approval (or on safety or efficacy data submitted in support of the prior approval) of such Licensed Product (in the U.S., pursuant to Section 505(b)(2) or Section 505(j) of the FD&C Act (21 U.S.C. 355(b)(2) and 21 U.S.C. 355(j), respectively)), whether or not such Regulatory Approval was based upon clinical data generated by the Parties pursuant to this Agreement or was obtained using an abbreviated, expedited or other process, and (d) is AB Rated with respect to such Branded Oral TU Product. For the avoidance of doubt, any pharmaceutical product sold by Licensee or its Affiliates or Sublicensee shall not be deemed a Generic Competing TU Product hereunder.

1.61 “Generic Product” means, with respect to a Licensed Product, an oral testosterone product in the Field in the Territory that (a) contains only the same API at the same dosage strength as such Licensed Product, (b) is sold by a Third Party that is not a Sublicensee and did not purchase such product in a chain of distribution that included Licensee or its Affiliates, or any of its or their sublicensees, and (c) is approved in part in reliance on the prior approval (or on safety or efficacy data submitted in support of the prior approval) of such Licensed Product (in the U.S., pursuant to Section 505(b)(2) or Section 505(j) of the FD&C Act (21 U.S.C. 355(b)(2) and 21 U.S.C. 355(j), respectively), whether or not such Regulatory Approval was based upon clinical data generated by the Parties pursuant to this Agreement or was obtained using an abbreviated, expedited or other process and (d) is AB Rated with respect to such Licensed Product. Notwithstanding the foregoing, any pharmaceutical product meeting clauses (a) and (d) above that is authorized for distribution in the Territory by Licensee or its Affiliates under a limited sublicense, covenant not to sue, settlement, release, or other arrangement in connection with the settlement of an ANDA litigation proceeding under the Drug Price Competition and Patent Term Restoration Act of 1984 (Public Law 98-417, known as the Hatch-Waxman Act), as amended, shall be deemed a Generic Product hereunder.

1.62 “GLP” means all applicable Good Laboratory Practice standards, including, as applicable, as set forth in the then current good laboratory practice standards promulgated or endorsed by the U.S. Food and Drug Administration as defined in 21 C.F.R. Part 58, each as may be amended and applicable from time to time.

1.63 “GMP” means all applicable current Good Manufacturing Practices including, as applicable, (a) the principles detailed in the U.S. Current Good Manufacturing Practices, 21 C.F.R. Parts 4, 210, 211, 601, 610 and 820, (b) European Directive 2003/94/EC and Eudralex 4, (c) the principles detailed in the ICH Q7 guidelines, and (d) the equivalent Applicable Laws in the Territory, each as may be amended and applicable from time to time.

1.64 “Governmental Entity” means any regional, central, federal, state, provincial or local court, commission or governmental, regulatory or administrative body, board, bureau, agency, instrumentality, authority or tribunal or any subdivision thereof.

1.65 “Government Official” has the meaning set forth in Section 7.4(a).

1.66 “Improvement” means any Invention that is (a) a modification, improvement or enhancement to a Licensed Product or Licensed Technology (and including all line extensions of a Licensed Product (e.g. for different dosage strengths of Licensed Product)), and (b) necessary or reasonably useful for the Development, Manufacturing, or Commercialization of a Licensed Product, including all intellectual property rights therein and thereto. Notwithstanding anything to the contrary herein, Improvement excludes New Lipocine Data and Licensee Data.

1.67 “IND” means an Investigational New Drug Application, Clinical Study Application, Clinical Trial Exemption, or similar application or submission for approval to conduct Clinical Trials filed with or submitted to a Regulatory Authority in the applicable jurisdiction in conformance with the requirements of such Regulatory Authority, including all supplements and amendments that may be filed with respect to the foregoing.

1.68 “Indemnitee” has the meaning set forth in Section 8.3.

1.69 “Initial FDA Guidance” has the meaning set forth in Section 2.2(b).

1.70 “Invention” means any process, formulation, method, composition of matter, article of manufacture, discovery, improvement, know-how or finding that is conceived or reduced to practice (whether patentable or not) as a result of a Party exercising its rights or carrying out its obligations under this Agreement, including all rights, title and interest in and to the intellectual property rights therein.

1.71 [***]

1.72 “Joint Development Committee” or “JDC” has the meaning set forth in Section 4.2(a).

1.73 “Joint Inventions” means any and all Inventions discovered or created jointly by or on behalf of Lipocine or its Affiliates, on the one hand, and Licensee or its Affiliates or Sublicensees, on the other hand, whether or not patented or patentable.

1.74 “Joint Improvements” means any and all Improvements discovered or created jointly by or on behalf of Lipocine or its Affiliates, on the one hand, and Licensee or its Affiliates or Sublicensees, on the other hand, whether or not patented or patentable.

1.75 “Know-How” means all technical information and other technical subject matter, proprietary methods, ideas, concepts, formulations, discoveries, inventions, devices, technology, trade secrets, compositions, designs, formulae, know-how, show-how, specifications, drawings, techniques, results, data, processes, methods, procedures, designs and regulatory correspondence and information (including pharmacological, toxicological, pre-clinical, clinical and manufacturing test data, manufacturing protocols, analytical methods and data, quality control data and process validation) whether or not patentable, but excluding all Data.

1.76 “Licensed Data” means all Data Controlled by Lipocine or its Affiliates as of the Effective Date that is necessary or reasonably useful for (a) the Development or Commercialization of the Licensed Products in the Field in the Territory or (b) the Manufacture of the Licensed Products in or outside of the Territory. For clarity, Licensed Data includes all data set forth in NDA No. 208088, IND No. 106476 and IND No. 119099 as of the Effective Date related Regulatory Documentation.

1.77 “Licensed Know-How” means all Know-How Controlled by Lipocine or its Affiliates as of the Effective Date or during the Term that is necessary or reasonably useful for (a) the Development or Commercialization of the Licensed Products in the Field in the Territory or (b) the Manufacture of the Licensed Products in or outside of the Territory, including, in all cases (including subsections (a) and (b) hereunder), Lipocine Improvements and Lipocine’s joint ownership interest in any Joint Improvements.

1.78 “Licensed Patents” means all Patents, Controlled by Lipocine or its Affiliates as of the Effective Date or during the Term that claims or Covers a Licensed Product or is otherwise necessary or reasonably useful for the (a) Development or Commercialization of the Licensed Products in the Field in the Territory or (b) Manufacture of the Licensed Products in or outside of the Territory, including, in all cases (including subsections (a) and (b) hereunder), Patents Covering Lipocine Improvements and Lipocine’s joint ownership interest in any Patents Covering Joint Improvements. The Licensed Patents existing as of the Effective Date are set forth in Schedule 1.78.

1.79 “Licensed Product” means the First Product or, if and only if Licensee exercises the option to obtain a license to the Second Product in accordance with Section 2.2, the Second Product. “Licensed Products” means, if and only if Licensee exercises the option to obtain a license to the Second Product in accordance with Section 2.2, both the First Product and the Second Product.

1.80 “Licensed Technology” means the Licensed Data, Licensed Know-How, Licensed Patents, and all other intellectual property rights Controlled by Lipocine that are necessary or reasonably useful for (a) the Development or Commercialization of any Licensed Product in the Field in the Territory or (b) the Manufacture of the Licensed Products in or outside of the Territory. Notwithstanding anything to the contrary herein, Licensed Technology excludes intellectual property rights to any molecule, biologic, material, or drug substance other than testosterone undecanoate and testosterone tridecanoate, in each case, as contained in the Licensed Products.

1.81 “Licensee” has the meaning set forth in the introductory paragraph.

1.82 “Licensee Data” means all Data relating to the Licensed Products Controlled by Licensee or its Affiliates during the Term (other than the Licensed Data).

1.83 “Licensee Improvements” means any and all Improvements discovered or created solely by or on behalf of Licensee during the Term.

1.84 “Licensee Indemnitees” has the meaning set forth in Section 8.2.

1.85 “Licensee Inventions” means any and all Inventions discovered or created solely by or on behalf of Licensee during the Term.

1.86 “Licensee Supplied Product” has the meaning set forth in Section 4.7(b).

1.87 “Lipocine” has the meaning set forth in the introductory paragraph.

1.88 “Lipocine Improvements” means any and all Improvements discovered or created solely by or on behalf of Lipocine during the Term.

1.89 “Lipocine Indemnitees” has the meaning set forth in Section 8.1.

1.90 “Lipocine Inventions” means any and all Inventions discovered or created solely by or on behalf of Lipocine during the Term.

1.91 “Litigation Costs” has the meaning set forth in Section 8.1.

1.92 “Losses” has the meaning set forth in Section 8.1.

1.93 “Manufacture”, “Manufactured” or “Manufacturing” means any and all activities directed to the synthesis, manufacture, formulation, filling and finishing, packaging, storage, handling, releasing, assembly, production, processing, labeling, testing, disposition, packaging and quality control and quality assurance testing (including in-process, release and stability testing, if applicable) of the Licensed Products, including manufacturing process development, process qualification and validation, scale-up, commercial manufacturing and analytical development, product characterization and stability testing, and in each case includes having such activity performed by a contract manufacturer, or “have Manufactured.”

1.94 “NDA” means a “New Drug Application,” as defined in the FD&C Act and applicable regulations promulgated thereunder by the FDA and all amendments and supplements thereto filed with the FDA, or the equivalent application filed with any Regulatory Authority, including all documents, data, and other information concerning a drug product, which are necessary for gaining Regulatory Approval to market and sell a drug product in the relevant jurisdiction.

1.95 “Net Profit” means, with respect to an Authorized Generic Product in a Calendar Quarter, [***].

1.96 “Net Profit Margin” means, with respect to an Authorized Generic Product in a Calendar Quarter, [***].

1.97 “Net Sales” means the gross amounts invoiced and actually recorded by Licensee, its Affiliates or Sublicensees, for sales of Licensed Product in the Territory to Third Parties (that are not Sublicensees) in an arm’s length transaction, in each case, less the following deductions to the extent actually allowed and taken in accordance with GAAP: [***].

1.98 “New Lipocine Data” means all Data Controlled by Lipocine or its Affiliates during the Term that is necessary or reasonably useful for (a) the Development or Commercialization of the Licensed Products in the Field in the Territory or (b) the Manufacture of the Licensed Products in or outside of the Territory. For clarity, New Lipocine Data excludes Licensed Data.

1.99 “Non-Prosecuting Party” has the meaning set forth in Section 5.2(d).

1.100 “Other Covered Party” has the meaning set forth in Section 7.4(a).

1.101 “Option Party” has the meaning set forth in Section 4.5(b).

1.102 “Party” or “Parties” has the meaning set forth in the introductory paragraph.

1.103 “Patents” means all: (a) patents and patent applications, including any provisional patent applications, (b) any patent application claiming priority from such patent applications or provisional patent applications, including divisions, continuations, continuations-in-part, additions, (c) any patent that has issued or in the future issues from any of the foregoing patent applications, including any utility or design patent or certificate of invention, and (d) re-issues, renewals, extensions, substitutions, re-examinations or restorations, registrations and revalidations, and supplementary protection certificates and equivalents to any of the foregoing.

1.104 “Person” means any individual, corporation, partnership, association, joint-stock company, trust, unincorporated organization or government or political subdivision thereof.

1.105 “Personally Identifiable Information” or “PII” means any information that identifies or can be used to identify a natural person, including any information defined as “personally identifiable information,” “personal information,” “protected health information,” or “nonpublic personal information” under Applicable Law.

1.106 “Phase 1 Trial” means a human clinical trial that would satisfy the requirements of 21 C.F.R. Part 312.21(a) (as amended from time to time).

1.107 “Phase 2 Trial” means a human clinical trial that would satisfy the requirements of 21 C.F.R. Part 312.21(b) (as amended from time to time).

1.108 “Phase 3 Trial” means a human clinical trial that would satisfy the requirements of 21 C.F.R. Part 312.21(c) (as amended from time to time).

1.109 “Phase 4 Trial” means a post-marketing human clinical trial of a Licensed Product as described in 21 CFR §312.85 (as hereafter modified or amended).

1.110 “Prosecute”, “Prosecuted” or “Prosecution” means (a) preparing, filing for, prosecuting and maintaining Patents and (b) responding to oppositions, nullity actions, re- examinations, revocation actions and similar proceedings (including conducting or participating in interference and oppositions) filed by a Party against a Third Party Patent or filed by a Third Party against a Patent.

1.111 “Prosecuting Party” has the meaning set forth in Section 5.2(d).

1.112 [***]

1.113 “Regulatory Approval” means, with respect to a country or jurisdiction within the Territory, any approvals, licenses, registrations or authorizations necessary for the commercial manufacture, marketing sale, distribution or use of a Licensed Product in such country or jurisdiction.

1.114 “Regulatory Authority” means any applicable Governmental Entity involved in the granting of Regulatory Approval for Licensed Product in the Field in the Territory.

1.115 “Regulatory Documentation” means all filings, applications and submissions to Regulatory Authorities and other Governmental Entities, including for Clinical Trials, preclinical trials, tests, and studies, relating to a Licensed Product, including all INDs, NDAs and Regulatory Approvals, as well as all correspondence with Governmental Entities (registration and licenses, pricing and reimbursement correspondence, regulatory drug lists, advertising and promotion documents), adverse event files, complaint files, manufacturing records and inspection reports.

1.116 “Residual Knowledge” has the meaning set forth in Section 6.5.

1.117 “Royalty Term” has the meaning set forth in Section 3.4(d).

1.118 [***]

1.119 “Second Product” means, if and only if Licensee exercises the option to obtain a license pursuant to Section 2.2, the testosterone tridecanoate product described in IND No. 119099 (which, as of the Effective Date, has the proposed brand name TLANDO® XR), including all forms, compounds, formulations, presentations, specifications, manner of delivery, dosage strengths, line extensions, modifications, developments and Improvements of such product. For clarity, an Authorized Generic Product of the Second Product is a Second Product.

1.120 “Second Product Development Costs” has the meaning set forth in Section 9.8(a).

1.121 “Second Product Option Exercise Fee” has the meaning set forth in Section 2.2(a).

1.122 “Sublicense Agreement” means an agreement with a Sublicensee, including co- commercialization agreements, co-promotion or co-marketing agreements, and other similar agreements.

1.123 “Sublicensee” means a Third Party to whom Licensee grants a sublicense pursuant to Section 2.6. For the avoidance of doubt, “Sublicensee” shall include Development and Commercialization partners and entities granted the right to Develop, Manufacture, or Commercialize the Licensed Products or Authorized Generic Products, but shall exclude any contract manufacturers, clinical research organizations, wholesalers or distributors or other service providers typically engaged by companies similar to Licensee in the development, manufacture, commercialization, distribution, marketing, detailing or other exploitation of pharmaceutical products, in each case such Person has been granted a limited sublicense under the rights granted by Lipocine to Licensee under this Agreement in order for such Person to perform services. For clarity, “Sublicensee” shall not include any sublicense, covenant not to sue, settlement, release, or other arrangement in connection with the settlement of an ANDA litigation proceeding under the Drug Price Competition and Patent Term Restoration Act of 1984 (Public Law 98-417, known as the Hatch-Waxman Act), as amended, and any such arrangements shall be governed by Sections 5.4 and 5.5.

1.124 “Successful Completion” means, with respect to a Phase 3 Trial, [***].

1.125 “Term” has the meaning set forth in Section 9.1.

1.126 “Terminated Product” has the meaning set forth in Section 9.3.

1.127 “Territory” means the United States and all its territories and possessions.

1.128 [***]

1.129 “Third Party” means any Person other than Lipocine, Licensee or any Affiliate of either Lipocine or Licensee.

1.130 [***]

1.131 “U.S. Dollars” and “US$” means United States dollars.

1.132 “USPTO” means the United States Patent and Trademark Office.

1.133 “Valid Claim” means (a) any claim of an issued and unexpired patent that has not been permanently revoked or held unenforceable or invalid by a court or other governmental agency of competent jurisdiction in a decision that is not appealed or is unappealable, and which patent has not been disclaimed, cancelled, withdrawn, abandoned, or admitted to be invalid or unenforceable through reissue or otherwise, or (b) a claim in a pending patent application that has been pending for no more than [***] years from the filing date of the first utility patent application (or equivalent concept in any such country) and not been abandoned, rejected, cancelled or expired without the possibility of revival or appeal.

ARTICLE 2

LICENSES AND TRANSITION SERVICES

2.1 License for the First Product. During the Term, subject to the terms and conditions of this Agreement, including Section 2.11, Lipocine hereby grants to Licensee (a) an exclusive (even as to Lipocine and its Affiliates, subject to Section 2.2), royalty-bearing, sublicensable (in accordance with Section 2.6) right and license under the Licensed Technology to Develop and Commercialize the First Product (including the compounds contained therein) in the Field in the Territory, and (b) a co-exclusive (with Lipocine), royalty-bearing, sublicensable (in accordance with Section 2.6) right and license under the Licensed Technology to Manufacture the First Product (including the compounds contained therein) in or outside of the Territory solely for Development and Commercialization of the Licensed Product in the Field in the Territory and to supply Lipocine or its designees with Licensed Product in accordance with Section 4.7(b).

