Bone mulls a trade sale

The company has ambitious plans for its cell therapies, but money is tight.

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Bone Therapeutics should maybe say yes. The failure of its joint cushioning project JTA-004 a fortnight ago wiped 36% off its share price and appears to have prompted a takeover offer from a fellow French cell therapy company, Hybrigenics, which Bone says it is considering.

Bone has very little else going on. Its one remaining clinical-stage asset, Allob, is still years from market, and, despite recently negotiating a loan from the European Investment Bank, Bone does not have enough cash to get Allob across the line. Its ambitions to expand into new arenas are laudable, but not, on current appearance, realistic. If Bone ends up turning Hybrigenics down it is hard to discern what its future might hold. 

Miguel Forte, Bone Therapeutics’ chief executive, has played down Hybrigenics’ approach, saying his company fielded enquiries from potential partners, investors and buyers “all the time”. Bone is having discussions internally, he says, and the board is considering Hybrigenics’ offer. The overture was the second Hybrigenics has made, having also attempted to buy Bone in early 2020.

However, the financial terms of the proposed deal are undisclosed, and Hybrigenics has not responded to requests for comment. It is not known whether Hybrigenics offered a sweeter deal this time or whether, in light of JTA-004's failure, it felt that it did not have to.

The unusual aspect of this negotiation is simply that Hybrigenics has been open about it. Typically takeovers are thrashed out behind closed doors, and are either formalised and announced or quietly dropped. 

Cash crunch

In this case many investors might conclude that the best course of action is for Bone to sign on the dotted line. The failure of JTA-004 – this did not distinguish itself from placebo in the phase 3 JTA-KOA2 trial in knee osteoarthritis – leaves Bone with just one project in the clinic.

Allob, a formulation of donor-derived stem cells, is in phase 2b in 178 patients with fresh tibial fractures at risk of delayed union or non-union. It will compare a single percutaneous injection of Allob with placebo on the measure of radiologically determined bone healing. Topline results, delayed slightly by the pandemic, are due by the end of 2022. 

The trouble is that Bone’s cash will run out long before then. At the half year the group had €6m ($7.1m) in cash left, and has since arranged a €16m loan from the European Investment Bank, of which it has drawn down half. This will take it to the second quarter of next year, six months before the Allob trial reports. 

Mr Forte says he cannot exclude the need to drum up additional cash even though the second tranche of the loan is still available. Bone is working on different financing options, including raising new funds from existing and new investors as well as working with partners. 

Preclinical

Investors or partners might be hooked by Bone’s newer programmes, which are still preclinical, Mr Forte believes. The group is working on stem cell-based therapies for immunomodulatory indications including graft-versus-host disease and acute lung injury. 

This is intended to create a platform out of the technology behind Allob. The stem cells can be differentiated, or to use Bone’s term, “professionalised”, via growth factors or gene modification. Of course, if these programmes are successful and the company moves into new indications, Bone Therapeutics will become a bit of a misnomer. 

Still, given that has insufficient money to finish work on Allob it is hard to see how Bone can pay for the development of these earlier projects. And there is a certain opacity to the long-term future of the company as a whole. 

Mr Forte says there is always a possibility that Bone might eventually be acquired. The Hybrigenics offer is still on the table, and might be a better solution to going cap in hand to investors once again.

Bone Therapeutics' clinical trials 
Project  Study  Details Results
Allob  Allob-TF2 Ph2b, 178 pts, delayed union and non-union tibial fractures Expected H2 2022
Allob  Allob-IF1  Ph2a, 32 pts, lumbar spinal fusion Hit, but trial uncontrolled
Allob  Allob-RIF1  Ph2, 23 pts,  rescue interbody fusion  Halted to focus on the lumbar fusion trial of Allob
Allob  Allob-DU1  Ph1/2a, 35 pts, delayed-union long-bone fractures  Halted for efficacy
JTA-004 JTA-KOA2 Ph3, 746 pts, knee osteoarthritis Failed
JTA-004 JTA-KOA1 Ph2/3, 229 pts, knee osteoarthritis Failed; post-hoc subgroup hit
Preob  Preob-ON3  Ph3, 118 pts, hip osteonecrosis Halted for futility
Preob  Preob-NU3  Ph2b/3, 176 pts, non-union long-bone fractures  Halted to focus on Allob
Source: Evaluate Pharma & clinicaltrials.gov.

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