What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-02-11 compared with 2024-11-13 · 134 added, 75 removed, 175 unchanged (54% of the section changed)

82 unchanged sentences

the Company has designed a new Phase 2 study of bezisterim (NE3107) as a potential first line therapy to treat patients with new onset

In August 2024, the FDA authorized the protocol for this new study.

In July 2024, the Company submitted the new protocol and received a response from the FDA which permitted the Company to proceed with

The trial is anticipated to commence during the first calendar quarter of 2025.

Long COVID Program

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and the FDA authorized our Investigational New Drug (“IND”)

application for bezisterim (NE3107) allowing us to study a novel, anti-inflammatory approach or the treatment of the debilitating neurocognitive

symptoms associated with long covid.

application for bezisterim (NE3107) allowing the Company to study a novel, anti-inflammatory approach or the treatment of the debilitating

neurocognitive symptoms associated with long covid.

The Company anticipates the trial to commence by early 2025.

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The FDA has not approved any drug to treat refractory

Comparison of the three months ended September 30, 2024 to the three

months ended September 30, 2023

net loss for the three months ended September 30, 2024 was approximately $4.2 million and as compared to the net loss of $10.7 million

for the three months ended September 30, 2023.

The net decrease of $6.5 million for the three months ended September 30, 2024 was comprised

of a decrease in research and development expenses of $6.9 million, offset by increased selling, general and administrative expenses

of approximately $132,000 and a decrease in other (expense) income, net of approximately $195,000.

operating expenses for the three months ended September 30, 2024 were approximately $4.1 million as compared to $10.9 million for the

three months ended September 30, 2023.

The net decrease of approximately $6.8 million for the three months ended September 30, 2024,

was comprised of decreased research and development expenses of approximately $6.9 million primarily due to the completion of clinical

trials in the prior fiscal year, offset by a net increase in selling general and administrative expenses of approximately $132,000, primarily

attributed to increased legal expenses related to regulatory, patent filings and litigation related to the class action suit.

and Development Expenses

and development (“R&D”) expenses were approximately $2.0 million for the three months ended September 30, 2024, a decline

of approximately $6.9 million from $8.9 million for three months ended September 30, 2023.

The net decrease in R&D expenses of approximately

$6.9 million is primarily attributed to the completion of clinical trials in the prior fiscal year ended June 30, 2024, causing decreased

clinical trials expenses of $5.2 million, a decline in the clinical team expense consisting of reductions in clinical team payroll of

approximately $915,000, reduction in the use of consultants of approximately $547,000, a reduction in the use of regulatory and other

consultants totaling approximately $274,000, and a decrease in other related expenses of approximately $126,000 in travel, conferences

and publications.

This was offset by increased expenses in Chemistry, Manufacturing and Controls (“CMC”) totaling approximately

$155,000 related to drug production and drug discovery development.

The decline in clinical studies of $5.2 million represented

the net decrease in clinical trial studies expense due the completion of the clinical trials in fiscal year 2024 offset by the planning

and development of the two new clinical studies PD and LC.

The table below summarizes the expense amounts for the three months ended September

30, 2024 and 2023 by study:

Comparison of the three months ended December 31, 2024 to the three

months ended December 31, 2023

The net loss for the three months ended December 31,

2024 was approximately $7.1 million as compared to the net loss of $8.4 million for the three months ended December 31, 2023.

decrease of $1.3 million for the three months ended December 31, 2024 was comprised of a decrease in research and development expenses

of $1.8 million, offset by increased selling, general and administrative expenses of approximately $277,000 and a decrease in other income,

net of approximately $200,000.

Total operating expenses for the three months ended

December 31, 2024 were approximately $7.3 million as compared to $8.8 million for the three months ended December 31, 2023.

decrease of approximately $1.5 million for the three months ended December 31, 2024 was comprised of decreased research and development

expenses of approximately $1.8 million primarily due to the completion of clinical trials in the prior fiscal year, offset by a net increase

in selling general and administrative expenses of approximately $277,000.