2.2 Option and License for the Second Product.

(a) As of the Effective Date [***]. Commencing on the Effective Date and until Lipocine receives [***], Licensee shall have the right, but not the obligation, to exercise an exclusive option to obtain a license to the Second Product by (i) notifying Lipocine in writing of its decision to exercise the option and (ii) paying Lipocine one million U.S. Dollars (U.S. $1,000,000).

(b) If the [***] then for a period of [***] days following the date upon which a copy of [***] is delivered to Licensee, Licensee shall have the right, but not the obligation, to exercise an exclusive option to obtain a license to the Second Product by (i) notifying Lipocine in writing of its decision to exercise the option and (ii) paying Lipocine one million U.S. Dollars (U.S. $1,000,000).

(c) If the [***], then during the period of [***] days following the date upon which a copy of such [***] is delivered to Licensee, the Parties shall cooperate in good faith with respect to [***]. For clarity, during such [***] day period, Licensee shall have the right, but not the obligation, to exercise an exclusive option to obtain a license to the Second Product by (i) notifying Lipocine in writing of its decision to exercise the option and (ii) paying Lipocine one million U.S. Dollars (U.S. $1,000,000).

(d) During the period of [***] days following the date of [***] during such [***] day period, Licensee shall have the right, but not the obligation, to exercise an exclusive option to obtain a license to the Second Product by (i) notifying Lipocine in writing of its decision to exercise the option and (ii) paying Lipocine one and one half million U.S. Dollars (U.S. $1,500,000). Notwithstanding the foregoing, should the FDA provide the [***] during such [***] day period, for a period of [***] days following the date upon which a [***] is delivered to Licensee, Licensee shall have the right, but not the obligation, to exercise an exclusive option to obtain a license to the Second Product by (i) notifying Lipocine in writing of its decision to exercise the option and (ii) paying Lipocine one and one half million U.S. Dollars (U.S. $1,500,000).

(e) Notwithstanding anything else to the contrary in Sections 2.2(a) -2.2(d), and regardless of [***], (i) in no event shall the option periods set forth in Sections 2.2(a) -2.2(d) remain in effect beyond March 31, 2022, and (ii) Licensee may end its exclusive option at any time during the option periods set forth in Sections 2.2(a) -2.2(d) by notifying Lipocine of such decision in writing.

(f) From the Effective Date until the earlier of (i) Licensee’s exercise of its exclusive option to include the Second Product hereunder, (ii) the expiration of the final option period and (iii) Licensee’s decision to ends its exclusive option, Lipocine shall not grant to any Third Party any license under the Licensed Technology to Develop, or Commercialize the Second Product (including the compounds contained therein) in the Field in the Territory or to Manufacture the Second Product (including the compounds contained therein) in or outside of the Territory for the Development, or Commercialization of the Second Product in Field in the Territory.

(g) Upon Lipocine’s receipt of the Second Product Option Exercise Fee, subject to the terms and conditions of this Agreement, including Section 2.11, Lipocine shall grant, and hereby does grant, to Licensee (i) an exclusive (even as to Lipocine and its Affiliates, subject to Section 2.2), royalty-bearing, sublicensable (in accordance with Section 2.6) right and license under the Licensed Technology to Develop and Commercialize the Second Product (including the compounds contained therein) in the Field in the Territory, and (ii) a co-exclusive (with Lipocine), royalty-bearing, sublicensable (in accordance with Section 2.6) right and license under the Licensed Technology to Manufacture the Second Product (including the compounds contained therein) in or outside of the Territory.

2.3 Lipocine’s Reservation of Rights. Licensee acknowledges and agrees that notwithstanding Section 2.1 or Section 2.2(g) (if applicable), Lipocine retains all rights under the Licensed Technology to (a) perform its obligations under this Agreement, (b) Develop, Manufacture, and Commercialize any product (including the Licensed Products) outside the Field in the Territory, (c) Develop, Manufacture, and Commercialize any product (including the Licensed Products) outside the Territory, inside or outside the Field, (d) Develop and Manufacture the Licensed Products in the Field in the Territory solely for Development and Commercialization outside the Field in the Territory, (e) Develop and Manufacture the Licensed Products in the Field in the Territory solely for Development and Commercialization outside the Territory, inside or outside of the Field, and (f) resolve any intellectual property disputes in accordance with Section 5.8. For the avoidance of doubt, Licensee shall not have any right under this Agreement to use or exploit the Licensed Technology for any purpose outside the Field in the Territory or outside of the Territory, inside or outside the Field.

2.4 Rights to Improvements.

(a) Subject to the terms and conditions of this Agreement, including Section 9.6, during the Term Licensee hereby grants Lipocine an exclusive (even as to Licensee and its Affiliates), irrevocable, royalty-free, fully paid-up license, with the right to sublicense through multiple tiers, under the Licensee Improvements to Develop, Manufacture and Commercialize oral testosterone undecanoate and testosterone tridecanoate products outside the Field in the Territory and outside the Territory, inside or outside the Field, and to Develop and Manufacture the Licensed Products in the Field in the Territory solely for Development and Commercialization of the Licensed Products outside the Field in the Territory and outside the Territory, inside or outside the Field.

(b) Subject to the terms and conditions of this Agreement, including Section 9.6, Licensee retains all rights under the Licensee Improvements to Develop, Manufacture and Commercialize the Licensed Products in the Field in the Territory and to Manufacture the Licensed Products in or outside of the Territory solely for Development and Commercialization of the Licensed Product in the Field in the Territory and to supply Lipocine or its designees with Licensed Product in accordance with Section 4.7(b), in each case subject to Section 2.8.

2.5 Right of Reference. Subject to the transfer set forth in Section 2.7, Licensee hereby grants to Lipocine a right to reference the portions of NDA No. 208088, IND No. 106476, and IND No. 119099 that exist as of the Effective Date to Develop, Manufacture and Commercialize any product (including the Licensed Products) outside the Field in the Territory and outside of the Territory, inside or outside the Field.

2.6 Sublicenses.

(a) The rights and licenses granted pursuant to Section 2.1 include the right to grant Sublicense Agreements; provided, however, [***]and any such Sublicense Agreement shall be consistent with and subject to the terms and conditions of this Agreement and, without limiting the foregoing, shall include provisions (i) allowing Licensee to conduct an audit of such Sublicensee in a comparable manner to Section 3.9, it being understood that commercially sensitive information may be redacted from such copies, to the extent such information is not necessary to verify compliance hereunder and (ii) requiring such Sublicensee to account for and report its Net Sales of such Licensed Product on substantially the same basis as if such sales were Net Sales hereunder. The terms, conditions and existence of each Sublicense Agreement shall be deemed the Confidential Information of Licensee. Any Sublicense Agreement entered into by Licensee and a Third Party that does not conform with the foregoing shall be deemed null and void. For the avoidance of doubt, Licensee shall have the right to grant sublicenses to its Affiliates without Lipocine’s consent in accordance with Section 10.7.

(b) Licensee shall remain fully responsible to Lipocine for the performance of its Sublicensee(s) with respect to Licensee’s obligations under the terms of this Agreement. Without limiting the foregoing, Licensee shall remain obligated to make all payments due to Lipocine under the terms of this Agreement with respect to the activities of its Sublicensees, including, for clarity, all royalty payments for Licensed Products sold by its Sublicensee(s) and all milestone payments for milestone events achieved by its Sublicensee(s).

2.7 Technology, Documentation, and Materials Transfer and Assistance.

(a) As of the Effective Date, Lipocine shall, and hereby does, transfer and assign to Licensee: (i) all Regulatory Documentation related to the First Product in the Field in the Territory Controlled by Lipocine or its Affiliates as of the Effective Date, including, but not limited to, NDA No. 208088, (ii) the Assigned Trademarks (including associated goodwill) relating to the First Product, (iii) the Assigned Domain Names relating to the First Product, and (iv) the Assigned Agreements relating to the First Product. The formal transfer of Regulatory Documentation shall be effectuated by a dossier transfer letter pursuant to Section 2.7(b), and the transfer and assignment of Assigned Trademarks, Assigned Domain Names, Regulatory Documentation and Assigned Agreements shall be in accordance with the Assignment and Assumption Agreement attached as Exhibit 1. For clarity, Lipocine shall remain the sole owner and title holder to all Licensed Data, and the transfer of ownership of Regulatory Documentation does not alter the ownership of the Licensed Data referenced in such Regulatory Documentation. Effective as of the effective date of Licensee’s exercise of the option under Section 2.2 with respect to the Second Product, if applicable, Lipocine shall, and hereby does, transfer and assign to Licensee all Regulatory Documentation, Assigned Trademarks, Assigned Domain Names, and Assigned Agreements, in each case related to the Second Product in the Field in the Territory, Controlled by Lipocine or its Affiliates as of the effective date of Licensee’s exercise of the option, and the foregoing provision with respect to the First Product shall apply to the Second Product mutatis mutandis.

(b) Within [***] Business Days of the Effective Date, Lipocine shall deliver the dossier transfer letters attached hereto as Exhibit 3 and Exhibit 4 to the FDA to effectuate the formal transfer of the Regulatory Documentation relating to the First Product to Licensee. Within [***] Business Days of Licensee’s exercise of the option under Section 2.2 with respect to the Second Product and payment of the Second Product Development costs pursuant to Section 2.7(e), Lipocine shall deliver the dossier transfer letter attached hereto as Exhibit 5 to the FDA to effectuate the formal transfer of the Regulatory Documentation relating to the Second Product to Licensee.

(c) Within [***] Business Days of the Effective Date, Lipocine shall complete the Electronic Trademark Assignment System filing with the USPTO and execute all other documents necessary to transfer the Assigned Trademark and all associated goodwill relating to the First Product. Within [***] Business Days of Licensee’s exercise of the option under Section 2.2 with respect to the Second Product and payment of the Second Product Development costs pursuant to Section 2.7(e), Lipocine shall complete the Electronic Trademark Assignment System filing with the USPTO and execute all other documents necessary to transfer the Assigned Trademark and all associated goodwill relating to the Second Product.

(d) As soon as reasonably practical following the Effective Date, Lipocine shall, and shall use Commercially Reasonable Efforts to do so within [***] days following the Effective Date, disclose and transfer to Licensee copies of tangible embodiments of all Licensed Technology, including all technology, Know-How, data, documentation and other information contained therein in its and its Affiliates’ possession. The foregoing disclosure and transfer shall be at Lipocine’s sole expense. Should Licensee exercise the option under Section 2.2 with respect to the Second Product, the foregoing transfer shall apply mutatis mutandis with respect to the Second Product, as of the date of Licensee’s exercise of the option. Throughout the term of this Agreement, subject to Section 9.3, Lipocine shall continue to disclose and transfer to Licensee copies of tangible embodiments of any and all technology, Know-How, data, documentation and other information that comes in its and its Affiliates’ possession that constitutes Licensed Technology.

(e) Without limiting the foregoing Section 2.7(d), promptly after Licensee’s exercise of the option under Section 2.2 to obtain a license to the Second Product, Lipocine will transfer all ongoing Development activities to Licensee and Licensee shall assume all responsibilities and costs of continuing Development of the Second Product. Upon such transfer of Development activities to Licensee, Lipocine will deliver to Licensee an invoice of reasonable, documented expenses (consistent with Schedule 2.7(e)) incurred by or on behalf of Lipocine in its Development of the Second Product, including the cost associated with Clinical Trial(s), CMC, and other Development costs necessary for obtaining Regulatory Approval for the Second Product incurred by Lipocine between [***] and the date of Licensee’s exercise of the option under Section 2.2 with respect to the Second Product, and Licensee shall reimburse Lipocine for all such invoiced expenses within [***] days of Licensee’s receipt of invoice and all reasonable supporting documentation thereof; provided that, (i) if such expenses, in the aggregate, exceed the reimbursable amounts set forth in Schedule 2.7(e) by more than [***], Licensee shall only be obligated to reimburse Lipocine for the amounts set forth [***] unless Lipocine receives prior written approval from Licensee for such overage amounts and (ii) if Licensee does not exercise the option under Section 2.2, it shall have no obligation to pay for any such expenses.

(f) Beginning as of the Effective Date, Lipocine shall provide reasonable technical assistance and support to Licensee with respect to the transfers set forth in this Section 2.7. Lipocine agrees to make its employees reasonably available at their respective places of employment at Lipocine to consult with Licensee on issues arising during Development, Manufacturing or Commercialization and in connection with any request related to the Licensed Product from any Regulatory Authority, including regulatory, scientific, technical and clinical testing issues. Lipocine shall provide all such technical support provided by its employees at its own cost and expense. Lipocine agrees to permit Licensee to independently engage with Lipocine’s non-employee consultants who are knowledgeable about the subject matter of this Agreement and Lipocine shall authorize such consultants to assist Licensee with the technology transfer hereunder, [***].

2.8 Non-Compete.

(a) During the Term, neither Licensee nor any of its Affiliates shall develop, manufacture or commercialize, directly or indirectly, or in-license or otherwise acquire any oral pharmaceutical product containing testosterone undecanoate or testosterone tridecanoate, other than the Licensed Products, in or outside the Territory, inside or outside the Field.

(b) During the Term, and subject to Section 5.8 and Section 9.4, neither Lipocine nor any of its Affiliates shall develop, manufacture, or commercialize, directly or indirectly, or in-license or otherwise acquire any (i) injectable pharmaceutical product [***], or (ii) [***], oral pharmaceutical products containing testosterone in the Field in the Territory.

2.9 No Diversion. To the extent permitted by Applicable Laws, each Party shall use Commercially Reasonable Efforts not to, and shall use Commercially Reasonable Efforts to cause its Affiliates, licensees, sublicensees, distributors and wholesalers not to, (a) export, distribute, market, promote, offer for sale or sell the Licensed Products outside its territory (for Licensee, the Territory and for Lipocine, the rest of the world outside the Territory); or (b) distribute, market, promote, offer for sale or sell the Licensed Products to any Third Party inside its territory that is reasonably likely to directly or indirectly distribute, market, promote, offer for sale or sell the Licensed Product in the other Party’s territory, or distribute, market, promote, offer for sale or sell the Licensed Product to another Person that, in turn, will be reasonably likely to do so.

2.10 No Other Rights. Lipocine and Licensee each acknowledges and agrees that, except as expressly granted under this Agreement, no right, title, or interest of any nature whatsoever is granted whether by implication, estoppel, reliance, or otherwise, by either Party to the other Party. Any rights of a Party that are not specifically granted to the other Party herein are reserved.

2.11 Section 365(n). Notwithstanding any other provision of this Agreement to the contrary, the Parties expressly acknowledge and agree that in the event either Party becomes a debtor under Title 11 of the United States Code, 11 U.S.C. §§ 101-1532 (the “Bankruptcy Code”), or such equivalent law in the United States or any other country, and rejects (either as a debtor or on its behalf by a bankruptcy trustee) this Agreement pursuant to Section 365 of the Bankruptcy Code or any other equivalent law in the United States or any other country (a “Bankruptcy Rejection”), (a) all rights and licenses including the Licensed Technology, the Licensed Products, Improvements, Licensee Data, and New Lipocine Data, as applicable, granted under or pursuant to this Agreement, including amendments hereto, are, and will otherwise be deemed to be, for all purposes of Section 365(n) of the Bankruptcy Code, licenses of rights to intellectual property as defined in Section 101 of the Bankruptcy Code regardless of whether such intellectual property is domestic or foreign, and shall include all trademarks licensed to the Licensee under this Agreement, and all such intellectual property shall be fully retained by and vested in the licensee as protected (or deemed to be protected) intellectual property rights under Section 365(n) of the Bankruptcy Code regardless of whether the licensor Party files for bankruptcy in the United States or other jurisdiction; (b) the licensee Party shall have all of the rights and elections afforded to non-debtor licensees under Section 365(n) of the Bankruptcy Code.

ARTICLE 3

COMPENSATION

3.1 One-Time Payments. In partial consideration of the rights, option, and licenses granted by Lipocine hereunder, subject to the terms and conditions of this Agreement, Licensee shall pay to Lipocine a non-refundable, non-creditable payment of twenty one million U.S. Dollars (U.S. $21,000,000) as follows: (a) eleven million U.S. Dollars (U.S. $11,000,000) on the Effective Date, (b) five million U.S. Dollars (U.S. $5,000,000) on January 1, 2025 if no Generic Competing TU Product has Commercially Launched in the Territory as of such date, and (c) five million U.S. Dollars (U.S. $5,000,000) on January 1, 2026 if no Generic Competing TU Product has Commercially Launched in the Territory as of such date. For avoidance of doubt, the contingent payments under foregoing clauses (b) and (c) shall be deemed waived if a Generic Competing TU Product has Commercially Launched in the Territory as of January 1, 2025, and the contingent payments under foregoing clause (c) shall be deemed waived if a Generic Competing TU Product has Commercially Launched in the Territory between January 1, 2025 and January 1, 2026. In addition, subject to the terms and conditions of this Agreement, if Licensee exercises its option to obtain a license to the Second Product pursuant to Section 2.2, in partial consideration of the rights and licenses granted by Lipocine with respect to the Second Product, Licensee shall pay to Lipocine a non-refundable, non-creditable payment of (a) if Licensee had paid an option fee of one million U.S. Dollars (U.S. $1,000,000), then three million U.S. Dollars (U.S. $3,000,000) on or before the one (1) year anniversary date of the Effective Date and (b) if Licensee had paid an option fee of one million five hundred thousand U.S. Dollars (U.S. $1,500,000), then two million five hundred thousand U.S. Dollars (U.S. $2,500,000) on or before the one (1) year anniversary date of the Effective Date.

