UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
Form
10-K
(Mark
One)
For
the fiscal year ended December 31, 2021
For
the transition period from ____ to _____
Commission
file number: 000-19871
MICROBOT
MEDICAL INC.
(Exact
name of registrant as specified in its charter)
25
Recreation Park Drive, Unit 108
Hingham,
MA02043
(Address
including zip code of registrant’s Principal Executive Offices)
(781)875-3605
(Registrant’s
Telephone Number, Including Area Code)
Securities
registered under Section 12(b) of the Act:
Title of each class Trading Symbol(s) Name of each exchange on which registered
Common Stock, Par value $0.01 MBOT NASDAQ Capital Market
Securities
registered under Section 12(g) of the Act: None
Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒
Indicate
by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒
Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate
by check mark whether the registrant has submitted electronically every Interactive Data file required to be submitted pursuant to Rule
405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant
was required to submit such files). Yes ☒ No ☐
Indicate
by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting
company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,”
“smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☐ Accelerated filer ☐
Non-accelerated filer ☒ Smaller reporting company ☒
Emerging Growth Company ☐
If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate
by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness
of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered
public accounting firm that prepared or issued its audit report. ☐
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
State
the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which
the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s
most recently completed second fiscal quarter: approximately $56,438,576.
Common
stock outstanding as of March 29, 2022: 7,108,133shares
INFORMATION
CONCERNING FORWARD-LOOKING STATEMENTS
This
report contains forward-looking statements. Forward-looking statements are projections in respect of future events or our future financial
performance. In some cases, you can identify forward-looking statements by terminology such as “may”, “should”,
“intends”, “expects”, “will”, “plans”, “anticipates”, “believes”,
“estimates”, “predicts”, “potential”, or “continue” or the negative of these terms or
other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors,
including the risks listed under the section entitled “Risk Factors” commencing on page 20 of this report, which may cause
our or our industry’s actual results, levels of activity or performance to be materially different from any future results, levels
of activity or performance expressed or implied by these forward-looking statements.
Table
of Contents
Page
PART I
Item 1. Business 3
Item 1A. Risk Factors 19
Item 1B. Unresolved Staff Comments 36
Item 2. Description of Property 36
Item 3. Legal Proceedings 36
Item 4. Mine Safety Disclosures 37
PART II
Item 6. [Reserved] 38
Item 7A. Quantitative and Qualitative Disclosures about Market Risk 42
Item 8. Financial Statements and Supplementary Data 43
Item 9A. Controls and Procedures 43
Item 9B. Other Information 43
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections 43
PART III
Item 10. Directors, Executive Officers and Corporate Governance 44
Item 11. Executive Compensation 49
Item 14. Principal Accountant Fees and Services 55
PART IV
Item 15. Exhibits and Financial Statement Schedules 55
NOTE
REGARDING REFERENCES TO OUR COMPANY
Throughout
this Form 10-K, the words “we,” “us,” “our,” the “Company” and “Microbot”
refer to Microbot Medical Inc., including our directly and indirectly wholly-owned subsidiaries and, unless the context otherwise requires,
the historical business, financial statements and operations of Microbot are of Microbot Medical Ltd., an Israeli corporation (“Microbot
Israel”) which became a wholly-owned subsidiary of the Company on November 28, 2016.
i
Risk
Factors Summary
The
following is a summary of the principal risks that could adversely affect our business, operations, and financial results. A more thorough
discussion of these and other risks are listed under the section entitled “Risk Factors” commencing on page 20.
Risks
Relating to Microbot’s Financial Position and Need for Additional Capital
Risks
Relating to the Development and Commercialization of Microbot’s Product Candidates
Risks
Relating to Microbot’s Intellectual Property
Risks
Relating to Operations in Israel
● Israel’s economy may become unstable.
Risks
Relating to Microbot’s Securities, Governance and Other Matters
● We do not expect to pay cash dividends on our common stock.
General Risks
● The market price for our Common Stock may be volatile.
PART
I
Item
1. Description of Business.
The
Company
Microbot
is a pre-clinical medical device company specializing in the research, design and development of next generation robotic endoluminal
surgery devices targeting the minimally invasive surgery space. Microbot is primarily focused on leveraging its micro-robotic technologies
with the goal of redefining surgical robotics while improving surgical outcomes for patients.
Microbot’s
current technological platforms, ViRobTM, TipCATTM, LIBERTY® and certain CardioSert assets, are
comprised of proprietary innovative technologies. Using the ViRob platform, Microbot is currently developing the Self-Cleaning
Shunt, or SCSTM, for the treatment of hydrocephalus and Normal Pressure Hydrocephalus, or NPH. Utilizing the LIBERTY and CardioSert
platforms, Microbot is developing the first ever fully disposable robot for various endovascular interventional procedures. In addition,
the Company is focused on the development of a Multi Generation Pipeline Portfolio utilizing all of its proprietary technologies.