Research and Development Expenses

Research and development (“R&D”) expenses

were approximately $4.7 million and $6.5 million for the three months ended December 31, 2024 and 2023, respectively.

The $1.8 million

net decline was primarily attributed to the increase in direct cost related to the development and preparation of the new clinical studies

to be launched in the first calendar quarter of 2025 of $3.4 million;

offset by the decline in cost of approximately $3.1 million from

completed studies;

and other decreases in related expenses such as the clinical teams’ payroll of approximately $461,000, reflecting

the reduction in force in December 2023, and a decrease in consultancy expense of approximately $1.0 million, resulting from declining

use of consultants as the clinical studies were completed in the prior fiscal year, a decrease in Chemistry, Manufacturing and Controls

(“CMC”) and new drug discovery totaling approximately $344,000, a reduction in the use of regulatory and other consultants

totaling approximately $186,000, and a decrease in related expenses of approximately $59,000 in travel, conferences and publications.

The table below summarizes the expenses incurred for

the three months ended December 31, 2024 and 2023 by study:

Three Months Ended

September 2024

September 2023

New Development

December 31, 2024

December 31, 2023

Current Studies

Sunrise PD Phase 2

Long Covid Program, net of $325,000 reimbursement

Long Covid Program

Investigator-Initiated studies

Completed Studies

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Investigator-Initiated studies

Other studies in development/canceled

$ (3,069,636 )

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Selling, general and administrative expenses were

approximately $2.1 million and $1.9 million for the three months ended September 30, 2024 and 2023, respectively.

The net decrease of

approximately $132,000 was primarily attributed to the increases in legal fee expenses of approximately $400,000 and insurance premiums

of approximately $29,000;

offset by declines in the executive teams compensation of approximately $188,000, investor relations and other

filing fees of approximately $49,000, and other professional and consulting fees of approximately $52,000.

approximately $2.5 million and $2.3 million for the three months ended December 31, 2024 and 2023, respectively.

The net increase of approximately

$200,000 was primarily attributed an increase in other consultancy fees of approximately $593,000, increased audit and accounting fees

of approximately $42,000, and increases in expenses for shareholders’ meeting and regulatory filing fees of approximately $25,000.

This was offset by declines in the executive team’s compensation totaling approximately $78,000 reflecting the reduction in force

in December 2023, director compensation expense of approximately $141,000, investor relations of approximately $90,000, legal fees of

approximately $24,000 and conference & meetings and website development totaling approximately $22,000 and $29,000, respectively.

Other Income and Expense

Other expense, net was approximately $30,000 compared

to other income, net of $165,000, for the three months ended September 30, 2024 and 2023, respectively.

The net increase in other expense

of approximately $195,000 is comprised of a reduction in the change in fair value of the related derivative liabilities of approximately

$705,000 and a reduction in interest expense of approximately $749,000, offset by a reduction in interest income of approximately $239,000.

Other income, net was approximately $180,000 compared

to other income, net of $380,000, for the three months ended December 31, 2024 and 2023, respectively.

The net decrease in other income,

net of approximately $200,000 is comprised of a change in fair value of the derivative liabilities of approximately $989,000, which was

offset by a reduction in interest expense of approximately $754,000 due to the notes payable being paid off on December 1, 2024, and an

increase in interest income of approximately $35,000.

Comparison of the six months ended December 31, 2024 to the six months

ended December 21, 2023

The net loss for the six months ended December 31,

2024 was approximately $11.3 million as compared to the net loss of $19.1 million for the six months ended December 31, 2023.

decrease of $7.8 million was comprised of decreases in research and development expenses of $8.7 million, offset by increased selling,

general and administrative expenses of approximately $409,000 and a decrease in other income, net of approximately $395,000.

Total operating expenses for the six months ended

December 31, 2024 were approximately $11.4 million as compared to $19.7 million for the six months ended December 31, 2023.

decrease of approximately $8.3 million was comprised of decreased research and development expenses of approximately $8.7 million primarily

due to the completion of clinical trials in the prior fiscal year, offset by increased selling, general and administrative expenses of

approximately $409,000.

