InspireMD, Inc. — 2021 Form 10-K Summary
Reporting period: Fiscal year ended December 31, 2021, compared with fiscal 2020. Amounts below are U.S. dollars; financial statement figures are generally in millions unless noted. This is an annual report, not a standalone fourth-quarter report.
Business context
InspireMD develops and sells medical devices built around its MicroNet mesh technology, primarily CGuard EPS, a mesh-covered carotid stent. CGuard sales are concentrated in international markets; the company stated that none of its products was approved for commercial sale in the United States. Its U.S. pivotal C-Guardians study began enrolling in 2021 and is designed for approximately 315 patients.
The company intends to focus resources on CGuard and plans to phase out MGuard Prime, its bare-metal coronary stent, during 2022 as the market favors drug-eluting stents. It does not plan to pursue PVGuard development in the near term.
Key financial metrics
| Metric | 2021 | 2020 |
|---|---|---|
| Revenue | $4.495 million | $2.485 million |
| Gross profit / gross margin | $0.754 million / 16.8% | $0.083 million / 3.3% |
| Research and development expense | $5.158 million | $2.233 million |
| Selling and marketing expense | $2.907 million | $2.103 million |
| General and administrative expense | $7.405 million | $6.127 million |
| Net loss | $14.918 million | $10.544 million |
| Net cash used in operating activities | $13.210 million | $9.081 million |
CGuard revenue was $4.309 million, up from $2.764 million, with management attributing the increase largely to the return of postponed procedures as hospitals’ COVID-19 pressures eased. Total revenue rose 80.9%. The 2020 comparison included a $580,000 former-distributor settlement charged against revenue; this affected reported revenue and gross profit comparisons.
At year-end, cash and cash equivalents were $12.004 million and short-term bank deposits were $22.036 million. Working capital was $32.747 million, and current assets were 8.5 times current liabilities. Total liabilities were $6.180 million, including lease and employee-related liabilities; the filing does not report conventional borrowings in the balance sheet presented. Accumulated deficit was $183.094 million.
Net cash used in investing activities was $22.457 million, principally reflecting $24 million invested in short-term deposits, partly offset by $2 million withdrawn. Financing activities provided $35.034 million, primarily through equity offerings, ATM sales and warrant exercises. The company issued substantial additional shares during 2021; common shares outstanding were 8,296,256 at year-end, compared with 3,284,322 a year earlier, after giving effect to the 1-for-15 reverse split.
Material changes versus 2020
- Revenue increased by $2.010 million, principally from higher CGuard sales and the absence of the 2020 settlement charge.
- Gross profit improved, but remained modest relative to operating expenses. Operating expenses rose $5.007 million, including increased U.S. trial, product-development, sales and compensation costs.
- Net loss widened by $4.374 million, and operating cash use increased by $4.129 million.
- Liquidity increased substantially following equity financing, including a February 2021 public offering that generated approximately $18.9 million net, alongside ATM proceeds and warrant exercises.
- France added CGuard to its reimbursed medical products list effective October 25, 2021. The company also signed an exclusive China distribution agreement whose partners are responsible for registration trials and face minimum purchase obligations.
Outlook, commentary and risks
Management said the company could fund planned operations for at least the next 12 months as of the financial statements’ issuance, but expects continued losses and negative operating cash flows until products, primarily CGuard, reach commercial profitability. It may need additional capital; future financing could be difficult, costly and dilutive. No revenue or earnings guidance was provided.
- Clinical and regulatory: U.S. commercialization depends on successful trial completion and FDA premarket approval. Enrollment, trial timelines, results and approval are uncertain; COVID-19 could disrupt enrollment, procedures and supply chains.
- Commercial and operating: Market adoption, reimbursement, competition and distributor ordering patterns affect growth. The company relies on a single Israeli manufacturing facility and certain single-source suppliers.
- Geopolitical and currency: The company reported that Russia generated approximately 8.2% of 2021 sales. It warned that the Russia-Ukraine conflict and sanctions could affect sales and collections, with the specific impact not yet estimable. Operations and manufacturing are based in Israel, exposing the business to regional disruption and exchange-rate movements.
- Other exposures: Risks include product liability, intellectual-property disputes, EU medical-device regulatory transition requirements, and Nasdaq continued-listing compliance.
- Contingencies and controls: The China agreement may require reimbursement of 50% of certain partner trial costs, capped at $1 million, if specified regulatory and termination conditions occur; the recorded liability at year-end was described as immaterial. Management reported effective disclosure controls and internal control over financial reporting at December 31, 2021. The auditor issued an unqualified opinion on the financial statements and reported no critical audit matters.
Important facts for investors to verify
- Cash, short-term deposits, operating cash burn and the company’s stated minimum 12-month funding outlook against current and expected trial and commercial spending.
- C-Guardians enrollment pace, completion timeline, endpoint results and the clinical evidence required for a U.S. PMA.
- Whether CGuard revenue growth translates into improved gross margins and progress toward commercial profitability, particularly after MGuard Prime is phased out.
- Actual dilution and potential share issuance from warrants, equity plans and future capital raises.
- China registration progress, partner purchase commitments and any potential trial-cost reimbursement obligation.
- Exposure to Russia-related sales and collections, and any supply-chain or manufacturing disruption affecting the Israeli facility or single-source suppliers.