BIOVIE INC. 10-Q

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-Q (Mark One) x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended: December 31, 2021 ☐ 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: 001-39015 BIOVIE INC. (Exact name of registrant as specified in its charter ) Nevada 46-2510769 (State or other jurisdiction of incorporation or organization) (I.R.S. Empl. Ident. No.) 9120 Double Diamond Parkway Suite 1400 Reno , NV 89521 (Address of principal executive offices, Zip Code) (775) 888-3162 (Registrant’s telephone number, including area code) Title of each class Trading Symbol(s) Name of each exchange on which registered Class A Common Stock, par value $0.0001 per share BIVI The Nasdaq Stock Market, LLC 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. Yes ☒ No ☐ 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). Yes ☒ No ☐ 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 ☐ Non-accelerated Filer ☒ Smaller reporting company x 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 ☐ No ☒ There were 24,984,063 shares of the Registrant’s $0.0001 par value Class A common stock outstanding as of February 4, 2022. TABLE OF CONTENTS PART I – FINANCIAL INFORMATION Item 1. Financial Statements 1 Condensed Balance Sheets at December 31, 2021 (unaudited) and June 30, 2021 1 Condensed Statements of Operations (unaudited) - for the three months and six months ended December 31, 2021 and 2020 2 Condensed Statements of Cash Flows (unaudited) - for the six months ended December 31, 2021 and 2020 3 Condensed Statements of Changes in Stockholders’ Equity (Deficit) (unaudited) - for the periods from July 1, 2020 through December 31, 2020 and July 1, 2021 through December 31, 2021 4 Notes to Unaudited Condensed Financial Statements 5 Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 17 Item 3. Quantitative and Qualitative Disclosures About Market Risk 21 Item 4. Controls and Procedures 21 PART II – OTHER INFORMATION Item 1. Legal Proceedings 22 Item 1A. Risk Factors 22 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 22 Item 3. Defaults Upon Senior Securities 22 Item 4. Mine Safety Disclosures 22 Item 5. Other Information 22 Item 6. Exhibits 23 SIGNATURES 24 FORWARD-LOOKING STATEMENTS This report contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, and Section 27A of the Securities Act of 1933. 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 impositions requirements; and 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. 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. 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. PART I – FINANCIAL INFORMATION Item 1. Financial Statements BioVie Inc. Condensed Balance Sheets December 31 June 30, 2021 2021 ASSETS (Unaudited) CURRENT ASSETS: Cash $ 30,391,675 $ 4,511,642 Other assets 154,868 93,487 Total current assets 30,546,543 4,605,129 OTHER ASSETS: Intangible assets, net 981,161 1,095,849 Goodwill 345,711 345,711 Total other assets 1,326,872 1,441,560 TOTAL ASSETS $ 31,873,415 $ 6,046,689 LIABILITIES AND STOCKHOLDERS’ EQUITY CURRENT LIABILITIES: Accounts payable and accrued expenses $ 1,663,089 $ 996,374 Current portion of other liabilities 580,625 — Warrant liabilities 896,959 — Embedded derivative liability 1,217,765 — Total current liabilities 4,358,438 996,374 Other liabilities 338,698 — Note Payable net of financing costs and unearned premium and discount ($3,888,813) 11,111,187 — TOTAL LIABILITIES 15,808,323 996,374 Commitments and contingencies (Note 10) STOCKHOLDERS’ EQUITY: Preferred stock; $ 0.001 par value; 10,000,000 shares authorized; 0 shares issued and outstanding — — Common stock, $ 0.0001 par value; 800,000,000 shares authorized at December 31, 2021 and June 30, 2021, respectively; 24,984,083 and 22,333,324 shares issued and outstanding at December 31, 2021 and June 30, 2021, respectively 2,496 2,232 Additional paid in capital 251,903,088 229,933,505 Accumulated deficit ( 235,840,492 ) ( 224,885,422 ) Total stockholders’ equity 16,065,092 5,050,315 TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 31,873,415 $ 6,046,689 See accompanying notes to unaudited condensed financial statements - 1 - Table of Contents BioVie Inc. Condensed Statements of Operations (Unaudited) Three Months Ended Three Months Ended Six Months Ended Six Months Ended December 31 2021 December 31 2020 December 31 2021 December 31 2020 OPERATING EXPENSES: Amortization $ 57,344 $ 57,344 $ 114,689 $ 114,688 Research and development expenses 4,591,432 938,101 7,437,026 1,063,112 Selling, general and administrative expenses 2,016,234 2,067,920 4,660,579 2,272,320 TOTAL OPERATING EXPENSES 6,665,010 3,063,365 12,212,294 3,450,120 LOSS FROM OPERATIONS ( 6,665,010 ) ( 3,063,365 ) ( 12,212,294 ) ( 3,450,120 ) OTHER (INCOME) EXPENSE: Change in fair value of derivative liabilities ( 1,555,254 ) — ( 1,555,254 ) ( 8,279,919 ) Interest expense 316,263 143 317,378 559,455 Interest income ( 11,702 ) ( 5,701 ) ( 19,348 ) ( 5,765 ) TOTAL OTHER EXPENSE (INCOME), NET ( 1,250,693 ) ( 5,558 ) ( 1,257,224 ) ( 7,726,229 ) NET (LOSS)/INCOME $ ( 5,414,317 ) $ ( 3,057,807 ) $ ( 10,955,070 ) $ 4,276,109 Deemed dividends - related party — — — 53,598,320 NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS $ ( 5,414,317 ) $ ( 3,057,807 ) $ ( 10,955,070 ) $ ( 49,322,211 ) NET LOSS PER COMMON SHARE - Basic $ ( 0.22 ) $ ( 0.22 ) $ ( 0.45 ) $ ( 4.95 ) - Diluted $ ( 0.22 ) $ ( 0.22 ) $ ( 0.45 ) $ ( 4.95 ) WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING - Basic 24,962,373 13,916,164 24,344,545 9,965,599 - Diluted 24,962,373 13,916,164 24,344,545 9,965,599 See accompanying notes to unaudited condensed financial statements - 2 - Table of Contents BioVie Inc. Condensed Statements of Cash Flows (Unaudited) Six Months Ended Six Months Ended December 31, 2021 December 31, 2020 CASH FLOWS FROM OPERATING ACTIVITIES: Net (loss)/income $ ( 10,955,070 ) $ 4,276,109 Adjustments to reconcile net (loss) income to net cash used in operating activities: Amortization of intangible assets 114,689 114,688 Stock based compensation - restricted stock 384,454 — Stock option based compensation expense 3,074,384 1,536,929 Amortization of financing costs 14,185 — Accretion of unearned loan discount 133,454 537,275 Accretion of loan premium 23,611 — Change in fair value of embedded derivative liability ( 995,701 ) ( 2,225,798 ) Change in fair value of warrant liability ( 559,553 ) ( 6,054,121 ) Changes in operating assets and liabilities: Other assets ( 61,381 ) 348,528 Accounts payable and accrued expenses 666,715 ( 936,778 ) Other liabilities 919,323 — Net cash used in operating activities ( 7,240,891 ) ( 2,403,168 ) CASH FLOWS FROM FINANCING ACTIVITIES: Net proceeds from issuance of common stock 18,511,009 15,628,010 Payment of convertible debenture - related party — ( 1,821,818 ) Proceeds from convertible debenture - related party — 436,000 Proceeds from note payable net of financing costs 14,609,915 — Net cash provided by financing activities 33,120,924 14,242,192 Net increase in cash 25,880,033 11,839,024 Cash, beginning of period 4,511,642 37,195 Cash, end of period $ 30,391,675 $ 11,876,219 SUPPLEMENTAL CASH FLOW INFORMATION: