This report contains forward-looking statements within the meaning of Section
21E of the Securities Exchange Act of 1934, and Section 27A of the Securities
Act of 1933. 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 our; research and development activities,
distributor channel; compliance with regulatory impositions; and 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.
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. 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 that attempt to advise
interested parties of the risks, uncertainties and other factors that may affect
our business.
All statements other than statements of historical fact are statements that
could be deemed forward-looking statements. The Company assumes no obligation
and does not intend to update these forward-looking statements, except as
required by law. When used in this report, the terms "BioVie", "Company", "we",
"our", and "us" refer to BioVie Inc.
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 document.
The Private Securities Litigation Reform Act of 1995 provides a safe harbor for
forward-looking statements. In order to comply with the terms of the safe
harbor, the Company notes that in addition to the description of historical
facts contained herein, this report contains certain forward-looking statements
that involve risks and uncertainties as detailed herein and from time to time in
the Company's other filings with the Securities and Exchange Commission and
elsewhere. Such statements are based on management's current expectations and
are subject to a number of factors and uncertainties, which could cause actual
results to differ materially from those, described in the forward-looking
statements. These factors include, among others: (a) the Company's fluctuations
in sales, expenses and operating results; (b) risks associated with
international operations; (c) regulatory, competitive and contractual risks; (d)
product development risks; (e) the ability to achieve strategic initiatives,
including but not limited to the ability to achieve sales growth across the
business segments through a combination of enhanced sales force, new products,
and customer service; and (f) pending litigation.
Management's Discussion
BioVie is a clinical-stage company pursuing the discovery, development, and
commercialization of innovative drug therapies targeting life-threatening
complications of liver cirrhosis. Our initial disease target is ascites, a
serious medical condition affecting about 100,000 Americans and many times more
worldwide. Our therapeutic drug candidate BIV201 is based on a drug that is
approved in about 40 countries to treat related complications of liver cirrhosis
(part of the same disease pathway as ascites), but not yet available in the US.
The active agent in BIV201, terlipressin, is a potent vasoconstrictor which is
in use for various medical conditions around the world. The goal is for BIV201
to interrupt the ascites disease pathway, thereby halting the cycle of
accelerating fluid generation in ascites patients.
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Comparison of the three months ended December 31, 2019 to the three months ended
December 31, 2018
Net income (loss)
The net income for the three months ended December 31, 2019 was $6.7 million as
compared to a net loss of $501,000 for the three months ended December 31, 2018.
The increase in net income (loss) of $7.2 million was due to a decrease in fair
value of derivative liabilities of approximately $7.4 million offset by an
increase in operating expenses of approximately $210,000. The change in the fair
value of derivative liabilities was due to a decrease in the Company's stock
price.
Total operating expenses for the three months ended December 31, 2019 were
approximately $710,000 compared to $501,000 for the three months ended December
31, 2018. The net increase of approximately $209,000 was primarily due to
activities related to the Phase 2a clinical trials wrap up and preparation of
the protocols for the Phase 2b/3 trials during the three months ended December
31, 2019 and an increase in selling, general and administrative expenses.
Research and Development Expenses
Research and development expenses were approximately $347,000 for the three
months ended December 31, 2019, an increase of $141,000, from $206,000 for the
three months ended December 31, 2018. The increase was primarily attributed to
the wrapping up of the phase 2a clinical trials and readying for the next phase
of trials including the preparing the protocols and manufacturing of the
prefilled syringe which may be used in the next phase of trials subject to FDA
clearance.
Selling, General and Administrative Expenses
Selling, general and administrative expenses were approximately $307,000 for the
three months ended December 31, 2019, a net increase of approximately $69,000,
from $238,000 for the three months ended December 31, 2018. The net increase was
primarily attributed to an increase in the insurance premiums of approximately
$73,000 for increased coverage.
Comparison of the six months ended December 31, 2019 to the six months ended
December 31, 2018
Net income (loss)
The net income for the six months ended December 31, 2019 was $2.8 million as
compared to a net loss of $940,000 for the six months ended December 31, 2018.
The increase in net income of $3.8 million was due to a decrease in fair value
of derivative liabilities of $7.8 million offset by an increase in operating
expenses of $424,000 and increase in interest expense of $3.5 million related to
the embedded derivative liability warrants. The change in the fair value of
derivative liabilities was due to a decrease in the Company's stock price.
Total operating expenses for the six months ended December 31, 2019 were
approximately $1.4 million compared to $992,000 for the six months ended
December 31, 2018. The net increase of approximately $424,000 was primarily due
to activities related to the Phase 2a clinical trials wrap up and preparation of
the protocols for the Phase 2b/3 trials during the six months ended December 31,
2019 and an increase in selling, general and administrative expenses.
