Biovie Inc 10-Q for FY2024 Q1
Biovie Inc. (BIVI)
About this 10-Q
Biovie Inc filed this 10-Q on November 8, 2023, covering the quarter ended September 30, 2023 (FY2024 Q1).
Headline figures
Quarter ended September 30, 2023, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Net loss
- $10.71M
- compared with a net loss of $10.42M a year earlier
- Diluted EPS
- -$0.29
- compared with -$0.38 a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form
(Mark One)
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended:
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from ____________to _____________
Commission File Number:
(Exact name of registrant as specified in its charter)
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(I.R.S. Empl. Ident. No.) |
| (Address of principal executive offices, Zip Code) |
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| (Registrant’s telephone number, including area code) |
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
| The |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company or emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | Accelerated filer | ☐ |
| ☒ | Smaller reporting company | ||
| Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes ☐
There were shares of the Registrant’s $0.0001 par value Class A common stock outstanding as of November 6, 2023.
TABLE OF CONTENTS
FORWARD-LOOKING STATEMENTS
This report contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and Section 27A of the Securities Act of 1933, as amended. Any statements contained in this report that are not statements of historical fact may be forward-looking statements. When we use the words “intends,” “estimates,” “predicts,” “potential,” “continues,” “anticipates,” “plans,” “expects,” “believes,” “should,” “could,” “may,” “will” or the negative of these terms or other comparable terminology, we are identifying forward-looking statements. Forward-looking statements involve risks and uncertainties, which may cause our actual results, performance or achievements to be materially different from those expressed or implied by forward-looking statements. These factors include, among others: our research and development activities and distributor channel; compliance with regulatory requirements; and our ability to satisfy our capital needs. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements.
You are cautioned not to place undue reliance on the forward-looking statements in this report, which speak only as of the date of this report. Except as may be required by applicable law, we do not undertake or intend to update or revise our forward-looking statements, and we assume no obligation to update any forward-looking statements contained in this report as a result of new information or future events or developments, except as required by law. Thus, you should not assume that our silence over time means that actual events are bearing out as expressed or implied in such forward-looking statements. You should carefully review and consider the various disclosures we make in this report and our other reports filed with the Securities and Exchange Commission that attempt to advise interested parties of the risks, uncertainties and other factors that may affect our business.
When used in this report, the terms “BioVie”, “Company”, “we”, “our”, and “us” refer to BioVie Inc.
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PART I – FINANCIAL INFORMATION
Item 1. Financial Statements
BioVie Inc.
Condensed Balance Sheets
| September 30, | June 30, | |||||||
| 2023 | 2023 | |||||||
| (Unaudited) | ||||||||
| ASSETS | ||||||||
| CURRENT ASSETS: | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Investments in U.S. Treasury Bills | ||||||||
| Prepaids and other assets | ||||||||
| Total current assets | ||||||||
| Operating lease right-of-use assets, net | ||||||||
| Intangible assets, net | ||||||||
| Goodwill | ||||||||
| TOTAL ASSETS | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| CURRENT LIABILITIES: | ||||||||
| Accounts payable and accrued expenses | $ | $ | ||||||
| Other current liabilities | ||||||||
| Current portion of operating lease liabilities | ||||||||
| Current portion of note payable, net of financing cost, unearned premium and discount of $ | ||||||||
| Warrant liabilities | ||||||||
| Embedded derivative liability | ||||||||
| Total current liabilities | ||||||||
| Operating lease liabilities, net of current portion | ||||||||
| Note payable, net of current portion, financing cost, unearned premium and discount of $ | ||||||||
| TOTAL LIABILITIES | ||||||||
| Commitments and contingencies (Note 12) | ||||||||
| STOCKHOLDERS’ EQUITY: | ||||||||
| Preferred stock; $ par value; shares authorized; shares issued and outstanding | ||||||||
| Common stock, $ par value; shares authorized at September 30, 2023 and June 30, 2023, respectively; shares issued of which shares are outstanding at September 30, 2023; and shares issued of which shares outstanding at June 30, 2023; | ||||||||
| Additional paid in capital | ||||||||
| Accumulated other comprehensive income | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Treasury stock | ( | ) | ( | ) | ||||
| Total stockholders’ equity | ||||||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | $ | ||||||
See accompanying notes to unaudited condensed financial statements
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BioVie Inc.
Condensed Statements of Operations and Comprehensive Loss
(Unaudited)
| Three Months Ended | Three Months Ended | |||||||
| September 30, 2023 | September 30, 2022 | |||||||
| OPERATING EXPENSES: | ||||||||
| Amortization | $ | $ | ||||||
| Research and development expenses | ||||||||
| Selling, general and administrative expenses | ||||||||
| TOTAL OPERATING EXPENSES | ||||||||
| LOSS FROM OPERATIONS | ( | ) | ( | ) | ||||
| OTHER EXPENSE (INCOME): | ||||||||
| Change in fair value of derivative liabilities | ( | ) | ||||||
| Interest expense | ||||||||
| Interest income | ( | ) | ( | ) | ||||
| TOTAL OTHER (INCOME) EXPENSE, NET | ( | ) | ||||||
| NET LOSS | $ | ( | ) | $ | ( | ) | ||
| NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS | $ | ( | ) | $ | ( | ) | ||
| NET LOSS PER COMMON SHARE | ||||||||
| - Basic | $ | ( | ) | $ | ( | ) | ||
| - Diluted | $ | ( | ) | $ | ( | ) | ||
| WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING | ||||||||
| - Basic | ||||||||
| - Diluted | ||||||||
| NET LOSS | $ | ( | ) | $ | ( | ) | ||
| Other comprehensive loss | ||||||||
| Reclassification of unrealized gains on available-for-sale investments upon settlement | ( | ) | ||||||
| Total other comprehensive loss | ( | ) | ||||||
| Comprehensive loss | $ | ( | ) | $ | ( | ) | ||
See accompanying notes to unaudited condensed financial statements
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BioVie Inc.
Condensed Statements of Cash Flows
(Unaudited)
| Three Months Ended | Three Months Ended | |||||||
| September 30, 2023 | September 30, 2022 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Amortization of intangible assets | ||||||||
| Stock based compensation - restricted stock units | ||||||||
| Stock based compensation expense - stock options | ||||||||
| Amortization of financing costs | ||||||||
| Accretion of unearned loan discount | ||||||||
| Accretion of loan premium | ||||||||
| Realized gain on maturity of available-for sale | ( | ) | ||||||
| Change in operating lease right-of-use assets | ||||||||
| Change in fair value of derivative liabilities | ( | ) | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Prepaids and other assets | ( | ) | ( | ) | ||||
| Accounts payable and accrued expenses | ( | ) | ||||||
| Operating lease liabilities | ( | ) | ( | ) | ||||
| Other liabilities | ( | ) | ( | ) | ||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Maturity of U.S. Treasury Bills | ||||||||
| Net cash provided by investing activities | ||||||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Net proceeds from issuance of common stock | ||||||||
| Payment of note payable | ( | ) | ||||||
| Net proceeds from issuance of common stock - Related Party | ||||||||
| Net cash (used in) provided by financing activities | ( | ) | ||||||
| Net increase in cash and cash equivalents | ||||||||
| Cash and cash equivalents, beginning of period | ||||||||
| Cash and cash equivalents, end of period | $ | $ | ||||||
| SUPPLEMENTAL CASH FLOW INFORMATION: | ||||||||
| Cash paid for interest | $ | $ | ||||||
| SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING ACTIVITIES: | ||||||||
| Reclassification of unrealized gains on available-for-sale investments upon settlement | $ | $ | ||||||
See accompanying notes to unaudited condensed financial statements
5
BioVie Inc.
