BioVie Inc (NASDAQ: BIVI) speciality is in developing drug therapies for disease of the liver with a special concentration on ascites. BioVie’s FDA candidate BIV201 treats ascites that develop in cases of chronic liver cirrhosis.
As healthcare investor focus shifted to vaccines, BioVie has had a mostly down year last year. Still, BIVI share price demonstrated bursts higher from time to time on hopes of positive clinical trial results.
Is BioVie worth holding for the long-term by investors or does it simply offer a quick trade for speculators? In short, is BioVie stock a buy?
BioVie Share Price History 101
BioVie was established in April 2013 in Santa Monica, California. It went public via an over-the-counter initial public offering in April 2014 with an opening price of $36.25.
In 2020, the company’s stock price had a bumpy ride. It started off the year around the $3.00 mark but enjoyed an uptick during the summer months to the $15.00 range. This spike higher in share price was due to positive news around the first clinical trials of Phase 2 for BIV201.
The company successfully transitioned into the second set of trials for Phase 2 by late summer.
On September 1st, BIVI share price closed at $20.00 and then slowly fell back down below $10 until the very end of December when it made a leap back towards $20.00 per share.
By the start of 2021, BIVI share price sat at $17.59, a massive year over year jump, on the possibility of BIV201 entering Phase 3 of clinical trials sooner than expected.
BioVie is aiming to receive final FDA approval for BIV201 sometime in 2022.
BioVie Balance Sheet Strengthened Via Cash Injection
BioVie Inc. received a much-needed cash infusion with an IPO in September of 2020 at $10.00 / share and raised $16 million in the process.
This September IPO was BioVie Inc.’s entry onto the NASDAQ ticker for the first time. This follows the usual natural progression for young pharmaceutical companies as money is usually raised by investors or scheduled IPO’s at certain financial quarters of the fiscal year.
The company’s net income was negative throughout 2020, save for the completion of Phase 2A of BIV201 in Q2.
Net Income – BioVie Inc. – 2020
Q1 – (-3.82M)
Q2 – 6.67M
Q3 – (-366.4K)
Q4 – (-19.15M)
BioVie Inc. diluted EPS numbers mirrored the net income numbers as well and reflected the company’s fortunes in their ongoing research.
Diluted EPS – BioVie Inc. – 2020
Q1 – (-5.06)
Q2 – 1.29
Q3 – (-0.07)
Q4 – (-19.15M)
Despite the negative Q4 figures, analysts remain optimistic. B.Riley Financial confirms a “buy” rating for BioVie Inc. with a target price of $47.00.
What Are The Risks Of Investing In BioVie?
BioVie Inc. has huge upside share price potential if its BIV201 drug were approved by the FDA to treat ascites for liver disease.
But BioVie Inc. is cash-starved. The question arises: how many times will BioVie management need to tap public markets to raise cash to strengthen its balance sheet. And the more times it does so, the more current investors are diluted.
Plus, there is the inherent risk of failure. A poor result in clinical trials would be near catastrophic for BioVie share price in the short-term.
This is a company for speculators who want the optionality of a big share price pop up while remaining well aware that a big dip could lie ahead too.
Who Competes Against BioVie?
Both companies also research and develop drugs for chronic liver disease and look to bring therapies to the market in the coming years.
Galectin is a smaller company out of Norcross, Georgia. It recently went public. Galectin’s current EPS outlook for Q4 is (-0.391). Such a negative EPS is to be expected from an early stage pharmaceutical company.
Galectin looks to grow with more investors and other cash infusions in 2021 as they continue research on liver disease therapies. The future looks bright for Galectin Therapeutics, Inc; three different analysts have all rated it a “buy”.
Intercept Pharmaceuticals, Inc. have been around much longer than both BioVie Inc. and Galectin. It was established in 2002.
The current EPS outlook for Q4 for Intercept is negative. However, 10 of 20 analysts recommend it with a “buy”, 8 of 20 analysts suggest “hold”, and 2 of 20 analysts expect that the stock will underperform.
The big risk associated with Intercept is that it is defending a class-action lawsuit that was filed last year.
Is BioVie Stock A Buy? The Bottom Line
BioVie Inc. is a company with stratospheric upside if clinical trials are received positively and approved by the FDA.
BIV201 could be a major game changer for treatment of chronic liver disease sufferers who have ascites. BIV201 would be the first FDA approved drug in fighting this affliction.
Hitting this finish line would open the company up to contracts with suppliers to produce this drug. The capital earned from such contracts would fund more research projects for the future and open up a drug pipeline potential.
It’s just a matter of getting to that finish line which will prove problematic as Phase 3 could take up all of 2021.
Investors run the risk of investing now and seeing their investment sharply move down or up dependent upon news of any headway made with the FDA.
The worst-case scenario is that the company runs into a problem during Phase 3 of the clinical trials and that would either delay or possibly stop the timeline of FDA approval altogether. That type of news could lead investors holding the bag on BioVie Inc. stock and an uncertain future.
That all being said, the upside of this stock is too great to ignore and with current good news about the company and its’ sunny outlook, speculators willing to take the risk should pay heed to the possibility of a fast return on invested capital.
The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.