LIPOCINE INC. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (form 10-Q) – Marketscreener.com

The following discussion of our financial condition and results of operationsshould be read in conjunction with our unaudited condensed consolidatedfinancial statements and the related notes thereto and other financialinformation included elsewhere in this report. For additional context with whichto understand our financial condition and results of operations, see themanagement's discussion and analysis included in our Form 10-K, filed with theSEC on March 9, 2022 as well as the financial statements and related notescontained therein.

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

This section and other parts of this report contain forward-looking statementswithin the meaning of Section 27A of the Securities Act of 1933, as amended, andSection 21E of the Securities Exchange Act of 1934, as amended, that involverisks and uncertainties. Forward-looking statements provide current expectationsof future events based on certain assumptions and include any statement thatdoes not directly relate to any historical or current fact. Forward-lookingstatements may refer to such matters as products, product benefits, pre-clinicaland clinical development timelines, clinical and regulatory expectations andplans, expected responses to regulatory actions, anticipated financialperformance, future revenues or earnings, business prospects, projectedventures, new products and services, anticipated market performance, expectedresearch and development and other expenses, future expectations for liquidityand capital resources needs and similar matters. Such words as "may", "will","expect", "continue", "estimate", "project", and "intend" and similar terms andexpressions are intended to identify forward looking statements. Forward-lookingstatements are not guarantees of future performance and our actual results maydiffer significantly from the results discussed in the forward-lookingstatements. Factors that might cause such differences include, but are notlimited to, those discussed in Part II, Item 1A (Risk Factors) of this Form10-Q, or in Part I, Item 1A (Risk Factors) of our Form 10-K filed with the SECon March 9, 2022. Except as required by applicable law, we assume no obligationto revise or update any forward-looking statements for any reason.

We are a clinical-stage biopharmaceutical company focused on neuroendocrine andmetabolic disorders using our proprietary oral drug delivery technology. Ourproprietary delivery technologies are designed to improve patient compliance andsafety through orally available treatment options. Our primary developmentprograms are based on oral delivery solutions for poorly bioavailable drugs. Wehave a portfolio of differentiated innovative product candidates that targethigh unmet needs for neurological and psychiatric CNS disorders, liver diseases,and hormone supplementation for men and women.

We entered into a license agreement for the development and commercializationour product candidate, TLANDO, an oral testosterone replacement therapy ("TRT")comprised of testosterone undecanoate ("TU"). TLANDO is a registered trademarkassigned to Antares. On October 14, 2021, we entered into a license agreement(the "Antares License Agreement") with Antares Pharma, Inc. ("Antares" or our"Licensee"), 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 United States Food and DrugAdministration ("FDA"), the TLANDO product for TRT in the U.S. Any FDA requiredpost-marketing studies will also be the responsibility of our licensee, Antares.On March 28, 2022, Antares received approval from the FDA for TLANDO as a TRT inadult males for conditions associated with a deficiency of endogenoustestosterone, also known as hypogonadism.

Additional pipeline candidates include: LPCN 1148 comprising a novel prodrug oftestosterone, testosterone laurate ("TL"), for the management of decompensatedcirrhosis; LPCN 1144, an oral prodrug of androgen receptor modulator for thetreatment of non-cirrhotic non-alcoholic steatohepatitis ("NASH") which hascompleted phase 2 testing; LPCN 1111 (TLANDO XR), a next generation oral TRTproduct comprised of testosterone tridecanoate ("TT") with the potential foronce daily dosing which has completed Phase 2 testing; ; LPCN 1107, potentiallythe first oral hydroxy progesterone caproate ("HPC") product indicated for theprevention of recurrent preterm birth ("PTB"), which has completed a dosefinding clinical study in pregnant women and has been granted orphan drugdesignation by the FDA; and neuroactive steroids (NAS) including LPCN 1154 forpostpartum depression (PPD) and LPCN 2101 for epilepsy.

The following chart summarizes the status of our product candidate developmentprograms:

To date, we have funded our operations primarily through the sale of equitysecurities, debt and convertible debt and through up-front payments, researchfunding and royalty and milestone payments from our license and collaborationarrangements. We have not generated any revenues from product sales and we donot expect to generate revenue other than TLANDO royalties and license fees fromproduct sales by Antares unless and until we obtain regulatory approval of ourproduct candidates.

We have incurred losses in most years since our inception. As of March 31, 2022,we had an accumulated deficit of $176.2 million. Income and losses fluctuateyear to year, primarily depending on the nature and timing of research anddevelopment occurring on our product candidates. Our net loss was $3.5 millionfor the three months ended March 31, 2022, compared to $3.4 million for thethree months ended March 31, 2021. Substantially all of our operating lossesresulted from expenses incurred in connection with our product candidatedevelopment programs, our research activities and general and administrativecosts associated with our operations.

