Transitioning with growing confidence

Update | 30 July 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 31201720182019E2020E
Sales (SEKm)129.396.6227.7349.6
Adj. PBT (SEKm)(127.9)(175.2)(128.8)(68.5)
Net Income (SEKm)(128.9)(176.7)(129.3)(68.8)
EPS (SEK)(3.2)(3.4)(2.5)(1.3)
Cash (SEKm)533.4261.5113.324.1
EBITDA (SEKm)(98.1)(172.8)(125.1)(65.4)
Source: Trinity Delta
  • Commercial re-organisation to accelerate sales From October 21st, Bonesupport will sell CERAMENT BVF direct in the US via an initial 18 distributors, supported by a larger US commercial team (from 14 to 23) and increased marketing effort. This platform should enable it to access 100% of the US synthetic bone substitute market (vs c30% under Zimmer Biomet), lifting sales and margins, and improving penetration ahead of potential US launch of CERAMENT G in 2021. In Europe, a headcount doubling will strengthen the presence in key markets (eg Germany), improving penetration and driving use of higher margin CERAMENT G/V in trauma.
  • Products and pipeline underpinned by industry leading data Investment in sales should enable Bonesupport to capitalise on top-line data from CERTiFy (expected late-2018), which has the potential to change treatment paradigms in trauma and replace current gold standard autograft. FORTIFY recruitment remains on track for planned PMA filing in 2020. Other ongoing or planned studies could improve reimbursement in various markets. We await detail on plans to expand the product offering at the September Capital Markets events (19th: Stockholm; 20th: London).
  • Zimmer Biomet to weigh on sales for one more quarter As we expected, Q218 SEK28.2m (-28%) net sales were impacted by Zimmer Biomet. US net sales (SEK 14m) were down 40% due to run-down of CERAMENT BVF inventory and ongoing hardware supply issues. Changing priorities at Zimmer Biomet also contributed to a 5% decline in in-market sales by value, albeit with growth in unit sales (reflecting a shift to smaller volumes). European sales vacancies and a large India order in Q217 dampened Europe/RoW sales growth (SEK14.2m, +4%). However, 15% growth in CERAMENT G/V sales supported overall gross margins of 87.4%.
  • SEK26/share valuation maintainedWe conservatively value Bonesupport at SEK1.325bn ($152m) or SEK26/share, using a three-phase DCF. Near-term upside potential comes from strategic execution and US sales acceleration; longer-term growth drivers and pipeline insights are expected to be revealed in September.


30 July 2018

Market CapSEK1,061m
Enterprise ValueSEK800m
Shares in issue51.8m
12 month rangeSEK9.04-26.5
Free float87.2%
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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