Is Bullfrog AI Holdings Inc. IPO a Good Buy?

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Contributor, Benzinga
February 13, 2023

Advancements in medical and biological technologies delivered life-changing therapeutics to the market over the past several years. However, even in the front lines of groundbreaking innovations, areas for significant improvement exist, ushering in a potentially viable pathway for Bullfrog AI Holdings Inc. Specializing in artificial intelligence (AI) and machine learning (ML), its bfLEAP platform aims to deliver increased probabilities of success for each stage of clinical research and development for the biopharmaceutical industry.

Undergirding the relevancy of Bullfrog AI’s upcoming public market debut — set for the week beginning Feb. 12, 2023 — stands the human quotient. Though scientists in the field of biotechnology work around the clock to devise lifesaving medical solutions, federal regulators oversee the efficacy and safety profile of proposed drug, vaccine and device candidates. Each failure at the clinical stages can mean financial catastrophe for biotech firms and devastation for patients.

However, by capitalizing on the innovations of AI and ML, Bullfrog AI can stack the odds in favor of the broader biopharma industry, reducing developmental costs and accelerating the speed to market for critical therapeutics. While a compelling narrative, prospective investors should also realize that aspirational stocks tend to feature a higher-risk profile.

Below are key factors to consider for Bullfrog AI’s upcoming public market debut.

What Does Bullfrog AI Holdings Do?

Somewhat of a hybrid business, Bullfrog AI Holdings at its core represents a biopharma company. However, what distinguishes the organization from its sector peers stands its bfLEAP platform, a proprietary AI/ML analytics solution developed in collaboration with Johns Hopkins University Applied Physics Laboratory.

Through this advanced technology, Bullfrog AI aims to improve drug development and clinical trials through the identification of high-value data niches and patient subgroups. According to its LinkedIn profile, this scientific advancement “will ultimately lead to the implementation of new precision medicine strategies in our disease areas of focus and improved clinical outcomes for patients.”

According to its website, Bullfrog AI entered into exclusive, worldwide agreements with major U.S. biomedical institutions to in-license assets for clinical development. Currently, its most advanced clinical candidate, BF-222, is a repositioned small molecule therapeutic formulated specifically for maximum utility against myriad cancers.

Its second drug candidate, BF-114, is a novel nucleic acid therapeutic for several interrelated liver diseases including cancer, obesity, non-alcoholic steatohepatitis (NASH) and non-alcoholic fatty liver disease (NAFLD).

Finally, BullFrog’s third therapeutic program (which has not been assigned a label to date) is an exclusive co-development project to design, generate and validate a novel, precision-engineered oncolytic virus against colorectal cancer.

Regarding the clinical-accelerative potential of bfLEAP, Bullfrog’s Form S-1 filing with the U.S. Securities and Exchange Commission (SEC) revealed that this platform “utilizes both supervised and unsupervised machine learning — as such, it is able to reveal real/meaningful connections in the data without the need for a prior hypothesis.”

In addition, Bullfrog states that “supervised machine learning uses labeled input and output data, while an unsupervised learning algorithm does not. In supervised learning, the algorithm ‘learns’ from the training dataset by iteratively making predictions on the data and adjusting for the correct answer. Unsupervised learning, also known as unsupervised machine learning, uses machine learning algorithms to analyze and cluster unlabeled datasets.”

Significantly, Bullfrog asserts that bfLEAP will inform and enable decision making throughout the development cycle. This process includes the discovery phase (categorizing data to define where scientists should concentrate their resources), the pre-clinical phase (uncovering genetic backgrounds that may achieve the highest correlation to therapeutic responses) and the clinical development phase (aiding in the patient selection process).

When is the Bullfrog AI Holdings IPO Date?

As of the latest information, Bullfrog AI Holdings will launch its initial public offering (IPO) — or the first time a private enterprise distributes its equity shares to retail (public) investors — on Feb. 14, 2023. The company’s shares will trade on the Nasdaq exchange under the ticker symbol BFRG.

According to Renaissance Capital, Bullfrog initially planned to raise $8 million at a market capitalization of $34 million. However, the AI-empowered biopharma firm now seeks to raise $9 million through the offering of 1.3 million units at a price of $6.50. Per Renaissance Capital, “each unit consists of one share of common stock and two warrants, one of which is exercisable at 120% of the IPO price. The other is a five-year non-tradable warrant exercisable at 125% of the IPO price.”

The latest adjustments to Bullfrog’s IPO will raise 2% more in proceeds than previously anticipated. In addition, the company will command a market value of $37 million, assuming the debut materializes according to the upgraded terms.

