Microbot Medical Inc. — Form 10-Q Summary
Reporting period: Three and nine months ended September 30, 2020; filed November 16, 2020. Amounts are in U.S. dollars, thousands, except per-share data. Microbot is a pre-clinical medical-device developer and has not generated operating revenue.
Financial results and liquidity
| Metric | Q3 2020 | Q3 2019 | Nine months 2020 | Nine months 2019 |
|---|---|---|---|---|
| Revenue | None | None | None | None |
| Research and development | $1,037 | $843 | $2,397 | $2,207 |
| General and administrative | $1,378 | $948 | $4,065 | $3,045 |
| Operating loss | ($2,415) | ($1,791) | ($6,462) | ($5,252) |
| Net loss | ($2,472) | ($1,874) | ($6,532) | ($5,377) |
| Basic and diluted loss per share | ($0.35) | ($0.44) | ($0.92) | ($1.27) |
- For the nine months, operating cash use was $5,582, versus $4,531 in 2019. Investing activities provided $2,438, mainly from sale of marketable securities; financing activities used $3,375, reflecting repayment related to litigation. Cash, cash equivalents and restricted cash decreased $6,519 to $26,610.
- At September 30, cash and cash equivalents were $26,531; restricted cash was $79. Marketable securities were nil, compared with $2,521 at year-end 2019. Working capital was approximately $26,025, down from $31,110.
- Total assets were $28,024 and total liabilities $1,548. No borrowings are reported; lease liabilities totaled $813, including $184 current and $629 non-current. The filing provides no meaningful revenue margin information.
- Stockholders’ equity was $26,476, compared with $31,540 at December 31, 2019. Shares outstanding were 7,108,133 at September 30, 2020.
Changes versus prior period
- Nine-month net loss increased by $1,155, with higher R&D and G&A costs. R&D rose $190; G&A rose $1,020, partly reflecting salary, insurance, rent and share-based compensation costs. Share-based compensation expense increased to $1,468 from $906.
- Quarterly net loss increased $598 year over year. Financing expense declined to $70 for the nine months from $125, primarily due to accrued interest associated with litigation resolved in early 2020.
- Operating cash use rose $1,051 year over year. Cash and restricted cash fell from $33,129 at the start of 2020 to $26,610 at September 30.
Business, outlook and material risks
- The company is developing minimally invasive robotic medical technologies, including the Self Cleaning Shunt, Liberty, ViRob and TipCAT platforms. It reported that a Liberty feasibility animal study concluded in August 2020, met its endpoints and had no intraoperative adverse events. The company remains pre-clinical.
- Management expects continuing losses and anticipates R&D spending may rise as programs advance. Management stated cash should fund operations for at least 12 months from issuance and, elsewhere in MD&A, estimated at least 24 months; the longer estimate could be reduced if the company loses pending investor litigation.
- The company may seek additional grants, debt or equity financing. Financing availability and terms are uncertain; equity issuance could dilute shareholders, and debt could add service obligations and restrictive covenants. The filing reports no off-balance-sheet arrangements.
- 2017 financing litigation: Following an adverse judgment and unsuccessful appeal, the company paid approximately $3,700 and returned 83,333 shares to Sabby; the balance sheet shows the related $3,604 provision at year-end 2019 cleared by September 2020. Empery and Hudson Bay investors separately seek rescission and return of $6,750 plus interest. The company’s motion to dismiss remained pending, and management could not assess its likelihood of success.
- Other litigation: The court granted Alliance summary judgment in September 2020, dismissing the company’s claim against Alliance for estimated short-swing profits of approximately $468. Its claim against Mona and Mona’s counterclaim seeking approximately $151 remained pending; outcomes and potential damages were uncertain.
- COVID-19 could delay pre-clinical studies, trial-site monitoring, supplier access and product development. Additional risks include foreign-exchange exposure and cash balances at financial institutions above federally insured limits.
- IIA grants received totaled approximately $1,500 and may require royalties of 3%–3.5% of future sales up to the grant amount. Certain grant-funded technology transfers outside Israel require IIA approval.
Investor verification priorities
- Track the Empery/Hudson Bay case, including the potential $6,750 return plus interest and any effect on cash runway.
- Reconcile management’s stated 12-month minimum and 24-month expected cash runway against operating cash burn and planned development spending.
- Monitor R&D progress and whether Liberty’s animal-study results translate into further pre-clinical, clinical and regulatory milestones.
- Review future cash burn, share-based compensation, financing needs and potential dilution; confirm the company’s reported cash and lease obligations.
- Follow the remaining Mona litigation and assess the royalty and technology-transfer obligations associated with IIA grants.