Cash paid for interest $ 146,128 $ 22,180 Cash paid for taxes $ — $ — SCHEDULE OF NON-CASH FINANCING ACTIVITIES: Deemed dividends - related party $ — $ 53,598,320 See accompanying notes to unaudited condensed financial statements - 3 - Table of Contents BioVie Inc. Condensed Statements of Changes in Stockholders’ Equity (Deficit) For the periods July 1, 2020 though December 31, 2020 and July 1, 2021 through December 31, 2021 (Unaudited) Additional Total Stockholders’ Common Stock Paid in Accumulated Equity Shares Amount Capital Deficit (Deficit) Balance, June 30, 2020 5,204,392 $ 520 $ 19,538,742 $ ( 41,037,898 ) $ ( 21,498,636 ) Proceeds from issuance of common stock,net of cost of $ 2,371,790 1,799,980 180 15,627,830 — 15,628,010 Redemption of warrants - related party 1,549,750 155 13,132,230 — 13,132,385 Deemed dividend for purchase option - related party 5,359,832 536 53,597,784 ( 53,598,320 ) — Cashless exercise of options 2,210 — — — — Net income — — — 7,333,916 7,333,916 Balance, September 30, 2020 13,916,164 1,391 101,896,586 ( 87,302,302 ) 14,595,675 Stock-based compensation — — 1,536,929 — 1,536,929 Net loss — — — ( 3,057,807 ) Balance, December 31, 2020 13,916,164 $ 1,391 $ 103,433,515 $ ( 90,360,109 ) $ 13,074,797 Balance June, 30, 2021 22,333,324 $ 2,232 $ 229,933,505 $ ( 224,885,422 ) $ 5,050,315 Proceeds from issuance of common stock, net cost of $ 2,224,992 2,592,000 259 18,510,750 — 18,511,009 Stock based compensation - restricted stock 37,049 3 286,756 — 286,759 Stock option based compensation — — 1,926,962 — 1,926,962 Net loss — — — ( 5,540,753 ) ( 5,540,753 ) Balance, September 30, 2021 24,962,373 2,494 250,657,973 ( 230,426,175 ) 20,234,292 Stock based compensation - restricted stock 21,710 2 97,693 — 97,695 Stock option based compensation 1,147,422 — 1,147,422 Net Loss — — — ( 5,414,317 ) ( 5,414,317 ) Balance, December 31, 2021 24,984,083 $ 2,496 $ 251,903,088 $ ( 235,840,492 ) $ 16,065,092 See accompanying notes to unaudited condensed financial statements - 4 - Table of Contents BIOVIE INC. Notes to Condensed Financial Statements For the Six Months Ended December 31, 2021 and 2020 (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 liver disease and neurological and neuro-degenerative disorders and certain cancers. In liver disease, our Orphan Drug candidate BIV201 (continuous infusion terlipressin) is being developed as a future treatment option for patients suffering from ascites and other life-threatening complications of advanced liver cirrhosis caused by NASH, hepatitis, and alcoholism. The initial target for BIV201 therapy is refractory ascites. These patients 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 US Food and Drug Administration (FDA) has not approved any drug to treat refractory ascites. A Phase 2a clinical trial of BIV201 was completed in 2019, and a multi-center, randomized 30-patient Phase 2b trial is currently underway. As of December 31, 2021, ten of the thirteen planned US study centers had been activated and are actively screening patients, and multiple patients have been enrolled in the study. The FDA has communicated to us that pending positive Phase 2 study results, a sufficiently large and well-controlled Phase 3 trial, with supportive trend data from the Phase 2b, could potentially yield the clinical data needed to apply for BIV201 marketing approval. The Phase 2b clinical trial protocol is summarized on www.clinicaltrials.gov, trial identifier NCT04112199. Top-line results from this trial are expected in mid-2022, to be followed by a proposed single pivotal Phase 3 clinical trial beginning in late 2022, subject to favorable FDA review. The BIV201 development program was initiated by LAT Pharma LLC. On April 11, 2016, the Company acquired LAT Pharma LLC and the rights to its BIV201 development program. The Company currently owns all development and marketing rights to its drug candidate. Pursuant to the Agreement and Plan of Merger entered into on April 11, 2016, between our predecessor entities, LAT Pharma LLC and NanoAntibiotics, Inc., BioVie is obligated to pay a low single digit royalty on net sales of BIV201 (continuous infusion terlipressin) to be shared among LAT Pharma Members, PharmaIn Corporation, and The Barrett Edge, Inc. In neurodegenerative disease, BioVie acquired the biopharmaceutical assets of NeurMedix, Inc. (“NeurMedix”), a privately held clinical-stage pharmaceutical company, in June 2021 (See Note 5 Related Party Transactions ). The acquired assets included NE3107, a potentially selective inhibitor of inflammatory 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 and Parkinson’s Disease, and NE3107 could, if approved represent an entirely new medical approach to treating these devastating conditions affecting an estimated 6 million Americans suffering from Alzheimer’s and 1 million from Parkinson’s. The FDA has authorized a potentially pivotal Phase 3 randomized, double-blind, placebo-controlled, parallel group, multicenter study to evaluate NE3107 in subjects who have mild to moderate Alzheimer’s disease (NCT04669028). In August 2021, the study was initiated and the Company is anticipating top line results in the first half of 2023. On January 20, 2022, the Company initiated by treating the first patient, in it’s Phase 2 study assessing NE3107’s safety and tolerability and potential pro-motoric impact in Parkinson’s disease patients. The NM201 study (NCT05083260) is a double-blind, placebo-controlled, safety, tolerability, and pharmacokinetics study in Parkinson’s Disease (PD). Participants will be treated with carbidopa/levodopa and NE3107 or placebo. Forty patients with a defined PD medication “off state” will be randomized 1:1 placebo to: active NE3107 20 mg twice daily for 28 days. Safety assessments will look at standard measures of patient health and potential for drug-drug interactions affecting L-dopa pharmacokinetics and activity. Exploratory efficacy assessments will use the Motor Disease Society Unified Parkinson’s Disease Rating (MDS-UPDRS) parts 1-3, ON/OFF Diary, and Non-Motor Symptom Scale. Topline results are expected for the NM201 study in mid-2022. - 5 - Table of Contents Inflammation-driven insulin resistance is believed to be implicated in a broad range of serious diseases, including multiple myeloma and prostate cancer, and we plan to begin exploring these opportunities in the coming months using NE3107 or related compounds acquired in the NeurMedix asset purchase. NE3107 is patented in the United States, Australia, Canada, Europe and South Korea. 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 December 31, 2021, the Company had working capital of approximately $ 26.2 million , cash of approximately $30.4 million, stockholders’ equity of approximately $16.1 million, and an accumulated deficit of approximately $235.8 million. In addition, the Company has not generated any revenues to date 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 as needed. Although our cash balance could possibly sustain operations over the next 12 months if measures are taken to delay planned expenditures in our research protocols and slow the progress in the Company’s clinical programs, the Company’s current planned operations to meet certain goals and objectives, project cash flows to be depleted within that period of time. 