BIOVIE INC. 10-K

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 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. Overview We are a clinical-stage company developing innovative drug therapies for the treatment of neurological and neurodegenerative disorders and advanced liver disease. Neurodegenerative Disease Programs The Company acquired the biopharmaceutical assets of NeurMedix, a privately held clinical-stage pharmaceutical company and a related party in June 2021. The acquired assets included bezisterim. Bezisterim, the approved generic name for 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 could, if approved by the FDA, represent an entirely new medical approach to treating these devastating conditions affecting an estimated 6 million Americans suffering from AD, 1 million Americans suffering from PD, and approximately 20 million adults in the US suffering from Long COVID, with millions more affected worldwide. With respect to the mechanism of action, we believe bezisterim inhibits activation of inflammatory ERK and NFκB (including interactions with TNF signaling and other relevant inflammatory pathways) that lead to neuroinflammation and insulin resistance. By binding to ERK and selectively modulating NFκB activation and TNF-α production without interfering with their homeostatic functions (e.g., insulin signaling and neuron growth and survival), we believe that bezisterim may offer clinical improvements in several disease indications, including PD, AD and long COVID. 40 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 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. The Company recently conducted a Phase 2b clinical trial of bezisterim as a potential first-line therapy for patients with newly diagnosed PD. The SUNRISE-PD trial was designed to evaluate the safety and efficacy of bezisterim on motor and non-motor symptoms in patients with PD who have not been treated with carbidopa/levodopa. The trial was a multicenter, randomized, double-blind, placebo-controlled trial with a hybrid decentralized design and lasted 20 weeks from initial screening through safety follow-up for each participant. The trial commenced in April 2025and completed enrollment in December 2025. In August 2026, the Company announced topline results of the trial. The trial successfully met prespecified endpoints and achieved its objectives, with topline results showing that bezisterim improved blood based inflammatory markers of disease, along with a broad range of biological markers associated with overall cellular health and nerve cell damage. Participants treated with bezisterim experienced greater improvements than those receiving placebo across a series of clinical outcome measures of daily living, motor symptoms, and nonmotor symptoms. We intend to use these results to inform the design of a potentially pivotal Phase 3 registrational trial of bezisterim in PD. The previous Phase 2 study of bezisterim (NE3107) for the treatment of PD (NCT05083260) that we 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. Long COVID Program 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, generally three months or more. Common symptoms include lingering loss of smell and taste, extreme fatigue, and “brain fog,” though persistent cardiovascular and respiratory problems, muscle weakness, and neurologic issues have also been documented. 41 In April 2024, the Company was awarded a clinical trial grant of $13.1 million from the DOW, awarded through the Peer Reviewed Medical Research Program of the Congressionally Directed Medical Research Programs. In August 2024, the U.S. Army Medical Research and Development Command, OHRO approved the Company’s plan to evaluate bezisterim for the treatment of neurological symptoms that are associated with long COVID and the FDA authorized our IND application for bezisterim allowing the Company to study a novel, anti-inflammatory approach for the treatment of the debilitating neurocognitive symptoms associated with long COVID. The Phase 2 ADDRESS-LC study is a randomized (1:1), placebo-controlled, multicenter trial evaluating the efficacy, safety and tolerability of bezisterim in adult participants with long COVID who have cognitive impairment sequelae and fatigue. The trial commenced in May 2025 and completed enrollment in May 2026. The Company currently expects to report topline results in late summer 2026. As of June 30, 2026, the total cost incurred was approximately $12.9 million and as of August 7, 2026 the total cost reimbursed was $12.9 million. Grant reimbursements recognized for the corresponding research and development expenses in the accompanying statements of operations totaled approximately $7.6 million and $5.3 million for the years ended June 30, 2026 and 2025, respectively. Alzheimer’s Disease In AD, BioVie has conducted both Phase 2 and Phase 3 trials. Preliminary data from these trials suggest improvements in cognition and biomarkers, supporting further trials to evaluate its potential as a therapy for the six million Americans living with AD. Results of a Phase 2 investigator-initiated trial (NCT05227820) showing bezisterim treated patients experienced improved cognition and biomarker levels were presented at the Clinical Trials on Alzheimer’s Disease (CTAD) annual conference in December 2022. On November 29, 2023, the Company announced the analysis of its unblinded, topline efficacy data from its Phase 3 clinical trial (NCT04669028) of bezisterim in the treatment of mild to moderate AD. The study had co-primary endpoints measuring cognitive impairment 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 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 cGCP 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 OSI for potential 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 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 decline; these same patients experienced an advantage in age deceleration vs. placebo as measured by DNA epigenetic changes. 