BioVie Inc. — Form 10-Q Summary
Reporting period: Quarter and six months ended December 31, 2022; filed February 10, 2023. BioVie is a clinical-stage drug developer with no commercial revenue. Its programs include NE3107 for Alzheimer’s and Parkinson’s diseases and BIV201 for refractory ascites associated with cirrhosis.
Financial performance and liquidity
| Metric | Three months ended Dec. 31, 2022 | Six months ended Dec. 31, 2022 | Comparable 2021 period |
|---|---|---|---|
| Revenue | None | None | None |
| Operating expenses | $11.5 million | $20.3 million | $6.7 million and $12.2 million |
| Net loss | $15.7 million | $26.1 million | $5.4 million and $11.0 million |
| Basic and diluted loss per share | $0.50 | $0.89 | $0.22 and $0.45 |
| Net cash used in operating activities | Not separately presented | $17.2 million | $7.2 million |
- Research and development expense was $7.0 million for the quarter and $13.8 million for six months, up from $4.7 million and $7.8 million, respectively, primarily reflecting increased clinical activity.
- General and administrative expense was $4.4 million for the quarter and $6.4 million for six months, versus $1.9 million and $4.3 million. The quarterly increase included higher stock-based compensation, management compensation, and professional fees.
- Other expense was $4.2 million for the quarter and $5.8 million for six months. The results included $3.2 million and $3.8 million, respectively, of expense from increased fair value of derivative liabilities, as well as higher interest expense. These fair-value charges are not operating cash outflows.
- At December 31, cash was $45.7 million, working capital was approximately $38.2 million, total assets were $47.2 million, and stockholders’ equity was $26.1 million. Cash was $18.6 million at June 30, 2022.
- Six-month financing cash inflows were $44.3 million, mainly from common-stock sales. Cash increased by $27.1 million over the six months.
- Debt had a $15.0 million principal balance and a $13.3 million net carrying value. The loan is secured by company assets, matures December 1, 2024, and bears interest at the greater of prime plus 7% or 10.75% (14.5% using the reported 7.5% prime rate). Monthly principal payments were scheduled to begin July 2023.
Profit margins are not meaningful because the company reported no revenue.
Material changes and financing
- Compared with the prior-year quarter, net loss increased by approximately $10.3 million; for the six-month period, it increased by approximately $15.1 million. The filing attributes the increases principally to higher clinical and other operating costs, loan interest expense, and changes in derivative fair value.
- Under its equity sales agreement, BioVie raised $38.4 million net during the six months, including $32.5 million in the December quarter. A separate related-party placement with majority stockholder Acuitas generated approximately $5.9 million net.
- Shares outstanding were 34.5 million at December 31 and 35.0 million at February 1, 2023. The company also reported 7.77 million outstanding warrants and 3.45 million options at December 31; up to 18 million additional shares may be issuable upon specified milestones under the NeurMedix asset purchase agreement.
- In January 2023, BioVie sold an additional 483,036 shares for approximately $2.9 million net under the equity sales agreement.
Outlook, risks, and unusual items
- Management targets primary completion of the NE3107 Alzheimer’s Phase 3 study in the third quarter of calendar 2023 and expects topline results from the BIV201 Phase 2b study in mid-2023. The filing gives no earnings or revenue guidance.
- BioVie reported that both objectives of the NE3107 Parkinson’s Phase 2 study were met: safety and drug-interaction objectives, and the secondary assessment of potential motor activity. The company said it was still processing findings; the filing does not provide a clear quantified efficacy result.
- The company has generated no revenue and expects none in the foreseeable future. Management stated that cash could support operations for the next 12 months only if planned research spending is delayed and clinical programs slowed; planned operations aimed at its objectives were projected to exhaust cash within that period. Management concluded that substantial doubt exists about the company’s ability to continue as a going concern.
- Key risks include the need for further financing and resulting dilution, clinical-trial enrollment or execution delays, regulatory uncertainty, reliance on third-party research organizations, and pandemic-related disruptions. The filing also notes Mallinckrodt’s September 2022 FDA approval of terlipressin for hepatorenal syndrome, which could affect the competitive and exclusivity landscape for BIV201.
- The loan’s conversion feature and the Acuitas warrants’ down-round protection may affect future dilution and financial reporting. Derivative liabilities are Level 3 fair-value estimates based on unobservable inputs.
- Management reported disclosure controls were effective at a reasonable-assurance level and no material change in internal control over financial reporting during the quarter. The filing reports no material legal proceedings.
Important facts for investors to verify
- Whether available cash and subsequent financing are sufficient to fund planned trials without materially slowing development, given the going-concern warning.
- Enrollment, timing, and complete results for the NE3107 Alzheimer’s and Parkinson’s studies, including the clinical significance of the Parkinson’s findings.
- BIV201 Phase 2b results, regulatory path, and potential competitive or exclusivity effects following Mallinckrodt’s terlipressin approval.
- Future share issuance, warrant exercises and repricing, the lender’s conversion option, and milestone-based potential issuance of up to 18 million shares.
- The debt’s cash interest and scheduled principal payments, and the assumptions driving the reported derivative fair-value liabilities.