BIVI - BioVie Day And The Path Of Least Resistance To Approval In Alzheimer's

2023-04-10 06:00:47 ET

Summary

• Seven months separate BioVie investors from Phase 3 results in Alzheimer’s disease.
• During BioVie Day, the company announced six upcoming Phase 3 trials in Alzheimer’s, Parkinson’s, MCI and ascites.
• Good Phase 2 results in Parkinson’s have allowed enlargement of Phase 3 trials to treatment-naïve Parkinson’s patients.
• Epigenetics data may lead to partnering; a recent bylaw modification allows the board to meet on short notice.
• BioVie’s $250 million market cap may see a significant upside in case of good news.

Thesis

Since my first coverage of BioVie ten months ago, the company has gone through a series of de-risking positive events, with successful reporting in Alzheimer's, Parkinson's and refractory ascites.

A potentially pivotal event in the company's history, which in the case of Biogen ( BIIB ) added $10 billion to its market cap, should take place in seven months, as BioVie's Phase 3 trial in Alzheimer's will report topline data in October 2023. BioVie's aim is to stabilize cognition or do better than that. I believe its open label results are a good indicator of its chances of success.

On March 28, 2023, BioVie Day allowed insight in the company's enlarged universe and its journey ahead. Next to the fully-enrolled ongoing Phase 3 trial, the company will launch six upcoming Phase 3 trials starting from Q2 2023 to Q1 2024.

The company's ambition to get to the Alzheimer's/MCI market first with a potentially cognition-stabilizing/improving and disease-modifying drug is outspoken. Both an accelerated approval or a full approval in MCI resulting from a successful readout in MCI that should end at the end of Q1 2024 could give way to such an outcome.

NE3107's good results from the Phase 2 study in PD, including the fact that patients remained in ON-state a night after their levodopa had stopped working, have allowed enlargement of two upcoming Phase 3 studies from patients on levodopa to treatment-naïve patients.

I believe NE3107's results on epigenetics are undervalued by investors and analysts. These best results seen so far appear legitimate, and the company has announced on several occasions that it has been in partnership talks with other companies in this respect.

NE3107's mechanism of action in neurodegenerative diseases is further understood and will be included in an upcoming publication. I see remarkable similarities with the MoA of drug candidates of two other companies who have reported results in Alzheimer's indicative of disease-reversal or -stabilization. Both may have an anti-inflammatory component, and a dual mechanism of action.

The company's candidate solution for refractory ascites is low-hanging fruit, which investors systematically seem to ignore in light of NE3107's potential.

Seven Months Separate Investors From Phase 3 Readout In Alzheimer's Disease

October 2023 should see topline data for BioVie's randomized placebo-controlled Phase 3 trial in Alzheimer's disease, which was extended to 400 patients since October 2022. I liked this company's science ten months ago for NE3107's dual mechanism of action of selective inhibition of TNF/NF-kB and ERK, acting on inflammation and insulin resistance as drivers of neurodegenerative diseases. The positive results that came out of the Phase 2 open label study, on cognition and biomarkers, proved NE3107's efficacy.

On the Adas-Cog12 rating scale, these results are a 0.9 point cognitive improvement in all patients and a 2.2 cognitive improvement in MCI/mild Alzheimer's patients. Being able to improve or even stabilize patients' cognitive deficit is the penultimate goal of AD therapy, certainly when backed by MRI scans and biomarkers such as TNF, glutathione and p-tau.

NE3107's similarity with drug candidates of other companies in the race to cognition-stabilizing drugs gives these results credence. The correlation between cognitive benefit and reduction of TNF resulting from the open label Phase 2 trial underscores that the drug does what it should. Both INmune Bio's ( INMB ) XPro and BioVie's NE3107 share the similarity that they selectively inhibit TNF. Both companies refer to meta-analyses in millions of patients that show that traditional TNF inhibitors, though not being brain-penetrant, lead to significantly reduced chances of developing Alzheimer's disease. Additionally, XPro also acts on insulin resistance.

NE3107, originally having been developed as an anti-diabetes drug, is a brain-penetrant insulin sensitizer. Alzheimer's is often referred to as Diabetes type 3. It is that dual mechanism, acting both on TNF and insulin resistance, that sets NE3107 apart as a drug candidate.

The Phase 2 open label data in Alzheimer's disease led to what I believe to be the best results ever reported in an open label study in Alzheimer's, and the rich dataset that came with that may be a good indicator for potential success.

BioVie's Updated Timeline: Six Upcoming Phase 3 Trials

During BioVie Day, BioVie announced a total of six upcoming Phase 3 trials. This includes a second Phase 3 trial in Alzheimer's disease, two upcoming Phase 3 trials in mild cognitive impairment or MCI, two upcoming Phase 3 trials in Parkinson's disease, and one Phase 3 trial in refractory ascites. Three of these should end in 2024, and the other three in the first half of 2025.

