BIOVIE INC. 10-Q

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations This report contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and Section 27A of the Securities Act of 1933, as amended. Any statements contained in this report that are not statements of historical fact may be forward-looking statements. When we use the words “intends,” “estimates,” “predicts,” “potential,” “continues,” “anticipates,” “plans,” “expects,” “believes,” “should,” “could,” “may,” “will” or the negative of these terms or other comparable terminology, we are identifying forward-looking statements. Forward-looking statements involve risks and uncertainties, which may cause our actual results, performance or achievements to be materially different from those expressed or implied by forward-looking statements. These factors include, among others: our research and development activities and distributor channel; compliance with regulatory requirements; and our ability to satisfy our capital needs Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. You are cautioned not to place undue reliance on the forward-looking statements in this report, which speak only as of the date of this report. Except as may be required by applicable law, we do not undertake or intend to update or revise our forward-looking statements, and we assume no obligation to update any forward-looking statements contained in this report as a result of new information or future events or developments, except as required by law. Thus, you should not assume that our silence over time means that actual events are bearing out as expressed or implied in such forward-looking statements. You should carefully review and consider the various disclosures we make in this report and our other reports filed with the Securities and Exchange Commission (the “SEC”) that attempt to advise interested parties of the risks, uncertainties and other factors that may affect our business. The following discussion of the Company’s financial condition and the results of operations should be read in conjunction with the Financial Statements and Notes thereto appearing elsewhere in this report. Management’s Discussion BioVie Inc. (the “Company” or “we” or “our”) is a clinical-stage company developing innovative drug therapies to treat chronic debilitating conditions including neurological and neuro-degenerative disorders and liver disease. The Company acquired the biopharmaceutical assets of NeurMedix, Inc. (“NeurMedix”), a privately held clinical-stage pharmaceutical company, in June 2021 . The acquired assets included NE3107, a potentially selective inhibitor of inflammatory extracellular single-regulated kinase (ERK) signaling that, based on animal studies, is believed to reduce neuroinflammation. NE3107 is a novel orally administered small molecule that is thought to inhibit inflammation-driven insulin resistance and major pathological inflammatory cascades with a novel mechanism of action. There is emerging scientific consensus that both inflammation and insulin resistance may play fundamental roles in the development of Alzheimer’s Disease (AD) and Parkinson’s Disease (PD), and NE3107 could, if approved represent an entirely new medical approach to treating these devastating conditions affecting an estimated 6 million Americans suffering from AD and 1 million Americans suffering from PD. Late in September 2023, the last patient completed the last treatment at week 30 in the Company’s multicenter, randomized, double-blind, placebo-controlled Phase 3 study (NCT04669028) of NE3107 in patients who have mild to moderate Alzheimer’s disease. The database cleaning process remains underway, with the clinical team resolving outstanding queries and entering final data into the electronic data system. Final database lock, unblinding, and subsequent release of topline results is anticipated to occur during the fourth quarter of calendar year 2023. The Phase 2 study of NE3107 in Parkinson’s disease (“PD”) (NCT05083260), completed in December 2022 was a double-blind, placebo-controlled, safety, tolerability, and pharmacokinetics study in PD participants treated with carbidopa/levodopa and NE3107. Forty-five patients with a defined L-dopa “off state” were randomized 1:1 to placebo:NE3107 20 mg twice daily for 28 days. This trial was launched with two design objectives: 1) the primary objective was safety and a drug-drug interaction study as requested by the FDA to demonstrate the absence of adverse interactions of NE3107 with levodopa; and 2) the secondary objective is to determine if preclinical indications of promotoric activity and apparent enhancement of levodopa activity can be seen in humans. Both objectives were met. The Company continues to process its findings from its completed study as it prepares for the next round of clinical studies in PD. Neuroinflammation, insulin resistance, and oxidative stress are common features in the major neurodegenerative diseases, including AD, PD, frontotemporal lobar dementia, and Amyotrophic lateral sclerosis (ALS). NE3107 is an oral small molecule, blood-brain permeable, compound with potential anti-inflammatory, insulin sensitizing, and ERK-binding properties that may allow it to selectively inhibit ERK-, NFκB- and TNF-stimulated inflammation. NE3107’s potential to inhibit neuroinflammation and insulin resistance forms the basis for the Company’s work testing the molecule in AD and PD patients. NE3107 is patented in the United States, Australia, Canada, Europe and South Korea. The Company’s Orphan Drug candidate BIV201 (continuous infusion terlipressin), with FDA Fast Track designation status, is being evaluated and discussed after receiving guidance from the FDA regarding the design of Phase 3 clinical testing of BIV201 for the treatment of ascites due to chronic liver cirrhosis. BIV201 is administered as a patent-pending liquid formulation. The Phase 2b study was closed before full enrollment, without clinically meaningful adverse effects associated with BIV201 treatment. The active agent is approved in the U.S. and in about 40 countries for related complications of advanced liver cirrhosis. 