Condensed Statements of Changes in Stockholders’ Equity
(Unaudited)
| Accumulated | ||||||||||||||||||||||||||||||||
| Additional | Other | Total | ||||||||||||||||||||||||||||||
| Common Stock | Common Stock | Paid in | Treasury Stock | Treasury Stock | Comprehensive | Accumulated | Stockholders’ | |||||||||||||||||||||||||
| Shares | Amount | Capital | Shares | Amount | Income | Deficit | Equity | |||||||||||||||||||||||||
| Balance, June 30, 2022 | $ | $ | $ | $ | $ | ( | ) | $ | ||||||||||||||||||||||||
| Stock option based compensation | - | - | ||||||||||||||||||||||||||||||
| Stock-based compensation - restricted stock units | - | - | ||||||||||||||||||||||||||||||
| Proceeds from issuance of common stock, net of costs of $368,370 | - | |||||||||||||||||||||||||||||||
| Proceeds from issuance of common stock, net of costs of $94,160 - Related Party | - | |||||||||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Balance, September 30, 2022 | $ | $ | $ | ( | ) | $ | ||||||||||||||||||||||||||
| Balance, June 30, 2023 | $ | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | $ | ||||||||||||||||||||
| Stock - based compensation - stock options | - | - | ||||||||||||||||||||||||||||||
| Stock-based compensation - restricted stock units | - | - | ||||||||||||||||||||||||||||||
| Proceeds from issuance of common stock, net of costs of $118,891 | - | |||||||||||||||||||||||||||||||
| Issuance of common stock from vesting of - restricted stock units | ( | ) | - | |||||||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Reclassification of unrealized gains on available for sale investments upon settlement | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Balance, September 30, 2023 | $ | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | $ | ||||||||||||||||||||
See accompanying notes to unaudited condensed financial statements
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BIOVIE INC.
Notes to Condensed Financial Statements
For the Three Months Ended September 30, 2023 and 2022
(unaudited)
| 1. | Background Information |
BioVie Inc. (the “Company” or “we” or “our”) is a clinical-stage company developing innovative drug therapies to treat chronic debilitating conditions including neurological and neuro-degenerative disorders and liver disease.
The Company acquired the biopharmaceutical assets of NeurMedix, Inc. (“NeurMedix”), from a related party privately held clinical-stage pharmaceutical company, in June 2021. The acquired assets included NE3107, a potentially selective inhibitor of inflammatory extracellular single-regulated kinase (“ERK”) signaling that, based on animal studies, is believed to reduce neuroinflammation. NE3107 is a novel orally administered small molecule that is thought to inhibit inflammation-driven insulin resistance and major pathological inflammatory cascades with a novel mechanism of action. There is emerging scientific consensus that both inflammation and insulin resistance may play fundamental roles in the development of Alzheimer’s Disease (AD) and Parkinson’s Disease (PD), and NE3107 could, if approved represent an entirely new medical approach to treating these devastating conditions affecting an estimated 6 million Americans suffering from AD and 1 million Americans suffering from PD.
Late in September 2023, the final patient completed the last treatment at week 30 in the Company’s multicenter, randomized, double-blind, placebo-controlled Phase 3 study (NCT04669028) of NE3107 in patients who have mild to moderate Alzheimer’s disease. The database cleaning process remains underway, with the clinical team resolving outstanding queries and entering final data into the electronic data system. Final database lock, unblinding and subsequent release of topline results is anticipated to occur during the fourth quarter of calendar year 2023.
The Company completed its Phase 2 study assessing NE3107 in PD patients in the fourth quarter of calendar year 2022. The NM201 study (NCT05083260) was a double-blind, placebo-controlled, safety, tolerability, and pharmacokinetics study in PD participants treated with carbidopa/levodopa and NE3107. The study was primarily designed to assess safety (general safety in the patient population and potential for drug-drug interactions of NE3107 with levodopa); and secondary, to look for indications of promotoric activity akin to promotoric activity and apparent enhancement of levodopa activity observed in preclinical models. Both the safety and efficacy objectives of the study were met.
Neuroinflammation, insulin resistance, and oxidative stress are common features in the major neurodegenerative diseases, including AD, PD frontotemporal lobar dementia, and Amyotrophic lateral sclerosis (ALS). NE3107 is an orally bioavailable, blood-brain permeable, small molecule, with potential anti-inflammatory, insulin sensitizing, and ERK-binding properties that may allow it to selectively inhibit ERK-, NFκB- and TNF-stimulated inflammation. NE3107’s potential to inhibit neuroinflammation and insulin resistance forms the basis for the Company’s work testing the molecule in AD and PD patients. NE3107 is patented in the United States, Australia, Canada, Europe and South Korea.
The Company’s Orphan Drug candidate BIV201 (continuous infusion terlipressin), has been granted Fast Track designation status by the U.S. Food and Drug Administration (“FDA”), is being evaluated and discussed after receiving guidance from the FDA regarding the design of Phase 3 clinical testing of BIV201 for the treatment of ascites due to chronic liver cirrhosis. BIV201 is administered as a patent-pending liquid formulation. The Phase 2b study was closed before full enrollment, without clinically meaningful adverse effects associated with BIV201 treatment. While the active agent is approved in the U.S. and in about 40 countries for related complications of advanced liver cirrhosis, treatment of ascites is not included in these authorizations. Patients with refractory ascites suffer from frequent life-threatening complications, generate more than $5 billion in annual treatment costs, and have an estimated 50% mortality rate within 6 to 12 months. The FDA has not approved any drug to treat refractory ascites.
The BIV201 development program was initiated by LAT Pharma LLC (“LAT Pharma”). On April 11, 2016, the Company acquired LAT Pharma and the rights to its BIV201 development program. The Company currently owns all development and marketing rights to this drug candidate. Pursuant to the Agreement and Plan of Merger entered into on April 11, 2016, between our predecessor entities, LAT Pharma and NanoAntibiotics, Inc., the Company is obligated to pay a low single digit royalty on net sales of BIV201 (continuous infusion terlipressin), if approved, to be shared by the members of LAT Pharma, PharmaIn Corporation and The Barrett Edge, Inc.
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| 2. | Liquidity |
The Company’s operations are subject to
a number of factors that can affect its operating results and financial conditions. Such factors include, but are not limited to: the
results of clinical testing and trial activities of the Company’s products, the Company’s ability to obtain regulatory approval
to market its products; competition from products manufactured and sold or being developed by other companies; the price of, and demand
for, Company products; the Company’s ability to negotiate favorable licensing or other manufacturing and marketing agreements for
its products; and the Company’s ability to raise capital. The Company’s financial statements have been prepared assuming the
Company will continue as a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal
course of business. As of September 30, 2023, the Company had working capital of approximately $
The future viability of the Company is largely dependent upon its ability to raise additional capital to finance its operations. Management expects that future sources of funding may include sales of equity, obtaining loans, or other strategic transactions.
