BBLG: A Potential Game-Changer for Back Surgeries
NASDAQ:BBLG
READ THE FULL BBLG RESEARCH REPORT
Bone Biologics (NASDAQ:BBLG) is a medical device company focused on addressing the spinal fusion market with their worldwide exclusive use of the NELL-1 technology developed by the UCLA Technology Development Group (UCLA TDG). NELL-1 has shown in clinical studies involving rats the ability to stimulate bone growth in a more targeted way, while allowing bone regeneration to occur at a more rapid rate. The company is developing a process to partner the NELL-1 technology to bone putty known as DBM (demineralized bone matrix) to safely inject the substance into the vertebrae being fused in order to have better outcomes and quicker recovery for spinal fusion patients. A recent funding round has given them the capital to pursue human trials, which the company is approved for in Australia and which will begin in 2023, and further the process toward FDA approval and commercialization of the NELL-1/DBM product.
The company recently gave an update through their earnings release for 3Q 2022 as well as a letter from the Chairman to shareholders. The summary is that the process remains on track for human trials to begin next year, while the funding currently in place is encouraging given the tightening financial conditions existing in the market at the present time. Details of the update are as follows:
• Bone reported 3Q 2022 earnings of -$0.12 per share, slightly better than our expectations as the company exhibits good cost control.
o The company, as a clinical stage entity, has yet to recognize revenue, and funding issues are the important metric to pay attention to in order for the company to shepherd its NELL-1 product through the FDA approval process.
▪ As of September 30, 2022, Bone reported it had just under $5.1 million in cash on the balance sheet.
• Since that report, the company announced an offering that netted Bone an additional $4.45 million in cash.
• Company management estimates that it will require approximately $15 million to complete the first in man studies.
o Those studies are anticipated to begin in 2023.
▪ The study will be a 30-patient clinical trial in Australia and will be a randomized pilot study evaluating the safety and preliminary effectiveness of NELL-1 in subjects with degenerative disk disease undergoing transforaminal lumbar interbody fusion.
• The primary endpoints will include fusion success at 12 and 24 months after surgery.
• The company also announced that it has engaged a contract development manufacturing organization (CDMO).
o The CDMO offers a global site network from process development to recombinant protein manufacturing.
▪ NELL-1 is a recombinant human protein that will be used in humans and, therefore, must be manufactured in specialized facilities so this is an important preparatory step.
We have written before about the market opportunity that BBLG has—an estimated global market of $3 billion per year just for bone graft substitutes in spine fusion, which is the market Bone intends to address initially. This is what we are focused on but there is what we consider an “upside call” if the company addresses other market opportunities such as the $11 billion osteoporosis market and the $8 billion trauma market. We continue to be excited about the opportunity and the science behind NELL-1 and are looking forward to the human trials beginning next year. BBLG has what we believe is a product with great potential, addressing a market with seemingly insatiable demand and a solid funding situation, which is vital in this environment. As such, we believe investors with a longer-term investing horizon should take a look at BBLG.
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