3.2 Development Milestone Payments. To the extent Licensee exercises the option under Section 2.2 and the Second Product becomes a Licensed Product, Licensee shall pay to Lipocine the non-refundable, non-creditable one-time milestone payments set forth below for the achievement by Licensee or its Affiliates or Sublicensees of each of the development milestone events set forth below, said milestone payments to be made upon no later than fifteen (15) days after the occurrence of such event:

Development Milestone Event		Payment
Successful Completion of a Phase 3 Trial for the Second Product in the Field in the Territory		[*] million U.S. Dollars (U.S. [*])
Receipt of Regulatory Approval from FDA for the Second Product		[*] million U.S. Dollars (U.S. [*])

If Licensee receives Regulatory Approval from FDA for the Second Product after the Commercial Launch of a Generic Product (excluding, however, a Generic Product subject to the last sentence of the definition of “Generic Product”) or Generic Competing TU Product, then the applicable [***] milestone payment shall be reduced to [***]. If, for any reason, Licensee receives Regulatory Approval from FDA for the Second Product without achieving the “Successful Completion of a Phase 3 Trial for the Second Product in the United States” milestone event, Licensee shall pay Lipocine the [***] milestone payment corresponding to such milestone event concurrently with Licensee’s milestone payment for receiving Regulatory Approval from FDA for the Second Product. The aggregate maximum of development milestone payments under this Section 3.2 shall in no event exceed thirty-five million U.S. Dollars (U.S. $35,000,000) (or [***] if Licensee receives Regulatory Approval from FDA for the Second Product after the Commercial Launch of a Generic Product (excluding, however, a Generic Product subject to the last sentence of the definition of “Generic Product”) or Generic Competing TU Product).

3.3 Commercial Milestone Payments. In further consideration of the rights and licenses granted by Lipocine hereunder, on an aggregate basis of Net Sales of all Licensed Products by Licensee, its Affiliates, or Sublicensees, Licensee shall pay to Lipocine the commercial milestone payments set forth below within [***] days from the end of the Calendar Year in which the corresponding commercial milestone event has been achieved:

Commercial Milestone Event		Payment
First achievement of Net Sales in the Territory reaching [***] in a single Calendar Year.		[***]

First achievement of Net Sales in the Territory reaching [***] in a single Calendar Year.		[***]

First achievement of Net Sales in the Territory reaching [***] in a single Calendar Year.		[***]

First achievement of Net Sales in the Territory reaching [***] in a single Calendar Year.		[***]

First achievement of Net Sales in the Territory reaching [***] in a single Calendar Year.		[***]

First achievement of Net Sales in the Territory reaching [***] in a single Calendar Year.		[***]

First achievement of Net Sales in the Territory reaching [***] in a single Calendar Year.		[***]

First achievement of Net Sales in the Territory reaching [***] in a single Calendar Year.		[***]

First achievement of Net Sales in the Territory reaching [***] in a single Calendar Year.		[***]

First achievement of Net Sales in the Territory reaching [***] in a single Calendar Year.		[***]

For avoidance of doubt, if Licensee, its Affiliates, or Sublicensees simultaneously achieves multiple commercial milestone events, Licensee shall simultaneously pay to Lipocine all milestone payments corresponding to all preceding commercial milestone events achieved. By way of example, if in a single Calendar Year Licensee achieves a Net Sales increase from [***], then Licensee shall pay to Lipocine a total of [***] corresponding to the milestone payments for crossing both the [***] and the [***] commercial milestone thresholds.

The payments set forth in this Section 3.3 corresponding to each commercial milestone event shall only be payable one (1) time with respect to any and all Licensed Products developed under this Agreement. For clarity, if a milestone is achieved by the aggregate Net Sales of a first Licensed Product and such milestone payment is made, then no repeat milestone payment is due for such milestone if such milestone is later achieved for a second time based on the Net Sales of a second Licensed Product. For further clarity, the Net Sales of such second Licensed Product shall be aggregated with the Net Sales of the first Licensed Product to determine when any unpaid milestone has been achieved. The aggregate maximum of commercial milestone payments under this Section 3.3 shall in no event exceed one hundred sixty million U.S. Dollars (U.S.$160,000,000).

3.4 Royalties

(a) Royalty Rates. In further consideration of the rights and licenses granted by Lipocine hereunder, Licensee shall pay to Lipocine a tiered royalty on aggregate annual Net Sales of all Licensed Product by Licensee, its Affiliates, or Sublicensees during the Royalty Term as follows:

Annual Net Sales		Royalty rate
That portion of aggregate annual Net Sales less than or equal to [***]		Fourteen percent [***]

That portion of aggregate annual Net Sales greater than [*] and less than or equal to [*]		Eighteen percent [***]

That portion of aggregate annual Net Sales greater than [***]		Twenty percent (20%)

For the avoidance of doubt, Licensee’s obligation to pay royalties under this Section 3.4 is imposed only once with respect to the same unit of Licensed Product, even if such Licensed Product is Covered by more than one (1) Valid Claim within the Licensed Patents.

(b) Minimum Royalty. Notwithstanding the foregoing Section 3.4(a) and any applicable royalty reductions under Section 3.4(f), Licensee shall pay to Lipocine a minimum royalty during [***]

(c) Payment of Royalties. Licensee shall pay all royalties due and payable on Net Sales of Licensed Products in each Calendar Quarter pursuant to this Section 3.4 within [***] days after the last day of each Calendar Quarter in which the applicable Net Sales underlying such royalties were billed or invoiced by Licensee, its Affiliate or its Sublicensee; provided, that if a Sublicense Agreement provides the Sublicensee with more than [***] days to comply with its payment and reporting requirements, then Licensee shall have up to an additional [***]days to comply with its payment and reporting requirements hereunder (i.e., no more than [***]days).

(d) Royalty Term. Notwithstanding anything to the contrary, the royalties under this Section 3.4 shall be payable in respect of each Licensed Product until, on a Licensed Product- by-Licensed Product basis, the period commencing with the First Commercial Sale of such Licensed Product until the later of (i) the expiry of the last-to-expire Valid Claim of a Licensed Patent that Covers such Licensed Product the Field in the Territory and (ii) ten (10) years after the First Commercial Sale of such Licensed Product in the Field in the Territory (the “Royalty Term”). On a Licensed Product-by-Licensed Product basis, upon the expiration of the Royalty Term, the license grants under Section 2.1 and Section 2.2(g) (if applicable) shall become perpetual, fully- paid up, royalty-free, and non-exclusive.

(e) Upstream Licensor. Lipocine shall be solely responsible for all royalty payments under the AbbVie Agreement.

(f) Royalty Reduction.

Generic Entry. On a Licensed Product-by-Licensed Product basis:

(A) In the event of a Commercial Launch of a Generic Product in the Territory which results in a decline in Net Sales of such Licensed Product of between [***] and [***] for any [***] consecutive Calendar Quarters compared to the Net Sales of such Licensed Product for the [***] consecutive Calendar Quarters immediately prior to the launch of such Generic Product, then the royalty payments under Section 3.4(a) shall be reduced by [***] for such Licensed Product until such time that such Generic Product (and any other equivalent Generic Product launched during the time that the first Generic Product is on the market) is no longer on the market.

(B) In the event of a Commercial Launch of a Generic Product in the Territory which results in a decline in Net Sales of such Licensed Product of greater than [***] for any [***] consecutive Calendar Quarters compared to the Net Sales of such Licensed Product for the [***] consecutive Calendar Quarters immediately prior to the launch of such Generic Product, then the royalty payments under Section 3.4(a) shall be reduced by [***] for such Licensed Product until such time that such Generic Product (and any other equivalent Generic Product launched during the time that the first Generic Product is on the market) is no longer on the market.

(C) In the event of a Commercial Launch of a Generic Competing TU Product in the Territory which results in a decline in Net Sales of the First Product of greater than [***] for any [***] consecutive Calendar Quarters compared to the Net Sales of the First Product for the [***] consecutive Calendar Quarters immediately prior to the launch of such Generic Competing TU Product, then the royalty payments under Section 3.4(a) shall be reduced by [***] for the First Product until such time that such Generic Competing TU Product (and any other equivalent Generic Competing TU Product launched during the time that the first Generic Competing TU Product is on the market) is no longer on the market.

ii. Third Party Intellectual Property. Excluding any royalty payments due and payable by Lipocine under the AbbVie Agreement or that are owed by Licensee pursuant to Section 5.8(b), if Licensee determines in good faith that intellectual property rights controlled by a Third Party are necessary for (a) the Development or Commercialization of a Licensed Product in the Field in the Territory or (b) the Manufacture of a Licensed Product in or outside of the Territory, Licensee may reduce the royalty payments under Section 3.4(a) by deducting [***] of all amounts paid by Licensee to such Third Party for rights to such Third Party’s intellectual property; provided that, Licensee shall use Commercially Reasonable Efforts to negotiate commercially reasonable terms for such rights and shall seek Lipocine’s prior written consent in accordance with Section 5.5 prior to entering into an agreement with respect thereto, such consent not to be unreasonably withheld, conditions, or delayed.

iii. [***]

iv. Authorized Generic. The royalty rate for a Licensed Product that is an Authorized Generic Product shall not exceed [***] of the Net Profit Margin for such Authorized Generic Product. If the royalty rate for a Licensed Product that is an Authorized Generic Product exceeds [***] of the Net Profit Margin, then the royalty rate for such Authorized Generic Product shall be reduced to [***] of the Net Profit Margin for such Authorized Generic Product.

v. Maximum Reduction. The maximum aggregate reduction with respect to each applicable Licensed Product during any Calendar Quarter pursuant to this Section 3.4(f) shall be capped at [***] of the amount of the royalty that would be payable under Section 3.4(a) prior to any such reductions.

3.5 Payment Method. All payments made by Licensee under this Agreement shall be made in U.S. Dollars, and such payments shall be made by check or wire transfer to one or more bank accounts to be designated in writing by Lipocine.

3.6 Late Payment Interest. Any undisputed payment due and payable to Lipocine under the terms and conditions of this Agreement, including any royalty payment, made by Licensee after the date such payment is due and payable shall bear interest as of the day after the date such payment was due and payable and shall continue to accrue such interest on a monthly basis until such payment is made at a rate equal to the lesser of either (a) [***] as reported by the Wall Street Journal, New York Edition, as of the date such payment was due and payable, or (b) the maximum rate permitted by Applicable Law.

3.7 Records and Reports.

(a) Within [***] days of the end of each Calendar Quarter, Licensee shall provide to Lipocine a good faith estimate of the Net Sales of each Licensed Product during such Calendar Quarter. Concurrent with each royalty payment made in accordance with Section 3.4(c), Licensee shall provide a report to Lipocine describing in reasonable detail the calculations of all royalty payments owed to Lipocine from such Calendar Quarter, including the gross amount billed or invoiced by Licensee, its Affiliate or Sublicensee for sale or other disposition of Licensed Products, the itemized deductions against such gross amount in accordance with Section 1.97 in order to determine Net Sales, and the royalty rate applied.

(b) Licensee shall maintain complete and accurate records sufficient to enable accurate calculation of royalties and other payments due to Lipocine hereunder. Such records and books of account shall be preserved by Licensee for a period of at least [***]years after the end of the period covered by such records and books of account, which obligation shall survive termination of this Agreement.

(c) Licensee must ensure that its Sublicensees provide reports and keep records in a manner consistent with this Section 3.7. Licensee shall provide reports received from Sublicensees to Lipocine with the applicable payment.

3.8 Taxes. Licensee may withhold from payment made to Lipocine under this Agreement any income tax required to be withheld by Licensee under Applicable Law. If any tax is withheld by Licensee, Licensee shall provide Lipocine receipts or other evidence of such withholding and payment to the appropriate tax authorities on a timely basis following that tax payment. Each Party agrees to cooperate with the other Party in claiming refunds or exemptions from such deductions or withholdings under any Applicable Law which is in effect. The Parties shall discuss applicable mechanisms for minimizing taxes to the extent possible in compliance with Applicable Law. In addition, the Parties shall cooperate in accordance with Applicable Law to minimize indirect taxes (such as value added tax, sales tax, consumption tax and other similar taxes) in connection with this Agreement.

3.9 Audit Rights. Licensee shall permit an independent public accountant designated by Lipocine and acceptable to Licensee (such acceptance not to be unreasonably denied, conditioned, or delayed), to have access, no more than [***] in each Calendar Year during the Term and for the [***] Calendar Years following the termination or expiration of this Agreement, during regular business hours and upon at least [***] days written notice, to Licensee’s records and books to the extent necessary to determine the accuracy of Net Sales reported and payments made by Licensee to Lipocine within the [***]year period immediately preceding such an audit. No period will be audited more than once unless an audit uncovers a material inaccuracy that is disputed by a Party, in which event a further audit will be permitted in order to facilitate dispute resolution. Before beginning its audit, the independent public accountant shall enter into a confidentiality agreement acceptable to Licensee pursuant to which such independent public accountant shall keep confidential all information reviewed during such audit. The independent public accountant shall disclose to each Party only (a) the accuracy of Net Sales reported and the basis for royalty and other payments made to Lipocine under this Agreement and (b) the difference, if any, such reported and paid amounts vary from amounts determined as a result of the audit. If such examination results in a determination that Net Sales or payments have been misstated, over or under paid amounts due shall be paid promptly to the appropriate Party. If Net Sales are understated by greater than [***], the fees and expenses of such accountant shall be paid by Licensee; otherwise the fees and expenses of such accountant shall be paid by Lipocine. All matters reviewed by such independent public accountant shall be deemed Confidential Information of Licensee subject to Article 6.

ARTICLE 4

PRODUCT ACTIVITIES

4.1 Diligence.

(a) Licensee shall use Commercially Reasonable Efforts to Develop and Commercialize the Licensed Products in the Field in the Territory and Manufacture the Licensed Products in or outside of the Territory, either directly or through an Affiliate or Sublicensee. Licensee shall use Commercially Reasonable Efforts to obtain and maintain all necessary Regulatory Approvals in connection with the foregoing obligations. Without limiting the foregoing, Licensee shall use Commercially Reasonable Efforts to perform Development activities relating to the Second Product in accordance with the Development Plan (including as reasonably amended from time-to-time).

(b) Without limiting Licensee’s obligations under Section 4.1(a) and to the extent Licensee exercises the option under Section 2.2 and the Second Product becomes a Licensed Product, Licensee shall use Commercially Reasonable Efforts to initiate a Phase 3 Trial of the Second Product by no later than [***] for purposes of obtaining Regulatory Approval of the Second Product in the Field in the Territory.

4.2 Joint Development Committee.

(a) Upon the Effective Date, the Parties shall establish a joint committee dedicated to overseeing Licensee’s Development of the Licensed Products in the Field in the Territory (the “Joint Development Committee” or the “JDC”). Each Party shall appoint [***] representatives who possess a general understanding of Development matters to act as its representatives on the JDC. Each Party shall designate one of its representatives as a co-chair of the JDC. Each co-chair shall serve as the primary single point of communication within the respective Party’s organization with respect to JDC activities, confer with the co-chair of the other Party regarding JDC logistics and issues and disputes to be raised during JDC meetings, and ensure each Party’s compliance with the rules governing the JDC. Each Party may replace one or more of its representatives (including the co-chair), in its sole discretion, effective upon written notice to the other Party of such change. Each Party’s representatives on the JDC, and any replacement for any such representative, shall be bound by the obligations of confidentiality set forth in Article 6. Each Party shall be responsible for all of its own expenses incurred in connection with participating in all such meetings.

(b) The JDC shall, consistent with the terms and conditions set forth in this Agreement:

i. review and promptly comment on the initial Development Plan for the Second Product for obtaining Regulatory Approval in the Territory (to the extent Licensee exercises the option under Section 2.2 and the Second Product becomes a Licensed Product);

ii. review and promptly comment on any material updates or amendments to the Development Plan;

iii. keep Lipocine reasonably informed, at each JDC meeting, as to the progress of Licensee’s material Development activities under the Development Plan;

iv. review and promptly comment on material Development activities not otherwise included in the Development Plan, including any Phase 4 Trials and other Clinical Trials to be conducted by Licensee to amend the label for a Licensed Product such as to change in dosage forms, strengths, indications or other modifications;

v. keep the other Party reasonably informed of any Licensee Improvements, Lipocine Improvements or Joint Improvements;

vi. subject to Section 4.5 and solely to the extent necessary to effectuate Section 4.5, keep the other Party reasonably informed of the creation of any new Licensee Data or New Lipocine Data generated by a Party or its Representatives (but for clarity, this Section 4.2(b)(vi) shall not permit any access to any Licensee Data or New Lipocine Data by the non-Data Generating Party, which access shall be subject to the terms and conditions of Section 4.5); review and promptly comment on material Regulatory Documentation and material amendments thereto for the Licensed Products prior to submission by Licensee to FDA;

vii. review and approve any material aspects of Clinical Trials in accordance with Section 4.4(b);

viii. perform any and all tasks and responsibilities that are otherwise expressly attributed to the JDC under the Agreement; and

ix. perform such other functions as the Parties may mutually agree in writing.

