Stronger commercial platform to make strategic inroads

Update | 8 November 2018

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Q218 results confirm the progress made during this transition year, as Bonesupport implements several important strategic changes. As we highlighted in our June initiation, focus on commercial execution with direct US distribution (from October 2018) and a stronger European commercial footprint should accelerate global CERAMENT sales, catalysing a return to growth in FY19. Upcoming Capital Markets events will provide detail on the longer-term growth drivers and plans for expanding the product offering. However, there are clear signs of optimism for the future, with management confident of achieving annual growth of c40% beyond 2019. Our forecast and DCF-based valuation of SEK1.325bn (SEK26/share) are unchanged.

Year-end: December 31201620172018E2019E
Sales (SEKm)104.6129.3102.1228.0
Adj. PBT (SEKm)(109.6)(127.9)(176.7)(133.9)
Net Income (SEKm)(110.2)(128.9)(177.8)(134.4)
EPS (SEK)(4.3)(3.2)(3.4)(2.4)
Cash (SEKm)141.5533.4267.4 114.2
EBITDA (SEKm)(87.4)(98.1)(174.9)(130.7)
Source: Trinity Delta
  • Bigger and better US commercial infrastructure  First direct US CERAMENT BVF sales have been made by the distributor network, which according to management is of better quality and larger than originally expected. 18 independent distributors were targeted for 2018; 25 have been secured, comprising 512 reps which, unlike with Zimmer Biomet, are able to access the entire addressable market. Training is ongoing, with new and existing surgeon relationships being developed over the next 6 months. These will be leveraged following synergistic product launches (Collagen Matrix and MTF Biologics) in H119, and potentially CERAMENT G in 2021 (assuming FDA approval following positive FORTIFY read out /PMA filing in 2020).
  • Positive European margin and growth trends Q318 net sales (SEK14.2m) fell 56% y-o-y purely due to zero reported US sales. In Europe/RoW sales performance was strong (+29%), with CERAMENT G/V posting 35% growth and underpinning an impressive 91% gross margin. Three further hires will complete the European sales expansion, which has already improved Bonesupport’s penetration of regions with key orthopaedic centres (particularly for trauma) where it has had limited presence. Greater sales impact of this expansion and marketing focus is expected from 2019.
  • CERTiFy data: the next big thing Various marketing initiatives are planned around top-line CERTiFy data, expected in December. This level 1 randomised prospective trial non-inferiority trial of CERAMENT BVF vs autograft, could, if positive, position BVF as a new standard of care in trauma, enabling share capture from autograft and other synthetic bone void fillers. Detailed results will be published in Q119.
  • Valuation maintained at SEK37/share Post-Q318 we have updated our model assumptions with a Europe long-term gross margin of 85% (from 80%), and higher near-term US operating costs reflecting a larger distribution network. Per share, these changes largely offset (valuation remains SEK37/share); on a whole company basis, there is an 8% valuation uplift to SEK2,042m (vs SEK1,892m previously). Commercial execution, CERTiFy data, and new US product launches represent near-term upside. Longer-term, it is FORTIFY data that we view as the key growth driver.


8 November 2018

Market CapSEK1,108m
Enterprise ValueSEK595.3m
Shares in issue55.6m
12 month rangeSEK9.04-26.5
Free float88.7%
Primary exchangeOMX Stockholm
Other exchangesN/A
Company CodeBONEX
Corporate clientYes

Company description

Bonesupport is a Swedish ortho-biologics company focused on developing and commercialising a pipeline of unique injectable drug eluting bioceramic bone graft substitutes based on its proprietary CERAMENT technology.


Lala Gregorek
+44 (0) 20 3637 5043

Mick Cooper PhD
+44 (0) 20 3637 5042

Exhibit 1: Summary of financials
Source: Company, Trinity Delta Note: Historical adjustment of number of shares following 5:1 consolidation in 2017.


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