BioVie Inc. — Form 10-Q Summary
Reporting period: Fiscal second quarter and six months ended December 31, 2023. The unaudited filing was signed February 12, 2024. BioVie is a pre-revenue clinical-stage biotechnology company developing NE3107 for neurological disorders and BIV201 for liver disease.
Financial performance and position
| Metric | Three months ended Dec. 31, 2023 | Six months ended Dec. 31, 2023 | Prior-year comparison |
|---|---|---|---|
| Revenue | No revenue | No revenue | No revenue; none expected in the foreseeable future |
| Research and development | $6.47 million | $15.35 million | $7.03 million and $13.80 million, respectively |
| Selling, general and administrative | $2.25 million | $4.20 million | $4.40 million and $6.41 million, respectively |
| Total operating expenses | $8.78 million | $19.66 million | $11.49 million and $20.33 million, respectively |
| Net loss | $8.40 million | $19.11 million | $15.69 million and $26.10 million, respectively |
| Net loss per share, basic and diluted | $0.22 | $0.51 | $0.50 and $0.89, respectively |
| Operating cash used | Not stated for the quarter | $18.09 million | $17.23 million for the prior-year six months |
- At December 31, 2023, cash and cash equivalents were $20.23 million, working capital was approximately $6.6 million, total assets were $21.49 million, total liabilities were $14.00 million, and stockholders’ equity was $7.49 million. Accumulated deficit was $320.34 million.
- Six-month cash flows included $14.53 million from Treasury bill maturities and $4.33 million net cash from financing, including $9.33 million net proceeds from common-stock sales and $5.00 million of note repayments.
- The Avenue loan had $10 million principal outstanding at period-end, with monthly principal installments and a December 1, 2024 maturity. The loan is secured by company assets, including intellectual property; its stated minimum interest rate is 10.75% (or prime plus 7%, if higher). The filing reports a 25% adjusted effective interest rate.
- Gross margins are not meaningful because the company has no revenue. Operating expenses were $8.78 million for the quarter and $19.66 million for the six months.
Material changes versus prior periods
- Quarterly net loss declined by $7.29 million year over year; six-month net loss declined by $6.99 million. The improvements included lower SG&A and favorable changes in the fair value of derivative liabilities, which reduced expense by $4.20 million for the quarter and $5.48 million for the six months versus the prior-year periods. These fair-value changes are not operating revenue.
- Quarterly operating expenses fell $2.71 million, primarily because SG&A decreased by about $2.15 million, largely reflecting lower stock-based compensation, and R&D decreased by about $0.56 million. For the six months, operating expenses fell $0.67 million: R&D rose $1.54 million while SG&A fell $2.22 million.
- Cash and cash equivalents decreased from $34.04 million in combined cash and Treasury-bill current assets at June 30, 2023 to $20.23 million at December 31, 2023; the Treasury bills classified separately as investments at June 30 had matured by period-end. Total assets decreased from $35.10 million to $21.49 million.
- Common shares issued increased from 36.45 million at June 30 to 39.87 million at December 31. The company reported 39,871,098 shares outstanding as of February 7, 2024.
Outlook, risks and unusual items
- Going concern and funding: Management says planned operations could deplete available cash within six to nine months from the balance-sheet date. Cash might last longer only if the company delays planned research and slows development and launch of next-phase clinical programs. Management expects to seek equity, loans or strategic transactions, but says financing is not assured; substantial doubt exists about the company’s ability to continue as a going concern.
- NE3107 Alzheimer’s trial: After unblinding its Phase 3 study, the company identified suspected protocol deviations and current Good Clinical Practice violations at 15 sites, excluded patients from those sites, and referred them to the FDA’s Office of Scientific Investigations. The remaining 81 patients in the modified intent-to-treat population and 57 in the per-protocol population left the study underpowered versus its original target of 125 patients per arm. The company described a possible signal in descriptive per-protocol results and an age-deceleration measure, but these findings do not establish efficacy or statistical significance. It is considering FDA discussions about further enrollment under an adaptive feature or a new Phase 3 study.
- Other programs: The NE3107 Parkinson’s Phase 2 study completed in December 2022; Phase 3 planning is on hold pending funding. BIV201’s Phase 2 enrollment was paused. The company reported preliminary reductions in ascites fluid among treated patients and is finalizing a Phase 3 protocol after receiving FDA guidance; no Phase 3 start date is stated.
- Litigation: A securities class-action complaint was filed January 19, 2024, after the reporting period, against the company and certain officers and directors concerning alleged disclosures, including those related to the NE3107 trial. Damages are unspecified. The company intends to defend the case, cannot predict its outcome, and recorded no accrual. It cites a $2 million insurance deductible for applicable coverage.
- Dilution and control: At December 31, the company had 7.77 million warrants, 4.17 million options and 0.69 million restricted stock units outstanding. Up to 18 million additional shares may be issuable upon specified milestones under the NeurMedix asset-purchase agreement. The filing also reports significant ownership concentration among directors, executives and affiliates.
- The company reported effective disclosure controls at the reasonable-assurance level and no material change in internal control over financial reporting during the quarter. It identified risks including clinical-trial data integrity, dependence on third parties, regulatory approval, financing availability, bank concentration and potential litigation costs.
Important facts for investors to verify
- Whether FDA review or further investigation of the 15 NE3107 trial sites changes the usable data, and whether the company can support efficacy with an adequately powered study.
- Cash burn, discretionary spending reductions, financing needs and the timing and terms of any funding; compare these with the stated six-to-nine-month cash horizon.
- The Avenue loan repayment schedule, interest burden and ability to meet the December 2024 maturity.
- Whether and when the company finalizes and funds Phase 3 plans for BIV201 and NE3107, including the status of FDA discussions.
- Developments, potential costs and insurance coverage relating to the securities class action, including the $2 million deductible.
- Potential dilution from equity sales, warrants, options, restricted stock units and milestone shares.