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 and a related party in June 2021 . The acquired assets included NE3107. In April 2024, the Company announced that the United States Adopted Names (“USAN”) Council, and the World Health Organization (“WHO”) International Nonproprietary Names (INN) expert committee had approved “bezisterim” as the non-proprietary (generic) name for NE3107. Bezisterim (NE3107) is an investigational, 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 AD and PD, and bezisterim (NE3107) could, if approved by FDA, 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. Neurodengenerative Disease Program In neurodegenerative disease, the Company’s drug candidate NE3107 inhibits activation of inflammatory actions extracellular single-regulated kinase (“ERK”) and nuclear factor kappa-light-chain-enhancer of activated B cells (“NFκB”) (including interactions with tumor necrosis factor (“TNF”) signaling and other relevant inflammatory pathways) that lead to neuroinflammation and insulin resistance. NE3107 does not interfere with their homeostatic functions (e.g., insulin signaling and neuron growth and survival). Both inflammation and insulin resistance are drivers of AD and PD. 26 Table of Contents Alzheimer’s Disease (NCT05083260) On November 29, 2023, the Company announced the analysis of its unblinded, topline efficacy data from its Phase 3 clinical trial (NCT04669028) of bezisterim (NE3107) in the treatment of mild to moderate AD. The study has co-primary endpoints looking at cognition using the Alzheimer’s Disease Assessment Scale-Cognitive Scale (ADAS-Cog 12) and function using the Clinical Dementia Rating-Sum of Boxes (CDR-SB). Patients were randomly assigned, 1:1 versus placebo, to receive sequentially 5 mg of bezisterim (NE3107) orally twice a day for 14 days, then 10 mg orally twice a day for 14 days, followed by 26 weeks of 20 mg orally twice daily. Upon trial completion, as the Company began the process of unblinding the trial data, the Company found significant deviation from protocol and current good clinical practices (“cGCPs”) violations at 15 study sites (virtually all of which were from one geographic area). This highly unusual level of suspected improprieties led the Company to exclude all patients from these sites and to refer the sites to the FDA Office of Scientific Investigations (“OSI”) for further action. After the patient exclusions, 81 patients remained in the Modified Intent to Treat population, 57 of whom were in the Per-Protocol population which included those who completed the trial and were verified to take study drug from pharmacokinetic data. The trial was originally designed to be 80% powered with 125 patients in each of the treatment and placebo arms. The unplanned exclusion of so many patients has left the trial underpowered for the primary endpoints. In the Per-Protocol population, which included those patients who completed the trial and who were further verified to have taken the study drug (based on pharmacokinetic data), an observed descriptive change from baseline appeared to suggest a slowing of cognitive loss; these same patients experienced an advantage in age deceleration vs. placebo as measured by DNA epigenetic change. Age deceleration is used by longevity researchers to measure the difference between the patient’s biological age, in this case as measured by the Horvath DNA methylation Skin Blood Clock, relative to the patient’s actual chronological age. This test was a non-primary/secondary endpoint, other-outcome measure, done via blood test collected at week 30 (end of study). Additional DNA methylation data continues to be collected and analyzed. Based on the efficacy signal seen in this trial, the Company is exploring (1) a discussion with the FDA to potentially employ the adaptive trial feature of the protocol to continue enrolling patients to achieve statistical significance; and/or (2) designing a new Phase 3 study of bezisterim (NE3107) that leverages the most recent data and understanding of the potential effect bezisterim (NE3107) may have in helping persons with AD. Parkinson’s Disease (NCT05083260) The Phase 2 study of bezisterim (NE3107) for the treatment of 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 bezisterim (NE3107). Forty-five patients with a defined L-dopa “off state” were randomized 1:1 to placebo: bezisterim (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 measure the potential for adverse interactions of bezisterim (NE3107) with carbidopa/ levodopa; and 2) the secondary objective was to determine if preclinical indications of promotoric activity and apparent enhancement of levodopa activity could be seen in humans. Both objectives were met. The initiation of trial design for a Phase 3 study of bezisterim (NE3107) for the treatment of PD is currently on hold, pending additional funding. 27 Table of Contents Long COVID Program In April 2024, the Company announced the grant of a clinical trial award of up to $13.1 million from the U.S. Department of Defense (“DOD”), awarded through the Peer Reviewed Medical Research Program (“PRMRP”) of the Congressionally Directed Medical Research Programs (“CDMRP”). The award can provide up to 2 years of non-dilutive funding for a Phase 2b clinical trial that will assess bezisterim (NE3107) for the treatment of neurological symptoms that are associated with long COVID. The Company anticipates the trial to commence by early 2025. Long COVID is a condition in which symptoms of COVID-19, the acute respiratory disease caused by the SARS-CoV-2 virus, persist for an extended period of time, generally three months or more. The Centers for Disease Control recently reported that 6.8% of adults in the United States (more than 17 million individuals) currently or previously had long COVID. Symptoms, which include fatigue, cognitive dysfunction and sleep disturbances, are debilitating. The loss in quality of life and earnings and increased medical costs has an enormous economic impact estimated to be 3.7 trillion dollars. To date there are no therapies proven effective for treatment. Chronic inflammation is one of the main hypotheses that researchers have proposed to explain the persistence of symptoms in long COVID. Specifically in