ITEM 1A. RISK FACTORS
Our business, financial condition, operating results
and prospects are subject to the following risks. Additional risks and uncertainties not presently foreseeable to us may also impair our
business operations. If any of the following risks or the risks described elsewhere in this report actually occur, our business, financial
condition or operating results could be materially adversely affected. In such case, the trading price of our Class A Common Stock, par
value $0.0001 (“Common Stock”) could decline, and our stockholders may lose all or part of their investment.
Risk Factor Summary
Our business operations are subject to numerous
risks, factors and uncertainties, including those outside of our control, which could cause our actual results to be harmed, including
risks regarding the following:
Risks Relating to Our Business and Industry
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· We may not be able to attract and retain highly skilled personnel.
Risks Relating to Our Intellectual Property
· Intellectual property rights do not necessarily address all potential threats.
Risks Relating to Our Common Stock
· The market price and trading volume of our Common Stock may be volatile.
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Risks Relating to Our Business and Industry
We rely and will continue to rely on third
parties to conduct our clinical trials. If these third parties do not successfully carry out their contractual duties or meet expected
deadlines or do not successfully perform and comply with regulatory requirements, we may not be able to obtain regulatory approval of
or commercialize our product candidates.
We depend, and will continue
to depend, on third parties, including, but not limited to, contract research organizations (“CROs”), clinical trial sites
and clinical trial principal investigators, contract laboratories, independent institutional review boards (“IRBs”), manufacturers,
suppliers, and other third parties to conduct our clinical trials, including those for our drug candidates bezisterim (NE3107) and BIV201.
We rely heavily on these third parties over the course of our clinical trials, and we control only certain aspects of their activities.
Nevertheless, we retain ultimate responsibility for ensuring that each of our studies is conducted in accordance with the protocol and
applicable legal, regulatory, and scientific standards and regulations, and our reliance on third parties does not relieve us of our regulatory
responsibilities. We and these third parties are required to comply with cGCPs, which are regulations and guidelines enforced by the FDA
and comparable foreign regulatory authorities for the conduct of clinical trials on product candidates in clinical development. Regulatory
authorities enforce cGCPs through periodic inspections and for-cause inspections of clinical trial principal investigators and trial sites.
If, due to the failure of either us or a third party, a clinical trial fails to comply with applicable cGCPs, FDA’s IND requirements,
other applicable regulatory requirements, or requirements set forth in the applicable IRB-approved protocol, we may be required to conduct
additional clinical trials to support our marketing applications, which would delay the regulatory approval process. For example, our
drug product candidate bezisterim (NE3107) was cleared by FDA for use in a Phase 3, randomized, double blind, placebo controlled, parallel
group, multicenter study in subjects who have mild to moderate AD. Enrollment in that trial began in August 2021, with a planned primary
completion in late 2022/early 2023. On November 29, 2023, we announced topline efficacy data from its Phase 3 clinical trial (NCT04669028)
of bezisterim (NE3107) in the treatment of mild to moderate AD. Upon trial completion, as we began the process of analyzing the trial
data, we found significant deviations from the 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 us to exclude all patients from these sites. We subsequently notified
FDA’s OSI of such significant deviations from study protocol, the suspected improprieties, and the study sites involved. The identification
of significant deviations from study protocol and numerous GCP violations at multiple study sites raised questions regarding the validity
and robustness of data from these study sites. The unplanned exclusion of so many patients left the trial underpowered for its primary
endpoints. However, based on the remaining dataset from those other sites determined to be in compliance with the protocol and GCP’s,
a preliminary signal of efficacy was detected.
Although we design the
clinical trials for our product candidates, our CROs are tasked with facilitating and monitoring these trials. As a result, many aspects
of our clinical development programs, including site and investigator selection, and the conduct, timing, and monitoring of the study,
is outside our direct control, either partially or in whole. Our reliance on third parties to conduct clinical trials also results in
less direct control over the collection, management, and quality of data developed through clinical trials than would be the case if we
were relying entirely upon our own employees. Communicating with third parties can also be challenging, potentially leading to mistakes
as well as difficulties in coordinating activities. Our business may be impacted if any of these third parties violates applicable federal,
state, or foreign laws and/or regulations, including but not limited to FDA’s IND regulations, cGCPs, fraud and abuse or false claims
laws, healthcare privacy and data security laws, or provide us or government agencies with inaccurate, misleading, or incomplete data.
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Successful development of biopharmaceuticals
is highly uncertain and is dependent on numerous factors, many of which are beyond our control.
Product candidates that appear promising in the
early phases of development may fail to reach the market for several reasons. Pre-clinical study results may show the product candidate
to be less effective than desired (e.g., the study failed to meet its primary endpoints) or to have harmful or problematic side effects.
Product candidates may fail to receive the necessary regulatory approvals or may be delayed in receiving such approvals. Among other things,
such delays may be caused by slow enrollment in clinical studies; length of time to achieve study endpoints; additional time requirements
for data analysis; IND and later new drug application preparation; discussions with the FDA; an FDA request for additional pre-clinical
or clinical data; unexpected safety or manufacturing issues; manufacturing costs; pricing or reimbursement issues; clinical sites deviating
from the trial protocol, committing scientific misconduct, or other violations of regulatory requirements - which can render data from
those sites unusable in support of regulatory approval; or other factors that make the product not economical. Proprietary rights of others
and their competing products and technologies may also prevent the product from being commercialized.
Success in pre-clinical and early clinical studies
does not ensure that large-scale clinical studies will be successful. Clinical results are frequently susceptible to varying interpretations
that may delay, limit or prevent regulatory approvals. The length of time necessary to complete clinical studies and to submit an application
for marketing approval for a final decision by a regulatory authority varies significantly from one product to the next, and may be difficult
to predict. There can be no assurance that any of our products will develop successfully, and the failure to develop our products will
have a materially adverse effect on our business and will cause you to lose all of your investment.
The concentration of our assets within a
certain financial institution could have a material adverse effect on its business, financial condition and results of operations.