Although management continues to pursue the Company’s strategic plans, there is no assurance that the Company will be successful in obtaining sufficient financing on terms acceptable to the Company, if at all, to fund continuing operations. These circumstances raise substantial doubt on the Company’s ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
| 3. | Significant Accounting Policies |
Basis of Presentation – Interim Financial Information
These unaudited interim condensed financial statements and related notes have been prepared in accordance with accounting principles generally accepted in the United State of America (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X of the Securities and Exchange Commission (the “SEC”) for Interim Reporting. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. The unaudited interim condensed financial statements furnished reflect all adjustments (consisting of normal recurring accruals) that are, in the opinion of management, considered necessary for a fair presentation of the results for the interim periods presented. Interim results are not necessarily indicative of the results for the full year. The condensed balance sheet at June 30, 2023 was derived from audited annual financial statements but does not contain all the footnote disclosures from the annual financial statements. These unaudited interim condensed financial statements should be read in conjunction with the Company’s audited financial statements for the fiscal years ended June 30, 2023 and 2022 in our Annual Report on Form 10-K filed with the SEC on August 16, 2023 (the “2023 Form 10-K”). A summary of significant accounting policies can also be found in those audited financial statements in the 2023 Form 10-K.
8
Basic net loss per common share is computed by dividing the net loss attributable to common stockholders by the weighted average number of shares of common stock, par value $ per share (“common stock”), outstanding during the period. Diluted net loss per common share is computed by dividing the net loss attributable to common stockholders by the weighted average number of shares of common stock outstanding and potentially outstanding shares of common stock during the period to reflect the potential dilution that could occur from common shares issuable through stock options, warrants, and restricted stock units. For the three months ended September 30, 2023 and 2022, such amounts were excluded from the diluted loss since their effect was considered anti-dilutive due to the net loss for the periods.
The table below shows the number of outstanding stock options, warrants and restricted stock units as of September 30, 2023 and 2022:
| Schedule of dilutive securities were excluded from the computation of diluted loss per share | ||||||||
| September 30, 2023 | September 30, 2022 | |||||||
| Number of Shares | Number of Shares | |||||||
| Stock Options | ||||||||
| Warrants | ||||||||
| Restricted Stock Units | ||||||||
| Total | ||||||||
Recent Accounting Pronouncements
The Company considers the applicability and impact of all Accounting Standards Updates (“ASUs”). There have been no recent ASUs that are expected to have a material impact on the Company’s balance sheets or statements of operations and comprehensive loss since the 2023 Form 10-K.
Cash and cash equivalents
Cash and cash equivalents consisted of cash deposits and money market funds held at a bank and funds held in a brokerage account which included a U.S. treasury money market fund and U.S. Treasury Bills with original maturities of three months or less.
Investments in U.S. Treasury Bills
Investments in U.S. Treasury Bills with maturities greater than three months, are accounted for as available for sale and are recorded at fair value. Unrealized gain were included in other comprehensive income in the accompanying statements of operations and comprehensive loss. Upon the maturity and settlement of these investments, realized gains were recorded as a component of interest income on the accompanying condensed statement of operations and comprehensive loss.
Concentration of Credit Risk in the Financial Service Industry
As of September 30, 2023, the Company had cash deposited in certain financial institutions in excess of federally insured levels. The Company regularly monitors the financial stability of these financial institutions and believes that it is not exposed to any significant credit risk in cash and cash equivalents. However, in March and April 2023, certain U.S. government banking regulators took steps to intervene in the operations of certain financial institutions due to liquidity concerns, which caused general heightened uncertainties in financial markets. While these events have not had a material direct impact on the Company’s operations, if further liquidity and financial stability concerns arise with respect to banks and financial institutions, either nationally or in specific regions, the Company’s ability to access cash or enter into new financing arrangements may be threatened, which could have a material adverse effect on its business, financial condition and results of operations.
Fair value measurement of assets and liabilities
We determine the fair values of our financial instruments based on the fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value assumes that the transaction to sell the asset or transfer the liability occurs in the principal or most advantageous market for the asset or liability and establishes that the fair value of an asset or liability shall be determined based on the assumptions that market participants would use in pricing the asset or liability. The classification of a financial asset or liability within the hierarchy is based upon the lowest level input that is significant to the fair value measurement. The fair value hierarchy prioritizes the inputs into three levels that may be used to measure fair value:
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Level 1 – Inputs are unadjusted quoted prices in active markets for identical assets or liabilities.
Level 2 – Inputs are quoted prices for similar assets and liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the financial instrument.
Level 3 – Inputs are unobservable inputs based on our assumptions.
The Company’s financial instruments include cash, accounts payable, the carrying value of the operating lease liabilities, notes payable and other derivative liabilities (see Note 9). The carrying amounts of cash and accounts payable approximate their fair value, due to the short-term nature of these items. The carrying amounts of notes payable and operating lease liabilities approximate their fair values since they bear interest at rates which approximate market rates for similar debt instruments.
| 4. | Investments in U.S. Treasury Bills Available for Sale |
The following is a summary of the U.S. Treasury Bills held at June 30, 2023:
| Schedule of U.S. treasury bills held | ||||||||||||||||
| Amortized Cost Basis | Gross Unrealized Gain | Fair Value | Total Accumulated Other Comprehensive Income | |||||||||||||
| U.S. Treasury Bills due is 3 - 6 months | $ | $ | $ | $ | ||||||||||||
During the fiscal year ended June 30, 2023, the Company purchased a
total of approximately $
| 5. | Intangible Assets |
The Company’s intangible assets consist of intellectual property acquired from LAT Pharma and are amortized over their estimated useful lives.
The following is a summary of the Company’s intangible assets:
| Schedule of intangible assets | ||||||||
| September 30, 2023 | June 30, 2023 | |||||||
| Intellectual Property | $ | $ | ||||||
| Less Accumulated Amortization | ( | ) | ( | ) | ||||
| Intellectual Property, Net | $ | $ | ||||||
Amortization expense was $
Estimated future amortization expense is as follows:
| Schedule of future amortization expense | ||||
| Year ending June 30, 2024 (Remaining 9 months) | $ | |||
| 2025 | ||||
| 2026 | ||||
| $ | |
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| 6. | Related Party Transactions |
Equity Transactions with Acuitas
On July 15, 2022, the Company entered into a securities purchase agreement with Acuitas Group Holdings, LLC (“Acuitas”), the Company’s majority stockholder, pursuant to which Acuitas agreed to purchase from the Company, in a private placement, (i) an aggregate of shares of the Company’s Common Stock, at a price of $1.65 per share (the “PIPE Shares”), and (ii) a warrant to purchase 7,272,728 shares of Common Stock (“PIPE Warrant Shares”), at an exercise price of $1.82, with a term of exercise of five years. The warrant has a down round feature that reduces the exercise price of the warrant if the Company sells stock at a price lower than the exercise price of the warrant. On August 15, 2022, the Company received net proceeds of approximately $5.9 million, net of costs of approximately $94,000, and entered into an amended and restated registration agreement with Acuitas, which amended and restated that certain registration rights agreement, dated as of June 10, 2021, by and between the Company and Acuitas (the “Existing Registration Rights Agreement”), to amend the definition of “Registrable Securities” in the Existing Registration Rights Agreement to include the PIPE Shares and the PIPE Warrant Shares as Registrable Securities thereunder.
| 7. | Other Liabilities |
The current portion of other liabilities at June
30, 2023 was approximately $
| 8. | Notes Payable |
On November 30, 2021 (the “Closing Date”),
the Company entered into a Loan and Security Agreement and the Supplement to the Loan and Security Agreement and Promissory Notes (together,
the “Loan Agreement”) with Avenue Venture Opportunities Fund, L.P. (“AVOPI”) and Avenue Venture Opportunities
Fund II, L.P. (“AVOPII,” and together with AVOPI, “Avenue”) for growth capital loans in an aggregate commitment
amount of up to $20 million (the “Loan”). On the Closing Date, $15 million of the Loan was funded (“Tranche 1”).
