BIOVIE INC. 10-K/A

ITEM 5. MARKET FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Unregistered Sales of Securities All sales of unregistered securities during the year ended June 30, 2020 were previously disclosed in a Quarterly Report on Form 10-Q or Current report on Form 8-K. Issuer Purchases of Common Stock During the fourth quarter of the year ended June 30, 2020, there were no issuer repurchases of shares of common stock. ITEM 6. SELECTED FINANCIAL DATA Not Required. ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 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. Overview We are a clinical stage biotechnology company engaged in the discovery, development and commercialization of therapies targeting life-threatening complications of liver cirrhosis. Our initial disease target is ascites, a serious medical condition affecting about 100,000 Americans and many times more worldwide. Our therapeutic product candidate BIV201 is based on a drug that is approved in about 40 countries to treat related complications of liver cirrhosis (part of the same disease pathway as ascites), but not yet available in the US. The active agent in BIV201, terlipressin, is a potent vasoconstrictor which is in use for various medical conditions around the world. The goal is for BIV201 to interrupt the ascites disease pathway, thereby halting the cycle of accelerating fluid generation in ascites patients. BioVie accomplished the following key milestones in 2019: - In April, we announced top-line results for the Phase 2a clinical trial of BIV201 in six patients. - In June, we met with representatives of the U.S. Food & Drug Administration (“FDA”) for a Type C Guidance Meeting to plan our next clinical study. We discussed our clinical development program with the FDA and proposed clinical trial endpoints. - In August, we invented a proprietary novel liquid formulation of terlipressin that is intended to improve convenience for outpatient administration and avoid potential formulation errors when pharmacists reconstitute the powder version. - In October, we submitted our proposed Phase 2b/3 randomized, controlled clinical trial protocol to the FDA. - In November, we announced that the first batch of pre-filled syringes containing our novel BIV201 liquid formulation was manufactured and had cleared quality control testing. - 26 - Table of Contents BioVie accomplished the following key milestones in 2020: - In February, we submitted a detailed meeting information package to the FDA supporting our proposed trial design. - In March, we requested feedback from the FDA's CMC division regarding the novel BIV201 prefilled terlipressin syringe and subsequently submitted a detailed information package. - In early April, we received the FDA's written response to our Type B meeting questions, requiring changes to the clinical trial design. In mid-April we submitted a revised Phase 2 trial design and follow-up questions for clarification. - In April, we submitted a continuation-in-part amendment to the Angeli et al. '945 patent application to the US Patent & Trademark Office seeking restricted claims covering the use of BIV201 to treat ascites. - In May, we received CMC division feedback regarding the new BIV201 prefilled terlipressin syringe. We may use it in the upcoming Phase 2 trial subject to conducting certain additional standard analytical testing expected to take approximately two weeks. - In May, we filed a PCT ("Patent Cooperation Treaty") application for our novel liquid terlipressin formulations as we pursue global patent coverage. - In June, we announced that room temperature stability of the prefilled syringe had been confirmed at 6 months, with the potential for 12 months or up to two years of stability (yet to be confirmed). Room temperature storage presents a key product differentiation versus terlipressin products in countries where the drug is approved. To the best of the Company's knowledge, all other terlipressin products sold globally must be stored under refrigeration and there is no prefilled syringe format of terlipressin available for treating patients in these countries. - In June, we also announced further guidance from the FDA regarding clinical trial design in response to the follow-up questions submitted in April. The Company plans to commence a randomized 24-patient Phase 2 study in 2020, to be followed by a larger pivotal Phase 3 clinical trial targeted to begin in 2021. The FDA communicated that pending positive Phase 2 study results, a sufficiently large and well-controlled Phase 3 trial, with supportive data from the Phase 2 (statistical significance not required), could potentially yield the clinical data needed to apply for BIV201 marketing approval. Results of Operations Comparison of the Year Ended June 30, 2020 to the Year Ended June 30, 2019 Net loss The net loss for the year ended June 30, 2020 was approximately $16.7 million as compared to a net loss of approximately $2.4 million for the year ended June 30, 2019. The increase in net loss of approximately $14.3 million was primarily due to