UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-K
For
the fiscal year ended: December 31, 2023
For
the transition period from _________ to _________
Commission
File Number: 001-40899
Bone
Biologics Corporation
(Exact
name of registrant as specified in its charter)
2
Burlington Woods Drive, Ste 100, Burlington, MA01803
(Address of principal executive offices) (Zip Code)
(781)552-4452
(Registrant’s telephone number, including area
code)
Securities
registered pursuant to Section 12(b) of the Act:
Title of each class Trading Symbol(s) Name of each exchange on which registered
Common stock, $0.001 par value per share BBLG The Nasdaq Capital Market
Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒
Indicate
by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒
Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate
by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule
405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Yes ☒ No ☐
Indicate
by check mark whether the Company is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting
company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,”
and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer ☐ Accelerated filer ☐
Non-accelerated filer ☒ Smaller reporting company ☒
Emerging growth company ☐
If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate
by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness
of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered
public accounting firm that prepared or issued its audit report. ☐
If securities are registered pursuant to Section 12(b) of the Act, indicate
by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to
previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements
that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during
the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate
by check mark whether the Company is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
The
approximate aggregate market value of the registrant’s common equity held by non-affiliates of the registrant at the close of
business on June 30, 2023, was $4,162,560.
As
of February 14, 2024, there were 534,238 shares of common stock, par value $0.001, outstanding.
TABLE
OF CONTENTS
Page
Part I
Item 1. Business 5
Item 1A. Risk Factors 13
Item 1B. Unresolved Staff Comments 43
Item 1C. Cybersecurity 43
Item 2. Properties 44
Item 3. Legal Proceedings 44
Item 4. Mine Safety Disclosures 44
Part II
Item 6. [Reserved] 45
Item 7A. Quantitative and Qualitative Disclosures About Market Risk 48
Item 8. Financial Statements and Supplementary Data 48
Item 9A. Controls and Procedures 48
Item 9B. Other Information 49
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections 49
Part III
Item 10. Directors, Executive Officers and Corporate Governance 50
Item 11. Executive Compensation 53
Item 14. Principal Accounting Fees and Services 59
Part IV
Item 15. Exhibits, Financial Statement Schedules 60
Signatures 63
Power of Attorney 64
Index to Consolidated Financial Statements F-1
Cautionary
Note on Forward-Looking Statements
This
annual report on form 10-K (“Annual Report”) contains forward-looking statements. Such forward-looking statements include
those that express plans, anticipation, intent, contingency, goals, targets or future development and/or otherwise are not statements
of historical fact. These forward-looking statements are based on our current expectations and projections about future events and they
are subject to risks and uncertainties known and unknown that could cause actual results and developments to differ materially from those
expressed or implied in such statements.
All
statements other than historical facts contained in this Annual Report, including statements regarding our future financial position,
capital expenditures, cash flows, business strategy and plans and objectives of management for future operations are forward-looking
statements. The words “anticipated,” “believe,” “expect,” “plan,” “intend,”
“seek,” “estimate,” “project,” “could,” “may,” and similar expressions are
intended to identify forward-looking statements. These statements include, among others, information regarding future operations, future
capital expenditures, and future net cash flow. Such statements reflect our management’s current views with respect to future events
and financial performance and involve risks and uncertainties, including, without limitation, our ability to raise additional capital
to fund our operations, obtaining Food and Drug Administration (“FDA”) and other regulatory authorization to market our drug
and biological products, successful completion of our clinical trials, our ability to achieve regulatory authorization to market our
lead product NELL-1/DBM, our reliance on third party manufacturers for our drug products, market acceptance of our products, our dependence
on licenses for certain of our products, our reliance on the expected growth in demand for our products, exposure to product liability
and defect claims, development of a public trading market for our securities, and various other matters, many of which are beyond our
control.
Should
one or more of these risks or uncertainties occur, or should underlying assumptions prove to be incorrect, actual results may vary materially
and adversely from those anticipated, believed, estimated or otherwise indicated. Consequently, all of the forward-looking statements
made in this Annual Report are qualified by these cautionary statements and accordingly there can be no assurances made with respect
to the actual results or developments. We undertake no obligation to revise or publicly release the results of any revision to these
forward-looking statements, except as required by law. Given these risks and uncertainties, readers are cautioned not to place undue
reliance on such forward-looking statements.
Unless
expressly indicated or the context requires otherwise, the terms “Company,” “we,” “us,” and “our”
in this document refer to Bone Biologics Corporation, a Delaware corporation, and, our wholly owned subsidiary, as defined under Part
I, Item 1-”Business” in this Annual Report.