individuals with “brain fog,” sustained systemic inflammation and persistent localized blood-brain-barrier (“BBB”) dysfunction are key physiological features. Bezisterim (NE3107) permeates the BBB and has been shown to modulate inflammation via the activation of NF-kB, thus representing a novel oral treatment targeting an underlying cause of long COVID symptoms. Neuroinflammation, insulin resistance, and oxidative stress are common features in the major neurodegenerative diseases, including AD, PD, frontotemporal lobar dementia, and Amyotrophic lateral sclerosis. Bezisterim (NE3107) is an investigational 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. Bezisterim’s (NE3107) potential to inhibit neuroinflammation and insulin resistance forms the basis for the Company’s work testing the molecule in AD, PD, and long COVID patients. Bezisterim (NE3107) is patented in the United States, Australia, Canada, Europe and South Korea. Liver Disease Program In liver disease, our investigational drug candidate BIV201 (continuous infusion terlipressin), which has been granted both FDA Fast Track designation status and FDA Orphan Drug 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. In June 2021, the Company initiated a Phase 2 study (NCT04112199) designed to evaluate the efficacy of BIV201 (terlipressin, administered by continuous infusion for two 28-day treatment cycles) combined with standard-of-care (“SOC”), compared to SOC alone, for the treatment of refractory ascites. The primary endpoints of the study are the incidence of ascites-related complications and change in ascites fluid accumulation during treatment compared to a pre-treatment period. In March 2023 the company announced enrollment was paused and that data from the first 15 patients treated with BIV201 plus SOC appeared to show at least a 30% reduction in ascites fluid during the 28 days after treatment initiation compared to the 28 days prior to treatment. The change in ascites volume was significantly different from those patients receiving SOC treatment. Patients who completed the treatment with BIV201 experienced a 53% reduction in ascites fluid, which was sustained (43% reduction) during the three months after treatment initiation as compared to the three-month pre-treatment period. In June 2023, the Company requested and subsequently received guidance from the FDA regarding the design and endpoints for definitive clinical testing of BIV201 for the treatment of ascites due to chronic liver cirrhosis. The Company is currently finalizing protocol designs for the Phase 3 study of BIV201 for the treatment of ascites due to chronic liver cirrhosis. While the active agent, terlipressin, is approved in the U.S. and in about 40 countries for related complications of advanced liver cirrhosis, treatment of ascites is not included in these authorizations. Patients with refractory ascites suffer from frequent life-threatening complications, generate more than $5 billion in annual treatment costs, and have an estimated 50% mortality rate within 6 to 12 months. The U.S. FDA has not approved any drug to treat refractory ascites. 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 this 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. 28 Table of Contents Comparison of the three months ended March 31, 2024 to the three months ended March 31, 2023 Net loss The net loss for the three months ended March 31, 2024 and 2023, was approximately $8.1 million compared to a net loss of $15.0 million, respectively. The net decrease in net loss of approximately $6.9 million was due to reduced research and development expenses of approximately $5.5 million, a decrease in selling, general and administrative expenses of approximately $546,000, a reduction in interest expense of approximately $454,000 and the change in the fair value of derivative liabilities of approximately $475,000. Total operating expenses for the three months ended March 31, 2024, were approximately $7.7 million as compared to $13.8 million for the three months ended March 31, 2023. The net decrease of approximately $6.1 million for the three months ended March 31, 2024, represented a net decrease in research and development expenses of approximately $5.5 million due to the completion of clinical trials and a decrease in selling general and administrative expenses of approximately $546,000 from a decline in investor relations expense of approximately $365,000 and a decline in legal expenses of $129,000. Research and Development Expenses Research and development expenses were approximately $5.7 million and $11.2 million for the three months ended March 31, 2024, and 2023, respectively. The net decrease of approximately $5.5 million for three months ended March 31, 2024, was primarily attributed to reduction in expenses totaling approximately $6.0 million due to completion of clinical studies and offset by increased expenses in CMC and clinical team compensation totaling approximately $520,000. The decreased expenses from completed clinical studies were comprised of approximately $868,000 from Ascites BIV201 Phase 2b study which was paused in March 2023; approximately $577,000 from completing PD Phase 2 study during the three months ended March 31, 2023; approximately $160,000 from the Investigator-Initiated Trial in MCI and Mild Alzheimer’s Disease, approximately $3.8 million from the completing AD pivotal Phase 3 clinical study and approximately $581,000 for the development of a new PD study which launch was delayed. The net decrease in clinical study expenses were offset by increased net expenses totaling approximately $520,000 and was comprised of increased expense in CMC for drug production and development of approximately $336,000; the increased clinical team compensation of $285,000 from the expansion of the clinical team subsequent to March 31, 2023; reduced by approximately $51,000 for consultancy expenses and approximately $50,000 from less travel and publications in the three months ended March 31, 2024. Selling, General and Administrative Expenses Selling, general and administrative expenses were approximately $2.0 million and $2.5 million for the three months ended March 31, 2024, and 2023, respectively. The net decrease of approximately $546,000 was primarily attributed from a decline in investor relations expense of approximately $365,000 and decline in legal expenses of $129,000. Other Income and Expense Other expense, net was approximately $336,000 compared to other expense, net of $1.3 million, for the three months ended March 31, 2024 and 2023, respectively. The net decrease in other expense of approximately $931,000 represented a change in fair value of the related derivative liabilities of approximately $475,000 and a decrease in interest expense of approximately $454,000 as the principal payments of the debt balance began July 1, 2023. 