Bone Biologics (NASDAQ:BBLG) is a medical device company focused on developing innovative solutions for bone regeneration, particularly in the lucrative spinal fusion market. With a unique technology platform and a meticulously managed pipeline, the company is poised to tackle the challenges of traditional bone graft materials and emerge as a significant player in the orthobiologics space.
Company History and Overview
Bone Biologics was incorporated under the laws of the State of Delaware on October 18, 2007, as AFH Acquisition X, Inc. The company underwent a significant transformation in September 2014 when it merged with Bone Biologics, Inc., a California corporation founded on September 9, 2004, and subsequently changed its name to Bone Biologics Corporation. This merger marked the beginning of the company's public journey.
The company's core focus is on bone regeneration in spinal fusion using the recombinant human protein known as NELL-1. What sets Bone Biologics apart is its innovative approach of combining NELL-1 with demineralized bone matrix (DBM) to create an osteopromotive recombinant protein that provides targeted control over bone regeneration. This proprietary NELL-1 technology platform has been exclusively licensed for worldwide applications through a technology transfer from the UCLA Technology Development Group on behalf of UC Regents.
A significant milestone in the company's history occurred in 2019 when Bone Biologics entered into an Amended and Restated Exclusive License Agreement with UCLA TDG. This agreement broadened the company's rights, granting exclusive access to develop and commercialize NELL-1 not only for spinal fusion by local administration but also for osteoporosis and trauma applications. The agreement comes with specific obligations, including meeting diligence milestone deadlines, making milestone payments, and paying royalties on net sales of licensed products.
It's important to note that Bone Biologics has faced financial challenges throughout its development journey. From inception through September 30, 2024, the company has accumulated losses of approximately $83.5 million. As a pre-revenue company, Bone Biologics has relied heavily on capital raised through the issuance of equity and debt securities to fund its operations and development activities. In 2024, the company took proactive steps to address its funding needs by completing several financing transactions, including a public offering in March and a warrant inducement in August, to secure additional capital for its ongoing operations.
Financial Snapshot
Bone Biologics is currently in the development stage and has not yet generated any revenue from product sales. The company's financial statements reflect the investments required to advance its pipeline, with a net loss of $2.59 million reported for the nine months ended September 30, 2024. However, the company's cash position remains solid, with $3.57 million in cash as of the same date, providing runway into the second quarter of 2025.
For the most recent quarter, Bone Biologics reported no revenue, a net loss of $4,734,219, negative operating cash flow of $1,353,497, and negative free cash flow of $1,353,497. These figures reflect the ongoing research and development expenses as the company works to advance its lead product NELL-1DBM. Year-over-year growth comparisons are not applicable due to the lack of prior year data.
The company operates solely in the United States at this time, as it is a small cap company focused on developing its lead product for the US market.
Liquidity
The company's ability to maintain its operations and fund ongoing research and development activities is crucial. As of September 30, 2024, Bone Biologics had $3.57 million in cash, which provides a runway into the second quarter of 2025. This liquidity position is a result of recent financing activities, including a public offering and warrant inducement, which have helped strengthen the company's balance sheet.
The company's financial position is further characterized by a debt-to-equity ratio of 0, as the company currently has no debt. The current ratio and quick ratio are both 10.223, indicating a strong short-term liquidity position. However, it's worth noting that the company does not have any credit facilities or credit lines available at this time.
Operational Highlights
The key operational highlight for Bone Biologics in recent quarters has been the initiation of a multicenter, prospective, randomized pilot clinical study of its NB1 bone graft device. This study, which began enrolling patients in June 2024, is evaluating the safety and effectiveness of the NELL-1/DBM combination in 30 adult subjects undergoing transforaminal lumbar interbody fusion (TLIF) to treat degenerative disc disease (DDD).
The successful enrollment and treatment of the first two patients in this pilot study marks a significant milestone for the company, as it moves closer to generating clinical data to support the potential regulatory approval and commercialization of its lead product. Additionally, the company has continued to make progress in controlling expenses and streamlining its operations, focused on preserving cash to fund the advancement of its pipeline.
Regulatory Status and Clinical Development
Bone Biologics has received guidance from the FDA that NELL-1DBM will be classified as a device-drug combination product. This classification necessitates an extensive regulatory approval process involving rigorous preclinical animal and clinical human testing. The company's ongoing pilot clinical study in Australia is evaluating not only safety and effectiveness but also fusion success, pain, function improvement, and adverse events.
Competitive Landscape and Risks
The orthobiologics market, particularly in the spinal fusion segment, is highly competitive, with established players such as Medtronic, Stryker, and DePuy Synthes commanding a significant market share. Bone Biologics will need to demonstrate the superior performance of its NELL-1/DBM technology to gain traction and capture market share.
Furthermore, the regulatory approval process for combination products like NELL-1DBM can be complex and time-consuming, posing a significant risk to the company's timeline and success. Potential delays or setbacks in clinical trials or the regulatory review process could adversely impact Bone Biologics' ability to commercialize its lead product.
The company also faces risks related to its dependence on the exclusive license agreement with UCLA Technology Development Group, which grants Bone Biologics the rights to the NELL-1 technology. Any disruption or termination of this agreement could have severe consequences for the company's future.
Going Concern
It's important to note that the company's independent auditor has expressed substantial doubt about Bone Biologics' ability to continue as a going concern. This assessment is based on the company's accumulated losses of approximately $83.5 million since inception and the anticipated need for significant additional funding to complete first-in-man studies and potentially achieve FDA approval for a spine interbody fusion indication.
Outlook and Conclusion
Bone Biologics' progress in advancing its NB1 bone graft device through the initial stages of clinical testing is a promising development. The company's ability to control expenses and maintain a strong cash position amid the ongoing development efforts is also noteworthy.
As Bone Biologics continues to navigate the regulatory landscape and works towards generating robust clinical data, investors will be closely watching for updates on the company's progress. The successful commercialization of NELL-1DBM could position Bone Biologics as a valuable player in the orthobiologics market, offering a differentiated solution to address the limitations of existing bone graft materials used in spinal fusion procedures.
However, the company faces significant challenges, including the need for substantial additional funding, the complex regulatory pathway for its combination product, and the competitive nature of the orthobiologics market. The coming months and years will be critical for Bone Biologics as it seeks to advance its lead product through clinical development and towards potential commercialization.