LONDON – Bonesupport AB intends to raise SEK500 million (US$57 million) in a listing on Nasdaq Stockholm's main market, providing funding to expand the sales infrastructure and advance new clinical applications for its drug-eluting bioceramic Cerament.

The IPO comes eight months after raising $37 million in private equity and debt to move Cerament beyond its traditional use as a bone void filler and position the company as a bone diseases specialist.

"We want to continue to finance our growth and an IPO will give us funds to drive sales and generate additional clinic data to support new applications [of Cerament]," said Richard Davies, CEO.

Bonesupport has lined up Swedbank Robur Fonder AB as a new cornerstone investor, with the bank agreeing to subscribe for shares to the value of SEK130 million.

The existing investors Healthcap V. LP; Stiftelsen Industrifonden; Lunkbackfond Invest A/S; Carl Westin Ltd; Tredje AP-fonden; Tellacq AB; OFP V Advisor AB and Artic Funds plc are all following on, investing SEK106 million in total.

Speaking from Switzerland where he is wooing institutional investors from beyond the Swedish home market, Davies, told BioWorld, "This is the first day of the roadshow, but we have done early look meetings. There is a lot of interest."

Davies is hopeful also of attracting a couple of U.S. institutional investors; there will be a retail offer in Sweden, too.

The Lund-based company is issuing 18.5 million new shares at a price of between SEK27 and SEK 31 per share. There is an overallotment option of 2.8 million shares that could raise a further SEK75 million.

The IPO takes place at a time when business is starting to build, with sales rising from SEK61.8 million in 2015 to SEK104.6 million in 2016, an increase of 69 percent. However, Bonesupport is some way short of profitability, amassing net losses of SEK110.2 million (US$12.6 million) in 2016.

Between 30 percent and 40 percent of the new money will fund the U.S. Fortify trial of Cerament G, a formulation of the injectable bioceramic containing the antibiotic gentamicin. The study is in the treatment of open tibial fractures, an injury that is hard to heal and prone to infection.

Cerament G provides an initial high concentration of gentamicin at the fracture site, followed by sustained release over at least 28 days, as the product promotes bone remodeling.

The 230-patient trial, which opened last month, will be subject to the usual difficulties of recruiting patients in an emergency setting. "We are enrolling patients as I speak, though it is early days," said Davies.

Bonesupport hopes for FDA approval in 2021.

Cerament vs. gold standard

In a second trial, Bonesupport is funding an investigator-initiated study that is designed to prospectively generate evidence of the health economic benefits of the use of the basic Cerament as a bone void filler in comparison to autologous bone grafts.

"Whilst the Fortify study has health economic endpoints built in, this trial is comparing Cerament to the gold standard, looking at health economics as the endpoint," Davies said.

The health economic data will be reinforced by the growing Cerament G European patient registry, which Bonesupport hopes to use to demonstrate reduced need for further treatment due to repeat infections in complex fracture, chronic osteomyelitis and when infection has spread to the bone in diabetic foot. The company said the registry already points to improved clinical outcomes and shorter hospital stays.

In addition, Bonesupport is commissioning smaller pieces of health economic and outcomes research to support reimbursement and access in specific markets. "In the U.K. we want to show [hospital] trusts how they can save money, in other countries to show [private] providers how they can make more money," said Davies.

At the level of clinical practice, he said, surgeons are likely to be responsive. Most procedures use some form of void filler, with manufactured products increasingly favored over natural bone. "The desire among surgeons to have antibiotics included is there already, and there need not be a huge shift in surgical practice."

Bonesupport also will devote some of the IPO proceeds to advancing the pipeline of preclinical products. In one, Cerament will be used to deliver approved bone morphogenetic proteins, in the hope of stimulating differentiation of endogenous mesenchymal stem cells to osteoblasts.

In a second product, Bonesupport aims to harvest mesenchymal stem cells from bone marrow and use Cerament as a carrier to deliver them to the site of bone injury or infection.

Another preclinical program involves using Cerament to deliver bisphosphonate in the treatment of osteoporosis. Academic studies have shown the bisphosphate zoledronic acid is strongly absorbed by Cerament. In an animal study run by Bonesupport, the combination led to enhanced bone healing and increase bone mineral density.