Bone Biologics Corporation (NASDAQ:BBLG) is a pioneering medical device company focused on developing advanced orthobiologic products for the spinal fusion market. With an exclusive license to the NELL-1 technology platform, Bone Biologics is poised to transform the standard of care in bone regeneration and spinal fusion procedures.
Business Overview and History Bone Biologics Corporation was initially incorporated on October 18, 2007, as AFH Acquisition X, Inc. under Delaware law. The company's roots trace back to 2004 when Bone Biologics, Inc. was originally incorporated in California. In September 2014, a significant merger took place between AFH Acquisition X, Inc. and Bone Biologics, Inc., resulting in the company's current name, Bone Biologics Corporation.
The company was established by a collaborative effort of University of California professors, an Osaka University professor, and a University of Southern California surgeon. This diverse founding team brought together a wealth of expertise in bone biology and orthopedic surgery. Bone Biologics has developed proprietary, patented technology that has shown promising results in animal studies for facilitating bone growth.
The company's primary focus has been on spinal fusion surgery, which represents one of the larger segments within the orthopedic market. This strategic choice aligns with the significant demand for innovative solutions in this area of medical treatment.
Throughout its history, Bone Biologics has navigated the complex landscape of medical device development and regulatory approval. As a development stage entity, the company has been subject to extensive regulation by numerous governmental authorities in the United States, particularly in the areas of product development, clinical studies, and potential marketing of its products.
The regulatory approval process, implemented by the FDA, requires rigorous preclinical animal testing and extensive clinical human trials for any combination product developed by the company before it can be marketed in the United States. This comprehensive approach ensures the safety and efficacy of new medical devices but also presents significant challenges in terms of time and resources.
Another critical aspect of Bone Biologics' business strategy has been its focus on intellectual property protection. The company's success has largely depended on its ability to obtain patents and product license rights, maintain trade secrets, and operate without infringing on the proprietary rights of others, both domestically and internationally. However, the company acknowledges that there have been no guarantees that patents issued to or licensed by Bone Biologics would not be challenged, invalidated, or circumvented, or that the rights granted would provide definitive proprietary protection or competitive advantages.
Exclusive License Agreement with UCLA A key milestone for Bone Biologics was the signing of an amended and restated exclusive license agreement with the University of California, Los Angeles (UCLA) Technology Development Group in 2019. This agreement granted the company exclusive worldwide rights to develop and commercialize NELL-1 for spinal fusion, osteoporosis, and trauma applications.
Under the terms of the agreement, Bone Biologics is obligated to make milestone payments to UCLA upon the achievement of key development and regulatory milestones, as well as royalty payments on net sales of any licensed products. In June 2024, the company triggered the initial $100,000 milestone payment by enrolling the first patients in a pilot clinical study of its NB1 bone graft device, which combines NELL-1 with demineralized bone matrix (DBM).
Pilot Clinical Study of NB1 In June 2024, Bone Biologics announced the treatment of the first patients in a multicenter, prospective, randomized pilot clinical study of its NB1 bone graft device. This study is evaluating the safety and effectiveness of NB1 in 30 adult subjects undergoing transforaminal lumbar interbody fusion (TLIF) to treat degenerative disc disease.
The study design was previously reviewed and agreed upon by the U.S. Food and Drug Administration's Division of Orthopedic Devices, paving the way for progression to a pivotal clinical trial in the United States. The successful completion of this pilot study will be a critical step towards securing regulatory approval and commercialization of NB1.
Financials and Liquidity As of September 30, 2024, Bone Biologics reported a cash balance of $3.57 million, compared to $3.03 million as of December 31, 2023. The company's net loss for the nine months ended September 30, 2024, was $2.59 million, a significant improvement from the $7.40 million net loss reported for the same period in the prior year.