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

To fund future long-term operations, including the potential commercializationof any of our product candidates, we will need to raise additional capital. Theamount and timing of future funding requirements will depend on many factors,including capital market conditions, the commercial success of TLANDO,regulatory requirements related to our other product development programs, thetiming and results of our ongoing development efforts, the potential expansionof our current development programs, potential new development programs, ourability to license our products to third parties, the pursuit of variouspotential commercial activities and strategies associated with our developmentprograms and related general and administrative support. We anticipate that wewill seek to fund our operations through public or private equity or debtfinancings or other sources, such as potential license, partnering andcollaboration agreements. We cannot be certain that anticipated additionalfinancing will be available to us on favorable terms, in amounts sufficient tofund our operations, or at all. Although we have previously been successful inobtaining financing through public and private equity securities offerings andour license and collaboration agreements, there can be no assurance that we willbe able to do so in the future.

Our goal is to become a leading biopharmaceutical company focused on applyingour proprietary drug delivery technology for the development of pharmaceuticalproducts focusing on neuroendocrine and metabolic disorders. The key componentsof our strategy are to:

Build a diversified multi-asset pipeline of novel therapies. We intend to employa value-driven strategy based on our proprietary technology platform to identifyand develop product candidates for neuroendocrine and metabolic disordersincluding Central Nervous System (CNS) disorders and end stage diseases such asdecompensated cirrhosis. We intend to focus on product candidates that webelieve are differentiated, have attractive profiles, and address a clear unmetmedical need that we can advance quickly and efficiently into late-stagedevelopment.

Advance LPCN 1148, a unique prodrug of androgen receptor agonist to manage endstage (decompensated) liver cirrhosis disease. We believe LPCN 1148, a novelprodrug of testosterone, could address a significant unmet medical need inpatients with decompensated liver cirrhosis accompanied with muscle disordersuch as secondary sarcopenia. Sarcopenia in male cirrhotic patients is known tobe independently associated with poor outcomes including quality of life,increased decompensation events such as hepatic encephalopathy, increasedhospital admissions, and increased mortality rate. We believe LPCN 1148 may beeligible for an orphan drug designation. Enrollment in a multi-centerplacebo-controlled phase 2 trial is currently ongoing.

Support our licensee in commercialization of our licensed oral TRT option. Webelieve the TRT market needs a differentiated, convenient oral option. We haveexclusively licensed rights to TLANDO to Antares for commercialization of TLANDOin the US. We plan to support our licensee's efforts to effectively enable theavailability of TLANDO to patients in a timely manner, in addition to receivingmilestone and royalty payments associated with TLANDO commercialization asagreed to in the Antares License Agreement.

Develop partnership(s) to continue the advancement of pipeline assets. Wecontinuously strive to prioritize our resources in seeking co-developmentpartnerships of our pipeline assets. We currently plan to explore partnering ofLPCN 1144, our candidate for treatment of non-cirrhotic NASH, LPCN 1107, ourcandidate for prevention of pre-term birth, and LPCN 1111, a once-a-day therapycandidate for TRT.

Our pipeline of clinical candidates including LPCN 1148, an androgen therapy forthe management of cirrhosis, LPCN 1144, an oral androgen therapy for thetreatment of non-cirrhotic NASH, LPCN 1111, a next-generation potential oncedaily oral TRT, LPCN 1107, an oral therapy for the prevention of PTB, and NASincluding LPCN 1154 for postpartum depression (PPD) and LPCN 2101 for epilepsy.We will continue to explore other product candidates targeting indications witha significant unmet need.

Our products are based on our proprietary Lip'ral drug delivery technologyplatform. Lip'ral based TLANDO was approved in March 2022. Lip'ral technology isa patented technology based on lipidic compositions which form an optimaldispersed phase in the gastrointestinal environment for improved absorption ofinsoluble drugs. The drug loaded dispersed phase presents the solubilized drugefficiently at the absorption site (gastrointestinal tract membrane) thusimproving the absorption process and making the drug less dependent onphysiological variables such as dilution, gastro-intestinal pH, and food effectsfor absorption. Lip'ral based formulation enables improved solubilization andhigher 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 targetedlymphatic delivery where appropriate.

LPCN 1148: Oral Product Candidate for the Management of Decompensated Cirrhosis

We are currently evaluating LPCN 1148 comprising testosterone laurate (TL) forthe management of decompensated cirrhosis. We believe LPCN 1148 targets unmetneeds for cirrhosis subjects including improvement in the quality of life ofpatients while on the liver transplant waiting list, prevention or reduction inthe occurrence of new decompensation events, and improvement in post livertransplant survival, including outcomes and costs.

We are currently conducting a Phase 2 POC study (NCT04874350) in male cirrhoticsubjects to evaluate the therapeutic potential of LPCN 1148 for the managementof sarcopenia. The ongoing Phase 2 POC study is a prospective, multi-center,randomized, placebo-controlled study in male sarcopenic cirrhotic patients.Subjects will be randomized 1:1 to one of two arms. The treatment arm is an oraldose of LPCN 1148, and the second arm is a matching placebo. The primaryendpoint is change in skeletal muscle index at week 24 with key secondaryendpoints including change in liver frailty index, rates of breakthrough hepaticencephalopathy, and number of waitlist events, including all-cause mortality.Total treatment is expected to be 52 weeks. We currently expect enrollment inthe Phase 2 study to be complete by the end of the third quarter of 2022 andtop-line 24-week results by the end of the first quarter of 2023.