The Loan provided for an additional $5 million to be available to the Company on or prior to September 15, 2022, subject to the Company’s
achievement of certain milestones with respect to certain of its ongoing clinical trials, which were not achieved. The Loan bears interest
at an annual rate equal to the greater of (a) the sum of
The Loan Agreement required monthly interest-only payments during the first eighteen months of the term of the Loan. Following the interest-only period, on July 1, 2023, the Company pays equal monthly payments of principal, plus accrued interest, until the Loan’s maturity date when all remaining principal and accrued interest is due. If the Company prepays the Loan, it will be required to pay (a) a prepayment fee in an amount equal to 3.0% of the principal amount of the Loan that is prepaid during the interest-only period; and (b) a prepayment fee in an amount equal to 1.0% of the principal amount of the Loan that is prepaid after the interest-only period. At the Loan’s maturity date, or on the date of the prepayment of the Loan, the Company will be obligated to pay a final payment equal to 4.25% of the Loan commitment amount, the sum of Tranche 1 and Tranche 2.
The Loan Agreement includes a conversion option to convert up to $5.0 million of the principal amount of the Loan outstanding at the option of Avenue, into shares of the Company’s Common Stock at a conversion price of $6.98 per share.
On the Closing Date, the Company issued to Avenue warrants to purchase 361,002 shares of Common Stock of the Company (the “Avenue Warrants”) at an exercise price per share equal to $5.82. The Avenue Warrants are exercisable until November 30, 2026.
The amount of the carrying value of the notes
payable was determined by allocating portions of the outstanding principal of the notes; approximately $
The total interest expense of approximately $
As of September 30, 2023, the remaining principal balance of $12.5 million under the Loan is payable in 15 monthly equal installments. For the three months ended September 30, 2023, the Company paid back $2.5 million of the original loan of $15 million.
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The following is a summary of the Notes Payable as of September 30, 2023 and June 30, 2023:
Current portion of Notes Payable
| Schedule of note payable | ||||||||
| September 30, 2023 | June 30, 2023 | |||||||
| Current portion of Notes Payable | $ | $ | ||||||
| Less debt financing costs | ( | ) | ( | ) | ||||
| Less unearned discount | ( | ) | ( | ) | ||||
| Plus accretion of loan premium | ||||||||
| Current portion of Notes Payable, net of financing costs, unearned premiums and discount | $ | $ | ||||||
Non-current portion of Notes Payable
| September 30, 2023 | June 30, 2023 | |||||||
| Notes Payable | $ | $ | ||||||
| Less debt financing costs | ( | ) | ( | ) | ||||
| Less unearned discount | ( | ) | ( | ) | ||||
| Plus accretion of loan premium | ||||||||
| Notes Payable, net of the current portion financing costs, unearned premiums and discount | $ | $ | ||||||
Estimated future amortization expense and accretion of premium is as follows:
| Schedule of estimated future amortization expense and accretion of premium | ||||||||||||
| Unearned Discount | Debt Financing Costs | Loan accretion Premium | ||||||||||
| Year ending June 30, 2024 (Remaining 9 months) | $ | $ | $ | |||||||||
| 2025 | ||||||||||||
| Total | $ | $ | $ | |||||||||
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| 9. | Fair Value Measurements |
At September 30, 2023 and June 30, 2023, the estimated fair value of derivative liabilities measured on a recurring basis are as follows:
| Schedule of derivative liabilities at fair value | ||||||||||||||||
| Fair Value Measurements at | ||||||||||||||||
| September 30, 2023 | ||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| Derivative liability - Warrants | $ | $ | $ | $ | ||||||||||||
| Derivative liability - Conversion option on notes payable | ||||||||||||||||
| Total derivatives | $ | $ | $ | $ | ||||||||||||
| Fair Value Measurements at | ||||||||||||||||
| June 30, 2023 | ||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| Derivative liability - Warrants | $ | $ | $ | $ | ||||||||||||
| Derivative liability - Conversion option on note payable | ||||||||||||||||
| Total derivatives | $ | $ | $ | $ | ||||||||||||
The following table presents the activity for liabilities measured at fair value using unobservable inputs for the three months ended September 30, 2023:
| Fair value, liabilities measured on recurring basis | ||||||||
| Derivative liabilities - Warrants | Derivative liability - Conversion Option on Convertible Debenture | |||||||
| Balance at June 30, 2023 | $ | $ | ||||||
| Additions to level 3 liabilities | ||||||||
| Change in in fair value of level 3 liability | ( | ) | ( | ) | ||||
| Transfer in and/or out of Level 3 | ||||||||
| Balance at September 30, 2023 | $ | $ | ||||||
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The following table presents the activity for liabilities measured at fair value using unobservable inputs for the three months ended September 30, 2022:
| Derivative liabilities - Warrants | Derivative liability - Conversion Option on Convertible Debenture | |||||||
| Balance at June 30, 2022 | $ | $ | ||||||
| Additions to level 3 liabilities | ||||||||
| Change in in fair value of level 3 liability | ||||||||
| Transfer in and/or out of Level 3 | ||||||||
| Balance at September 30, 2022 | $ | $ | ||||||
The fair values of derivative liabilities for the Avenue Warrants and the conversion option at September 30, 2023 in the accompanying condensed balance sheet, were approximately $622,000 and approximately $490,000, respectively. The total change in the fair value of the derivative liabilities totaled approximately $708,000 for the three months ended September 30, 2023; and accordingly, was recorded in the accompanying condensed statement of operations and comprehensive loss. The assumptions used in the Black Scholes model to value the derivative liabilities at September 30, 2023 included the closing stock price of $ per share; for the Avenue Warrants, the exercise price of $, remaining term years, risk free rate of and volatility of ; and for the embedded derivative liability of the conversion option, the conversion price of $; remaining term years, risk free rate of and volatility of .
Derivative liability – Avenue Warrants
The Company accounts for stock purchase warrants as either equity instruments or derivative liabilities depending on the specific terms of the warrant agreements. Under applicable accounting guidance, stock warrants that are precluded from being indexed to the Company’s own stock because of full-rachet and anti-dilution provisions or adjustments to the strike price due to an occurrence of a future event are accounted for as derivative financial instruments. The Avenue Warrants were not considered to be indexed to the Company’s own stock, and accordingly, were recorded as a derivative liability at fair value in the accompany condensed balance sheet at September 30, 2023.
The Black Scholes model was used to calculate the fair value of the warrant derivative to bifurcate the warrant derivative amount from the Avenue Loan amount funded. The Avenue Warrants are recorded at their fair values at the date of issuance and remeasured at September 30, 2023.
Embedded derivative liability – Conversion Option
The embedded derivative liability represents the optional conversion feature of up to $5.0 million of the outstanding Loan, which meets the definition of a derivative and requires bifurcation from the loan amount.
The Black Scholes model was used to calculate the fair value of the embedded derivative to bifurcate the embedded derivative amount representing the conversion option from the Avenue Loan amount funded.
Financial assets
As of September 30, 2023, investments in U.S. Treasury Bills were valued through use of quoted prices and are classified as Level 1.
