BioVie Inc. — Form 10-K Summary
Reporting period: Fiscal year ended June 30, 2018. Although the request metadata says “2017 Q4,” this filing reports FY2018 results, with FY2017 as the comparative period. BioVie is a clinical-stage biotechnology company focused on BIV201, an investigational terlipressin therapy for cirrhosis-related ascites.
Financial results and liquidity
| Metric | FY2018 | FY2017 |
|---|---|---|
| Revenue | $0 | $0 |
| Research and development | $370,853 | $466,354 |
| Total operating expenses | $2,372,166 | $1,553,614 |
| Operating loss | $(2,372,166) | $(1,553,614) |
| Net loss | $(2,413,122) | $(1,330,672) |
| Net loss per common share, basic and diluted | $(0.03) | $(0.01) |
| Cash used in operating activities | $(621,341) | $(623,615) |
- Professional fees rose to $1,331,142 from $503,369, primarily due to financial and strategic advisory services paid in BioVie shares. Payroll was $311,525, and selling, general and administrative expense was $129,270.
- FY2017 included $222,928 of other income from forgiven salary debt; FY2018 recorded $40,960 of interest expense. These items affect the year-over-year net-loss comparison.
- At June 30, 2018, cash was $45,800, total assets were $2,175,491, and total liabilities were $2,064,292. Current liabilities of $1,238,374 exceeded current assets of $45,800. Long-term liabilities included a $250,000 demand note and $575,918 in related-party notes payable.
- FY2018 net cash financing proceeds were $661,999. The filing reports $3.2 million of equity financing proceeds received July 3, 2018 and approximately $2.255 million cash on hand at August 31, 2018. Management said available cash, including post-year-end proceeds, was expected to fund operations and capital requirements for at least 12 months from the report date.
Business progress, outlook, and risks
- BIV201 was in an open-label, six-patient U.S. Phase 2a trial; three patients had been treated by June 2018. The trial began dosing in September 2017. A safety board recommended continuing after reviewing the first two patients; the filing does not report efficacy results.
- BIV201 received FDA Fast Track designation in December 2017 and had FDA Orphan Drug designation for ascites. The company held an issued U.S. patent for ambulatory-pump use and had filed related applications in Japan, Europe, and China. These designations do not guarantee approval or shorten the evidentiary requirements for approval.
- Management planned to complete work on Phase 2 development and pursue further Orphan Drug designations. A larger Phase 2b trial was conditional on satisfactory Phase 2a results and available funding. Acuitas could invest an additional $3 million for year two if BIV201 development continues, less qualifying grant funding; this was not guaranteed.
- The company had no approved products or revenue and disclosed substantial doubt about its ability to continue as a going concern. It stated that additional financing would be needed and that failure to obtain it could force delays, reductions, licensing, a sale, or cessation of operations.
- After year-end, the $3.2 million financing involved Series A preferred stock convertible into 213,333,200 common shares and warrants to purchase 213,333,200 shares. The agreement also gave Acuitas an option, subject to conditions, to purchase up to 200 million additional common shares and associated warrants. The filing describes price-adjustment provisions; the potential dilution is substantial.
- Mallinckrodt petitioned for inter partes review of BioVie’s U.S. patent. BioVie filed a preliminary response in August 2018; the filing said the outcome was uncertain and recorded no related accrual at year-end.
- Management reported ineffective disclosure controls and internal control over financial reporting, citing lack of formalized controls, inadequate segregation of duties, and no independent audit committee chair. The auditor gave an unqualified opinion on the financial statements but was not engaged to audit internal controls.
- Common stock traded on the OTCQB; the June 30, 2018 closing bid was $0.05. The filing emphasizes limited liquidity, penny-stock constraints, potential dilution, and concentrated ownership. Post-financing share and warrant issuance may materially change the capital structure.
Key facts for investors to verify
- Current trial enrollment, safety and efficacy data, regulatory feedback, and the funding and timeline required for any Phase 2b study.
- The terms, conversion and exercise mechanics, price adjustments, and fully diluted impact of the July 2018 financing and any later securities issuances.
- Status and potential consequences of Mallinckrodt’s patent challenge, and the scope and enforceability of BioVie’s U.S. and foreign patent protection.
- Current cash, cash runway, liabilities, and whether the proposed additional Acuitas investment or grant funding has been secured.
- Progress in remediating the disclosed material weaknesses and improving disclosure controls and financial reporting oversight.