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 collected at week 30 (end of study). Additional DNA methylation data continues to be collected and analyzed. 42 Liver Cirrhosis Program In liver disease, our investigational drug candidate BIV201 (continuous infusion terlipressin) was granted both FDA Fast Track status and FDA Orphan Drug designation for ascites (due to all etiologies except cancer), which is the most common complication related to liver cirrhosis and represents a significant unmet medical need. BIV201 is being evaluated as a treatment option for patients suffering from life-threatening complications of liver cirrhosis and ascites due to hepatitis, nonalcoholic steatohepatitis, and alcoholism. U.S. treatment costs for liver cirrhosis, including ascites and other complications, are estimated at more than $5 billion annually and have an estimated 50% mortality rate within 6 to 12 months. The FDA has never approved any drug specifically for treating ascites. After receiving guidance from the FDA regarding the design of Phase 3 clinical testing of BIV201 for the treatment of patients with cirrhosis and ascites, the Company is currently finalizing the protocol design for the Phase 3 study of BIV201 with a focus on demonstrating clinical benefit through a composite primary endpoint of complications and disease progression in patients with cirrhosis and ascites who have recently recovered from AKI. Ascites is a common complication of advanced liver cirrhosis involving the accumulation of large volumes of fluid in the abdomen, often exceeding five liters, due to liver and kidney dysfunction. BIV201 is administered in a continuous infusion of terlipressin as a patent-pending liquid formulation with patents issued in the U.S., China, Japan, Chile, Australia, Mexico and India to date. Terlipressin is used in over 40 countries to treat complications of liver cirrhosis, including Type 1 hepatorenal syndrome and bleeding esophageal varices, and was approved in the U.S. in 2022 to improve kidney function in adults with hepatorenal syndrome experiencing a rapid reduction in kidney function; it is not currently approved in Japan. Results of Operations Comparison of the Year Ended June 30, 2026 to the Year Ended June 30, 2025 Net loss The net loss for the year ended June 30, 2026, was approximately $22.1 million as compared to the net loss of $17.5 million for the year ended June 30, 2025. The net increase of $4.6 million was primarily attributed to increase in operating expenses of $4.6 million, offset by a net increase in other income, net of approximately $55,000. Total operating expenses for the years ended June 30, 2026 and 2025 were approximately $22.7 million and $18.1 million, respectively. The net increase of approximately $4.6 million was comprised of net increased R&D expenses of approximately $4.7 million attributed to the increased activities in both the Sunrise PD Phase 2 study and LC Phase 2 study offset by a decrease in general and administrative expenses of approximately $59,000. Research and Development Expenses R&D expenses were approximately $14.0 million for the year ended June 30, 2026, an increase of approximately $4.7 million from $9.3 million for the year ended June 30, 2025. The net increase in R&D expenses was attributed to increases in direct study costs of approximately $4.5 million; clinical team compensation of approximately $686,000 that was primarily comprised of stock based compensation and year-end bonuses; and abstracts, publications and conferences of approximately $141,000, offset by approximately $646,000 in Chemistry, Manufacturing and Controls and Discovery expenses that were curtailed. 43 As the table indicates below, the increase in clinical studies of approximately $4.5 million is attributed to increased activity in both our clinical studies. Sunrise PD Phase 2 study costs increased by approximately $4.0 million as the study completed enrollment in January 2026 and the study close process began with the last patient treated in May 2026. Long Covid Phase 2 study activities increased and the net increase in cost, net of reimbursements totaled approximately $709,000. The study reached full enrollment in May 2026 and the study is currently nearing completion. As of June 30, 2026, the total cost incurred since inception was approximately $12.9 million and as of August 5, 2026 the total cost reimbursed was $12.9 million. Year ended Year ended Increase June 30, 2026 June 30, 2025 (Decrease) Sunrise PD Phase 2 $ 7,300,000 $ 3,343,000 $ 3,957,000 Liver Program Phase 3 18,000 173,000 (155,000 ) Long COVID Phase 2 8,474,000 5,465,000 3,009,000 Long