Microbot Medical Inc. — Q2 2021 Form 10-Q
Reporting period: Three and six months ended June 30, 2021; balance-sheet figures are as of June 30, 2021, compared with December 31, 2020. Financial statement amounts below are in U.S. dollars, thousands, except per-share data. Microbot is a pre-clinical medical-device company developing minimally invasive surgical robotics and reported no operating revenue to date.
Financial performance and position
- Revenue: None reported; the company has not generated operating revenue.
- Q2 2021: R&D expense was $1.389 million, up from $0.669 million; G&A was $1.087 million, down from $1.215 million. Operating loss was $2.476 million versus $1.884 million, and net loss was $2.511 million versus $1.855 million. Basic and diluted loss per share was $0.35 versus $0.26.
- First half 2021: R&D expense was $2.508 million versus $1.360 million; G&A was $2.360 million versus $2.687 million. Operating loss was $4.868 million versus $4.047 million, and net loss was $4.899 million versus $4.060 million. Basic and diluted loss per share was $0.69 versus $0.57.
- Cash flow: Operating cash use was $4.291 million in H1 2021 versus $3.688 million in H1 2020. Investing activities provided $0.259 million, compared with $2.245 million in the prior period; financing cash flow was zero versus $3.375 million used. Cash, cash equivalents and restricted cash declined $4.032 million to $15.702 million.
- Liquidity: Cash and cash equivalents were $15.619 million, marketable securities $4.999 million, and restricted cash $0.083 million. Management reported working capital of approximately $19.757 million, down from $23.908 million at year-end 2020. It said available funds were expected to support operations for at least 24 months, but warned this could be shorter if the company loses the Empery/Hudson Bay litigation. A note to the financial statements separately states that unrestricted cash was believed sufficient for more than 12 months.
- Debt and obligations: No borrowings are listed on the balance sheet. Lease liabilities totaled $0.708 million, including $0.165 million current and $0.543 million long-term. Total liabilities were $1.747 million; total assets were $21.865 million and stockholders’ equity was $20.118 million.
- Margins: Not applicable because no revenue was reported. Share-based compensation was $0.709 million in H1 2021, versus $0.909 million in H1 2020.
Material changes and management commentary
- R&D spending rose substantially, primarily due to new hires and increased professional services, materials and intellectual-property costs related to LIBERTY. Management expects R&D spending to increase as programs advance and preclinical and clinical trials begin.
- G&A declined, mainly because of lower CEO bonus and travel expenses, partly offset by higher salaries and related costs. Management said G&A could increase with expanded operations, headcount and public-company costs.
- The company continued feasibility animal trials for LIBERTY. It reported a 2020 feasibility study met its endpoints without intraoperative adverse events; the filing describes ongoing trials and development, not commercial or clinical approval.
- Management cited cash needs for continuing development and said it may seek additional grants and debt or equity financing. The company entered a $10 million at-the-market offering agreement in June 2021 and also described access to other offerings under its shelf registration. Equity issuance could dilute shareholders; debt could add repayment obligations and restrictive covenants.
Outlook, risks and unusual items
- Development timeline: Management expected a LIBERTY design freeze in Q4 2021, FDA pre-submission in Q1 2022, clinical trials to begin in Q3 2022, and FDA submission in Q4 2022. These are forward-looking targets, not assurances.
- Litigation risk: A lawsuit by Empery and Hudson Bay seeks rescission of a 2017 financing and return of $6.75 million. The company’s motion to dismiss was denied; it appealed, and management said the outcome could not be estimated. A prior adverse judgment related to that financing led to repayment of approximately $3.7 million to Sabby.
- Other litigation: The company obtained a $484,614 judgment against Joseph Mona, which he appealed. Subsequent proceedings allowed an amended counterclaim and rejected the company’s request to execute on the judgment; the appeal remained pending.
- COVID-19 and operations: The filing identifies potential delays or disruption to studies, trial-site monitoring, suppliers and product development from the pandemic and related restrictions.
- Other exposures: The company has received approximately $1.5 million in Israeli Innovation Authority grants, with future-sales royalties of 3%–3.5% up to grant amounts and restrictions on transferring grant-supported technology outside Israel without approval. Foreign-currency movements affect expenses; management reported no significant inflation impact in the periods presented.
- Management stated disclosure controls and procedures were effective as of June 30, 2021, and reported no material changes in internal control over financial reporting during the quarter.
Important facts for investors to verify
- Whether development and regulatory milestones for LIBERTY are achieved on the stated timeline, and the resulting trial and commercialization costs.
- Cash runway assumptions and any effect of the pending $6.75 million financing litigation on liquidity.
- Any shares sold under the $10 million ATM or other shelf offerings, and the resulting dilution.
- Progress and potential recovery of the appealed $484,614 judgment, alongside developments in the related counterclaim.
- Continuing R&D burn, absence of revenue, and the company’s ability to secure additional financing or grants on acceptable terms.