Item 1A. Risk Factors 18
Item 1B. Unresolved Staff Comments 37
Item 2. Properties 37
Item 3. Legal Proceedings 37
Item 4. Mine Safety Disclosures 38
PART II
Item 6. [Reserved] 39
Item 7A. Quantitative and Qualitative Disclosures about Market Risk 43
Item 8. Financial Statements and Supplementary Data 44
Item 9A. Controls and Procedures 44
Item 9B. Other Information 44
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections 44
PART III
Item 10. Directors, Executive Officers and Corporate Governance 45
Item 11. Executive Compensation 51
Item 14. Principal Accountant Fees and Services 57
PART IV
Item 15. Exhibits and Financial Statement Schedules 58
i
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 subsidiary. Unless the context otherwise requires,
the historical business, financial statements and operations of Microbot include Microbot Medical Ltd., an Israeli corporation (“Microbot
Israel”) which became a wholly-owned subsidiary of the Company on November 28, 2016.
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
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 robotic technologies
with the goal of redefining surgical robotics while improving surgical outcomes for patients.
Microbot’s
current technological platforms, LIBERTY®, NovaCrossTM, One & DoneTM, ViRobTM and TipCATTM,
are comprised of proprietary innovative technologies. Utilizing the LIBERTY and One & Done 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 58 issued/allowed patents and 51 patent applications pending worldwide, of which 6 issued/allowed patents and
34 patent applications relate to the LIBERTY device.
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 and Product Pipeline
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 our One & Done and NovaCross platforms 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
our One & Done 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.
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.
LIBERTY
is being designed to have the following attributes:
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 still determining scheduling to move the collaboration forward.
In
the first quarter of 2022, we filed our pre-submission package for the LIBERTY Robotic System with the FDA, addressing the regulatory
pathway for the LIBERTY® Robotic System.
In
March 2022, we held a laboratory session at a Boston-based academic center, at which several interventional radiologists attended. The
session was designed to give the radiologists first-hand experience using the LIBERTY Robotic System. The system performed as expected
on a vascular model and the positive real-time commentary provided to the Company’s clinical team was invaluable.
On
October 13, 2022, we announced the completion of a pre-clinical animal study that was conducted in September 2022. The study was performed
by a team of Key Opinion Leaders (KOLs) in the endovascular space at a research laboratory with FDA-required levels of planning, controlling,
monitoring, and reporting (GLP standards), using a porcine model. During the animal study, the physicians conducted pre-determined 63
navigations to the targeted sites using the LIBERTY Robotic System and performed an equal number of procedures manually. The performance
endpoint of the LIBERTY Robotic System after robotic navigation was successfully completed for 58 out of the 63 targets (92%), while
3 of the targets (4.8%) were not completed due to technical issues and 2 (3.2%) were not completed due to fluoroscopy related issues
(non-device related). Post navigation intra-operative selective angiograms of the target vessels showed no definite evidence of acute
vascular injury. Follow up angiograms of these vessels in post-procedure day-three showed normal vessel anatomy without signs of injury.
Initial postmortem gross pathology examination of some of the target organs showed preliminary findings, which will be further investigated
in the second quarter of 2023 in the pending histopathology analysis, and potentially an additional pre-clinical study.
In
addition to the objective measurements, the performance and usability of the LIBERTY Robotic System were subjectively graded by each
of the physicians, with their assessments accounting for features such as ease of navigation to the target, learning curve, and system
stability. For the target sites reached, the physicians graded the LIBERTY Robotic system at the highest grade. The histopathology analysis
of the target vessels was completed, and we are currently studying these results.
In
October 2022, we submitted a follow-up pre-submission package for the LIBERTY® Robotic System to ensure that we remain
aligned with the FDA as we prepare for our Investigational Device Exemption (IDE) submission and first-in-human clinical trial with the
system, expected in 2023.
We
are continuously exploring and evaluating additional innovative guidewire/microcatheter technologies to be integrated and combined with
the LIBERTY robotic platform.
One
& DoneTM Technology
On
April 8, 2018, we 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 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”.
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.
NovaCrossTM
On
October 6, 2022, we purchased substantially all of the assets, including intellectual property, devices, components and product related
materials of Nitiloop Ltd., an Israeli limited liability company. The assets include intellectual property and technology in the field
of intraluminal revascularization devices with anchoring mechanism and integrated microcatheter, and the products or potential products
incorporating the technology owned by Nitiloop and designated by Nitiloop as “NovaCross”, “NovaCross Xtreme”
and “NovaCross BTK” and any enhancements, modifications and improvements.
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.
On
October 11, 2022, we announced that we are planning to focus our strategic efforts on the growing endovascular space and advancing the
LIBERTY Robotic System to achieve its regulatory and commercial milestones, as well as expanding the LIBERTY ecosystem, and made a strategic
decision to suspend the continued research and development of the SCS project, effective at that date. The SCS generally performed as
expected during testing, both internally and externally, and we believe it continues to have potential clinical value as evidenced by
the pre-clinical data submitted to the FDA, which allowed us to successfully apply for the Early Feasibility Study program administered
by the FDA. However, the conflicting commercialization pathways between LIBERTY and the SCS due to different hospital call points, and
the anticipated lengthier regulatory process of the SCS, led us to believe that focusing our strategic efforts on the LIBERTY Robotic
System will provide us with a greater opportunity for success and future growth. We are exploring opportunities with the SCS assets with
the focus on maximizing shareholders value, including seeking buyers for the assets, entering into joint ventures, licensing arrangements,
spinning-off the assets into a new operating company or discontinue the project altogether.