Possible outcomes of interest from the Phase 2 study include clinical outcomessuch as overall survival and new decompensation events (including hepaticencephalopathy and/or ascites occurrences), rates of survival to transplant,rates of hospitalizations, infections, etc., muscle changes such as muscle mass,body composition, myosteatosis (muscle fat), functional capacity changes such asliver frailty index (LFI), patient reported outcomes (PROs), and biochemicalmarkers including hematocrit for anemia status, albumin, creatinine/kidneyfunction, etc.

Disease Overview - Cirrhosis

There are over 2 million cases of cirrhosis worldwide, with over 500,000 peopleliving with decompensated cirrhosis in the U.S. and nonalcoholic fatty liverdisease is the most rapidly increasing indication for liver transplant. 62% ofthose on the liver transplant ("LT") waitlist are male. The economic burden(approximately $812,500/transplant) is high and continues to increase. Each yearabout half of the approximately 17,000 people in U.S. on the LT waitlist undergotransplant, while nearly 3,000 patients either die or are removed from the listbecause they were "too sick to transplant."

Liver cirrhosis is defined as the histological development of regenerativenodules surrounded by fibrous bands. Cirrhotic patients typically have ayears-long silent, asymptomatic phase (compensated cirrhosis) until decreasingliver function and increasing portal pressure move the patient into thesymptomatic phase (decompensated cirrhosis). Transition to decompensatedcirrhosis is marked by clinical events including ascites, encephalopathy,jaundice, and/or variceal hemorrhage. Decompensated subjects survive on averageless than 2 years. Common causes of liver cirrhosis include alcoholic liverdisease, nonalcoholic fatty liver disease (NAFLD), chronic hepatitis B and C,primary biliary cirrhosis (PBC), primary sclerosing cholangitis (PSC) andcryptogenic.

Common complications in cirrhotic patients may include: compromised liverfunction, portal hypertension, varices in GI tract with internal bleeding,edema, ascites, hepatic encephalopathy, compromised immunity withpost-transplant acute rejection risk, high sodium levels, increased bilirubin,low albumin level, insulin resistance with impaired peripheral uptake ofglucose, depression, accelerated muscle disorder in the form of sarcopenia,myosteotosis, and frailty with compromised energetics, bone diseases (e.g.,osteoporosis), high alkaline phosphatase (ALP), cachexia, malnutrition, weightloss (>5%), symptoms of hypogonadism such as abnormal hair distribution, anemia,sexual dysfunction, testicular atrophy, muscle wasting, fatigue, osteoporosis,gynecomastia, inflammation with elevated cytokines, and infection risk leadingto hospital admissions and possibly death.

Hepatic encephalopathy ("HE"), a significant decompensation event in patientwith cirrhosis, is a brain dysfunction caused by liver insufficiency and/orportal systemic shunting. Because the damaged liver cannot function normally (asin cirrhosis), neurotoxins such as ammonia are inadequately removed fromsystemic circulation and travel to the brain, where they affectneurotransmission. This can cause episodes of HE, which may present asalterations in consciousness, cognition, and behavior that range from minimal tosevere. Overt HE occurs in 30% to 40% of patients with cirrhosis at some pointduring the clinical course of their disease. As the burden of chronic liverdisease and cirrhosis is increasing, the frequency of HE is also increasing.

Muscle Disorders and Cirrhosis

Muscle disorders secondary to cirrhosis could be manifested in the form ofseveral inter-related characteristics such as sarcopenia, myosteotosis, andfrailty impacting muscle mass, strength, quality, and function. Chronicinflammation and oxidative stress have also been reported to accelerate musclewasting. Muscle also plays a significant compensatory role in detoxifyingammonia, a neurotoxin and a myotoxin implicated in precipitation of HE incirrhosis patients.

Sarcopenia and associated frailty affect up to 70% of cirrhotic men and are aleading cause of patients being removed from the LT wait list. Due to the lackof available organs and aging demographics of those on the waitlist, patientsthat do receive a transplant are "increasingly being described as frail". Thepresence of sarcopenia or frailty is associated with increased risk ofhospitalization and hepatic decompensation, a two-fold increase in waitlistmortality, poor post-transplant outcomes, and reportedly is equivalent to adding9-10 points to the Model for End-Stage Liver Disease (MELD) score.

Sarcopenia is typically associated with body composition changes with decreasedmuscle mass and/or low skeletal muscle index. Change in one or more ofappendicular lean mass, total lean mass, fat mass, high VAT (visceral adiposetissue), waist circumference, weight, and/or BMI are notable features.Myosteotosis (fat infiltration in muscles) is indicative of poor muscle quality.Frailty is a state of low energetics accompanied with low physicalperformance/mobility probably because of poor muscle strength/function and isassessed via various measures such as decreased gait speed, weak hand grip; slowrising from a chair, balance, isometric knee extension peak torque or acomposite measure such as liver frailty index (LFI).

Reportedly, as shown in the figure below, muscle disorder such as sarcopenia andmyosteotosis in cirrhosis could be a clinically meaningful predictor of survivaland mortality with lower survival in cirrhotic patients with accompanying muscledisorders.

