BioVie Inc. — Form 10-Q Summary
Reporting period: The filing covers the three and nine months ended March 31, 2018, with comparisons to the periods ended March 31, 2017. This differs from the request metadata, which identifies the period as 2017 Q3. Financial statement amounts are presented in dollars.
Business context
BioVie is a clinical-stage biotechnology company developing BIV201 (terlipressin) for ascites associated with liver cirrhosis. The company reported no revenue. Its Phase 2a U.S. trial was ongoing; three patients had been treated as of April 2018. BIV201 has FDA Fast Track status and Orphan Drug designation, according to the filing.
Financial performance and position
| Metric | Three months ended March 31, 2018 | Nine months ended March 31, 2018 | Comparable 2017 period |
|---|---|---|---|
| Revenue | $0 | $0 | $0 |
| Operating expenses | $691,215 | $1,848,253 | $400,527; $1,109,680 |
| Net loss | $692,557 | $1,858,080 | $178,495; $887,637 |
| Net loss per share | $0.01 | $0.02 | $0.00; $0.01 |
No meaningful revenue or profit margin was reported because the company had no sales and incurred operating losses.
- Cash and liquidity: Cash was $28,080 at March 31, 2018, versus $5,140 at June 30, 2017. The company reported a working capital deficit of $1,055,676 and said available cash was insufficient for the next 12 months.
- Cash flow, nine months: Operating activities used $412,061, compared with $498,446 in 2017. Financing activities provided $435,001, compared with $409,999. Ending cash was $28,080, versus $35,309 at March 31, 2017.
- Liabilities: Total liabilities were $1,659,674, including $1,083,756 of current liabilities and $575,917 of long-term related-party notes payable. Current related-party loans were $25,000.
- Assets and equity: Total assets were $2,215,116, including $1,841,324 of net intangible assets and $345,711 of goodwill. Stockholders’ equity was $555,442, down from $1,157,318 at June 30, 2017.
- Shares and potential dilution: 97,334,699 common shares were outstanding at March 31, 2018. The filing reports 9,774,014 warrants outstanding and gives inconsistent option totals in different notes.
Changes versus prior year
- Nine-month net loss increased to $1,858,080 from $887,637; operating expenses rose to $1,848,253 from $1,109,680.
- Professional fees increased to $1,093,857 from $312,277, primarily due to financial and strategic advisory services paid in common stock. The quarter’s professional fees were $489,443 versus $126,098.
- Research and development expense decreased to $275,116 from $375,872 for nine months, while selling, general and administrative expense increased to $103,304 from $35,453.
- Share-based compensation was $811,203 for the nine months, compared with $34,884 in 2017. Financing included $345,001 from common stock issuance and $100,000 from warrant issuance.
Outlook, risks and unusual items
- Going concern: Management stated that substantial doubt exists about the company’s ability to continue as a going concern. It needs additional financing and estimated near-term financing needs of approximately $250,000–$500,000. Planned spending over the next 12 months, conditional on successful financing, included $3 million for research and development, $500,000 for corporate overhead and $500,000 for staffing.
- The company warned that without financing it may delay or reduce development, seek licensing or strategic arrangements, sell assets or the company, cease operations, or seek bankruptcy protection. No committed source of financing was identified.
- Patent challenge: On April 30, 2018, BioVie said it received notice that Mallinckrodt had petitioned the USPTO to institute inter partes review of BioVie’s U.S. patent covering treatment of ascites. The filing said institution requires PTAB approval and BioVie intends to oppose the petition.
- Subsequent financing: The filing describes director loans of $30,000 dated March 29, $100,000 dated April 25 and $30,000 dated May 9, with 10% interest and conversion terms. The March 29 date precedes the March 31 reporting date despite appearing in the subsequent-events note; verify its period-end accounting treatment.
- Controls: The CEO and CFO concluded disclosure controls and procedures were not effective as of March 31, 2018. No material change in internal control over financial reporting was reported during the nine-month period.
- Management cited clinical development, regulatory requirements, financing needs and the company’s limited drug-development experience as risks. No specific financial guidance or revenue forecast was provided.
Important facts for investors to verify
- Reconcile the requested “2017 Q3” label with the filing’s March 31, 2018 reporting period.
- Confirm the accounting and disclosure for the March 29 director loan, and the status and terms of all post-quarter loans and other financing.
- Review the company’s current cash runway, financing progress and going-concern disclosures; the filing stated cash was insufficient for the next 12 months.
- Check the PTAB decision and subsequent developments in the inter partes review petition involving the BIV201 patent.
- Reconcile option and warrant counts, share-based compensation, and potential dilution across the filing’s notes.
- Assess remediation of the ineffective disclosure controls and the status of BIV201 clinical enrollment and development.