Bone Biologics Corporation — Q1 2024 Form 10-Q
Reporting period: Three months ended March 31, 2024. Bone Biologics is a development-stage medical device company focused on NELL-1/DBM for bone regeneration in spinal fusion. The product is expected to require FDA pre-market approval as a device/drug combination product. The company reported no operating revenue.
Financial performance and liquidity
| Metric | Q1 2024 | Q1 2023 |
|---|---|---|
| Revenue | $0 | $0 |
| Research and development expense | $245,625 | $2,590,645 |
| General and administrative expense | $657,911 | $556,892 |
| Total operating expenses | $903,536 | $3,147,537 |
| Net loss | $865,970 | $3,709,899 |
| Net cash used in operating activities | $1,303,411 | $1,349,993 |
- Cash was $3.23 million at March 31, 2024, versus $3.03 million at December 31, 2023. Total current assets were $3.84 million and current liabilities were $164,626. The filing reports no debt.
- Q1 financing activities provided $1.50 million, primarily from the March public offering. Cash increased by $201,065 during the quarter.
- Margins are not meaningful because the company has no revenue. The company reported an accumulated deficit of approximately $81.8 million.
Changes and notable items
- Operating expenses fell 71% year over year, principally because Q1 2023 included substantial NELL-1 protein production costs for the initial clinical study. R&D expense declined 91%; management expects substantial future development spending. G&A rose 18%, with management citing legal expenses related to litigation settlement.
- Net loss improved 77%. In addition to lower operating expenses, Q1 2024 included a $37,311 gain from the change in fair value of warrant liability, compared with a $562,918 expense in Q1 2023.
- The company settled litigation for $750,000: it paid $414,989 and its insurer paid $335,011. The action was dismissed with prejudice.
- The March offering generated approximately $1.5 million net proceeds and included common shares, pre-funded warrants, and warrants. Common shares outstanding rose from 534,238 at year-end to 1,016,489 at March 31; the filing reported 1,100,489 shares outstanding as of May 9. There were 1,324,970 warrants outstanding at quarter-end.
Outlook, risks and contingencies
- Management estimates operating expenditures of $6.9 million over the next 12 months and says available cash is expected to fund operations through Q3 2024. The filing states that substantial doubt exists about the company’s ability to continue as a going concern within one year after issuance.
- Management expects to seek additional debt or equity financing, with no assurance it will be available. Insufficient funding could require reduced or discontinued development or operations; equity financing could substantially dilute shareholders. Management estimates approximately $5 million to complete first-in-human studies and an additional $24 million in scientific expenses to achieve FDA approval, if possible.
- The first-in-human pilot clinical study began in December 2023. Management anticipates continued investment as it prepares for a future pivotal clinical study. FDA approval, clinical success, financing access, third-party manufacturing, intellectual property rights, and market acceptance remain key risks.
- The UCLA license requires annual maintenance payments, royalties and milestone payments; none of the disclosed development or commercial milestones had been met by March 31. Failure to meet diligence requirements, including at least $1 million in annual preclinical or clinical development spending until completion of a Phase III pivotal study, could allow UCLA TDG to terminate or make the license non-exclusive.
- The company regained Nasdaq’s minimum-bid-price compliance in January 2024 but remained subject to a discretionary panel monitor through June 28, 2024. Management reported disclosure controls were effective and no material changes in internal control over financial reporting during the quarter.
Important facts for investors to verify
- Whether additional financing can be secured before the stated cash runway ends, and how financing terms may affect dilution or operations.
- Clinical-study progress, pivotal-study timing, FDA requirements, and the funding needed to reach the next milestones.
- The potential dilution from outstanding warrants, pre-funded warrants and stock options, including the post-quarter share count.
- Compliance with UCLA license diligence obligations and any future license milestones or payments.
- Whether Nasdaq listing compliance continued after the panel-monitor period.