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The following table presents information about our assets that are measured at fair value on a recurring basis.
| Measured at fair value on a recurring basis | ||||||||||||||||
| Fair Value Measurements at | ||||||||||||||||
| September 30, 2023 | ||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| Cash | $ | $ | $ | $ | ||||||||||||
| U.S. Treasury Bills due in 3 months or less at purchase | ||||||||||||||||
| U.S. Treasury Bills due in 3 - 6 months at purchase | ||||||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||
| Fair Value Measurements at | ||||||||||||||||
| June 30, 2023 | ||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| Cash | $ | $ | $ | $ | ||||||||||||
| U.S. Treasury Bills due in 3 months or less at purchase | ||||||||||||||||
| U.S. Treasury Bills due in 3 - 6 months at purchase | ||||||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||
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| 10. | Equity Transactions |
Issuance of common stock for cash
On August 31, 2022, the Company entered into a
Controlled Equity Offering Sales Agreement (the “Sales Agreement”) with Cantor Fitzgerald & Co. and B. Riley Securities,
Inc. (collectively, the “Agents”), pursuant to which the Company may issue and sell from time-to-time shares of the Company’s
common stock through the Agents, subject to the terms and conditions of the Sales Agreement. On April 6, 2023, the Company and B. Riley
Securities, Inc. mutually agreed to terminate B. Riley Securities, Inc.’s role as a sales agent under the Sales Agreement. During
the three months ended September 30, 2023, the Company sold shares of common stock under the Sales Agreement for total net proceeds
of $
Stock Options
The following table summarizes the activity relating to the Company’s stock options for the three months ended September 30, 2023:
| Schedule of summarizes the activity relating to the Company’s stock options | ||||||||||||||||
| Options | Weighed- Average Exercise Price | Weighted Remaining Average Contractual Term | Aggregate Intrinsic Value | |||||||||||||
| Outstanding at June 30, 2023 | $ | $ | ||||||||||||||
| Outstanding at September 30, 2023 | ||||||||||||||||
| Exercisable at September 30, 2023 | $ | $ | ||||||||||||||
The fair value of each option grant on the date of grant is estimated using the Black-Scholes option. No stock options were issued, expired, canceled or exercised during the three months ended September 30, 2023.
The total stock option-based compensation expense for three-months ended September 30, 2023 and 2022 was of $ and $, respectively.
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Issuance of restricted stock units and options :
On November 23, 2022, the Company issued equity
awards for the board of directors’ annual compensation. Four directors received restricted stick units (“RSUs”) to purchase
a total of
The following table summarizes vesting of restricted common stock:
| Schedule of vesting of restricted common stock | ||||||||
| Number of Shares | Weighted Average Grant Date Fair Value Per Share | |||||||
| Unvested at June 30, 2023 | $ | |||||||
| Vested | ( | ) | ||||||
| Unvested at September 30, 2023 | $ | |||||||
The total stock based compensation – restricted
stock expense for three-months ended September 30, 2023 and 2022 was of $
Issuance of Stock Options under the 2019 Omnibus Plan.
On October 3, 2023, the Company granted stock options to purchase shares of Common Stock to new hire employees. of the shares underlying the options awarded vest on the one-year anniversary of the grant date, and the remaining will vest in equal monthly installments over months each month thereafter. The exercise price of the options is $ per share and the options terminate on the earlier of the tenth grant date anniversary or the date of which the options are fully exercised.
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Stock Warrants
The following table summarizes warrant activity during the three months ended September 30, 2023:
| Summary of warrants activity | ||||||||||||||||
| Number of Shares | Weighted Average Exercise Price | Weighted Average Remaining Life (Years) | Aggregate Intrinsic Value | |||||||||||||
| Outstanding and exercisable at June 30, 2023 | $ | $ | ||||||||||||||
| Outstanding and exercisable at September 30, 2023 | $ | $ | ||||||||||||||
Of the above warrants, 101,380 expire in the fiscal year ending June 30, 2025, 35,175 expire in the fiscal year ending June 30, 2026, and 7,633,730 expire in the fiscal year ending June 30, 2027. No warrants were granted, expired, or were exercised during the three months ended September 30, 2023.
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| 11. | Leases |
Office Lease
The Company pays an annual rent of $2,200 for its headquarters at 680 W Nye Lane, Suite 201, Carson City Nevada 897603. The rental agreement was for a one-year term and commenced on October 1, 2022 and has been subsequently renewed for another year at the same rate.
On February 26, 2022, the Company’s San Diego office relocated to 5090 Shoreham Place, San Diego, CA 92122. The term for the office lease is 38 months and commenced on March 1, 2022. The monthly base rate currently is $4,300, with annual increases of three percent.
Total operating lease
expense of approximately $
The right-of-use asset, net and current and non current portion of the operating lease liabilities included in the accompany condensed balance sheets are as follows:
| Schedule of deferred tax assets | ||||||||
| September 30, 2023 | June 30, 2023 | |||||||
| Assets | ||||||||
| Operating lease, right-of-use asset, net | $ | $ | ||||||
| Liabilities | ||||||||
| Current portion of operating lease liabilities | $ | $ | ||||||
| Operating lease liabilities, net of current portion | ||||||||
| Total operating lease liabilities | $ | $ | ||||||
At September 30, 2023, the future estimated minimum lease payments under non-cancelable operating leases are as follows:
| Schedule of future estimated minimum lease payments under non-cancelable operating leases | ||||
| Year ending June 30, 2024 (Remaining 9 months) | $ | |||
| 2025 | ||||
| Total minimum lease payments | ||||
| Less amount representing interest | ( | ) | ||
| Present value of future minimum lease payments | ||||
| Less current portion of operating lease liabilities | ( | ) | ||
| Operating lease liabilities, net of current portion | $ |
Total cash paid for amounts included in the measurement of lease liabilities
were $
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The weighted average remaining lease term and discount rate as of September 30, 2023 and June 30, 2023 were as follows:
| Schedule of weighted average remaining lease term and discount rate | ||||||||
| September 30, 2023 | June 30, 2023 | |||||||
| Weighted average remaining lease term (Years) | ||||||||
| Operating leases | ||||||||
| Weighted average discount rate | ||||||||
| Operating leases | % | % | ||||||
| 12. | Commitments and Contingencies |
Royalty Agreements
Pursuant to the Agreement and Plan of Merger entered into on April 11, 2016, by and between our predecessor entities, LAT Pharma and NanoAntibiotics, Inc., the Company is obligated to pay a low single digit royalty on net sales of BIV201 (continuous infusion terlipressin) to be shared by the members of LAT Pharma Members, PharmaIn Corporation, and The Barrett Edge, Inc.
Pursuant to the Technology Transfer Agreement entered into on July 25, 2016, by and between the Company and the University of Padova (Italy), the Company is obligated to pay a low single digit royalty on net sales of all terlipressin products covered by US patent no. 9,655,645 and any future foreign issuances, capped at a maximum of $200,000 per year.
| 13. | Employee Benefit Plan |
On August 1, 2021, the Company began sponsoring an employee benefit plan subject to Section 401(K) of the Internal Revenue Service Code (the “401K Plan”) pursuant to which, all employees meeting eligibility requirements are able to participate.
Subject to certain limitations in the Internal
Revenue Code, eligible employees are permitted to make contributions to the 401K Plan on a pre-tax salary reduction basis and the Company
will match 5% of the first 5% of an employee’s contributions to the 401K Plan., The Company made contributions of approximately
$
| 14. | Subsequent Events |
Subsequent to September 30, 2023, the Company sold shares of common
stock for net proceeds of $
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
This report contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and Section 27A of the Securities Act of 1933, as amended. Any statements contained in this report that are not statements of historical fact may be forward-looking statements. When we use the words “intends,” “estimates,” “predicts,” “potential,” “continues,” “anticipates,” “plans,” “expects,” “believes,” “should,” “could,” “may,” “will” or the negative of these terms or other comparable terminology, we are identifying forward-looking statements. Forward-looking statements involve risks and uncertainties, which may cause our actual results, performance or achievements to be materially different from those expressed or implied by forward-looking statements. These factors include, among others: our research and development activities and distributor channel; compliance with regulatory requirements; and our ability to satisfy our capital needs Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements.