As of June 30, 2026, we had cash deposited in
a certain financial institution in excess of federally insured levels. We regularly monitor the financial stability of these financial
institutions and believes that it is not exposed to any significant credit risk in cash and cash equivalents. Bank failures, events involving
limited liquidity, defaults, non-performance, or other adverse developments that affect financial institutions, or concerns or rumors
about such events, may lead to liquidity constraints. In 2023, certain U.S. government banking regulators took steps to intervene in the
operations of certain financial institutions due to liquidity concerns, which caused general heightened uncertainties in financial markets.
While previous bank failures have not had a material direct impact on our operations, if further liquidity and financial stability concerns
arise with respect to banks and financial institutions, either nationally or in specific regions, our ability to access cash or enter
into new financing arrangements may be threatened, which could have a material adverse effect on its business, financial condition and
results of operations.
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We are currently subject to securities class
action litigation and may be subject to similar or other litigation in the future, all of which will require significant management time
and attention, result in significant legal expenses and may result in unfavorable outcomes, which may have a material adverse effect on
our business, operating results and financial condition, and negatively affect the price of our Common Stock.
We are, and may in the future become, subject
to various legal proceedings and claims that arise in or outside the ordinary course of business. For example, on January 19, 2024, a
purported securities class action complaint, captioned Eric Olmstead v. BioVie Inc. et al., No. 3:24-cv-00035, was filed in the
U.S. District Court for the District of Nevada, naming us and certain of our officers as defendants. On February 22, 2024, a second, related
putative securities class action was filed in the same court asserting similar claims against the same defendants, captioned Way v.
BioVie Inc. et al., No. 2:24-cv-00361. On April 15, 2024, the court consolidated these two actions under the caption In re BioVie
Inc. Securities Litigation, No. 3:24-cv-00035 (the "Securities Class Action"), appointed the lead plaintiff, and approved
selection of the lead counsel. On June 21, 2024, the lead plaintiff filed an amended complaint, alleging that the defendants made material
misrepresentations and/or omissions of material fact relating to our business, operations, compliance, and prospects, including information
related to the NM101 Phase 3 study and trial of bezisterim (NE3107) in mild to moderate probable AD, in violation of Sections 10(b) and
20(a) of the Exchange Act, and Rule 10b-5 promulgated thereunder. The class action is on behalf of purchasers of our securities during
the period from December 7, 2022 through November 28, 2023 and seeks unspecified monetary damages on behalf of the putative class and
an award of costs and expenses, including attorney’s fees. The defendants filed a motion to dismiss the amended complaint on August
21, 2024, and on March 27, 2025, the court denied that motion. The parties are now engaged in fact discovery. On February 13, 2026, the
plaintiffs filed a motion for class certification and a motion for leave to file a second amended complaint. Defendants opposed the motion
for leave to amend. On June 5, 2026, the court granted the plaintiffs’ motion for leave to amend, and the same day the plaintiffs
filed their Second Amended Complaint. On June 15, 2026, the defendants filed a Notice of Non-Opposition and Reservation of Rights in response
to the motion for class certification, and on June 18, 2026, the Court granted the plaintiffs’ motion and certified the class subject
to the defendants’ reservation of rights. The defendants answered the Second Amended Complaint on June 22, 2026. The Company believes
that the claims are without merit and intends to defend vigorously against them, but there can be no assurances as to the outcome.
Three shareholder derivative lawsuits piggy-backing
on the Securities Class Action were filed in the United States District Court for the District of Nevada, allegedly on behalf of the Company,
by three putative stockholders: Andrew Hulm on December 30, 2024; William Settel on April 28, 2025 and Cline Wilkerson on September 11,
2025, (collectively the “Related Derivative Lawsuits”). Each Related Derivative Lawsuit names the same current and former
officers and directors as defendants and alleges essentially the same claims: that the defendants breached their fiduciary duties by causing
or failing to prevent the securities violations alleged in the Securities Class Action, and related claims for unjust enrichment, waste
of corporate assets, gross mismanagement, and abuse of control. On September 29, 2025, at the request of the parties, the court consolidated
all three Related Derivative Lawsuits under the caption In re BioVie Inc. Derivative Litigation, Case No. 3:24-cv-0602-CSD (the “Consolidated
Derivative Action”). On January 27, 2026, at the request of the parties, the court stayed the Consolidated Derivative Action pending
resolution of a summary judgment motion by defendants in the Securities Class Action. The Company believes that the claims are without
merit and intends to defend vigorously against them, but there can be no assurances as to the outcome.
It is possible that additional lawsuits will be
filed, or allegations received from stockholders, with respect to these same or other matters and also naming us and/or our officers and
directors as defendants. Such lawsuits and any other related lawsuits are subject to inherent uncertainties, and the actual defense and
disposition costs will depend upon many unknown factors. The outcome of such lawsuits is necessarily uncertain. We could be forced to
expend significant resources in the defense of the pending lawsuits and any additional lawsuits, and we may not prevail. In addition,
we may incur substantial legal fees and costs in connection with such lawsuits. We currently are not able to estimate the possible cost
to us from these matters, as the pending lawsuits are currently at an early stage, and we cannot be certain how long it may take to resolve
the pending lawsuits or the possible amount of any damages that we may be required to pay. Monitoring, initiating and defending against
legal actions is time-consuming for our management, is likely to be expensive and may detract from our ability to fully focus our internal
resources on our business activities. We could be forced to expend significant resources in the settlement or defense of the pending lawsuit
and any potential future lawsuits, and we may not prevail in such lawsuits.
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Although we have insurance coverage that we believe
applies to these actions, the coverage is subject to a $2 million deductible. That means that we are responsible for the first $2 million
of loss arising from these actions, which includes both defense costs and damages, before any insurance coverage applies. Furthermore,
our insurance coverage may be insufficient, and our assets may be insufficient to cover any amounts that exceed our insurance coverage,
and we may have to pay damage awards or otherwise may enter into a settlement arrangement in connection with such claims. A decision adverse
to our interests in the pending lawsuits, or in similar or related litigation, could result in the payment of substantial damages, or
possibly fines, and could have a material adverse effect on our business, our stock price, cash flow, results of operations and financial
condition. We have not established any reserve for any potential liability relating to the pending lawsuits or any potential future lawsuits.
