Microbot Medical Inc. — 2016 Q1 Form 10-Q summary
Registrant identity: The supplied filing is for StemCells, Inc., not Microbot Medical Inc. It reports the quarter ended March 31, 2016, and was signed May 10, 2016. The filing describes StemCells as a biopharmaceutical company developing cell-based therapeutics.
Business context and reporting period
StemCells focused primarily on developing its HuCNS-SC human neural stem cells, particularly for chronic spinal cord injury. It had no material product sales; reported revenue consisted of licensing agreements. Financial statements are unaudited. Share and per-share data reflect a one-for-twelve reverse stock split effective May 6, 2016.
Financial performance and liquidity
| Metric | Q1 2016 | Q1 2015 or comparison |
|---|---|---|
| Revenue | $23,164 | $20,997; up 10% |
| Research and development expense | $5.209 million | $6.292 million; down 17% |
| General and administrative expense | $4.628 million | $2.689 million; up 72% |
| Total operating expenses | $9.837 million | $8.981 million; up 10% |
| Operating loss | $9.814 million | $8.960 million |
| Net loss | $9.561 million | $9.351 million |
| Net loss per share | $0.98 | $1.62 |
| Cash used in operations | $9.236 million | $8.907 million |
At March 31, cash and cash equivalents were $8.674 million and restricted cash was $2.423 million. Total current assets were $11.683 million versus current liabilities of $7.201 million; restricted cash was pledged to the lender. Total liabilities were $24.271 million and stockholders’ deficit was $6.853 million. Loan payable, net of discount, was $9.275 million at quarter-end. In April 2016, the company repaid the outstanding SVB principal, interest and fees, and the $2.423 million restricted balance was released to unrestricted cash; the filing does not provide a clear post-repayment cash balance.
March’s public offering generated approximately $8.0 million gross and $7.1 million net proceeds. Financing activities provided $5.806 million in Q1, after loan and other repayments. The company reported no meaningful operating margin because revenue was minimal relative to expenses. No dividend or formal financial guidance is provided.
Material changes versus the prior comparable period
- Net loss increased by approximately $211,000, while loss per share decreased because the weighted-average share count rose from 5.768 million to 9.805 million.
- R&D expense fell $1.083 million, mainly from workforce reductions and lower external preclinical-study costs.
- G&A expense rose $1.939 million, primarily due to the former CEO’s separation and consulting agreement, including approximately $1.257 million in salary and benefits and $920,000 in accelerated stock compensation, net of cancellations.
- Other income was $252,000 versus $390,000 of other expense in Q1 2015, mainly reflecting a favorable change in warrant fair value; this non-cash valuation item is sensitive to assumptions.
- Shares outstanding were 11.602 million at March 31, compared with 9.279 million at December 31, 2015. New financing warrants and other potential securities create additional dilution risk.
Outlook, risks and unusual items
- Management stated that the company had very limited liquidity, expected further operating losses, and needed significant additional capital. It warned that inability to obtain financing could prevent it from meeting obligations and could require bankruptcy proceedings.
- For the Pathway Phase II spinal-cord-injury study, management expected detailed 12-month results for the first cohort by the end of Q2 2016, completion of Cohort II enrollment by the end of Q3 2016, and final trial results before year-end 2017. Six-month results for the first six patients showed improved muscle strength in five and improved injury classification in four; these are interim findings, not proof of efficacy.
- The company suspended further enrollment in its Radiant Phase II dry-AMD study in December 2015 and was seeking a partner to fund further retinal-disorder development.
- Clinical development, regulatory approval, manufacturing, financing, intellectual-property, competition and trial-delay risks remain significant. Management said additional trials would be required to confirm safety and demonstrate efficacy.
- Warrant liabilities totaled $6.160 million at March 31 and were valued using a Monte Carlo model with significant unobservable assumptions. The warrants include anti-dilution provisions. The reverse split and March financing are material capital-structure events.
- Contractual obligations totaled $14.144 million at March 31, primarily operating leases. The filing reported no legal proceedings and no material change to previously disclosed risk factors.
Most important facts for an investor to verify
- Whether this StemCells, Inc. filing is the intended filing for the requested company, Microbot Medical Inc.
- Cash and unrestricted liquidity after the April SVB repayment, and the company’s subsequent financing needs and funding availability.
- Current status and results of the Pathway study, including whether stated enrollment and reporting timelines were met.
- Whether a partner was secured for the suspended AMD program and whether its development resumed.
- Outstanding shares, warrants, anti-dilution terms and potential dilution after the reverse split and March/April offerings.
- How much reported earnings and equity remain affected by warrant-liability revaluations and stock-based compensation.