Bullfrog will enter the public domain at a more auspicious time than in 2022. Almost one year ago to the original date of this publication, Russia launched an invasion of neighboring Ukraine, catalyzing a radical paradigm shift in geopolitical relations and behavioral standards. The Federal Reserve embarked on an aggressive interest rate hiking campaign to unwind the monetary excesses of the initial government response to COVID-19.

At the present juncture, circumstances ping relatively more favorably for risk-on investments like BFRG stock. For instance, the benchmark S&P 500 index gained nearly 7% on a year-to-date basis through the close of the February 10 session. As well, the sector-related fund SPDR S&P Biotech ETF (NYSEARCA: XBI) moved up 5% for the year.

Nevertheless, prospective investors of BFRG stock should note the blowout January jobs report. Essentially, this framework indicates that more dollars continue to chase after fewer goods — an inherently inflationary dynamic. As well, China’s recent economic reopening will likely lead to greater commercial activity, thus sparking greater energy consumption.

Together, these factors could catalyze inflation, forcing the Fed into an even more hawkish monetary policy. Unfortunately, the associated higher borrowing costs may not bode well for a riskier trade like BFRG stock.

What Analysts Are Saying About Bullfrog AI Holdings IPO

As Renaissance Capital noted, Bullfrog’s post-IPO market cap will sit below $50 million (barring unusual demand during the opening day). Therefore, the investment resource will not cover the offering in its IPO tracker. The IPO calendar for the month of February has been relatively warm to new listings. Therefore, it’s possible that BFRG stock can ride the coattails of improved sentiment.

Regarding Bullfrog specifically, its bfLEAP platform holds astounding upside potential should it work as advertised. According to the industry journal Clinical and Translational Science, “the success rate of each drug discovery stage in academia was 31.8% for preclinical, 75.1% for phase I, 50.0% for phase II, 58.6% for phase III, and 87.5% for [new drug application] and [biologics license application].”

The journal stated that “academic‐industrial collaboration seemed to have some positive impact on academic drug discovery; the nonclinical success rate was 36.7% for collaborative projects and 29.5% for non collaborating projects.”

Therefore, if collaboration with academic resources bolstered success rates, the thesis behind BFRG stock is that advanced AI/ML protocols may spark even greater improvements. While compelling, interested buyers should also note the risk factors associated with Bullfrog.

According to the company’s S-1 filing, the biopharma features a limited operating history. As well, management admits that the development of its technology, products and services is highly competitive. Perhaps the biggest challenge facing Bullfrog is its disclosure that “new product development involves a lengthy, expensive and complex process.”

Regarding broader market pressures, prospective BFRG stock buyers must keep watch on Fed policy. Should the central bank hike interest rates aggressively, the rise in borrowing costs may hurt aspirational companies like Bullfrog AI.

Bullfrog AI Holdings Financial History

Primarily, the biggest obstacle to BFRG stock representing a viable, long-term investment centers on its revenue. For the full years 2020 and 2021, Bullfrog did not generate any sales. Further, its loss from operations expanded unfavorably from $260,067 below parity in 2020 to $555,362 below breakeven in 2021.

As well, Bullfrog’s balance sheet carries credibility concerns. Total assets only amount to $10,014 at the end of 2021, expanding marginally on a nominal basis from the $5,019 posted in 2020. As of Dec. 31, 2021, Bullfrog’s total stockholders’ deficit sat at $1 million below parity.

Bullfrog AI Holdings Potential

As a micro-cap company leveraging a possibly game-changing platform for the biopharma industry, Bullfrog AI commands significant upside potential. Through its AI- and ML-driven platform, biotech firms may be able to deliver critical therapeutics to market faster, leading to significant cost savings and most importantly, superior health outcomes for patients.

However, companies plying their trade in the biotech space encounter heavy risks, which Bullfrog’s management team disclosed. As well, broader market conditions — such as an uncooperative Fed — could hinder the progress of BFRG stock.

Where to Buy BFRG IPO Stock

If you want to participate in Bullfrog’s IPO, you’ll need to know how to buy stocks. Before you take that step, you must sign up for a brokerage account. Below is a list of the best brokers to consider.

Bullfrog AI Holdings Restrictions for Retail Investors

Review the Financial Industry Regulatory Authority (FINRA) rules on restricted persons before participating in an IPO. Don’t engage if you have privileged information.

About Joshua Enomoto

His distinct writing style of distilling convoluted data into relatable and compelling narratives has earned him recognition among several investment-related publications.