BIVI - BioVie: Not Investible For Its Alzheimer's Program

2023-06-23 16:49:28 ET

Summary

• BioVie will produce some lateral data from its phase 3 trial tomorrow.
• I was not overly impressed by its Alzheimer's program; the ascites program seemed more promising.
• The company is precariously low on cash. I will avoid for the time being.

I covered BioVie ( BIVI ) in February, discussing its data drop from December, but I ended up with a not-too-positive feeling about this stock, primarily because for an Alzheimer’s player with data, they were in a poor cash situation. Somehow that did not add up. Anyway, they are announcing phase 3 data - well, an abstract highlighting baseline data from the trial - of this Alzheimer’s program at a Diabetes conference. That’s in two days. So it is time to look into this company once again.

BioVie's pipeline includes two molecules: NE3107 and BIV201. NE3107 is being developed for Alzheimer's and Parkinson's diseases, while BIV201 is being developed for refractory ascites. Inflammation is the common thread that runs between these various diseases. BioVie's approach is based on the anti-inflammatory effects of their molecules, particularly NE3107, which can cross the blood-brain barrier. NE3107 is a synthetic analogue of a metabolite of the adrenal hormone DHEA. While synthetic versions of DHEA are sometimes used in treating various syndromes, the connection between DHEA usage and benefits remains inconclusive due to limited research. However, NE3107 has shown central anti-inflammatory effects, and BioVie aims to further validate these effects through clinical trials.

In a Phase 2 biomarker trial for Alzheimer's, patients treated with NE3107 for three months experienced cognitive decline reversal, reduced production of phospho-tau (a protein associated with neurodegeneration), and improvements in brain regions. In a Phase 2 trial for Parkinson's, NE3107 showed superior improvement in UPDRS part 3 score compared to levodopa alone.

A few weeks after my February article, BioVie presented more data from this phase 2 trial. These results indicate that a significant number of patients treated with BioVie's drug, NE3107, experienced an improved "ON state" in the morning after withholding their standard Parkinson's medications for at least 8 hours, compared to patients on standard of care (SOC) plus placebo. The "ON state" refers to a period when patients have better control over their motor symptoms, leading to improved movement and stability.

The additional analysis of the data showed that out of 20 NE3107-treated patients, six experienced a morning "ON state" without levodopa (a commonly used medication for PD) overnight and prior to their morning medication, whereas none of the placebo-treated patients achieved this state. These findings are considered clinically meaningful for PD patients.

Following the favorable Phase 2 results, the company is preparing to launch Phase 3 potential pivotal trials to further develop NE3107 for Parkinson's Disease.

On a side note, BIVI’s second asset BIV201 also had some interesting news in March. Their phase 2b trial was paused and patient enrollment halted after generating "compelling" data from its first 15 patients. Refractory ascites has no approved therapies and is a common complication of advanced liver cirrhosis, where fluid accumulates in the peritoneal cavity. Patients have a low probability of survival. Key data from this trial were:

According to the company, during 28 days after the treatment initiation, BIV201 plus SOC led to a 34% reduction in ascites fluid compared to 28 days before the treatment (p=0.0046).

Meanwhile, those who received SOC only were found to have a mean increase of 3.1% in ascites fluid. Those who were treated with BIV201 showed a 53% reduction.

The company stock doubled on this data over a period of a few weeks, but has come down to the $5 zone again.

Coming back to Alzheimer’s, the company, as I noted earlier, is going to present some very lateral data in a day’s time, as a poster at the 83rd Scientific Sessions of the American Diabetes Association, on June 24.

The poster , Metabolic Dysregulation in Probable Alzheimer’s Disease, will discuss “the role of insulin resistance and neuroinflammation in the risk of mild cognitive impairment and Alzheimer’s Disease, and details baseline metabolic and inflammation characteristics from the Phase 3 study, including data on the regulation of glycemia.”

I have been asked in the TPT forum whether this poster presentation will have a catalytic effect on the stock. I doubt it will. Firstly, if it were to have such an effect, I think a buildup would have been in order. Instead, what we see now can only be described as a “build down.” And second, there’s probably a reason for this low enthusiasm. This poster is not Alzheimer’s data. This is merely some tangential discussion.

This phase 3 trial will be read out in October this year. Last year, the company published the design and plan of this trial, as follows :

Diabetes and other inflammatory diseases increase the risk of Alzheimer’s disease. Insulin controls energy use in both the body and the brain. NE3107 is an oral pharmaceutical that has been shown to decrease inflammation and to improve insulin function in animals and in human subjects. We have designed a Phase III clinical trial to test the safety and activity of NE3107 in 316 elderly adults with Alzheimer’s disease, compared with a placebo capsule. After 30 weeks, assessments will be made to look for benefits in cognition, function and behavior compared with the control group.

The two co-primary endpoints of this trial are change in ADAS Cog12, and change in ADCS CGIC. These are standard Alzheimer’s disease endpoints, especially the first one, which is widely used to measure 12 items, including memory, attention, language, and orientation through a series of standardized tasks and questions. Thus, although the molecule has a novel mechanism of action, the trial is a standard Alzheimer’s trial, which I appreciate.

In the earlier phase 2 trial, ADAS COG 12 was a secondary endpoint whose data was as follows:

82% of 17 MCI/mild AD patients improved with a mean ADAS-Cog12 change of -2.6 points (p=0.046) equating to a mean percentage change of -25.1% (p=0.0026). 61% of all 23 patients improved with a mean change of -1.04 (p=ns).

Thus, for the broad population of 23 patients, the improvement in ADAS COG 12 was not significant, and in the mild cognitive impairment subgroup, the improvement was significant, but barely. It is, therefore, difficult to make predictions. Note that the population in the phase 3 trial has mild to moderate AD, while the phase 2 trial had a population with “mild cognitive impairment to mild dementia.” Alzheimer’s trials can be very tricky.

Financials

BIVI has a market cap of $214mn and a cash balance of $44mn if you include “investments in US treasury bills” and “prepaids and other assets.” Cash and cash equivalents is $31mn. They spent $11mn in R&D and $2.5mn in G&A last quarter. The R&D figures have nearly doubled since 2022. At that rate, they have cash for just two more quarters including the current one.

The problem with that scenario is that their Alzheimer's trial reads out in October, which is just after they exhaust their cash. There has been no news that they are planning to raise funds non-dilutively. I do not expect the AD trial to be a roaring success, so I expect the reaction after the data drop to be subdued. There are certain situations, fairly common, where the trial data may not be black or white, but grey. Stocks react differently to such situations. However, given their lack of cash, I do not expect a bullish stock in October unless their data is very clearly positive - and I have low expectation for that.

All told, I believe October has a high probability of a stock price drop.

Bottom Line

I have said this before, that an Alzheimer’s company with positive phase 2 and upcoming phase 3 should not have a market cap and cash balance like this. Clearly, the market seems to have low enthusiasm for this company. Being a conservative investor, I do not like the cash risk associated with this company. The phase 2 data is also not overwhelming. I actually find BIV201 to be on more solid ground, however we will need to pass through the Alzheimer’s data readout before we can get clarity on how BIV201 will look like in the future. I will, therefore, keep watching from the sidelines.

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