BioVie Inc. — Form 10-Q Summary
Reporting period: Three months ended September 30, 2022 (the company’s fiscal first quarter; unaudited). Comparatives are for the three months ended September 30, 2021. BioVie is a clinical-stage biotechnology company with no revenue to date.
Financial results and liquidity
- Revenue: None; the company stated it does not expect revenue in the foreseeable future.
- Net loss: $10.42 million, versus $5.54 million; loss per share was $0.38 versus $0.23.
- Operating expenses: $8.83 million, up from $5.55 million. Research and development was $6.77 million versus $3.09 million; selling, general and administrative expense was $2.01 million versus $2.40 million. No gross margin is meaningful because there were no sales.
- Cash flow: $9.22 million used in operations, compared with $2.53 million used a year earlier. Financing provided $11.81 million, including approximately $5.9 million from an at-the-market offering and $5.9 million from a private placement with majority shareholder Acuitas. Cash increased by $2.59 million to $21.23 million.
- Liquidity: Working capital was approximately $17.5 million. Management said existing cash might support operations for 12 months only if planned research spending is delayed; current planned operations were projected to exhaust cash within that period. Management identified substantial doubt about the company’s ability to continue as a going concern.
- Debt: The Avenue loan has $15 million principal outstanding, with a September 30 carrying value of $12.73 million after financing costs, discount and premium adjustments. It is secured by company assets, bears interest at the greater of 7% plus prime or 10.75%, and matures December 1, 2024. Quarterly interest expense was $1.06 million, including noncash financing accretion and amortization; cash interest paid was approximately $470,000.
- Other balance-sheet items: Total assets were $22.86 million, total liabilities $16.90 million, and stockholders’ equity $5.96 million. Accumulated deficit was $261.39 million. Derivative liabilities totaled $949,103, up from $382,561 at June 30; the $566,542 fair-value increase was recorded as expense.
Changes versus prior year
- Net loss increased approximately $4.9 million, primarily reflecting a $3.3 million increase in operating losses, $1.1 million in interest expense related to the November 2021 loan, and a $567,000 derivative fair-value loss.
- R&D expense rose approximately $3.7 million as NE3107 clinical studies became more active; the company attributed about $3.9 million of the net increase to its neuroscience studies. SG&A declined approximately $388,000, largely due to lower stock-based compensation.
- Financing proceeds were lower than the prior-year quarter’s $18.51 million public offering. The company issued 5.18 million shares in the quarter through its ATM and Acuitas placement, increasing shares outstanding from 24.98 million at June 30 to 30.17 million at September 30.
Programs, outlook and key risks
- NE3107: The Alzheimer’s Phase 3 trial was underway and approaching full enrollment; topline results were targeted for mid-2023. The 40-patient Parkinson’s Phase 2 study was underway, with topline results expected in December 2022.
- BIV201: The 30-patient Phase 2b trial for refractory ascites was underway; topline results were expected in mid-2023. The company described further development, including a possible Phase 3 program, as dependent on FDA guidance and additional capital.
- Funding and dilution: The company may need additional equity, loans or strategic financing. Its ATM remains available; after quarter-end, it issued 367,511 shares for net proceeds of approximately $1.2 million. The Acuitas placement included warrants for 7.27 million shares at $1.82, with a five-year term and a down-round price adjustment. The NeurMedix asset agreement may also require up to 18 million milestone shares.
- Clinical, regulatory and market risks: Trial outcomes and regulatory approval are uncertain; limited funding could delay or prevent studies. COVID-19-related staffing and enrollment disruptions could affect trial timelines. The filing highlighted Mallinckrodt’s September 2022 FDA approval of terlipressin for hepatorenal syndrome and associated exclusivity as a potential competitive or regulatory concern for BioVie’s terlipressin program.
- Contingencies and controls: BioVie reported no material legal proceedings or material off-balance-sheet arrangements. Management concluded disclosure controls were effective at a reasonable-assurance level and reported no material change in internal control over financial reporting.
Important facts for investors to verify
- Actual cash runway against planned clinical spending, and the timing and terms of any needed financing.
- Enrollment, trial timelines and results for NE3107 Alzheimer’s and Parkinson’s studies and the BIV201 Phase 2b study.
- The effects of Mallinckrodt’s terlipressin approval and exclusivity on BioVie’s BIV201 plans and potential market opportunity.
- Potential dilution from the ATM, Acuitas warrants, Avenue conversion feature and up to 18 million milestone shares.
- The outstanding $15 million loan’s interest, repayment schedule and secured status, as well as the sensitivity of derivative liabilities to share-price and valuation assumptions.