BBS - Bioactive Bone Substitutes

[Pohjolan_Eka]

BBS's company presentation

Now that BBS’s bone implant is gradually approaching striking distance of CE marking and sales authorization, let’s open a dedicated thread for the company. In this opening, I will drastically simplify and explain, from a layman’s perspective, what the company does and why its product is very interesting.

As the name suggests, BBS develops solutions for treating difficult bone fractures and ossification problems. Traditionally, difficult bone fractures and ossification problems have been treated with bone grafts.

Because bone grafting is expensive and carries its own risks, there has been a continuous effort to develop alternative methods. Today, there are many synthetic and other solutions on the market, but all of them have their own weaknesses.

Therefore, there is a crying need in the market for a new generation of bone treatment solutions, and BBS is trying to seize this opportunity. The company is in a completely unique position due to its special location. Finland has been blessed with a significant population of a rare animal that has the fastest antler growth rate in the world. To leverage this advantage, the company has acquired a pharmaceutical factory license for its production line located in North Ostrobothnia (Pohjois-Pohjanmaa), and patents for the “Reindeer to Paste” (Porosta tahnaksi) production method have been secured in all major markets.

According to the company, the market for bone solutions is quite significant:

Here are the company’s views on the competitive landscape:

According to the company’s view, it would be possible to take market share from several existing products:

So far, the results from clinical tests of the company’s main product have been very promising, and BBS aims to launch the product as early as next year.

According to the latest announcement, the company’s cash reserves are sufficient until at least mid-2022, and by then, the product is hopefully already on the market. BBS has previously estimated that its factory can produce 25,000 paste syringes per year.

[Wallet_Nahlroos]

Thanks for starting this thread, @Pohjolan_Eka. This has been on my watch/buy list for a long time. Just waiting for the first green light from the authorities. The case is interesting. The company has 20 years? of its own development behind it, however.

[nova18]

In my opinion, this product also benefits from a strong megatrend: the aging population. As the population ages, bone fractures both increase and become more difficult to repair with autologous bone grafts. Bone implant paste avoids costly bone graft surgeries even in younger age groups, meaning one surgery may suffice instead of two. At the same time, the risks of complications also decrease as the number of surgeries per bone fracture repair decreases.
I’ve already made a couple of nice profits from news bumps with this and bought back cheaper.
It would be interesting to know if the product can be used in dental surgery and after the removal of bone tumors. Or in bone destructive diseases?

[Pohjolan_Eka]

@nova18

It would be interesting to know if the product can be used in dental surgery and after the removal of bone tumors. Or in bone wasting diseases?

ARTEBONE is aimed for orthopaedic and trauma surgery. Approvals for dental, maxillofacial and veterinary indications are in scope.

At least the dental side seems to be possible at a later stage

[nova18]

Excellent! I’ve read carelessly.

[xlat]

Thanks for opening this thread. This is on my watch list, and as a layman, the product sounds interesting. This would be a good addition to my healthcare portfolio, which currently only includes established, large companies. The company is indeed a very high-risk company at this stage and difficult to assess. I’ll have to delve into this further!

[III21]

A truly interesting innovation with huge potential, if the sales permit is granted.

What could be the reason for the stock price falling from its peaks in the first half of the year? Did some investors lose patience when the sales permit still hasn’t been obtained? The summer offering mentioned that they would try to get the sales permit this year. It seems unlikely that they will make it this year anymore.

[Juunatan]

Thanks for a very factual thread opener; it provides good basic information about this company in plain language.

@III21

What could be the reason for the stock price falling from its peaks in the first half of the year? Did some people lose patience when the sales permit still hadn’t been obtained?

That spike was caused, if I recall correctly, by the patent being granted in the USA. People probably just got tired of waiting afterwards, as permit processes are notoriously time-consuming.

The company recently hired its first production employees for its own factory, so it seems product sales will also start soon. Hopefully, the marketing team succeeds in its task, so money will also start flowing into the company.

