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 Inc. is a clinical-stage company pursuing the discovery and development
of innovative drug therapies to address severe unmet needs in chronic
debilitating diseases. We are currently focused on developing and
commercializing BIV201 (continuous infusion terlipressin), a novel approach to
the treatment of ascites due to chronic liver cirrhosis. Our therapy 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 United States. BIV201's active agent is a potent
vasoconstrictor and has shown efficacy for reducing portal hypertension in
studies 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 March 31, 2021 to the three months ended
March 31, 2020
Net income (loss)
The net loss for the three months ended March 31, 2021 was approximately $3
million as compared to a net loss of $366,000 for the three months ended March
31, 2020. The increase in loss of approximately $2.6 million was primarily due
an increase in operating expenses of $2.3 million, a change in fair value of
derivative liabilities of approximately $367,000, and a decrease in interest
expense of approximately $34,000.
Total operating expenses for the three months ended March 31, 2021 were
approximately $3 million as compared to $699,000 for the three months ended
March 31, 2020. The net increase of approximately $2.3 was primarily consisted
of increases in research and development expenses of $344,000 and selling,
general and administrative expenses of $2 million related to stock-based
compensation and due diligence services related to the Company's purchase of
NeurMedix's assets. (See Note 9 Subsequent events in the accompanying condensed
financial statements.)
Research and Development Expenses
Research and development expenses were approximately $697,000 for the three
months ended March 31, 2021, a net increase of approximately $344,000, from
$353,000 for the three months ended March 31, 2020. Research and development
activities increased in preparation and launch of the Phase 2b clinical trials.
Selling, General and Administrative Expenses
Selling, general and administrative expenses were approximately $2.2 million for
the three months ended March 31, 2021 compared to $289,000 for the three months
ended March 31, 2020. The net increase of approximately $1.9 million was
primarily attributed to legal and consulting expenses totaling approximately $1
million for due diligence services in the acquisition of NeurMedix assets, and
approximately $804,000 related to stock-based compensation for stock options
granted to certain management and the Company's key consultants and amortization
for stock options granted to directors.
Comparison of the nine months ended March 31, 2021 to the nine months ended
March 31, 2020
Net income (loss)
The net income for the nine months ended March 31, 2021 was $1.3 million as
compared to a net income of $2.5 million for the nine months ended March 31,
2020. The decrease in net income of $1.2 million was due to a decrease in
interest expense of $3 million related to the embedded derivative liability
warrants offset by operating expenses increases totaling $4.3 million.
Total operating expenses for the nine months ended March 31, 2021 were
approximately $6.5 million compared to $2.1 million for the nine months ended
March 31, 2020. The net increase of approximately $4.4 million was primarily
consisted of increases in research and development expenses of $757,000 and
selling, general and administrative expenses of $3.6 million attributed to
stock-based compensation expenses for due diligence related to the purchase of
the NeurMedix assets.
Research and Development Expenses
Research and development expenses were approximately $1.8 million for the nine
months ended March 31, 2021, an increase of $757,000, from $1 million for the
nine months ended March 31, 2020. Research and development activities increased
in preparation and launch of Phase 2b clinical trials.
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Selling, General and Administrative Expenses
Selling, general and administrative expenses were approximately $4.5 million for
the nine months ended March 31, 2021, a net increase of approximately $3.6
million, from $941,000 for the nine months ended March 31, 2020. The net
increase primarily consisted of stock-based compensation of $2.3 million related
to stock options granted to the Board of Directors, management and certain key
consultants to the Company and amortization for stock options granted to
directors; and legal and consulting expenses totaling approximately $1 million
for due diligence services in the acquisition of NeurMedix assets as described
below.
Capital Resources and Liquidity
As of March 31, 2021, the Company had working capital of approximately $10
million and cash of $11.4 million and, stockholders' equity was approximately
$11.4 million, and its accumulated deficit was approximately $93.4 million. In
addition, the Company has not generated any revenues 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 effort, as well as continuing to secure additional financing.
As described in Note 9 Subsequent Events in the accompany condensed interim
financial statements, on April 27, 2021, the Company entered into an Asset
Purchase Agreement which was amended by Amendment No. 1 to the Asset Purchase
Agreement on May 9, 2021, (collectively "the Amended Asset Purchase Agreement")
with Neurmedix to acquire certain assets from NeurMedix and assume certain
liabilities of NeurMedix, in exchange for the consideration of cash and common
stock of the Company. At the close of the transaction, the Company will issue
8,361,308 shares of the Company's common stock and make a cash payment equal to
the aggregate amount of NeurMedix's direct and documented cash expenditures to
advance certain clinical programs from March 1, 2021 through the closing, which
cash payment is estimated to be approximately $3.0 million. The cash
requirements for expenses such as the due diligence, legal fees and the fairness
opinion and including the $3 million cash consideration totals approximately $
7.4 million and will be due at the close of the transaction, currently
anticipated in the last quarter of our fiscal year. These expenditures will have
a significant impact on the Company's cash position and the funding of its
future operations over the next 12 months, raising substantial doubt about its
ability to meet its financial cash flow requirements. Subject to the terms and
conditions of the Amended Asset Purchase Agreement following the closing, BioVie
will also be obligated to deliver contingent consideration to NeurMedix (or its
successor) consisting of (i) a cash payment of approximately $7.3 million,
subject to a pivotal clinical trial for NE3107 meeting its primary endpoint(s)
and BioVie having successfully raised at least $50 million in new capital, and
(ii) contingent stock consideration to NeurMedix (or its successor) consisting
of up to 18.0 million shares of BioVie's common stock, with 4.5 million shares
issuable upon the achievement of each of the four milestones set forth in the
Purchase Agreement, subject to a cap limiting the issuance of shares if such
issuance would result in the beneficial ownership of NeurMedix and its
affiliates exceeding 87.5% of BioVie's issued and outstanding common stock.
The future viability of the Company is largely dependent upon its ability to
raise additional capital to finance its operations. 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 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.
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.
Although management continues to pursue these 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.
The emergence of widespread health emergencies or pandemics of the coronavirus
("Covid-19"), may lead to continued regional quarantines, business shutdowns,
labor shortages, disruptions to supply chains, and overall economic instability,
including the duration and spread of the outbreak and restrictions and the
impact of Covid-19 on the financial markets and the overall economy, all of
which are highly uncertain and cannot be predicted. If the financial markets
and/or the overall economy are impacted for an extended period, the Company's
ability to raise funds may be materially adversely affected.
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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 nine-month period ended March 31, 2021, 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, 2020.
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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