Any such payments or settlement arrangements in current or future litigation could have a material adverse effect on our business, operating
results or financial condition. In addition, such lawsuits may make it more difficult to finance our operations and affect our ability
to make payments for damages.
We have no products approved for commercial
sale, have never generated any revenues and may never achieve revenues or profitability, which could cause us to cease operations.
We have no products approved for commercial sale
and, to date, we have not generated any revenue. Our ability to generate revenue depends heavily on (a) successful completion of one or
more development programs demonstrating in human clinical trials that BIV201 and bezisterim (NE3107), our product candidates, are safe
and effective; (b) our ability to seek and obtain regulatory approvals, including, without limitation, with respect to the indications
we are seeking; (c) successful commercialization of our product candidates; and (d) market acceptance of our products. There are no assurances
that we will achieve any of the foregoing objectives. Furthermore, our product candidates are in the development stage, and have not been
fully evaluated in human clinical trials. If we do not successfully develop and commercialize our product candidates we will not achieve
revenues or profitability in the foreseeable future, if at all. If we are unable to generate revenues or achieve profitability, we may
be unable to continue our operations.
We are a development stage company with
a limited operating history, making it difficult for you to evaluate our business and your investment.
Although the Company was incorporated on April
10, 2013, we are a development stage biopharmaceutical company with potential therapies that have not been fully evaluated in clinical
trials, and our operations are subject to all of the risks inherent in the establishment of a new business enterprise, including but not
limited to the absence of an operating history, the lack of commercialized products, insufficient capital, expected substantial and continual
losses for the foreseeable future, limited experience in dealing with regulatory issues, the lack of manufacturing experience and limited
marketing experience, possible reliance on third parties for the development and commercialization of our proposed products, a competitive
environment characterized by numerous, well-established and well capitalized competitors and reliance on key personnel.
Since inception, we have not established any revenues
or operations that would provide financial stability in the long term, and there can be no assurance that we will realize our plans on
our projected timetable in order to reach sustainable or profitable operations.
Investors are subject to all the risks incident
to the creation and development of a new business and each investor should be prepared to withstand a complete loss of his, her or its
investment. Furthermore, the accompanying financial statements have been prepared assuming that we will continue as a going concern. We
have not emerged from the development stage, and may be unable to raise further equity. These factors raise substantial doubt about our
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.
Because we are subject to these risks, you may
have a difficult time evaluating our business and your investment in the Company. Our ability to become profitable depends primarily on
our ability to develop drugs, to obtain approval for such drugs, and if approved, to successfully commercialize our drugs, our R&D
efforts, including the timing and cost of clinical trials; and our ability to enter into favorable alliances with third-parties who can
provide substantial capabilities in clinical development, regulatory affairs, sales, marketing and distribution.
Even if we successfully develop and market BIV201
and/or bezisterim (NE3107), we may not generate sufficient or sustainable revenue to achieve or sustain profitability, which could cause
us to cease operations and cause you to lose all of your investment.
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If the FDA or comparable foreign regulatory
authorities approve generic versions of any of our product candidates that receive marketing approval, or such authorities do not grant
our products sufficient, or any, periods of exclusivity before approving generic versions of our products, the sales of our products could
be adversely affected.
Once a New Drug Application (“NDA”)
is approved, the product covered thereby becomes a “reference listed drug” (“RLD”), in the FDA’s publication,
“Approved Drug Products with Therapeutic Equivalence Evaluations,” commonly known as the Orange Book. Other manufacturers
may seek approval of generic versions of reference listed drugs through submission of abbreviated new drug applications (“ANDAs”)
in the United States. In support of an ANDA, a generic manufacturer need not conduct clinical trials. Rather, the applicant generally
must show that its product has the same active ingredient(s), dosage form, strength, route of administration and conditions of use or
labeling as the reference listed drug and that the generic version is bioequivalent to the reference listed drug, meaning it is absorbed
in the body at the same rate and to the same extent as the RLD. Generic products may be significantly less costly to bring to market than
the reference listed drug and companies that produce generic products are generally able to offer them at lower prices. Moreover, generic
versions of RLDs are often automatically substituted for the RLD by pharmacies when dispensing a prescription written for the RLD. Thus,
following the introduction of a generic drug, a significant percentage of the sales of any branded product or reference listed drug is
typically lost to the generic product.
The FDA may not approve an ANDA for a generic
product until any applicable period of non-patent exclusivity for the reference listed drug has expired. The Federal Food, Drug and Cosmetic
Act (“FDCA”) provides a period of five years of non-patent exclusivity for a new drug containing a new chemical entity (“NCE”).
An NCE is an active ingredient that has not previously been approved by FDA in any other NDA. Specifically, in cases where such exclusivity
has been granted, an ANDA may not be submitted to the FDA until the expiration of five years unless the submission is accompanied by a
Paragraph IV certification that a patent covering the reference listed drug is either invalid or will not be infringed by the generic
product, in which case the applicant may submit its application four years following approval of the reference listed drug. If an ANDA
is submitted to FDA with a Paragraph IV Certification, the generic applicant must also provide a “Paragraph IV Notification”
to the holder of the NDA for the RLD and to the owner of the listed patent(s) being challenged by the ANDA applicant, providing a detailed
written statement of the basis for the ANDA applicant’s position that the relevant patent(s) is invalid or would not be infringed.
If the patent owner brings a patent infringement lawsuit against the ANDA applicant within 45 days of the Paragraph IV Notification, FDA
approval of the ANDA will be automatically stayed for 30 months, or until 7-1/2 years after the NDA approval if the generic application
was filed between 4 years and 5 years after the NDA approval. Any such stay will be terminated earlier if the court rules that the patent
is invalid or would not be infringed.
Competition that our products may face from generic
versions of our products could materially and adversely impact our future revenue, profitability and cash flows and substantially limit
our ability to obtain a return on the investments we have made in those product candidates.
If we fail to obtain
or maintain Orphan Drug exclusivity for BIV201, we will have to rely on other potential marketing exclusivity, and on our intellectual
property rights, which may reduce the length of time that we can prevent competitors from selling generic versions of BIV201.