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.
Currently,
Microbot is not pursuing the development of the TipCAT as a colonoscopy tool due to its focus on the 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.
Industry
Overview
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 One & Done, NovaCross products 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.
Strategy
Microbot’s
goal is to generate sales of its products, once they have received regulatory approval, by establishing, LIBERTY and perhaps other devices
from its technological platforms, as the standard-of-care in the eyes of medical practitioners, 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:
Competition
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. To our knowledge, CorPath GRX system is FDA-approved and CE-marked for percutaneous coronary and vascular procedures,
is CE-marked for neurovascular interventions and is pending FDA approval for neurovascular interventions. Another competitor is Robocath
(CE Marked for PCI only). 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.
One
& DoneTM 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 One & Done 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.
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.
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. The NovaCross® device is based on technologies acquired
by Microbot from Nitiloop Ltd. 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 58 patents issued/allowed and 48 patent applications pending worldwide.
Microbot also holds 5 design patents issued/allowed and 6 design patents 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, Europe and Japan, and pending in the US, UK, China, and Japan. Microbot also has a registered trademark
in the US for the newly acquired NovaCross trademark.
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 2040.
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 milestone for the TipCAT include commencing first in human clinical trials in
December 2023. The milestones for the SCS include commencing first in human clinical trials by December 2024, and commencing a pivotal
study by June 2027. 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 the parties established 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
Israel has received grants from the Israeli Innovation Authority (“IIA”) for participation in research and development
since 2013 through December 31, 2022 totaling approximately $1,500,000. In addition, on January 4, 2018, Microbot Israel assumed the
repayment obligations under CardioSert’s IIA grants in the aggregate amount of approximately $530,000, and on October 6, 2022,
Microbot Israel assumed the repayment obligations under Nitiloop’s IIA grants in the aggregate amount of approximately
$925,000.
In
relation to the IIA grants described above, we are obligated to pay royalties amounting to 3.0%-3.5% of our future sales of the products
relating to such grants. The grants are linked to the exchange rate of the dollar to the New Israeli Shekel and bear interest of Libor
per annum.
The
repayment of the grants is contingent upon the successful completion of the Company’s research and development programs and generating
sales. The Company has no obligation to repay these grants, if the project fails, is unsuccessful or aborted or if no sales are generated.
The financial risk is assumed completely by the Government of Israel. The grants are received from the Government on a project-by-project
basis.
Microbot
expects to continue to access government funding in the future.
For
the fiscal years ended December 31, 2022 and 2021, respectively, Microbot incurred research and development expenses of approximately
$7,736,000 and $6,153,000.
Strategic
collaboration agreement with Stryker
On
December 22, 2021, the Company 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 the Company and Stryker
aims to integrate certain of Stryker’s instruments with the Company’s LIBERTY® Robotic System to address certain neurovascular
procedures. The parties conducted discussions to define the development plan and are considering next steps.
LIBERTY
The
LIBERTY prototype system was tested at our laboratories in an in-vitro silicone model, using off-the-shelf guidewires and microcatheters,
and showing an ability to successfully provide linear and rotational movements of the guidewires and linear motion of the microcatheters.
During 2022, we conducted several simulated trials using silicone models as well as animal trials to validate the design and obtain valuable
feedback.
The
LIBERTY prototype is designed to control the One & DoneTM tool; however, the One & DoneTM tool is not currently
expected to be integrated into the current version of the LIBERTY device. Future versions are expected to control the NovaCross products
that were acquired by us in 2022. Additionally, we are exploring and evaluating additional innovative guidewire/microcatheter technologies
to be integrated and combined with the LIBERTY robotic platform to further enhance the performance of the system.
Since
the One & DoneTM tool was originally designed for chronic total occlusion, we are currently working with subcontractors
and guidewire design-houses to perfect the performance of the One & DoneTM tool to the indication that will be selected
for the LIBERTY platform. These may include procedures in the peripheral, coronary or neurovascular spaces.
SCS
See
“–Technological Platforms and Product Pipeline–ViRob” above with respect to the SCS technology and research and
development status.
Manufacturing
Microbot
does not have any manufacturing facilities or manufacturing personnel. Microbot currently relies, and expects to continue to rely, on
third parties for the manufacturing of its product candidates for preclinical and clinical testing, as well as for commercial manufacturing
if its product candidates receive marketing approval.
During
2022 Microbot initiated the transfer to production by means of designing and building molds for plastic injection of parts which is a
more cost-effective method for producing high quantities compared to conventional machined production of these parts. Some molds are
already operative while others are being designed and built. We expect completing the molds during 2023.
