Bone Biologics (BBLG) - 2024 Q4 - Annual Report

Part I Business Bone Biologics is a clinical-stage medical device company focused on bone regeneration for spinal fusion, with its lead product NB1 in a pilot clinical study in Australia - The company is a medical device firm focused on bone regeneration in spinal fusion using the recombinant human protein NELL-1, licensed exclusively from UCLA TDG[18] - The lead product candidate, NB1 (NELL-1/DBM), is in a pilot clinical study in Australia involving up to 30 subjects to evaluate its safety and effectiveness in treating degenerative disc disease (DDD), with the first patients treated in 2024[22][23] - The FDA has classified the NELL-1/DBM product as a device/drug combination that will require a Pre-Market Approval (PMA) application for commercialization in the U.S[18][39] Research and Development Expenses | Fiscal Year | R&D Expense ($) | | :--- | :--- | | 2024 | $2,130,385 | | 2023 | $6,907,824 | - The company holds exclusive licenses for six U.S. patents from UCLA TDG related to NELL-1, with expiration dates ranging from 2026 to 2033[59] - The company has two full-time employees and relies heavily on independent organizations, advisors, and consultants for regulatory, clinical, and manufacturing functions[80] Risk Factors The company faces substantial risks related to its financial position, early-stage product development, and heavy reliance on third parties and external funding - The company has a limited operating history, has incurred losses since inception (accumulated deficit of ~$85.0 million), and its recurring operating losses raise substantial doubt about its ability to continue as a going concern, with available cash expected to fund operations only up to Q4 2025[87][92][93] - Product candidates are in an early stage of development, and the FDA regulatory process is costly, time-consuming, and uncertain, with the company's pilot clinical study in Australia potentially not accepted for a U.S. pivotal trial[96][101] - The company relies on third parties for its core technology license (UCLA TDG), raw material supply, and to conduct preclinical and clinical trials, where failure to maintain these relationships could impair development[125][126][140] - The company faces substantial competition from large, established orthopedic and biotechnology companies with significantly greater resources, which may develop and commercialize products more successfully[179][185][187] - The company's ability to protect its intellectual property is critical, requiring compliance with its UCLA TDG license agreement and ensuring patents are sufficient to prevent competition[131][140][152] - To maintain its Nasdaq listing, the company must meet continued listing standards, including a minimum bid price of $1.00, with failure to do so potentially resulting in delisting[210] Unresolved Staff Comments The company reports that it has no unresolved comments from the SEC staff - None[232] Cybersecurity The company has implemented policies and processes to manage cybersecurity risks, with oversight from the Board of Directors - The Board of Directors oversees the company's cybersecurity risk management process[236] - The CEO and CFO are primarily responsible for assessing and managing material risks from cybersecurity threats[237] - The company has not encountered any cybersecurity challenges that are reasonably likely to materially impair its operations or financial standing[234] Properties The company leases its principal executive office in Burlington, Massachusetts on a month-to-month basis - The company leases its primary office at 2 Burlington Woods Drive, Ste 100, Burlington, MA 01803, on a month-to-month lease[238] Legal Proceedings The company is not currently involved in any legal proceedings that would be expected to have a material adverse effect on its business or financial condition - The company is not presently a party to any legal proceedings that would have a material adverse effect on its business, results of operations, or financial condition[239] Mine Safety Disclosures This item is not applicable to the company - Not applicable[240] Part II Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities The company's common stock and certain warrants are traded on The Nasdaq Capital Market, with 22 registered shareholders as of February 19, 2025 - The company's common stock and certain warrants trade on The Nasdaq Capital Market under the symbols "BBLG" and "BBLGW"[243] - As of February 19, 2025, there were 22 shareholders of record[244] - The company has never declared or paid cash dividends and does not anticipate doing so in the foreseeable future[245] Management's Discussion and Analysis of Financial Condition and Results of Operations The company's net loss decreased to $4.1 million in FY2024 from $8.9 million in FY2023, primarily due to reduced R&D expenses, but faces substantial doubt about its going concern ability Results of Operations The company reported a net loss of $4.1 million in FY2024, a 54% improvement from FY2023, driven by a 69% decrease in Research and Development expenses Comparison of Operations for the Years Ended December 31 | | 2024 ($) | 2023 ($) | % Change | | :--- | :--- | :--- | :--- | | Operating Expenses | | | | | Research and development | $2,130,385 | $6,907,824 | (69.16)% | | General and administrative | $2,088,776 | $2,520,479 | (17.13)% | | Total operating expenses | $4,219,161 | $9,428,303 | (55.25)% | | Loss from operations | ($4,219,161) | ($9,428,303) | (55.25)% | | Net loss | ($4,112,420) | ($8,948,731) | (54.04)% | - Research and development expenses decreased by $4.8 million (69.16%) in 2024, primarily because significant expenses were incurred in 2023 to produce the NELL-1 protein needed for the initial clinical study[258] - General and administrative expenses decreased by $431,703 (17.13%) in 2024, mainly due to higher legal expenses related to litigation matters in 2023[259][260] Liquidity and Capital Resources The company faces significant liquidity challenges with an accumulated deficit of $85.0 million and cash expected to last only until Q4 2025, necessitating future capital raises - The company's financial condition raises substantial doubt about its ability to continue as a going concern, with an accumulated deficit of approximately $85.0 million and cash of $3.3 million as of December 31, 2024, expected to fund operations into Q4 2025[264][276] - In March 2024, the company raised net proceeds of $1.5 million through a public offering of common stock and warrants[266] - In August 2024, the company raised net proceeds of $1.8 million through a warrant inducement transaction[270] - The company established an At-The-Market (ATM) offering facility in September 2024, raising net proceeds of $1.1 million during the year[273] Cash Flow Summary | Cash Flow Activity | Year Ended Dec 31, 2024 ($) | Year Ended Dec 31, 2023 ($) | | :--- | :--- | :--- | | Net Cash Used in Operating Activities | ($4,124,935) | ($9,555,904) | | Net Cash Provided by Financing Activities | $4,423,497 | $5,044,161 | Quantitative and Qualitative Disclosures About Market Risk This item is not applicable to the company - Not applicable[286] Financial Statements and Supplementary Data This section indicates that the company's financial statements and supplementary data are included in Part IV, Item 15 of the Annual Report - The required financial statements and supplementary data are included in Item 15 of this Annual Report[287] Changes in and Disagreements with Accountants on Accounting and Financial Disclosure The company reports no changes in or disagreements with its accountants on accounting and financial disclosure - None[288] Controls and Procedures Management concluded that the company's disclosure controls and internal control over financial reporting were effective as of December 31, 2024 - Management concluded that the company's disclosure controls and procedures were effective as of December 31, 2024[289] - Management concluded that the company's internal control over financial reporting was effective as of December 31, 2024, based on the criteria set forth by COSO[292] - No changes in internal control over financial reporting occurred during the fourth quarter of 2024 that materially affected, or are reasonably likely to materially affect, these controls[293] Other Information During the fourth quarter of 2024, no director or officer of the company adopted or terminated a Rule 10b5-1 trading arrangement - No director or officer adopted or terminated a Rule 10b5-1 trading arrangement during the three months ended December 31, 2024[295] Disclosure Regarding Foreign Jurisdictions that Prevent Inspections This item is not applicable to the company - Not applicable[296] Part III Directors, Executive Officers and Corporate Governance The company's executive team is led by CEO Jeffrey Frelick and CFO Deina Walsh, with a four-member independent Board of Directors overseeing governance - The company's executive officers are Jeffrey Frelick (CEO and President) and Deina H. Walsh (CFO)[299] - The Board of Directors has four members, all of whom have been determined to be independent under Nasdaq listing standards[308][309] - The Board has three standing committees: Audit, Compensation, and Nominating and Corporate Governance, with all committee members being independent[313][314][315] - The company has adopted a Code of Conduct and Ethics, an Insider Trading Policy, and an Anti-Hedging Policy[317][318][319] Executive Compensation This section details the compensation for CEO Jeffrey Frelick and CFO Deina Walsh, including base salary, option awards, and non-equity incentive plan compensation FY2024 Summary Compensation Table | Name and Principal Position | Salary ($) | Option Awards ($) | Non-Equity Incentive Plan Compensation ($) | Total Compensation ($) | | :--- | :--- | :--- | :--- | :--- | | Jeffrey Frelick, CEO and President | $300,000 | $30,788 | $54,109 | $384,897 | | Deina Walsh, CFO | $200,000 | $15,394 | $27,054 | $242,448 | - CEO Jeffrey Frelick's employment agreement includes a $300,000 annual salary and a target bonus of 50% of base salary[324] - CFO Deina Walsh's employment agreement includes a $200,000 annual salary and a target bonus of 25% of base salary[326][327] - Non-employee directors receive annual cash retainers ($25,000 for members, $35,000 for the Chair) and automatic equity grants (initial and annual stock options)[341][344][345] Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters This section discloses equity compensation plan information and beneficial ownership, with directors and executive officers owning 6.1% of outstanding common stock Equity Compensation Plan Information (as of December 31, 2024) | Plan Category | Securities to be Issued Upon Exercise | Weighted-Average Exercise Price ($) | Securities Remaining Available for Future Issuance | | :--- | :--- | :--- | :--- | | Equity compensation plans approved by security holders | 194,484 | $42.14 | 435,005 | - As of February 19, 2025, all directors and executive officers as a group (6 