COVID Phase 2 - reimbursements (7,620,000 ) (5,320,000 ) (2,300,000 ) $ 8,172,000 $ 3,661,000 $ 4,511,000 General and Administrative Expenses General and administrative expenses were approximately $8.5 million and $8.6 million for the year ended June 30, 2026 and 2025, respectively. The net decrease of approximately $59,000 was primarily attributed to increases in the executive team and directors compensation of approximately $344,000 and $179,000, respectively, primarily comprised of stock based compensation and year end bonus; legal expenses of approximately $30,000; and insurance premiums of approximately $80,000, offset by a decrease in consultancy fees of approximately $606,000 and a decline in other expenses such as meetings and travel totaling $8,000, investor and public relations expense of approximately $9,000, shareholder meeting and filing fees of approximately $30,000 and accounting and auditing fees of approximately $29,000. Other Income and Expense Other income, net was approximately $579,000 for the year ended June 30, 2026 compared to other income, net of $524,000, for the year ended June 30, 2025. The net increase in other income of approximately $55,000 was comprised of a reduction in interest expense of approximately $314,000 due to the payoff of the notes payable on December 1, 2024, offset by decline in interest income of approximately $256,000. Capital Resources and Liquidity As of June 30, 2026, the Company had working capital of approximately $9.8 million, cash and cash equivalents of approximately $9.0 million, stockholders’ equity of approximately $10.3 million, and an accumulated deficit of approximately $374.3 million. Additionally, the Company had a net loss of approximately $22.1 million and net cash used in operating activities of approximately $19.0 million during the year ended June 30, 2026. 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. 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. 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 included elsewhere in this report do not include any adjustments that might result from the outcome of this uncertainty. 44 Registered Direct Offerings [TO BE UPDATED FOR SUBSEQUENT CLOSE OF CAP RAISE] On August 11, 2025, the Company closed an underwritten public offering of (i) 5,620,000 units (the “Units”), with each Unit consisting of one share of common stock and one warrant (the “Warrants”) and (ii) 380,000 pre-funded units (the “Pre-Funded Units”), with each Pre-Funded Unit consisting of one pre-funded warrant and one Warrant. The underwriter also exercised its over-allotment option in part and purchased an additional 667,300 Warrants. The offering resulted in net proceeds of approximately $10.5 million, after deducting underwriting discounts and commissions and other estimated offering expenses. Each Unit was sold to the public at a price of $2.00 per Unit and each Pre-Funded Unit was sold to the public at a price of $1.9999 per Pre-Funded Unit (which represents the public offering price of each Unit less the $0.0001 per share nominal exercise price for each Pre-Funded Warrant). On August 8, 2025, the Warrants commenced trading on The Nasdaq Capital Market under the symbol “BIVIW.” Each Warrant is immediately exercisable, entitles the holder to purchase one share of common stock at an exercise price of $2.50 per share and expires five years from the date of issuance. Each Pre-Funded Warrant is immediately exercisable, entitles the holder to purchase one share of common stock, and may be exercised at any time until exercised in full. Additionally, upon closing, the Company issued the underwriter warrants to purchase 300,000 shares of Common Stock exercisable at a per share price of $2.50, which was equal to 125% of the public offering price per share. The underwriter’s Warrants are exercisable during a five-year period commencing 180 days from August 11, 2025. Off-Balance Sheet Arrangements 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. 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. Critical Accounting Policies and Estimates Research and Development Research and development expenses and corresponding accrued expenses, consist primarily of costs associated with the preclinical and/or clinical trials of drug candidates, compensation and other expenses for research and development, personnel, supplies and development materials, costs for consultants and related contract research costs. Stock-based Compensation The Company follows the provision of Accounting Standards Codification (“ASC”) Topic 718 - Stock Compensation (“ASC 718”), which requires the measurement of compensation expense for all share-based payment awards made to employees and non-employee director, including employee stock options. Share-based compensation expense is based on the grant date fair value estimated in accordance with the provisions of ASC 718 and is generally recognized as an expense over the requisite service period, net of forfeitures which are recorded as they occur. ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Not applicable. ITEM 8. FINANCIAL STATEMENTS 45 Our financial information required to be filed hereunder are indexed under Item 15 of this report and are incorporated herein by reference. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURES Not applicable.