InspireMD, Inc. — Q2 2023 Form 10-Q
Reporting period: Quarter and six months ended June 30, 2023. Unaudited. InspireMD develops and commercializes MicroNet-based vascular stents; CGuard EPS is its principal marketed product, sold mainly through distributors in international markets.
Financial performance
| Metric | Q2 2023 | Q2 2022 | First half 2023 | First half 2022 |
|---|---|---|---|---|
| Revenue | $1.649 million | $1.531 million | $2.888 million | $2.714 million |
| Gross profit / margin | $0.491 million / 29.8% | $0.431 million / 28.1% | $0.864 million / 29.9% | $0.553 million / 20.4% |
| Operating expenses | $5.806 million | $5.112 million | $10.560 million | $9.720 million |
| Operating loss | $5.315 million | $4.681 million | $9.696 million | $9.167 million |
| Net loss | $5.077 million | $4.636 million | $9.333 million | $9.117 million |
| Net loss per share | $0.24 | $0.59 | $0.64 | $1.17 |
Q2 revenue rose 7.7%, mainly from CGuard sales growth in existing markets; CGuard generated all Q2 2023 revenue. First-half revenue grew 6.4%. Improved first-half gross profit and margin reflected fewer write-offs and higher revenue. Operating costs rose, including higher general and administrative expense; net losses increased in both comparative periods. Financial income was $238,000 in Q2 and $363,000 for the first half, up from $45,000 and $50,000, respectively.
Cash, liquidity and capitalization
- At June 30, cash and cash equivalents were $11.545 million, short-term bank deposits $6.631 million, and marketable securities $28.817 million; total current assets were $50.520 million and working capital was $45.691 million. Current liabilities were $4.829 million.
- First-half operating cash use was $8.156 million, versus $7.243 million a year earlier. Investing activities used $22.442 million, chiefly due to purchases of marketable securities. Financing provided $37.534 million net, principally from the May private placement.
- Total liabilities were $6.825 million. The filing reports operating lease liabilities but no conventional borrowings. Management stated that available resources could fund planned operations for at least 12 months from issuance of the financial statements; it expects continuing losses and negative operating cash flows and may need additional capital.
- The May 2023 private placement generated $42.2 million gross and approximately $37.5 million net proceeds after issuance costs. It included 10.266 million common shares, 15.562 million pre-funded warrants, and warrants to purchase up to 51.656 million shares. Cash exercise of the warrants in full could provide another $71.4 million, but would be subject to exercise terms.
Material changes, outlook and risks
- Q2 G&A expense increased 41.1%, to $2.921 million, mainly due to compensation and share-based compensation, legal costs, and other expenses. For the first half, G&A rose 18.6%, with higher salaries, legal and MDR-related regulatory expenses. Q2 R&D and selling and marketing expenses declined year over year; first-half R&D increased modestly.
- In June, the company completed enrollment of 315 patients at 25 U.S. and European sites in its C-Guardians pivotal study. The filing provides no trial outcome results. It continues development of CGuard Prime and the SwitchGuard transcarotid system, alongside efforts to obtain U.S. regulatory approvals.
- CGuard’s prior EU CE mark under the MDD expired in November 2022. MDR recertification documentation review remained pending; EU measures allow continued marketing under specified conditions through December 31, 2027. The company said it was expediting recertification.
- Management expects ongoing losses until CGuard EPS reaches commercial profitability. It identifies potential need for further financing, which could be costly or dilute shareholders, and says financing is not assured. No numerical revenue or earnings guidance is provided.
- Russia and Belarus accounted for 11.6% of Q2 2023 sales and 10.0% of first-half sales. Sanctions, collection challenges, currency changes, or expanded restrictions could adversely affect business there. Other identified risks include clinical and regulatory uncertainty, competition, reliance on a single manufacturing facility, reimbursement, foreign exchange, and geopolitical risks, including hostilities in Israel.
- Potential dilution is substantial: the company reported 75.2 million potential shares excluded from diluted loss-per-share calculations as anti-dilutive. No pending material legal proceedings were reported; management said there were no material changes to contractual commitments during the quarter.
Key facts for investors to verify
- Progress and results from C-Guardians, and timing and requirements for FDA approvals of CGuard products and SwitchGuard.
- Status and conditions of EU MDR recertification and continued market access under the transitional rules.
- Cash burn relative to management’s stated 12-month funding outlook, and whether additional capital will be required.
- Actual and potential dilution from pre-funded warrants, the large warrant overhang, and share-based awards.
- Revenue growth, gross-margin durability, customer and geographic concentration, and exposure to Russia and Belarus.