Research and Development Expenses
Research and development expenses were approximately $688,000 for the six months
ended December 31, 2019, an increase of $287,000, from $401,000 for the six
months ended December 31, 2018. The increase was primarily attributed to the
wrapping up of the phase 2a clinical trials and readying for the next phase of
trials including the preparing the protocols and manufacturing of the prefilled
syringe which may be used in the next phase of trials subject to FDA clearance.
Selling, General and Administrative Expenses
Selling, general and administrative expenses were approximately $614,000 for the
six months ended December 31, 2019, a net increase of approximately $137,000,
from $477,000 for the six months ended December 31, 2018. The net increase was
primarily attributed to an increase in the insurance premiums of approximately
$88,000 for increased coverage, increased payroll of approximately $30,000 due
the hiring of a half time chief financial officer that joined in October 2018
and other expenses of approximately $19,000 related to activities of the
Company's capital raise and up listing to the Nasdaq.
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Capital Resources and Liquidity
At December 31, 2019 the Company had approximately $3,000 in cash and had
completed its Phase 2a clinical trial of the BIV201 therapy. On September 24,
2019, the Company entered into a Securities Purchase Agreement with its
controlling stockholder regarding bridge financing (the "Bridge Financing") in
the form of up to $2.0 million in convertible debt and warrants, of which
$750,000 has been drawn to date. Amounts borrowed under the Bridge Financing
must be repaid with the proceeds of our potential public offering of equity
securities referred to below. The availability of additional draws under the
Bridge Financing is under discussion with Acuitas in light of delays in the
timing of the potential public offering. As further discussed below, the Company
is pursuing various options to raise further financing to continue the testing
and development of its product. If the Company is not successful in raising
additional funds it may reduce its monthly spend and potentially delay the
implementation of the larger scale Phase 2b Clinical trial until sufficient
funding is secured. On January 3, 2020, Acuitas provided the Company a
short-term interest free advance of $20,000. The short-term advance along with
the $30,000 advances in December 2019 were rolled into the partial draw number 2
of $250,000 received on January 14, 2020.
As of December 31, 2019, the Company had an accumulated deficit of approximately
$21.5 million and as a development stage enterprise, the Company expects
substantial losses in future periods. The accompanying interim financial
statements were prepared assuming the Company will continue as a going concern,
which contemplates the realization of assets and the satisfaction of liabilities
in the normal course of business. The Company's future operations are dependent
on the success of the Company's ongoing development and commercialization
effort, as well as continuing to secure additional financing.
We cannot assure you that our drug candidate will be developed, work, or receive
regulatory approval; that we will ever earn revenues sufficient to support our
operations or that we will ever be profitable. Furthermore, since we have no
committed source of sufficient financing, we cannot assure you that we will be
able to raise money as and when we need it to continue our operations. If we
cannot raise funds as and when we need them, we may be required to severely
curtail, or even to cease, our operations.
Additionally, in April 2019, to facilitate our planned up listing to the NASDAQ
Stock Market and related potential future issuances and sales of our equity
securities for ordinary corporate finance and general corporate purposes and as
recommended by our Board of Directors ("Board"), our stockholders approved an
amendment to our Articles of Incorporation to effect a reverse split of our
outstanding Class A common stock in the range of 50:1 to 200:1, as determined by
our Board. On November 22, 2019, the Company effected a reverse stock split of
125 common stock for every 1 common stock. All share amounts have been updated
to reflect the reverse stock split.
Management intends to attempt to secure additional required funding primarily
through additional equity or debt financings. We may also seek to secure
required funding through sales or out-licensing of intellectual property assets,
seeking partnerships with other pharmaceutical companies or third parties to
co-develop and fund research and development efforts, or similar
transactions. However, there can be no assurance that we will be able to obtain
required funding. If we are unsuccessful in securing funding from any of these
sources, we will defer, reduce or eliminate certain planned expenditures in our
research protocols. If we do not have sufficient funds to continue operations,
we could be required to seek bankruptcy protection or other alternatives that
could result in our stockholders losing some or all of their investment in us.
These circumstances raise substantial doubt on our ability to continue as a
going concern. These financial statements do not include any adjustments
relating to the recoverability and classification of recorded asset amounts or
amounts and classification of liabilities that might result from this
uncertainty.
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Off-Balance Sheet Arrangements
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. 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.
Critical Accounting Policies and Estimates
For the six-month period ended December 31, 2019, 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, 2019.
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.
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