persons) beneficially owned 213,266 shares, representing 6.1% of the outstanding common stock[355] Certain Relationships and Related Transactions, and Director Independence The company reports no material related person transactions since January 1, 2023, and all four directors are deemed independent under Nasdaq rules - Since January 1, 2023, there have been no transactions with related persons that had a direct or indirect material interest[357] - The Board of Directors has determined that all four of its members (Bruce Stroever, Sid Angle, Robert Gagnon, and Phil Meikle) qualify as independent under Nasdaq Listing Rules[358] Principal Accountant Fees and Services This section details the fees billed by Weinberg & Company, P.A., totaling $178,728 in 2024, with all services pre-approved by the Audit Committee Accountant Fees Billed by Weinberg & Company, P.A. | Fee Category | 2024 ($) | 2023 ($) | | :--- | :--- | :--- | | Audit Fees | $89,108 | $121,437 | | Audit Related Fees | $89,620 | $19,310 | | Tax fees | $0 | $0 | | All other fees | $0 | $0 | | Total | $178,728 | $140,747 | - The Audit Committee pre-approves all audit and permissible non-audit services provided by the independent registered public accounting firm[360] Part IV Exhibits and Financial Statement Schedules This section lists the documents filed as part of the Form 10-K, including consolidated financial statements and various exhibits - This section contains the list of financial statements and exhibits filed with the annual report[368][369] Form 10-K Summary This item is noted as "None," indicating no summary is provided - None[376][377] Financial Statements Report of Independent Registered Public Accounting Firm The auditor issued a qualified opinion with a going concern emphasis due to recurring losses and identified the 2024 warrant inducement as a critical audit matter - The auditor's report expresses substantial doubt about the Company's ability to continue as a going concern, citing a net loss of $4.1 million and cash used in operations of $4.1 million in 2024[390] - A critical audit matter was identified related to the accounting for the August 2024 warrant inducement, due to the significant management judgments required for its valuation and presentation[395][396] Consolidated Financial Statements The consolidated financial statements show $3.3 million in cash and a $4.1 million net loss in 2024, reflecting significant financing activities and ongoing going concern risk Consolidated Balance Sheets As of December 31, 2024, the company reported total assets of $3.9 million, primarily cash, with total stockholders' equity increasing to $3.5 million Consolidated Balance Sheet Data (as of December 31) | | 2024 ($) | 2023 ($) | | :--- | :--- | :--- | | Assets | | | | Cash | $3,325,131 | $3,026,569 | | Total Current Assets | $3,861,369 | $3,737,763 | | Total Assets | $3,861,369 | $3,737,763 | | Liabilities & Equity | | | | Total Current Liabilities | $377,712 | $831,402 | | Total Liabilities | $377,712 | $831,402 | | Total Stockholders' Equity | $3,483,657 | $2,906,361 | Consolidated Statements of Operations For FY2024, the company reported no revenue and a net loss of $4.1 million, a significant improvement from the $8.9 million loss in 2023 due to lower R&D expenses Consolidated Statement of Operations Data (For the Year Ended December 31) | | 2024 ($) | 2023 ($) | | :--- | :--- | :--- | | Revenues | $0 | $0 | | Total operating expenses | $4,219,161 | $9,428,303 | | Loss from operations | ($4,219,161) | ($9,428,303) | | Net loss | ($4,112,420) | ($8,948,731) | | Net loss attributable to common stockholders | ($7,324,924) | ($8,948,731) | | Loss per share – basic and diluted | ($4.83) | ($34.01) | Consolidated Statements of Cash Flows In 2024, the company used $4.1 million in operating cash, offset by $4.4 million from financing, resulting in a net cash increase of $0.3 million and a year-end balance of $3.3 million Consolidated Statement of Cash Flows Data (For the Year Ended December 31) | | 2024 ($) | 2023 ($) | | :--- | :--- | :--- | | Net cash used in operating activities | ($4,124,935) | ($9,555,904) | | Net cash provided by financing activities | $4,423,497 | $5,044,161 | | Net increase (decrease) in cash | $298,562 | ($4,511,743) | | Cash, end of year | $3,325,131 | $3,026,569 | Notes to Consolidated Financial Statements The notes highlight the company's going concern risk, details of R&D expenses, significant 2024 financing activities including a $3.2 million non-cash deemed dividend, and commitments to UCLA - Note 1 (Going Concern): The company has an accumulated deficit of ~$85.0 million and expects its current cash of $3.3 million to fund operations only up to Q4 2025, raising substantial doubt about its ability to continue as a going concern[416][418] - Note 3 (R&D): Research and development costs totaled $2.1 million in 2024 and $6.9 million in 2023, primarily related to the pilot clinical study for the NB1 bone graft device being conducted in Australia[456][457] - Note 6 (Stockholders' Equity): In August 2024, a warrant inducement transaction resulted in the exercise of existing warrants for $1.9 million in gross proceeds and was accounted for with a $3.2 million non-cash deemed dividend[473] - Note 10 (Commitments): Under the UCLA TDG license agreement, the company was triggered to pay a $100,000 milestone fee in 2024 upon treatment of the first patients in its pilot clinical study, with future milestone, royalty, and diligence fee payments contingent on development and sales progress[496][499]