We have obtained Orphan Drug Designation for BIV201
(terlipressin) in the U.S. for the treatment of HRS on November 21, 2018 and treatment of ascites due to all etiologies except cancer
on September 8, 2016. Under the Orphan Drug Act, the FDA may designate a product as an Orphan Drug if it is a drug intended to treat a
rare disease or condition, defined, in part, as a patient population of fewer than 200,000 in the U.S. In the European Union (“EU”),
Orphan Drug designation may be granted to drugs intended to treat, diagnose or prevent a life-threatening or chronically debilitating
disease having a prevalence of no more than five in 10,000 people in the EU, and which meet other specified criteria. The company that
first obtains FDA approval for a designated Orphan Drug for the associated rare disease may receive a seven-year period of marketing exclusivity
during which time FDA may not approve another application for the same drug for the same orphan disease or condition. Orphan Drug Exclusivity
does not prevent FDA approval of another application for the same drug for a different disease or condition, or of an application for
a different drug for the same rare disease or condition. Orphan Drug exclusive marketing rights may be lost under several circumstances,
including a later determination by the FDA that the request for designation was materially defective or if the manufacturer is unable
to assure sufficient quantity of the drug. Similar regulations are available in the EU with a ten-year period of market exclusivity.
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Even though BioVie has obtained two Orphan Drug
Designations for its lead product candidate, terlipressin, for treatment of ascites and for treatment of HRS, and may seek other Orphan
Drug Designations for BIV201, and Orphan Drug Designation for other product candidates, there is no assurance that BioVie will be the
first to obtain marketing approval for any particular rare indication. Further, even though BioVie has obtained Orphan Drug Designations
for its lead product candidate, or even if BioVie obtains Orphan Drug Designation for other potential product candidates, such designation
may not effectively protect BioVie from competition because different drugs can be approved for the same condition and the same drug can
be approved for different conditions and potentially used off-label in the Orphan indication. Even after an Orphan Drug is approved, the
FDA can subsequently approve another competing drug with the same active ingredient for the same condition for several reasons, including,
if the FDA concludes that the later drug is clinically superior due to being safer or more effective or because it makes a major contribution
to patient care. Orphan Drug Designation neither shortens the development time or regulatory review time of a drug, nor gives the drug
any advantage in the regulatory review or approval process.
In addition, other companies have received Orphan
Drug designations for terlipressin. Mallinckrodt Hospital Products IP Limited received Orphan Drug designation in 2004 for terlipressin
for the treatment of Hepatorenal Syndrome (HRS). Mallinckrodt has already gained FDA approval for its product, lyophilized terlipressin
acetate for bolus intravenous administration for the treatment of HRS Type 1 in September 2022. PharmaIN Corporation received Orphan Drug
Designation in 2012 for PGC-C12E-terlipressin for treatment of ascites due to all etiologies except cancer. In addition, Ferring Pharmaceuticals
Inc. received Orphan Drug designation in 1986 for terlipressin for the treatment of bleeding esophageal varices. If one of those or any
other company with Orphan Drug Designation for the same drug as ours for the same proposed disease or condition receives FDA approval
and Orphan Drug Exclusivity before our product is approved, approval of our drug(s) for the orphan indication may be blocked for seven
years by the other company’s Orphan Exclusivity and they may obtain a competitive advantage even after the exclusivity period expires
associated with being the first to market.
We will need to raise substantial additional
capital in the future to fund our operations and we may be unable to raise such funds when needed and on acceptable terms, which could
have a materially adverse effect on our business.
Developing biopharmaceutical products, including
conducting pre-clinical studies and clinical trials and establishing manufacturing capabilities, requires substantial funding. Additional
financing will be required to fund the R&D of our product candidates. We have not generated any product revenues, and do not expect
to generate any revenues until, and only if, we develop, and receive approval to sell our product candidates from the FDA and other regulatory
authorities for our product candidates.
We may not have the resources to complete the
development and commercialization of any of our proposed product candidates. We will require additional financing to further the clinical
development of our product candidates. In the event that we cannot obtain the required financing, we will be unable to complete the development
necessary to file an NDA with the FDA for BIV201 or bezisterim (NE3107). This will delay or require termination of R&D programs, preclinical
studies and clinical trials, material characterization studies, regulatory processes, the establishment of our own laboratory or a search
for third party marketing partners to market our products for us, which could have a materially adverse effect on our business.
The amount of capital we may need will depend
on many factors, including the progress, timing and scope of our R&D programs, the progress, timing and scope of our preclinical studies
and clinical trials, the time and cost necessary to obtain regulatory approvals, the time and cost necessary to establish our own marketing
capabilities or to seek marketing partners, the time and cost necessary to respond to technological and market developments, changes made
or new developments in our existing collaborative, licensing and other commercial relationships, and new collaborative, licensing and
other commercial relationships that we may establish.
Until we can generate a sufficient amount of product
revenue, if ever, we expect to finance future cash needs through public or private equity offerings, debt financings, or corporate collaboration
and licensing arrangements. Additional funds may not be available when we need them on terms that are acceptable to us, or at all. If
adequate funds are not available, we may be required to delay, reduce the scope of, or eliminate one or more of our research or development
programs or our commercialization efforts. In addition, we could be forced to discontinue product development and reduce or forego attractive
business opportunities. To the extent that we raise additional funds by issuing equity securities, our stockholders may experience additional
significant dilution, and debt financing, if available, may involve restrictive covenants. To the extent that we raise additional funds
through collaboration and licensing arrangements, it may be necessary to relinquish some rights to our technologies or our product candidates
or grant licenses on terms that may not be favorable to us. We may seek to access the public or private capital markets whenever conditions
are favorable, even if we do not have an immediate need for additional capital at that time.
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Our fixed expenses, such as rent and other contractual
commitments, will likely increase in the future, as we may enter into leases for new facilities and capital equipment and/or enter into
additional licenses and collaborative agreements. Therefore, if we fail to raise substantial additional capital to fund these expenses,
we could be forced to cease operations, which could cause you to lose all of your investment.
We have limited experience in drug development
and may not be able to successfully develop any drugs, which would cause us to cease operations.
