Creative Medical Technology Holdings, Inc. — FY2023 Form 10-K
Reporting period: Fiscal year ended December 31, 2023; comparative figures are for FY2022. The filing was signed March 22, 2024. The company is a small commercial-stage biotechnology business, with most current commercial activity from physician kits for CaverStem erectile dysfunction procedures; its other principal programs are in development.
Financial performance and liquidity
| Metric | FY2023 / year-end | FY2022 / prior year-end |
|---|---|---|
| Revenue | $9,000 | $88,600 |
| Gross profit; gross margin | $5,400; 60.0% | $60,109; 67.8% |
| Research and development expense | $1,970,639 | $6,268,854 |
| Selling, general and administrative expense | $3,560,309 | $3,943,543 |
| Operating loss | $(5,620,132) | $(10,244,372) |
| Interest income | $333,558 | $100,328 |
| Net loss | $(5,286,574) | $(10,144,044) |
| Cash and investments | $9,987,058 | $18,399,136 |
| Working capital | Approximately $9.9 million | Approximately $15.4 million |
| Net cash used in operating activities | $(8,027,885) | $(7,796,966) |
Revenue fell 89.8%, primarily due to lower CaverStem sales. Operating expenses declined substantially, but the year-over-year improvement in operating loss was driven mainly by the absence of a $5.0 million research-tools charge recorded in 2022. Excluding that unusual charge, R&D expense rose by $701,785. The filing reports no income-tax provision. Gross margin is calculated from reported revenue and cost of revenue.
At December 31, 2023, the balance sheet showed $3.47 million cash and $6.52 million investments, including certificates of deposit and U.S. Treasuries. Total liabilities were $371,394, comprising current liabilities; the filing reports no debt balance. Cash declined by $4.85 million during the year. Investing activities provided $3.45 million, primarily from investment redemptions; financing activities used $270,952 for stock repurchases. Management believes existing resources will fund anticipated costs through at least March 2025, but says additional capital will be needed. The filing does not provide a clear quarterly revenue or profit breakdown for Q4.
Material changes and business developments
- The company operates CaverStem and FemCelz disposable-kit programs through eight U.S. physician locations. FY2023 revenue was minimal, and FemCelz had generated no revenue to date.
- FDA clearance for the Type 1 diabetes CELZ-201 CREATE-1 Phase I/II trial had been received in 2022; patient recruitment began in September 2023.
- The company received FDA clearance in September 2023 for a Phase I/II trial of its allogeneic chronic lower-back-pain program and IRB approval in October. It was vetting contract research organizations, with enrollment planned to begin in early 2024.
- ImmCelz (CELZ-100) remained preclinical. The company reported favorable laboratory-platform results and was responding to FDA clarification requests on its orphan-drug-designation application for brittle Type 1 diabetes.
- The company repurchased 57,500 shares for approximately $270,952 under a program authorizing up to $2 million. It also effected a 1-for-10 reverse split in 2023.
- Year-end stockholders’ equity was $10.34 million. There were 1,356,626 common shares outstanding as of March 22, 2024. Warrants to purchase 2,284,932 shares remained outstanding at year-end.
Outlook, risks, contingencies, and unusual items
Management expects continued operating losses while it funds research, clinical trials, regulatory work, and potential commercialization. It anticipates raising additional capital; availability and terms are uncertain, and equity financing could dilute current stockholders. The company has a history of losses, limited product revenue, a small sales and marketing operation, and dependence on third parties for research, trials, and kit manufacturing.
Key risks include clinical-trial delays or unsuccessful results, regulatory uncertainty, limited market acceptance and reimbursement, competition, intellectual-property challenges, and the need to maintain Nasdaq listing compliance. The filing also identifies cybersecurity and data-privacy risks; management states that it has not implemented a formal cybersecurity risk-management process. Cash balances exceeded FDIC insurance limits at three of the company’s four financial institutions.
Unusual and related-party matters include a $5.0 million 2022 research-tools purchase from Narkeshyo LLC, an entity affiliated with a former director and current consultant; the entire amount was expensed in 2022. The company also reported patent-related payments to affiliate Creative Medical Health and a license arrangement with Jadi Cell, controlled by a former director. The auditor issued an unqualified opinion on the financial statements; the company was not required to obtain an auditor attestation on internal controls. Management concluded its disclosure controls and internal control over financial reporting were effective.
Important facts for investors to verify
- Whether cash use, trial spending, and financing availability support the stated runway through March 2025—and the timing and terms of anticipated future capital raises.
- Actual recruitment, enrollment, trial execution, and safety or efficacy data for CREATE-1 and the lower-back-pain trial; the filing describes planned milestones, not completed pivotal trials.
- Whether commercial revenue can recover after the sharp decline in kit sales, and what results follow the company’s review of its marketing strategy and potential partnerships.
- The status and economic terms of outstanding warrants, potential dilution, and the remaining authorization and use of the share-repurchase program.
- The rationale, valuation, and measurable development benefits of the $5.0 million related-party research-tools purchase, along with ongoing related-party patent and license obligations.
- Program naming differs in places in the filing, including CELZ-201 versus CELZ-202 for the back-pain program; confirm the trial identity and applicable regulatory status.
- Reconcile reported available liquidity: the balance sheet’s cash plus investments totals about $9.99 million, while MD&A cites approximately $9.90 million of available cash and certificates of deposit.