Glossary
of Abbreviations and Defined Terms
Abbreviations
ACA Affordable Care Act
BMP Bone Morphogenic Protein
CDMO Contract Development and Manufacturing Organization
cGMP current Good Manufacturing Practice
CRO Contract Research Organization
DDD Degenerative disc disease
FDA Food and Drug Administration
HIPAA Health Insurance Portability and Accountability Act of 1996
IDE Investigational Device Exemption
IRB Institutional Review Board
MTF Musculoskeletal Transplant Foundation
NDA New Drug Application
NELL-1 Neural epidermal growth factor-like 1 protein (NELL-1)
NOL Net Operating Loss
PMA Pre-market approval
rhBMP-2 Recombinant Bone Morphogenic Protein
rhNELL-1 Recombinant NELL-1
UCLA TDG UCLA Technology Development Group on behalf of UC Regents
USPTO The United States Patent and Trademark Office
Defined Terms
Demineralized Bone Bone that has had the calcium removed.
Osteopromotive A material that promotes the de novo formation of bone.
Osteostimulative Stimulates bone growth.
PART
I
Item
1. Business
Company
Overview
We
are a medical device company that is currently focused on bone regeneration in spinal fusion using the recombinant human protein known
as NELL-1. NELL-1 in combination with DBM, demineralized bone matrix, is an osteopromotive recombinant protein that provides target specific
control over bone regeneration. The NELL-1 technology platform has been licensed exclusively for worldwide applications to us through
a technology transfer from the UCLA Technology Development Group on behalf of UC Regents (“UCLA TDG”). UCLA TDG and the Company
received guidance from the Food and Drug Administration (“FDA”) that NELL-1/DBM will be classified as a device/drug combination
product that will require an FDA-approved pre-market approval application (“PMA”) before it can be commercialized in the
United States.
We
were founded by University of California professors in collaboration with an Osaka University professor and a University of Southern
California surgeon in 2004 as a privately-held company with proprietary, patented technology that has been validated in sheep and non-human
primate models to facilitate bone growth. We believe our platform technology has application in delivering improved outcomes in the surgical
specialties of spinal, orthopedic, general orthopedic, plastic reconstruction, neurosurgery, interventional radiology, and sports medicine.
Lead product development and clinical studies are targeted on spinal fusion surgery, one of the larger segments in the orthopedic market.
We
are a development stage entity. The production and marketing of our products and ongoing research and development activities are
subject to extensive regulation by numerous governmental authorities in the United States. Prior to marketing in the United States,
any combination product developed by us must undergo rigorous preclinical (animal) and clinical (human) testing and an extensive
regulatory approval process implemented by the FDA under the Federal Food, Drug, and Cosmetic Act. There can be no assurance that we
will not encounter problems in clinical trials that will cause us or the FDA to delay or suspend the clinical trials.
Our
success will depend in part on our ability to obtain patents and product license rights, maintain trade secrets, and operate without
infringing on the proprietary rights of others, both in the United States and other countries. There can be no assurance that patents
issued to or licensed by us will not be challenged, invalidated, rendered unenforceable, or circumvented, or that the rights granted
thereunder will provide proprietary protection or competitive advantages to us.
Product
Candidates
We
have developed a stand-alone platform technology through significant laboratory and small and large animal research over more than ten
years to generate the current applications across broad fields of use. The platform technology is our recombinant human protein, known
as NELL-1, a proprietary skeletal specific growth factor which is a bone void filler. NELL-1 provides regulation over skeletal tissue
formation and stem cell differentiation during bone regeneration. We obtained the platform technology pursuant to an exclusive license
agreement with UCLA TDG which grants us exclusive rights to develop and commercialize NELL-1 for spinal fusion by local administration,
osteoporosis and trauma applications. A major challenge associated with orthopedic surgery is effective bone regeneration, including
challenges related to rapid, uncontrolled bone growth which can cause unsound structure; cysts and less dense bone formation; unwanted
bone formation, and swelling; and intense inflammatory response to current bone regeneration compounds. We believe NELL-1 will address
these unmet clinical challenges for effective bone regeneration, especially in hard healers.
We
are currently focused on bone regeneration in lumbar spinal fusion, in keeping with our exclusive license agreement, using NELL-1 in
combination with DBM, a demineralized bone matrix from Musculoskeletal Transplant Foundation (“MTF”). The NELL-1/DBM medical
device is a combination product which is an osteopromotive recombinant protein that provides target specific control over bone regeneration.
Leveraging the resources of investors and strategic partners, we have successfully surpassed four critical milestones:
● Completed pivotal animal study; and
● Initiated a first-in-man pilot clinical trial in Australia.