For the avoidance of doubt, should Licensee determine that JDC review and comment in accordance with this Section 4.2(b) is materially hindering its Development activities hereunder (e.g., review is taking an unreasonably long time) due to Lipocine’s representative(s)’s action, inaction or omission, Licensee may proceed with its planned Development activities prior to receipt of comment from the JDC, provided that Licensee’s decision to proceed is consistent with its obligations to use Commercially Reasonable Efforts with respect to Development hereunder. Notwithstanding the foregoing, nothing in this Section 4.2, shall prevent Licensee from taking action to address a safety concern.

(c) To the extent Licensee exercises the option under Section 2.2 and the Second Product becomes a Licensed Product, the JDC shall meet at least (i) [***] per Calendar Quarter until Regulatory Approval of the Second Product and (ii) for the remainder of the Term, at least [***] per Calendar Year. If the First Product is the only Licensed Product, the JDC shall meet at least [***] per Calendar Year during the Term. The location of JDC meetings shall alternate between locations designated by Lipocine and locations designated by Licensee. The co-chairs of the JDC shall be responsible for calling meetings on reasonable prior notice. Each Party shall use reasonable efforts to make all proposals for agenda items and to provide all appropriate information with respect to such proposed items reasonably in advance of the applicable meeting. The co-chairs may suggest topics for the agenda for JDC meetings and prepare and circulate to the JDC for review and approval of the Parties’ minutes of each meeting within [***] days of a JDC meeting. The Parties shall agree on the minutes of each meeting as promptly as practicable following receipt of the initial draft minutes of such meeting. Representatives of the Parties on the JDC may attend meetings by telephone, videoconference or in person; provided that each participant in any meeting held by telephone or videoconference can hear what is said by, and be heard by, all other participants. Until Regulatory Approval of the Second Product (if applicable), at least [***] (1) JDC meeting per year shall be held in person, unless by reason of a Force Majeure Event, travel or in-person meeting cannot reasonably occur. A quorum of the JDC shall exist whenever there is present at a meeting at least [***] representative appointed by each Party. As appropriate, and upon at least [***]business days’ prior written notice to the other Party, a Party may allow its other employees or a Third Party to attend JDC meetings as observers; provided, however, that a Party shall not allow a Third Party to attend a JDC meeting without the other Party’s prior written consent, not to be unreasonably withheld, conditioned or delayed; and provided further, however, that each such additional attendee (i) shall not participate in the decision-making process of the JDC and (ii) shall agree in writing to be bound by obligations of confidentiality and non-disclosure consistent with those set forth in Article 6. Each Party may also call for special meetings of the JDC with reasonable prior written notice to the other Party (it being agreed that at least [***] business days shall constitute reasonable notice) to resolve particular matters requested by such Party and within the decision-making responsibility of the JDC. Each Party shall be responsible for all of its own expenses incurred in connection with participating in all such meetings.

(d) Each Party shall provide the JDC such material information as required under this Agreement or as otherwise reasonably requested by the other Party and reasonably available to such Party to enable the other Party to perform its material obligations under this Agreement, in each case relating to the progress of material activities under the Development Plan and other agreed upon material activities with respect to each Licensed Product.

(e) If a dispute arises that cannot be resolved by the JDC through good faith discussions, the co-chair of either Party may cause such dispute to be referred to their respect Party’s respective Executives for resolution. Such Executives (or their designees) will in good faith seek to resolve the matter within [***] days after the matter has been referred to them, or within such longer time period as the Parties may mutually agree upon. In the event that consensus cannot be reached with respect to a decision after a meeting of the Executives, then Licensee shall have the final decision-making authority for all Development activities, provided that Licensee’s decision is consistent with its obligations to use Commercially Reasonable Efforts with respect to Development hereunder.

(f) The JDC shall not have any authority beyond the authority with respect to the matters expressly set forth in this Agreement nor any power to amend, modify or waive compliance with this Agreement. In furtherance thereof, each Party shall retain the rights, powers and discretion granted to it under this Agreement and no such rights, powers or discretion shall be delegated or vested in the JDC unless such delegation or vesting of rights is expressly provided for in this Agreement or the Parties expressly so agree in writing.

4.3 Development.

(a) Subject to its obligation to use Commercially Reasonable Efforts as further set forth in Section 4.1(b), Licensee shall have sole control over and decision-making authority with respect to the Development of all Licensed Products in the Field in the Territory, including the conduct of any Clinical Trials (including Phase 4 Trials) necessary to obtain and maintain Regulatory Approval of the Licensed Products in the Field in the Territory. All Data obtained from Clinical Trials conducted by Licensee shall be Licensee Data.

(b) Lipocine shall be responsible for the Development of all Licensed Products outside the Field in the Territory and outside of the Territory, inside or outside the Field, and all costs and expenses for such Development, including conduct of any Clinical Trials (including Phase 4 Trials) necessary to obtain and maintain Regulatory Approval of the Licensed Products outside the Field in the Territory and outside of the Territory, inside or outside the Field. All Data obtained from Clinical Trials conducted by Lipocine shall be New Lipocine Data.

4.4 Development Plan.

(a) The significant Development activities related to Licensee’s Development of the Second Product in the Field in the Territory will be set forth in the Development Plan, as such may be revised by Licensee in its sole discretion from time to time. [***].

(b) [***]

4.5 Development Data and Costs.

(a) Except as set forth in this Section 4.5, each Party shall bear one hundred percent (100%) of all costs and expenses for Development activities for which it has responsibility under Section 4.3. If either Party desires to conduct a Clinical Trial which is expected to generate Data that is reasonably likely to be useful for the Development or Commercialization of a Licensed Product in the other Party’s territory or field, then such Party shall discuss with the other Party in good faith splitting of the costs and expenses of such Clinical Trial or CMC, and upon reaching written agreement regarding cost-splitting, the Parties shall negotiate in good faith a license agreement with respect to such Data that contains the licenses set forth in Section 4.5(c).

(b) If the Parties choose to not to equally share the costs of such Clinical Trial or CMC and one Party nonetheless conducts such Clinical Trial or CMC at its own cost and expense (“Data Generating Party”), then upon completion of such Clinical Trial or CMC, the other Party (“Option Party”) shall not have the right to access the Data arising therefrom for any reason; provided however that such Option Party shall have an option to acquire rights to such Data in accordance with the following:

i. Upon completion of such Clinical Trial or CMC, the Data Generating Party shall promptly provide written notice to the Option Party of such completion. Following receipt of such written notice, the Option Party shall have the right, at any time during the Term, to notify the Data Generating Party of its desire to acquire rights to New Lipocine Data (if Licensee is the Option Party) or Licensee Data (if Lipocine is the Option Party), as applicable. Upon receipt of such notice, the Parties shall negotiate in good faith a license agreement with respect to such New Lipocine Data or Licensee Data, as applicable, that contains the licenses set forth in Section 4.5(c), provided that: [***].

4.6 Regulatory Responsibilities and Costs.

(a) On and after the Effective Date, Licensee shall bear one hundred percent (100%) of all costs and expenses associated with regulatory activities related to the Licensed Products in the Field in the Territory, including preparation and submission of Regulatory Documentation to obtain and maintain Regulatory Approvals, and shall use Commercially Reasonable Efforts thereto.

(b) Lipocine representatives shall have the right, but no obligation, to attend as an observer any meeting (whether in person or by electronic means) between Licensee and FDA regarding the Licensed Products. Upon Lipocine’s request, Licensee shall provide copies of all Regulatory Documentation (excluding any Licensee Data contained therein unless the Parties enter into a license agreement with respect thereto in accordance with Section 4.5 or unless that portion of Licensee Data is safety data required to be disclosed to a Regulatory Agency pursuant to pharmacovigilance obligations outside the Territory (in accordance with a pharmacovigilance agreement entered into between the Parties)) regarding the Licensed Products Controlled by Licensee including all correspondence between Licensee and FDA related to the Licensed Products in the Territory.

(d) Licensee shall be responsible for ensuring, at its sole expense, that the Development and Commercialization of all Licensed Products in each applicable jurisdiction within the Territory are in compliance with Applicable Laws in all material respects, including all rules and regulations promulgated by applicable Regulatory Authorities. Specifically and without limiting the foregoing, Licensee shall file all compliance filings, certificates and safety reporting for the Licensed Products at its sole expense in the Territory.

(e) Licensee shall, at its own cost and expense, control and conduct all pharmacovigilance and medical affairs activities in the Territory for the Licensed Products. To the extent the Licensed Products are Developed or Commercialized by Lipocine outside the Field in the Territory or outside of the Territory, inside or outside the Field, Licensee and Lipocine (or Lipocine’s licensee as applicable) will enter into a pharmacovigilance agreement outlining their respective obligations with respect to pharmacovigilance.

(f) Licensee shall be responsible, at its own cost and expense, for taking all actions related to adverse event reporting and other regulatory obligations for the Licensed Products in the Territory that are legally required of the holder of a Regulatory Approval application, license, registration or authorization.

4.7 Manufacturing.

(a) Licensee shall be solely responsible for Manufacturing the Licensed Products for Licensee’s Development and Commercialization purposes. Licensee shall use Commercially Reasonable Efforts to initiate Manufacturing of the Second Product (if applicable) in accordance with the timelines set forth in the Development Plan.

(b) Should Lipocine notify Licensee that it wishes to obtain a supply of Licensed Product for clinical or non-clinical use from Licensee following the Effective Date (“Licensee Supplied Product”), the Parties shall in good faith negotiate a supply agreement (which shall incorporate the terms set forth in Schedule 4.7, in addition to other commercially reasonable and customary terms) and accompanying quality agreement, which shall collectively govern Licensee’s use of Commercially Reasonable Efforts to supply Lipocine with Licensee Supplied Product in bulk capsule form (i.e. not packaged or finished product) from Licensee’s existing inventory, in each case for use outside the Field in the Territory or outside the Territory inside or outside the Field.

(c) Notwithstanding the foregoing clauses of this Section 4.7, Lipocine may continue and maintain Manufacturing relationships with contractors and suppliers that exist as of the Effective Date and to use such contractors and suppliers to supply Licensed Products to Lipocine in accordance with its retained rights set forth in Section 2.2(a).

4.8 Existing Inventory. In accordance with Schedule 4.8-A, within [***] days of (a) the Effective Date with respect to the First Product or (b) the option exercise date with respect to the Second Product, Licensee shall purchase from Lipocine the Licensed Products, raw materials, excipients, active pharmaceutical ingredients, and other works in progress for the Licensed Products set forth on Schedule 4.8-B (collectively, “Existing Inventory”) at the prices for the Existing Inventory as set forth on Schedule 4.8-B. For clarity, (i) Licensee’s purchase obligations under this Section 4.8 are subject to the testing and acceptance procedures set forth in Schedule 4.8-A and only apply to that portion of the Existing Inventory that is of sufficient quality (as determined by such testing and acceptance procedures set forth in the approved specifications) and shelf-life to be usable by Licensee for Development, Manufacturing, or Commercialization of the Licensed Products, (ii) Licensee is not obligated to purchase any Licensed Products, raw materials, excipients, active pharmaceutical ingredients, and other works in progress for the Licensed Products, except as expressly set forth on Schedule 4.8-B, and (iii) all references to the Second Product in Schedule 4.8 shall apply if and only if Licensee exercises the option with respect to the Second Product pursuant to Section 2.2. Notwithstanding anything to the contrary in this Agreement, in the event all or a substantial portion (i.e., equal to or greater than [***]) of the finished bulk product of the Existing Inventory (i.e. finished capsules in bulk packaging and, for clarity, not raw materials or API) set forth in Schedule 4.8-B fails the testing and acceptance procedures set forth in Schedule 4.8-A, the [***]month periods after receipt of final FDA Regulatory Approval set forth in Sections 4.9 and 9.2(c) for the First Product shall automatically be modified to be [***]months after Licensee’s CMO supplies Licensee sufficient quantities of finished and labelled First Product meeting all quality requirements to launch the First Product in the Field in the Territory.

4.9 Commercialization. Licensee shall bear one hundred percent (100%) of all costs and expenses associated with Commercialization of the Licensed Products in the Field in the Territory. Licensee shall use Commercially Reasonable Efforts to complete the First Commercial Sale of each Licensed Product (if Licensee exercises its option to include the Second Product under this Agreement in accordance with Section 2.2) in the Field in the Territory no later than [***] months after receipt of final FDA Regulatory Approval for such Licensed Product.

4.10 Commercialization Plan. Commencing at least [***] days prior to the projected First Commercial Sale of each Licensed Product in the Territory, Licensee shall deliver to Lipocine a Commercialization Plan for the applicable Licensed Product for review and comment, [***].

ARTICLE 5

INTELLECTUAL PROPERTY

5.1 Intellectual Property Ownership.

(a) The Parties agree that ownership of all Inventions shall be allocated based on inventorship, as determined in accordance with U.S. law governing inventorship and shall apply for all Inventions. Each Party shall disclose to the other Party, all Inventions arising under this Agreement and made, created or discovered by it or its employees, representatives, or agents, in writing after the actual or constructive reduction to practice of such Inventions as soon as practicable.

(b) Subject to the rights granted hereunder to Licensee, Lipocine shall own all right, title and interest in and to all (i) Licensed Technology, (ii) Lipocine Inventions (including Lipocine Improvements), (iii) Lipocine’s undivided [***] interest in and to all Joint Inventions (including Joint Improvements), and (iv) New Lipocine Data and intellectual property rights therein.

(c) Subject to the rights granted hereunder to Lipocine, Licensee shall own all right, title and interest in and to all (i) Licensee Inventions (including Licensee Improvements), (ii) Licensee’s undivided [***] in and to all Joint Inventions (including Joint Improvements), and (iii) Licensee Data and intellectual property rights therein.

(d) The Parties shall jointly own all Joint Inventions (including Joint Improvements). Subject to the rights granted by a Party to the other Party hereunder, (i) neither Party will have any obligation to obtain any approval or consent of, nor pay a share of the proceeds to or account to, the other Party to practice, enforce, license, assign or otherwise exploit any Joint Inventions (including Joint Improvements), and each Party hereby waives any right it may have under the laws of any jurisdiction to require such approval, consent or accounting; and (ii) each Party hereby grants to the other Party a nonexclusive, royalty-free, worldwide license, with the right to grant sublicenses through multiple tiers (except as otherwise expressly provided in this Agreement) under their undivided interest in the Joint Inventions (including Joint Improvements), to exploit the Joint Inventions.

5.2 Patent Maintenance and Prosecution.

(a) Subject to Section 5.2(d), Lipocine shall be responsible, in its sole discretion and at its sole expense, for Prosecuting the Licensed Patents and any Patents Covering Lipocine Inventions.

(b) Subject to Section 5.2(d), Licensee shall be responsible, in its sole discretion and at its sole expense, for Prosecuting any Patents Covering Licensee Inventions (including Licensee Improvements).

(c) Subject to Section 5.2(d), the Parties shall be jointly responsible for Prosecuting any Patents Covering Joint Inventions (and not otherwise included in the Licensed Patents). The Parties shall [***] share the cost of initial drafting and preparation of the patent applications Covering Joint Inventions (including Joint Improvements), and thereafter, Licensee shall be responsible for all Prosecution costs in the Territory and Lipocine shall be responsible for all Prosecution costs outside the Territory. At all times, the Parties shall use good faith effort to coordinate their Prosecution strategy, shall make available to each other copies of all material correspondence and submissions with any patent office regarding the Patents being prosecuted hereunder, and reasonably consider any comments from the other Party. If a Party confirms in writing that it declines its Prosecution responsibility or its share the costs and expenses, then the remaining Party shall take full responsibility at its sole cost and expense, and the first Party shall no longer have rights to control Prosecution of such Patents.

(d) The Party having Prosecuting responsibilities (“Prosecuting Party”) under this Section 5.2 shall keep the other Party (“Non-Prosecuting Party”) reasonably informed with respect to its Prosecuting activities, consult in good faith with the Non-Prosecuting Party regarding such activities, provide the Non-Prosecuting Party with copies of all material correspondence with applicable patent authority, consider in good faith any comments from the Non-Prosecuting Party, and provide the Non-Prosecuting Party with final copies of all documents submitted to or received from with applicable patent authority. If the Prosecuting Party decides to cease activities relating to Prosecuting any U.S. Licensed Patents for which it is responsible, such Party shall provide written notice thereof to the other Party and discuss in good faith with the other Party the reasons for ceasing such activities. Thereafter, the Non-Prosecuting Party may, but is not required to, undertake, at its sole expense and in its sole discretion, the Prosecution of such U.S. Licensed Patent, and the Prosecuting Party shall cooperate to enable the Non-Prosecuting Party to do so, provided, however, Licensee may offset any out-of-pocket cost and expense incurred by Licensee in prosecuting any U.S. Licensed Patents by deducting such amounts from the royalties owed to Lipocine, subject to the royalty reduction cap under Section 3.4(f)ii. Without limiting the foregoing, Lipocine agrees to not abandon any issued patents within the U.S. Licensed Patents during the Term without Licensee’s prior written consent, which consent shall not be unreasonably withheld, delayed or conditioned.