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. The continual widespread health emergencies or pandemics such as the coronavirus (“COVID-19”) pandemic (and its related variants), has lead to continued regional quarantines, business shutdowns, labor shortages, disruptions to supply chains, and overall economic instability. Although some jurisdictions have relaxed these measures, others have not or have reinstated them as COVID-19 cases surge and variants emerge. The duration and spread of the COVID-19 pandemic and the long-term impact of COVID-19 and its variants on the financial markets and the overall economy are highly uncertain and cannot be predicted at this time. 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. In addition, the COVID-19 pandemic has created a widespread labor shortage, including a shortage of medical professionals, which may adversely impact our ability to continue or complete our clinical trials in the planned timeline. 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. - 6 - Table of Contents 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, 2021 was derived from audited annual financial statements for the year ended June 30, 2021 but does not contain all the footnote disclosures from the annual financial statements. These unaudited interim condensed financial statements and information included under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations” should be read in conjunction with the Company’s audited financial statements for the fiscal years ended June 30, 2021 and 2020 in our Annual Report on Form 10-K filed with the SEC on August 30, 2021. For a summary of significant accounting policies, see the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2021, filed with the SEC on August 30, 2021. Certain prior period amounts have been reclassified for consistency with the current period presentation. Fair Value of Financial Instruments Fair value is defined as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value for applicable assets and liabilities, we consider the principal or most advantageous market in which we would transact and we consider assumptions. market participants would use when pricing the asset or liability, such as inherent risk, transfer restrictions, and risk of nonperformance. This guidance also establishes a fair value hierarchy to prioritize inputs used in measuring fair value as follows: ● Level 1: Observable inputs such as quoted prices in active markets; ● Level 2: Inputs, other than quoted prices in active markets, that are observable either directly or indirectly; and ● Level 3: Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions Net loss per Common Share 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 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 convertible debentures. For the three and six months ended December 31, 2021 and 2020, such amounts were excluded from the diluted loss since their effect was considered anti-dilutive due to the net loss for the period. The table below shows the number of outstanding stock options and warrants as of December 31, 2021 and 2020: Schedule of Dilutive securities were excluded from the computation of diluted loss per share December 31, 2021 December 31, 2020 Number of Shares Number of Shares Stock Options 2,047,910 750,400 Warrants 519,763 214,665 Total 2,567,673 965,065 - 7 - Table of Contents Recent Accounting Pronouncements The Company considers the applicability and impact of all Accounting Standards Updates (“ASU’s”). There were no recent ASUs that are expected to have a material impact on the Company’s balance sheets or statements of operations. 4. Intangible Assets The Company’s intangible assets consist of intellectual property acquired from LAT Pharma, Inc. and are amortized over their estimated useful lives. The following is a summary of the intangible assets as of December 31, 2021 and June 30, 2021: December 31, 2021 June 30, 2021 Intellectual Property $ 2,293,770 $ 2,293,770 Less Accumulated Amortization ( 1,312,610 ) ( 1,197,921 ) Intellectual Property, Net $ 981,161 $ 1,095,849 Amortization expense was $ 57,344 in each of the three-month periods ended December 31, 2021 and 2020. Amortization expense for the six-month period ended December 31, 2021 and 2020 was $ 114,689 and $ 114,688 respectively. The Company amortizes intellectual property over the expected original useful lives of 10 years . Estimated future amortization expense is as follows: Schedule of Future expected Amortization of intangible assets Year ending June 30, 2022 (Remaining six months) $ 114,689 2023 229,377 2024 229,377 2025 229,377 2026 178,341 Intellectual Property, Net $ 981,161 5. Related Party Transactions Asset Acquisition with NeurMedix On April 27, 2021, the Company entered into an Asset Purchase Agreement (“APA”) with NeurMedix and Acuitas Group Holdings, LLC (“Acuitas”), which are related party affiliates, pursuant to which the Company acquired certain assets from NeurMedix and assumed certain liabilities of NeurMedix, in exchange for consideration of cash and shares of common stock. The acquired assets include, among others, those related to certain drug candidates being developed by NeurMedix, including NE3107, a small molecule orally administered inhibitor of insulin resistance and the pathological inflammatory cascade, with a novel mechanism of action that has potential applications for treatment against Alzheimer’s Disease and Parkinson’s Disease. Subject to the terms and conditions of the APA, following the closing, the Company was potentially obligated to deliver contingent stock consideration to NeurMedix (or its successor). Previously, the Company was obligated to deliver contingent stock consideration to NeurMedix (or its successor) consisting of shares of the Company’s common stock having an aggregate value of up to $3.0 billion, subject to the Company’s achievement of certain clinical, regulatory and commercial milestones related to the drug candidates to be acquired from NeurMedix, and subject to a cap limiting each issuance of shares if such issuance would result in the beneficial ownership of NeurMedix and its affiliates exceeding 89.9999% of the Company’s issued and outstanding common stock. Pursuant to Amendment No. 1 to the APA, dated May 9, 2021, the Company is now obligated to deliver to NeurMedix (or its successor) 4.5 million shares upon the achievement of each of the four milestones set forth in the APA, for an aggregate of up to 18 million shares, subject to a cap limiting the issuance of shares if such issuance would result in the beneficial ownership of NeurMedix and its affiliates exceeding 87.5% of the Company’s issued and outstanding common stock. - 8 - Table of Contents On June 10, 2021, and pursuant to the APA, the Company issued to Acuitas (as NeurMedix’s assignee) 8,361,308 shares of the Company’s common stock and made a cash payment of approximately $2.3 million, representing NeurMedix’s direct and documented cash expenditures to advance certain