BioVie (BIVI) When you lie down with dogs…

It really is important to know your history

I know I shouldn’t be writing up so many Alzheimer’s companies but with a founder (and former chairman and CEO) like BioVie’s, I just couldn’t resist.  But before I get to that really entertaining part of the post, let’s give a little intro to the company.  BioVie is focused on NE3107, an anti-inflammatory small molecule, for the treatment of Alzheimer’s and Parkinson’s.

NE3107, like many of the compounds I’ve written about, has been around for a while.  It is a chemical derivative of βAET, which is a metabolite of the steroid dehydroepiandrosterone (DHEA).  However, despite being related to steroids, it doesn’t seem to act on the steroid receptors.  That’s probably a good thing considering that in a study of prednisone in Alzheimer’s patients, the treatment arm actually did worse than placebo on a number of metrics.

NE3107, formerly known as HE2386, and was in a number of trials for diabetes, obesity, rheumatoid arthritis and ulcerative colitis between 2008 and 2011 when it was owned by Harbor Therapeutics.  Obviously, it didn’t do too well because fast forward to 2014 and it was mentioned on the NeurMedix website.  The founder, chairman and CEO of NeurMedix was Terren Peizer, who also appeared to be its sole shareholder.  Terren Peizer was also chairman and CEO of BioVie at the time.  

In 2021, BioVie bought NeurMedix, or more specifically, Terren Peizer sold NeurMedix to Terren Peizer.  

And there are some interesting terms.  Upfront, things are fine, as 8.4 million shares were issued with an additional $2.3 million in cash paid to cover certain expenses.  It’s the contingent consideration where things get interesting.  It appears that Terren Peizer (through his Acuitas Group) will be paid $7.3 million in cash if the Phase 3 in Alzheimer’s hits its primary endpoint and in the original version of the purchase agreement, would be paid $350 million in stock!  In total, Terren Peizer would have netted $3 billion in stock if all regulatory and commercial milestones were met (see Table 1 below), which really goes to show you how much power he had over the BioVie board.  

Luckily, saner heads prevailed (or maybe the lawyers just said “you can’t do that”) and now only 4.5 million shares will be issued (still about $16 million at today’s prices) if the trial works and 18 million ($63 million at today’s prices)  in total across all milestones.  So, he’d still make out like a bandit but just not so egregiously as before.  And you just have to wonder why he wanted to be so over the top. I mean the guy owned 80% of BioVie at the time (and 69.1% currently according to the proxy), so it’s clear he would directly benefit from a successful trial as it is, without adding all of these additional payments.

But then again this is Terren Peizer.  Who is infamous.  In March 2023, he was charged by the SEC with insider trading and also by the DOJ criminally with one count of a securities fraud scheme and two counts of securities fraud for insider trading.  He faces a maximum of 75 years in prison for all charges (obviously not going to happen, but he could go to jail for several years).  Here’s a summary:

According to court documents, between May and August 2021, Peizer, 63, a resident of Puerto Rico and Santa Monica, California, allegedly avoided more than $12.5 million in losses by entering into two Rule 10b5-1 trading plans while in possession of material, nonpublic information concerning the serious risk that Ontrak’s then-largest customer would terminate its contract. In May 2021, Peizer allegedly entered into his first 10b5-1 trading plan shortly after learning that the relationship between Ontrak and the customer was deteriorating and that the customer had expressed serious reservations about continuing its contract with Ontrak. The indictment alleges that Peizer later learned that the customer informed Ontrak of its intent to terminate the contract. Then, in August 2021, Peizer allegedly entered into his second 10b5-1 trading plan approximately one hour after Ontrak’s chief negotiator for the contract confirmed to Peizer that the contract likely would be terminated.

The worst part is that this wasn’t a one-time “mistake”.  In 1990, he testified against Michael Milken in exchange for immunity from both criminal prosecution and criminal sanctions. Typically, you don’t ask for something like that unless you’ve done something.  And that’s not even all, there is also the case of Millfield Trading.

Peizer divested himself of over 90 percent of his Millfeld stock on September 23, 1991, one day before Millfeld first publicly acknowledged that it had materially underpaid its Customs obligations since 1986 and faced a $1.6 million liability.