Microbot
has a patent portfolio of 47 issued/allowed patents and 29 patent applications pending worldwide.
We
were incorporated on August 2, 1988 in the State of Delaware under the name Cellular Transplants, Inc. The original Certificate of Incorporation
was restated on February 14, 1992 to change our name to CytoTherapeutics, Inc. On May 24, 2000, the Certificate of Incorporation as restated
was further amended to change our name to StemCells, Inc. On November 28, 2016, C&RD Israel Ltd., a wholly-owned subsidiary of ours,
completed its merger with and into Microbot Medical Ltd., or Microbot Israel, an Israeli corporation that then owned our assets and operated
our current business, with Microbot Israel surviving as a wholly-owned subsidiary of ours. We refer to this transaction as the Merger.
On November 28, 2016, in connection with the Merger, we changed our name from “StemCells, Inc.” to Microbot Medical Inc.,
and each outstanding share of Microbot Israel capital stock was converted into the right to receive shares of our common stock. In addition,
all outstanding options to purchase the ordinary shares of Microbot Israel were assumed by us and converted into options to purchase
shares of the common stock of Microbot Medical Inc. On November 29, 2016, our common stock began trading on the Nasdaq Capital Market
under the symbol “MBOT”. Prior to the Merger, we were a biopharmaceutical company that operated in one segment, the research,
development, and commercialization of stem cell therapeutics and related technologies. Substantially all of the material assets relating
to the stem cell business were sold on November 29, 2016.
Technological
Platforms
ViRob
The
ViRob is an autonomous crawling micro-robot which can be controlled remotely or within the body. Its miniature dimensions are expected
to allow it to navigate and crawl in different natural spaces within the human body, including blood vessels, the digestive tract and
the respiratory system as well as artificial spaces such as shunts, catheters, ports, etc. Its unique structure is expected to give it
the ability to move in tight spaces and curved passages as well as the ability to remain within the human body for prolonged time. The
SCS product was developed using the ViRob technology.
TipCAT
The
TipCAT is a disposable self-propelled locomotive device that is specially designed to advance in tubular anatomies. The TipCAT is a mechanism
comprising a series of interconnected balloons at the device’s tip that provides the TipCAT with its forward locomotion capability.
The device can self-propel within natural tubular lumens such as the blood vessels, respiratory and the urinary and GI tracts. A single
channel of air/fluid supply sequentially inflates and deflates a series of balloons creating an inchworm like forward motion. The TipCAT
maintains a standard working channel for treatments. Unlike standard access devices such as guidewires, catheters for vascular access
and endoscopes, the TipCAT does not need to be pushed into the patient’s lumen using external pressure; rather, it will gently
advance itself through the organ’s anatomy. As a result, the TipCAT is designed to be able to reach every part of the lumen under
examination regardless of the topography, be less operator dependent, and greatly reduce the likelihood of damage to lumen structure.
The TipCAT thus offers functionality features equivalent to modern tubular access devices, along with advantages associated with its
physiologically adapted self-propelling mechanism, flexibility, and design.
One
& DoneTM (CardioSert) Technology
On
April 8, 2018, Microbot acquired a patent-protected technology from CardioSert Ltd., a privately-held medical device company based in
Israel that was part of a technological incubator supported by the Israel Innovation Authorities. The CardioSert technology contemplates
a combination of a guidewire and microcatheter, technologies that are broadly used for surgery within a tubular organ or structure such
as a blood vessel or duct. The CardioSert technology features a unique guidewire delivery system with steering and stiffness control
capabilities which when developed is expected to give the physician the ability to control the tip curvature, to adjust tip load to varying
degrees of stiffness in a gradually continuous manner. The CardioSert technology was originally developed to support interventional cardiologists
in crossing chronic total occlusions (CTO) during percutaneous coronary intervention (PCI) procedures and has the potential to be used
in other spaces and applications, such as peripheral intervention, and neurosurgery. Our CardioSert tool is now trademarked as “One
& DoneTM”.
LIBERTY®
On
January 13, 2020, Microbot unveiled what it believes is the world’s first fully disposable robotic system for use in endovascular
interventional procedures, such as cardiovascular, peripheral and neurovascular. The LIBERTY robotic system features a unique compact
design with the capability to be operated remotely, reduce radiation exposure and physical strain to the physician, reduce the risk of
cross contamination, as well as the potential to eliminate the use of multiple consumables when used with its “One & Done”
capabilities, which would be based in part on the CardioSert platform or possibly other guidewire/microcatheter technologies.
LIBERTY
is designed to maneuver guidewires and over-the-wire devices (such as microcatheters) within the body’s vasculature. It eliminates
the need for extensive capital equipment requiring dedicated Cath-lab rooms as well as dedicated staff. In addition, when combined with
CardioSert technology or possibly other guidewire/microcatheter technologies, it is being designed to streamline Cath-lab procedures
with tools that combines guidewire and microcatheter into a single device. With control over tip curvature and stiffness for maneuverability
and access – and without the need for constant tool exchanges – when integrated into the LIBERTY device, the device may drastically
reduce procedure time and costs while enhancing the operator experience.