The trials in Alzheimer's and Parkinson's also feature open label extension studies that should allow further insight in long-term disease-modifying effects.

As I understand it, patients with MCI have less ongoing decay and may be prone to a more drastic improvement of cognition than late-stage patients suffering from Alzheimer's disease. The best results could be seen here.

I believe this pipeline remodeling, together with a clear Social Impact Partners program which has BioVie's Sarah Hoit taking front-stage , shows confidence in NE3107's potential.

NE3107 had its rapid onset proven in the 28-day Parkinson's trial. As inflammation is an underlying factor to many neurodegenerative diseases, rapid onset makes sense, and is also seen with INmune Bio's XPro and Cassava's simufilam also have a rapid onset. INmune has expressly stated that it sees XPro work in a plethora of neurodegenerative diseases.

The Path Of Least Resistance To Approval In Alzheimer's

During BioVie day, BioVie has expressed its intention to see NE3107 in Alzheimer's disease approved first.

We expect to start a second Phase 3 trial [in Alzheimer's disease] for global registration. And under our default plan, we would file for registration globally in 2025 and then hopefully launch some time in 2026. But as you also know, in certain indications where there are few therapeutic options, the FDA has been known to often give conditional approval based upon the strong results from a single Phase 3 trial. And that's why we have these question marks here. There is a possibility - we are not planning on it, it's not our default plan, but it's a possible scenario - that if we get the kinds of strong results that we hope to see in October, there is a possibility that we may engage the FDA in a conversation about conditional approval in the US, based upon what we find.

And what I'm going to reveal now is some of the additional trials that we will launch based upon the strong findings that we have from our Phase 2 in Alzheimer's. We will launch, hopefully by June of this year, what we call Radiance-MCI which is a study that will look in MCI or mild cognitive impairment patients, a trial that will run for six months extendable to a year, and with this trial, it gives us greater flexibility from a regulatory standpoint and how we can bring this drug to market. If we get positive results from this Phase 3, and if we get positive results from this MCI trial, it is possible that we can go and file for full approval in 2024 for MCI based upon the results of these trials. And in addition to that, we will launch a second MCI Radiance trial in the early part of next year for global registration. So this opens up greater flexibility, gives the company greater optionality on how we bring Alzheimer's treatment to the world.

This gives the following scenarios for the neurodegenerative indications BioVie is currently targeting:

• Conditional approval for Alzheimer's, in the US, after the Phase 3 readout in October 2023;
• Full approval for MCI, in the US, after the Phase 3 readout in MCI in Q2 2024;
• Full approval for AD after a second global Phase 3 readout in Q1 2025;
• Full approval for Parkinson's after a first Phase 3 readout in Q4 2024 and second Phase 3 readout in Q3 2025.

For reference, Cassava expects its two Phase 3 trials to be enrolled by the end of 2023. These are respectively 52 and 76 weeks long.

NE3107 drug has always proven to be safe. Though the company is cautious about it, I believe that cognition-stabilizing results may have a good chance of receiving conditional approval in light of earlier conditional approvals in Alzheimer's of Aduhelm and Leqembi. Both of these amyloid-targeting therapies are now on the market, are not reimbursed, and come with five significant downsides:

• they harm patients, causing brain-swelling and brain-bleeding;
• they do not cure the disease; at best - unproven for Aduhelm - they modestly slow down cognitive decline on average;
• their time of onset is only months after the initial treatment;
• they require patients to come into hospital to receive an intravenous infusion;
• CMS does not provide coverage to anti-amyloid based therapies which have only been approved on a conditional basis.

A safe and good working anti-inflammatory drug could solve all these problems, and that is what I notice with BioVie's NE3107, INmune Bio's XPro and Cassava Sciences' simufilam. All share the same characteristic that:

• they have a perfect safety profile so far;
• all these companies aim to stabilize cognition;
• they have very fast onset;
• they do not require patients to come into hospital for burdensome treatment;
• they may see coverage from CMS, even if approved on a conditional basis.

BioVie's Phase 2 data from last summer apparently gave its trial enrollment a boost. All patients are now fully enrolled, and BioVie should already be able to look at blinded data in about +300 patients. In the small Phase 2 trial in Parkinson's, that blinded data turned out to be a good indicator of success.

The broadening from Parkinson's patients on levodopa to treatment-naïve Parkinson's patients

NE3107's results in combination with levodopa showed patients to perform significantly better than when they were on levodopa alone. Additionally, NE3107 has a beneficial effect on Parkinson's disease which is unrelated to levodopa. Some patients in fact remained in the 'ON' state a night after the effects of standard of care had worn off. Levodopa's effects or 'ON-time' only last some hours , which is why patients need to take the drug three times a day. Patients could not be measured during the night, so the trial could not assess how NE3107's effect developed during the night. The fact that some patients still had an effect the next morning showed a distinct effect from NE3107 alone, that lasted much longer than levodopa itself.