Muscle Disorders and Mortality in Liver Cirrhosis

Sarcopenia develops in the majority of male cirrhosis patients. The mainmechanisms associated with sarcopenia and decompensated cirrhosis include acatabolic state, progressive immobility, imbalance between muscle breakdown andformation, and hormonal changes. Patients are typically diagnosed withdecompensated cirrhosis upon development of cirrhotic symptoms (e.g., jaundice,HE), and the diagnosis is confirmed via various liver function/imaging tests(e.g., MELD score, liver biopsy, CT scan). A variety of clinical evaluations formuscle mass, strength, and function are typically used to diagnose sarcopenia.Sarcopenia in cirrhosis also correlates with decompensation events, particularlyHE (sarcopenia is about 2-fold more prevalent in overt HE patients than thosewithout overt HE). Notably, low testosterone in males is associated withsarcopenia, severity of cirrhosis, and mortality.

Reportedly, as shown in figure below, sarcopenia is a predictor for increasedmortality in cirrhosis (about 2-fold higher compared to no sarcopenia).

Reportedly, as shown in figure below, pre transplant sarcopenia in livercirrhosis often produces poor post-transplant outcomes with higher mortalityrates. Longer post-transplant hospitalization and rehabilitation can bedemanding on the individual, both physically and financially.

Myosteatosis, fat infiltration in muscles, has been found in many cirrhoticpatients undergoing liver transplant evaluation, and studies have associated itwith more complications and poor survival. Myosteatosis is characteristicallyassociated with liver steatosis in NAFLD, resulting from ectopic fataccumulation in skeletal muscle. Myosteatosis may affect many individuals who donot meet the anthropometric criteria for sarcopenia or obesity. The accumulationof excess fat in extramyocellular compartments is mostly pathologic. It can bedefined as intramuscular (between muscle fibers) or intermuscular (betweenmuscle fascicles) and is associated with lower muscle function and strength,muscle atrophy, and physical disabilities.

Frailty is a state of low energetics accompanied with low physicalperformance/mobility, usually as a result of poor muscle strength/function andits presence is assessed via various measures such as decreased gait speed, weakhand grip, slow rising from a chair, poor balance, low isometric knee extensionpeak torque or a composite measure such as liver frailty index (LFI).

Reportedly, as shown in figure below, frailty predicts LT waitlist mortalityamong outpatients with cirrhosis regardless of the MELD score.

The presence of frailty is associated with increased waitlist death/delisting

Moreover, it has also been reported, as shown in figure below, that there is ahigher incidence of waitlist mortality as the frailty worsened.

Trajectory of liver frailty and mortality

Currently, there are no FDA approved drugs to treat secondary sarcopenia incirrhosis. We believe we are the only clinical-stage company pursuingdecompensation in sarcopenic cirrhotic patients, and no regulatory precedentcurrently exists for the approval of decompensation or sarcopenia-targetedtherapies. We believe LPCN 1148 has the potential to aid the management ofdecompensation events in male sarcopenic cirrhotic patients through thefollowing possible mechanisms of action: myo-augmentation (impact muscle massand/or quality and/or function) via myostatin inhibition, myosteatosisreduction, anti-catabolic effect, changes in body composition (increase leanmass and/or reduce fat mass) and slowing muscle autophagy; inducinghepato-effective actions with improved key liver injury markers; increaseprotein synthesis; improve anemia, induce immunomodulation with improvement ofimmuno-dysregulation, and lower infection rates; anti-inflammatory/antioxidanteffects by lowering undesirable cytokines such as IL-1, IL-6, and TNF-?; andimprove mitochondrial function.(1)

(1) Ref: Leise. Mayo Clin Proc. 2014.; Hudson. Eur J Gastroenterol. 2019.; Bajaj.

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

We are currently evaluating LPCN 1144, an oral prodrug of bioidenticaltestosterone comprised of TU, for the treatment of non-cirrhotic NASH.

NASH is a more advanced state of non-alcoholic fatty liver disease ("NAFLD") andcan progress to a cirrhotic liver or liver failure, require liver transplant,and can result in hepatocellular carcinoma/ liver cancer, and death. Progressionof NASH to end stage liver disease will soon surpass all other causes of liverfailure requiring liver transplantation. Importantly, beyond these criticalconditions, NASH and NAFLD patients additionally suffer heightenedcardiovascular risk and, in fact, die more frequently from cardiovascular eventsthan from liver disease. NAFLD/NASH is becoming more common due to its strongcorrelation with obesity and metabolic syndrome, including components ofmetabolic syndrome such as diabetes, cardiovascular disease and high bloodpressure. Twenty to thirty percent of the U.S. population is estimated to sufferfrom NAFLD and fifteen to twenty percent of this group progresses to NASH, whichis a substantially large population that lacks an effective therapy. NASH is asilent killer that affects millions in the U.S. Diagnoses have been on the riseand are expected to increase dramatically in the next decade. Approximately 50%of NASH patients are in adult males. In men, especially with comorbiditiesassociated with NAFLD/NASH, testosterone deficiency has been associated with anincreased visceral adipose tissue and insulin resistance, which could be factorscontributing to NAFLD/NASH. There is currently no approved therapy for thetreatment of NASH although there are several drug candidates currently underdevelopment with many clinical failures to date.