Our
lead product candidate is expected to be purified NELL-1 mixed with 510(k) cleared DBM Demineralized Bone Putty recommended for use in
conjunction with applicable hardware consistent with the indication. The NELL-1/DBM Fusion Device, NB1, will be comprised of a single dose
vial of NELL-1 recombinant protein freeze dried onto DBM. A vial of NELL-1/DBM will be sold in a convenience kit with a diluent and a
syringe of 510(k) cleared demineralized bone (“DBM Putty”) produced by MTF. A delivery device will allow the surgeon to mix
the reconstituted NELL-1 with the appropriate quantity of DBM Putty just prior to implantation.
The
NELL-1/DBM Fusion Device, NB1, is intended for use in lumbar spinal fusion and may have a variety of other spine
and orthopedic applications. While the product is initially targeted at the lumbar spine fusion market, in keeping with our exclusive
license agreement, we believe NELL-1’s novel set of characteristics, target specific mechanism of action, efficacy, safety and
affordability position the product well for application in a variety of procedures including:
UCLA’s
initial research was funded with approximately $18 million in resources from UCLA TDG and government grants. Since licensing the exclusive
worldwide intellectual property rights from UCLA TDG, our continued development has been funded through capital raises. Our research
and development expenses for the years ended December 31, 2023 and 2022 were $6,907,824 and $1,579,298, respectively. We anticipate that
we will require approximately $5 million to complete first-in-man studies, and an estimated additional $24 million in scientific expenses
to achieve FDA approval, if possible, for a spine interbody fusion indication. These amounts are estimates based on data currently available
to us, and are subject to many factors including the various risk factors discussed below under “Risk Factors.”
NELL-1’s
powerful specific bone and cartilage forming properties are derived from the ability of NELL-1 to only target cells that exhibit an activated
“master switch” to develop into bone or cartilage. NELL-1 is a function specific recombinant human protein that has been
proven in laboratory bench models to recapitulate normal human growth and development to provide control over bone and cartilage regeneration.
NELL-1
was isolated in 1996, and the first NELL-1 patent on bone regeneration was filed in 1999. Subsequent patents and continuations in part
describing NELL-1 manufacturing, delivery, and cartilage regeneration were filed to further strengthen the patent portfolio.
We
have completed two preclinical sheep studies that demonstrated our recombinant NELL-1 (“rhNELL-1”) growth factor effectively
promotes bone formation in a phylogenetically advanced spine model. In addition, rhNELL-1 was shown to be well tolerated and there were
no findings of inflammation. Our pivotal sheep study evaluated the effect of rhNELL-1 combined with DBM on lumbar interbody arthrodesis
in an adult ovine model and demonstrated a 37.5% increased frequency of fusion at 26 weeks from the control.
Our
first-in-man pilot clinical study commenced year-end 2023 and will evaluate the safety and effectiveness of NB1 in adult subjects with
spinal degenerative disc disease at one level from L2-S1, who may also have up to Grade 1 spondylolisthesis or Grade 1 retrolisthesis
at the involved level who undergo transforaminal lumbar interbody fusion. The multi-center, prospective, randomized trial consists of
30 patients in Australia, with the primary end-point being fusion success at 12 months and change from baseline in the Oswestry Disability
Index pain score. We expect completion of the trial 12 months following enrollment of the 30th patient. We intend to use the
pilot clinical trial data from Australia to enable a future larger U.S. pivotal clinical study, prior to submission of a PMA to the FDA.
Research
& Publications
We
believe our scientific evidence validates the many benefits of NELL-1. Currently there is a comprehensive database of more than 80 research
publications and abstracts of preclinical studies with NELL-1 of which more than 45 are peer-reviewed publications.
We
completed a preclinical study, which shows our rhNELL-1 growth factor effectively promotes bone formation in a phylogenetically advanced
spine model. In addition, rhNELL-1 was shown to be well tolerated and there were no findings of inflammation.
Proposed
Initial Clinical Application
The
NELL-1/DBM Fusion Device will be indicated for spinal fusion procedures in skeletally mature patients with spinal degenerative disk disease (“DDD”) at one level from L2-S1.
These DDD patients may also have up to Grade I spondylolisthesis at the involved level. The NELL-1/DBM Fusion Device is to be implanted
via an anterior open or an anterior laparoscopic approach in conjunction with a cleared intervertebral body fusion device. Patients receiving
the device should have had at least six months of non-operative treatment prior to treatment with the device. A cervical indication is
currently under consideration. This indication for use would fill a current clinical gap, created by potentially dangerous inflammatory
responses caused by commercially available catalytic bone growth agents, the subject of a Public Health Notification from the FDA on
July 1, 2008 about life threatening complications associated with a recombinant human protein in cervical spine fusion. We do not expect
our product to see the same adverse events with NELL-1/DBM as have been observed with other commercially available protein. We have performed
a rat femoral onlay model to compare proinflammatory response of rhBMP-2 and NELL-1 within Helistate collagen sponges. While NELL-1 induced
normal healing, rhBMP-2 induced significant amounts of swelling and histological evidence of intense inflammatory response.