This data confirmed what had been seen in monkeys, namely that NE3107 administered alone is as pro-motoric as levodopa. In that preclinical study, NE3107 preserved twice as many dopaminergic neurons as those treated with levodopa alone, which is in line with the recent publication of a causal link between TNF-NFkB signaling and the limitation of cell survival of dopaminergic neurons.

BioVie will launch two Phase 3 trials in Parkinson's, the first one around August 2023 and the second one in the first quarter of 2024. Both should take a year to finish.

There may be breakthrough-potential for NE3107 to be first-line therapy instead of levodopa.

And if we are able to develop as such, we'll become the first new therapy for Parkinson's patients since the advent of levodopa over five decades ago.

Starting patients on levodopa far later in their disease progression, if they would need it at all, would be a turnaround in Parkinson's care. If NE3107 would allow stabilization or reversal of the disease, even in a subset of patients, there may not be a need for levodopa for those patients. Besides, I do not see one competing drug with a similar profile in the Parkinson's space at an even remotely similar stage of development.

NE3107's Mechanism Of Action

BioVie is among the few companies that focus on inflammation as key driver of neurodegenerative diseases, including Alzheimer's.

And once we recognized it, we recognized that NE3107 plays a central role in Alzheimer's, because it's been known that A[myloid] beta and p-tau are not necessarily the toxic factors that cause the cognitive decline in Alzheimer's. Over the last decade or so, I think the community has grown more accustomed to the fact that A beta and p-tau are inflammatory in nature, but a number of other factors are inflammatory as well, but they all share one common trait.

During BioVie Day, the company revealed some further understanding of NE3107's pathways. Those include TLR4 , a pathway which is also being used by Cassava's ( SAVA ) simufilam. Though the latter's science is disputed by some, TLR4 is very much an inflammation-related validated pathway in neurodegenerative diseases including Alzheimer's .

BioVie's science is undisputed, as shown in its ' rationale for an anti-inflammatory insulin sensitizer in a phase 3 Alzheimer's disease trial '. I see BioVie's NE3107 as more de-risked than Cassava Sciences' simufilam for lack of certainty about simufilam's action on homeostatic functions of immune cells. NE3107 preserves homeostatic functions of immune cells, which I believe to be the key to long-term benefits here, and which may include the risk that benefits may wear off over time. The malfunctioning of the brain's immune cells - microglia , astrocytes , oligodendrocytes , … - are key to the development of neurodegenerative diseases.

NE3107's best-in-class results on epigenetics and partnering possibilities

BioVie's Phase 2 open-label study was led by Dr. Jordan Sheldon, co-author of ' Regenesis: the brain doctor's guide to health '. That trial design bore similarities with many ideas expressed in that book, which give credence to the results. One of these ideas was that a good aging treatment may lead to good results on an markers of DNA methylation. Inflammation plays a key role in DNA methylation, resulting in the inability to decipher the information contained in DNA.

Treatment of Alzheimer's patients with NE3107 result ed in a statistically significant reduction of 3.3 years over 3 months on the Horvath DNA methylation SkinBlood clock. 19 out of the 22 patients saw a reduction.

That result is the best ever reported. Epigenetic clocks made world news in 2019 when one treatment was seen to reverse patients' biological age by 2.2 years over one year's time. In 2021, it was shown that psoriasis patients on traditional TNF inhibitors had better DNA methylation scores than partial responders.

Though the market may take some time to digest this information, the scientific community has been suggesting and researching effects of anti-diabetic treatments on epigenetics. That scientific research comes, for example, from the angle of anti-diabetic agents such as metformin, or GLP-1 agonists such as exenatide/Bydureon or semaglutide/Ozempic. NE3107 fits in perfectly here, as a drug candidate that had originally been developed as an anti-diabetic treatment, but features a dual mechanism of action working on inflammation as well.

BioVie has mentioned on several occasions that its data on DNA methylation have been well received by the scientific community, and that it several partnering discussions have taken place. On March 12, 2023, BioVie made a modification to its bylaws allowing to board to call a special board meeting allowing the board to meet within at least 4 hours if the if the Chairman or CEO consider that necessary or advisable.

In the past, these SEC filings have revealed where I believed the company was heading - cfr. my September 2022 coverage . BioVie's CEO had stated in August 2023 that the company was substantially undervalued , which turned out to be correct. He repeated on BioVie Day that he believed the company may create substantial shareholder value.

