Microbot Medical Inc. — Q3 2022 Form 10-Q
Reporting period: Three and nine months ended September 30, 2022. Unaudited interim consolidated financial statements; dollar amounts below are in thousands unless stated otherwise.
Business context
Microbot is a pre-clinical medical-device company developing robotic endoluminal surgery technologies, including its LIBERTY robotic system. It has not generated operating revenue and expects continuing losses as it funds research and development.
Financial results and liquidity
| Metric | Q3 2022 | Q3 2021 | Nine months 2022 | Nine months 2021 |
|---|---|---|---|---|
| Revenue | None | None | None | None |
| Research and development expense | $1,953 | $1,389 | $5,852 | $3,897 |
| General and administrative expense | $1,521 | $1,163 | $4,361 | $3,523 |
| Operating loss | $(3,474) | $(2,552) | $(10,213) | $(7,420) |
| Net loss | $(3,468) | $(2,555) | $(10,170) | $(7,454) |
| Basic and diluted loss per share | $(0.49) | $(0.36) | $(1.43) | $(1.05) |
| Cash used in operating activities | — | — | $(9,086) | $(6,467) |
At September 30, cash and cash equivalents were $4,332, marketable securities $1,999, and restricted cash $79. Unrestricted cash, cash equivalents and marketable securities totaled approximately $6,331. Net working capital was approximately $4,953, versus $13,895 at December 31, 2021. Total assets were $7,409 and total liabilities $1,876. Liabilities included $504 of lease obligations; the filing reports no other material borrowing balance. Operating margins are not meaningful because the company had no revenue.
Cash, cash equivalents and restricted cash declined $9,169 during the first nine months of 2022. Investing cash use was $83, primarily for property and equipment; there were no financing cash flows in the period. The company reported $5,533 of stockholders’ equity at September 30, down from $14,381 at year-end 2021.
Changes versus prior comparable periods
- Q3 net loss widened to $3,468 from $2,555; nine-month net loss widened to $10,170 from $7,454.
- R&D expense increased 41% for Q3 and 50% for the nine-month period, primarily due to hiring, salary increases, and preparations to move LIBERTY toward controlled, low-volume production.
- G&A expense rose 31% for Q3 and 24% year to date, reflecting higher payroll, share-based compensation, D&O insurance and travel, partly offset by lower legal and consulting costs.
- Nine-month operating cash use increased by $2,619 year over year. Cash balances fell substantially from December 2021.
Outlook, developments and risks
- Funding and going concern: Management said October 2022 financing generated approximately $4.3 million in net proceeds and estimated available cash would fund operations for about eight months from the filing, based on projected burn and milestones. The filing states there is substantial doubt about the company’s ability to continue as a going concern and that additional capital will likely be required. If it loses the pending financing litigation, management estimated runway could fall to about one month.
- October financing: The company issued 782,495 common shares and pre-funded warrants for up to 240,000 shares at approximately $4.89 per security, for approximately $5.0 million gross proceeds. Placement-agent cash fees and expenses were about $565,000, and additional warrants were issued. The transaction creates potential dilution. The ATM prospectus supplement was suspended; no shares had been sold under the ATM through the filing’s stated period.
- LIBERTY: The company completed a GLP animal study and reported successful robotic navigation to 58 of 63 targets (92%). It reported no definite acute vascular injury in post-navigation angiograms; histopathology was pending, with a further preclinical study possible. FDA feedback recommended a clinical study and human-factors validation to support a potential 510(k) path. The company was preparing for an IDE submission and first-in-human study in 2023; timing and regulatory outcomes are uncertain.
- Portfolio changes: In October, Microbot suspended the Self-Cleaning Shunt project and said it would consider alternatives for those assets, including a sale, licensing, joint venture, spin-off or discontinuation. It also acquired substantially all Nitiloop assets, including the NovaCross device family, in exchange for royalties capped at $8 million. The company assumed certain associated Israeli Innovation Authority grant repayment obligations.
- Litigation: Empery and Hudson Bay seek rescission of a 2017 financing and repayment of $6.75 million. The case was in discovery; management could not estimate the outcome and recorded no provision. The company previously paid approximately $3.7 million in a separate adverse case related to that financing. A separate appeal in the Mona litigation remained pending.
- Other exposures: The company cited potential COVID-related disruption to studies, suppliers and operations, foreign-exchange exposure, and cash holdings above federally insured limits. Israeli Innovation Authority grants entail royalties on future sales and restrictions on transferring certain technology outside Israel without approval.
Investor verification points
- Confirm post-October financing net proceeds, outstanding shares and potential dilution from pre-funded and other warrants.
- Track cash burn and runway against management’s approximately eight-month estimate and the company’s stated going-concern uncertainty.
- Follow the $6.75 million financing lawsuit, including any judgment, settlement or resulting liquidity impact.
- Verify LIBERTY’s pending histopathology results, FDA/IDE milestones and expected first-in-human timing.
- Assess the financial and strategic effects of the SCS suspension, Nitiloop asset integration and related royalty or grant obligations.