Bone Biologics Corporation — FY2022 Form 10-K
Reporting period: Fiscal year ended December 31, 2022. This is an annual report, not a standalone fourth-quarter report. The company is a development-stage medical device company focused on NELL-1 combined with demineralized bone matrix (DBM) for spinal fusion; it reported no revenue.
Financial performance and liquidity
| Metric | FY2022 | FY2021 |
|---|---|---|
| Revenue | $0 | $0 |
| Research and development expense | $1.579 million | $82,044 |
| General and administrative expense | $2.086 million | $1.021 million |
| Total operating expenses | $3.665 million | $1.103 million |
| Operating loss | $3.665 million | $1.103 million |
| Net loss | $1.485 million | $1.611 million |
| Basic and diluted loss per share | $0.13 | $0.35 |
| Net cash used in operating activities | $3.567 million | $1.229 million |
| Cash at year-end | $7.538 million | $6.675 million |
There was no gross profit or margin because the company had no revenue. The FY2022 net loss narrowed despite higher operating expenses, primarily reflecting a $2.912 million noncash gain from remeasuring warrant liabilities; FY2021 included $805,109 of interest expense, while FY2022 had none after convertible notes were converted in 2021.
At December 31, 2022, total assets were $8.495 million, including $956,925 in prepaid expenses. Current liabilities were $2.548 million, comprising $888,461 of accounts payable and accrued expenses and a $1.659 million warrant liability. No debt is shown on the year-end balance sheet. Financing activities provided $4.430 million in net proceeds from the October 2022 offering, offsetting operating cash use; cash increased by $863,000 during the year.
The company reported approximately $72 million of accumulated losses and its auditor cited substantial doubt about its ability to continue as a going concern. Management estimated operating expenditures of $8.8 million for the next 12 months and stated that additional financing would be needed.
Material changes and financing
- Operating expenses rose 232% year over year as research and development resumed after curtailed activity in 2021; R&D expense increased to $1.579 million.
- Shares outstanding increased from 10.351 million at year-end 2021 to 15.302 million at year-end 2022. The October 2022 offering sold 3.778 million units and included common shares and multiple warrant series.
- At year-end, 13.844 million warrants were outstanding, including warrants exercisable at a zero-dollar stated price. The warrant terms required liability accounting and periodic fair-value remeasurement, creating noncash earnings volatility.
- The filing reports October 2022 net offering proceeds as $4.430 million in its financial statements and cash-flow discussion, but approximately $4.454 million in other disclosures; gross proceeds were reported as $5.1 million.
Development outlook, risks, and contingencies
- The lead NELL-1/DBM product is a device-drug combination expected to require FDA premarket approval. The company planned a 30-patient, randomized, multicenter pilot study in Australia, with a late-2023 start anticipated in the filing. The proposed initial indication is lumbar spinal fusion; clinical progress and regulatory approval were not assured.
- Management estimated approximately $15 million to complete first-in-human studies and a further $27 million to achieve FDA approval for a spine interbody fusion indication. These are estimates, not committed funding or guidance on a guaranteed timeline.
- The company depends on future equity or debt financing and third parties for manufacturing, clinical, regulatory, and other services. Financing may be unavailable, dilutive, or restrictive; absent adequate funds, development could be reduced or halted.
- On November 17, 2022, Nasdaq notified the company that its share price had fallen below the $1 minimum bid requirement. The initial compliance deadline was May 16, 2023; the filing describes possible additional compliance time and delisting risk.
- A 2019 lawsuit alleges breach of contract and tortious interference relating to terminated professional service agreements. The company intends to defend the case, but said it could not estimate a possible loss because the litigation remained at an early stage.
- The company had two full-time employees and no commercial product or operating revenue. Other significant risks include clinical-trial failure or delay, regulatory uncertainty, competition, dependence on its UCLA license and MTF, and potential dilution.
- Management concluded that disclosure controls and internal control over financial reporting were effective at year-end. The auditor did not provide an internal-control attestation.
Important facts for investors to verify
- Current cash, burn rate, financing plans, and whether the company can fund its stated clinical and operating needs.
- Actual status and timing of the Australian pilot study, and any required FDA or ethics approvals.
- Reconciliation of the offering-proceeds disclosures and details of warrant terms, potential dilution, and the warrant liability.
- Subsequent Nasdaq listing status and any reverse split or other action taken to address the bid-price deficiency.
- Developments in the lawsuit and any resulting legal costs, settlement, or loss exposure.
- Clarification of the filing’s R&D disclosures: the business section cites $35,623 for 2022 and $45,500 for 2021, whereas the audited statements report R&D expense of $1,579,298 and $82,044, respectively; the smaller figures appear in the license-payment disclosure.