The critical pathophysiologic mechanisms underlying the development andprogression of NASH include reduced ability to handle lipids, increased insulinresistance, injury to hepatocytes and liver fibrosis in response to hepatocyteinjury. NASH patients have an excessive accumulation of fat in the liverresulting primarily from a caloric intake above and beyond energy needs. Ahealthy liver contains less than 5% fat, but a liver in someone with NASH cancontain more than 20% fat. This abnormal liver fat contributes to theprogression to NASH, a liver necro-inflammatory state that can lead to scarring,also known as fibrosis, and, for some, can progress to cirrhosis and liverfailure.

Alanine aminotransferase ("ALT") is an enzyme that is produced in liver cellsand 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 bloodlevels of ALT to monitor the health of a patient's liver. ALT level is aclinically important biochemical marker of the severity of liver inflammationand ongoing liver disease. Elevated levels of ALT represent general markers ofliver cell death and inflammation without regard to any specific mechanism.Aspartate aminotransferase ("AST") is a second enzyme found in the blood that isproduced in the liver and routinely measured by physicians along with ALT. Aswith ALT, AST is often elevated in liver disease and, like ALT, is considered anoverall marker of liver inflammation.

Most people with NASH are asymptomatic and their disease is often discoveredincidentally following a liver imaging procedure, such as an ultrasound,prescribed for other reasons or as part of an investigation for elevated liverenzymes. Once suspected clinically, a liver biopsy is required to definitivelydiagnose NASH, which necessitates the joint presence of steatosis, ballooningand lobular inflammation. Once pathologically confirmed, the severity of NAFLDand NASH is determined using the histologically validated NAFLD activity score,which grades disease activity on a scale of 0 to 8. The NAFLD activity score isthe sum of the individual scores for steatosis (0 to 3), lobular inflammation (0to 3), and hepatocellular ballooning (0 to 2) but does not include a score forfibrosis. Fibrosis staging (F0-F4) relies on the NASH CRN classification (F0 =no fibrosis; F1 = perisinusoidal or portal/periportal fibrosis (not both); F2 =both perisinusoidal and portal/periportal fibrosis; F3 = bridging fibrosis; F4 =cirrhosis).

Histological diagnosis remains the gold standard for assessment of NASH andfibrosis. However, given that liver biopsy is associated with risks of pain,bleeding and other morbidity, as well as significant cost, the procedure is notpractical for general patient screening. Several non-invasive tools such asclinical risk scores and imaging techniques are increasingly used to assesspotential NASH patients. Clinical risk scores such as the NAFLD fibrosis score,Fibrosis-4 index, the Enhanced Liver Fibrosis score and vibration-controlledtransient elastography ("VCTE"), have been validated and are increasingly used.These tools have an excellent negative predictive value and an acceptablepositive predictive value for detection of advanced (? F3) fibrosis and areincreasingly used in clinical settings. Extensive efforts are also under way todevelop non-invasive means to identify patients with NAS ? 4 or fibrosis ? F2without a liver biopsy. In draft guidance, the FDA encouraged sponsors toidentify biochemical or noninvasive imaging biomarkers that, once characterizedand agreed by the FDA, could replace liver biopsies for patient selection andefficacy assessment in clinical trials.

We expect that the validation and subsequent adoption of these new tools willresult in an increase in the diagnosis and treatment rates for NASH in thefuture.

We have recently completed the LiFT Phase 2 clinical study in biopsy-confirmednon-cirrhotic NASH subjects. The LiFT clinical study was a prospective,multi-center, randomized, double-blind, placebo-controlled multiple-arm study inbiopsy-confirmed hypogonadal and eugonadal male NASH subjects with grade F1-F3fibrosis and a target 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 twicedaily oral dose of 142 mg testosterone equivalent, Treatment B is a twice dailyoral dose of 142 mg testosterone equivalent formulated with 217 mg of d-alphatocopherol equivalent, and the third arm is twice daily matching placebo).

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

Additionally, subjects have access to LPCN 1144 through an open label extension("OLE") study. The extension study will enable the collection of additional dataon LPCN 1144 for up to a total of 72 weeks of therapy, as well as data for 36weeks of therapy for those subjects on placebo in the LiFT study. The OLE hasbeen completed and we expect topline results from the study in May 2022.

Treatments with LPCN 1144 post 12 weeks of treatment resulted in robust liverfat reduction, assessed by MRI-PDFF, and showed improvement of liver injurymarkers with no observed tolerability issues.

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 digitaltechnique ("Digital Technique-Fibronest"). All biopsy analyses were performed onthe same slides and the reads for the three techniques were done independently.Analysis sets included the NASH Resolution Set (all subjects that have BL andEOS biopsy with NASH at BL [NAS ?4 with lobular inflammation score ? 1 andhepatocyte ballooning score ?1 at BL] (n=37)), the Biopsy Set (all subjects withbaseline and EOS biopsies (n=44)), and the Safety Set (all randomized subjects(n=56)).

Both LPCN 1144 treatment arms met with statistical significance thepre-specified accelerated approval regulatory endpoint of NASH resolution withno worsening of fibrosis based on NASH CRN scoring. Additionally, both treatmentarms showed substantial improvement of the observed NASH activity in steatosis,inflammation, and ballooning.

