First off, I’d like to thank my recent new followers for following me on Substack. I started the Substack in early 2023 and I now have 311 followers. Thank you all for your support.
If you have read my articles on pharma companies or follow my X account here ,you know I have been researching stocks involved in the AI (Artificial Intelligence) theme.
I believe we are still early in the theme. Big techs continued and accelerating CapEx into infrastructure supports this as well as Oracle's ORCL two most recent quarters. Companies from agriculture to Walmart are now using AI to drive results.
I’ve been an early adopter of LLMs (Large Language Models) for research and as a search engine. I’ve almost entirely replaced my Google search use by about 80-90%. I have been very open-minded to the positive future uses of these neural nets.
If you are skeptical of AI or already have a strong negative opinion on it, that’s fine. You can rest assured, for the sake of the company analysis in this article, that machine learning and AI have already been around for over a decade in computational biology and the pharmacutical industry and it has only been positive. There are plenty of articles written explaining the uses of AI and machine learning if you are curious about the uses in the pharma industry. One such article is Revolutionizing clinical trials: the role of AI in accelerating medical breakthroughs
I just watched a recent interview with Nvidia (NVDA) CEO Jensen Huang. He mentioned the industries he sees most impacted by AI in the near future. One he mentioned was digital biology. Nvidia has already invested directly into clinical biotechnology company Recursion Pharmaceuticals (RXRX). Recursions mission statement is exactly like Bullfrog AI’s (BFRG).
Recursion was founded to harness the power of accelerating technological innovations to improve the efficiency of drug discovery and development. Bullfrog AI has the same technology focused approach to drug discovery.
I knew for sure I was onto something when one of the value stocks I covered on the Substack SomaLogic got bought out by Standard Biotools (LAB) only a few months after my write-up on it. SomaLogic is a protein biomarker discovery and clinical diagnostic company. They have the SomaScan Platform. It is a tool that helps scientists study proteins in a much faster and more detailed way. It lets researchers understand how proteins work and interact with each other.
Bullfrog AI Bullfrog AI (BFRG) calls itself “an emerging digital biopharma company. Using our proprietary AI/ML analytics platform, we aim to improve drug development and clinical trials through identification of high-value data niches and patient subgroups.”
One of the most interesting things about Bullfrog is they truly are on the cutting edge of technology. They have been working with Johns Hopkins Applied Physics Lab since atleast 2017 and also collaborating with George Washington University. Both Johns Hopkins Hospital and University are some of the most renowned institutions in the nation.
In 2017 Bullfrog AI was granted licenses to a data analysis tool from Johns Hopkins. In March of 2023 they were granted additional licenses to two machine learning tools from Johns Hopkins. Their names are Prometheus and Seagull.
They also have a relationship with the Lieber Institute for Brain Development (LIBD). The collaboration between BullFrog AI and LIBD, announced in September 2023, uses the bfLEAP™ platform to mine LIBD’s comprehensive brain data. This data includes transcriptomic, genomic, DNA methylation, cell-line, clinical, and imaging data from over 2,800 brain samples. Early results announced in January 2024 highlighted the ability to stratify brain expression data, revealing biological subtypes within psychiatric disorders.
Some recent developments came for Bullfrog AI just days ago with the prospects of Bullfrogs drug candidate BF-114. There was a publication of new research in the peer-reviewed journal Cell Reports supporting the potential of BF-114 (SPTBN1 siRNA), in treating a range of liver diseases, including metabolic dysfunction-associated steatotic liver disease (MASLD), metabolic dysfunction-associated steatohepatitis (MASH), and hepatocellular carcinoma (HCC). BF-114 is being developed for the treatment of obesity and liver diseases and this research appears to be promising.
They have acquired the rights to a series of preclinical and early clinical drug assets from universities and entered into a strategic collaboration with a world-renowned research institution to create a HSV1 viral therapeutic platform to engineer immunotherapies for colorectal cancer.
They have signed exclusive worldwide license agreements with Johns Hopkins University for a cancer drug that targets glioblastoma (brain cancer), pancreatic cancer, and other cancers. They have also signed an exclusive worldwide license with George Washington University for another cancer drug that targets hepatocellular carcinoma (liver cancer), and other liver diseases.
Business Strategy
One of their business goals is to “rescue” drugs that have failed in phase 3 clinical trials by using their technology to analyze all available data with the goal of designing a precision medicine clinical trial that will have a better chance of being successful. They see this servicable market as a $47 billion market.
The Company has a unique strategy designed to reduce risk and increase the frequency of cash flow. The first part of the strategy is to generate revenues through strategic relationships with biopharma companies. These relationships will be structured as a combination of fees and intellectual property based on the specific scope of the engagement.
In the future, the second part of our strategy involves acquiring the rights to clinical stage drugs, using our bfLEAP technology to design a precision medicine trial, conduct the trial with a partner, and sell the asset. This approach may also apply to earlier phases in the drug development process such as discovery and preclinical.
The company has two main platforms.
The bfLEAP™- an AI/ML platform for analysis of preclinical and/or clinical data. This is how the company describes bfLEAP in their annual report.
"The analytics industry and application of AI in healthcare is growing rapidly. Competition exists along the entire continuum of the drug development process from discovery to commercialization and beyond.
We believe the weakness of the industry is the quality of the data and we believe bfLEAP provides several competitive advantages, that will position the Company for success.
"First, bfLEAP is highly scalable and can process data from small to extremely large complex data sets without the need for additional code being developed. Second, it is adept at processing and analyzing incomplete data and making predictions that we do not believe other technologies are capable of doing.
Finally, bfLEAP has the ability to extract the most important features for analysis out of extremely large complex data sets using unsupervised machine learning algorithms, thereby greatly simplifying complex problems. Since data quality is a problem that exists in the healthcare industry, we see these as major differentiators." -company annual 10-K
The ability to make predictions, find relationships and patterns and anomalies in extremely large complex data sets has been demonstrated by the Applied Physics Lab in other applications and sectors. Finally, the algorithms used by bfLEAP are proprietary and protected, having been developed at Johns Hopkins University Applied Physics Lab.
We believe most of the competitors rely on open-source algorithms and we also believe that we have already demonstrated our superiority via the August 2021 publication in DeepAI.org."
siRNA -for targeting Beta2-spectrin in the treatment of human diseases developed at George Washington University and licensed by the company.
Valuation Bullfrog AI has a market capitalization of $21.2 million. NCAV (net current asset value) is $5.3 mil. The company didn’t have any revenue in the most recent quarter and revenue has been very sporatic. They generated their first revenues in late 2022 from services provided to a pharmaceutical customer. In the third quarter of 2023 they completed their first commercial service contract and recognized revenue in the amount of $65,000.
For the full year in 2022 the company used $911,000 in cash. They said they expect that to increase going forward. As of the last quarter they have $7 million in cash and a very strong current ratio of 9. There is an accumulated deficit of $11.6 million.
I looked up the company address listed in their annual report at 325 Ellington Blvd, Unit 317, Gaithersburg, MD 20878. It's at what appears to be a retail shopping building. There is a UPS store on one side of it and a ZAGG on the other and a sit-down restaurant at the end of the building. There isn't a business marking on their front. Maybe the Google image is old or they just moved. I don't know.
What explains this is they also say all of the company's employees work virtually and they own no properties. Unless I am mistaken of what I am looking at on Google Maps this is unusual to me though. I was expecting to see an office building.
Technical Analysis The technicals are holding as it is on a major support level that goes way back. This last consolidation looks like a bullish flag on that level. The stock is incredibly volatile.
Full Disclosure: I am long shares of BFRG