Continuous terlipressin for refractory ascites: the low-hanging fruit

BIV201 or continuous terlipressin, which has received fast-track and orphan drug designation, recently confirmed its de-risked properties. As a reminder, refractory ascites or a permanent fluid buildup in the abdomen is the result end-stage liver disease, a fatal condition. BioVie had been running a Phase 2 trial consisting of two 28-day cycles since June 2021.

On March 13, 2023, BioVie announced that its Phase 2 trial had reached statistical significance even prior to full enrollment - which had suffered from Covid-related delays. BioVie therefore chose to engage in talks with the FDA to start a Phase 3 trial in refractory ascites.

The trial did not see unexpected serious adverse events, and continuous terlipressin has a good safety profile. The following statistically significant results were furthermore reported:

• treatment with BIV201 plus standard of care resulted in a 34% reduction in ascites fluid over 28 days;
• ascites fluid in patients on placebo increased by 3.1%;
• treatment over patients who completed the treatment experienced a 53% reduction in ascites fluid;
• that reduction was significantly different from those treated with standard of care.

There were no unexpected serious adverse events and overall safety was consistent with the patient population.

Full results should be published at an upcoming conference.

Considerations on Valuation

During BioVie Day, BioVie gave more detail about its sales potential in the different indications it is targeting. This includes the following estimates of commercial potential, without including MCI.

That is roughly $34 billion in realistic sales potential, with a possible launch fairly soon. If this could be realized, a 9x sales multiple common for biotech would lead to $306 billion. The current market cap is less than 0.1% of that.

The levels of market penetration are estimated at a very moderate level, with 15% for Alzheimer's disease and 10% for Parkinson's and at a reasonably cost of $30,000 per year. It is needless to consider that, if NE3107 would get to market first in both indications, with potential off-label prescriptions, the sales potential could be higher.

With BioVie already in, or moving into, only Phase 3 trials after substantial de-risking of its key assets over the past nine months, I agree with the company that substantial shareholder value can be created here.

As to commercialization, BioVie stressed that all options are open, but that partnering is certainly an option as an opportunity to very rapidly bring NE3107 to market.

Practically, after having come off its recent highs, with so much money-making potential and de-risking having taken place, I don't see BioVie heading into its pivotal data readout at a market cap of only $250 million.

Financials

The company's cash situation is now more secured. BioVie has used the past months' opportunity to raise cash. The last-communicated cash position for the year 2022 is $44 million. A SEC filing of April 7, 2023 mentions that the company has raised $48.8 million through its ATM facility, i.e. $10.4 million in addition to what was reported at the end of December 2022. Taking into account a quarterly cash burn of about $6.4 million, BioVie's cash should be about $48 million now, largely enough to continue operations at least through its October 2023 topline data readout in Alzheimer's.

Risks

Risks here are similar to those mentioned in my previous coverage , including non-enrichment of trials and inclusion of patients who may be far-advanced.

Given the upcoming trials, BioVie may also need to engage in discussions with regulators on its trial design, which may cause delays or clinical holds.

I have mentioned some other competitors above. I do believe that combination therapies are the way forward, and competition should not necessarily exclude the potential for success.

Of note, Terren Peizer has recently resigned from his function of chairman of the board.

Conclusion

Seven months separate BioVie investors from potentially a life-changing event for the company, namely the topline readout of its Phase 3 trial. Blinded 6-month data in more than three quarters of patients enrolled should already be in, and may give the company an indication as to how results could be.

NE3107, a dual-mechanism drug candidate for neurodegenerative diseases Alzheimer's, MCI and Parkinson's, is consistently found to be safe. Results so far show strong efficacy, independent of use of standard of care, with fast onset, in both Alzheimer's and Parkinson's disease.

During BioVie Day, the company has announced a substantial enlargement of its pipeline with studies in mild cognitive impairment. BioVie will launch a total of six Phase 3 trials over the coming quarters, additional to the one in Alzheimer's which should soon take an end. Many of these studies have open label extensions which should allow to see whether the drug is not just merely symptomatic. The drug's mechanism of action fully underscores its disease-modifying potential.

BioVie's goal is to go for NE3107's approval for marketing in the US, either conditionally if the expected strong Phase 3 results from October 2023 could support it, or fully on the basis of two Phase 3 trials.

In neurodegenerative diseases, I see de-risking not only from the past month's successful reporting by the company, but also because I see validation of NE3107's targets by other companies' drug candidates.

In light of roughly $34 billion in realistic sales potential and a current market cap of about $250 million, I tend to agree with BioVie's CEO when he considered on BioVie Day - as he did correctly 7 months ago when the share price was still around $2.85 - that the company is undervalued and may create substantial shareholder value.

For all the above, I continue to rate the company as a Strong Buy.

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