Description
of the DBM Putty to Be Used With Nell-1
The
DBM Demineralized Bone Putty provided as part of the convenience kit with NELL-1/DBM is a Class II device. The common name is “Bone
Void Filler Containing Human Demineralized Bone Matrix.” The product is regulated under 21 C.F.R. §888.3045 Resorbable calcium
salt bone void filler device, Product Codes MQV, GXP, and MBP. MTF is the manufacturer of the DBM Putty that was cleared by the FDA for
spine indication in December 2006.
DBM
Putty is a matrix composed of processed human cortical bone. Demineralized bone granules are mixed with sodium hyaluronate to form the
DBM Putty. Every lot of final DBM Putty product is tested in an athymic mouse model or in an alkaline phosphatase assay, which has been
shown to have a positive correlation with the athymic mouse model, to ensure osteostimulation.
Based
upon extensive discussions with regulatory experts and a specific communication from the FDA in response to a submission of our plan
under the Amended License Agreement between UCLA TDG and the Company, we believe the NELL-1/DBM Fusion Device will be regulated as a
Class III medical device and that will therefore require submission and approval of a PMA.
Our
Business Strategy
Our
business plan is to develop our target-specific growth factor for bone regeneration, based on preclinical and clinical data that has
demonstrated increases in the quantity and quality of bone, and a strong safety profile. Our initial focus on lumbar spinal fusion entails
advancing our target-specific growth factor through clinical studies to achieve FDA approval with comparable efficacy and safety to the
gold standard for spine fusion (autografts). Continued capital funding is critical to facilitate the development of our Nell-1 technology
through the clinical regulatory path.
Development
of the Company
We
were incorporated under the laws of the State of Delaware on October 18, 2007 as AFH Acquisition X, Inc. Pursuant to a Merger Agreement,
dated September 19, 2014, by and among the Company, its wholly-owned subsidiary, Bone Biologics Acquisition Corp., a Delaware corporation
(“Merger Sub”), and Bone Biologics, Inc. Merger Sub merged with and into Bone Biologics Inc., with Bone Biologics Inc. remaining
as the surviving corporation in the merger. Upon the consummation of the merger, the separate existence of Merger Sub ceased. On September
22, 2014, the Company officially changed its name to “Bone Biologics Corporation” to more accurately reflect the nature of
its business and Bone Biologics, Inc. became a wholly owned subsidiary of the Company. Bone Biologics, Inc. was incorporated in California
on September 9, 2004.
Effective
July 24, 2018, we implemented a reverse split of the outstanding common stock of the Company at a ratio of 1-for-10.
Effective
October 12, 2021, we implemented a reverse split of the outstanding common stock of the Company at a ratio of 1-for-2.5.
Effective
June 5, 2023, we implemented a reverse split of the outstanding common stock of the Company at a ratio of 1-for-30.
Effective
December 20, 2023, we implemented a reverse split of the outstanding common stock of the Company at a ratio of 1-for-8.
All
share and per share amounts have been retro-actively restated as if the reverse split occurred at the beginning of the earliest period
presented.
UCLA
TDG Exclusive License Agreement
Effective
April 9, 2019, we entered into an Amended and Restated Exclusive License Agreement dated as of March 21, 2019, which was subsequently
amended through three sets of amendments (as so amended the “Amended License Agreement”) with the UCLA TDG. The Amended License
Agreement amends and restates the Amended and Restated Exclusive License Agreement, dated as of June 19, 2017 (the “2017 Agreement”).
The 2017 Agreement amended and restated the Exclusive License Agreement, effective March 15, 2006, between the Company and UCLA TDG,
as amended by ten amendments. Under the terms of the Amended License Agreement, the Regents have continued to grant us exclusive rights
to develop and commercialize NELL-1 (the “Licensed Product”) for spinal fusion by local administration, osteoporosis and
trauma applications. The Licensed Product is a recombinant human protein growth factor that is essential for normal bone development.
We
have agreed to pay an annual maintenance fee to UCLA TDG of $10,000 as well as pay certain royalties to UCLA TDG under the Amended License
Agreement at the rate of 3.0% of net sales of licensed products or licensed methods. We must pay the royalties to UCLA TDG on a quarterly
basis. Upon a first commercial sale, we also must pay a minimum annual royalty between $50,000 and $250,000, depending on the calendar
year which is after the first commercial sale. If we are required to pay any third party any royalties as a result of us making use of
UCLA TDG patents, then we may reduce the royalty owed to UCLA TDG by 0.333% for every percentage point paid to a third party. If we grant
sublicense rights to a third party to use the UCLA TDG patent, then we will pay UCLA TDG 10% to 20% of the sublicensing income we receive
from such sublicense.