(e) [***]

5.3 Patent Term Extension. The Parties will cooperate with each other in gaining extensions of Patent term where applicable to a Licensed Product in the Territory. In the event of any disagreement, Lipocine shall have final authority as to term extension.

5.4 Enforcement.

(a) Notification. Each Party shall promptly notify the other Party when it becomes aware of any infringement misappropriation, or violation of any of the Licensed Technology (“Enforceable IP”) by a Third Party in the Field in the Territory that becomes known to such Party.

(b) [***]

5.5 Cooperation. In any action under Section 5.4, the Parties shall provide each other with reasonable cooperation, and, upon the request and at the expense of the Party bringing suit, the other Party shall make available to the Party bringing suit, at reasonable times and under appropriate conditions, all relevant personnel, records, papers, information, samples, specimens, and the like in its possession. Notwithstanding any other provision of this Article 5, neither Party shall make any settlements of any suit, proceeding or action relating to an infringement, misappropriation or violation of Enforceable IP in the Field in the Territory under Section 5.4 without first obtaining such other Party’s prior written consent, such consent not to be unreasonably withheld, conditioned, or delayed.

5.6 Defense Against Third Party Claims.

(a) Notification. Each Party shall promptly notify the other Party when it becomes aware of any claim by a Third Party that the activities of a Party relating to a Licensed Product infringe Patent rights or misappropriate other intellectual property rights of such Third Party.

(b) Defense. If a Licensed Product in the Field in the Territory becomes the subject of a Third Party’s claim or assertion of infringement, misappropriation, or violation of a Third Party’s intellectual property rights, the Party first having notice of the claim or assertion shall promptly notify the other Party, and the Parties shall promptly confer to consider the claim or assertion and the appropriate course of action. Unless the Parties otherwise agree in writing, each Party shall have the right to defend itself against a suit that names it as a defendant (the “Defending Party”), provided, however, subject to Section 5.8, [***] .

5.7 Third Party Declaratory Judgment or Patent Challenges. If a Third Party asserts, in a declaratory judgment action, administrative proceeding (e.g. inter partes review), or similar action, that a Licensed Patent is invalid or unenforceable, then the Party first becoming aware of such action or claim shall promptly give written notice to the other Party. The Party having the right to prosecute such Patent rights under Section 5.2 shall use Commercially Reasonable Efforts to defend against such action or claim. Any costs and expenses with respect to such defense with respect to such Patent rights shall be borne by the Party or Parties responsible for the expenses of prosecuting such Patent rights, and the Parties shall reimburse one another for such expenses in the same manner as the Parties are to bear and reimburse one another for the expenses relating to prosecution and maintenance of Patent rights in accordance with Section 5.2. If such Party fails, notwithstanding the foregoing, to assume such defense and use Commercially Reasonable Efforts in respect to any Licensed Patent, the other Party shall have the right to defend against such action or claim at such other Party’s expense.

5.8 Clarus Dispute.

(a) Settlement. Licensee acknowledges that Lipocine and Clarus have entered into a Confidential Settlement Agreement, dated July 13, 2021, attached hereto as Exhibit 6 (the “Clarus Settlement Agreement”). Lipocine acknowledges and agrees that Licensee’s written consent shall be required for any amendment to the Clarus Settlement Agreement. [***]

(b) [***]

5.9 Trademark.

(a) During the Term, Licensee shall be the sole owner of the Assigned Trademarks and solely responsible, at its own cost, for the registration, filing, and maintenance of the Assigned Trademarks. Licensee shall keep Lipocine reasonably informed with respect to such activities, consult in good faith with Lipocine regarding such activities, and provide Lipocine with copies of all of material communications and filings with the trademark authority. Licensee shall not abandon the Assigned Trademark without Lipocine’s prior written consent. In the event Licensee materially fails to fulfill its obligations under this Section 5.9 and such failure materially adversely affects Lipocine or the Assigned Trademarks, Licensee shall assign back to Lipocine the Assigned Trademark and all associated goodwill therein within [***] days following notice of such failure from Lipocine if Licensee fails to cure such failure within such [***] day notice period. In the event the Assigned Trademark and all associated goodwill is assigned back to Lipocine, such Assigned Trademark and all associated goodwill shall automatically be deemed licensed to Licensee and shall be considered Licensed Technology, subject to the terms and conditions of this Agreement, including Section 5.9(c).

(b) In addition to the Assigned Trademark, Licensee shall have the right to use and apply for additional trademarks for Licensed Products (including for the Second Product if applicable) for use in the Field in the Territory (“Additional Trademarks”). Licensee shall be the sole owner of any Additional Trademarks and shall be solely responsible, at its own cost, for the registration, filing, and maintenance of any Additional Trademark. For avoidance of doubt, subject to Section 5.9(c), Lipocine shall have the right to use and apply for any trademark for Licensed Products outside the Field in the Territory and outside the Territory inside or outside the Field.

(c) Neither Party shall, directly or indirectly: (i) use in their respective businesses, any trademark that is confusingly similar to, misleading or deceptive with respect to or that dilutes any Assigned Trademark or Additional Trademark, (ii) do any act which endangers, destroys, or similarly affects, in any material respect, the value of the goodwill pertaining to the Assigned Trademark or Additional Trademark, or (iii) attack, dispute, or contest the validity of or ownership of the Assigned Trademark or Additional Trademark. Licensee shall conform to the customary industry standards for the protection of the Assigned Trademark and Additional Trademark with respect to manner of use of the Assigned Trademark and Additional Trademark in the Field in the Territory.

(d) Licensee shall include, to the extent permitted by Applicable Law, on the label or package insert of each unit of Licensed Product intended for sale a statement that such Licensed Product (but not the Assigned Trademark) “is produced under license from Lipocine, Inc.” or a similar phrase as mutually agreed by the Parties. Licensee shall mark the Licensed Products with the patent numbers of all applicable Licensed Patents, consistent with Applicable Laws, including patent marking statutes.

5.10 Domain Names.

(a) During the Term, Licensee shall be solely responsible, at its own cost, for the registration and maintenance of the Assigned Domain Names. Licensee shall not abandon the Assigned Domain Names without Lipocine’s prior written consent. In the event Licensee materially fails to fulfill its obligations under this Section 5.10 and such failure materially adversely effects Lipocine or the Assigned Domain Names, Licensee shall assign back to Lipocine the Assigned Domain Names within [***]days following notice of such failure from Lipocine if Licensee fails to cure such failure within such [***] day notice period. In the event the Assigned Domain Names are assigned back to Lipocine, such Assigned Domain Names shall automatically be deemed licensed to Licensee and shall be considered Licensed Technology subject to the terms and conditions of this Agreement.

(b) In addition to the Assigned Domain Names, Licensee shall have the right to apply for additional domain names for the Licensed Product (“Additional Domain Names”) in its sole discretion. Licensee shall be the sole owner of any Additional Domain Name and shall be solely responsible, at its own cost, for registration and maintenance of any Additional Domain Name.

ARTICLE 6

CONFIDENTIALITY

6.1 Confidentiality Obligations. Each Party agrees that, during the Term and for seven (7) years thereafter, all Confidential Information of the other Party shall be maintained in strict confidence, and shall not be used for any purpose other than the purposes expressly permitted by this Agreement, and, subject to Section 6.2, shall not be disclosed to any Third Party. The foregoing obligations will not apply to any information to the extent that it can be established by competent proof that such information:

(a) was already known to the recipient as evidenced by its written records, other than under an obligation of confidentiality, at the time of disclosure;

(b) had been independently developed by or for the receiving Party without reference to, use, or disclosure of the disclosing Party’s Confidential Information.

(c) was generally available to the public or was otherwise part of the public domain at the time of its disclosure to the recipient;

(d) became generally available to the public or otherwise becomes part of the public domain after its disclosure and other than through any act or omission of the recipient in breach of this Agreement; or

(e) was subsequently lawfully disclosed to the recipient by a Third Party other than in contravention of a confidentiality obligation of such Third Party to the disclosing Party.

6.2 Permitted Usage. Each Party may use and disclose Confidential Information of the other Party, in accordance with this Agreement, as follows: (a) under appropriate confidentiality provisions no less restrictive than those in this Agreement, in connection with the performance of its obligations or exercise of rights granted to or retained by such Party; (b) in connection with the Prosecution of patents or enforcement of Enforceable IP, in accordance with this Agreement; (c) in connection with prosecuting or defending litigation arising out of or relating to this Agreement; (d) for complying with Applicable Law, including rules of the Securities Exchange Commission or of any stock exchange (including NASDAQ), filing for, obtaining and maintaining Regulatory Approvals, maintaining licensure with state regulatory bodies, complying with applicable court orders or governmental regulations, or as otherwise required by Applicable Law, but provided that if a Party is required by Applicable Law to make any disclosure of the other Party’s Confidential Information, it will give reasonable advance notice to the other Party of such disclosure requirement, it will disclose only for the sole purpose of and solely to the extent required by such Applicable Law, and it will use Commercially Reasonable Efforts to secure confidential treatment of such Confidential Information required to be disclosed; (e) in connection with obtaining financing, insurance, or investments or similar activity, to any financial advisors, accountants, potential sublicensees, investors, or potential acquirers, but provided that any such Person receiving the Confidential Information has a binding obligation of confidentiality, through written contract or professional code of conduct, to the Party disclosing such Confidential Information that is substantial similar to the obligations of confidentiality herein.

6.3 Terms of Agreement. The terms of this Agreement shall be Confidential Information of both Parties, and subject to the terms of this Article 6. Prior to any disclosure of this Agreement in accordance with Section 6.2 to comply with rules of the Securities Exchange Commission or of any stock exchange (including NASDAQ), to the extent not prohibited by Applicable Law, the Party disclosing this Agreement shall provide the other Party with the proposed redactions of this Agreement that the first Party intends to disclose for the other Party’s review and comment. The Party disclosing this Agreement shall incorporate the other Party’s comments to the extent such comments related to the other Party’s Confidential Information or intellectual property. The Parties agree to discuss and coordinate in good faith a unified set of redactions for this Agreement that will be used by both Parties to comply with rules of the Securities Exchange Commission or of any stock exchange (including NASDAQ).

6.4 Public Announcements. Upon execution of this Agreement or reasonably soon thereafter, both Parties shall be permitted to issue a mutually agreed upon press release, which press release may contain, at a minimum, the Parties’ names and the key financial terms of this Agreement. Except as permitted under Section 6.2, neither Party shall make any subsequent public announcement concerning this Agreement or the terms hereof, not previously made public without breach of this Agreement, without the prior written approval of the other Party, such consent not be unreasonably withheld or delayed by such other Party, with regard to the form, content, and precise timing of such announcement.

6.5 Residual Knowledge. Notwithstanding any provision to the contrary set forth in this Agreement, Confidential Information will not include any knowledge, technique, experience, or Know-How that is retained in the unaided memory of any authorized representative of the receiving Party after having access to such Confidential Information (“Residual Knowledge”). Any use made by the receiving Party of any such Residual Knowledge is on an “as is, where is” basis, with all faults and all representations and warranties disclaimed and at its sole risk.

6.6 Existing Confidentiality Agreement. It is agreed between the Parties that this Agreement shall supersede that certain Confidential Disclosure Agreement, dated as of October 4, 2019 by and between the Parties, as amended; provided, however, that all “Confidential Information” disclosed or received by the Parties thereunder will be deemed “Confidential Information” hereunder and will be subject to the terms and conditions of this Agreement.

ARTICLE 7

REPRESENTATIONS, WARRANTIES AND COVENANTS

7.1 General. Each Party represents and warrants to the other that:

(a) it is duly organized and validly existing under the law of the jurisdiction of its incorporation, and has full corporate power and authority to enter into this Agreement (including the Assignment and Assumption Agreement) to carry out the provisions hereof;

(b) it is duly authorized to execute and deliver this Agreement (including the Assignment and Assumption Agreement) and to perform its obligations hereunder, and the individual executing this Agreement (including the Assignment and Assumption Agreement) on its behalf has been duly authorized to do so by all requisite corporate action;

(c) this Agreement (including the Assignment and Assumption Agreement) is legally binding upon it and enforceable in accordance with its terms and the execution, delivery and performance of this Agreement (including the Assignment and Assumption Agreement) by it does not conflict with any agreement, instrument or understanding, oral or written, to which it is a party or by which it may be bound, nor violate any material Applicable Law; and

(d) it is not aware of any action, suit or inquiry or investigation instituted by any Person which questions or threatens the validity of this Agreement (including the Assignment and Assumption Agreement).

7.2 Representations, Warranties and Covenants of Lipocine. Lipocine hereby represents, warrants and covenants to Licensee that:

(a) as of the Effective Date, it has the full right, power and authority to grant all of the right, title and interest in the licenses and other rights granted under this Agreement, and, as of the effective date of the exercise of the option under Section 2.2, it has the full right, power and authority to grant all of the right, title and interest in the licenses and other rights granted in Section 2.2(g);

(b) as of the Effective Date, it has the full right, power and authority to assign, free and clear of any security interests, liens or other collateral, the Assigned Agreements, Assigned Domain Names and Assigned Trademarks to Licensee in accordance with the Assignment and Assumption Agreement and to perform the technology transfer set forth in Section 2.7;

(c) as of the Effective Date, the Assigned Trademark and Assigned Domain Names represent all material trademarks (including associated goodwill) and domain names under Lipocine’s Control as of the Effective Date that are specifically and substantially directed to the Licensed Products;

(d) as of the Effective Date, the Assigned Agreements represent all of Lipocine’s material agreements with Third Parties as of the Effective Date that are specifically and substantially directed to the Licensed Products;

(e) as of the Effective Date and to Lipocine’s knowledge, no consent, approval, license, permit, order or authorization of, or registration, declaration, notice or filing with, any Governmental Entity is required by or with respect to Lipocine in connection with the execution, delivery and performance by Lipocine of this Agreement to which it will be a party or the consummation by Lipocine of the transactions contemplated hereby and thereby;

(f) except for the Clarus Settlement Agreement, to Lipocine’s knowledge, it has not undertaken and will not undertake, any material obligation, or grant any right, license, sublicense, interest or lien, that conflicts with its obligations, or the rights and licenses granted to Licensee (including under the Licensed Technology or New Lipocine Data), under the terms of this Agreement, or impairs the rights granted by Lipocine to Licensee under the terms of this Agreement;

(g) as of the Effective Date, to Lipocine’s knowledge, it has made available to Licensee a copy of (i) all relevant material data and information with respect to the Licensed Products, (ii) any material correspondence to and from any Regulatory Authority concerning the Licensed Products (including, but not limited to, with respect to the termination, suspension or material modification of any Clinical Trials of the Licensed Products) and (iii) all adverse event files and complaint files related to the Licensed Products that were reported to the FDA, with respect to the foregoing subclauses (i)-(iii), that are in the possession of Lipocine as of the Effective Date.

(h) to its knowledge, as of the Effective Date, all filings with and submissions to the FDA made by Lipocine, whether oral, written or electronically delivered, were true, accurate and complete in all material respects as of the date made, and, to the extent required to be updated, as so updated remain true, accurate and complete in all material respects as of the date hereof and do not materially misstate any of the statements or information included therein, or omit to state a material fact necessary to make the statements therein not misleading;

(i) all Licensed Patents existing as of the Effective Date are set forth on Schedule 1.78, and to its knowledge, such Licensed Patents represent all Patents Controlled by Lipocine that are necessary or reasonably useful for Licensee’s Development, Manufacture or Commercialization of the Licensed Products as contemplated by this Agreement;

(j) as of the Effective Date, it is the sole and exclusive owner of the entire right, title, and interest in the Licensed Patents set forth on Schedule 1.78, and to its knowledge, the Licensed Patents set forth on Schedule 1.78 are free of any encumbrance, lien, or claim of ownership by any Third Party;

(k) to its knowledge, all Development and Manufacture of the Licensed Products prior to the Effective Date has been performed in all material respects with Applicable Law (including GMP, as applicable);

(l) to its knowledge, all Clinical Trials conducted prior to the Effective Date have complied in all material respects with all Applicable Law (and all Data was collected and maintained in accordance with all applicable Data Security and Privacy Laws);

(m) as of the Effective Date, there are no adverse actions, challenges, suits, claims or other judicial, arbitral or administrative proceedings pending or to, its knowledge, threatened or asserted by or against Lipocine or any of its Affiliates in any court or before any Governmental Entity with respect to the Licensed Technology, including with respect to the ownership, scope, duration, validity enforceability, priority or right to use the Licensed Technology;

(n) as of the Effective Date and except as disclosed on Schedule 7.2(n): (i) Lipocine has not received any written communication, or been named in any proceeding, alleging or implying that the Licensed Technology or the operation of the business of the Lipocine is infringing or misappropriating any intellectual property of a Third Party or Person; (ii) no action has been instituted or, to Lipocine’s knowledge, threatened relating to any Licensed Technology; and (iii) no Licensed Technology is subject to any proceeding or outstanding order or stipulation restricting in any way the use, transfer, or licensing by Licensee, or which may adversely affect the validity, use, or enforceability of such Licensed Technology;

(o) to its knowledge, as of the Effective Date, there is no unauthorized use, infringement or misappropriation of any of the Licensed Technology by any Person, including any employee, former employee, independent contractor or consultant of Lipocine, except as would not, individually or in the aggregate, result in a material adverse effect on Lipocine nor Licensee’s rights under this Agreement;

(p) as of the Effective Date, the execution, delivery and performance by Lipocine of this Agreement and its compliance with the terms and provisions hereof does not, to its knowledge, violate or result, in any material respect, in a breach of or default under any binding obligation or agreement of Lipocine existing as of the Effective Date;

(q) as of the Effective Date, IND No. 106476 is the IND covering the First Product, NDA No. 208088 is the NDA covering the First Product and IND No. 119099 is the IND covering the Second Product;

(r) as of the Effective Date, the AbbVie Agreement is in full force and effect and neither Lipocine nor any of its Affiliates has received any written notice alleging any material breach (and neither Lipocine nor any of its Affiliates is currently in material breach, nor will it be in material breach as a result of the delivery and execution of this Agreement) of the AbbVie Agreement; and

(s) as of the Effective Date, other than the AbbVie Agreement, there are no other Third Party agreements pursuant to which Lipocine owes royalties with respect to the Licensed Technology or Licensed Products.