programs from March 1, 2021 through the closing date and cash payments to other third parties for expenses totaling approximately $4.0 million for due diligence, legal fees, transaction fees and the fairness opinion. Since the transaction was between entities under common control, there were no fair value adjustments of the purchased assets, and the historical cost basis of the purchased assets was zero. The total consideration paid was expensed as research and development expense at the time of the transaction. Equity Transactions with Acuitas On September 22, 2020, concurrent with the closing of the Company’s Offering, approximately $1.8 million was paid to Acuitas satisfying all amounts owed on the Debenture due September 24, 2020 held by the Company’s controlling stockholder, Acuitas. Additionally, in connection with the close of the public offering on September 22, 2020, the Company issued an aggregate of 6,909,582 shares of Common Stock to Acuitas, representing (i) 5.4 million shares issuable pursuant to Acuitas’ rights under the Purchase Agreement dated July 3, 2018, as amended on June 24, 2019 and October 9, 2019; and the various extension letters; which resulted in a deemed dividend at the close of the public offering at price of $10 per share, consistent with the Company’s accounting policy; and (ii) the automatic exercise of 1.5 million warrants issued to Acuitas in connection with the Debenture financing at the par value of the Common Stock. During the year ended June 30, 2021, the Company received additional draws under the Debenture totaling $436,000. The total draws as of September 22, 2020 were $1.7 million and the related total number of warrants issuable at $4.00 per share of common stock was 424,750 of which 328,250 warrants had been issued. In accordance with the Debenture agreements, at September 22, 2020 upon the Company’s close of its public offering, all the warrants issued related to the debenture totaling 1,453,250 were mandatorily redeemed along with the additional 96,500 shares common stock issued to Acuitas. 6. Other Liabilities Other liabilities represent retention bonus arrangements with certain employees that was recognized in August 2021 totaling $ 1,161,000 and included in the accompanying statement of operations for six months ended December 31, 2021. The payment terms are equal monthly installments over a 24 month period and began in August 2021. - 9 - Table of Contents 7. 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”) together (“Avenue”) for growth capital loans in an aggregate commitment amount of up to $20 million (the “Loan”). On the closing date, $15 million funded (“Tranche 1”) and up to $5 million will be made 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 (“Tranche 2”). The Loan bears interest at an annual rate equal to the greater of (a) the sum of 7.00% plus the prime rate as reported in The Wall Street Journal and (b) 10.75%. The Loan is secured by a lien upon and security interest in all of the Company’s assets, including intellectual property, subject to agreed exceptions. The maturity date of the Loan is December 1, 2024. An additional growth capital loan in an amount equal to $5 million may be available (i) upon the Company’s achievement of additional milestones with respect to certain of its ongoing clinical trials (ii) upon the mutual written agreement of the Company and the Lenders each acting in its sole discretion, and (iii) subject to execution and delivery by the Company and the Lenders of amendments to the loan documents and the Warrant (as defined below) to reflect such additional loan and approval of each Lender’s investment committee (“Tranche 3”). The Loan Agreement requires monthly interest-only payments during the first eighteen months of the term of the Loan, which may be increased up to an additional six months from the end of such eighteen-month period prior to receipt of the Tranche 2 Loan. Following the interest-only period, the Company will make 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, a final payment equal to 4.25% of the sum of (a) the Loan commitment amount under Tranche 1 and Tranche 2, plus (b) the aggregate principal amount of additional growth capital loans borrowed under Tranche 3. The Loan Agreement includes a conversion option to convert up to $5 million of the principal amount of the Loan outstanding at the option of the Lenders, into shares of the Company’s Class A common stock at a conversion price of $6.98 per share. On the Closing Date, the Company issued to the Lenders warrants to purchase 361,002 shares of Class A common stock of the Company (the “Warrants”) at an exercise price per share equal to $5.82 (the “Stock Purchase Price”). The warrants are exercisable until November 30, 2026 (the “Expiration Date”). The amount of the carrying value of the notes payable were determined by allocating portions of the outstanding principal of the notes to the fair value of the warrants of approximately $1.4 million and the fair value of the embedded conversion option of approximately $2.2 million. Accordingly, the total amount of unearned discount of approximately $3.7 million, the total direct financing cost of approximately $390,000 and premium of $850,000 are recognized on an effective interest method over term of the Loan. The adjusted effective interest rate is 25%. The carrying value of notes payable at December 31, 2021 was approximately $11.1 million, net of unearned discount of approximately $3.5 million, unamortized direct costs of approximately $376,000 and accreted premium of approximately $24,000 in the accompanying balance sheets. The total interest expense of approximately $316,000 for the three and six months ended December 31, 2021, was recognized in the accompanying statements of operations. The following is a summary of the Note Payable as of December 31, 2021 and June 30, 2021: December 31, 2021 June 30, 2021 Note Payable $ 15,000,000 $ — Less debt financing costs $ (375,900 ) — Less unearned discount $ (3,536,524 ) — Plus accretion of loan premium 23,611 — Note Payable, net of financing costs and premiums $ 11,111,187 $ — Estimated future amortization expense and accretion of premium is as follows: Unearned Discount Debt Financing Loan accretion Premium Year ending June 30, 2022 (Remaining six months) $ 800,722 $ 85,110 $ 141,667 2023 1,601,445 170,219 283,333 2024 1,023,145 108,751 283,333 2025 111,212 11,820 118,056 Total $ 3,536,524 $ 375,900 $ 826,389 - 10 - Table of Contents 8. Fair Value Measurements At December 31,2021 and June 30, 2021, the estimated fair value of derivative liabilities measured on a recurring basis are as follows: Fair Value Measurements at December 31, 2021 Level 1 Level 2 Level 3 Total Derivative liability - Warrants $ — $ — $ 896,959 $ 896,959 Derivative liability -Conversion option — — 1,217,765 1,217,765 Total derivatives $ — $ — $ 2,114,724 $ 2,114,724 Fair Value Measurements at June 30, 2021 Level 1 Level 2 Level 3 Total Derivative liability - Warrants $ — $ — $ — $ — Derivative liability -Conversion option on convertible debenture — — — — Total derivatives $ — $ — $ — $ — The following table presents the activity