We
are obligated to make the following milestone payments to UCLA TDG for each Licensed Product or Licensed Method:
● $100,000 upon enrollment of the first subject in a Feasibility Study;
● $250,000 upon enrollment of the first subject in a Pivotal Study:
We
are also obligated pay to UCLA TDG a fee (the “Diligence Fee”) of $8,000,000 upon the sale of any Licensed Product (the “Triggering
Sale Date”) in accordance with the payment schedule below:
Our
obligation to pay the Diligence Fee will survive termination or expiration of the Amended License Agreement and we are prohibited from
assigning, selling, or otherwise transferring any of its assets related to any Licensed Product unless our Diligence Fee obligation is
assigned, sold, or transferred along with such assets, or unless we pay UCLA TDG the Diligence Fee within ten (10) days of such assignment,
sale or other transfer of such rights to any Licensed Product.
We
are also obligated to pay UCLA TDG a cash milestone payment within thirty (30) days of a Liquidity Event (including a Change of Control
Transaction and a payment election by UCLA TDG exercisable after December 22, 2016) such payment to equal the greater of:
● 2% of all proceeds in connection with a Change of Control Transaction.
As
of December 31, 2023, none of the above milestones have been met.
We
are obligated to diligently proceed with developing and commercializing licensed products under UCLA TDG patents set forth in the Amended
License Agreement. UCLA TDG has the right to either terminate the license or reduce the license to a non-exclusive license if we do not meet certain diligence milestone deadlines set forth in the Amended License Agreement.
We
must reimburse or pre-pay UCLA TDG for patent prosecution and maintenance costs incurred during the term of the Amended License Agreement.
We have the right to bring infringement actions against third party infringers of the Amended License Agreement, UCLA TDG may join voluntarily,
at its own expense, or, at our expense, be joined involuntarily to the action. We are required to indemnify UCLA TDG against any third
party claims arising out of our exercise of the rights under the Amended License Agreement or any sublicense.
Payments
to UCLA TDG under the Amended License Agreement for the years ended December 31, 2023 and 2022 were $30,845 and $35,623, respectively.
Competition
The
orthobiologic and orthopedic industries are characterized by rapidly advancing technologies, intense competition and a strong emphasis
on intellectual property. We face substantial competition from many different sources, including large and specialty orthopedic companies,
biotechnology companies, academic research institutions and governmental agencies along with public and private research institutions.
Our
business is in a very competitive and evolving field, that faces competition from large established orthopedic companies such as (but
not limited to) Medtronic, Stryker, Zimmer-Biomet, and DePuy-Synthes that possess considerably more resources than Bone Biologics.
Our
commercial opportunity could be reduced if our competitors develop and commercialize products that are safer, more effective, have fewer
or less severe side effects, are more convenient or are less expensive than any products that we may develop. Our competitors also may
obtain FDA or other regulatory approval for their products more rapidly than we may obtain approval for ours, which could result in our
competitors establishing a strong market position before we are able to enter the market.
The
NELL-1 growth factor is mechanistically distinct from bone morphogenetic proteins (“BMPs”) and can minimize complications
associated with BMP therapies. The early proof of concept animal studies has shown the efficacy of NELL-1 combined with demineralized
bone matrix as a novel bone graft material for interbody spine fusion.
Customers
The
populations of interest include spine surgeons, and patients with a skeletal bone defect or bone-related condition in their spine, for
which intervention is undertaken to correct such a defect. Spine surgeons and patients can choose to eliminate the need to perform a
second painful surgery to obtain autograft harvest of hip bone for fusion procedures by utilizing various other types of biologics.
Most
cases of lower back pain can be linked to a general cause such as muscle strain, injury, overuse, or can be attributed to a specific
condition like herniated disc, degenerative disc disease, spondylolisthesis, spinal stenosis, or osteoarthritis.
Intellectual
Property
We
have an intellectual property portfolio that includes exclusive, worldwide licenses from UCLA TDG which we believe constitute a formidable
barrier to entry.
Additional
patent applications are currently in preparation. The intellectual property portfolio comprehensively covers NELL-1 manufacture, NELL-1
compositions and NELL-1 use in wide ranging clinical and diagnostic applications. We protect our proprietary technology through mechanisms
including U.S. and foreign patent filings, trade secret protections, and collaboration agreements with domestic and international corporations,
universities and research institutions. We are the exclusive licensee for the following nine (9) UCLA TDG issued patents:
U.S. Patent No. Summary Date Issued
These patents will expire between 2024 and 2033.