[nova18]

I think that for some, the stock has only been for those looking for quick profits from bounces, and many give up on the game when they realize the slowness of development or lose patience when the stock diluted after the offerings. The development of medicinal products is long and slow. Regulation is strict, and permits are behind heavy processes and evidence.
I believe that even with new offerings, more money will be sought from owners as we progress.
EDIT: The same things were already pondered above

[jokuvaan1]

My understanding is that obtaining a marketing authorization has been slowed down by:
-Brexit
-Tightened CE requirements
-Covid
-A conceptual error in test design
-The exceptional nature of the product, with no precedents for CE

So, with a bit more luck, sales would already be in full swing. Even now, the situation could be that the approval body’s backlog is delaying the reception of the application.

One investor in the chain plans to wait for CE approval, which is a logical plan, but the investment return idea for these medical/pharmaceutical companies is to buy shares long before marketing authorization, usually at the latest before phase 3 results if the product is foolproof based on phase 1 and phase 2.

If the marketing authorization comes during the January-February price rally and it’s a low-volume stock, BBS could cost, who knows, up to 20e. Of course, it would then start a steady decline, but it will be hard to wait for that decline after CE marketing authorization, when in theory any collaboration agreements could be published or the whole reindeer-sausage stand is quickly bought out of the stock market. After a takeover bid, it is extremely difficult to make a profit on shares as the price locks to the offer level.

[Mukava_valkku]

@K.Harvia

A bone graft indeed requires two surgeries: one where bone is taken, and another where the grafted bone is put in place.

Well, to be precise, the graft can be taken during the same surgery, meaning with a single anesthesia or general anesthesia. Of course, there will be multiple incisions and operative areas when bone is taken from another part of the body.

Such substances already exist today, so I haven’t quite understood what makes BBS’s product superior or how it plans to gain market share amidst competition from large companies.

[Pohjolan_Eka]

@Mukava_valkku

Such substances also exist today, so I haven’t quite understood what makes BBS’s product superior or how it intends to gain market share amidst competition from big companies.

At least according to the company’s own claims, competitors’ products cannot technically achieve the same performance at such an affordable price. The anti-brochure also mentioned the following:

However, recent market growth has been negatively impacted by severe side effects observed in the market leaders’ BMP-2 and BMP-7 products, which have led to a decrease in their sales.

When the marketing strategy is to advertise directly to doctors, the ease of use of the product can become highly valued. According to BBS, Artebone does not need to be mixed in any way; the syringes are ready for use. If we look at, for example, a product from a very promising competitor, it requires quite a bit of adjustment to make the product usable:

[Mukava_valkku]

Now I must admit that I skimmed the opening message very quickly the first time, and didn’t notice that some of my thoughts had already been chewed over there.

I can’t for the life of me remember what products were used at my former workplace, but they were pretty smooth to use too. The instrument nurse usually prepares the instruments and materials for the surgeon, so the ease of use probably doesn’t interest the surgeon that much. But there’s certainly no harm in easy use, and we work as a team there.

The most significant selling point is probably the research evidence of the product’s effectiveness and superiority over competitors. And at least here in my home country, the price.

[Pohjolan_Eka]

Based on the company’s presentation, the price aspect is more important than I initially thought, as apparently, purchases under 1000 €/$/£ have lighter procurement bureaucracy than products exceeding that magical limit. Thus, a low price removes barriers to adoption, facilitates marketing, and speeds up product implementation. I don’t have first-hand information on this from the pharmaceutical side, but in companies in other sectors, that thousand has often been the limit for “small purchases.”

