For reasons most of us will hope to never find out, Bone Support is an interesting company. The Swedish group develops and commercialises bio-ceramic bone grafts. Its core product, Cerament BVF, is an injectable plaster that fills skeletal voids and hardens into a substitute for the host bone within six to 12 months. Bone Support’s existing market is stable but small: about 7,200 patients received Cerament BVF implants last year, giving the company around a 25 per cent share in extremities. Much more important for the investment case are the second-generation products, Cerament G and V, which add slow-release antibiotics.

US doctors do about 3.2mn graft procedures each year, so broader approvals are steadily opening up the company to bigger markets. The next-gen Cerament formulations combat infection by eluting antibiotics over 28 days. Cerament G, having gained US regulatory approval in 2022, is used widely to treat osteomyelitis. Bone Support is now pushing to broaden access to the drug for treating trauma, complex infections and in arthroplasty. It’s expensive stuff, at approximately $5,000 per 10ml for US hospitals.

All six sell-side analysts who cover Bone Support have “buy” recommendations. The company’s own guidance shoots for organic growth this year of between 33 and 36 per cent. So why is the Nasdaq Stockholm-listed stock among the most heavily shorted in Europe? One idea to have caught the attention of hedge funds is that next-gen Cerament might not work as claimed. A paper to be published in the Journal of Bone and Joint Surgery argues that pivotal trials of antibiotic-loaded ceramic bone grafts used flawed data. A team of researchers from Denmark say results were “driven by serial dilution rather than release.”

The paper’s authors include founders of Precision Antibiotics, a Danish start-up funded by Novo Nordisk Foundation. Bone Support said by email that the Danish study “differs substantially from the intended clinical use of Cerament G.”