Microbot Medical Inc. — Q1 2023 Form 10-Q
Business context and period: Unaudited results for the three months ended March 31, 2023, with balance-sheet comparisons to December 31, 2022. Microbot is a pre-clinical medical-device company developing robotic endoluminal surgery technology, principally its LIBERTY robotic system. It has not generated operating revenue.
Financial results and liquidity
Amounts are in U.S. dollars in thousands, except per-share data.
| Metric | Q1 2023 | Q1 2022 / prior date |
|---|---|---|
| Revenue | None | None |
| Research and development expense | $1,617 | $1,706 |
| General and administrative expense | $1,302 | $1,470 |
| Operating loss | $2,919 | $3,176 |
| Financing income (expense), net | $66 | $(13) |
| Net loss | $2,853 | $3,189 |
| Basic and diluted loss per share | $(0.36) | $(0.45) |
| Net cash used in operating activities | $3,203 | $3,007 |
At March 31, 2023, cash and cash equivalents were $2,150 and marketable securities were $2,907; unrestricted cash, cash equivalents and marketable securities totaled approximately $5,057. Total current assets were $5,581, current liabilities $1,233, and working capital approximately $4,348. Total assets were $6,208, total liabilities $1,360, and stockholders’ equity $4,848. Lease liabilities totaled $393; the filing does not report other debt outstanding on the balance sheet. Gross margin is not applicable because the company had no revenue.
Cash, cash equivalents and restricted cash decreased by $320 to $2,199 during the quarter. Investing activities provided $2,883, primarily from sales and maturities of marketable securities, net of purchases; financing cash flow was zero. There were no purchases of property and equipment in Q1 2023.
Changes versus the prior comparable period
- Net loss narrowed by $336, and loss per share improved from $0.45 to $0.36. R&D expense fell $89 and G&A expense fell $168.
- Management attributed lower R&D expense mainly to reduced payroll from fewer employees, partially offset by preparations to move LIBERTY toward low-volume controlled production. Lower G&A primarily reflected no Q1 2023 bonus accrual and lower D&O insurance costs, partly offset by higher travel and professional services.
- Operating cash use increased by $196, which management attributed mainly to the timing of payroll payments.
- Cash, cash equivalents and marketable securities declined from $8,202 at December 31, 2022 to $5,057 at March 31, 2023; marketable securities fell from $5,760 to $2,907.
Outlook, risks and unusual items
- Going concern and financing: Management stated that available unrestricted funds were expected to fund operations for about four months from the May 17 filing date, through September 30, 2023, following cost reductions. The filing identifies substantial doubt about the company’s ability to continue as a going concern. Additional debt or equity financing is needed, with no assurance it will be available on acceptable terms. Without adequate funding, further cuts, asset sales, suspension of programs, or cessation of operations may be required.
- May 2023 strategic and cost actions: The company focused development and regulatory work on LIBERTY, halted R&D unrelated to LIBERTY, and planned to return the SCS/ViRob and TipCAT licensed assets to TRDF. It also initiated headcount reductions, a hiring freeze, executive salary reductions, suspension of independent director fees, and other cost controls. The GLP study and CE activities for LIBERTY were postponed. Management said the savings were expected to support verification and validation and potential first-in-human cases through September 30, 2023.
- LIBERTY development: The company reported more than 100 catheterizations in pre-clinical studies, with a 95% success rate in reaching predetermined vascular targets and no notable intraoperative injury. Potential first-in-human cases in Brazil or elsewhere depend on completing verification and validation and obtaining required regulatory approvals; timing and outcomes are uncertain.
- Litigation exposure: Investors in a 2017 financing seek rescission and return of $6.75 million. The case was in discovery; management could not assess the likelihood of success. The company also disclosed continuing Mona litigation, including a pending appeal and motions; outcomes remain uncertain.
- Other commitments: Certain Israeli Innovation Authority grants carry royalties of 3.0%–3.5% on future sales of related products, contingent on successful development and sales. The Nitiloop asset acquisition also provides for royalties subject to an $8 million aggregate cap. The filing describes these as future-sales-based obligations, not current scheduled debt repayment.
- Subsequent event: On May 17, 2023, the company gave notice terminating its CardioSert agreement, effective August 17, 2023; CardioSert may reacquire the technology for nominal consideration. The company stated CardioSert had not done so as of the filing date.
Important facts for investors to verify
- Current cash runway, actual spending after the cost plan, and whether financing was secured before the stated September 30, 2023 runway endpoint.
- Progress and results of LIBERTY verification and validation, regulatory steps, and any first-in-human cases, including approvals and timing.
- Status and potential financial effect of the $6.75 million 2017-financing lawsuit and the separate Mona proceedings.
- Implementation and realized savings from the May 2023 workforce, compensation, and program reductions; confirm whether further cuts or shutdown actions were required.
- Final disposition of the CardioSert, SCS/ViRob, and TipCAT assets and any associated obligations or effects on LIBERTY development.
- Potential dilution and financing terms from future capital raises, as well as any material change in liquidity or going-concern disclosures.