Key results from the LiFT clinical study are presented in the following tablesand figures:

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

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

Finding on liver injury marker and positive effects on body composition can beseen in the following table:

During the 36 weeks of treatment, LPCN 1144 was well tolerated with an overallsafety profile comparable to placebo.

In November 2021, the FDA granted Fast Track Designation to LPCN 1144 as atreatment for non-cirrhotic NASH. The Fast Track program is designed toaccelerate the development and expedite the review of products, such as LPCN1144, which are intended to treat serious diseases and for which there is anunmet medical need.

We had a written only response from FDA for a LPCN 1144 Type C meeting with theFDA in January 2022 to discuss the development path forward with LPCN 1144. TheFDA acknowledged that the NDA submission of LPCN 1144 would be via 505(b)2regulatory pathway and agreed that no additional non-clinical studies are neededto support an NDA submission. The FDA recommended to request an end-of-phase 2(EOP2) meeting. The FDA acknowledged that in the LiFT study subjects achievedimprovements in key components associated with NASH histopathology after36-weeks of treatment with LPCN 1144 in adult males and agreed that the proposedmulticomponent primary surrogate endpoint is acceptable for seeking approvalunder the accelerated approval pathway. The FDA also recommended eitherconducting a separate dose-ranging study prior to phase 3 or evaluating multipledoses in phase 3. The FDA agreed that the proposed primary multicomponentsurrogate endpoint, NASH resolution with no worsening of fibrosis, is acceptablefor seeking approval under the accelerated approval pathway and the FDArecommended a phase 3 trial with a study duration of 72 weeks. The FDA hasrequested that Lipocine submit an updated Phase 3 protocol for FDA feedback onthe study design and we have requested an EOP2 meeting to discuss the phase 3and confirmatory trial designs.

We are exploring the possibility of licensing LPCN 1144 to a third party,although no licensing agreement has been entered into by the Company. Noassurance can be given that any license agreement will be completed, or, if anagreement is completed, that such an agreement would be on acceptable terms.

TLANDO: An Oral Product Candidate for Testosterone Replacement Therapy

As previously described, under the Antares License Agreement, we granted toAntares an exclusive, royalty-bearing, sublicensable right and license todevelop and commercialize, upon final approval of TLANDO from the FDA, ourTLANDO product for TRT in the U.S. On December 8, 2020, the FDA providedtentative approval for TLANDO as a TRT in adult males for conditions associatedwith a deficiency of endogenous testosterone, also known as hypogonadism. TheFDA provided final approval of TLANDO on March 28, 2022. Any FDA requirement toconduct certain post-marketing studies will be the responsibility of ourlicensee, Antares.

Proof-of-concept for TLANDO was initially established in 2006, and subsequentlyTLANDO was licensed in 2009 to Solvay Pharmaceuticals, Inc. which was thenacquired by Abbott Products, Inc. ("Abbott"). Following a portfolio reviewassociated with the spin-off of AbbVie Inc. by Abbott in 2011, the rights toTLANDO were reacquired by us. All obligations under the prior license agreementhave been completed except that Lipocine will owe Abbott a perpetual 1% royaltyon net sales. Such royalties are limited to $1 million in the first two calendaryears following product launch, after which period there is not a cap onroyalties and no maximum aggregate amount. If generic versions of any suchproduct are introduced, then royalties are reduced by 50%.

Under the Pediatric Research Equity Act ("PREA"), since TLANDO received full FDAapproval, under the Antares Licensing Agreement, Antares will need to addressthe PREA requirement to assess the safety and effectiveness of TLANDO inpediatric patients. The FDA may also require certain post-marketing studies tobe conducted which will also be the responsibility of our licensee, Antares.

Upon execution of the Antares License Agreement, Antares paid to us an initialpayment of $11.0 million. Antares will also make additional payments of $5.0million to us on each of January 1, 2025, and January 1, 2026, provided thatcertain conditions are satisfied. We are also eligible to receive milestonepayments of up to $160.0 million in the aggregate, depending on the achievementof certain sales milestones in a single calendar year with respect to allproducts licensed by Antares under the Antares License Agreement. In addition,upon commercialization, we will receive tiered royalty payments at rates rangingfrom percentages in the mid-teens to up to 20% of net sales of TLANDO in theUnited States, subject to certain minimum royalty obligations. Further, onOctober 14, 2021, we assigned our Manufacturing Agreement, dated August 27,2013, by and between the Company and Encap Drug Delivery (the "ManufacturingAgreement") to Antares as part of the Antares License Agreement.

We are exploring the possibility of licensing LPCN 1021 (known as TLANDO in theUnited States) to third parties outside the United States, although no licensingagreement has been entered into by the Company. If and when an agreement is madewith a partner, such arrangement would likely be contingent upon obtainingacceptable cost of goods by securing an agreement with a new manufacturer inaddition to obtaining local regulatory approval. No assurance can be given thatany license agreement will be completed, or, if an agreement is completed, thatsuch an agreement would be on terms favorable to us.