change in the fair value of derivative liabilities by $9.2 million which was primarily driven by the increase in the Company’s stock price at June 30, 2020 and increase in interest expense of approximately $4.8 million related to the embedded conversion derivative liability from warrants associated with the draws on the convertible debenture. Total operating expenses for the year ended June 30, 2020 of approximately $2.7 million was comparable to $2.5 million for year ended June 30, 2019. - 27 - Table of Contents Research and Development Expenses Research and development expenses were approximately $1.2 million for year ended June 30, 2020 comparable with the prior year’s expense of $1 million for the year ended June 30, 2019, resulting in a net increase of approximately $142,000. The net increase represents an increase of approximately $513,000 primarily attributed to readying for the next Phase 2 and Phase 3 clinical phase trials, including preparing the protocols and manufacturing of the prefilled syringe which may be used in the next phase of trials subject to FDA clearance, and development of PRO scales, and investing in the Company’s drug supply offset by a decrease in salaries of approximately $16,000 due to reduction of one employee and decline in trial expenses of approximately $355,000 from the prior year as the Phase 2a clinical trial completed earlier in the current fiscal year. Selling, General and Administrative Expenses Selling, general and administrative expenses were approximately $1.3 million for the year ended June 30, 2020 and June 30, 2019. The net fluctuations was attributed to a decrease in legal and professional fees of $367,000 offset by an increase of approximately $135,000 in insurance premiums for increased coverage, an increase in payroll and benefits of approximately $56,000 due to the hiring of a half time chief financial officer that joined in October 2018 and increase in other expenses of approximately $231,000 representing legal and professional fees and other activities related to the the Company’s capital raise. Capital Resources and Liquidity At June 30, 2020 the Company had approximately $37,000 in cash and continues to focus on obtaining financing and raise capital. On September 24, 2019, the Company entered into a Securities Purchase Agreement with its controlling stockholder regarding bridge financing (the “Bridge Financing”) in the form of up to $2.0 million in convertible debt and warrants, of which $1.3 million has been drawn and reflected in the amount of $848,543, net of unearned discount of $462,864 as Convertible debenture - related party. Amounts borrowed under the Bridge Financing must be repaid with the proceeds of our potential public offering of equity securities referred to below. The availability of additional draws under the Bridge Financing is under further discussion with the controlling stockholder in light of delays in the timing of the potential public offering. As further discussed below, the Company is pursuing various options to raise further financing to continue the testing and development of its product. If the Company is not successful in raising additional funds it may reduce its monthly spend and potentially delay the implementation of the larger scale Phase 2 and Phase 3 clinical trials until sufficient funding is secured. As of June 30, 2020, the Company had an accumulated deficit of approximately $41.0 million and as a development stage enterprise, the Company expects substantial losses in future periods. The accompanying interim financial statements were 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. The Company’s future operations are dependent on the success of the Company’s ongoing development and commercialization effort, as well as continuing to secure additional financing. We cannot assure you that our drug candidate will be developed, work, or receive regulatory approval; that we will ever earn revenues sufficient to support our operations or that we will ever be profitable. Furthermore, since we have no committed source of sufficient financing, we cannot assure you that we will be able to raise money as and when we need it to continue our operations. If we cannot raise funds as and when we need them, we may be required to severely curtail, or even to cease, our operations. On November 22, 2019, the Company effected the reverse stock split of 125 common stock for every 1 common stock. All share amounts have been updated to reflect the reverse stock split. The stock split was related to the Company’s planned up listing to NASDAQ Stock Market and potential future issuance and sales of our equity securities for ordinary corporate finance and general corporate purposes. - 28 - Table of Contents Management intends to attempt to secure additional required funding primarily through additional equity or debt financings. We may also seek to secure required funding through sales or out-licensing of intellectual property assets, seeking partnerships with other pharmaceutical companies or third parties to co-develop and fund research