BioVie Inc. — Form 10-Q Summary
Period clarification: The request labels this “2018 Q3,” but the filing covers the three and nine months ended March 31, 2019, BioVie’s fiscal third quarter of 2019. The financial statements are unaudited.
Business context and reporting period
BioVie is a clinical-stage drug-development company focused on BIV201, continuous-infusion terlipressin for ascites associated with liver cirrhosis. The company reported no revenue. It had treated all six planned patients in its Phase 2a study; in May 2019, after quarter-end, it announced that the study’s primary safety, tolerability, and pharmacokinetic objectives had been achieved.
Financial performance and position
| Metric | Three months ended March 31, 2019 | Nine months ended March 31, 2019 |
|---|---|---|
| Revenue | $0 | $0 |
| Operating expenses | $848,289 | $1,840,586 |
| Net loss | $848,041 | $1,788,422 |
| Net loss attributable to common stockholders | $848,041 | $1,837,081 |
| Basic and diluted loss per share | $0.00 | $0.01 |
At March 31, 2019, cash was $971,614; current assets were $1,006,614 and current liabilities were $179,054. Total liabilities were $179,054, with no long-term debt reported. Stockholders’ equity was $2,785,218 and accumulated deficit was $6.6 million. The company had no revenue on which to calculate margins.
For the nine months, operating cash use was $1,869,886. Financing provided $2,795,700, including $3.04 million of cash proceeds from preferred-stock issuance and $244,300 of debt repayments; cash increased by $925,814 to $971,614. The filing does not provide a clear cash-runway estimate.
Changes versus the prior comparable periods
- Quarterly operating expenses increased about $157,000 year over year: R&D rose about $286,000, primarily due to clinical-trial timing, while SG&A fell about $128,000.
- Nine-month operating expenses were nearly flat, down about $7,700 year over year. R&D increased $457,257 as clinical development resumed; SG&A decreased $464,924, partly because prior-year professional fees had been paid with stock.
- Nine-month net loss improved to $1,788,422 from $1,858,080. The current-period result included $51,400 of other income from a debt settlement; a $48,659 deemed dividend increased the loss attributable to common stockholders.
- Common shares outstanding rose to 316,453,673 from 98,503,199 at June 30, 2018, principally following preferred-stock conversion and debt settlements. The company also reported 216,440,548 warrants and 7,250,000 options outstanding at quarter-end.
Outlook, risks, and unusual items
- Management says further financing is necessary and that the company has no committed funding source. The filing states that these conditions raise substantial doubt about its ability to continue as a going concern. Without financing, it may reduce or delay research and could curtail or cease operations.
- The July 2018 financing included $3.2 million in gross proceeds and an Acuitas option to invest up to an additional $3 million in year two, reduced by qualifying grant funding. In April 2019, stockholders approved a 50:1 to 200:1 reverse-split range, and the company filed an S-1 registration statement for a proposed offering intended to fund a Phase 2b study and at least twelve months of operations. Neither the offering nor the additional investment was assured.
- Mallinckrodt’s challenge to BioVie’s U.S. ascites patent was instituted by the PTAB. BioVie was defending the patent; a final written decision was due before November 14, 2019 if the proceeding was not terminated. No loss accrual was recorded because the outcome could not be determined.
- Debt settlements included cash payments and common-share issuance; related-party balances were also settled. Warrants have down-round adjustment provisions, and the financing agreement provides for potential additional share issuance following certain adverse patent outcomes.
- Management identifies clinical-development, regulatory-approval, financing, competition, and intellectual-property risks. It provided no specific revenue or earnings guidance.
Important facts for investors to verify
- Whether the proposed S-1 offering was completed, its proceeds, and the resulting share dilution and cash runway.
- The PTAB outcome and any effect on the BIV201 patent, financing terms, or potential warrant adjustments.
- Full Phase 2a results and the timing, cost, and funding status of the planned Phase 2b study.
- The potential dilution from the large warrant and option overhang, including applicable exercise prices and adjustment provisions.
- The company’s ability to meet near-term operating needs and resolve the going-concern uncertainty.