You are cautioned not to place undue reliance on the forward-looking statements in this report, which speak only as of the date of this report. Except as may be required by applicable law, we do not undertake or intend to update or revise our forward-looking statements, and we assume no obligation to update any forward-looking statements contained in this report as a result of new information or future events or developments, except as required by law. Thus, you should not assume that our silence over time means that actual events are bearing out as expressed or implied in such forward-looking statements. You should carefully review and consider the various disclosures we make in this report and our other reports filed with the Securities and Exchange Commission (the “SEC”) that attempt to advise interested parties of the risks, uncertainties and other factors that may affect our business.
The following discussion of the Company’s financial condition and the results of operations should be read in conjunction with the Financial Statements and Notes thereto appearing elsewhere in this report.
Management’s Discussion
BioVie Inc. (the “Company” or “we” or “our”) is a clinical-stage company developing innovative drug therapies to treat chronic debilitating conditions including neurological and neuro-degenerative disorders and liver disease.
The Company acquired the biopharmaceutical assets of NeurMedix, Inc. (“NeurMedix”), a privately held clinical-stage pharmaceutical company, in June 2021. The acquired assets included NE3107, a potentially selective inhibitor of inflammatory extracellular single-regulated kinase (ERK) signaling that, based on animal studies, is believed to reduce neuroinflammation. NE3107 is a novel orally administered small molecule that is thought to inhibit inflammation-driven insulin resistance and major pathological inflammatory cascades with a novel mechanism of action. There is emerging scientific consensus that both inflammation and insulin resistance may play fundamental roles in the development of Alzheimer’s Disease (AD) and Parkinson’s Disease (PD), and NE3107 could, if approved represent an entirely new medical approach to treating these devastating conditions affecting an estimated 6 million Americans suffering from AD and 1 million Americans suffering from PD. Late in September 2023, the last patient completed the last treatment at week 30 in the Company’s multicenter, randomized, double-blind, placebo-controlled Phase 3 study (NCT04669028) of NE3107 in patients who have mild to moderate Alzheimer’s disease. The database cleaning process remains underway, with the clinical team resolving outstanding queries and entering final data into the electronic data system. Final database lock, unblinding, and subsequent release of topline results is anticipated to occur during the fourth quarter of calendar year 2023.
The Phase 2 study of NE3107 in Parkinson’s disease (“PD”) (NCT05083260), completed in December 2022 was a double-blind, placebo-controlled, safety, tolerability, and pharmacokinetics study in PD participants treated with carbidopa/levodopa and NE3107. Forty-five patients with a defined L-dopa “off state” were randomized 1:1 to placebo:NE3107 20 mg twice daily for 28 days. This trial was launched with two design objectives: 1) the primary objective was safety and a drug-drug interaction study as requested by the FDA to demonstrate the absence of adverse interactions of NE3107 with levodopa; and 2) the secondary objective is to determine if preclinical indications of promotoric activity and apparent enhancement of levodopa activity can be seen in humans. Both objectives were met. The Company continues to process its findings from its completed study as it prepares for the next round of clinical studies in PD.
Neuroinflammation, insulin resistance, and oxidative stress are common features in the major neurodegenerative diseases, including AD, PD, frontotemporal lobar dementia, and Amyotrophic lateral sclerosis (ALS). NE3107 is an oral small molecule, blood-brain permeable, compound with potential anti-inflammatory, insulin sensitizing, and ERK-binding properties that may allow it to selectively inhibit ERK-, NFκB- and TNF-stimulated inflammation. NE3107’s potential to inhibit neuroinflammation and insulin resistance forms the basis for the Company’s work testing the molecule in AD and PD patients. NE3107 is patented in the United States, Australia, Canada, Europe and South Korea.
The Company’s Orphan Drug candidate BIV201 (continuous infusion terlipressin), with FDA Fast Track designation status, is being evaluated and discussed after receiving guidance from the FDA regarding the design of Phase 3 clinical testing of BIV201 for the treatment of ascites due to chronic liver cirrhosis. BIV201 is administered as a patent-pending liquid formulation. The Phase 2b study was closed before full enrollment, without clinically meaningful adverse effects associated with BIV201 treatment. The active agent is approved in the U.S. and in about 40 countries for related complications of advanced liver cirrhosis.
21
Comparison of the three months ended September 30, 2023 to the three months ended September 30, 2022
Net loss
The net loss for the three months ended September 30, 2023, was approximately $10.7 million and was comparable to the net loss of $10.4 million for the three months ended September 30, 2022. The increase in net loss was comprised of increased research and development expenses of $2.1 million offset from a decrease in selling, general and administrative expenses of approximately $64,000, an increase in interest income of approximately $420,000 and the change in the fair value of derivative liabilities of $1.3 million for the three months ended September 30, 2023 from the three months ended September 30, 2022.
Total operating expenses for the three months ended September 30, 2023, were approximately $10.9 million as compared to $8.8 million for the three months ended September 30, 2022. The net increase of approximately $2.1 million for the three months ended September 30, 2023 was comprised of increased research and development expenses of approximately $2.1 million offset by a decrease in selling general and administrative expenses of approximately $64,000.
Research and Development Expenses
Research and development expenses were approximately $8.9 million and $6.8 million for the three months ended September 30, 2023, and 2022, respectively. The net increase of approximately $2.1 million, represented an approximate decline of $1.4 million in expenses from the completion of the PD Phase 2 and Ascites Phase 2b studies and the near completion of the AD Phase 3, offset by increased expenditures of $1.7 million related to development of next clinical studies and other research; increased expenses attributed to publication of our abstracts and posters presented at various conferences totaling approximately $172,000, and increased expenses in Chemistry, Manufacturing and Control of approximately $46,000 and the Clinical Teams compensation of approximately $1.5 million. The total clinical team employee and outside consultants’ compensation increased by approximately $780,000 and $712,000, respectively; for the three months ended September 30 2023; representing an increase in the employee headcount by 7 to 15 and the expanded use in the number of outside consultants.
Selling, General and Administrative Expenses
Selling, general and administrative expenses were approximately $1.9 million and $2.0 million for the three months ended September 30, 2023, and 2022, respectively. The net decrease of approximately $64,000 was primarily attributed to decline in directors stock compensation of approximately $313,000,and other professional and advisory fees of $37,000 offset by general administrative compensations of $31,000, increased legal fees of $155,000, other consultants of approximately $58,000 and insurance expenses of approximately $41,000.
Other Income and Expense
Other income, net was approximately $165,000 compared to other expense, net of $1.6 million, for the three months ended September 30, 2023 and 2022, respectively. The net increase in other income of approximately $1.8 million represented change in fair value of the related derivative liabilities of approximately $1.3 million, and increase in interest income of approximately $420,000 which was primarily comprised of $223,865 realized gain on settlement of investments in U.S. Treasury Bills.
22
Capital Resources and Liquidity
As of September 30, 2023 the Company had working capital of approximately $9.6 million, cash and cash equivalents totaling approximately $21.2 million, stockholders’ equity of approximately $7.5 million, and an accumulated deficit of approximately $311.9 million.