We have never successfully developed a new drug
and brought it to market. Our management and clinical teams have experience in drug development but they may not be able to successfully
develop any drugs. Our ability to achieve revenues and profitability in our business will depend on, among other things, our ability to
develop products internally or to obtain rights to them from others on favorable terms; complete laboratory testing and human studies;
obtain and maintain necessary intellectual property rights to our products; successfully complete regulatory review to obtain requisite
governmental agency approvals; enter into arrangements with third parties to manufacture our products on our behalf; and enter into arrangements
with third parties to provide sales and marketing functions. If we are unable to achieve these objectives we will be forced to cease operations
and you will lose all of your investment.
Development of pharmaceutical products is
a time-consuming process, subject to a number of risks, many of which are outside of our control. Consequently, we can provide no assurance
that our product candidates will obtain regulatory approval, and if we are unsuccessful or fail to timely develop new drugs, we could
be forced to discontinue our operations.
Development and extensive testing will be required
to determine the technical feasibility and commercial viability of BIV201 and bezisterim (NE3107). Our success will depend on our ability
to achieve scientific and technological advances and to translate such advances into reliable, commercially competitive drugs on a timely
basis. Drugs that we may develop are not likely to be commercially available, at a minimum, for several years, if ever. Our drug product
candidate, BIV201 (continuous infusion terlipressin), was cleared by the FDA to undergo testing in a mid-stage (Phase 2b) clinical trial
for the treatment of refractory ascites due to cirrhosis. On June 24, 2021, we announced that the first patient has been enrolled in this
study. In March 2023, the open-label trial was stopped after 15 of the planned 30 patients were enrolled, and an evaluation of those completed
patients assessed. Encouraging data from these patients appeared to show that treatment with BIV201 plus SOC resulted in a reduction in
ascites fluid accumulation during treatment versus pre-treatment. In June 2023 and December 2024, we requested and subsequently received
guidance from the FDA regarding the design and endpoints for definitive clinical testing of BIV201 for the treatment of chronic liver
cirrhosis. We are 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.
The proposed development schedules for our product
candidates may be affected by a variety of factors, including technological difficulties, proprietary technology of others, and changes
in government regulation, many of which will not be within our control. In June 2021, FDA approved the drug aducanumab for treatment of
Alzheimer’s despite a strong recommendation against approval from an FDA advisory committee. That FDA approval has generated significant
medical and political controversy, including a Congressional investigation, announced on June 25, 2021, into the basis for FDA’s
approval decision. That investigation, other potential investigations, and negative publicity of FDA’s approval decision could adversely
impact the agency’s oversight of our clinical development program, how the agency may view and act upon any NDA we may file for
bezisterim (NE3107), and the commercial viability of bezisterim (NE3107) if it were to be approved and marketed.
Any delay or further delay in the development,
introduction or marketing of our product candidates could result either in such drugs being marketed at a time when their cost and performance
characteristics would not be competitive in the marketplace or in the shortening of their commercial lives. In light of the long-term
nature of our projects and other risk factors described elsewhere in this document, we may not be able to successfully complete the development
or marketing of any drugs, which could cause us to cease operations.
From time to time, the FDA may have feedback on
our clinical trial designs, including for example certain of our endpoints and outcome measures. As a result, we may consider revisions
to our protocols which may delay progress in implementing our trials. We may fail to successfully develop and commercialize our product
candidate(s) if it is found to be unsafe or ineffective in clinical trials; does not receive necessary approval from the FDA or foreign
regulatory agencies; fails to conform to a changing standard of care for the disease it seeks to treat; or is less effective or more expensive
than current or alternative treatment methods.
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Drug development failure can occur at any stage
of clinical trials and as a result of many factors, there can be no assurance that we or our collaborators will reach our anticipated
clinical targets. Even if the trials are successfully completed, clinical data are often susceptible to varying interpretations and analyses,
and we cannot guarantee that the FDA or comparable foreign regulatory authorities will interpret the results as we do, and more trials
could be required before we submit our product candidates for approval. We cannot guarantee that the FDA or comparable foreign regulatory
authorities will view our product candidates as having efficacy even if positive results are observed in clinical trials. In some instances,
there can be significant variability in safety or efficacy results between different clinical trials of the same product candidate due
to numerous factors, including changes in trial procedures set forth in protocols, differences in the size and type of the patient populations,
changes in and adherence to the clinical trial protocols, and the rate of dropout among clinical trial participants. If the results of
our ongoing or future clinical trials are inconclusive with respect to the efficacy of our product candidates, if we do not meet the clinical
endpoints with statistical and clinically meaningful significance, or if there are safety concerns associated with our product candidates,
we may be delayed in obtaining marketing approval, if at all. Additionally, any safety concerns observed in any one of our clinical trials
in our targeted indications could limit the prospects for regulatory approval of our product candidates in those and other indications.
We also do not know what the long-term effects of exposure to our product candidates will be. Furthermore, our product candidates may
be used in combination with other treatments and there can be no assurance that such use will not lead to unique or unexpected safety
issues.
Failure to complete clinical trials or to prove
that our product candidates are safe and effective would have a material adverse effect on our ability to generate revenue and could require
us to reduce the scope of or discontinue our operations, which could cause you to lose all of your investment.
We may expend our limited resources to pursue
a particular drug candidate or indication and fail to capitalize on drug candidates or indications that may be more profitable or for
which there is a greater likelihood of success.
Because we have limited human capital and financial
resources, we focus on research programs and drug candidates that we identify for specific indications. As a result, we may forego or
delay pursuit of opportunities with other drug candidates or for other indications that later prove to have greater commercial potential.
Our resource allocation decisions may cause us to fail to capitalize on viable commercial drugs or profitable market opportunities. Our
spending on current and future R&D programs and drug candidates for specific indications may not yield any commercially viable drugs.
If we do not accurately evaluate the commercial potential or target market for a particular drug candidate, we may relinquish valuable
rights to that drug candidate through collaboration, licensing or other royalty arrangements in cases in which it would have been more
advantageous for us to retain sole development and commercialization rights to such drug candidate.
