Zacks sees 2,000+% upside in micro-cap biotech Bone Biologics

Shares of Bone Biologics, a micro-cap biotech focused on bone regeneration in spinal fusion, have massive upside of more than 2,130%, Zacks Small-Cap Research argues in an update report published last week. Long overlooked by investors, Bone Biologics has now started human clinical trials. If successful, the stock could soar.

Zacks SCR values Bone Biologics at $16.50 per share, more than 22 times the stock’s closing price of $0.74 per share yesterday, May 19.

Zacks SCR issued this valuation following Bone Biologics’ first-quarter financials. The company is currently generating no revenue, which, as Zacks SCR notes, is unsurprising, since its products are still being tested. What’s more important is that Bone Biologics had a little over $2.7 million in cash and no debt at the end of the first quarter. Zacks SCR believes this puts the company in a “comparatively healthy situation for a clinical stage company.”

Late last year, Bone Biologics began human trials of its main product, NELL-1, a potential substitute for bone grafts for patients with degenerative disc disease. As spinal discs deteriorate with age, they often cause chronic pain. The first two patients were treated with NELL-1 in Australia. The U.S. FDA has already approved Bone Biologics’ investigational new drug application, paving the way for trials in the U.S.

If trial results are positive, the market reaction could be swift, Zacks SCR notes. “BBLG has what we believe is a product with great potential, addressing a market with seemingly insatiable demand and a solid funding situation,” it explains. Zacks SCR thinks the stock deserves attention from long-term investors. Bone Biologics estimates its target market at $3 billion.

Each year, around 350,000 spinal fusion surgeries are performed in the U.S. to relieve pain caused by conditions like degenerative disc disease, according to Zacks SCR. The current standard treatment is rhBMP-2 (recombinant human bone morphogenetic protein 2), but it has side effects like uncontrolled bone growth in unintended areas.

Bone Biologics offers a nonsurgical alternative. Nonhuman trials have shown that NELL-1 promotes bone regeneration without triggering uncontrolled growth or other harmful side effects.

According to MarketWatch, only one Wall Street analyst besides Zacks SCR currently covers Bone Biologics. That rating is a “buy,” with a target price of $16.75 per share, similarly 22.6 times the current market price.