Microbot Medical Inc. — FY 2022 Form 10-K
Business context and reporting period. This annual report covers the year ended December 31, 2022; it does not provide standalone fourth-quarter results. Microbot is a pre-clinical medical-device company developing robotic endovascular technologies, with LIBERTY its lead product candidate. The company reported no operating revenue and has not commercialized a product.
Financial performance and liquidity
| Metric | 2022 | 2021 |
|---|---|---|
| Revenue | None | None |
| Research and development expense | $7.736 million | $6.153 million |
| General and administrative expense | $5.545 million | $5.204 million |
| Operating loss | $13.281 million | $11.357 million |
| Net loss | $13.168 million | $11.313 million |
| Basic and diluted loss per share | $1.81 | $1.59 |
| Cash used in operating activities | $11.549 million | $9.354 million |
| Net working capital | $6.745 million | $13.895 million |
Dollar amounts are reported in U.S. dollars. Margins are not meaningful because the company had no revenue. Cash, cash equivalents and marketable securities totaled $8.202 million at year-end 2022, compared with $15.492 million a year earlier. Year-end current assets were $8.814 million and current liabilities $2.069 million. Total liabilities were $2.248 million, including $462,000 of lease liabilities; the filing reports no conventional borrowings on the balance sheet.
Cash used in investing activities was $3.836 million, principally reflecting purchases of marketable securities; financing provided $4.324 million, compared with no financing cash flow in 2021. The October 2022 registered offering and concurrent private placement generated approximately $5.0 million gross, before fees and expenses. The company reported an accumulated deficit of $68.761 million.
Material changes and operating developments
- R&D expense rose $1.583 million, primarily from LIBERTY-related salaries, recruitment, professional services and materials; savings from suspending SCS partly offset the increase. G&A expense increased $341,000.
- A September 2022 GLP animal study completed 58 of 63 LIBERTY navigations (92%). Three targets were not completed due to technical issues and two due to fluoroscopy issues unrelated to the device. The company reported no definite acute vascular injury in post-navigation angiograms; it was still evaluating histopathology results.
- The company filed LIBERTY FDA pre-submission materials in early 2022 and a follow-up package in October. It expected to pursue an IDE and first-in-human trial in 2023, subject to FDA alignment and required testing.
- In October, Microbot suspended SCS research and development to concentrate resources on LIBERTY and explore alternatives for the SCS assets. It also acquired substantially all Nitiloop assets, including NovaCross technologies, for royalties capped at $8 million.
- The Stryker neurovascular collaboration remained at the development-planning stage; the company said timing and next steps were still being determined.
Outlook, risks and unusual items
- Going concern and funding: The auditor’s report and management disclosure identify substantial doubt about the company’s ability to continue as a going concern. Management estimated year-end unrestricted cash, cash equivalents and marketable securities would fund operations for less than four months from the March 31, 2023 filing date, with funding expected to last only until approximately August 2023. Additional financing is not assured; management contemplated equity or debt offerings, grants and other funding. Further financing could dilute shareholders or restrict operations.
- Material litigation exposure: Investors in the 2017 financing seek rescission and return of $6.75 million. The case was in discovery; management could not assess the outcome. No loss provision was recorded because management concluded the loss was not probable and could not be reasonably estimated. The auditor identified this litigation assessment as a critical audit matter. An adverse outcome could materially affect liquidity and operations.
- Product and regulatory risk: LIBERTY remains pre-clinical, with regulatory pathway, clinical requirements, safety and effectiveness, manufacturing scale-up, reimbursement and commercial acceptance unresolved. The company depends heavily on LIBERTY; its product candidates have not received marketing clearance or approval.
- Technology and execution risks: CardioSert may buy back One & Done for $1 under the agreement after missed commercialization deadlines; the relevant 50-month period had expired, though no buy-back election had been reported. Third-party manufacturers and design houses are important dependencies. IIA grants and licensed technology also carry royalty, development-milestone and technology-transfer conditions.
- Other exposures: Operations and staff are concentrated partly in Israel, exposing the company to regional, political, currency and workforce disruption risks. Government-grant-related royalties generally become payable from qualifying future sales. The company also disclosed an ongoing Alliance litigation appeal and a counterclaim; the related judgment was approximately $485,000, but the company had not obtained permission to execute on it.
Management reported effective disclosure controls and internal control over financial reporting as of year-end. The auditor did not attest to internal controls, as permitted for the company’s filer status. No specific revenue or profitability guidance was provided.
Key facts investors should verify
- Current cash runway, subsequent financing, and whether funding needs or plans changed after the filing’s approximately August 2023 runway estimate.
- Developments and potential financial exposure in the $6.75 million investor lawsuit, including any settlement, judgment or change in the company’s loss assessment.
- FDA feedback, IDE submission status, clinical-trial timing and final interpretation of LIBERTY animal-study and histopathology findings.
- Whether CardioSert exercised its buy-back right and the status of SCS assets, the Stryker collaboration and NovaCross development.
- Potential dilution from the October financing securities: 2,044,990 Series A and B warrants at $4.64 per share, 51,125 placement-agent warrants at $6.11, and outstanding options. The company reported 7,890,628 shares outstanding at December 31, 2022 and 8,130,628 at March 30, 2023.