for liabilities measured at fair value unobservable inputs for the six months ended December 31, 2021: Derivative liabilities - Warrants Derivative liability - Conversion Option on Convertible Debenture Balance at July 1, 2021 $ — $ — Additions to level 3 liabilities 1,456,512 2,213,466 Change in in fair value of level 3 liability ( 559,553 ) ( 995,701 ) Transfer in and/or out of Level 3 — — Balance at December 31, 2021 $ 896,959 $ 1,217,765 The following table presents the activity for liabilities measured at fair value unobservable inputs for the six months ended December 31, 2020: Derivative liabilities - Warrants Derivative liability - Conversion Option on Convertible Debenture Beginning balance at July 1, 2020 $ 16,411,504 $ 5,000,800 Additions to level 3 liabilities — — Change in in fair value of level 3 liability ( 6,054,121 ) ( 2,225,798 ) Transfer in and/or out of Level 3 ( 10,357,383 ) ( 2,775,002 ) Balance at December 31, 2020 $ — $ — - 11 - Table of Contents The fair values of derivative liabilities for the warrants and conversion option at December 31, 2021 were approximately $897,000 and approximately $1.2 million, respectively. The total change in the fair value of the derivative liabilities totaled approximately $1.6 million 2021 and accordingly, was recorded in the accompanying statement of operations for the three and six months ended December 31, 2021. The assumptions used in the Black Scholes model to value the derivative liabilities included the closing stock price of $ 4.50 and for the warrants, the warrant exercise price of $ 5.82 , 5-year term, risk free rate of 1.26 % risk free and volatility of 74.796 % . and for the embedded derivative liability of the conversion option, the conversion price of $ 6.98 ; 3-year term, risk free rate of 0.97 % and volatility of 76.15 % . Derivative liability - 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 as derivative financial instruments. The warrants issued on November 30, 2021 in connection with the Avenue loan financing were not considered to be indexed to the Company’s own stock and accordingly, recorded as a derivative liability at their fair values in the accompany balance sheets at December 31, 2021. 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 warrants are recorded at their fair values at the date of issuance and remeasured at December 31, 2021. The assumptions used for the fair value calculation at November 30, 2021 follows: the closing stock price of $ 6.44 per share; the exercise price of $ 5.82 ; 5 year term: a risk free rate of 1.14 % and volatility of 74.4 % . Embedded derivative liability – Conversion Option The embedded derivative represents the optional conversion feature of up to $5.0 million of the outstanding Avenue note amounts 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. The assumption used for the fair value calculation at November 30, 2021 follows: the closing stock price of $ 6.44 per share; the conversion price of $ 6.98 , 3 year term, risk free rate of 0.81 % risk free and volatility of 76.85 % . 9. Equity Transactions Stock Options The following table summarizes the activity relating to the Company’s stock options for the six months ended December 31, 2021: Options Weighted-Average Exercise Price Weighted Remaining Average Contractual Term Aggregate Intrinsic Value Outstanding at June 30, 2021 755,200 $ 4.34 4.4 $ 2,569,232 Granted 1,365,835 7.74 5.0 — Options Forfeited ( 73,125 ) ( 13.91 ) — — Outstanding at December 31, 2021 2,047,910 $ 9.79 4.4 $ 15,840 Exercisable at December 31, 2021 509,667 $ 9.36 4.2 $ 15,840 - 12 - Table of Contents The fair value of each option grant on the date of grant is estimated using the Black-Scholes option. The pricing model reflects the following weighted-average assumptions for the six months ended December 31, 2021 and 2020: December 31, 2021 December 31, 2020 Expected life of options (In years) 5 5 Expected volatility 74.96 % 77.29 % Risk free interest rate 0.8 % 0.4 % Dividend Yield 0 % 0 % Expected volatility is based on the historical volatilities of the daily closing price of the common stock of three comparable companies and the expected life of options is based on historical data with respect to employee exercise periods. The Company accounts for forfeitures as they are incurred. The Company recorded stock option-based compensation expense of $1,147,422 and $1,536,929 for three-month periods ended December 31, 2021 and 2020, respectively; and of $3,074,384 and $1,536,929 for six-month periods ended December 31, 2021 and 2020, respectively. As of December 31, 2021, there was approximately $ 5.7 million of unrecognized compensation cost related to non-vested stock options granted to Directors and Officers, which is expected to be recognized over a weighted-average period of approximately 4.5 years. The following is a summary of stock options outstanding and exercisable by exercise price as of December 31, 2021: Exercise Price Outstanding Weighted Average Contract Life Exercisable $ 2.80 7,200 3.1 7,200 $ 3.75 4,800 2.1 4,800 $ 6.25 1,600 1.8 1,600 $ 7.50 25,600 4.1 25,600 $ 7.74 1,365,835 4.6 273,167 $ 8.75 1,600 2.3 1,600 $ 9.54 800 3.8 800 $ 9.90 800 3.8 800 $ 12.50 4,000 1.1 4,000 $ 13.91 618,475 4.0 172,900 $ 25.00 1,600 0.8 1,600 $ 26.25 4,400 0.3 4,400 $ 27.50 800 0.2 800 $ 28.75 1,600 0.6 1,600 $ 31.25 4,000 — 4,000 $ 42.09 4,800 4.1 4,800 2,047,910 509,667 - 13 - Table of Contents Stock Warrants The following table summarizes warrant activity during the six months ended December 31, 2021: Number of Shares Weighted Average Exercise Price Weighted Average Remaining Life (Years) Aggregate Intrinsic Value Outstanding and exercisable at June 30, 2021 158,761 $ 10.37 3.1 $ 1,765,437 Granted 361,002 $ 5.82 5.0 $ — Exercised — $ — — $ — Outstanding and exercisable at December 31, 2021 519,763 $ 7.21 4.2 $ 247,124 Of the above warrants, 9,391 expire in the fiscal year ending June 30, 2022, 4,815 expire in the fiscal year ending June 30, 2023, 2,714 expire in the fiscal year ending June 30, 2025, and 502,843 expire in the fiscal year ending June 30, 2026. Issuance of common stock for cash On August 11, 2021, the Company closed a registered public offering issuing 2,500,000 of its Class A common stock at $8.00 per share, resulting in net proceeds to the Company of approximately $17.8 million, net of issuance costs of approximately $2.2 million. On September 24, 2021, the Company issued 92,000 of its Class A common stock at $8.00 per share in connection with the underwriters’ exercise of its over-allotment option in for the August 2021 registered public offering, resulting in net proceeds to the Company of approximately $707,000, net of issuance cost of approximately $29,000. Issuance of Shares for Services On August 20, 2021, the Company awarded 58,759 restricted stock units (“RSUs”) to the President and CEO under the Company’s 2019 Omnibus Incentive Equity Plan (the “2019 Omnibus Plan”) as his salary for the period from April 27, 2021, the date of his appointment, through December 31, 2021. The number of RSUs awarded was based on a prorated annual base salary of $600,000 at a 10% discount to the grant date fair value of $7.74 per share of the Company’s common stock. Each RSU awarded the to the CEO entitles him to receive one share of common stock upon vesting. A total of 15,339 RSUs (representing the pro rata portion of the RSU award for the period from April 27, 2021 to June 30, 2021) vested at the grant date, 21,710 vested at September 30, 2021 and 21,710 vested at December 31, 2021. Accordingly, as of December 31, 2021, 58,759 shares of common had been issued to the CEO. The Company recorded stock-based compensation expense related to these RSUs of $97,695 and $384, 454 for three and six month periods ended December 31, 2021, respectively. Issuance of Stock Options On August 20, 2021, the Company granted, under the 2019 Omnibus Plan, stock options to purchase 1,365,835 shares of common stock to the executive management team. Twenty percent (20%) of the shares underlying the options awarded vested on the grant date, and the remaining 80% vest equally over a 5-year period, on the first, second, third, fourth and fifth anniversary of the grant date. The option price per share is $7.74 per share, the grant date fair value, and the options terminate on the tenth anniversary of the grant date. Forfeiture of Stock Options On August 27, 2021, the Chief Executive Officer forfeited unvested stock options to purchase up to 73,125 shares of common stock that were previously granted to him as compensation as an independent director of the board. - 14 - Table of Contents 10. Commitments and Contingencies Office Lease From July 1, 2019 to October 31, 2021, the Company paid monthly rent of $1,000 to Acuitas for its headquarter office at 2120 Colorado Avenue Suite 230, Santa Monica, CA 90404. Effective November 1, 2021, the Company relocated its headquarters to Nevada at 9120 Double Diamond Parkway, Suite 1400, Reno Nevada 89521. On June 1, 2021, the Company assumed a NeurMedix office lease that was extended to February 2022 at 6165 Greenwich Dr Suite 150, San Diego, CA 92122. The lease agreement requires monthly payments of $8,782. The Company will be relocating to 5090 Shoreham Place, San Diego, CA 92122 on February 26, 2022, its new office space, (“New Office”). The Company on December 21, 2021, entered into a lease agreement for the New Office. The term of the lease is for 40 months commencing on March 1, 2022. Monthly base rate of $4,175 begins on May 1, 2022, with three percent increases at the end of each 12 month period. Challenge to US Patent On April 30, 2018, we received notice that Mallinckrodt had petitioned the U.S. Patent and Trademark Office (“USPTO”) to institute an Inter Partes Review (“IPR”) of our U.S. Patent No. 9,655,945 titled “Treatment of Ascites” (the “’945 patent”). On November 13, 2019, the Patent Trial and Appeal Board of USPTO issued a written decision in the IPR from which no appeal was taken. The decision revoked all of the claims of the patent as lacking novelty or as obvious. This ruling is unrelated to the Company’s Orphan drug designations for ascites and hepatorenal syndrome (“HRS”), which remain unchanged. An Orphan drug that is first-to-market typically receives 7 years of market exclusivity in the United States for the designated use(s). In addition, the ruling does not affect the Company’s rights in its pending patent application directed to proprietary liquid formulations of terlipressin for use in its planned Phase 2 and Phase 3 trials, subject to FDA review and authorization, which could eventually provide up to 20 years of patent coverage in each country in which the Company seeks patent protection, such as the United States, if a patent issues from a patent application according to the patent laws of each issuing count. Royalty Agreements Pursuant to the Agreement and Plan of Merger entered into on April 11, 2016, between our predecessor entities, LAT Pharma LLC and NanoAntibiotics, Inc., BioVie is obligated to pay a low single digit royalty on net sales of BIV201 (continuous infusion terlipressin) to be shared among LAT Pharma Members, PharmaIn Corporation, and The Barrett Edge, Inc. Pursuant to the Technology Transfer Agreement entered into on July 25, 2016 between BioVie and the University of Padova (Italy), BioVie 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. - 15 - Table of Contents 11. 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. For the three and six months ended December 31, 2021, the Company’s contributions to the 401K Plan totaled approximately $ 22,800 and $ 46,600 , respectively. - 16 - Table of Contents 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, and Section 27A of the Securities Act of 1933. 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 among others, include our; research and development activities and, distributor channel; compliance with regulatory impositions requirements; and 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. 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. 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. is a clinical-stage company developing innovative drug therapies to overcome unmet medical needs in chronic debilitating conditions. In liver disease , our Orphan Drug candidate BIV201 (continuous infusion terlipressin) is being developed as a future treatment option for patients suffering from ascites and other life-threatening complications of advanced liver cirrhosis caused by NASH, hepatitis, and alcoholism. The initial target for BIV201 therapy is refractory ascites. These patients 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 US Food and Drug Administration (FDA) has not approved any drug to treat refractory ascites. A Phase 2a clinical trial of BIV201 was completed in 2019, and a multi-center, randomized and controlled Phase 2b trial is currently underway at ten of thirteen planned US medical centers including Vanderbilt University, the Mayo Clinic, and the University of Pennsylvania (NCT04112199). Top-line results from this trial are expected in mid-2022, to be followed by a proposed single pivotal Phase 3 clinical trial beginning in late 2022, subject to favorable FDA review. In neurodegenerative disease, BioVie acquired the biopharmaceutical assets of NeurMedix, Inc., a privately held clinical-stage pharmaceutical company, in June 2021. The acquired assets include NE3107, a potentially selective inhibitor of inflammatory ERK signaling that, based on animal studies, is believed to reduce neuroinflammation. NE3107is 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 and Parkinson’s Disease, and NE3107 could, if approved, represent an entirely new medical approach to treating these devastating conditions affecting an estimated 6 million Americans suffering from Alzheimer’s and 1 million from Parkinson’s. The FDA has authorized a potentially pivotal Phase 3 randomized, double-blind, placebo-controlled, parallel group, multicenter study to evaluate NE3107 in subjects who have mild to moderate Alzheimer’s disease (NCT04669028). We initiated this trial on August 5, 2021 and are targeting primary completion in the first half of 2023. - 17 - Table of Contents In addition to Alzheimer’s disease, the FDA has authorized a Phase 2 study assessing NE3107’s