Government
Regulation
The
manufacturing and marketing of any product which we may formulate with our technologies as well as our related research and development
activities are subject to regulation for safety, efficacy and quality by governmental authorities in the U.S. and other countries. We
anticipate that these regulations will apply separately to each product. We believe that complying with these regulations will involve
a considerable level of time, expense and uncertainty.
In
the U.S., devices are subject to rigorous federal regulation and, to a lesser extent, state regulation. The Federal Food, Drug and Cosmetic
Act, as amended, and the regulations promulgated thereunder, and other federal and state statutes and regulations govern, among other
things, the testing, manufacture, safety, efficacy, labeling, storage, record keeping, approval, advertising and promotion of our products.
Device development and approval within this regulatory framework is difficult to predict, requires a number of years and involves the
expenditure of substantial resources. Moreover, ongoing legislation by U.S. Congress and rule making by the FDA presents an ever-changing
landscape where we could be required to undertake additional activities before any governmental approval is granted allowing us to market
our products. The steps required before a biological device may be marketed in the U.S. include:
● The submission of a PMA to the FDA; and
In
addition to obtaining FDA approval for each product, each manufacturing establishment must be registered with, and approved by, the FDA.
Moreover, manufacturing establishments are subject to biennial inspections by the FDA and must comply with the FDA’s current Good
Manufacturing Practice “cGMP” for products, drugs and devices.
Non-clinical
Trials
Non-clinical
testing includes laboratory evaluation of chemistry and formulation as well as tissue culture and animal studies to assess the safety
and potential efficacy of the product. Non-clinical safety tests must be conducted by laboratories that comply with FDA regulations regarding
good laboratory practices. Non-clinical testing is inherently risky and the results can be unpredictable or difficult to interpret. The
results of non-clinical testing are submitted to the FDA as part of an IDE and are reviewed by the FDA prior to the commencement of clinical
trials. Unless the FDA objects to an IDE, clinical studies may begin 30 days after the IDE is submitted. We have relied and intend to
continue to rely on third-party contractors to perform non-clinical trials.
Clinical
Trials
Our
first-in-man pilot clinical study commenced year-end 2023 and will evaluate the safety and effectiveness of NB1 in adult subjects
with DDD at one level from L2-S1, who may also have up to Grade 1 spondylolisthesis or Grade 1 retrolisthesis at the involved level
who undergo transforaminal lumbar interbody fusion. The multi-center, prospective, randomized trial will consist of 30 patients in
Australia, with the primary end-point being fusion success at 12 months and change from baseline in the Oswestry Disability Index
pain score. We expect completion of the trial 12 months following enrollment of the 30th patient.
Our
clinical, and regulatory strategy involves a well-established pathway to success. We intend to use the pilot clinical study data from
Australia to enable our larger U.S. pivotal clinical study, prior to submission of a PMA to the FDA.
Clinical
trials involve the administration of the investigational product to healthy volunteers or to patients under the supervision of a qualified
investigator. Clinical trials must be conducted in accordance with good clinical practices under protocols that detail the objectives
of the study, the parameters to be used to monitor safety and the efficacy criteria to be evaluated. Each protocol must be submitted
to the FDA prior to its conduct. Further, each clinical study must be conducted under the auspices of an independent institutional review
board. The institutional review board will consider, among other things, ethical factors, the safety of human subjects and the possible
liability of the institution. The drug product used in clinical trials must be manufactured according to the FDA’s current Good
Manufacturing Practices.
Clinical
trials under IDE regulations are typically conducted in two sequential trials. In the Pilot trial, the initial introduction of the product
into healthy human subjects, the drug is tested for safety (adverse side effects), absorption, metabolism, bio-distribution, excretion,
food and drug interactions, abuse as well as limited measures of pharmacologic effect and proof of principle that involves studies in
a limited patient population in order to:
● demonstrate efficacy in a limited patient population;
● identify the range of doses likely to be effective for the indication; and
● identify possible adverse events and safety risks.
When
there is evidence that the product may be effective and has an acceptable safety profile in pilot evaluations, pivotal trials are undertaken
to establish and confirm the clinical efficacy and establish the safety profile of the product within a larger population at geographically
dispersed clinical study sites. Pivotal trials frequently involve randomized controlled trials and, whenever possible, studies are conducted
in a manner so that neither the patient nor the investigator knows what treatment is being administered. The Company, the institutional review board (“IRB”) or the
FDA, may suspend clinical trials at any time if it is believed that the individuals participating in such trials are being exposed to
unacceptable health risks. We intend to rely upon third-party contractors to advise and assist us in the preparation of our IDEs and
the conduct of clinical trials that will be conducted under the IDEs.