On
August 17, 2020, Microbot announced the successful conclusion of its feasibility animal study using the LIBERTY robotic system. The study
met all of its end points with no intraoperative adverse events, which supports Microbot’s objectives to allow physicians to conduct
a catheter-based procedure from outside the catheterization laboratory (cath-lab), avoiding radiation exposure, physical strain and the
risk of cross contamination. The study was performed by two leading physicians in the neuro vascular and peripheral vascular intervention
spaces, and the results demonstrated robust navigation capabilities, intuitive usability and accurate deployment of embolic agents, most
of which was conducted remotely from the cath-lab’s control room.
On
December 22, 2021, we entered into a strategic collaboration agreement for technology co-development with Stryker Corporation, acting
through its Neurovascular Division. Pursuant to the agreement, the collaborative development program between Stryker and us aims to integrate
certain of Stryker’s instruments with our LIBERTY Robotic System to address certain neurovascular procedures. The activities contemplated
by the Agreement shall be specified in one or more development plans derived from the terms and conditions set forth in the Agreement.
We
are continuously exploring and evaluating additional innovative guidewire/microcatheter technologies to be integrated and combined with
the LIBERTY robotic platform.
Industry
Overview
CSF
Management
Hydrocephalus
is a medical condition in which there is an abnormal accumulation of cerebrospinal fluid, or CSF, in the brain that can cause increased
intracranial pressure. It is estimated that one in every 500 babies are born with hydrocephalus, and over 1,000,000 people in the United
States currently live with hydrocephalus.
Symptoms
of hydrocephalus vary with age, disease progression and individual tolerance to the condition, but they can include convulsion, tunnel
vision, mental disability or dementia-like symptoms and even death. NPH is a type of hydrocephalus that usually occurs in older adults.
NPH is generally treated as distinct from other types of hydrocephalus because it develops slowly over time. In NPH, the drainage of
CSF is blocked gradually and the excess fluid builds up slowly. This slow accumulation means that the fluid pressure may not be as high
as in other types of hydrocephalus. It is estimated that more than 700,000 Americans have NPH, but less than 20% receive an appropriate
diagnosis.
Hydrocephalus
is most often treated by the surgical insertion of a shunt system. The shunt system diverts the flow of CSF from the brain’s ventricles
(or the lumbar subarachnoid space) to another part of the body where the fluid can be more readily absorbed. Hydrocephalus shunt designs
have changed little since their introduction in the 1950s. A shunt system typically consists of three parts: the distal tubing or shunt
(a flexible and sturdy plastic tube), the ventricular catheter (the proximal catheter), and a valve. The end of the shunt system with
the proximal catheter is placed in the ventricles (within the CSF) and the distal catheter is placed in the site of the body where the
CSF can be drained. A valve is located along the shunt to maintain and regulate the rate of CSF flow. Current systems can be created
from separate components or bought as complete units.
The
treatment of hydrocephalus with existing shunt systems often includes complications. For example, approximately 50% of shunts used in
the pediatric population fail within two years of placement and repeated neurosurgical operations are often required. Ventricular catheter
blockage, or occlusion, is by far the most frequent event that results in shunt failure. Shunt occlusion occurs when there is a partial
or complete blockage of the shunt that causes it to function intermittently or not at all. Such a shunt blockage can be caused by the
accumulation of blood cells, tissue, or bacteria in any part of the shunt system. In the event of shunt occlusion, CSF begins to accumulate
in the brain or lumbar region again and the symptoms of untreated hydrocephalus can reappear until a shunt replacement surgery is performed.
Although
several companies are active in the field of hydrocephalus treatment and the manufacturing of shunt systems and shunt components, Microbot
believes that the majority of those companies are focusing on the development of valves. The development of a “smart shunt”
– a shunt that could provide data to the physician on patient conditions and shunt function with sensor-based controls, or correct
the high failure rate of existing shunt systems – is for the most part at an academic and conceptual level only. Reports of smart
shunt technologies are typically focused on a subset of components with remaining factors left unspecified, such as hardware, control
algorithms or power management. Microbot does not believe that a smart shunt that can prevent functional failures has been developed
to date. Because of the limited innovation in this area, Microbot believes an opportunity exists to provide patients suffering from hydrocephalus
or NPH with a more effective instrument for treating their condition.
An
alternative, short-term solution to hydrocephalus is the implantation of an External Ventricular Drainage, or EVD, an implanted device
used in neurosurgery for the short-term treatment and monitoring of elevated intracranial pressure when the normal flow of CSF inside
the brain is obstructed. If after using an EVD, the underlying hydrocephalus does not eventually resolve, the EVD may then be replaced
with a cerebral shunt, a fully internalized, long-term treatment for hydrocephalus.
EVDs
are also used in other instances when the normal flow of CSF inside the brain is obstructed, such as a result of head trauma, intracerebral
hemorrhage, brain tumors and infection. The EVD serves to divert excess fluids from the brain and allows for the monitoring of intracranial
pressure. An EVD must be placed in a center with full neurosurgical capabilities because immediate neurosurgical intervention may be
needed if a complication of EVD placement, such as bleeding, is encountered. EVD is one of the most commonly used and most important
life-saving procedures in the neurologic ICU, with more than 200,000 neuro-intensive patients requiring EVD insertions annually.
Similar
to shunts, EVDs are also prone to occlusion, mostly due to cellular debris, such as blood clots and/or tissue fragments. Studies have
shown that approximately 1-7% of EVDs require replacement secondary to occlusion. Current solutions for EVD occlusion include irrigation
and replacement, which we believe may be ineffective (in the case of irrigation) or costly (in the case of replacement) and in either
case, put the patient at risk of unintended side effects. Microbot believes that with its portfolio of technologies, and its initial
pre-clinical results, it is well-positioned to explore and expand its offerings as an alternative solution for EVD occlusion.
Minimally
Invasive Robot-Assisted Endovascular Interventions
Minimally
Invasive Surgery, or MIS, refers to surgical procedures performed through tiny incisions instead of a single large opening. Because the
incisions are small, patients tend to have quicker recovery times and experience less trauma than with conventional surgery. The global
MIS surgery is expected to grow from $24 billion in 2020 to $42 billion in 2026, representing a CAGR of 9.85%. MIS involves three major
categories of devices: surgical, monitoring and visualization, and endoscopy. The market for surgical devices, including ablation, electrosurgery
and medical robotic systems, accounts for the largest share of revenue and is also expected to show the highest rate of growth. According
to the Society of Robotic Surgery, the US market growth in endoluminal robotic surgery is projected to be 15-25% by 2025.
Vascular
disease is the most common precursor to ischemic heart disease and stroke, which are two of the leading causes of death worldwide. Advances
in endovascular intervention in recent years have transformed patient survival rates and post-surgical quality of life. It is estimated
that more than three million percutaneous coronary interventions (PCI) and over two million of peripheral vascular interventions are
performed annually worldwide. The incidence of stroke in the US alone is estimated at 900,000 cases annually. Compared to open surgery,
it has the advantages of faster recovery, reduced need for general anesthesia, reduced blood loss and significantly lower mortality.
However, the current practice of endovascular procedures, which virtually has remained unchanged since the introduction of Intervention
four decades ago, is limited by a number of factors, including physical strain and exposure to X-Ray radiation of the operator, and involves
complex maneuvering of intervention tools, such as guidewires and catheters, to reach target areas in the vasculature. Despite recent
advancements in technology and devices, manual procedures are still highly dependent on the technical skills and training of the operator,
what makes the access to expert medical centers and advanced emergent treatments, such as endovascular thrombectomy for acute ischemic
stroke, geographically limited. In addition, we believe that demand for physicians continues to grow faster than supply.
Endovascular
robotic systems are aimed to increase the stability and precision of guidewires and catheters, protecting the physicians from ionizing
radiation and physical strain by removing them from the radiation source, helping in closing shortages of skilled physicians and skill
gaps and enable tele-interventions (e.g. the Hub & Spoke hospital model).
Today,
there are only a few commercially available robotic systems for endovascular interventions. We believe these systems have major drawbacks,
such as limited maneuverability, the requirement to exchange and use multiple expensive surgical tools, being cumbersome to set-up and
operate, and requiring significant capital expenditures.
Navigating
and placing access devices through tortuous and highly delicate brain arteries is a complex procedure that requires high-level surgical
skills with specialist training. In many procedures, surgeons exchange numerous access devices before reaching the target and applying
the therapeutic agent or device, increasing the risk of adverse events and the exposure of both patient and physician to radiation. Adverse
events, such as perforation of brain arteries or the release of embolies from a thrombus or atherosclerotic lesion can have devastating
or even fatal results.
Microbot
believes that with its portfolio of CardioSert and LIBERTY technologies, it is well-positioned to explore and develop such technologies
as neurovascular access devices, with a focus on improving the ease and access and enhancing the safety of endovascular interventions.
Our
Product Pipeline
Self-Cleaning
Shunt
The
SCS device is designed to act as the ventricular catheter portion of a CSF shunt system that is used to treat hydrocephalus and NPH.
It is designed to work as an alternative to any ventricular catheter options currently on the market and to connect to all existing shunt
system valves currently on the market; therefore, the successful commercialization of the SCS is not dependent on any single shunt system.
Initially, Microbot expects the SCS device to be an aftermarket purchase that would be deployed to modify existing products by the end
user. Microbot believes that the use of its SCS device will be able to reduce, and potentially eliminate, shunt occlusions, and by doing
so, Microbot believes its SCS has the potential to become the gold standard ventricular shunt in the treatment of hydrocephalus and NPH.
The
SCS device embeds an internal robotic cleaning mechanism in the lumen, or inside space, of the ventricular catheter which prevents cell
accumulation and tissue ingrowth into the catheter. The SCS device consists of a silicone tube with a perforated titanium tip, which
connects to a standard shunt valve at its distal end. The internal cleaning mechanism is embedded in the lumen of the titanium tip. Once
activated, the cleaning mechanism keeps tissue from entering the catheter perforations while maintaining the CSF flow in the ventricular
catheter.
The
internal cleaning mechanism of the SCS device is activated by means of an induced magnetic field, which is currently designed to be externally
generated by the patient through a user-friendly headset that transmits the magnetic field at a pre-determined frequency and operating
sequence protocol. The magnetic field that is created by the headset is then captured by a flexible coil and circuit board that is placed
just under the patient’s scalp in the location where the valve is located. The circuit board assembly converts the magnetic field
into the power necessary to activate the cleaning mechanism within the proximal part of the ventricular catheter.
Microbot
has completed the development of an SCS prototype and is currently continuing the safety testing, general proof of concept testing and
performance testing for the device, which Microbot began in mid-2013. In May 2018, Microbot announced the results of two pre-clinical
studies assessing the SCS, an in-vitro study and a small animal study. The in-vitro study, which was performed at Wayne State University
by Dr. Carolyn Harris, supports the SCS’s potential as a viable technology for preventing occlusion in shunts used to treat hydrocephalus.
The first stage animal study designed to assess the safety profile of the SCS, which was performed by James Patterson McAllister, PhD,
a Professor of Neurosurgery at Washington University School of Medicine in St. Louis, met the primary goal to determine the safety of
the SCS device that aims to prevent obstruction in CSF catheters. Following the completion of the first stage initial studies, Microbot
commenced a follow-up study to further evaluate the safety of the SCS. The follow-up study was also conducted by leading hydrocephalus
experts at Washington University. The study, included a larger sample size compared to the initial studies and the primary and secondary
endpoints were to validate the safety of the activated SCS in-vivo (animal) models. In that in-vivo study the major finding was that
the SCS system is as safe to use as currently marketed devices. The study also mentions, that in the animal model, contact of the shunt
with the choroid plexus is impossible to avoid and that it may lead to shunt obstruction due to hemorrhage of this highly vascular structure.
In
parallel with the in-vivo study, Microbot also contracted with Envigo CRS Israel, a leading provider of non-clinical contract research
services, to conduct an in-vitro study designed to evaluate the operational performance of the SCS. Human brain glioblastoma cells were
used in order to assess performance of the SCSTM in a test system with accelerated cell growth, accumulation and obstruction
rates. In 2018, Microbot and Envigo conducted an in-vitro trial that its final conclusion was:
While
significant cell growth and accumulation were seen in the non-operating SCSTM group after 30 days, the shunt openings remained clear
in the constantly operating SCSTM group, with little to no cell attachment on the robotic cleaning mechanism (the ViRobTM system)
and on the shunt openings.
The
SCSTM was further validated in a broader follow-up in-vitro study which commenced in July 2019 and concluded on August 14, 2019
and clearly demonstrated that the SCSTM prevented shunt occlusions under the parameters of that study. This follow-up study was
also conducted by Envigo CRS Israel using Human brain glioblastoma cells Specifically, the study demonstrated:
To
further investigate the efficacy of the SCSTM, Microbot conducted a follow-up in-vitro study at Wayne State University. The study
included a larger sample size compared to the initial study and the primary and secondary end points aimed to validate the efficacy of
the SCS in comparison to commercially available devices. After careful analysis of the results the final conclusion was that the data
from this study did not reveal statistically significant differences between the study’s groups.
Microbot
used the findings of the second stage of the animal study combined with additional experimental data that was acquired in the past year
for initial regulatory FDA pre-submissions.
On
January 27, 2021, we announced the completion of successful discussions with the FDA, for the SCSTM. After review of Microbot
existing pre-clinical data, the FDA’s feedback will allow us to apply for the EFS (Early Feasibility Study) without further animal
studies.
We
expect to continue to work with the FDA towards finalizing the SCSTM design, and to incorporate their feedback prior to submitting
the IDE to seek authorization to begin the EFS clinical trial. While there can be no assurance that the FDA will approve the EFS study,
the agency’s recent feedback indicates that the agency will be receptive to allowing a first-in-human study to proceed based on
existing data. After completing the EFS, we would then seek FDA input on the device design as finalized through the EFS process in a
subsequent IDE filing for approval of a clinical study proposal. Consequently, the timeline for the submission of the IDE for First-in-Human
clinical trial under the EFS is expected to commence in the first quarter of 2023.
In
spite of the above, there is still a possibility that Microbot may conduct clinical trials if they are requested by the FDA or if Microbot
decides that the data from such trials would improve the marketability of the product candidate.