[tainuska]

In our public healthcare unit, the guideline is to put everything costing over €10,000 out to tender. The threshold for small procurements is €60,000, and in that case, the tendering process is lighter than public tendering. For products like Artebone, the aim is (sometimes with aggressive price competition) to enter into framework agreements with clients, so that individual orders do not need to be agreed upon separately while the framework agreement is in effect. In the pharmaceutical market, price competition related to framework agreements can be tough to secure a contract. A large proportion of medications are started for the first time during a hospital visit. Upon discharge, the patient receives a prescription and continues the medication at home “ad infinitum.” Manufacturers outside the framework agreement lose this opportunity. Artebone is not a medicine and is not prescribed for home use, but entering into framework agreements is important, in my opinion. Additionally, as a user ordering the product, I would be interested in the order quantities and shelf life. It’s not worth buying batches to sit on the shelf and expire in very low-volume centers if the shelf life is short. In such cases, at least the supply chain should be smooth and delivery time short. The timing of trauma surgery often cannot be anticipated, unless it’s a planned reoperation for a non-union fracture. So, as a user, I would hope that the product can be ordered in small batches with a good shelf life. Furthermore, of course, good news about user experiences should start coming in, initially in the form of case reports and later clinical studies. It would be best if the product were eventually noted in, for example, treatment recommendations. But that’s a long and rocky road. Oh dear, as clinical experience accumulates and the number of cases increases, unforeseen harms might be discovered, leading to the product being withdrawn from the market. Here are some scattered thoughts from the perspective of the client.

[Pohjolan_Eka]

The shelf life was mentioned in a previous presentation to be “a couple of years” per syringe, which to a layman’s ear sounds like a reasonably good amount of time.

[YuriSalad]

(Someone else had already shown this image, oops.)

A long time ago, when I was researching the company, I found this chart in a presentation that explains Artebone’s strengths compared to other alternatives quite well. The y-axis represents the product’s ability to grow new bone tissue, and the x-axis represents the product’s ability to act as a “scaffold” for the bone tissue being grown. RGFs (Regenerative Growth Factors) are basically just hormones that are strongly osteoinductive but do not provide structure. Synthetics are porous minerals that resemble bone. Allograft is a bone sample taken from another person, and Autograft is a bone sample taken from the patient themselves. I don’t remember what DBM (Demineralized Bone Matrix) was.

Artebone seems to be quite close to Autograft, which, according to my own research, is quite unique. There is a lot of competition and “new solutions” in this ‘bone graft substitute’ market, but very little that is actually significant. In Israel, there was/is a company that produced a BGS (bone graft substitute) solution from corals. Like Artebone, a lot was promised, but there was little evidence, and the whole thing looked amateurish. There’s no information on whether that company is even still in business. I got the feeling that any product with some promise is funded indefinitely, and thus there are many “snake oils” on the market. There isn’t much data on the effectiveness of the products, as in many cases, market entry only requires the product to be similar to an existing product on the market and not dangerous to humans.

At BBS, the research seems professional. The studies conducted on Artebone are available to read if one simply searches for them, and I personally didn’t find anything strange about them, even though I don’t understand much about the subject myself. Clinical trials have been successful, and CE marking is coming soon. The question remains how willing surgeons will be to adopt such a method.

[OneBurst]

There are probably several similar companies in Finland? At least Inion Oy and Arctic Biomaterials. Both seem to have had challenges in making their operations a profitable business.

[tainuska]

A couple of years is certainly enough time to find a patient for the operating table who can be expected to benefit from this product. It is unlikely that Artebone will immediately achieve a position where it is routinely placed in every fracture gap. And from the perspective of sensible resource use, it shouldn’t be! In higher-volume centers, such shelf-life issues are not as relevant, as difficult trauma and complicated fractures are screwed and plated every day.

[xlat]

I’ve been reading a bit more now, watched the company’s introduction video, and listed my thoughts, pros & cons below:

• Over 20 years of development work behind it, a really long time
• The company is now moving from product development to production
• The product seems good, although it’s difficult for a layman to assess its competitive position
• CE application submitted
• Launch target April-June 2021, after which revenue would start to accumulate
• Future profitability is uncertain because production and sales have not yet started - true profit-making ability has not yet been seen
• Cash will last for a limited time → if there are delays along the way, the company will have to seek more funding
• The company’s value cannot be determined by traditional valuation metrics
• Pretty much an “either/or investment,” either the launch succeeds or, if it fails, the investment could truly go to zero

An interesting company, this would be a good stage to jump in, but there’s a long list of things to consider.