Research and Development Expenses

Research and development expenses were approximately

$6.7 million and $15.3 million for the six months ended December 31, 2024 and 2023, respectively.

The $8.7 million net decline was primarily

attributed to the completion of the clinical studies in the prior fiscal year and comprised of a net decrease in direct study costs of

approximately $4.6 million, and decreases in related expenses such as the clinical team payroll of $1.4 million, reflecting the reduction

in force in December 2023, and consultants expenses of $1.9 million, reflecting a declining use of consultants and a reduction in the

use of regulatory and other consultants totaling approximately $440,000 as the clinical studies completed in the prior fiscal year, a

decrease in Chemistry, Manufacturing and Controls (“CMC”) and new drug discovery totaling approximately $179,000, and a decrease

in travel & conferences of approximately $93,000 and publications of approximately $93,000.

The decrease in clinical studies of approximately

$4.6 million represented the net decrease in clinical trial studies expense due the completion of the clinical trials in the prior fiscal

year offset by the planning and development of the two new clinical studies PD and LC.

The table below summarizes the expense amounts

for the six months ended December 31, 2024 and 2023 by study:

Six Months Ended

December 31, 2024

December 31, 2023

Current Studies

Sunrise PD Phase 2

Long Covid Program, net of $325,000 reimbursement

Investigator-Initiated studies

Completed Studies

Ascites BIV201 Phase 2b

AD mild to moderate pivotal Phase 3

Investigator-Initiated studies

Other studies in development/canceled

$ (8,649,499 )

Selling, General and Administrative Expenses

Selling, general and administrative expenses were approximately $4.6

million and $4.2 million for the six months ended December 31, 2024 and 2023, respectively.

The net increase of approximately $409,000

was primarily attributed to the net increase in other consultancy fees of approximately $540,000, and other increases in audit and accounting

fees of approximately $61,000, legal fees of $376,000, insurance and office expense of approximately $30,000 and $21,000, respectively;

offset by declines in the executive team’s compensation totaling approximately $266,000, director compensation expense of approximately

$138,000, investor relations of approximately $139,000, conference & meetings and website development totaling approximately $36,000

and $29,000, respectively, and shareholders’ meetings and filing fees totaling approximately $12,000.

Other Income and Expense

Other income, net was approximately $150,000 compared to approximately

$545,000 for the six months ended December 31, 2024 and 2023, respectively.

The net decrease in other income, net of approximately $395,000

is comprised of a change in fair value of the related derivative liabilities of approximately $1.7 million, and a reduction in interest

income of approximately $204,000.

This was offset by a reduction in interest expense of approximately $1.5 million due to the notes payable

being paid in full on December 1, 2024.

Capital Resources and Liquidity

As of September 30, 2024, the Company had working

capital of approximately $13.3 million, cash and cash equivalents totaling approximately $20.0 million, stockholders’ equity of

approximately $14.1 million, and an accumulated deficit of approximately $338.7 million.

As of December 31, 2024, the Company had working capital

of approximately $23.2 million, cash and cash equivalents totaling approximately $24.4 million, stockholders’ equity of approximately

$23.9 million, and an accumulated deficit of approximately $345.9 million.

The Company used net cash in operations totaling approximately

$3.6 million and net cash provided by financing activities was approximately $241,000 comprised of net proceeds from capital raise activities

of $2.3 million offset by the payment of $2.5 million of the Company’s notes payable.

$12.2 million and net cash provided by financing activities was approximately $12.7 million comprised of net proceeds from the capital

raise activities of $15.7 million and proceeds from exercise of warrants of $2.9 million offset by the payment of $5.0 million of the

Company’s notes payable and payment of $850,000 loan premium.