potential pro-motoric impact in Parkinson’s disease patients, and to assess its safety and tolerability. The NM201 study (NCT05083260) Initiated by the Company on January 20, 2022; is a double-blind, placebo-controlled, safety, tolerability, and pharmacokinetics study in Parkinson’s Disease (PD). Participants will be treated with carbidopa/levodopa and NE3107 or placebo. Forty (40) patients with a defined L-dopa “off state” will be randomized 11placebo: active 20 mg twice daily for 28 days. Safety assessments will look at standard measures of patient health and potential for drug-drug interactions affecting L-dopa PK and activity. Efficacy assessments will use the Motor Disease Society Unified Parkinson’s Disease Rating (MDS-UPDRS) parts 1-4, Hauser ON/OFF Diary, and Non-Motor Symptom Scale. The study was initiated on January 20, 2022 and topline results are expected in mid 2022. Inflammation-driven insulin resistance is believed to be implicated in a broad range of serious diseases, including multiple myeloma and prostate cancer, and we plan to begin exploring these opportunities in the coming months using NE3107 or related compounds acquired in the NeurMedix asset purchase. Comparison of the three months ended December 31, 2021 to the three months ended December 31, 2020 Net income (loss) The net loss for the three months ended December 31, 2021, was approximately $5.4 million as compared to net loss of $3.1million for the three months ended December 31 2020. The net loss increase of $2.3 million for the three month period ended December 31, 2021 resulted from the increased loss from operations of $3.6 million primarily attributed to increased research and development activities, reduced by a $1.3 million increase in other income attributed to a change in fair value of the derivative liabilities and increased by interest expense of approximately $316,000 both related to the new debt financing that funded on November 30, 2021. Total operating expenses for the three months ended December 31 2021 and 2020 were approximately $6.7 million and $3.1 million respectively. The net increase of approximately $3.6 million during the three months ended December 31 2021 included an increase in research and development expenses of approximately $3.6 million, primarily attributed to the Alzheimer pivotal Phase 3 clinical trial that was initiated in August 2021 and continuation of our Orphan Drug candidate BIV201’s Phase 2b clinical trial, which was initiated earlier in the 2021 calendar year. Research and Development Expenses Research and development expenses were approximately $4.6 million and $938,000 for the three months ended December 31, 2021 and 2020, respectively. The net increase of approximately $3.7 million, for the three months period ended December 31, 2021 was comprised of Neuroscience operations of approximately $2.6 million from the increased activity in the Alzheimer pivotal Phase 3 clinical trial and the preparations for the Parkinson’s Phase 2 clinical trial initiated in January 2022; increased activities in the Liver Cirrhosis operations totaling approximately $556,000 for the continuation of Orphan Drug candidate BIV201’s Phase 2b clinical trial initiated in June 2021; and increases in compensation expense of approximately $452,000 due to neuroscience personnel hired to oversee the development of the biopharmaceutical assets purchased in June 2021 and hiring of our CMO who came on board on November 1, 2021. - 18 - Table of Contents Selling, General and Administrative Expenses Selling, general and administrative expenses were approximately $2.0 million in each of the three month periods ended December 31, 2021 and 2020. The components of a net nil change in selling, general and administrative expenses resulted primarily from a decline in stock compensation expense of approximately $451,000, representing a reduction in stock compensation expense from $969,000 for the three months ended December 31, 2020 to $518,000 for the three months ended December 31, 2021; offset by $458,000 representing the total increases in legal expenses of $325,000 and investor relations expense and annual shareholders meeting expenses of $133,000 for the three months ended December 31, 2021. Other Income/Expense Other income, net for the three months ended December 31, 2021 was $1.3 million compared to approximately $0.0 for the three months ended December 31, 2020. The increase for the three months ended December 31, 2021, was comprised of the change in fair value of the derivative liabilities of $1.6 million offset by interest expense of approximately $316,000. In the three month period ended December 31, 2020 there were no derivative liabilities or debt outstanding. Comparison of the six months ended December 31, 2021 to the six months ended December 31, 2020 Net income (loss) The net loss for the six months ended December 31, 2021 was approximately $11 million as compared to net income of $4.3 million for the six months ended December 31, 2020. The decline from net income to net loss of approximately $15.2 million was attributed to an increase in the loss from operations of approximately 8.8 million and the change in the fair value of derivative liabilities of approximately $6.7 million, offset by a decrease in interest expense of approximately 242,000. Total operating expenses for the six months ended December 31, 2021 were approximately $12.2 million as compared to $3.5 million for the six months ended December 31, 2020. The net increase of approximately $8.7 million during the six months ended December 31, 2021 was comprised of increased research and development expenses of approximately $6.3 million, primarily attributed to the Alzheimer pivotal Phase 3 clinical trial that was initiated in August 2021 and continuation of our Orphan Drug candidate BIV201’s Phase 2b clinical trial, which was initiated earlier in the 2021 calendar year and an increase in selling, general and administrative expenses of $2.4 million. Research and Development Expenses Research and development expenses were approximately $7.4 million and $1.1 million for the six months ended December 31, 2021, and 2020, respectively. The net increase of approximately $6.3 million, was comprised of the Neuroscience clinical operations of approximately $3.1 million for the activities in the Alzheimer pivotal Phase 3 clinical trial and the preparations for the initiation of the Parkinson’s Phase 2 clinical that launched in January 2022; an increase in the Liver Cirrhosis operating expenses totaling approximately $1.1 million for the ongoing Orphan Drug candidate BIV201’s Phase 2b clinical trial; and increases in compensation expense of approximately $2.1 million due to the neuroscience personnel hired to oversee the development of the biopharmaceutical assets purchased in June 2021, the hiring of our CMO who came on board in November 1, 2021 and included related stock based compensation awarded the management that totaled $579,000. Selling, General and Administrative Expenses Selling, general and administrative expenses were approximately $4.7 million and $2.3 million for the six months ended December 31, 2021 and 2020, respectively. The