The list kind of goes on where things look a bit suspicious.  From a Forbes story:

There was Urethane Technologies, a company that peddled a solid-urethane bicycle tire that supposedly wouldn't go flat. After acquiring over 50% of the money losing company and anointing himself chairman, Peizer managed to dump his shares at a profit before the company eventually limped into bankruptcy in 1997. Advanced Promotion Technologies, a company that made coupon machines for checkout lines, also went bust in 1996, after Peizer had pulled out.

This is the man who chose to develop NE3107 and put together much of BioVie.

Now I don’t just do ad hominem  arguments here so let’s go through their lead programs.  NE3107 is currently in a randomized, placebo-controlled Phase 3 study in 400 patients with mild to moderate Alzheimer’s Disease.  One bit of weirdness in the recent press release from September 26th is that they say:  

The study has co-primary endpoints looking at cognition using the Alzheimer’s Disease Assessment Scale-Cognitive Scale (ADAS-Cog 12) and function using the Alzheimer’s Disease Cooperative Study-Clinical Global Impression of Change (ADCS-CGIC).

But if you look at the record changes in clinicaltrials.gov, they changed the primary endpoint back in June to Clinical Dementia Rating Scale Sum of Boxes (CDR-SB) from ADAS-Cog 12 and ADCS-CGIC.  So, right now I’m not sure what the primary endpoint even is (or which primary endpoint needs to be hit for Terren Peizer to get his payout).   And then there was this statement from the CEO in the same press release:

“Furthermore, we do not need to demonstrate efficacy and statistical significance across the board or with all the pre-specified subgroups such as mild- vs. moderate-AD, Aβ positive vs. negative, Hispanics vs. non-Hispanic, insulin-resistant vs. not, etc. A win in one or more subgroups is still a big win for the patient community and the company.”

Kind of sounds like he is trying to talk down expectations.  And not sure what they will do if the drug hits significance in non-Hispanics.  Discriminate against the hispanic population in future trials?  How would that work?  And then there is the statistical analysis plan which sounds like it wasn’t pre-approved by the FDA.  Per the same company PR:

The trial’s Statistical Analysis Plan (SAP) that pre-specifies the analyses and treatment populations and subgroups will be submitted to the FDA prior to locking the EDC.

Note they also recently increased the size of the trial to 400 from the original 316, which is often not a great sign of confidence.   Should be an interesting data release in late November.  Who knows if anyone will know what to make of it all.  It doesn’t help that they are only following patients to week 30, which is much shorter that the trials for Leqembi, which went out to 18 months.

It’s also quite amazing that they would run such a large expensive trial without doing any proper dose ranging.  They are basing everything, including the dose, on a 23-patient, single-arm, single-site single-dosage level study.  That’s just not proper drug development.  I’d go over the data but with such a small trial that is single arm and conducted at just one site, it is meaningless.

Now let’s move to their Parkinson’s program which is headed towards Phase 3.  Back in December of 2022, they released data from a 46-patient trial.  Here is a chart the company loves to highlight.

As you can see that on an intent-to-treat basis, there is no difference between the treatment and control arms.  But the company datamined that for patients under the age of 70, there was a benefit.  There are a few problems with this, first, the control arm patients seem to have been worse off to begin with, so if the baselines were actually balanced, the benefit may go completely away.  Second, if the under 70 graph looks like this, then imagine what the over 70 graph looks like.  There is no escaping the math that if in the entire group there is no difference and then in one subgroup there is, then in the other subgroup difference should be the exact opposite of the first subgroup.  That’s a long and possibly confusing way to say that it is likely that patients over the age of 70 actually did worse in the treatment arm.

To illustrate, let’s take a look at some charts from that historic BrainStorm adcomm (historically negative for the sponsor).  Here is a chart from their Phase 2 showing no difference from treatment and placebo:

Obviously, the company needed a subgroup, in this case “rapid progressors”:

Using that analysis, looks like placebo patients tended to do worse.  But then when you look at the “slow progressors”, the treatment arm actually did worse than placebo:

So, this is a trick that companies use but they can’t escape the math.  So, they have a questionable founder, drug and data, but hey at least they have a Chief Social Impact Officer!:

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