The Company has not generated any revenue and no revenues

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Controlled Equity Offering

During the three months ended September 30, 2024,

the Company sold approximately 2,143 shares of its Common Stock under its Controlled Equity Offering Sales Agreement with Cantor Fitzgerald

During the six months ended December 31, 2024, the

Company sold approximately 2,143 shares of its Common Stock under its Controlled Equity Offering Sales Agreement with Cantor Fitzgerald

& Co for total net proceeds of approximately $6,400 after 3% commissions and offering costs totaling approximately $200.

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Registered Direct Offerings

On September 25, 2024, the Company closed a best

efforts public offering (the “September 2024 Offering”) of 1,360,800 shares of its common stock, par value $0.0001 per share,

pre-funded warrants (the “September Pre-funded Warrants”) to purchase 600,000 shares of Common Stock, and warrants to purchase

up to 1,960,800 shares of Common Stock (the “September Common Warrants”) at a combined public offering price of $1.53 per

Share, or September Pre-funded Warrant, and the associated September Common Warrant.

265,000 September Pre-funded Warrants were exercised

in the three months ended September 30, 2024 and reflected on the condensed statement of changes in stockholders’ equity as a component

On September 25, 2024, the Company closed a best efforts

public offering (the “September 2024 Offering”) of 1,360,800 shares of its common stock, par value $0.0001 per share, pre-funded

warrants (the “September Pre-funded Warrants”) to purchase 600,000 shares of Common Stock, and warrants to purchase up to

1,960,800 shares of Common Stock (the “September Common Warrants”) at a combined public offering price of $1.53 per share,

or September Pre-funded Warrant, and the associated September Common Warrant.

265,000 September Pre-funded Warrants were exercised in

the three months ended September 30, 2024 and reflected on the condensed statement of changes in stockholders’ equity as a component

of proceeds from issuance of common stock.

The September Common Warrants have an exercise price

of $1.53 per share and are immediately exercisable upon issuance and will expire on the fifth anniversary date of the original issuance

of $1.53 per share and were immediately exercisable upon issuance and will expire on the fifth anniversary date of the original issuance

The gross proceeds to the Company from the September 2024 Offering were approximately $3.0 million, before deducting placement

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during a five-year period commencing 180 days from September 25, 2024.

In October 2024, the

Company closed three registered direct offerings totaling 8,256,000 shares of its common stock, par value $0.0001 per share, and two

concurrent private placements of warrants to purchase up to 8,256,000 shares of Common Stock (the “October Common Warrants”)

priced at-the-market under Nasdaq rules at prices ranging from $1.50 to $2.83 per share (the “October Offerings”) .

The October Common Warrants have exercise prices ranging from $1.37 to $2.83 per share and are exercisable beginning six months following

In October 2024, the Company closed three registered

direct offerings totaling 8,256,000 shares of its common stock, par value $0.0001 per share, and two concurrent private placements of

warrants to purchase up to 7,110,000 shares of Common Stock (the “October Common Warrants”) priced at-the-market under Nasdaq

rules at prices ranging from $1.50 to $2.83 per share (the “October Offerings”) .

October Common Warrants have exercise prices ranging from $1.37 to $2.12 per share and are exercisable beginning six months following

issuance and will expire on the fifth anniversary date of the original issuance dates.

The gross proceeds to the Company from

the October Offerings totaled approximately $15.9 million, before deducting placement agent fees and offering expenses of approximately

$2.8 million.

The gross proceeds to the Company from the

October Offerings totaled approximately $15.9 million, before deducting placement agent fees and offering expenses of approximately $2.5

Additionally, upon closing of the October Offerings the Company issued placement agent warrants (the “October Placement

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Critical Accounting Policies and Estimates

For the three-month

period ended September 30, 2024, the Company added a Grant Program accounting policy that is disclosed in the Significant Accounting

Policies section of the 10-Q.

There were no other 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, 2024.

For the six-month period ended December 31, 2024,

the Company added a Grant Program accounting policy that is disclosed in the Significant Accounting Policies section of this Form 10-Q.

There were no other 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, 2024.

New Accounting Pronouncements

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis