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MM

Microbot Medical Inc. (MBOT)·Q3 2015 Earnings Summary

Executive Summary

  • StemCells, Inc. (public filer for this period) reported Q3 2015 total revenue of $0.037M, GAAP net loss of $9.643M (-$0.09/share), and non-GAAP net loss of $8.349M (-$0.08/share), reflecting intensified Phase II clinical activity in spinal cord injury (SCI) and dry AMD; YoY revenue declined vs. $0.082M and EPS worsened from -$0.04 in Q3 2014 .
  • Operating expenses rose to $10.025M (vs. $6.462M YoY) on higher personnel, clinical trial, and manufacturing/process development costs tied to the Phase II programs .
  • Near-term clinical catalyst delivered post-quarter: six-month interim data from the SCI Pathway Phase II Cohort I showed motor improvements in 4 of 6 patients, with strength gains in 5 of 6 and no cell-related AEs, supporting platform potential and narrative momentum into 2016 .
  • Listing compliance update: Nasdaq granted an extension to regain the $1 minimum bid price to May 9, 2016, reducing near-term delisting risk but maintaining capital markets overhang .

What Went Well and What Went Wrong

  • What Went Well

    • Positive SCI interim data post-quarter: motor improvements seen (strength and dexterity) in first 6-patient cohort; 4/6 improved on combined measures, 5/6 strength gains, and 0 cell-related AEs, enhancing conviction in HuCNS-SC platform. “For the first time, we have seen improvements in strength and motor function” (CEO) .
    • Management execution toward clinical milestones: Q3 press release reaffirmed advancing Phase II in cervical SCI and Phase II Radiant dry AMD, with interim Cohort I SCI data expected later in the quarter (delivered Nov 18) .
    • Balance sheet still supports operations into 2016 despite higher spend: cash and cash equivalents of $21.185M at 9/30/15; CFO had previously indicated spending trends steady in 2H15 .

  • What Went Wrong

    • Operating expenses increased sharply YoY to $10.025M, reflecting higher R&D and clinical operations expense, pressuring losses (GAAP net loss -$9.643M vs. -$2.757M YOY) .
    • Dry AMD Phase II enrollment pacing: post-quarter, company acknowledged enrollment taking longer than anticipated, potentially deferring timelines versus earlier expectations of ~20 U.S. sites .
    • Ongoing listing pressure and investor sentiment: company remained below the $1 bid price; while extension granted, the minimum bid non-compliance underscores financing constraints and continues to weigh on equity narrative .

Financial Results

MetricQ3 2014Q1 2015Q2 2015Q3 2015
Revenue ($USD Millions)$0.082 $0.021 $0.030 $0.037
GAAP EPS ($)-$0.04 -$0.14 -$0.09 -$0.09
Non-GAAP EPS ($)-$0.09 -$0.11 -$0.08 -$0.08
Operating Expenses ($USD Millions)$6.462 $8.981 $9.303 $10.025
Cash Used in Operations ($USD Millions)N/A$8.907 $7.577 $7.266

KPIs and Balance Sheet

KPIQ1 2015Q2 2015Q3 2015
Cash & Cash Equivalents ($USD Millions, period-end)$14.146 $29.929 $21.185
Shares Outstanding (used in EPS calc)69.220M 95.191M 108.478M

Notes:

  • Non-GAAP adjustments primarily include stock-based compensation, D&A, and warrant liability fair value changes; reconciliations provided in exhibits .
  • The company is pre-revenue; margins are not meaningful and are not presented in company materials; operating expense and burn rate are the key financial KPIs .

Guidance Changes

Metric/TopicPeriodPrevious Guidance/ExpectationCurrent UpdateChange
SCI Pathway Cohort I interim readoutQ4 2015Interim 6-month data from open-label Cohort I expected in Q4 2015 Six-month data released Nov 18, 2015 showing motor improvements Maintained (delivered)
Dry AMD (Radiant) Phase II enrollment2H15 into 2016~20 U.S. sites; enrollment commenced in Q2 2015 Enrollment taking longer than anticipated; additional sites being initiated; expect acceleration in 2016 Lowered (timing)
Nasdaq minimum bid compliance2015-2016Company anticipated delisting plan if not compliant by Nov 10, 2015 Nasdaq granted extension to May 9, 2016 to regain $1 bid Extended timeline

