Bullfrog AI: advancing technologies in leaps and bounds

Key Points

• Bullfrog AI announced positive results from a collaborative effort that may lead to significant revenue.
• The bfLEAP AI platform has proved helpful in finding previously unknown biological indicators for mental illness.
• New deals are expected soon, and a ramping revenue stream should follow, but there are risks to be aware of. 

If Bullfrog AI NASDAQ: BFRG is not on your radar yet, it should be. This company is an emerging leader in a subset of AI that will have one of the furthest-reaching impacts on humanity: drug discovery. AI drug-discovery market is expected to grow at a 30% CAGR through 2030, driven by discoveries, finding novel uses for existing treatments and repurposing old ones. For Bullfrog, the opportunity is twofold, and it aims to capitalize on drug discovery and AI-enhanced drug discovery platforms as a service. 

Advancing medicine with the bfLEAP platform

The company’s primary product is the bfLEAP, an AI-powered and machine-learning-capable platform for drug research. The platform developed at the Johns Hopkins University Applied Physics Laboratory can display and explain its data-derived insights. The benefits to pharma companies are apparent. The time to market on many drugs is nearly ten years and very costly: the bfLEAP platform aims to shorten the time and cost while raising the percentage of candidate drugs that make the final cut. 

Bullfrog revealed its first revenues in Q3, $65,000; growth is expected over the coming years. A recent announcement by Bullfrog in collaboration with the Lieber Institute for Brain Development highlights the bfPlatform’s efficacy and should lead to demand. The two announced a study of 2800 Lieber samples, resulting in the first grouping of mental disorders by biological factor without behavioral analysis. Further, the groupings reveal sub-sets within respective disorders that are expected to give new insight into the diagnosis and treatment of psychiatric patients. 

“The preliminary results are provocative and offer novel insights at the gene level that may only be discoverable using these novel AI technologies... This is an important first step towards personalized medicine in psychiatry,” said Daniel R. Weinberger, M.D., Director and CEO of LIBD.

The deal with LIBD highlights another potential revenue stream for Bullfrog AI. Along with exclusive rights to the data, Bullfrog may also commercialize products derived from it. The potential for new product revenue is astronomical because the company is expected to close more deals with similar organizations. The company also has five significant candidates in review or testing phases on track for clinical studies. 

Well-capitalized Bullfrog comes at a cost

The company is well-capitalized and on track to generate growing revenue with high margins, but there is a cost. The company’s business is high-cost, with R&D far exceeding the current income levels. The company leans into dilutive methods rather than debt and has increased the share count by nearly 30% as of the last report. Those efforts are expected to continue and may provide an overhang for the market as it moves higher. 

The sell-side has shown virtually no interest in this technology stock since its IPO. The institutions own less than 10%, and insiders and early investors hold most of the stock. Analysts have yet to issue targets or ratings but may become interested soon. 

Shares of BFRG surged more than 30% on the LIBD announcement and continued higher in the following session because the LIBD news affirmed the outlook. The move included a significant 500X increase in volume that suggests the movement will continue. The company’s short interest was low ahead of the report, so this is real volume and may include significant institutional activity. However, upside potential may be limited by resistance targets at $4.20 and $5.35, so traders should be ready to take profits when they are reached.