Check-Cap Ltd. — FY2021 Form 20-F
Entity and period: The supplied filing is Check-Cap Ltd.’s annual report for the fiscal year ended December 31, 2021, not a filing for “Mbody AI Ltd.” or a standalone 2021 fourth quarter. The company is an Israeli clinical-stage medical diagnostics developer; its Nasdaq symbols are CHEK and CHEKZ. Financial statements are prepared under U.S. GAAP.
Business context and reporting period
Check-Cap is developing C-Scan, an ingestible, ultra-low-dose X-ray capsule system intended to screen for colorectal polyps without bowel preparation or sedation. The filing reports annual results; it does not provide a clear standalone Q4 income statement or cash-flow value. The company had generated no revenue through the filing date.
Key financial metrics
| Metric (US$ millions, except per-share data) | FY2021 | FY2020 |
|---|---|---|
| Revenue | None | None |
| Research and development, net | 12.349 | 10.008 |
| General and administrative expense | 4.972 | 3.924 |
| Operating loss | 17.321 | 13.932 |
| Finance income, net | 0.119 | 0.086 |
| Net loss | 17.202 | 13.846 |
| Basic and diluted loss per share | $0.21 | $0.46 |
| Net cash used in operating activities | 16.264 | 13.113 |
| Net cash used in investing activities | 16.006 | 10.451 |
| Net cash provided by financing activities | 51.024 | 23.582 |
At December 31, 2021, cash and cash equivalents were $26.457 million, short-term bank deposits were $25.104 million, and restricted cash was $0.350 million. Total current assets were $52.750 million versus current liabilities of $4.041 million. Total assets were $55.659 million, total liabilities were $4.968 million, and shareholders’ equity was $50.691 million. The balance sheet reports no conventional borrowings; liabilities included operating leases and royalty provisions. Lease liabilities totaled $1.145 million, and the recorded ASIC-designer royalty provision was $0.132 million. No profit margin is meaningful because the company had no revenue.
Operating cash use rose as the company increased development spending. Investing cash outflow primarily reflected $15.0 million placed in short-term deposits and $1.0 million of property and equipment purchases. Financing inflows mainly comprised $31.8 million net proceeds from the July 2021 share-and-warrant offering and $19.2 million from warrant exercises.
Material changes versus prior comparable period
- Net loss increased by $3.356 million, from $13.846 million to $17.202 million. Operating loss increased by $3.389 million.
- Net R&D expense rose 23.4%, chiefly reflecting higher salaries and materials, partly offset by IIA grant participation. G&A expense increased 27%, including higher insurance and other corporate costs.
- Operating cash use increased by $3.151 million. Financing activity increased substantially, and year-end cash, cash equivalents and restricted cash rose to $26.807 million from $8.053 million; short-term deposits are reported separately.
- Ordinary shares outstanding increased from 46.2 million to 96.4 million during 2021, primarily through warrant exercises and the July offering. The filing describes substantial potential dilution from outstanding warrants and future financing needs.
Outlook, commentary, risks and unusual items
- Management expected available cash, including proceeds from the subsequent March 2022 offering, to fund operations and plans into the first quarter of 2024. It also expected continuing losses and negative operating cash flow, and said further financing would be needed. These are management estimates, not a guarantee.
- The FDA had approved the amended IDE for the planned two-part U.S. pivotal study in February 2022. The company anticipated starting the calibration stage in April 2022 and the larger second stage in Q4 2022; subject to successful trials and available capital, it anticipated submitting a direct de novo petition in early 2024. Timing and regulatory outcomes remain uncertain.
- C-Scan had EU CE certification valid through December 1, 2026, and Israeli AMAR approval valid through December 31, 2022, but the company had not begun sales and lacked U.S. marketing authorization. Prior studies were relatively small; technical failures, trial performance, patient enrollment, manufacturing scale-up, reimbursement, and market acceptance remain material uncertainties.
- The company reported a history of losses, an accumulated deficit of $108.2 million, dependence on C-Scan, single-source suppliers, and risks from COVID-19, operations in Israel, radiation-related regulation, and competition. IIA funding carried a contingent royalty obligation of approximately $6.1 million at year-end, with additional restrictions on transferring funded manufacturing or know-how outside Israel.
- Nasdaq notified the company in December 2021 that it did not meet the $1.00 minimum bid-price rule and gave it until June 21, 2022 to regain compliance. The filing also identifies possible dilution from equity financing and warrants.
- Subsequent to year-end, the March 3, 2022 offering raised $10.0 million gross, or approximately $8.9 million net, through shares and warrants; certain July 2021 warrants were also amended to reduce their exercise price. These are subsequent events, not FY2021 operating results.
- The independent auditor issued unqualified opinions on the financial statements and internal control over financial reporting. Management likewise concluded disclosure controls and internal controls were effective as of year-end.
Most important facts for investors to verify
- Confirm the issuer identity: this filing is for Check-Cap Ltd.; the request’s company name, Mbody AI Ltd., does not match.
- Review the audited financial statements and reconcile liquidity figures: $26.457 million cash and equivalents plus $25.104 million short-term deposits, with $0.350 million restricted cash.
- Verify cash runway assumptions against actual operating burn, clinical-trial costs, and financing after March 2022; the stated runway is a management estimate.
- Track pivotal-trial enrollment, safety and efficacy results, FDA pathway decisions, and the timing and feasibility of the proposed de novo submission.
- Assess dilution from shares, outstanding warrants and subsequent offerings, as well as Nasdaq minimum-bid compliance.
- Evaluate supplier continuity, manufacturing capacity, reimbursement prospects, and IIA royalty and manufacturing-transfer obligations.