LPCN 1111: A Next-Generation Long-Acting Oral Product Candidate for TRT

LPCN 1111: is a next-generation, novel ester prodrug of testosterone comprisedof testosterone tridecanoate (TT) which uses the proprietary delivery technologyto enhance solubility and improve systemic absorption. We completed a Phase 2bdose finding study in hypogonadal men in the third quarter of 2016. The primaryobjectives of the Phase 2b clinical study were to determine the starting Phase 3dose of LPCN 1111 along with safety and tolerability of LPCN 1111 and itsmetabolites following oral administration of single and multiple doses inhypogonadal men. Good dose-response relationship was observed over the testeddose range in the Phase 2b study. Additionally, the target Phase 3 dose metprimary and secondary end points. Overall, LPCN 1111 was well tolerated with nodrug-related severe or serious adverse events reported in the Phase 2b study.

In February 2018 we had a meeting with the FDA to discuss these pre-clinicalresults and to discuss the Phase 3 clinical study and path forward for LPCN1111. Based on the results of the FDA meeting and additional pre-clinicalstudies conducted after the FDA meeting, we have proposed a Phase 3 protocol forLPCN 1111 and have solicited FDA feedback. Based on initial FDA feedback, weexpect the Phase 3 clinical trial design to follow the International Council forHarmonisation of Technical Requirements for Pharmaceuticals for Human Use("ICH") guidelines and we expect the trial will include at least a three-monthefficacy treatment period and a one-year safety component for approximately 100subjects. We are currently seeking further clarification from FDA with respectto the total subject LPCN 1111 exposure information needed for an NDA filing. Wecontinue to refine the Phase 3 protocol and plan to request FDA approval of theprotocol once it is finalized. Additionally, the FDA previously requested that afood effect and a phlebotomy study be completed, and that ambulatory bloodpressure monitoring ("ABPM") be included as part of the Phase 3 clinical study.We are currently transferring the manufacturing of LPCN 1111 to a third-partycontract manufacturer and scaling up the formulation after which we anticipatethe next steps in developing LPCN 1111 may be to conduct a foodeffect/phlebotomy study with LPCN 1111. Under the terms of the Antares LicenseAgreement, Antares has been granted an option to license LPCN 1111, exercisableon or before March 31, 2022, for further development and, should LPCN 1111receive FDA approval, commercialization. On April 1, 2022, the Company enteredinto the First Amendment to the License Agreement (the "Amendment"), pursuant towhich the License Agreement was amended to extend the deadline by which Antaresshall exercise its option to license LPCN 1111 to June 30, 2022. Asconsideration for the Company agreeing to enter into the Amendment, Antares paidthe Company a non-refundable cash fee of $500,000 in April 2022.If Antaresexercises its option to license LPCN 1111, we will be entitled to an additionalpayment of $3.5 million, as well as development milestone payments of up to$35.0 million in the aggregate and tiered royalty payments at rates ranging frompercentages in the mid-teens to 20% of net sales of LPCN 1111 in the UnitedStates. We are currently in the process of scaling up manufacturing productionof clinical supplies for a Phase 3 clinical trial.

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

We believe LPCN 1107 has the potential to become the first oralhydroxyprogesterone caproate ("HPC") product indicated for the reduction of riskof PTB (delivery less than 37 weeks) in women with singleton pregnancy who havea history of singleton spontaneous PTB. Prevention of PTB is a significant unmetneed as approximately 11.7% of all U.S. pregnancies result in PTB, a leadingcause of neonatal mortality and morbidity.

We have completed a multi-dose PK dose selection study in pregnant women. Theobjective of the multi-dose PK selection study was to assess HPC blood levels inorder to identify the appropriate LPCN 1107 Phase 3 dose. The multi-dose PK doseselection study was an open-label, four-period, four-treatment, randomized,single and multiple dose PK study in pregnant women with three dose levels ofLPCN 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 19weeks. 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 threetreatment periods and then received five weekly injections of HPC during thefourth treatment period. During each of the LPCN 1107 treatment periods,subjects received a single dose of LPCN 1107 on Day 1 followed by twice dailyadministration from Day 2 to Day 8. Following completion of the three LPCN 1107treatment periods and a washout period, all subjects received five weeklyinjections of HPC. Results from this study demonstrated that average steadystate HPC levels (Cavg0-24) were comparable or higher for all three LPCN 1107doses than for injectable HPC. Additionally, HPC levels as a function of dailydose 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 sevendays.

A traditional PK/PD based Phase 2 clinical study in the intended patientpopulation 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 anEnd-of-Phase 2 meeting and subsequent guidance meetings with the FDA to define apivotal Phase 2b/3 development plan for LPCN 1107. However, these discussionswill need to be updated based on recent developments with Covis' Makena. Weplan to resume our interactions with the FDA to discuss our pivotal clinicaltrial design and better understand next steps to advance LPCN 1107

We are exploring the possibility of licensing LPCN 1107 to a third party,although no licensing agreement has been entered into by the Company. Noassurance can be given that any license agreement will be completed, or, if anagreement is completed, that such an agreement would be on acceptable terms.

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

On October 5, 2020, the FDA's Center for Drug Evaluation and Research ("CDER")proposed that Makena be withdrawn from the market because the PROLONG trialfailed to verify the clinical benefit of Makena and concluded that the availableevidence does not show Makena is effective for its approved use.

CDER issued AMAG Pharmaceuticals, the NDA holder at the time, a Notice ofOpportunity for Hearing to withdraw approval of Makena, for which AMAGPharmaceuticals responded by requesting a hearing and providing detail on thecompany's position, recognizing clinicians' decade-long use of Makena'streatment and the public health implications of withdrawing approval. The FDACommissioner has recently granted Covis a public hearing although the date ofthat hearing is not publicly known. During this time, Makena and the approvedgenerics of Makena will remain on the market until the FDA makes a finaldecision about these products.

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

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

Oral NAS Programs for CNS Disorders

Some preferred endogenous or naturally occurring NAS present in central nervoussystem (CNS) act as positive allosteric modulators (PAM) of the GABAA receptor,the major biological target of the inhibitory neurotransmitter ?-aminobutyricacid (GABAA). To improve oral delivery of these modulators, several syntheticNAS derivatives of endogenous GABAA receptor PAMs, have been developed fortherapeutic use in the past few decades.

We believe through utilization of our proprietary technology we may have theability to enable effective oral delivery of endogenous GABAA receptor PAMswhich historically had been challenging to deliver orally as they were deemed tobe not orally bioavailable. We believe these endogenous GABAA receptor PAMsprovide opportunity as a differentiated NAS for treatment of various CNSdisorders via the preferred and convenient oral route.

LPCN 1154: Product Candidate for PPD

We are currently evaluating LPCN 1154 comprising an endogenous NAS for PPD. FDAhas cleared LPCN 1154 IND (investigational new drug) application to conduct aphase 2 study in PPD. We have completed a PK study with LPCN 1154 post oraladministration in which we believe clinically relevant levels of the active wereobserved. We are currently conducting a food effect PK study.

PPD (Postpartum depression), a type of major depressive disorder with onseteither during pregnancy or within four weeks of delivery, refers to depressionpersisting up to 12 months after childbirth. PPD can be clinically segmented bythe severity of symptoms and presence of a comorbidity, including epilepsy.Approximately 1 in 9 mothers suffers from PPD in the United States alone; thisequates to approximately 500,000 women being affected by PPD annually.

Approximately, 1 in 9 mothers suffer from PPD in the United States alone, whichequates to approximately 500,000 women affected by PPD annually. We believethere is considerable unmet need within women with PPD due to lack of convenientand fast-acting oral therapies. Selective Serotonin Reuptake Inhibitors (SSRIs)have been the traditional first-line choice for women with severe PPD requiringweeks for onset of efficacy; therefore, a need for a faster onset of actionremains a significant unmet need in treating PPD, especially in women withepilepsy risk wherein psychiatric comorbidity is common and PPD rates are higherthan the general population.

Injectable brexanolone (ZulressoTM, Sage Therapeutics) became the firstFDA-approved treatment for postpartum depression. However, numerous factorslimit the utilization of injectable brexanolone such as method ofadministration, cost, and safety concerns. Administration of injectablebrexanolone requires a 60-hour continuous infusion in a supervised medicalsetting, a demanding ask for a mother with a newborn. Besides associated privacyconcerns and social stigma, hospitalization may also require separation of themother and child for a few days, which may be difficult to the already strainedmother-infant bond and may present breast feeding challenges. Moreover, thepharmacotherapy costs coupled with hospitalization/childcare costs limits itsaccessibility and affordability to women most in need of the therapy. Finally,due to concerns about the safety of injectable ZulressoTM including excessivesedation or loss of consciousness, Zulresso has a Black Box Warning in its labeland is only available through a restricted distribution program (REMS), andsites need significant time to become treatment ready.

We believe the need for a convenient, at-home treatment with faster onset ofaction which could offer privacy and affordability, independent ofsocio-economic status, for women with PPD is a significant unmet need. LPCN 1154targets this unmet need with affordable NAS.

LPCN 2101: NAS for epilepsy

We are currently evaluating an additional NAS candidate, LPCN 2101, for womenwith epilepsy ("WWE"). We have completed a pre-clinical study for LPCN 2101. Weplan to file an IND with the U.S. FDA for LPCN 2101 to conduct aproof-of-concept study for the evaluation of safety, tolerability, and efficacyin adult female subjects of childbearing age diagnosed with epilepsy.

Disease Overview - Epilepsy

Epilepsy is defined by the 1) occurrence of at least two unprovoked seizuresmore than 24 hours apart, 2) occurrence of one unprovoked seizure and aprobability of further seizures occurring over the next 10 years, and/or 3)diagnosis of an epilepsy syndrome. Patients with epilepsy are more likely to becomorbid with other conditions, including depression and anxiety.

Patients with epilepsy have increased risk of mortality due to direct effects ofseizures (e.g., status epilepticus, car accidents) and indirect effects ofseizures (e.g., suicide, cardiovascular effects.)

Epilepsy is a disorder of the brain that causes seizures, affecting thephysical, mental, and social well-being of persons, and is associated with a 2to 3 times greater mortality rate compared with the general population. About60-65% of epilepsy is idiopathic and about 30% of patients are refractory (i.e.,epilepsy not well managed with currently available antiepileptic drugs("AEDs")). Epilepsy is the most common neurological disorder during pregnancy.

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