29 Table of Contents Comparison of the nine months ended March 31, 2024 to the nine months ended March 31, 2023 Net loss The net loss for the nine months ended March 31, 2024, was approximately $27.2 million compared to a net loss of $41.1 million for the nine months ended March 31, 2023. The decrease in net loss of approximately $13.9 million was comprised of a net decrease in research and development expenses of approximately $4.0 million and selling, general and administrative expenses of approximately $2.8 million, and further reduced by an increase in interest income of approximately $557,000, a reduction in interest expense of approximately $739,000 and the change in the fair value of derivative liabilities of $6.0 million. Total operating expenses for the nine months ended March 31, 2024, were approximately $27.4 million as compared to $34.1 million for the nine months ended March 31, 2023. The net decrease of approximately $6.7 million for the nine months ended March 31, 2024, was comprised of a decrease in research and development expenses of approximately $4.0 million and a decrease in selling general and administrative expenses of approximately $2.8 million. Research and Development Expenses Research and development expenses were approximately $21.0 million and $25.0 million for the nine months ended March 31, 2024, and 2023, respectively. The net decrease of approximately $4.0 million for the nine months ended March 31, 2024, was primarily attributed to a reduction in expenses totaling approximately $8.0 million due to completion of clinical studies and increased expenses in development of new studies, CMC and clinical team expansion and offset by the use of consultants totaling approximately $4.1 million. The decreased expenses totaling approximately $8.0 million from completed clinical studies were comprised of approximately $2.3 million from Ascites BIV201 Phase 2b study which was paused in March 2023, approximately $1.9 million from completing PD Phase 2 study during the three months ended March 31, 2023 , approximately $195,000 from the Investigator-Initiated Trial in MCI and Mild Alzheimer’s Disease, approximately $3.6 million from the completing AD pivotal Phase 3 clinical study of approximately $3.8 million. The increased expenses totaling approximately $4.1 million was comprised of the planning and development of new studies of approximately $822,000, increases from the expansion of the clinical team employees and consultants of $1.3 million and $835,000, respectively; and other increases in regulatory and other consultants of approximately $412,000 and publications and travel of approximately $133,000. Selling, General and Administrative Expenses Selling, general and administrative expenses were approximately $6.2 million and $8.9 million for the nine months ended March 31, 2024, and 2023, respectively. The net decrease of approximately $2.7 million was primarily attributed to decreases in directors stock compensation of approximately $2.3 million, investor relations fees of $517,000 offset by insurance expenses of approximately $181,000. Other Income and Expense Other income, net was approximately $210,000 compared to other expense, net of $7.0 million, for the nine months ended March 31, 2024 and 2023, respectively. The net increase in other income of approximately $7.2 million was primarily driven by the change in fair value of the derivative liabilities of approximately $6.0 million, as well as an increase in interest income of approximately $557,000 which was primarily from the investments in U.S. Treasury Bills and a reduction in interest expense of approximately $739,000 due to amortization and accretion of the financing costs, unearned discount, and premium relating to the note payable. 30 Table of Contents Capital Resources and Liquidity As of March 31, 2024 the Company had working capital of approximately $18.1 million, cash and cash equivalents totaling approximately $30.4 million, stockholders’ equity of approximately $18.9 million, and an accumulated deficit of approximately $329.3 million. During the nine months ended March 31, 2024, the Company sold approximately 3.3 million shares of its Common Stock under its Controlled Equity Offering Sales Agreement with Cantor Fitzgerald & Co for total net proceeds of approximately $9.3 million after 3% commissions and offering costs totaling approximately $377,000. On March 6, 2024, the Company closed a best efforts public offering (the “Offering”) of 15,000,000 shares (the “Shares”) of its class A common stock, par value $0.0001 per share (the “Common Stock”), pre-funded warrants (the “Pre-funded Warrants”) to purchase 6,000,000 shares of Common Stock, and warrants to purchase up to 10,500,000 shares of Common Stock (the “Common Warrants”) at a combined public offering price of $1.00 per Share, or Pre-funded Warrant, and the associated Common Warrant. The gross proceeds to the Company from the Offering were approximately $21.0 million, before deducting placement agent fees and offering expenses of approximately $2.5 million. Additionally, upon closing the Company issued the placement agent warrants (“Placement Agent’s warrants”) to purchase 1,050,000 shares of Common Stock exercisable at a per share price of $1.25, which was equal to 125% of the public offering price per share. The Placement Agent’s Warrants are exercisable during a five-year period commencing 180 days from March 6, 2024. 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 nine-month period ended March 31, 2024, 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. 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. 31 Table of Contents