During the three months ended September 30, 2023, the Company sold approximately 432,000 shares of its Common Stock under its Controlled Equity Offering Sales Agreement with Cantor Fitzgerald & Co for total net proceeds of approximately $1.9 million after 3% commissions and offering costs totaling approximately $119,000.
The Company has not generated any revenue and no revenues are expected in the foreseeable future. The Company’s future operations are dependent on the success of the Company’s ongoing development and commercialization efforts, as well as its ability to secure additional financing. Management expects that future sources of funding may include sales of equity, obtaining loans, or other strategic transactions.
Although management continues to pursue the Company’s strategic plans, there is no assurance that the Company will be successful in obtaining sufficient financing on terms acceptable to the Company, if at all, to fund continuing operations. These circumstances raise substantial doubt on the Company’s ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Critical Accounting Policies and Estimates
For the three-month period ended September 30, 2023, there were no significant changes to the Company’s critical accounting policies as identified in the Annual Report Form 10-K for the fiscal year ended June 30, 2023.
23
New Accounting Pronouncements
The Company considered the applicability and impact of recent accounting pronouncements and determined those to be either not applicable or expected to have minimal impact on our balance sheets or statement of operations and comprehensive loss.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Not applicable to smaller reporting companies.
Item 4. Controls and Procedures
We maintain “disclosure controls and procedures.” Such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act that are designed to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in Securities and Exchange Commission rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Office and Chief Financial officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating our disclosure controls and procedures, management recognized that disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the disclosure controls and procedures are met. Our disclosure controls and procedures have been designed to meet reasonable assurance standards. Additionally, in designing disclosure controls and procedures, our management necessarily was required to apply its judgement in evaluating the cost-benefit relationship of possible disclosure and procedures. The design of and disclosure controls and procedures also are based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.
Based on their evaluation as of the end of the period covered by this Quarterly Report on Form 10-Q, our Chief Executive Officer and Chief Financial Officer have concluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level, as appropriate, to allow timely decisions regarding required disclosure.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting (as defined in Rule 13a-15f and 15d-15(f) under the Exchange Act) that occurred during the quarter ended September 30, 2023, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
24
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
To our knowledge, neither the Company nor any of its officers or directors is a party to any material legal proceeding or litigation and such persons know of no material legal proceeding or contemplated or threatened litigation. There are no judgments against us or our officers or directors. None of our officers or directors has been convicted of a felony or misdemeanor relating to securities or performance in corporate office.
Item 1A. Risk Factors
Except as described below, there have been no material changes to the Risk Factors previously disclosed in our Form 10-K. The risks described in our Form 10-K and below are not the only risks facing our company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition, and/or operating results.
Risks Relating to Our Business and Industry
We rely and will continue to rely on third parties to conduct our clinical trials. If these third parties do not successfully carry out their contractual duties or meet expected deadlines or do not successfully perform and comply with regulatory requirements, we may not be able to obtain regulatory approval of or commercialize our product candidates.
We depend, and will continue to depend, on contract research organizations (“CROs”), clinical trial sites and clinical trial principal investigators, contract laboratories, and other third parties to conduct our clinical trials. We rely heavily on these third parties over the course of our clinical trials, and we control only certain aspects of their activities. Nevertheless, we are responsible for ensuring that each of our studies is conducted in accordance with the protocol and applicable legal, regulatory, and scientific standards and regulations, and our reliance on third parties does not relieve us of our regulatory responsibilities. We and these third parties are required to comply with current good clinical practices (“cGCPs”), which are regulations and guidelines enforced by the FDA and comparable foreign regulatory authorities for the conduct of clinical trials on product candidates in clinical development. Regulatory authorities enforce cGCPs through periodic inspections and for-cause inspections of clinical trial principal investigators and trial sites. If we or any of these third parties fail to comply with applicable cGCPs or fail to enroll a sufficient number of patients, we may be required to conduct additional clinical trials to support our marketing applications, which would delay the regulatory approval process. Moreover, our business may be implicated if any of these third parties violates federal, state, or foreign fraud and abuse or false claims laws and regulations or healthcare privacy and security laws, or provide us or government agencies with inaccurate, misleading, or incomplete data. For example, during routine monitoring of blinded data from our Phase 3 study (NCT04669028) of NE3107, we uncovered what appears to be potential scientific misconduct and significant non-compliance with GCPs and regulation at six sites. We have alerted the FDA’s Office of Scientific Integrity (“OSI”) about these issues and believe OSI will perform a thorough, competent, objective and fair research of any potential scientific misconduct and non-compliance of GCPs and regulation. Sensitivity analysis excluding data from these six problematic sites has been performed and accounted for in the statistical analysis plan for the study (NCT04669028). Nonetheless, these findings of potential scientific misconduct and significant GCP violations may call into question the rigor, robustness and validity of the entire data set for this study (NCT04669028) and may require additional clinical studies to confirm the final results of the study.
Although we design the clinical trials for our product candidates, our CROs are tasked with facilitating and monitoring our clinical trials. As a result, many important aspects of our clinical development programs, including site and investigator selection, and the conduct and timing and monitoring of the study, will be partly or completely outside our direct control. Our reliance on third parties to conduct clinical trials also results in less direct control over the collection, management, and quality of data developed through clinical trials than would be the case if we were relying entirely upon our own employees. Communicating with third parties can also be challenging, potentially leading to mistakes as well as difficulties in coordinating activities.
Successful development of biopharmaceuticals is highly uncertain and is dependent on numerous factors, many of which are beyond our control.
Product candidates that appear promising in the early phases of development may fail to reach the market for several reasons. Pre-clinical study results may show the product candidate to be less effective than desired (e.g., the study failed to meet its primary endpoints) or to have harmful or problematic side effects. Product candidates may fail to receive the necessary regulatory approvals or may be delayed in receiving such approvals. Among other things, such delays may be caused by slow enrollment in clinical studies; length of time to achieve study endpoints; additional time requirements for data analysis; IND and later NDA preparation; discussions with the FDA; an FDA request for additional pre-clinical or clinical data; unexpected safety or manufacturing issues; manufacturing costs; pricing or reimbursement issues; clinical sites deviating from the trial protocol, committing scientific misconduct, or other violations of regulatory requirements – which can render data from those sites unusable in support of regulatory approval; or other factors that make the product not economical. Proprietary rights of others and their competing products and technologies may also prevent the product from being commercialized.
25
Success in pre-clinical and early clinical studies does not ensure that large-scale clinical studies will be successful. Clinical results are frequently susceptible to varying interpretations that may delay, limit or prevent regulatory approvals. The length of time necessary to complete clinical studies and to submit an application for marketing approval for a final decision by a regulatory authority varies significantly from one product to the next, and may be difficult to predict. There can be no assurance that any of our products will develop successfully, and the failure to develop our products will have a materially adverse effect on our business and will cause you to lose all of your investment.
Adverse Developments Affecting the Financial Services Industry and Concentration of Risk
As of September 30, 2023, the Company had cash deposited in certain financial institutions in excess of federally insured levels. The Company regularly monitors the financial stability of these financial institutions and believes that it is not exposed to any significant credit risk in cash and cash equivalents. However, in March and April 2023, certain U.S. government banking regulators took steps to intervene in the operations of certain financial institutions due to liquidity concerns, which caused general heightened uncertainties in financial markets. While these events have not had a material direct impact on the Company’s operations, if further liquidity and financial stability concerns arise with respect to banks and financial institutions, either nationally or in specific regions, the Company’s ability to access cash or enter into new financing arrangements may be threatened, which could have a material adverse effect on its business, financial condition and results of operations.