At any time and for any reason, we may determine
that one or more of our discovery programs or preclinical or clinical drug candidates or programs does not have sufficient potential to
warrant the allocation of resources toward such program or drug candidate. Accordingly, we may choose not to develop a potential drug
candidate or elect to suspend, deprioritize or terminate one or more of our discovery programs or preclinical or clinical drug candidates
or programs. For example, BIV201 has received Orphan Drug designation for Ascites and HRS. On June 23, 2021, we announced that FDA had
provided guidance on our planned Phase 3 clinical trial of BIV201 in Ascites and have since reached agreement on the key elements of the
trial design. Thereafter, we deprioritized the program due to funding. Mallinckrodt gained FDA approval for its product, lyophilized terlipressin
acetate for bolus intravenous administration for the treatment of hepatorenal syndrome Type 1 in September 2022. When we suspend, deprioritize
or terminate a program or drug candidate in which we have invested significant resources, we will have expended resources on a program
that will not provide a full return on our investment and may have missed the opportunity to have allocated those resources to potentially
more productive uses, including existing or future programs or drug candidates.
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We have no manufacturing experience, and
the failure to comply with all applicable manufacturing regulations and requirements could have a materially adverse effect on our business.
We have never manufactured products in the highly
regulated environment of pharmaceutical manufacturing, and our team has limited experience in the manufacture of drug therapies. There
are numerous regulations and requirements that must be maintained to obtain licensure and permitting required prior to the commencement
of manufacturing, as well as additional requirements to continue manufacturing pharmaceutical products. We currently do not own or lease
facilities that could be used to manufacture any products that might be developed by us, and have contracted with an experienced Contract
Manufacturing Organization (“CMO”) to perform the manufacturing of our investigational product candidates BIV201 and bezisterim
(NE3107). In addition, we do not have the resources at this time to acquire or lease suitable facilities. If we or our CMO fail to comply
with regulations, to obtain the necessary licenses and knowhow or to obtain the requisite financing in order to comply with all applicable
regulations and to own or lease the required facilities in order to manufacture our products, we could be forced to cease operations,
which would cause you to lose all of your investment.
In addition, the FDA and other regulatory authorities
require that product candidates and drug products be manufactured according to cGMP. Any failure by our third-party manufacturers to comply
with cGMP could lead to a shortage of BIV201 and NE3107. In addition, such failure could be the basis for action by the FDA to withdraw
approval, if granted to us, and for other regulatory enforcement action, including Warning Letters, product seizure, injunction or other
civil or criminal penalties.
BIV201 and bezisterim (NE3107) and any other product
candidates that we develop may have to compete with other products and product candidates for access to manufacturing facilities. There
are a limited number of manufacturers that operate under cGMP regulations and that are both capable of manufacturing for us and willing
to do so. If we need to find another source of drug substance or drug product manufacturing for BIV201 and bezisterim (NE3107), we may
not be able to identify, or reach agreement with, commercial-scale manufacturers on commercially reasonable terms, or at all. If we are
unable to do so, we will need to develop our own commercial-scale manufacturing capabilities, which would: impact commercialization of
BIV201 and bezisterim (NE3107) in the U.S. and other countries where it may be approved; require a capital investment by us that could
be quite costly; and increase our operating expenses.
If our existing third-party manufacturers, or
the third parties that we engage in the future to manufacture a product for commercial sale or for our clinical trials, should cease to
continue to do so for any reason, we likely would experience significant delays in obtaining sufficient quantities of product for us to
meet commercial demand or to advance our clinical trials while we identify and qualify replacement suppliers. If for any reason we are
unable to obtain adequate supplies of BIV201 or any other product candidate that we develop, or the drug substances used to manufacture
it, it will be more difficult for us to compete effectively, generate revenue, and further develop our products. In addition, if we are
unable to assure a sufficient quantity of the drug for patients with rare diseases or conditions, we may lose any Orphan Drug exclusivity
to which the product otherwise would be entitled.
We do not currently have the sales and marketing
personnel necessary to sell products, and the failure to hire and retain such staff could have a materially adverse effect on our business.
We are an early stage development company with
limited resources. Even if we had products available for sale, which we currently do not, we have not secured sales and marketing staff
at this early stage of operations to sell products. We cannot generate sales without sales or marketing staff and must rely on others
to provide any sales or marketing services until such personnel are secured, if ever. If we fail to hire and retain the requisite expertise
in order to market and sell our products or fail to raise sufficient capital in order to afford to pay such sales or marketing staff,
then we could be forced to cease operations and you could lose all of your investment.
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Even if we were to successfully develop
approvable drugs, we will not be able to sell these drugs if we or our third-party manufacturers fail to comply with manufacturing regulations,
which could have a materially adverse effect on our business.
If we were to successfully develop approvable
drugs, before we can begin selling these drugs, we must obtain regulatory approval of our manufacturing facility and process or the manufacturing
facility and process of the third party or parties with whom we may outsource our manufacturing activities. In addition, the manufacture
of our products must comply with the FDA’s current Good Manufacturing Practices regulations, commonly known as GMP regulations.
The GMP regulations govern quality control and documentation policies and procedures. Our manufacturing facilities, if any in the future,
and the manufacturing facilities of our third-party manufacturers will be continually subject to inspection by the FDA and other state,
local and foreign regulatory authorities, before and after product approval. We cannot guarantee that we, or any potential third-party
manufacturer of our products, will be able to comply with the GMP regulations or other applicable manufacturing regulations. The failure
to comply with all necessary regulations would have a materially adverse effect on our business and could force us to cease operations
and you could lose all of your investment.
We must comply with significant and complex
government regulations, compliance with which may delay or prevent the commercialization of our product candidates, which could have a
materially adverse effect on our business.
The R&D, manufacture and marketing of drug
product candidates are subject to regulation, primarily by the FDA in the United States and by comparable authorities in other countries.
These national agencies and other federal, state, local and foreign entities regulate, among other things, R&D activities (including
testing in animals and in humans) and the testing, manufacturing, handling, labeling, storage, record keeping, approval, advertising and
promotion of the product that we are developing. Noncompliance with applicable requirements can result in various adverse consequences,
including approval delays or refusals to approve drug licenses or other applications, suspension or termination of clinical investigations,
revocation of approvals previously granted, warning letters, fines, criminal prosecution, recalls or seizures of products, injunctions
against shipping drugs and total or partial suspension of production and/or refusal to allow a company to enter into governmental supply
contracts.
