BioVie Inc. — Form 10-Q Summary
Reporting period: Fiscal first quarter ended September 30, 2018. The financial statements are unaudited. BioVie is a clinical-stage drug developer focused on BIV201, an investigational terlipressin treatment for ascites associated with liver cirrhosis.
Financial results and liquidity
| Metric | Three months ended Sep. 30, 2018 | Prior-year period |
|---|---|---|
| Revenue | $0 | $0 |
| Operating expenses | $491,427 | $662,232 |
| Operating loss | $491,427 | $662,232 |
| Net loss | $439,871 | $662,842 |
| Net cash used in operating activities | $441,882 | $203,437 |
- Research and development expense rose to $194,521 from $41,854, reflecting Phase 2a trial activity, results analysis, research, and regulatory and trial planning. Lower professional fees—$135,230 versus $453,611—were the main reason total operating expenses declined.
- Other income included a $51,400 gain on settlement of debt. The statement reports a $48,659 deemed dividend and net loss attributable to company stockholders of $488,529; the filing’s displayed amounts do not reconcile exactly.
- Cash was $2.136 million at September 30, up from $45,800 at June 30. Financing activities provided $2.532 million, including $3.04 million of preferred-stock proceeds, partly offset by debt repayments. No revenue or profit margin is reported; margins are not meaningful with no revenue.
- Total assets were $4.208 million, current liabilities $183,090, and total liabilities $183,090. No debt is shown on the September 30 balance sheet, compared with $825,918 of long-term liabilities at June 30. Stockholders’ equity was $4.025 million, versus $111,199.
Material changes and capital structure
- In July, BioVie completed a $3.2 million preferred-stock financing, including $160,000 received earlier as prepaid equity; the filing reports approximately $3 million in net proceeds. The preferred shares converted into 213.3 million common shares in August.
- The company issued 975,361 common shares to settle debt and repaid or settled obligations, including related-party balances. Common shares outstanding increased from 98.5 million at June 30 to 315.1 million at September 30; authorized common shares increased to 800 million.
- At quarter-end, 216.4 million warrants and 5.15 million options were outstanding. The financing and warrant agreements include price-adjustment provisions that may result in additional share issuance. The filing also describes a potential Acuitas purchase of up to 200 million additional shares, subject to stated conditions.
Outlook, risks, and unusual items
- Four patients had been treated with BIV201 in the ongoing Phase 2a trial as of September 2018. The candidate has FDA Fast Track status and Orphan Drug designation; it has not been approved for sale in the United States.
- Management said the September cash balance should fund operating and capital requirements for at least 12 months. The Acuitas agreement provides for a possible additional $3 million investment in year two if clinical development continues, reduced by federal or FDA grant funding received; this is not described as committed financing.
- BioVie has recurring losses and a $5.2 million accumulated deficit, expects substantial future losses, and depends on successful development and additional financing. Management warned that failure to obtain funds could force it to delay or cut development, pursue licensing or strategic alternatives, or cease operations. No formal revenue or earnings guidance is provided.
- Mallinckrodt petitioned for inter partes review of BioVie’s U.S. patent covering ascites treatment. BioVie submitted a preliminary response in August; whether the review would be instituted and its outcome were uncertain. The financing agreement provides for potential price and conversion adjustments if an adverse patent outcome substantially reduces the useful life of the company’s intellectual property.
- Debt settlements included a $51,400 gain recorded as other income and releases of related-party liabilities recorded in additional paid-in capital. The company reported no goodwill impairment, material off-balance-sheet arrangements, or material legal proceedings in the filing.
Important facts for investors to verify
- Current cash runway, actual clinical-development spending, and the timing and conditions of any additional Acuitas funding or grant support.
- Phase 2a enrollment, trial progress and results, and the regulatory path for BIV201.
- Status and potential consequences of the Mallinckrodt patent review, including any effect on the financing’s price-adjustment provisions.
- Fully diluted share count and potential dilution from warrants, options, and the conditional additional-share purchase right.
- The reported debt settlements, related-party accounting, and the small discrepancy in the reported stockholder-attributable loss figures.