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 2015 and Q2 2015)Current Period (Q3 2015)Trend
Clinical execution – SCIQ1: Cohort I completed, interim readout targeted for Q4’15 . Q2: Began Cohort II; Health Canada approval; 8 U.S. sites active; discussed power and endpoints .Q3: Reiterated interim update timing; post-quarter readout positive on motor strength/function in 4/6 patients .Improving (data-positive)
Clinical execution – Dry AMD (Radiant)Q2: First patient dosed; ~20 U.S. sites expected; favorable Phase I/II safety prelim signals discussed .Post-quarter: enrollment taking longer than anticipated; expanding sites; aim to accelerate in 2016 .Slower enrollment
Regulatory/legalQ2: Discussed NASDAQ $1 bid deficiency and plan if not resolved .Extension granted to May 9, 2016 .Near-term risk managed
Financing and burnQ2: ~$29.9M cash at 6/30 post-$25M raise; burn to be fairly consistent in 2H15 .Cash $21.2M at 9/30, cash used in ops $7.3M in Q3 .Expected drawdown
R&D/manufacturing readinessQ1-Q2: Elevated process/manufacturing to support trials .Continued spend for clinical programs and process development .Ongoing investment

Management Commentary

  • “We continue to advance our HuCNS-SC human neural stem cells platform through Phase II clinical programs in both spinal cord injury and age-related macular degeneration… we look forward to providing an update on… interim data from Cohort I of the [cervical SCI] study later this month.” — Martin McGlynn, CEO (Q3 release) .
  • “The emerging data are the first clinical evidence of a treatment effect improving muscle strength and function following cellular transplant in spinal cord injuries.” — Dr. Armin Curt, University of Zurich (SCI interim) .
  • “These are the results we have been waiting to see… For the first time, we have seen improvements in strength and motor function.” — Martin McGlynn, CEO (SCI interim) .
  • CFO on listing risk (Q2 call): company received Nasdaq notice for sub-$1 bid and outlined plan to regain compliance, highlighting potential extension .

Q&A Highlights

  • Timing of interim SCI Cohort I data: management targeted a November window given analysis time, anticipating a press release and possibly a call depending on data .
  • Phase II enrollment status: additional patients enrolling in both SCI and AMD; AMD to add sites beyond first activated site; SCI had eight U.S. sites active with Canadian expansion .
  • Financing approach: while equity raise funded trials, management is exploring non-dilutive capital options to reduce reliance on capital markets .
  • AMD Phase I/II analyses: discussion of measurement challenges in large/complex GA lesions and rationale for Phase II inclusion criteria; subset of 5 patients supports Phase II design .

Estimates Context

  • Wall Street consensus (S&P Global) for Q3 2015 revenue and EPS was unavailable in this session; as a result, we cannot quantify beats/misses versus consensus for this micro-cap, pre-revenue stage company. We anchor comparisons to company-reported actuals and prior periods .

Key Takeaways for Investors

  • The fundamental driver is clinical progress: the SCI interim data (4/6 functional/strength improvements; 0 cell-related AEs) materially improves the risk-reward and underpins potential data momentum into 2016–2017 readouts .
  • Dry AMD Phase II enrollment delays introduce timeline risk versus earlier expectations of ~20 sites; watch for site activations and cadence updates in 2016 .
  • Operating expenses are climbing with clinical execution; monitor quarterly burn (~$7.3M cash used in ops in Q3) against cash on hand ($21.2M at 9/30) and any non-dilutive funding progress .
  • Listing compliance risk partially mitigated by the Nasdaq extension to May 9, 2016, but sustained stock price improvement may require continued positive clinical catalysts and financing clarity .
  • Near-term stock catalysts: additional clinical site activations (AMD, SCI), updates on enrollment pace, and any further interim clinical signals or regulatory interactions; the November 18 interim data demonstrated the potential for meaningful narrative re-rating .
  • Non-GAAP losses adjust for warrant liability changes and stock comp; while useful to track operating trends, they do not change the core cash runway dynamic in a pre-revenue setting .

Additional Relevant Press Releases in/around Q3 2015

  • Patent and employment litigation settlements (Sep 14, 2015) removed legal overhangs, allowing management focus on clinical programs .
  • Post-quarter 8-K (Nov 18, 2015) provided the detailed positive interim SCI update and announced a same-day webcast to discuss data, a potential stock catalyst .