The process of obtaining FDA approval is costly
and time consuming. Current FDA requirements for a new human drug or biological product to be marketed in the United States include, among
other things: (a) the successful conclusion of pre-clinical laboratory and animal tests, if appropriate, to gain preliminary information
on the product’s safety; (b) filing with the FDA of an IND application to conduct human clinical trials for drugs or biologics;
(c) the successful completion of adequate and well-controlled human clinical investigations to establish the safety and efficacy of the
product for its recommended use; and (d) filing by a company and acceptance and approval by the FDA of a NDA for a drug product or a Biologics
License Application (a “BLA”) for a biological product to allow commercial distribution of the drug or biologic. A delay in
one or more of the procedural steps outlined above could be harmful to us in terms of getting our product candidates through clinical
testing and to market, which could have a materially adverse effect on our business.
The FDA, clinical investigators, Data Safety Monitoring
Boards, and IRBs review the ongoing conduct of, and emerging safety information from, clinical trials and may order the temporary or permanent
discontinuation of clinical trials at any time if it believes the product candidate exposes clinical subjects to an unacceptable health
risk. Investigational drugs used in clinical studies must be produced in compliance with cGMP rules pursuant to FDA regulations.
Development, approval, and sales outside the United
States of products that we develop will also be subject to regulatory requirements governing human clinical trials and marketing for drugs
and biological products and devices. The requirements vary widely from country to country, but typically the registration and approval
process takes several years and requires significant resources.
If we experience delays or discontinuations of
our clinical trials by the FDA or comparable authorities in other countries, or if we fail to obtain registration or other approvals of
our products or devices then we could be forced to cease our operations and you will lose all of your investment.
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Even if we are successful in developing BIV201
and bezisterim (NE3107), our product candidates, we have limited experience in conducting or supervising clinical trials that must be
performed to obtain data to submit in concert with applications for approval by the FDA. The regulatory process to obtain approval for
drugs for commercial sale involves numerous steps. Drugs are subjected to clinical trials that allow development of case studies to examine
safety, efficacy, and other issues to ensure that sale of drugs meets the requirements set forth by various governmental agencies, including
the FDA. In the event that our protocols do not meet standards set forth by the FDA, or that our data is not sufficient to allow such
trials to validate our drugs in the face of such examination, we might not be able to meet the requirements that allow our drugs to be
approved for sale which could have a materially adverse effect on our business.
We depend upon our management and their
loss or unavailability could put us at a competitive disadvantage which could have a material adverse effect on our business.
We currently depend upon the efforts and abilities
of our executive and senior management team of Cuong Do, our Chief Executive Officer-President; Wendy Kim, our Chief Financial Officer;
Dr. Joseph Palumbo, our Executive Vice President - Chief Medical Officer; Penelope Markham, our Senior Vice President - Liver Disease
and Long COVID Programs; Chris Reading, our Senior Vice President - Alzheimer’s Disease Program; Clarence Ahlem, our Senior Vice
President - Operations; and David Morse, our Senior Vice President - Chief Regulatory Officer; who all serve the Company full-time. The
loss or unavailability of the services of any of these individuals for any significant period of time could have a material adverse effect
on our business, prospects, financial condition and results of operations which may cause you to lose all of your investment. We have
not obtained, do not own, nor are we the beneficiary of key-person life insurance.
We may not be able to attract and retain
highly skilled personnel, which could have a materially adverse effect on our business.
Our ability to attract and retain highly skilled
personnel is critical to our operations and expansion. We face competition for these types of personnel from other pharmaceutical companies
and more established organizations, many of which have significantly larger operations and greater financial, technical, human and other
resources than us. We may not be successful in attracting and retaining qualified personnel on a timely basis, on competitive terms, or
at all. If we are not successful in attracting and retaining these personnel, our business, prospects, financial condition and results
of operations will be materially and adversely affected.
The biotechnology and biopharmaceutical
industries are characterized by rapid technological developments and a high degree of competition. We may be unable to compete with enterprises
equipped with more substantial resources than us, which could cause us to curtail or cease operations.
The biotechnology and biopharmaceutical industries
are characterized by rapid technological developments and a high degree of competition based primarily on scientific and technological
factors, including the availability of patent and other protection for technology and products, the ability to commercialize technological
developments and the ability to obtain government approval for testing, manufacturing and marketing.
We compete with biopharmaceutical firms in the
United States, Europe and elsewhere, as well as a growing number of large pharmaceutical companies that are applying biotechnology to
their operations. Many biopharmaceutical companies have focused their development efforts in the human therapeutics area. Many major pharmaceutical
companies have developed or acquired internal biotechnology capabilities or made commercial arrangements with other biopharmaceutical
companies. These companies, as well as academic institutions, government agencies and private research organizations, also compete with
us in recruiting and retaining highly qualified scientific personnel and consultants. Our ability to compete successfully with other companies
in the pharmaceutical field will also depend to a considerable degree on the continuing availability of capital to us.
Although there are not currently any therapies
approved by the FDA specifically for the treatment of ascites due to liver cirrhosis, we still face significant competitive and market
risk. Other companies, such as Ocelot Bio, are developing therapies for severe complications of advanced liver cirrhosis, which may in
the future be developed for the treatment of ascites, and these therapies could compete indirectly or directly with our product candidate.
Similarly, other companies, such as Biogen and Eli Lilly, are developing treatments for AD and PD, which could compete indirectly or directly
with our product candidate. There may be other competitive development programs of which we are unaware. Even if our product candidates
are ultimately approved by the FDA, there is no guarantee that once they are on the market doctors will adopt them in favor of current
ascites treatment procedures such as diuretics and paracentesis with respect to BIV201 and AD and PD with respect to bezisterim (NE3107).
These competitive and market risks could have a material adverse effect on our business, prospects, financial condition and results of
operations which may cause you to lose all of your investment.
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Our competition will be determined in part by
the potential indications for which drugs are developed and ultimately approved by regulatory authorities. Additionally, the timing of
the market introduction of some of our potential product candidate or of competitors’ products may be an important competitive factor.
Accordingly, the relative speed with which we can develop drugs, complete pre-clinical testing, clinical trials, approval processes and
supply commercial quantities to market are important competitive factors. We expect that competition among drugs approved for sale will
be based on various factors, including product efficacy, safety, reliability, availability, price and patent protection.