26
Risks Relating To Our Common Stock
You may experience future dilution as a result of future equity offerings or if we issue shares subject to options, warrants, stock awards or other arrangements.
In order to raise additional capital, we may in the future offer additional shares of our common stock or other securities convertible into or exchangeable for our common stock, including under the Controlled Equity Offering Sales Agreement (the “Sales Agreement”), dated as of August 31, 2022, with Cantor Fitzgerald & Co. (the “Agent”), pursuant to which the Company may issue and sell from time to time shares of common stock through the Agent. We may sell shares or other securities in any other offering at a price per share that is less than the current market price of our securities, and investors purchasing shares or other securities in the future could have rights superior to existing stockholders. The sale of additional shares of common stock or other securities convertible into or exchangeable for our common stock would dilute all of our stockholders, and if such sales of convertible securities into or exchangeable into our common stock occur at a deemed issuance price that is lower than the current exercise price of our outstanding warrants sold to Acuitas Group Holdings, LLC (“Acuitas”) in August 2022, the exercise price for those warrants would adjust downward to the deemed issuance price pursuant to price adjustment protection contained within those warrants.
In addition, as of September 30, 2023, there were warrants outstanding to purchase an aggregate of 7,770,285 shares of common stock at exercise prices ranging from $1.82 to $12.50 per share and 3,952,864 shares issuable upon exercise of outstanding options at exercise prices ranging from $1.69 to $42.09 per share and restricted stock units totaling 557,727. Our Loan Agreement entered into on November 30, 2021 contains a conversion feature whereby at the option of lender, up to $5 million of the outstanding loan amount may be converted into shares of common stock at a conversion price of $6.98 per share. We may grant additional options, warrants or equity awards. To the extent such shares are issued, the interest of holders of our common stock will be diluted.
Moreover, we are obligated to issue shares of common stock upon achievement of certain clinical, regulatory and commercial milestones with respect to certain of our drug candidates (i.e., NE3107, NE3291, NE3413, and NE3789) pursuant to the asset purchase agreement, dated April 27, 2021, by and among the Company, NeurMedix, Inc. and Acuitas, as amended on May 9, 2021. The achievement of these milestones could result in the issuance of up to 18 million shares of our common stock, further diluting the interest of holders of our common stock.
Certain stockholders who are also officers and directors of the Company may have significant control over our management.
As of September 30, 2023, our directors and executive officers and affiliates currently own aggregate 23,587,296 shares of our Common Stock, which currently constitutes 64.0% of our issued and outstanding Common Stock. As a result, directors and executive officers and affiliates may have a significant influence on our affairs and management, as well as on all matters requiring member approval, including electing and removing members of our Board of Directors, causing us to engage in transactions with affiliates entities, causing or restricting our sale or merger, and certain other matters. Our majority shareholder, Mr. Terren Peizer, may be deemed to beneficially own the 23,166,210 shares of Common Stock held by Acuitas, which constitutes 63.0% of our issued and outstanding Common Stock Such concentration of ownership and control could have the effect of delaying, deferring or preventing a change in control of us even when such a change of control would be in the best interests of our stockholders.
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We may, in the future, issue additional common stock, which would reduce investors’ percent of ownership and may dilute our share value.
As of September 30, 2023, our Articles of Incorporation, as amended, authorize the issuance of 800,000,000 shares of Common Stock, and we had 36,922,760 shares of Common Stock issued and 36,899,880 issued and outstanding. Accordingly, we may issue up to an additional 763,100,120 shares of Common Stock. The future issuance of Common Stock may result in substantial dilution in the percentage of our Common Stock held by our then existing stockholders. We may value any Common Stock in the future on an arbitrary basis. The issuance of Common Stock for future services or acquisitions or other corporate actions may have the effect of diluting the value of the shares held by our investors, might have an adverse effect on any trading market for our Common Stock and could impair our ability to raise capital in the future through the sale of equity securities.
Item 2. Unregistered sales of equity securities
None.
Item 3. Defaults Upon Senior Securities
None
Item 4. Mine Safety Disclosures
None
Item 5. Other Information
None
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Item 6. Exhibits
(a) Exhibit index
| Exhibit | ||
| * | Filed herewith. |
| ** | Furnished herewith. This certification is being furnished solely to accompany this report pursuant to 18 U.S.C. Section 1350, and is not being filed for purposes of Section 18 of the Exchange Act of 1934, as amended, and is not to be incorporated by reference into any filings of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing. |
29
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
BioVie Inc.,
| Signature | Titles | Date | ||
| /s/ Cuong V Do | ||||
| Cuong V Do | Chairman and Chief Executive Officer (Principal Executive Officer) | November 8, 2023 | ||
| /s/ Joanne Wendy Kim | ||||
| Joanne Wendy Kim | Chief Financial Officer (Principal Financial and Accounting Officer) | November 8, 2023 |
30
Exhibit 31.1
CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES OXLEY ACT OF 2002
AND RULE 13-A14 OF THE EXCHANGE ACT OF 1934
CERTIFICATION
| I, Cuong V Do, certify that: | ||
| 1. | I have reviewed this quarterly report on Form 10-Q of BioVie Inc.; | |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; | |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; | |
| 4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a – 15(f) and 15d – 15(f)) for the registrant and have: | |
| a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | |
| b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | |
| c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | |
| d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of the annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and | |
| 5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): | |
| a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and | |
| b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. | |
Date: November 8, 2023
| /s/ Cuong V Do | ||||||||
Cuong V Do Chief Executive Officer (Principal Executive Officer) |
Exhibit 31.2
CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES OXLEY ACT OF 2002
AND RULE 13-A14 OF THE EXCHANGE ACT OF 1934
CERTIFICATION
| I, Joanne Wendy Kim, certify that: | ||
| 1. | I have reviewed this quarterly report on Form 10-Q of BioVie Inc.; | |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; | |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; | |
| 4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a – 15(f) and 15d – 15(f)) for the registrant and have: | |
| a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | |
| b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | |
| c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | |
| d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of the annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and | |
| 5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): | |
| a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and | |
| b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. | |
Date: November 8, 2023
| /s/ Joanne Wendy Kim | ||||||||
|
Joanne Wendy Kim Chief Financial Officer |
Exhibit 32.1
CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER PURSUANT TO 18 U.S. C. SECTION 1350 AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of BioVie Inc. (the “Company”) on Form 10-Q for the period ended September 30, 2023, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Cuong V Do, Chief Executive Officer of the Company certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes Oxley Act of 2002, that, to my knowledge:
| (1) | The Report fully complies with the requirements of Section 13 (a) or 15 (d) of the Securities Exchange Act of 1934; and |
| (2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Date: November 8, 2023
| /s/ Cuong V Do | ||||||||
|
Cuong V Do Chief Executive Officer (Principal Executive Officer) |
Exhibit 32.2
CERTIFICATION OF THE CHIEF FINANCIAL OFFICER PURSUANT TO 18 U.S. C. SECTION 1350 AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of BioVie Inc. (the “Company”) on Form 10-Q for the period ended September 30, 2023, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Joanne Wendy Kim, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes Oxley Act of 2002, that, to my knowledge:
| (1) | The Report fully complies with the requirements of Section 13 (a) or 15 (d) of the Securities Exchange Act of 1934; and |
| (2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Date: November 8, 2023
| /s/ Joanne Wendy Kim | |||||||||
|
Joanne Wendy Kim Chief Financial Officer |