Premarket
Approval and FDA Approval Process
The
results of the manufacturing process, development work, non-clinical studies and clinical studies are submitted to the FDA in the form
of a PMA prior to marketing and selling the product. The testing and approval process is likely to require substantial time and effort.
In addition to the results of non-clinical and clinical testing, the PMA applicant must submit detailed information about chemistry,
manufacturing and controls that will describe how the product is made and tested through the manufacturing process.
The
PMA review process involves FDA investigation into the details of the manufacturing process, as well as the design and analysis of each
of the non-clinical and clinical studies. This review includes inspection of the manufacturing facility, the data recording process for
the clinical studies, the record keeping at a sample of clinical trial sites and a thorough review of the data collected and analyzed
for each non-clinical and clinical study. Through this investigation, the FDA reaches a decision about the risk-benefit profile of a
product candidate. If the benefit is worth the risk, the FDA begins negotiating with the company about the content of an acceptable package
insert and associated Risk Evaluation and Mitigation Strategies, if required.
The
approval process is affected by a number of factors, including the severity of the disease, the availability of alternative treatments
and the risks and benefits demonstrated in clinical trials. Consequently, there is a risk that approval may not be granted on a timely
basis, if at all. The FDA may deny a PMA if applicable regulatory criteria are not satisfied, require additional testing or information
or require post-marketing testing (Phase 4) and surveillance to monitor the safety of a company’s product if it does not believe
the PMA contains adequate evidence of the safety and efficacy of the product. Moreover, if regulatory approval of a product is granted,
such approval may entail limitations on the indicated uses for which it may be marketed. Finally, product approvals may be withdrawn
if compliance with regulatory standards is not maintained or health problems are identified that would alter the risk-benefit analysis
for the product. Post-approval studies may be conducted to explore the use of the product for new indications or populations such as
pediatrics.
Among
the conditions for PMA approval is the requirement that any prospective manufacturer’s quality control and manufacturing procedures
conform to the FDA’s Good Manufacturing Practices and the specifications approved in the PMA. In complying with standards set forth
in these regulations, manufacturers must continue to expend time, money and effort in the area of product and quality control to ensure
full technical compliance. Manufacturing establishments, both foreign and domestic, also are subject to inspections by or under the authority
of the FDA and by other federal, state or local agencies. Additionally, in the event of non-compliance, FDA may issue warning letters
and/or seek criminal and civil penalties, enjoin manufacture, seize product or revoke approval.
International
Approval
Whether
or not FDA approval has been obtained, approval of a product by regulatory authorities in foreign countries must be obtained prior to
the commencement of commercial sales of the medical product in such countries. The requirements governing the conduct of clinical trials
and product approvals vary widely from country to country, and the time required for approval may be longer or shorter than that required
for FDA approval. Although there are some procedures for unified filings for certain European countries, in general, each country at
this time has its own procedures and requirements.
Other
Regulation
In
addition to regulations enforced by the FDA, we are also subject to U.S. regulation under the Controlled Substances Act, the Occupational
Safety and Health Act, the Environmental Protection Act, the Toxic Substances Control Act, the Resource Conservation and Recovery Act
and other present and potential future federal, state, local or similar foreign regulations. Our research and development may involve
the controlled use of hazardous materials, chemicals and radioactive compounds. Although we believe that its safety procedures for handling
and disposing of such materials comply with the standards prescribed by state and federal regulations, the risk of accidental contamination
or injury from these materials cannot be completely eliminated. In the event of any accident, we could be held liable for any damages
that result and any such liability could exceed our resources.
Employees
and Human Capital
As
of the date hereof, we have two full-time employees, Jeffery Frelick and Deina Walsh. See “Management” below for biographies
of Mr. Frelick and Ms. Walsh. We have relied and plan on continuing to rely on independent organizations, advisors and consultants to
perform certain services for us, including handling substantially all aspects of regulatory approval, clinical management, manufacturing,
marketing, and sales. Such services may not always be available to us on a timely basis or at costs that we can afford. Our future performance
will depend in part on our ability to successfully integrate newly hired officers and to engage and retain consultants, as well as our
ability to develop an effective working relationship with our management and consultants.
We
also have engaged and plan to continue to engage regulatory consultants to advise us on our dealings with the FDA and other foreign regulatory
authorities and have been and will be required to retain additional consultants and employees. Our future performance will depend in
part on our ability to successfully integrate newly hired officers into our management team and our ability to develop an effective working
relationship among senior management. Losing key personnel or failing to recruit necessary additional personnel would impede our ability
to attain our development objectives.
