InspireMD, Inc. — 2022 Form 10-K Summary
Business context and reporting period
Annual report for the fiscal year ended December 31, 2022; comparisons are with fiscal 2021. InspireMD develops and commercializes MicroNet mesh-covered stents. Its principal commercial product is CGuard EPS for carotid artery disease, sold mainly through international distributors. The company had no FDA-cleared or approved products for U.S. commercial sale; U.S. CGuard units generated revenue through the ongoing clinical study.
Financial performance and liquidity
| Metric (US$ millions, except per-share data) | 2022 | 2021 |
|---|---|---|
| Revenue | 5.171 | 4.495 |
| Gross profit / gross margin | 1.117 / 21.6% | 0.754 / 16.8% |
| Operating expenses | 19.830 | 15.470 |
| Loss from operations | (18.713) | (14.716) |
| Net loss | (18.491) | (14.918) |
| Net loss per share, basic and diluted | (2.35) | (2.03) |
| Cash used in operating activities | (15.542) | (13.210) |
Revenue increased 15%, principally from CGuard EPS sales, which rose to $5.123 million from $4.309 million. Gross margin improved, while R&D, selling and marketing, and general and administrative costs all increased. Higher clinical-trial spending was a major driver of R&D growth. Financial results included $250,000 net financial income in 2022, versus $157,000 net expense in 2021.
At year-end, cash and cash equivalents were $4.632 million and short-term bank deposits were $13.171 million, totaling $17.803 million. Current assets were $21.326 million against current liabilities of $5.070 million; reported working capital was $16.256 million. Equity was $17.393 million, down from $33.532 million. The filing reports no conventional borrowings; liabilities included lease obligations and employee retirement-related obligations. Net cash used in investing activities was $8.441 million, largely reflecting net withdrawals of short-term deposits, while financing activities used $140,000. The company reported an accumulated deficit of $201.585 million.
Material changes and developments
- Revenue rose, but net loss widened by about $3.6 million as operating expenses increased more than gross profit.
- Operating cash use increased by $2.332 million year over year. Cash and short-term deposits together fell by $16.237 million from year-end 2021.
- MGuard Prime EPS sales were phased out and ceased in the second quarter of 2022 as demand shifted toward drug-eluting stents.
- The company’s MDD CE mark for CGuard EPS expired in November 2022. After year-end, the company reported that EU marketing could continue subject to requirements while MDR recertification remained pending; EU rules published in March 2023 extended the stated MDD transition route through December 31, 2027.
Outlook, risks and unusual items
Management said available resources were expected to fund operations only through the end of September 2023 and concluded that substantial doubt existed about the company’s ability to continue as a going concern. The auditor issued an unmodified opinion on the financial statements with a going-concern explanatory paragraph. Management’s plans included continued commercialization and seeking additional capital through equity, debt or strategic partnerships; there was no assurance financing would be available. The financial statements do not include adjustments that might result from the uncertainty.
- The FDA-approved IDE pivotal C-Guardians study was designed to enroll approximately 315 patients. At the time of the report, enrollment was ongoing and management expected completion around the end of the second quarter of 2023; study success and timing were uncertain.
- The company depended on a single Israeli manufacturing facility. Its MicroNet fiber supplier said it could not supply the material in the future; inventory was expected to cover about 2.5 years of production, while qualifying another source could take up to a year.
- Russia and Belarus accounted for 12.1% of 2022 sales, versus 9.9% in 2021. Sanctions, collection difficulty, currency changes and regional instability could affect business in those markets.
- Other significant risks include MDR recertification, clinical and regulatory outcomes, reimbursement and market adoption, future financing and dilution, foreign-exchange exposure, competition, and political or military disruption in Israel.
- Management reported effective disclosure controls and internal control over financial reporting at year-end; the auditor was not engaged to audit internal controls.
Important facts for investors to verify
- Actual subsequent financing, cash runway and cash burn compared with the September 2023 runway estimate.
- Current MDR recertification status and compliance with conditions for continued CGuard sales in Europe.
- C-Guardians enrollment completion, final results, FDA submission plans and any changes to trial timing or cost.
- Progress qualifying an alternative MicroNet fiber supplier and the adequacy of inventory for production.
- Revenue concentration and collections, particularly exposure to Russia and Belarus, and whether distributor growth is sustainable.
- Current share count, potential dilution from equity plans and outstanding warrants, and ongoing Nasdaq listing compliance.