7.3 Representations, Warranties, and Covenants of Antares. Licensee hereby represents, warrants, and covenants to Lipocine during the Term that:

(a) it will maintain all licenses, authorizations, and permissions necessary under Applicable Law for meeting and performing its obligations under this Agreement;

(b) it will comply in all material respects with all Applicable Laws in performing its activities under this Agreement, including with respect to its conduct of Clinical Trials;

(c) it will maintain a commercially reasonable system of internal accounting controls in compliance with Applicable Laws and GAAP; and

(d) it will not knowingly or willfully infringe upon or misappropriate any intellectual property rights of a Third Party in performing its activities under this Agreement.

7.4 Anti-Bribery and Anti-Corruption Compliance.

(a) Neither Party has directly or indirectly, offered, promised, paid, authorized or given, nor will in the future, offer, promise, pay, authorize or give, money or anything of value, directly or indirectly, to any Government Official (as defined below) or Other Covered Party (as defined below) for the purpose of: (i) influencing any act or decision of the Government Official or Other Covered Party; (ii) inducing the Government Official or Other Covered Party to do or omit to do an act in violation of a lawful duty; (iii) securing any improper advantage; or (iv) inducing the Government Official or Other Covered Party to influence the act or decision of a government or government instrumentality, in order to obtain or retain business, or direct business to, any person or entity, in any way related to this Agreement.

For purposes of this Agreement: (i) “Government Official” means any official, officer, employee or representative of: (A) any federal, state, provincial, county or municipal government or any department or agency thereof; (B) any public international organization or any department or agency thereof; or (C) any company or other entity owned or controlled by any government; and

(ii) “Other Covered Party” means any political party or party official, or any candidate for political office.

(b) In performing under this Agreement, each Party (and its Affiliates) agrees to comply with all applicable anti-corruption laws, including the Foreign Corrupt Practices Act of 1977, as amended (“FCPA”) and all laws enacted to implement the OECD Convention on Combating Bribery of Foreign Officials in International Business Transactions.

(c) Neither Party is aware of any Government Official or Other Covered Party having any financial interest in the subject matter of this Agreement or in any way personally benefiting, directly or indirectly, from this Agreement.

(d) No political contributions or charitable donations shall be given, offered, promised or paid at the request of any Government Official or Other Covered Party that is in any way related to this Agreement or any related activity, without the other Party’s prior written approval.

(e) In the event that Licensee violates the FCPA or any applicable anti- corruption law or breaches any provision in this Section, Lipocine shall have the right to unilaterally terminate this Agreement. In addition, Licensee shall defend, indemnify and hold harmless Lipocine from and against any and all costs, damages, losses, liabilities, expenses, judgments, fines, settlements and any other amounts of any nature, including reasonable attorneys’ fees arising from any improper payment made in violation of the FCPA, any applicable anti- corruption laws or this Section, directly or indirectly, by, on behalf of or with the knowledge of the Licensee, in relation to this Agreement.

7.5 Debarment. Neither Party has ever been, is not currently, nor is it the subject of a proceeding that could lead to it becoming a Debarred Entity, Excluded Entity, or Convicted Entity and it will not use in any capacity, in connection with the obligations to be performed under this Agreement, any person who is a Debarred Individual, Excluded Individual or a Convicted Individual, nor are they listed on the FDA’s Disqualified/Restricted List for clinical investigators. Each Party further covenants that if, during the Term, it becomes a Debarred Entity, Excluded Entity, or Convicted Entity or if any employee or agent performing any of its obligations hereunder becomes a Debarred Individual, Excluded Individual, or a Convicted Individual, or is added to the FDA’s Disqualified/Restricted List for clinical investigators, then such Party shall immediately notify the other Party. For purposes of this provision, the following definitions shall apply:

(a) A “Debarred Individual” is an individual who has been debarred by the FDA pursuant to 21 U.S.C. §335a (a) or (b) from providing services in any capacity to a person that has an approved or pending drug or biological product application.

(b) A “Debarred Entity” is a corporation, partnership or association that has been debarred by the FDA pursuant to 21 U.S.C. §335a (a) or (b) from submitting or assisting in the submission of any abbreviated drug application, or a subsidiary or affiliate of a Debarred Entity.

(c) An “Excluded Individual” or “Excluded Entity” is (i) an individual or entity, as applicable, who has been excluded, debarred, suspended or is otherwise ineligible to participate in federal health care programs such as Medicare or Medicaid by the Office of the Inspector General (OIG/HHS) of the U.S. Department of Health and Human Services, or (ii) is an individual or entity, as applicable, who has been excluded, debarred, suspended or is otherwise ineligible to participate in federal procurement and non-procurement programs, including those produced by the U.S. General Services Administration (GSA).

(d) A “Convicted Individual” or “Convicted Entity” is an individual or entity, as applicable, who has been convicted of a criminal offense that falls within the ambit of 21 U.S.C. §335a (a) or 42 U.S.C. §1320a - 7(a), but has not yet been excluded, debarred, suspended or otherwise declared ineligible.

(e) “FDA’s Disqualified/Restricted List” is the list of clinical investigators restricted from receiving investigational drugs, biologics, or devices if FDA has determined that the investigators have repeatedly or deliberately failed to comply with regulatory requirements for studies or have submitted false information to the study sponsor.

7.6 Privacy Laws. Each Party covenants that it will comply with all Applicable Laws in its performance of its obligations under this Agreement. The Parties will enter into a written agreement governing PII protection prior to exchanging any PII under this Agreement consistent with Applicable Laws safeguard such PII.

7.7 DISCLAIMER. [***]

7.8 No Other Representations or Warranties. [***]

ARTICLE 8

INDEMNIFICATION; LIMITATION ON LIABILITY; INSURANCE;

8.1 Indemnification by Licensee. Licensee shall indemnify, hold harmless, and defend Lipocine, its Affiliates, and their respective equity holders, directors, officers, employees and agents (“Lipocine Indemnitees”) from and against any and all Third Party claims, suits, losses, liabilities, damages, costs, fees and expenses (including reasonable attorneys’ fees) (collectively, “Losses”) finally awarded to a Third Party by a court of competent jurisdiction or agreed to in a settlement approved by Licensee that result from any claim made or brought against a Lipocine Indemnitee by or on behalf of such Third Party, and subject to Section 8.3, any direct out-of-pocket costs and expenses (including reasonable attorneys’ fees) (“Litigation Costs”) incurred by a Lipocine Indemnitee while investigating or conducting the defense of such Third Party claim, in any such case, to the extent such claim arises out of or results from (a) any material breach of, or material error in, any representation or warranty made by Licensee in this Agreement, or any breach or violation of any covenant or agreement of Licensee or any of the Licensee Indemnitees or Sublicensees, (b) the negligence or willful misconduct by or of any of the Licensee Indemnitees or Sublicensees, (c) except for claims subject to Section 5.6 or Section 5.8, the Development, Manufacturing, or Commercialization of a Licensed Product by or on behalf of Licensee or its Affiliates or Sublicensees (including claims relating to product liability, off-label marketing and promotion, and manufacturing defects) during the Term, or (d) Licensee’s contractual agreements with Third Parties during the Term. Licensee shall have no obligation to indemnify the Lipocine Indemnitees to the extent that the Losses arise out of or result from, (i) any material breach of, or material error in, any representation or warranty made by Lipocine in this Agreement, or any breach or violation of any covenant or agreement of the Lipocine Indemnitees in or pursuant to this Agreement or (ii) the negligence or willful misconduct by or of any of the Lipocine Indemnitees.

8.2 Indemnification by Lipocine. Lipocine shall indemnify, hold harmless, and defend Licensee, its Affiliates and their respective equity holders, officers, employees and agents (“Licensee Indemnitees”) from and against any and all Losses finally awarded to a Third Party by a court of competent jurisdiction or agreed to in a settlement approved by Lipocine that result from any claim made or bought against a Licensee Indemnitee by or on behalf of such Third Party, and subject to Section 8.3, any Litigation Costs incurred by a Licensee Indemnitee while investigating or conducting the defense of such Third Party claim, in any such case, to the extent such claim arises out of or results from (a) any material breach of, or material error in, any representation or warranty made by Lipocine in this Agreement, or any breach or violation of any covenant or agreement of the Lipocine Indemnitees in or pursuant to this Agreement; (b) the negligence or willful misconduct by or of any of the Lipocine Indemnitees; (c) the Commercialization of Licensed Products by or on behalf of Lipocine, its Affiliates or its sublicensees outside the Field in the Territory or outside the Territory in or outside the Field; (d) the Development or Manufacture of Licensed Product by or on behalf of Lipocine or its Affiliates or sublicensees prior to the Effective Date, during the Term (except for claims subject to Section 5.6 or Section 5.8), or after the expiration or termination of this Agreement; (e) Third Party (including contract manufacturing organization (CMO)) payments that accrued prior to the Effective Date, (f) material breach of Lipocine’s contractual agreements with Third Parties regarding the Licensed Technology, including the AbbVie Agreement, or (g) the Manufacture or Commercialization of the Licensed Products following the effective date of termination of this Agreement (or solely with respect to a Terminated Product, as applicable), including, but not limited to, all product liability claims, claims that the Licensed Product infringe, misappropriate or violate a Third Party’s intellectual property rights, and Third Party claims related to the misappropriation of the Licensed Technology. Lipocine shall have no obligation to indemnify the Licensee Indemnitees to the extent that the Losses arise out of or result from (i) any material breach of, or material error in, any representation or warranty made by Licensee in this Agreement, or any breach or violation of any covenant or agreement of Licensee or any of the Licensee Indemnitees or Sublicensees or (ii) the negligence or willful misconduct by or of any of the Licensee Indemnitees.

8.3 Procedure. In the event of any such claim against any Licensee Indemnitee or Lipocine Indemnitee (individually, an “Indemnitee”), the indemnified Party shall promptly notify the other Party in writing of the claim and the indemnifying Party shall manage and control, at its sole expense, the defense of the claim and its settlement; provided that the failure to so notify promptly shall not relieve the indemnifying Party of its obligations under this Article 8 except to the extent of the actual prejudice suffered by such Party as a result of such failure; and further provided that, subject to Section 5.6, the indemnifying Party shall not have the right to assume the defense of such claim if such claim relates to a patent infringement claim. The Indemnitee shall cooperate with the indemnifying Party and may, at its option and expense, be represented in and participate in any such action or proceeding. The indemnifying Party shall not be liable for any settlements, litigation costs or expenses incurred by any Indemnitee without the indemnifying Party’s written authorization. Notwithstanding the foregoing, if the indemnifying Party believes that any of the exceptions to its obligation of indemnification of the Indemnitees set forth in Section 8.1 or Section 8.2 may apply, the indemnifying Party shall promptly notify the Indemnitees, which shall then have the right to be represented in any such action or proceeding by separate counsel at their expense; provided that the indemnifying Party shall be responsible for payment of such expenses if the Indemnitees are ultimately determined to be entitled to indemnification from the indemnifying Party. The indemnifying Party shall not affect any settlement of any such claims without the consent of the Indemnitee, which consent shall not be unreasonably withheld or delayed.

8.4 Limitation of Liability. [***], IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER PARTY FOR ANY SPECIAL, CONSEQUENTIAL, EXEMPLARY OR INCIDENTAL DAMAGES (AND, FOR CLARITY, NEITHER PARTY NOR ANY OF THEIR RESPECTIVE AFFILIATES SHALL BE ENTITLED TO RECOVER FOR ANY LOST PROFIT OR LOST REVENUE DAMAGES OF ANY KIND, WHETHER THOSE CLAIMED DAMAGES ARE DIRECT OR INDIRECT), HOWEVER CAUSED AND ON ANY THEORY OF LIABILITY ARISING OUT OF THIS AGREEMENT, WHETHER SUCH CLAIM IS BASED ON CONTRACT, TORT (INCLUDING NEGLIGENCE) OR OTHERWISE, AND WHETHER OR NOT SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGE. [***]. FOR THE AVOIDANCE OF DOUBT, THE REFERENCE TO ANY PAYMENT BY LICENSEE UNDER THIS AGREEMENT AS NON-REFUNDABLE AND/OR NON-CREDITABLE SHALL NOT BE READ TO BE A LIMITATION ON DAMAGES.

8.5 Insurance.

(a) Each Party shall, at its sole expense, procure and maintain comprehensive general liability insurance with reputable insurers in usual and customary amounts as may be necessary to protect its interests and fulfill its obligations under this Agreement (including personal property, clinical trial and product liability insurance). Such comprehensive general liability insurance policy or policies will have aggregate limits of liability of not less than [***] with respect to any incident or occurrence and of not less than [***] in the aggregate and such product liability insurance policy or policies will have aggregate limits of liability of not less than (i) with respect to Licensee, [***] with respect to any incident or occurrence and of not less than [***] in the aggregate and (ii) with respect to Lipocine, [***] with respect to any incident or occurrence and of not less than [***] in the aggregate. The limits required under this Section 8.5 can be satisfied through any combination of primary, umbrella/excess, captive insurance or self-insurance; provided that, if a Party elects to self-insure all or part of the limits described above, such self-insurance program must be acceptable to the other Party in its reasonable discretion. The maintenance of such insurance policies shall not in any way limit either Party’s liability with respect to indemnification under this Agreement.

(b) Each Party shall maintain such comprehensive general liability insurance for a period of [***] years beyond the expiration or termination of this Agreement. Upon request, each Party shall provide the other Party with a certificate of insurance evidencing the minimum coverage required by this Section 8.5.

ARTICLE 9

TERM AND TERMINATION

9.1 Term. This Agreement shall commence on the Effective Date and shall continue in full force and effect, on a Licensed Product-by-Licensed Product basis, until the expiration of the Royalty Term applicable to such Licensed Product and will expire in its entirety upon the expiration of the last Royalty Term, unless terminated earlier by either Party pursuant to this Article 9 (the “Term”).

9.2 Termination.

(a) For Material Breach. Subject to Section 9.3, if either Party at any time materially breaches any term, condition or agreement herein with respect to (a) the First Product or the Second Product (if applicable) or (b) this Agreement in its entirety, and, in either case of (a) or (b), fails to initiate and actively pursue a remedy to cure such breach within [***]days after receipt of written notice thereof from the other Party, that other Party may, at its sole discretion, immediately terminate this Agreement with respect to such First Product or Second Product (if applicable), or this Agreement in its entirety, as applicable.

(b) For Bankruptcy. Each Party may terminate this Agreement in its entirety upon the occurrence of one or more of the following: (i) immediately upon written notice to the other Party in the event the other Party is insolvent or initiates a voluntary proceeding under any applicable bankruptcy law or code; or (ii) immediately upon written notice to the other Party in the event such other Party becomes the subject of an involuntary proceeding under any applicable bankruptcy law or code and such proceeding is not dismissed or stayed within [***] days of its commencement.

(c) For Failure to Timely Commercialize. If Licensee has not used Commercially Reasonable Efforts to complete the First Commercial Sale of each Licensed Product (if Licensee exercises its option to include the Second Product under this Agreement in accordance with Section 2.2) in the Field in the Territory no later than [***]months after receipt of final FDA Regulatory Approval for such Licensed Product in accordance with Section 4.9, subject to Section 9.3, Lipocine shall have the right to terminate this Agreement with respect to the relevant Licensed Product with immediate effect upon written notice thereof.

(d) For Patent Challenge. If Licensee, its Affiliates or a Sublicensee institutes a Challenge (except (i) as required under a court order or subpoena; (ii) as a defense against a claim, action or proceeding asserted by or on behalf of Lipocine (or any of its Affiliates or sublicensees) against Licensee or any of its Affiliates or Sublicensees, or otherwise in connection with an assertion of a cross-claim or a counterclaim; or (iii) any involvement in any interference proceeding or other adversarial proceeding similar to an interference, including as instituted by the U.S. Patent & Trademark Office or other agency or tribunal in any jurisdiction between the Licensed Patents and any inventions claimed in Patents owned, licensed or controlled by Licensee that was not pursuant to suggestion of interference by Licensee or its Affiliates relates to the validity, enforceability or scope of any claim therein not solely directed to a Licensed Product), Lipocine may, at its option, terminate this Agreement with [***]days’ prior written notice; provided that Lipocine shall not have the right to terminate this Agreement under this Section 9.2(d) with immediate effect if such Challenge is withdrawn or dismissed within such [***]day period.

