BioVie Inc. — Form 10-Q Summary
Reporting period: Quarter and six months ended December 31, 2021 (the second quarter of BioVie’s fiscal 2022). The filing was signed February 7, 2022. BioVie is a clinical-stage biopharmaceutical company and reported no revenue.
Financial performance
| Metric | Three months ended Dec. 31, 2021 | Three months ended Dec. 31, 2020 | Six months ended Dec. 31, 2021 | Six months ended Dec. 31, 2020 |
|---|---|---|---|---|
| Revenue | $0 | $0 | $0 | $0 |
| Research and development | $4.59 million | $0.94 million | $7.44 million | $1.06 million |
| Selling, general and administrative | $2.02 million | $2.07 million | $4.66 million | $2.27 million |
| Total operating expenses | $6.67 million | $3.06 million | $12.21 million | $3.45 million |
| Net income (loss) | $(5.41) million | $(3.06) million | $(10.96) million | $4.28 million |
| Basic and diluted loss per share | $(0.22) | $(0.22) | $(0.45) | $(4.95) |
The six-month 2020 net income included a $8.28 million noncash derivative fair-value gain; common stockholders’ result also reflected a $53.60 million deemed dividend, producing a net loss attributable to common stockholders of $49.32 million. The 2021 six-month result included a $1.56 million derivative fair-value gain. These noncash items complicate period comparisons. The company reported no operating margins because it had no revenue.
Cash, liquidity and debt
- Cash was $30.39 million at December 31, 2021, versus $4.51 million at June 30, 2021. Working capital was approximately $26.2 million; stockholders’ equity was $16.1 million and accumulated deficit was $235.8 million.
- Six-month operating cash use was $7.24 million. Financing provided $33.12 million, including $18.51 million net proceeds from common-stock issuance and $14.61 million net proceeds from debt financing. Cash increased by $25.88 million.
- In November 2021, BioVie borrowed $15 million under an Avenue facility, with up to another $5 million available subject to clinical-trial milestones. The loan is secured by company assets, including intellectual property, bears interest at the greater of prime plus 7% or 10.75%, and matures December 1, 2024. Its reported carrying value was $11.11 million, net of discounts and costs; the stated principal was $15 million.
- The lenders may convert up to $5 million of principal into shares at $6.98 per share. BioVie issued warrants for 361,002 shares at $5.82 per share. The filing reports a 25% adjusted effective interest rate for the loan accounting.
Material changes and operating developments
- Operating expenses rose substantially, chiefly from research and development. Management attributed the increase to the NE3107 Alzheimer’s Phase 3 program, BIV201’s Phase 2b trial, preparations for a Parkinson’s study, and added neuroscience personnel. Six-month SG&A also increased, including compensation and public-company, legal, investor-relations and professional costs.
- BioVie acquired NeurMedix assets in June 2021, including NE3107. In August 2021, it initiated a potentially pivotal Phase 3 Alzheimer’s study; top-line results were targeted for the first half of 2023. The Parkinson’s Phase 2 study began enrolling its first patient on January 20, 2022, with top-line results expected in mid-2022.
- BIV201’s randomized Phase 2b study was underway at 10 of 13 planned U.S. centers, with multiple patients enrolled. Top-line results were expected in mid-2022; a proposed pivotal Phase 3 trial could begin in late 2022 subject to results and FDA review.
- Shares outstanding increased to 24,984,083 at December 31, 2021 from 22,333,324 at June 30, 2021. A further potential issuance of up to 18 million shares is tied to clinical, regulatory and commercial milestones under the NeurMedix asset purchase agreement.
Outlook, risks and contingencies
Management stated that current planned operations were projected to deplete available cash within 12 months, although cash could possibly last longer if research spending and clinical programs were delayed or slowed. The company has no revenue and expects none in the foreseeable future. Management expects to seek additional financing through equity, debt, partnerships, licensing or other transactions; it warned that failure to obtain funding could force it to curtail or cease operations. The filing states that these conditions raise substantial doubt about BioVie’s ability to continue as a going concern.
- Clinical results, regulatory review and the ability to recruit patients remain key uncertainties. COVID-19-related labor shortages and trial or supply-chain disruptions could affect timelines and financing access.
- BioVie disclosed that the USPTO revoked all claims of its U.S. Patent No. 9,655,945 in an inter partes review. It stated that its orphan-drug designations and a separate pending terlipressin formulation patent application were unaffected; the pending application is not an issued patent.
- The Avenue loan’s warrants and conversion option are Level 3 derivative liabilities subject to fair-value remeasurement. The company also reported employee retention-bonus liabilities and potential dilution from options, warrants, lender conversion rights and milestone shares.
- Management reported disclosure controls and procedures were effective at the reasonable-assurance level, with no material change in internal control over financial reporting during the quarter. The filing reported no material legal proceedings.
Important facts for investors to verify
- Updated enrollment, trial progress and results for BIV201, NE3107 Alzheimer’s and NE3107 Parkinson’s, including any changes to anticipated timelines or FDA requirements.
- Cash burn, projected runway, and whether the additional Avenue tranche becomes available or further financing is secured.
- Loan repayment terms, collateral and conversion provisions, derivative-liability valuation, and potential dilution from warrants, options and up to 18 million milestone shares.
- Current status and scope of BioVie’s issued and pending intellectual-property protections, including the patent ruling disclosed in the filing.
- Any changes to the company’s going-concern assessment, financing plans or expected clinical spending.