Microbot Medical Inc. — Q3 2023 Form 10-Q
Reporting period: Quarter and nine months ended September 30, 2023. Amounts are in U.S. dollars; financial statement figures are in thousands unless otherwise stated.
Business context
Microbot is a pre-clinical medical-device company developing robotic endoluminal surgery technologies. Its primary focus is the LIBERTY robotic surgical system. The company has not generated operating revenue and expects continued losses while developing its products.
Financial results and liquidity
| Metric | Q3 2023 | Q3 2022 | Nine months 2023 | Nine months 2022 |
|---|---|---|---|---|
| Revenue | None | None | None | None |
| Research and development expense, net | $1.612m | $1.953m | $4.594m | $5.852m |
| General and administrative expense | $0.932m | $1.521m | $3.193m | $4.361m |
| Operating loss | $2.544m | $3.474m | $7.787m | $10.213m |
| Net loss | $2.446m | $3.468m | $7.586m | $10.170m |
| Basic and diluted net loss per share | $0.21 | $0.49 | $0.79 | $1.43 |
Margins are not meaningful because the company has no revenue. Net financing income was $98,000 in Q3 and $201,000 for the nine months, mainly reflecting interest income and marketable-securities gains.
- Cash and liquidity: At September 30, cash and cash equivalents were $1.335m and marketable securities were $6.818m; unrestricted cash, equivalents and securities totaled approximately $8.153m. Restricted cash was $46,000. Net working capital was approximately $6.916m.
- Cash flow: Nine-month operating cash use was $6.712m, compared with $9.086m in 2022. Investing cash use was $0.984m; financing provided $6.558m, primarily from stock and warrant offerings. Cash, equivalents and restricted cash declined by $1.138m to $1.381m.
- Debt and obligations: The filing reports no conventional borrowing balance. Total liabilities were $1.530m, including $245,000 of lease liabilities. IIA grants and certain acquired-technology grants generally require royalties on future product sales; repayment is contingent on successful development and sales.
- Equity: Shares outstanding rose to 11.707m from 7.891m at year-end 2022. May and June offerings generated approximately $7.56m gross and $6.558m net proceeds, with additional warrants and potential dilution.
Changes versus the comparable period
Losses and operating cash use declined year over year, mainly due to the cost-reduction plan and discontinued or suspended non-LIBERTY programs. Q3 R&D expense fell 17% and G&A expense fell 39%; nine-month R&D and G&A expenses fell approximately 22% and 27%, respectively. Financing income increased as market interest rates rose. The improved loss per share also reflects a higher weighted-average share count, so the per-share comparison should be considered alongside dilution.
Outlook, risks and unusual items
- Runway and going concern: Management estimated funds would support operations through approximately April 2024, based on the cost-reduction plan and 2023 capital raises. The filing states substantial doubt exists about the company’s ability to continue as a going concern and that additional capital is needed. Financing may not be available on acceptable terms; further equity financing could dilute shareholders.
- Development milestones: Subject to the final pivotal pre-clinical study report and completion of verification and validation, management planned to submit an IDE application to the FDA in Q1 2024 for a pivotal human clinical trial. Initial October 2023 pivotal pre-clinical results reported 100% usability and technical success across 48 animal targets, with no visually observed acute adverse events; the comprehensive report was still pending. ISO 13485 audits supporting a future CE Mark process were expected to begin in the first half of 2024.
- Israel conflict and supply risk: The October 7, 2023 military conflict disrupted activity at some Israeli vendors and subcontractors and affected component availability and travel. The company reported delays to development and regulatory work and could not estimate the impact on milestones or results.
- Litigation: Investors in the 2017 financing seek rescission and return of $6.75m; the case was in discovery after court-ordered mediation, and management could not assess the likelihood of success. The company warns an adverse outcome could impair its ability to continue operations. Separately, the company is pursuing collection of an approximately $485,000 judgment against Joseph Mona after his counterclaim was dismissed and the appeal period expired.
- Portfolio changes: Under the core-business focus program, Microbot ended CardioSert-related development and returned the TipCat and SCS intellectual property to TRDF. CardioSert may reacquire its technology for nominal consideration; discussions were ongoing as of filing.
Investor verification priorities
- Confirm updated cash runway, operating burn and financing plans beyond April 2024, including any subsequent capital raises.
- Track the FDA IDE submission, final pre-clinical report, V&V completion and the effect of Israeli supply and operational disruptions on timing.
- Monitor the $6.75m 2017-financing litigation and any potential effect on liquidity; separately verify progress in collecting the Mona judgment.
- Assess dilution from the 2023 offerings, outstanding warrants and any future equity financing.
- Verify whether discontinued or transferred technologies, grant-related royalty obligations, or other contingencies change materially.