(e) For Convenience. Licensee shall have the right to terminate this Agreement (i) in its entirety after Regulatory Approval of the Second Product, or (ii) on a Licensed Product-by-Licensed Product basis, (x) with respect to the First Product after Commercial Launch of the First Product, (y) with respect to the Second Product, (A) with payment of a termination fee of [***] if notice is given before dosing of the first patient in the Phase 3 Trial of the Second Product, or (B) if notice is given after dosing the first patient in the Phase 3 Trial of the Second Product, as applicable, in each case (i) and (ii), for any or no reason upon [***]days’ written notice to Lipocine. If Licensee exercises its right to terminate under Section 9.2(e)(ii)(y) while the Phase 3 Trial of the Second Product is ongoing, (1) Licensee shall provide Lipocine with its rationale (including reasonable supporting data, if applicable) to discontinue such Phase 3 Trial, and (2) Lipocine shall have the right, at its sole discretion, to direct Licensee to either wind down and terminate such Phase 3 Trial or, to use Commercially Reasonable Efforts to transfer to Lipocine such Phase 3 Trial of the Second Product, and Licensee shall bear all reasonable costs for such wind down or transfer activities prior to the effective date of termination. [***]

(f) For Failure to Develop or Commercialize. Lipocine shall have the right to terminate this Agreement with immediate notice to Licensee on a Licensed Product-by-Licensed Product basis if Licensee ceases all or substantially all Development or Commercialization activities for such Licensed Product for a continuous period [***].

9.3 Product-by-Product Termination. In the event of termination of this Agreement with respect to either the First Product or the Second Product (i.e., not this Agreement in its entirety) (a “Terminated Product”), such terminated First Product or Second Product, as applicable, shall automatically be removed from the definition of “Licensed Product” and throughout this Agreement without any further action of either Party and this Agreement shall continue pursuant to the terms and conditions hereof with respect to the other Licensed Product. For example, if this Agreement is terminated by Licensee pursuant to Section 9.2(e) with respect to the Second Product, this Agreement shall continue with respect to the First Product and the effects of termination set forth in Section 9.7. shall only apply to this Agreement with respect to the Second Product.

9.4 Non-Compete. For avoidance of doubt, notwithstanding the non-compete provisions of Section 2.8(b), Lipocine shall have the right to Develop, Manufacture, and Commercialize in the Field in the Territory any Licensed Product that has been terminated pursuant to this Article 9, or, with respect to the Second Product, if Licensee does not exercise its option for the Second Product in accordance with Section 2.2.

9.5 Election to Terminate. [***]

9.6 Effects of Expiration.

(a) Without limiting Section 3.4(d), upon expiration (but not early termination) of this Agreement, the licenses granted by Lipocine to Licensee pursuant to Section 2.1 and Section 2.2 shall become perpetual, fully-paid up, royalty-free, and non-exclusive with respect to such Licensed Product.

(b) Upon expiration (but not early termination) of this Agreement, all rights and licenses granted by Licensee to Lipocine under this Agreement, including under Section 2.3, shall automatically become non-exclusive and expand to include the Field inside the Territory.

9.7 Effects of Termination.

(a) Reversion of Rights to Lipocine. [***]

(b) Expansion of Rights. [***]

(d) Regulatory Documentation. Upon termination of this Agreement, Licensee shall transfer and assign to Lipocine all (or solely with respect to a Terminated Product, as applicable) then-existing Regulatory Documentation (excluding any Licensee Data contained therein unless the Parties enter into a license agreement with respect thereto in accordance with Section 4.5) in Licensee’s possession together with all of Licensee’s rights in the transferred Regulatory Documentation, including all IND and NDA filings and Regulatory Approvals, in each case with respect to a Terminated Product, in each case pursuant to the dossier transfer letters held in escrow to become effective as of the effective date of such termination of this Agreement and attached hereto as Exhibit 7, as applicable.

(e) Domain Names. Upon termination of this Agreement in its entirety or with respect to a Terminated Product, Licensee shall transfer and assign and hereby transfers and assigns to Lipocine those Assigned Domain Names that are exclusively related to the Terminated Product(s), and the Assignment and Assumption Agreement attached hereto as Exhibit 2 shall become effective. In addition, Licensee shall grant and hereby does grant, a world-wide, non-exclusive, perpetual, fully-paid up right and license under those Additional Domain Names that are exclusively related to the Terminated Product(s) to Develop, Manufacture and Commercialize the Terminated Product(s). Lipocine shall have the option to purchase from Licensee on commercially reasonable terms all Additional Domain Names that are not used by Licensee after termination of this Agreement with respect to each Licensed Product.

(f) Trademarks. Upon termination of this Agreement in its entirety or with respect to a Terminated Product, Licensee shall transfer and assign and hereby transfers and assigns to Lipocine those Assigned Trademarks that are exclusively related to the Terminated Product(s), and the Assignment and Assumption Agreement attached hereto as Exhibit 2 shall become effective. In addition, Licensee shall grant and hereby does grant, a world-wide, non- exclusive, perpetual, fully-paid up right and license under those Additional Trademarks that are in use with the Terminated Product(s) as of the effective date of termination, to Develop, Manufacture and Commercialize the terminated Licensed Product(s); provided that Lipocine’s use of any such Additional Trademarks shall be in accordance with Antares’ reasonable written instructions, guidelines and restrictions. Lipocine shall have the option to purchase from Licensee on commercially reasonable terms all Additional Trademarks that are not used by Licensee after termination of this Agreement with respect to each Licensed Product.

(g) Regulatory Authorities. [***]

(h) Cooperation. Licensee shall promptly execute and deliver any and all (or solely with respect to a Terminated Product, as applicable) documents necessary to effectuate the transfers and assignments pursuant to the foregoing clauses Section 9.7(a)-(g) and otherwise reasonably assist Lipocine in effectuating such transfer and assignment, including pursuant to the Assignment and Assumption Agreement attached hereto as Exhibit 2. On or promptly after the effective date of termination, at Lipocine’s reasonable written request, Licensee shall use Commercially Reasonable Efforts to transfer and assign to Lipocine all contracts between Licensee and its contract manufacturers and suppliers, in each case solely related to the Terminated Product(s) (subject to such Third Parties’ consent, if applicable).

(i) Inventory. Upon termination of this Agreement in its entirety or with respect to a Terminated Product, Licensee shall have the right to sell its remaining inventory of each such Terminated Product(s) for a period of [***] days following such termination of this Agreement in its entirety or with respect to such Terminated Product so long as Licensee is able to do so in compliance with Applicable Laws and has fully paid, and continues to fully pay when due, any and all royalties and milestone payments owed to Lipocine with respect to the sale of its remaining inventory of such Terminated Product(s). Lipocine shall have the right, but not the obligation, to purchase any remaining inventory of each such Terminated Product(s) at Licensee’s actual cost of Manufacturing such Terminated Product(s).

9.8 Development Cost Recovery for the Second Product. To the extent Licensee exercises the option under Section 2.2 and the Second Product becomes a Licensed Product, the following Development cost recovery provisions shall apply to the Second Product:

(a) [***]

(b) [***]

9.9 Transition Services. [***]

9.10 Return of Confidential Information. Upon the effective date of the expiration or termination of this Agreement for any reason, each Party shall return to the other Party and cease using all (or solely with respect to a Terminated Product, as applicable) Confidential Information of the other; provided, however, each Party may retain one (1) copy of such Confidential Information for the sole purpose of performing any continuing obligations hereunder or for archival purpose.

9.11 Accrued Rights. Termination or expiration of this Agreement for any reason will be without prejudice to any rights that will have accrued to the benefit of a Party prior to such termination. Such termination or expiration will not relieve a Party from accrued payment obligations or from obligations which are expressly indicated to survive termination of this Agreement.

9.12 Governmental Consents. In the event that a Governmental Entity forces the termination of, does not consent to, or withholds any necessary consent related to this Agreement, the Parties shall take all actions necessary to ensure that each Party receives the benefits of the bargain that inure to such Party under the terms and conditions of this Agreement, including, the licenses, claims, rights, intellectual property, use, benefits, obligations, potential for gain, or dominion, control and command over any assets, claim or rights that inure to such Party under this Agreement.

9.13 Survival. All rights and obligations of the Parties which by intent or meaning have validity beyond or by their nature apply or are to be performed or exercised after the termination of this Agreement shall survive the expiration or early termination of this Agreement for the period so specified, if any, or for perpetuity, including Articles 1 (as necessary for the interpretation of the surviving provisions), 6, 8, and 10, and Sections 2.4(b), 2.11, 3.5, 3.6, 3.7(a) (for one (1) Calendar Quarter following expiration or earlier termination), 3.7(b), 3.7(c) (for one (1) Calendar Quarter following expiration or earlier termination), 3.8, 3.9, 9.6, 9.7, 9.8, 9.9, 9.10, 9.11, 9.12, 9.13.

ARTICLE 10

GENERAL PROVISIONS

10.1 Entire Agreement. The Parties acknowledge that this Agreement, together with the exhibits and schedules attached hereto, sets forth the entire agreement and understanding of the Parties as to the subject matter hereof, and supersedes all prior and contemporaneous discussions, agreements, understandings and representations, whether written or oral, with respect to the subject matter hereof.

10.2 Modification; Waiver. No waiver, modification, amendment or alteration of any provision of this Agreement will be valid or effective unless made in writing and signed by each of the Parties. The failure of a Party to enforce any rights or provisions of the Agreement shall not be construed to be a waiver of such rights or provisions, or a waiver by such Party to thereafter enforce such rights or provisions or any other rights or provisions hereunder.

10.3 Remedies. Except as otherwise provided herein, any and all remedies herein expressly conferred upon a Party will be deemed cumulative with and not exclusive of any other remedy conferred hereby, or by law or equity upon such Party, and the exercise by a Party of any one (1) remedy will not preclude the exercise of any other remedy.

10.4 Further Assurances. Each Party agrees to execute, acknowledge, and deliver such further instruments and to do all such other acts as may be necessary or appropriate in order to carry out the express provisions of this Agreement.

10.5 Force Majeure. Neither Party shall be held liable or responsible to the other Party or be deemed to have defaulted under or breached this Agreement for any delay or failure in fulfilling or performing any term of this Agreement when such delay or failure is caused by or results from a Force Majeure Event. The Parties agree the effects of the COVID-19 pandemic that is ongoing as of the Effective Date (including related government orders) may be invoked as a Force Majeure Event for the purposes of this Agreement even though the pandemic is ongoing and those effects may be reasonably foreseeable (but are not known for certain) as of the Effective Date. In addition, a Force Majeure Event may include reasonable measures affirmatively taken by a Party or its Affiliates to respond to any epidemic, pandemic, or spread of infectious disease (including the COVID-19 pandemic), such as requiring employees to stay home, closures of facilities, delays of Clinical Trials, or cessation of activities in response to an epidemic or other Force Majeure Event. The non-performing Party shall notify the other Party of such Force Majeure Event within thirty (30) days after such occurrence by giving written notice to the other Party stating the nature of the event, its anticipated duration, and any action being taken to avoid or minimize its effect. The suspension of performance shall be of no greater scope and no longer duration than is reasonably necessary and the non-performing Party shall use Commercially Reasonable Efforts to remedy its inability to perform.

10.6 Assignments. Neither this Agreement nor any interest hereunder may be assigned, nor any other obligation delegated, by a Party without the prior written consent of the other Party. Notwithstanding the foregoing, (a) [***]; and (b) either Party shall have the right to assign this Agreement without consent of the other Party to an Affiliate of the assigning Party or to any successor in interest in a Change of Control in a manner such that the assigning Party will remain liable and responsible for the performance and observance of all of its duties and obligations hereunder (subject to Section 2.7, if applicable to the assigning Party). This Agreement shall be binding upon successors and permitted assigns of the Parties. Any assignment not in accordance with this Section 10.6 will be null and void.

10.7 Performance by Affiliates. The Parties recognize that each may perform some or all of its obligations under this Agreement through its Affiliates or may exercise some or all of its rights under this Agreement through its Affiliates (including by sublicense); provided, however, that each Party shall remain responsible and be the guarantor of the performance by its Affiliates and shall cause its Affiliates to comply with the provisions of this Agreement in connection with such performance. In particular and without limitation, all Affiliates of a Party that receive Confidential Information of the other Party pursuant to this Agreement shall be governed and bound by all obligations set forth in Article 6. Each Party will prohibit all of its Affiliates from taking any action that such Party is prohibited from taking under this Agreement as if such Affiliates were parties to this Agreement.

10.8 Relationship of the Parties. The Parties shall perform their obligations under this Agreement as independent contractors and nothing in this Agreement is intended or will be deemed to constitute a partnership, agency or employer-employee relationship between the Parties. Neither Party will have any right, power or authority to assume, create, or incur any expense, liability, or obligation, express or implied, on behalf of the other.

10.9 No Third Party Beneficiaries. This Agreement is not intended, and shall not be deemed, to confer any rights or remedies upon any Person other than the Parties hereto and their respective successors and permitted assigns, to create any agreement of employment with any Person or to otherwise crate any Third Party beneficiary hereto.

10.10 No Use of Names. Except as otherwise required under Applicable Law, or as otherwise permitted under Section 6.4, neither Party shall mention or otherwise use the name, logo, or trademark of the other Party or any of its Affiliates (or any abbreviation or adaptation thereof) in any publication, press release, marketing and promotional material, or other form of publicity, without the prior written approval of such other Party in each instance, except for either Party’s references to the other as the licensor or licensee (as applicable) or a collaboration partner under this Agreement. The restrictions imposed by this Section 10.10 shall not prohibit either Party from making any disclosure identifying the other Party that, in the opinion of the disclosing Party’s counsel, is required by Applicable Law; provided that such Party shall use reasonable efforts to submit the proposed disclosure identifying the other Party in writing to the other Party as far in advance as reasonably practicable so as to provide a reasonable opportunity to comment thereon.

10.11 Notices. Any notice, request, delivery, approval or consent required or permitted to be given under this Agreement will be in writing and will be deemed to have been sufficiently given if delivered in person (in which case, it will be effective upon delivery), transmitted by facsimile, if facsimile number is provided below (receipt verified; in which case, it will be effective upon delivery) or by express courier service (signature required; in which case, it will be effective two business days after being deposited with such courier service), to the Party to which it is directed at its address or facsimile number shown below or such other address or facsimile number as such Party will have last given by notice to the other Party.

If to Lipocine:	Lipocine Inc.
	Attn. Chief Financial Officer
	675 Arapeen Dr, Suite 202
	Salt Lake City, UT 84095

With a copy to (which shall not constitute notice hereunder):

	Latham & Watkins LLP
	12636 High Bluff Drive, Suite 400
	San Diego, CA, 92130
	Attention: Steven T. Chinowsky, Esq.
	Fax: (858) 523-5450

	If to Licensee:

	Antares Pharma, Inc.
	100 Princeton South Corp. Center
	Suite 300
	Ewing, NJ 08628
	Attn: SVP, Corporate Development

With a copy to (which shall not constitute notice hereunder):

	Antares Pharma, Inc.
	100 Princeton South Corp. Center
	Suite 300
	Ewing, NJ 08628
	Attn: General Counsel

10.12 Governing Law; Jurisdiction. The rights and obligations of the Parties under this Agreement shall be governed, and shall be interpreted, construed, and enforced, in all respects by the law of the State of Delaware, without giving effect to any conflict of law rule that would result in the application of the law of any jurisdiction other than the internal law of the State of Delaware to the rights and duties of the Parties. Each Party hereby irrevocably and unconditionally consents to submit to the exclusive jurisdiction of United States District Court for the District of Delaware, or, if such suit, action or other proceeding may not be brought in such court for lack of federal jurisdiction, in another court having jurisdiction over such matter in the State of Delaware, for any matter arising out of or relating to this Agreement and the transactions contemplated hereby.

10.13 Dispute Resolution. With respect to any disputes between the Parties concerning this Agreement, the dispute shall be submitted to escalating levels of Licensee and Lipocine senior management for review. If the dispute cannot be resolved despite such escalation, then the matter may be referred by either Party to the Executive Officers to be resolved by negotiation in good faith as soon as is practicable but in no event later than [***] days after referral. Such resolution, if any, by the Executive Officers shall be in writing and final and binding on the Parties. If the Executive Officers are unable to resolve such dispute within such [***] day period, each Party will be free to pursue all rights available to it under law or equity in the state and federal courts of the State of Delaware, provided that it has complied with this Section 10.13. Notwithstanding the foregoing, either Party may seek emergency or temporary injunctive relief in any court of competent jurisdiction.

10.14 Headings. The article, section and subsection headings contained herein are for the purposes of convenience only and are not intended to define or limit the contents of the articles, sections or subsections to which such headings apply.

10.15 Interpretation. Unless the context of this Agreement otherwise requires: (a) words of any gender include each other gender; (b) words using the singular or plural number also include the plural or singular number, respectively; (c) the terms “hereof,” “herein,” “hereby” and derivative or similar words refer to this entire Agreement; (d) the terms “Article,” “Section” or “Exhibit” refer to the specified Article, Section or Exhibit of this Agreement; (e) the word “or” is used in the inclusive sense (and/or), and (f) the term “including” means “including without limitation.” Whenever this Agreement refers to a number of days, such number shall refer to calendar days.

