BioVie Inc. — Form 10-Q Summary
Reporting period: Three months ended September 30, 2017 (the company’s fiscal first quarter); filed November 8, 2017. Financial statements are unaudited. BioVie is a clinical-stage biotechnology company developing BIV201, a continuous low-dose terlipressin infusion for ascites associated with liver cirrhosis.
Financial results and liquidity
| Metric | Quarter ended Sep. 30, 2017 | Comparable 2016 quarter |
|---|---|---|
| Revenue | $0 | $0 |
| Operating expenses | $662,231 | $351,353 |
| Operating loss | $662,231 | $351,353 |
| Net loss | $662,841 | $351,342 |
| Basic and diluted loss per share | $(0.01) | $(0.00) |
| Net cash used in operations | $203,436 | $128,012 |
With no sales, gross margin is not meaningful. At September 30, cash was $21,705, versus $5,140 at June 30. Current liabilities were $665,283 and total liabilities were $1,241,200; total assets were $2,323,430. Stockholders’ equity was $1,082,229. Current liabilities included $467,783 of accounts payable and accrued expenses, $187,500 of accrued payroll, and a $10,000 related-party loan. Long-term liabilities included $173,333 of deferred consulting fees and $402,584 of accrued payroll. The related-party loan is due on demand, without interest.
Financing activities provided net cash of $220,001, including $245,001 from common-stock issuance and a reported $25,000 loan repayment. Shares outstanding increased from 91,925,000 at June 30 to 94,594,091 at September 30. The quarter’s stockholders’ equity statement reports $575,000 from share issuance, including shares issued for services; this is not all cash proceeds.
Changes from the prior comparable period
- Net loss increased by $311,499; operating expenses rose by $310,878.
- Professional fees increased to $453,611 from $93,165, principally due to financial and strategic advisory services paid in stock.
- Research and development expense declined to $41,854 from $127,270; management attributed the prior-year costs primarily to clinical development activities.
- Cash used in operations increased to $203,436 from $128,012. Cash at quarter-end was $21,705, compared with $8,745 a year earlier.
Business developments, outlook and risks
- The FDA notified BioVie in March 2017 that it could initiate a U.S. Phase 2a trial of BIV201. The company signed a research agreement with the McGuire Research Institute/VA in April and reported beginning to dose patients in September 2017. BIV201 has Orphan Drug designation for ascites.
- Management said existing cash was insufficient for the next 12 months and estimated it needed approximately $250,000–$500,000 of additional near-term financing. Its planned 12-month spending, conditional on raising financing, was $3.0 million for R&D, $500,000 for corporate overhead, and $500,000 for staffing.
- The company stated that cash would not meet operating and capital requirements through June 30, 2018. The filing identifies substantial doubt about the company’s ability to continue as a going concern; continuing operations depend on new financing, licensing or partnership proceeds, or another transaction. Failure to obtain funds could force reductions or suspension of development and could result in cessation of operations.
- BioVie had an Aspire Capital equity line providing for potential purchases of up to $12 million over 30 months, subject to its terms and market conditions; it is not a committed fixed amount of available cash. The company also reported August 2017 private-placement proceeds and a subsequent October 2017 stock-and-warrant placement for approximately $50,000.
- Risks cited include clinical and product-development uncertainty, regulatory requirements, financing needs, and the possibility that BIV201 will not be developed successfully or approved. The filing reports no material legal proceedings or material off-balance-sheet arrangements.
- Management concluded disclosure controls and procedures were not effective. The filing’s controls section refers to an evaluation “as of September 30, 2016” while discussing the quarter ended September 30, 2017, an apparent date inconsistency; it states no material change in internal control during the quarter.
Important facts for investors to verify
- Current cash, cash burn, and whether BioVie obtained enough financing to sustain operations and fund the trial.
- BIV201 trial status, enrollment, clinical results, regulatory milestones, and actual trial costs.
- Terms, availability, and potential dilution from the Aspire equity line, private placements, warrants, and other share issuances.
- The going-concern disclosure and the company’s options if financing, licensing, or partnership efforts fail.
- The apparent reporting-date inconsistency in the controls disclosure, and the differing share-issuance amounts in the equity and cash-flow statements.