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. Neurodegenerative Disease Program 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 Council, and the World Health Organization International Nonproprietary Names 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. In neurodegenerative disease, bezisterim (NE3107) inhibits activation of inflammatory ERK and nuclear factor kappa-light-chain-enhancer of activated B cells (“NFκB”) (including interactions with TNF signaling and other relevant inflammatory pathways) that lead to neuroinflammation and insulin resistance. Bezisterim (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. Chronic 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. Parkinson’s Disease Parkinson’s disease (“PD”) is driven in large part by neuroinflammation and activation of brain microglia, leading to increased proinflammatory cytokines (particularly TNF). Multiple daily administrations of levodopa (converted to dopamine in the brain) is the current standard of care treatment for this movement disorder. However, levodopa effectiveness diminishes over time necessitating increased dosage and prolonged daily administration leads to side effects of uncontrolled movements called levodopa-induced dyskinesia, commonly referred to as LID, which is exacerbated by high dose levodopa. Although levodopa provides symptomatic benefit, it does not slow PD progression. 22 Table of Contents 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. To extend this Phase 2 data in progressed patients, the Company has designed a new Phase 2 study of bezisterim (NE3107) as a potential first line therapy to treat patients with new onset PD. In July 2024, the Company submitted the new protocol and received a response from the FDA which permitted the Company to proceed with the study. The trial is anticipated to commence during the first calendar quarter of 2025. 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 of the Congressionally Directed Medical Research Programs. In August 2024, U.S. Army Medical Research and Development Command, Office of Human Research Oversight (“OHRO”) approved the Company’s plan to evaluate bezisterim (NE3107) for the treatment of neurological symptoms that are associated with long COVID. and the FDA authorized our Investigational New Drug (“IND”) 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. 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 FDA has not approved any drug to treat refractory ascites. 23 Table of Contents Comparison of the three months ended December 31, 2024 to the three months ended December 31, 2023 Net loss 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. The net 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. The net 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 Three Months Ended Increase December 31, 2024 December 31, 2023 (Decrease) Current Studies Sunrise PD Phase 2 $ 1,161,342 $ - $ 1,161,342 Long Covid Program 2,255,898 - 2,255,898 Investigator-Initiated studies 2,159 - 2,159 $ 3,419,399 $ - $ 3,419,399 Completed Studies Ascites BIV201 Phase 2b $ 48,562 $ 132,633 $ (84,071 ) AD mild to moderate pivotal Phase 3 26,091 2,685,413 (2,659,322 ) PD Phase 2 - 308,705 (308,705 ) Investigator-Initiated studies - 14,913 (14,913 ) Other studies in development/canceled - 2,625 (2,625 ) $ 74,653 $ 3,144,289 $ (3,069,636 ) 24 Table of Contents Selling, General and Administrative Expenses Selling, general and administrative expenses were 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 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 Net loss 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. The net 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. The net 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. 25 Table of Contents 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 Six Months Ended Increase December 31, 2024 December 31, 2023 (Decrease) Current Studies Sunrise PD Phase 2 $ 1,677,534 $ 20,000 $ 1,657,534 Long Covid Program, net of $325,000 reimbursement 2,401,028 - 2,401,028 Investigator-Initiated studies 12,738 - 12,738 $ 4,091,300 $ 20,000 $ 4,071,300 Completed Studies Ascites BIV201 Phase 2b $ (11,117 ) $ 517,006 $ (528,123 ) AD mild to moderate pivotal Phase 3 44,124 6,139,494 (6,095,370 ) PD Phase 2 - 485,033 (485,033 ) Investigator-Initiated studies - 87,058 (87,058 ) Other studies in development/canceled 18,253 1,472,168 (1,453,915 ) $ 51,260 $ 8,700,759 $ (8,649,499 ) 26 Table of Contents 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. 27 Table of Contents Capital Resources and Liquidity 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 $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 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. Controlled Equity Offering 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. On September 25, 2024, the Company filed a prospectus supplement to suspend sales under the Controlled Equity Offering Sales Agreement. 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 of proceeds from issuance of common stock. The September Common Warrants have an exercise price of $1.53 per share and were immediately exercisable upon issuance and will expire on the fifth anniversary date of the original issuance date. The gross proceeds to the Company from the September 2024 Offering were approximately $3.0 million, before deducting placement agent fees and offering expenses of approximately $747,000. Additionally, upon closing, the Company issued the placement agent warrants (“September Placement Agent’s Warrants”) to purchase 98,040 shares of Common Stock exercisable at a per share price of $1.91, which was equal to 125% of the public offering price per share. The September Placement Agent’s Warrants are exercisable 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 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”) . The 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 $2.5 million. Additionally, upon closing of the October Offerings the Company issued placement agent warrants (the “October Placement Agent’s Warrants”) to purchase 412,800 shares of Common Stock in the aggregate exercisable at a per share price ranging from $1.88 to $3.54, which was equal to 125% of the offering price per share in the applicable October Offering. The October Placement Agent’s Warrants are exercisable during a five-year period commencing 180 days from each of the respective closing dates of the October Offerings. Critical Accounting Policies and Estimates 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. 28 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.