The
proposed indication for use of the SCSTM device would be for the treatment of hydrocephalus and/or NPH as a component of commercially
available shunt systems. It continues to be possible that the FDA could require us to conduct a human clinical study to support the safety
and efficacy of the SCS and that such clinical data would need to be part of the future regulatory submission to authorize marketing
of the medical device in the U.S.
TipCAT
A
TipCAT prototype was shown to self-propel and self-navigate in curved plastic pipes and curved ex-vivo colon. In addition, in its first
feasibility study, the prototype device was tested in a live animal experiment and successfully self-propelled through segments of the
animal’s colon, with no post-procedural damage. All tests were conducted at AMIT (Alfred Mann Institute of Technology at the Technion),
prior to the licensing of TipCAT by Microbot.
Currently,
Microbot is not pursuing the development of the TipCAT as a colonoscopy tool due to its focus on the neurosurgical and endovascular intervention
spaces, and as such it is currently exploring the use of the TipCAT for minimally invasive neurosurgical and endovascular applications
to complement its other technologies.
LIBERTY
The
LIBERTY robotic system features a unique compact design with the capability to be operated remotely, reduce radiation exposure and physical
strain to the physician, reduce the risk of cross contamination, as well as the potential to eliminate the use of multiple consumables
when used with the One & DoneTM tool or possibly other guidewire/microcatheter technologies. LIBERTY is being designed
to have the following attributes:
We
are continuing our feasibility animal trials with respect to the LIBERTY device, with a planned pre-submission to the FDA as early as
the first quarter of 2022, and planned submission to the FDA in the first half of 2023.
Strategy
Microbot’s
goal is to generate sales of its products, once they have received regulatory approval, by establishing SCS, LIBERTY and additional devices
from its technological platforms, as the standard-of-care in the eyes of doctors, surgeons, patients and medical facilities, as well
as getting the support of payors and insurance companies. Microbot believes that it can achieve this objective by working with hospitals
to demonstrate the key benefits of its products. Microbot’s strategy includes the following key elements:
SCS
Opportunities
The
SCS is designed to prevent shunt occlusions in hydrocephalus and NPH patients who have undergone or are undergoing the surgical insertion
of a shunt system. For purposes of its marketing strategy, Microbot has split the market for shunt systems into two sub-markets:
● Primary shunt placement; and
● Shunt replacement.
Microbot’s
SCS device is universal (meaning that it is designed to be attachable to any valve on the market); therefore, Microbot’s initial
go-to-market strategy is the development of strategic partnerships with leading global medical device companies with ready sales and
distribution channels. Outside of a strategic partnership, it is most likely that Microbot’s SCS product will be initially used
in shunt replacement surgeries to replace occluded ventricular catheters. Accordingly, Microbot intends to establish key hospital and
clinic relationships that will allow it to diffuse the technology among experts and other stakeholders. Microbot is also planning to
apply for the SCS device to be covered under the current reimbursement codes in the United States for use in hydrocephalus and NPH shunt
procedures.
TipCAT
Opportunities
Microbot
is currently exploring the use of the TipCAT for minimally invasive neurological and endovascular applications.
One
& DoneTM (CardioSert) Opportunities
Microbot
is currently exploring the integration of the One & DoneTM technology into the LIBERTY endovascular robotic system for
a range of potential applications in the cardiovascular, peripheral vascular and neurovascular spaces.
LIBERTY
Opportunities
The
LIBERTY endovascular robotic system is being designed to remotely maneuver guidewires, microcatheters and over-the-wire devices within
the body’s vasculature. The device is being designed to be the size of a hand-held personal device and to be fully disposable
and affordable. We are aiming LIBERTY to be capable of supporting whole-endovascular procedures by providing solutions which would be
based in part on the One & DoneTM proprietary technology or possibly other guidewire/microcatheter technologies. With
control over tip curvature and stiffness for maneuverability and access – and without the need for constant tool exchanges –
the One & DoneTM tool, when integrated into the system, is expected to drastically reduce the procedure time and costs,
while enhancing the operator experience. We believe LIBERTY’s addressable markets are the Interventional Cardiology, Interventional
Radiology and Interventional Neuroradiology markets.
The
unique characteristics of LIBERTY – compact, mobile, disposable and remotely controlled - open the opportunity of expanding telerobotic
interventions to patients with limited access to life-saving procedures, such as mechanical thrombectomy in ischemic stroke.
Competition
SCS
Competitive Landscape
Several
academic research groups, such as at the New Jersey Institute of Technology, are currently researching sensing and obstruction-resistant
catheter designs, and the Smart Sensors and Integrated Microsystems (SSIM) Program at Wayne State University has publicized that it is
engaging in smart shunt development activity. However, based in part on its knowledge of the patented technologies, Microbot believes
that these technologies are still early in the research and development cycle. Although we believe the SCS may face direct competition
from Anuncia Inc., a spin-off of Alycone Lifesciences Inc., which received a CE Mark and FDA 510k clearance for the Alivio ReFlowTM
Ventricular System for the treatment of hydrocephalus, the commercialization status of the device is not clear. The SCS also faces non-direct
competition from Aqueduct Neurosciences, Inc., which we believe is developing a non-shunt, electro-mechanical technology platform to
control the draining of cerebrospinal fluid, and from Cerevasc Inc., which is developing the eShuntTM System that aims to
eliminate the need for passing a rigid catheter through cerebral cortex and subcortical white matter.