10.16 Severability. When possible, each provision of this Agreement will be interpreted in such manner as to be effective and valid under Applicable Law, but, if any provision of this Agreement is held to be prohibited by or invalid under Applicable Law, such provision will be ineffective but only to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or of this Agreement. The Parties will make a good faith effort to replace the invalid or unenforceable provision with a valid one which in its economic, business and other purposes is consistent with the invalid or unenforceable provision.

10.17 Counterparts. This Agreement may be executed in counterparts (including by facsimile or electronic signature), each of which shall be deemed an original and all of which together shall constitute one instrument.

[Signature Page Follows]

IN WITNESS WHEREOF, the Parties have executed this Agreement in duplicate originals by their duly authorized representatives as of the Effective Date.

LIPOCINE INC.		ANTARES PHARMA, I C.

(“Lipocine”),		(“Licensee”)

By:		By:
Name:	Mahesh Patel	Name:	Robert Apple
Title:	CEO. President and Chairman	Title:	President and Chief Executive Officer

[Signature Page to License Agreement]

IN WITNESS WHEREOF, the Parties have executed this Agreement in duplicate originals by their duly authorized representatives as of the Effective Date.

LIPOCINE INC.		ANTARES PHARMA, INC.

(“Lipocine”)		(“Licensee”)

By:		By:
Name:	Mahesh Patel	Name:	Robert Apple
Title:	CEO. President and Chairman	Title:	President and Chief Executive Officer

[Signature Page to License Agreement]

Exhibit 1

Assignment and Assumption Agreement (Lipocine to Licensee)

[***]

Exhibit 1

Assigned Agreement

[***]

Exhibit 2

Assigned IP

[***]

Exhibit 3

Trademark Assignment Agreement (For Recordation)

[***]

Exhibit 2

Assignment and Assumption Agreement (Licensee to Lipocine)

[***]

Exhibit 2

Trademark Assignment Agreement (For Recordation)

[***]

Exhibit 3

Tlando NDA Transfer Letter

[***]

Exhibit 4

Tlando IND Transfer Letter

[***]

Exhibit 5

Tlando XR IND Transfer Letter

[***]

Exhibit 6

Clarus Settlement Agreement

[***]

Exhibit 7

Dossier Transfer Letters From Licensee to Lipocine

[***]

Schedule 1.78

Licensed Patents

First Product:

[***]

Second Product:

[***]

Schedule 2.7(e)

[***]

Schedule 4.7

Supply Terms

1. Term. The term of the definitive supply agreement shall be for [***], extendable for an additional period of [***] if Lipocine is unable for any reason to enter into an agreement with [***] for contract manufacturing services for the Licensed Products outside the Territory.

2. Supply of Licensed Product. Licensee will use Commercially Reasonable Efforts to supply or have supplied to Lipocine such quantities of Licensee Supplied Product as ordered by Lipocine, its Affiliates or its sublicensees, based on Licensee’s then-existing inventory.

3. Form of Supply. Licensee shall not be required to make any changes to the Licensed Products for purposes of supplying Lipocine. The Licensee Supplied Product shall be supplied in bulk form and will have identical formulation and composition as Licensee’s general inventory of such Licensed Products in bulk form (i.e. not packaged or finished product).

4. Price. [***]

5. Quality. The Licensee Supplied Product shall meet the same quality standards as the Licensed Products and shall comply with Applicable Laws in the Territory and Licensee’s own specifications for the Licensed Products.

6. Delivery Terms. [***]

Schedule 4.8-A

Existing Inventory Terms and Conditions

[***]

Schedule 4.8-B

Existing Inventory

First Product:

[***]

Second Product:

[***]

Schedule 7.2(n)

[***]

Exhibit 10.2

Amendment #01

to the COMMERCIAL MANUFACTURING SERVICES AND SUPPLY AGREEMENT (“Agreement”), dated March 2, 2016

by and between

Lipocine Inc., with offices at 675 Arapeen Drive, Suite 202, Salt Lake City, UT 84108 (“Customer”),

and

MW Encap Ltd., Units 1-8 Oakbank Park Way Livingston, EH53 0TH United Kingdom, a NextPharma company, (“Encap”).

Each of Encap and Customer may be referred to herein individually as a “Party,” and Encap and Customer may be referred to collectively as the “Parties.” Capitalized terms used herein and not defined will have the meanings ascribed to them in the Agreement.

WHEREAS, the Agreement has been concluded on the assumption that a marketing authorization for the Customer Product would be granted by the Food and Drug Administration be granted within eighteen (18) months from the Effective Date of the Agreement.

WHEREAS, since the Customer Product is currently still under review by the Food and Drug Administration the Parties agreed to adapt the Agreement to take the new circumstances into account;

NOW THEREFORE, for good and valuable consideration, the Parties agree as follows:

DEFINITIONS AND GENERAL MATTERS

	1.1.	The definition of Launch Stock as set out in Section 1.1 of the Agreement shall be replaced by the following:

		““Launch Stock” means a certain quantity of Product units whereby the aggregate quantity of the Launch Stock needs to be spread on single Purchase Order(s) per month and quantity per Purchase Order shall not exceed [***] of Product per month.”

1.2.

The definition of “Minimum Purchase Requirement” set out in Section 1.1 of the Agreement is deleted and all cross references within the Agreement – including but not limited to Section 8.1 of the Agreement - shall no longer apply.

1.3.

Section 1.1 of the Agreement shall be supplemented as follows:

““Order Quantity” means a quantity of units of Product of up to [***] of Product per month.”

1.4.

The definition of “Product” set out in Section 1.1 of the Agreement shall be replaced by the following:

““Product” means 112.5 mg Testosterone undecanoate capsule drug product (“Product Capsules”) as more fully described in the Specifications.”

FORECASTS AND ORDERS

2.1.

Section 3.2 of the Agreement shall be replaced by the following:

“Steady State Rolling Forecasts. No later than one hundred and fifty (150) days prior to Commercialization, Customer shall submit on a monthly basis to Encap a good faith estimated twelve (12) month rolling forecast of the quantity of Product Customer expects to order for delivery commencing with the month following the month in which such forecast is provided as well as the desired delivery date (“Forecast’’). Such Forecast shall remain in force until replaced by a more current version. Each Forecast shall be non-binding, with the exception of the Forecast (i) provided within the first [***] as of the execution of this Amendment where the respective first [***] days of the Forecast shall be considered a firm order for Product and (ii) provided thereafter where the respective [***] days of the Forecast shall be considered a firm order for Product (“Firm Order’’).

2.2.

Section 3.3 of the Agreement shall be replaced by the following:

“Purchase Orders. The Customer shall submit a purchase order corresponding to the Firm Order (“Purchase Order”) for the Order Quantity (i) within the first six (6) months as of the execution of this Amendment according to Section 10.2 of this Amendment not later than [***] days in advance of the delivery date requested in the Purchase Order, and (ii) thereafter not later than [***] days in advance of the delivery date requested in the Purchase Order. Each Purchase Order shall amount to the Order Quantity and specify Customer’s Purchase Order number, the requested delivery date, the invoice address, the shipping address and any further information necessary or reasonably requested by Encap to facilitate the shipment of Product. Encap shall acknowledge receipt of Purchase Orders within ten (10) business days of receipt of the Purchase Order and Encap shall notify Customer immediately in writing if at any time Encap has reason to believe that it will not be able to fill a Firm Order (a “Supply Deficiency Notice”). Beginning with the [***] Purchaser Order delivered with the Firm Order portion of a Forecast, should Encap thereafter deliver to Customer [***] Supply Deficiency Notices in response to [***] consecutive Purchase Orders, or more than [***] Supply Deficiency Notices in any twelve (12) month rolling period, then a “Supply Failure” shall be deemed to have occurred and the provisions of Section 3.7 shall apply.

2.3.

Section 3.9 of the Agreement shall be replaced by the following:

“Reservation of Capacity. Encap will ensure that it will be in a position to manufacture and supply [***] units of Product per month and an aggregate maximum of [***] units of Product in a twelve (12) month period based on the rolling Forecast submitted pursuant to Section 3.2 above. Notwithstanding the foregoing, in case the quantities according to the provided Forecast amount to a quantity lower than the aforementioned, a lower capacity for the twelve (12) months period will be held. Should the Customer determine that it requires a quantity greater than [***] units of Product in any twelve (12) months, then the Parties shall negotiate in good faith any activities, costs and resources associated with such increased production demand.”

PRICE; PAYMENT TERMS; TITLE

3.1.

Section 4.6 of the Agreement shall be replaced by the following:

“Credit. In the event that Customer fails to timely pay [***] or more undisputed invoices owed pursuant to Section 4 in a given calendar year, and fails to remedy such failure to pay within [***] days’ advanced written notice by Encap of such failure to pay, then Encap may: (a) upon [***] days’ advance written notice, cancel any Purchase Order for Products previously accepted by Encap that were not yet produced until Customer remedies such past due payments, or (b) upon [***] days’ advance written notice, change or limit the amount or duration of credit to be allowed to Customer.”

3.2.

Section 4 of the Agreement is to be extended by the following:

“4.7 Supply Price Increase. “Commencing on [***] and each anniversary date thereafter during the Term, upon [***] days’ prior written notice and only once per calendar year, the Supply Price may be adjusted by Encap as follows: [***].”

4.8 Supply Price Adjustment. As consequence pursuant to Section 3.9 and/or 10.4, the Customer may request a pricing review. The Parties shall negotiate and agree in good faith to adjust the Price set forth on Exhibit A hereto.”

OBLIGATIONS OF THE CUSTOMER

4.1.

Second paragraph of Section 5.1 of the Agreement shall be replaced by the following:

“Customer shall supply Encap with the quantity of API required to manufacture the Product in the amount specified in Customer’s Purchase Order not less than [***] days prior to the requested delivery date of Product in an accepted Purchase Order within the first [***] months as of the execution of this Amendment, thereafter API is to be supplied not less than [***] days prior to the requested delivery date in an accepted Purchase Order. Customer shall also provide Encap with an additional amount of API to allow for normal waste and breakage in the manufacturing process. Such additional amount shall be based on the actual amount of API loss experienced in the manufacture of the initial [***] batches of Product, but such API loss shall not exceed [***] of the amount necessary to manufacture Product without Customer prior written agreement (excluding material for lab testing and retain) (“Loss Allowance”). The actual Loss Allowance experienced by Encap in the manufacture of Product shall be reconciled on an annual basis with the first such adjustment to occur at the end of [***]. The Parties shall determine the Loss Allowance for Product beginning [***] and beyond based on actual performance data but not to exceed [***]. Additionally, the agreed upon Loss Allowance shall be subject to recalculation on an annual basis to account for increases in efficiencies by Encap in the manufacture of Product. Encap shall not be responsible for any failure to deliver or any delivery delay of Product due to the failure of Customer to deliver or cause delivery of API in the time specified in this Section. In the event of any loss or damage to API while in the possession of Encap in excess of the Loss Allowance, Encap’s sole and exclusive liability to Customer related to or arising out of such loss shall be limited to reimbursement of Customer for replacement API at the actual cost thereof plus any additional direct costs of the API including shipping, handling and importation costs. Customer shall retain title to API and all Customer supplied materials at all times, and Customer shall bear the risk of loss thereof until the time API and/or Customer supplied materials are delivered to Encap’s loading dock at the Facility.”

OBLIGATIONS OF ENCAP

5.1.

Section 6.1 of the Agreement shall be replaced by the following:

“6.1 Manufacture of the Product, Raw Materials and API. Encap shall manufacture and supply Product in accordance with the Specifications. Encap shall execute process validation batches and perform validation services with protocols, time lines and pricing as agreed to between the Parties in writing.

Promptly following execution of this Agreement, Encap shall commence such activities as necessary to ensure that it has sufficient capacity to meet its Product supply obligations hereunder which activities shall include recruitment of personnel and construction of additional clean rooms as are necessary to ensure Encap’s ability to meet its supply obligations set forth in this Agreement.

Encap shall be responsible for procuring raw materials from vendors qualified by Customer, inspecting and releasing adequate raw materials in accordance with the Specifications as necessary to meet the Firm Order, unless otherwise agreed to by the Parties in writing. Encap shall keep safety stock of raw materials required for the manufacture of the Product of at [***] days of the twelve (12) month rolling forecast. In case the Customer fails to place Purchase Orders in line with the quantities set out in the corresponding Forecast period, Encap is entitled to pass the material costs on to the Customer should the raw materials purchased become expired.”

LIMITATION ON LIABILITY.

6.1.

The following shall be added at the end of Section 11.4:

“NOTWITHSTANDING THE FOREGOING, NOTHING IN THIS SECTION 11.4 SHALL LIMIT OR CAP ENCAP’S LIABILITY IN THE EVENT OF ENCAP’S GROSS NEGLIGENCE OR WILFUL MISCONDUCT.”

TERMINATION

7.1.

Section 14.3 of the Agreement shall be replaced by the following:

“14.3 Termination by Encap. Encap shall be entitled to terminate this Agreement without any penalty if Customer breaches its payment obligations [***] during the Term, provided that with respect to any breach of a payment obligation, Customer shall have [***] days to cure such breach from the date of written notification from Encap that a breach has occurred.

In addition, [***] post commercial launch of the Product, Encap may terminate this Agreement without cause with at least [***] advance written notice to Customer. For further clarity, the earliest effective date of termination of this Agreement through Encap would be [***] years from commercial launch of the Product.

MISCELLANEOUS

8.1.

Section 16.2 of the Agreement shall be replaced by the following:

“16.2 Successors and Assigns. Customer may assign this Agreement without the prior written consent of Encap.”

EXHIBIT A COMMERCIAL TERMS

9.1.

The Section “Pricing” shall be replaced by the following:

[***]

*Price based on an Order Quantity of a minimum of [***] batches; it includes conversion cost, raw materials, empty capsules but excludes API (provided by the Customer). The batch size is [***] capsules.

10.

EXHIBIT B RELEASE SPECIFICATIONS

10.1.

Release Specification of Testosterone Undecanoate Capsules Drug Product Specifications 75mg is deleted.

11.

OTHERS

11.1.

Save as amended by this Amendment #01, the terms of the Agreement shall continue in force and effect unmodified.

11.2.

This Amendment #01 shall effective as of the date of the last signature below.

11.3.

The Parties agrees that the electronic signatures, whether digital or encrypted, of the parties included in this Amendment #01 are intended to authenticate this writing and to have the same force and effect as manual signatures. Delivery of a copy of this Amendment #01 or any other document contemplated hereby bearing an original or electronic signature by facsimile transmission (whether directly from one facsimile device to another by means of a dial-up connection or whether mediated by the worldwide web), by electronic mail in “portable document format” (“.pdf”) form, or by any other electronic means intended to preserve the original graphic and pictorial appearance of a document, will have the same effect as physical delivery of the paper document bearing an original or electronic signature.

In witness thereof, the Parties have executed this Amendment #01:

Livingston, this		Salt Lake City, this
MW Encap Ltd.		Lipocine Inc.

/s/ Peter Burema		/s/ Morgan Brown
Peter Burema		Morgan Brown
CEO		EVP and CFO

EXHIBIT 31.1

CERTIFICATIONS

I, Mahesh V. Patel, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Lipocine Inc.;

2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

	a)	designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

	b)	designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

	c)	evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

	d)	disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

	a)	all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

	b)	any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: November 10, 2021	/s/ Mahesh V. Patel
	Mahesh V. Patel, President and Chief Executive Officer
	(Principal Executive Officer)

EXHIBIT 31.2

CERTIFICATIONS

I, Morgan R. Brown, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Lipocine Inc.;

2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

	a)	designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

	b)	designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

	c)	evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

	d)	disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

	a)	all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

	b)	any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: November 10, 2021

/s/ Morgan R. Brown

Morgan R. Brown, Executive Vice President and

Chief Financial Officer

(Principal Financial and Accounting Officer)

EXHIBIT 32.1

CERTIFICATION

In connection with the Quarterly Report on Form 10-Q of Lipocine Inc. (the “Corporation”) for the quarter ended September 30, 2021 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, Mahesh V. Patel, President and Chief Executive Officer of the Corporation, hereby certifies, pursuant to Rule 13a-14(b) or Rule 15d-14(b) and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to his knowledge:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Corporation.

Dated: November 10, 2021

/s/ Mahesh V. Patel

Mahesh V. Patel, President and Chief Executive Officer

(Principal Executive Officer)

EXHIBIT 32.2

CERTIFICATION

In connection with the Quarterly Report on Form 10-Q of Lipocine Inc. (the “Corporation”) for the quarter ended September 30, 2021 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, Morgan R. Brown, Executive Vice President and Chief Financial Officer of the Corporation, hereby certifies, pursuant to Rule 13a-14(b) or Rule 15d-14(b) and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to his knowledge:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Corporation.

Dated: November 10, 2021

/s/ Morgan R. Brown

Morgan R. Brown, Executive Vice President and

Chief Financial Officer

(Principal Financial and Accounting Officer)