The successful development of biopharmaceuticals
is highly uncertain. A variety of factors, including pre-clinical study results or regulatory approvals, could cause us to abandon the
development of our product candidates.
There may be conflicts of interest among
our officers, directors and stockholders.
Certain of our executive officers and directors
and their affiliates are engaged in other activities and have interests in other entities on their own behalf or on behalf of other persons.
Neither we nor any of our shareholders will have any rights in these ventures or their income or profits. In particular, our executive
officers or directors or their affiliates may have an economic interest in or other business relationship with partner companies that
invest in us or are engaged in competing drug development. Our executive officers or directors may have conflicting fiduciary duties to
us and third parties. The terms of transactions with third parties may not be subject to arm’s length negotiations and therefore
may be on terms less favorable to us than those that could be procured through arm’s length negotiations. Although we have established
an audit committee comprised solely of independent directors to oversee transactions between us and our insiders, we do not have any formal
policies in place to deal with such conflicting fiduciary duties should such a conflict arise.
We indemnify our officers and directors
against liability to us and our security holders, and such indemnification could increase our operating costs.
Our Articles of Incorporation and Bylaws require
us to indemnify our officers and directors against claims associated with carrying out the duties of their offices. We are also required
to advance the costs of certain legal defenses upon the indemnitee undertaking to repay such expenses to the extent it is determined that
such person was not entitled to indemnification of such expenses. Insofar as indemnification for liabilities arising under the Securities
Act of 1933, as amended, may be permitted to our officers, directors, or control persons, the Commission has advised that such indemnification
is against public policy and is therefore unenforceable.
Risks Relating to Our Intellectual Property
We may be unable to obtain or protect intellectual
property rights relating to our product candidates, which could have a materially adverse effect on our business.
Our ability to compete effectively will depend
on our ability to maintain the proprietary nature of our technologies. We cannot assure investors that we will continue to innovate and
file new patent applications, or that if filed any future patent applications will result in granted patents with respect to the technology
owned by us or licensed to us. Further, we cannot predict how long it will take for such patents to issue, if at all. The patent position
of pharmaceutical or biotechnology companies, including ours, is generally uncertain and involves complex legal and factual considerations
and, therefore, validity and enforceability cannot be predicted with certainty. Patents may be challenged, deemed unenforceable, invalidated
or circumvented.
We have seven (7) granted and six (6) pending
patent applications for our liquid formulations of terlipressin that claim priority to International Patent Application Number PCT/US2020/034269
filed on May 22, 2020 and published as WO2020/237170. Also, we own two (2) U.S. patents and one (1) European
patent directed to various methods of treating ascites with BIV201, and we are pursuing additional patent coverage in other jurisdictions.
We also have twelve (12) issued U.S. patents, seven (7) pending U.S. applications,
three (3) pending Patent Cooperation Treaty (“PCT”) applications, four (4) issued foreign patents and nine (9) pending foreign
patent applications directed to protecting bezisterim (NE3107) and related compounds and methods of making and using thereof. However,
there can be no assurance that our pending patent applications will result in issued patents, or that any issued patent claims from pending
or future patent applications will be sufficiently broad to protect BIV201, bezisterim (NE3107), or any other product candidates or to
provide us with competitive advantages.
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We can provide no assurance that any issued patents
will provide us with any competitive advantage. We cannot be certain that there is no invalidating prior art of which we and the patent
examiner are unaware of or that our interpretation of the relevance of prior art is correct. If a third-party patent or patent application
is determined to have an earlier priority date, it may prevent our patent applications from issuing at all or issuing in a form that provides
any competitive advantage for our drug candidates. Failure to obtain additional issued patents could have a material adverse effect on
our ability to develop and commercialize our drug candidates. Even if our patent applications do issue as patents, third parties may be
able to challenge the validity and enforceability of our patents on a variety of grounds, including that such third party’s patents
and patent applications have an earlier priority date, and if such challenges are successful, we may be required to obtain one or more
licenses from such third parties, if available on commercially reasonable terms, or be prohibited from commercializing our drug candidates.
We seek to protect our proprietary positions by,
among other things, filing patent applications in the United States and abroad related to our current drug candidates and other drug candidates
that we may identify. Obtaining, maintaining, defending and enforcing pharmaceutical patents is costly, time-consuming and complex, and
we may not be able to file and prosecute all necessary or desirable patent applications, or maintain, enforce and license any patents
that may issue from such patent applications, at a reasonable cost or in a timely manner. It is also possible that we will fail to identify
patentable aspects of our R&D output before it is too late to obtain patent protection. Moreover, under certain of our license or
collaboration agreements, we may not have the right to control the preparation, filing, prosecution and maintenance of patent applications,
or to maintain the rights to patents licensed to or from third parties.
We currently are the assignee of a number of U.S.
provisional patent applications. U.S. provisional patent applications are not eligible to become issued patents until, among other things,
we file a non-provisional patent application within 12 months of filing one or more of our related provisional patent applications. With
regard to such U.S. provisional patent applications, if we do not timely file any non-provisional patent applications, we may lose our
priority dates with respect to our provisional patent applications and any patent protection on the inventions disclosed in our provisional
patent applications. Further, in the event that we do timely file non-provisional patent applications relating to our provisional patent
applications, we cannot predict whether any such patent applications will result in the issuance of patents or if such issued patents
will provide us with any competitive advantage.
As to our material inventions, trade secrets,
and intellectual property, our employees, consultants, and advisors execute confidentiality agreements and agree to disclose and assign
to us all inventions conceived during the workday, using our property, or which relate to our business. However, any of these parties
may breach these agreements and disclose such output before a patent application is filed, thereby jeopardizing our ability to seek patent
protection. Further, we may not be aware of all third-party intellectual property rights potentially relating to our drug candidates.
Publications of discoveries in the scientific literature often lag behind the actual discoveries, and patent applications in the United
States and other jurisdictions are typically not published until 18 months after filing or, in some cases, not at all. Therefore, we cannot
know with certainty whether we were the first to make the inventions claimed in our patents or pending patent applications, or that we
were the first to file for patent protection of such inventions.