net increase of approximately $2.4 million was primarily attributed to increased compensation expense of approximately $ 1.5 million, of which $1.2 million related to stock based compensation expense; and a total net increase of approximately $765,000 expenses related to being listed on a national exchange including listing fees, investor relations, legal and professional fees and office and website development expenses, as the Company expanded its operations with the development of the recent neuroscience pharmaceutical assets. Other (Income)/Expense Other income, net for the six months ended December 31, 2021 and 2020 was $1.3 million compared to approximately $7.7 million, respectively. The net decrease of $6.4 million was comprised of the change in fair value of the derivative liabilities of $6.7 million and decrease interest expense of approximately $242,000. - 19 - Table of Contents Capital Resources and Liquidity As of December 31, 2021, the Company had working capital of approximately $26.2 million, cash of approximately $30.4 million, stockholders’ equity of approximately $16.1 million, and an accumulated deficit of approximately $235.8 million. In addition, the Company has not generated any revenues to date 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 as needed. In November 2021, the Company closed a debt financing, pursuant to which it received a loan in the aggregate principal amount of $15 million and incurred direct financing costs of approximately $390,000. Although the increase in the Company’s cash balance could possibly sustain operations over the next 12 months if measures are taken to delay planned expenditures in our research protocols and slow the progress in the Company’s clinical programs, given the Company’s current planned operations to meet certain goals and objectives, we expect projected cash flows to be depleted within that period of time. The future viability of the Company is largely dependent upon its ability to raise additional capital to finance its operations. 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 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. Although management continues to pursue its 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. 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 the coronavirus (“COVID-19”) pandemic (and its related variants), has lead to continued regional quarantines, business shutdowns, labor shortages, disruptions to supply chains, and overall economic instability. Although some jurisdictions have relaxed these measures, particularly as more and more people are vaccinated, others have not or have reinstated them as COVID-19 cases surge and variants emerge The duration and spread of the COVID-19 pandemic and the long-term impact of COVID-19 and its variants on the financial markets and the overall economy, are highly uncertain and cannot be predicted at this time. 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. The financial statements included in this report 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. - 20 - Table of Contents Critical Accounting Policies and Estimates For the three-month and six month periods ended December 31, 2021, 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, 2021. 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. 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 December 31, 2021 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. - 21 - Table of Contents 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 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 at prices that may not be the same as the price per share in this offering. We may sell shares or other securities in any other offering at a price per share that is less than the price per share paid by investors in this offering, and investors purchasing shares or other securities in the future could have rights superior to existing stockholders. The price per share at which we sell additional shares of our common stock, or securities convertible or exchangeable into common stock, in future transactions may be higher or lower than the price per share paid by investors in this offering. In addition, as of December 31, 2021, there were warrants outstanding to purchase an aggregate of 519,763 shares of common stock at exercise prices ranging from $1.88 to $75.00 per share and 2,047,910 shares issuable upon exercise of outstanding options at exercise prices ranging from $2.80 to $42.09 per share. 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 maybe converted to shares of common stock at a conversion price of $6.98 per share. We may grant additional options, warrants or stock awards. To the extent such shares are issued, the interest of holders of our comm on 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, NE3789) pursuant to the asset purchase agreement, dated April 27, 2021, by and among the Company, NeurMedix, Inc. and Acuitas Group Holdings, LLC, 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. Item 2. Unregistered Sales of Equity Securities None Item 3. Defaults Upon Senior Securities None Item 4. Mine Safety Disclosures Not applicable Item 5. Other Information None - 22 - Table of Contents Item 6. Exhibits (a) Exhibit index Exhibit 10.1 Loan and Security Agreement, dated November 30, 2021, among BioVie Inc. Avenue Venture Opportunities Fund II, L.P., and Avenue Venture Opportunities Fund, L.P. (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K (File No. 001-39015) filed on December 1, 2021). 10.2 Supplement to Loan and Security Agreement, dated November 30, 2021, among BioVie Inc., Avenue Venture Opportunities Fund II, L.P. and Avenue Venture Opportunities Fund, L.P. (incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K (File No. 001-39015) filed on December 1, 2021) 10.3 Form of Warrant to Purchase Shares of Class A Common Stock of BioVie Inc. (incorporated by reference to Exhibit 10.3 to the Current Report on Form 8-K (File No. 001-39015) filed on December 1, 2021) 31.1* Certification of Chief Executive Officer (Principal Executive Officer) required by Rule 13a-14(a) or Rule 15d-14(a) under the Securities Exchange Act of 1934, as amended. 31.2* Certification of Chief Financial Officer (Principal Financial Officer) required by Rule 13a-14(a) or Rule 15d-14(a) under the Securities Exchange Act of 1934, as amended. 32.1** Certifications of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 32.2** Certification of Chief Financial Officer (Principal Financial Officer) pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 101.INS XBRL Instance Document 101.SCH XBRL Taxonomy Extension Schema Document 101.CAL XBRL Taxonomy Extension Calculation Linkbase Document 101.LAB XBRL Taxonomy Extension Label Linkbase Document 101.PRE XBRL Taxonomy Extension Presentation Linkbase Document 101.DEF XBRL Taxonomy Extension Definition Linkbase Document * 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. - 23 - Table of Contents 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) February 7, 2022 /s/ Joanne Wendy Kim Joanne Wendy Kim Chief Financial Officer (Principal Financial and Accounting Officer) February 7, 2022 - 24 -