and development efforts, or similar transactions. However, there can be no assurance that we will be able to obtain required funding. If we are unsuccessful in securing funding from any of these sources, we will defer, reduce or eliminate certain planned expenditures in our research protocols. If we do not have sufficient funds to continue operations, we could be required to seek bankruptcy protection or other alternatives that could result in our stockholders losing some or all of their investment in us. The emergence of widespread health emergencies or pandemics such as coronavirus ("COVID-19"), may lead to continued regional quarantines, business shutdowns, labor shortages, disruptions to supply chains, and overall economic instability, including the duration and spread of the outbreak and restrictions and the impact of COVID-19 on the financial markets and the overall economy, all of which are highly uncertain and cannot be predicted. If the financial markets and/or the overall economy are impacted for an extended period, the Company’s ability to raise funds may be materially adversely affected. These circumstances raise substantial doubt on our ability to continue as a going concern. These financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts and classification of liabilities that might result from this uncertainty. Off-Balance Sheet Arrangements The Company has no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect or change on the Company’s financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors. The term “off-balance sheet arrangement” generally means any transaction, agreement or other contractual arrangement to which an entity unconsolidated with the Company is a party, under which the Company has (i) any obligation arising under a guarantee contract, derivative instrument or variable interest; or (ii) a retained or contingent interest in assets transferred to such entity or similar arrangement that serves as credit, liquidity or market risk support for such assets. Critical Accounting Policies and Estimates Accounting for Stock-based Compensation The Company follows the provision of ASC 718- Stock Compensation, which requires the measurement of compensation expense for all shared – based payment awards made to employees and non-employee director, including employee stock options. Share-based compensation expense is based on the grant date fair value estimated in accordance with the provisions of ASC 718 and is generally recognized as an expense over the requisite service period, net of forfeitures. - 29 - Table of Contents Goodwill Goodwill represents costs in excess of fair values assigned to the underlying net assets of acquired businesses. We test goodwill annually, or when a triggering event occurs between annual impairment tests, to determine if impairment exists and if the use of indefinite life is currently applicable. The Company did not recognize any goodwill impairments for the years ended June 30, 2020 and, 2019, respectively. Impairment of Long-Lived Assets Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of the assets to the future undiscounted net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets and would be charged to earnings. Recent accounting pronouncements The Company considers the applicability and impact of all Accounting Standard Updates (“ASU’s”). ASU’s not discussed below were assessed and determined to be either not applicable or expected to have minimal impact on our balance sheets or statement of operations. In June 2018, the FASB issued ASU 2018-07, “Compensation – Stock Compensation (Topic 718): Improvements to Non-employee Share-Based Accounting”. This guidance aligns the accounting for share-based payment transactions with non-employees to accounting for share-based payment transactions with employees. Companies are required to record a cumulative-effect adjustment (net of tax) to retained earnings as of the beginning of the fiscal year of the adoption. Upon transition, non-employee awards are required to be measured at fair value as of the adoption date. This standard will be effective for fiscal years beginning December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted. The Company’s adoption of this ASU as of July 1, 2019 had no impact on the financial statements. In August 2018, the FASB issued ASU 2018-13, “Fair value measurement (Topic 820): Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement”. The new guidance modifies the disclosure requirements on fair value measurements. ASU 2018-13 is effective for fiscal years beginning after December 15, 2019. Early adoption is permitted. The Company does not expect ASU 2018-13 to have a significant impact to it’s financial statements and related disclosures. ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Not applicable. ITEM 8. FINANCIAL STATEMENTS Our financial information required to be filed hereunder are indexed under Item 15 of this report and are incorporated herein by reference. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURES Not required. - 30 - Table of Contents