Bone Biologics has been diligent in managing its expenses, with research and development costs decreasing from $6.46 million in the first nine months of 2023 to $1.03 million in the same period of 2024. This reduction can be attributed to the significant expenses incurred in 2023 for the production of the NELL-1 protein necessary for the initial clinical study.
For the most recent quarter ended September 30, 2024, the company reported no revenue, a net loss of $4,153,506, operating cash flow (OCF) of -$572,162, and free cash flow (FCF) of -$572,162. The decrease in revenue, net income, OCF, and FCF compared to the prior year quarter is primarily due to the significant investment in research and development activities related to the NB1 bone graft device clinical study.
The company's management estimates that the available cash will cover operational needs into the second quarter of 2025. To fund future development activities and working capital requirements, Bone Biologics has taken several financing actions, including a $1.50 million public offering in March 2024 and an $1.81 million warrant inducement in August 2024.
In September 2024, the company entered into an At-the-Market (ATM) offering agreement with H.C. Wainwright & Co., LLC, allowing it to issue and sell up to approximately 1.10 million shares of common stock. Subsequent to the end of the third quarter, Bone Biologics raised an additional $640,610 in net proceeds through the ATM facility.
As of September 30, 2024, Bone Biologics had a debt-to-equity ratio of 0, indicating that the company has no long-term debt. The current ratio and quick ratio both stand at 14.87, suggesting strong short-term liquidity. The company does not have any available credit lines or credit facilities.
It's important to note that Bone Biologics has not generated any revenue from operations to date and has incurred accumulated losses of approximately $83.5 million as of September 30, 2024. The company used $2.77 million in cash for operating activities during the nine months ended September 30, 2024, a decrease from $7.54 million used in the same period in 2023. This reduction in cash expenditures is attributed to the development activities in 2023 related to preparing the NELL-1 protein for the pilot clinical study.
Product Development and Strategy Bone Biologics is currently focused on developing its lead product, NELL-1DBM, which combines the NELL-1 protein with demineralized bone matrix (DBM) to provide targeted control over bone regeneration. The company does not have distinct product segments, as all efforts are concentrated on advancing NELL-1DBM through clinical trials and towards potential commercialization.
NELL-1 is an osteopromotive recombinant protein that the company has licensed exclusively from UCLA Technology Development Group. NELL-1DBM is being developed as a combination product that will require FDA approval before commercialization in the United States. The ongoing pilot clinical study of the NB1 bone graft device, which incorporates NELL-1 with DBM, is a crucial step in this development process.
Risks and Challenges As a clinical-stage medical device company, Bone Biologics faces several risks and challenges common to the industry. These include the inherent uncertainties of the regulatory approval process, the ability to successfully complete clinical trials, and the potential for unforeseen safety or efficacy issues with its product candidates.
Furthermore, the company's reliance on the NELL-1 technology platform and its exclusive license agreement with UCLA introduces additional risks related to intellectual property protection and potential disputes or changes in the licensing terms.
Bone Biologics also operates in a highly competitive market, where it must compete with established players and novel technologies in the spinal fusion and orthobiologics space.
Outlook and Conclusion Bone Biologics' progress in advancing the NB1 bone graft device through the pilot clinical study and its efforts to strengthen its financial position through strategic financing activities position the company well for continued development and potential commercialization of its lead product.
As the company navigates the regulatory landscape and progresses towards pivotal trials, investors will closely monitor the outcomes of the current pilot study and the company's ability to secure the necessary funding to support its long-term growth strategy. With its exclusive NELL-1 technology and a clear focus on the large and growing spinal fusion market, Bone Biologics remains a promising investment opportunity for those interested in the orthobiologics space.
The company's ability to manage its cash burn while advancing its clinical program will be crucial in the coming quarters. As Bone Biologics continues to operate without revenue, securing additional financing and successfully progressing through clinical trials will be key milestones for investors to watch. The potential market for NELL-1DBM in spinal fusion applications represents a significant opportunity, but the path to commercialization will require continued dedication, strategic planning, and successful execution of the company's development strategy.