Microbot
does not expect its SCS device to directly compete against shunt systems currently available in the market. The SCS device is designed
to replace a component of existing shunt systems and is expected to be an aftermarket purchase that would be used to modify existing
products by the end user. However, there can be no assurance that Microbot’s product candidate will be accepted by the shunt market
as an alternative component.
TipCAT
Competitive Landscape
Microbot
has not at this time completed its evaluation of the current competitive landscape in the endovascular space for potential uses of the
TipCAT.
One
& DoneTM (CardioSert) Competitive Landscape
Competition
includes moveable-core guidewires from companies such as Boston Scientific and Rapid Medical, and steerable and deflectable sheaths and
catheters from companies such as Bendit Technologies, Agile Devices and Merit Medical. To our knowledge, the CardioSert device is the
only device that combines an inner moveable guidewire and an outer microcatheter, with the ability to control the shape and stiffness
of the distal tip in a continuous, gradual manner, and intends to compete on that basis.
LIBERTY
Competitive Landscape
We
believe the main competitor to the LIBERTY system is the CorPath GRX vascular robotics system by Corindus Vascular Robotics, a Siemens
Healthineers company. The CorPath GRX system has FDA approvals for percutaneous coronary interventions (PCI) and peripheral vascular
interventions (PVI) and is pending an approval for neurovascular interventions. Other competitors include Robocath (CE Marked for PCI
only) and Hansen Medical (a J&J Company with FDA approval for PVI). We believe these systems have drawbacks, such as limited maneuverability,
the requirement to exchange and use multiple expensive surgical tools, being cumbersome to set-up and operate, and requiring significant
capital expenditures. We further believe that these systems have captured a marginal market share to date.
Microbot’s
existing and planned products could also be rendered obsolete or uneconomical by technological advances developed in the future by existing
or new competitors. Some of Microbot’s competitors currently have significantly greater resources than Microbot does; have established
relationships with healthcare professionals, customers and third-party payors; and have long-term contracts with group purchasing organizations
in the United States. In addition, many of Microbot’s competitors have established distributor networks, greater resources for
product development, sales and marketing, additional lines of products and the ability to offer financial incentives such as rebates,
bundled products or discounts on other product lines that Microbot cannot provide.
Intellectual
Property
General
The
SCS and TipCAT are based on technological platforms licensed from The Technion Research and Development Foundation Ltd., or TRDF, as
further discussed below. The LIBERTY platform core technology is co-owned by Microbot and TRDF. The One & DoneTM
device is based on technologies acquired by Microbot from CardioSert. Microbot plans to develop other medical-robotic solutions
through internal research and development, to strengthen its intellectual property position, and to continue exploring strategic
collaborations and accretive acquisition opportunities. Microbot currently holds an intellectual property portfolio of 47 patents
issued/allowed and 29 patent applications pending worldwide. It also has registered trademarks in Israel, Europe and the US relating
to its LIBERTY platform, and also has trademarks relating to its proprietary Microbot Medical tradename and logo registered in
Israel, Europe, and the UK, and pending in the US and China, in addition to having registered trademarks for the “One
& Done” name in Israel, allowed in Europe and pending in the US, UK, China, and Japan.
Microbot
relies or intends to rely on intellectual property licensed or developed, including patents, trade secrets, trademarks, technical innovations,
laws of unfair competition and various licensing agreements, to provide its future growth, to build its competitive position and to protect
its technology. As Microbot continues to expand its intellectual property portfolio, it is critical for Microbot to continue to invest
in filing patent applications to protect its technology, inventions, and improvements.
Microbot
requires its employees and consultants to execute confidentiality agreements in connection with their employment or consulting relationships
with Microbot. Microbot also requires its employees and consultants who work on its product candidates to agree to disclose and assign
to Microbot all inventions conceived during the term of their service, while using Microbot property, or which relate to Microbot’s
business.
Patent
applications in the United States and in foreign countries are maintained in secrecy for a period of time after filing, which results
in a delay between the filing date of the patent applications and the time when they are published. Patents issued and patent applications
filed relating to medical devices are numerous, and there can be no assurance that current and potential competitors and other third
parties have not filed or in the future will not file applications for, or have not received or in the future will not receive, patents
or obtain additional proprietary rights relating to product candidates, products, devices or processes used or proposed to be used by
Microbot. Microbot believes that the technologies it employs in its products and systems do not infringe the valid claims of any third-party
patents. There can be no assurance, however, that third parties will not seek to assert that Microbot devices and systems infringe their
patents or seek to expand their patent claims to cover aspects of Microbot’s products and systems.
