BioVie Inc. — Form 10-Q Summary
Reporting period: Fiscal quarter and nine months ended March 31, 2023. The filing date was May 12, 2023. Although the request metadata says “2022 Q3,” the filing covers 2023 Q3.
Business context
BioVie is a clinical-stage drug developer with no product revenue. Its programs include NE3107 for Alzheimer’s and Parkinson’s diseases and BIV201, continuous-infusion terlipressin, for refractory ascites associated with liver cirrhosis.
Financial performance and position
| Metric | Three months ended March 31, 2023 | Nine months ended March 31, 2023 | Comparison period |
|---|---|---|---|
| Revenue | None | None | None; no revenue expected in the foreseeable future |
| Research and development | $11.2 million | $25.0 million | $3.6 million and $11.4 million, respectively, in 2022 |
| Selling, general and administrative | $2.5 million | $8.9 million | $2.1 million and $6.4 million, respectively, in 2022 |
| Total operating expenses | $13.8 million | $34.1 million | $5.7 million and $18.0 million, respectively, in 2022 |
| Net loss | $15.0 million | $41.1 million | $7.0 million and $18.0 million, respectively, in 2022 |
| Loss per share, basic and diluted | $0.43 | $1.32 | $0.28 and $0.73, respectively, in 2022 |
For the nine months, operating cash use was $29.0 million, compared with $13.1 million in the prior-year period. Investing cash use was $12.5 million, mainly for Treasury bills; financing provided $54.1 million, principally from common-stock sales. Cash and cash equivalents were $31.3 million at March 31, 2023; U.S. Treasury bills were $12.5 million, bringing cash and Treasury holdings to $43.8 million. Working capital was $28.0 million.
Total liabilities were $23.5 million and stockholders’ equity was $21.7 million. The Avenue loan had $15.0 million of remaining principal, with a net carrying value of approximately $13.8 million. The loan is secured by company assets, including intellectual property, bears interest at the greater of 7% plus prime or 10.75%, and matures December 1, 2024. Interest expense was $3.2 million for the nine months. No operating margin is meaningful because the company has no revenue.
Material changes versus prior comparable periods
- Nine-month net loss increased by approximately $23.1 million. Operating expenses rose $16.1 million, primarily from increased clinical activity; other expense increased about $7.0 million, including a $4.2 million fair-value charge on derivative liabilities versus a gain in the prior-year period.
- Quarterly R&D increased $7.6 million year over year, primarily due to NE3107 clinical work. The Alzheimer’s Phase 3 study reached full enrollment; the Parkinson’s Phase 2 study reported top-line results.
- Equity issuance generated $48.2 million net proceeds during the nine months, and a related-party private placement generated $5.9 million. Shares issued increased to 36.2 million from 25.0 million at June 30, 2022.
- Cash and Treasury holdings rose from $18.6 million at June 30, 2022, while liabilities increased from $16.4 million to $23.5 million.
Outlook, risks, and unusual items
- Management states planned operations to meet its goals could deplete available cash within 12 months of March 31, 2023. Spending delays and slower clinical progress might extend the runway, but would affect planned programs. Management says these circumstances raise substantial doubt about the company’s ability to continue as a going concern; additional financing is not assured.
- The NE3107 Alzheimer’s Phase 3 trial was targeting primary completion in Q4 calendar 2023. The completed Parkinson’s Phase 2 study met its stated safety/drug-interaction and secondary objectives; further study plans were being prepared.
- The BIV201 Phase 2b trial was paused in March 2023. Early results from the first 15 treated patients showed reductions in ascites fluid versus baseline, but the filing describes limited patient data and does not report a completed trial result.
- Potential funding sources include equity sales, loans, or strategic transactions. Further equity issuance may dilute shareholders. Outstanding warrants covered 7.77 million shares, options 3.44 million, and restricted stock units 0.53 million; milestone-related consideration could require up to 18 million additional shares. Acuitas-related warrants have price-adjustment protection.
- Derivative liabilities totaled $4.5 million, measured using Level 3 inputs; their fair-value change contributed materially to nine-month expense. The company also disclosed cash deposits above federally insured levels and risks to access to funds or financing if financial-institution liquidity concerns worsen.
- Management reported disclosure controls were effective at a reasonable-assurance level and no material changes in internal control over financial reporting during the quarter.
Important facts for investors to verify
- Progress, primary completion timing, and results of the NE3107 Alzheimer’s Phase 3 trial, and the next steps and full data from the Parkinson’s study.
- Why the BIV201 trial was paused, whether it will resume, and whether the preliminary findings hold in a larger study.
- Cash burn, committed clinical spending, and the financing required to fund operations beyond the stated 12-month period.
- Loan amortization, interest and maturity obligations, and the potential effects of warrants, equity sales, and milestone share issuances on dilution.
- The risks associated with Level 3 derivative valuations and the company’s ability to access cash held at financial institutions.