Corporate Information
Our principal executive offices are located at 2 Burlington Woods Drive, Suite 100, Burlington MA 01803 and our telephone
number is (781) 552-4452. Our website address is www.bonebiologics.com.
Our website and the information contained on, or that can be accessed through, the website will not be deemed to be incorporated by reference
in, and are not considered part of, this Annual Report.
Item
1A. Risk Factors
The
following factors, as well as factors described elsewhere in this Form 10-K, or in other filings by us with the Securities and Exchange
Commission, could adversely affect our consolidated financial position, results of operations or cash flows. Other factors not presently
known to us or that we presently believe are not material could also affect our business operations and financial results.
Risk
Factor Summary
The
following is a summary of the principal risks that could materially adversely affect our business operations, industry and financial
results.
● Risks Related to Our Financial Position and Capital Needs
○ We have a limited operating history.
○ Our long-term capital requirements are subject to numerous risks.
○ We have limited resources to pursue product candidates and indications.
○ We may find it difficult to enroll patients in our clinical trials.
○ We may be unable to obtain regulatory approval in non-U.S. jurisdictions.
● Risks Related to Our Dependence on Third Parties
● Risks Related to our Intellectual Property
● Risks Related to Our Business Operations
○ We operate in a highly competitive environment.
● Risks Related to Healthcare Compliance Regulations
○ The application of privacy provisions of HIPAA is uncertain.
● Risks Related to Owning our Common Stock
○ The price of our common stock may fluctuate substantially.
○ We may be unable to comply with the continued listing standards of Nasdaq.
○ We do not intend to pay cash dividends on our shares of common stock.
● General Risk Factors
○ We may be at risk of securities class action litigation.
Risks
Relating to Our Financial Position and Capital Needs
Our
limited operating history makes it difficult to evaluate our current business and future prospects.
We
have a limited operating history, and there is a risk that we will be unable to continue as a going concern. We have minimal assets and
no significant financial resources. Our limited operating history makes it difficult to evaluate our current business model and future
prospects. Accordingly, you should consider our prospects in light of the costs, uncertainties, delays and difficulties frequently encountered
by companies in the early stages of development. Potential investors should carefully consider the risks and uncertainties that a company
with a limited operating history will face. In particular, potential investors should consider that there is a significant risk that
we will not be able to, among other things:
● implement or execute our current business plan, which may or may not be sound;
● maintain our anticipated management and advisory team;
If
we cannot execute any one of the foregoing or similar matters relating to our business, the business may fail, in which case you would
lose the entire amount of your investment in us.
Our
long-term capital requirements are subject to numerous risks.
We
anticipate that we will require approximately $5 million to complete first-in-man studies, and an estimated additional $24 million in
scientific expenses to achieve FDA approval, if possible, for a spine interbody fusion indication. These amounts are estimates based
on data currently available to us, and are subject to many factors, including the risk factors discussed herein. We anticipate we will
need to raise substantial additional funds for the pivotal clinical trial prior to marketing our first product. The above estimates and
our long-term capital requirements will depend on many factors, including, among others:
● continued progress and cost of our research and development programs;
● progress with pre-clinical studies and clinical trials;
● time and costs involved in obtaining regulatory (including FDA) clearance;
● competing technological and market developments;
● market acceptance of our device formulations or products;
● costs for recruiting and retaining employees and consultants;
● costs for training physicians;
● legal, accounting and other professional costs; and
We
may consume available resources more rapidly than currently anticipated, resulting in the need for additional funding. We may seek to
raise any necessary additional funds through equity or debt financings, collaborative arrangements with corporate partners or other sources,
which may be dilutive to existing stockholders or otherwise have a material effect on our current or future business prospects. If adequate
funds are not available, we may be required to significantly reduce or refocus our development and commercialization efforts with regard
to our delivery technologies and our proposed formulations and products.
Our
recurring operating losses have raised substantial doubt regarding our ability to continue as a going concern.
Our
recurring operating losses raise substantial doubt about our ability to continue as a going concern. During the year ended December 31,
2023, we incurred a net loss of $8.9 million, and used net cash in operating activities of $9.6 million. Our available cash is expected
to fund our operations through the second quarter of 2024. In addition, our independent registered public accounting firm, in its audit
report to the financial statements as of and for the year ended December 31, 2023, expressed substantial doubt about our ability to continue
as a going concern. Our financial statements do not include any adjustments that might result if we are unable to continue as a going
concern and, therefore, be required to realize our assets and discharge our liabilities other than in the normal course of business which
could cause investors to suffer the loss of all or a substantial portion of their investment. In order to have sufficient cash and cash
equivalents to fund our operations in the future, we will need to raise additional equity or debt capital and cannot provide any assurance
that we will be successful in doing so. The perception of our ability to continue as a going concern may make it more difficult for us