The
medical device industry in general has been characterized by substantial litigation regarding patents and other intellectual property
rights. Any such claims, regardless of their merit, could be time-consuming and expensive to respond to and could divert Microbot’s
technical and management personnel. Microbot may be involved in litigation to defend against claims of infringement by other patent holders,
to enforce patents issued to Microbot, or to protect Microbot’s trade secrets. If any relevant claims of third-party patents are
upheld as valid and enforceable in any litigation or administrative proceeding, Microbot could be prevented from practicing the subject
matter claimed in such patents, or would be required to obtain licenses from the patent owners of each such patent, or to redesign Microbot’s
products, devices or processes to avoid infringement. There can be no assurance that such licenses would be available or, if available,
would be available on terms acceptable to Microbot or that Microbot would be successful in any attempt to redesign products or processes
to avoid infringement. Accordingly, an adverse determination in a judicial or administrative proceeding or failure to obtain necessary
licenses, could potentially prevent Microbot from manufacturing and selling its products.
Microbot’s
issued U.S. patents, which cover Microbot’s product candidates, will expire between 2026 and 2040, not including any patent term
adjustments that may be available. Issued patents outside of the United States directed to Microbot’s product candidates will expire
between 2026 and 2036.
License
Agreement with the Technion
In
June 2012, Microbot entered into a license agreement with TRDF, the technology transfer subsidiary of The Technion Institute of Technology,
pursuant to which it obtained an exclusive, worldwide, royalty-bearing, sub-licensable license to certain patents and inventions relating
to the SCS and TipCAT technology platforms invented by Professor Moshe Shoham, a former director of and an advisor to the Company, and
in certain circumstances other TRDF-related persons. Pursuant to the terms of the license agreement, in order to maintain the license
with respect to each platform, Microbot must use commercially reasonable efforts to develop products covered by the license, including
meeting certain agreed upon development milestones. The milestones for both SCS and TipCAT include commencing first in human clinical
trials by December 2021. Failure to meet any development milestone will give TRDF the right to terminate the license with respect to
the technology underlying the missed milestone.
As
partial consideration for the grant of the licenses under the agreement, Microbot issued a number of shares to TRDF equal to 3% of its
issued and outstanding shares at such time on a fully diluted basis. Such shares were initially subject to antidilution protections but
are no longer subject to adjustment. In addition, as partial consideration for the licenses granted, Microbot agreed to pay TRDF royalties
of between 1.5% and 3.0% of net sales of products covered by the licenses, subject to certain reductions, and certain percentages of
amounts received by Microbot in the event of sublicensing.
In
the case of termination of the license by Microbot without cause or by TRDF for cause, TRDF has the right to receive a non-exclusive
license from Microbot with respect to improvements to the licensed technologies made by Microbot. In such cases, TRDF would pay a royalty
of 10% of the income received by TRDF in connection its sublicensing of such patent right and related intellectual property. If the license
from TRDF were to be terminated with respect with either of the technology platforms underlying the SCS or the TipCAT, Microbot would
no longer be able to continue its development of the related product candidate. However, Microbot believes that its current intellectual
property portfolio, and its ongoing efforts to expand into other micro-robotic surgical technologies, will give it the flexibility to
shift its resources towards developing and commercializing related products.
In
addition to the licensed SCS and TipCAT technologies, the LIBERTY platform, which was invented by employees of Microbot together with
Professor Moshe Shoham of the Technion, in his capacity as a consultant to Microbot, is co-owned by Microbot and TRDF, and a process
is being conducted for establishing the LIBERTY platform as a “Joint Invention” in accordance with the terms of the License
Agreement. Once the Joint Invention is established, Microbot will have to pay TRDF royalties of between 1.5% and 3.0% of net sales of
products covered by this Joint Invention.
Research
and Development
Microbot’s
research and development programs are generally pursued by engineers and scientists employed by Microbot in its offices in Israel on
a full-time basis or as consultants, or through partnerships with industry leaders in manufacturing and design and researchers in academia.
Microbot is also working with subcontractors in developing specific components of its technologies.
The
primary objectives of Microbot’s research and development efforts are to continue to introduce incremental enhancements to the
capabilities of its candidate products and to advance the development of proposed products.
Microbot
has obtained grants from the Israeli Innovation Authority (“IIA”) for participation in research and development activities
since 2013 through 2021. During this time, Microbot has received grant revenues of approximately $1,500,000. In return, Microbot is obligated
to pay royalties amounting to 3%-3.5% of its future sales up to the amount of the grant. The grant is linked to the exchange rate of
the dollar to the New Israeli Shekel and bears interest of USD LIBOR per annum.
Under
the terms of the grants and applicable law, Microbot is restricted from transferring any technologies, know-how, manufacturing or manufacturing
rights developed using the grant outside of Israel without the prior approval of the Israel Innovation Authority. Microbot has no obligation
to repay the grant, if the SCS project fails, is unsuccessful or aborted before any sales are generated. The financial risk is assumed
completely by the IIA.
Microbot