21 Table of Contents Comparison of the three months ended September 30, 2023 to the three months ended September 30, 2022 Net loss The net loss for the three months ended September 30, 2023, was approximately $10.7 million and was comparable to the net loss of $10.4 million for the three months ended September 30, 2022. The increase in net loss was comprised of increased research and development expenses of $2.1 million offset from a decrease in selling, general and administrative expenses of approximately $64,000, an increase in interest income of approximately $420,000 and the change in the fair value of derivative liabilities of $1.3 million for the three months ended September 30, 2023 from the three months ended September 30, 2022. Total operating expenses for the three months ended September 30, 2023, were approximately $10.9 million as compared to $8.8 million for the three months ended September 30, 2022. The net increase of approximately $2.1 million for the three months ended September 30, 2023 was comprised of increased research and development expenses of approximately $2.1 million offset by a decrease in selling general and administrative expenses of approximately $64,000. Research and Development Expenses Research and development expenses were approximately $8.9 million and $6.8 million for the three months ended September 30, 2023, and 2022, respectively. The net increase of approximately $2.1 million, represented an approximate decline of $1.4 million in expenses from the completion of the PD Phase 2 and Ascites Phase 2b studies and the near completion of the AD Phase 3, offset by increased expenditures of $1.7 million related to development of next clinical studies and other research; increased expenses attributed to publication of our abstracts and posters presented at various conferences totaling approximately $172,000, and increased expenses in Chemistry, Manufacturing and Control of approximately $46,000 and the Clinical Teams compensation of approximately $1.5 million. The total clinical team employee and outside consultants’ compensation increased by approximately $780,000 and $712,000, respectively; for the three months ended September 30 2023; representing an increase in the employee headcount by 7 to 15 and the expanded use in the number of outside consultants. Selling, General and Administrative Expenses Selling, general and administrative expenses were approximately $1.9 million and $2.0 million for the three months ended September 30, 2023, and 2022, respectively. The net decrease of approximately $64,000 was primarily attributed to decline in directors stock compensation of approximately $313,000,and other professional and advisory fees of $37,000 offset by general administrative compensations of $31,000, increased legal fees of $155,000, other consultants of approximately $58,000 and insurance expenses of approximately $41,000. Other Income and Expense Other income, net was approximately $165,000 compared to other expense, net of $1.6 million, for the three months ended September 30, 2023 and 2022, respectively. The net increase in other income of approximately $1.8 million represented change in fair value of the related derivative liabilities of approximately $1.3 million, and increase in interest income of approximately $420,000 which was primarily comprised of $223,865 realized gain on settlement of investments in U.S. Treasury Bills. 22 Table of Contents Capital Resources and Liquidity As of September 30, 2023 the Company had working capital of approximately $9.6 million, cash and cash equivalents totaling approximately $21.2 million, stockholders’ equity of approximately $7.5 million, and an accumulated deficit of approximately $311.9 million. During the three months ended September 30, 2023, the Company sold approximately 432,000 shares of its Common Stock under its Controlled Equity Offering Sales Agreement with Cantor Fitzgerald & Co for total net proceeds of approximately $1.9 million after 3% commissions and offering costs totaling approximately $119,000. The Company has not generated any revenue and no revenues are expected in the foreseeable future. The Company’s future operations are dependent on the success of the Company’s ongoing development and commercialization efforts, as well as its ability to secure additional financing. Management expects that future sources of funding may include sales of equity, obtaining loans, or other strategic transactions. Although management continues to pursue the Company’s strategic plans, there is no assurance that the Company will be successful in obtaining sufficient financing on terms acceptable to the Company, if at all, to fund continuing operations. These circumstances raise substantial doubt on the Company’s ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. Critical Accounting Policies and Estimates For the three-month period ended September 30, 2023, there were no significant changes to the Company’s critical accounting policies as identified in the Annual Report Form 10-K for the fiscal year ended June 30, 2023. 23 Table of Contents New Accounting Pronouncements The Company considered the applicability and impact of recent accounting pronouncements and determined those to be either not applicable or expected to have minimal impact on our balance sheets or statement of operations and comprehensive loss. Item 3. Quantitative and Qualitative Disclosures About Market Risk Not applicable to smaller reporting companies.