Also,
Microbot Medical initiated discussions with subcontractor that we believe are suited to assemble and test our products under applicable
regulatory requirements and regulations.
Commercialization
Microbot
has not yet established a sales, marketing or product distribution infrastructure for its product candidates, which are still in development
stages. Microbot plans to access the U.S. markets with its initial device offerings through strategic partnerships but may develop its
own focused, specialized sales force or distribution channels once it has several commercialized products in its portfolio. Microbot
has not yet developed a commercial strategy outside of the United States.
Government
Regulation
General
Microbot’s
medical technology products and operations are subject to extensive regulation in the United States and other countries. Most notably,
if Microbot seeks to sell its products in the United States, its products will be subject to the Federal Food, Drug, and Cosmetic Act
(FDCA) as implemented and enforced by the U.S. Food and Drug Administration (FDA). The FDA regulates the development, bench and clinical
testing, manufacturing, labeling, storage, record-keeping, promotion, marketing, sales, distribution and post-market support and reporting
of medical devices in the United States to ensure that medical products distributed domestically are safe and effective for their intended
uses. Regulatory policy affecting its products can change at any time.
Advertising
and promotion of medical devices in the United States, in addition to being regulated by the FDA, are also regulated by the Federal Trade
Commission and by state regulatory and enforcement authorities. Recently, promotional activities for FDA-regulated products of other
companies have been the subject of enforcement action brought under healthcare reimbursement laws and consumer protection statutes. In
addition, under the federal Lanham Act and similar state laws, competitors and others can initiate litigation relating to advertising
claims.
Foreign
countries where Microbot wishes to sell its products may require similar or more onerous approvals to manufacture or market its products.
Government agencies in those countries also enforce laws and regulations that govern the development, testing, manufacturing, labeling,
advertising, marketing and distribution, and market surveillance of medical device products. These regulatory requirements can change
rapidly with relatively short notice.
Other
regulations Microbot encounters in the United States and in other jurisdictions are the regulations that are common to all businesses,
such as employment legislation, implied warranty laws, and environmental, health and safety standards, to the extent applicable. In the
future, Microbot will also encounter industry-specific government regulations that would govern its products, if and when they are developed
for commercial use.
U.S.
Regulation
The
FDA governs the following activities that Microbot performs, will perform, upon the clearance or approval of its product candidates,
or that are performed on its behalf, to ensure that medical products distributed domestically or exported internationally are safe and
effective for their intended uses:
● product design, and development;
● product safety, testing, labeling and storage;
● record keeping procedures; and
● product marketing.
There
are numerous FDA regulatory requirements governing the approval or clearance and subsequent commercial marketing of Microbot’s
products. These include:
● notices of correction or removal and recall regulations.
Unless
an exemption applies, before Microbot can commercially distribute medical devices in the United States, Microbot must obtain, depending
on the classification of the device, either prior 510(k) clearance, 510(k) de-novo clearance or premarket approval (PMA), from the FDA.
The FDA classifies medical devices into one of three classes based on the degree of risk associated with each medical device and the
extent of regulatory controls needed to ensure the device’s safety and effectiveness:
Microbot
expects the medical products in its pipeline currently to be classified as Class II. Class II devices are those for which general controls
alone are insufficient to provide reasonable assurance of safety and effectiveness and there is sufficient information to establish special
controls. Special controls can include performance standards, post-market surveillance, patient histories and FDA guidance documents.
Premarket review and clearance by the FDA for these devices is generally accomplished through the 510(k) or 510(k) de-novo premarket
notification process. As part of the 510(k) or 510(k) de-novo notification process, FDA may require the following:
● Development of comprehensive product description and indications for use;
Clinical
trials involve use of the medical device on human subjects under the supervision of qualified investigators in accordance with current
Good Clinical Practices (GCPs), including the requirement that all research subjects provide informed consent for their participation
in the clinical study. A written protocol with predefined end points, an appropriate sample size and pre-determined patient inclusion
and exclusion criteria, is required before initiating and conducting a clinical trial. All clinical investigations of devices to determine
safety and effectiveness must be conducted in accordance with the FDA’s Investigational device Exemption, or IDE, regulations that
among other things, govern investigational device labeling, prohibit promotion of the investigational device, and specify recordkeeping,
reporting and monitoring responsibilities of study sponsors and study investigators. If the device presents a “significant risk,”
as defined by the FDA, the agency requires the device sponsor to submit an IDE application, which must become effective prior to commencing
human clinical trials. The IDE will automatically become effective 30 days after receipt by the FDA, unless the FDA denies the application
or notifies the company that the investigation is on hold and may not begin. If the FDA determines that there are deficiencies or other
concerns with an IDE that requires modification, the FDA may permit a clinical trial to proceed under a conditional approval. In addition,
the study must be approved by, and conducted under the oversight of, an Institutional Review Board (IRB) for each clinical site. If the
device presents a non-significant risk to the patient, a sponsor may begin the clinical trial after obtaining approval for the trial
by one or more IRBs without separate approval from the FDA, but it must still follow abbreviated IDE requirements, such as monitoring
the investigation, ensuring that the investigators obtain informed consent, and labeling and record-keeping requirements. 510(k) clearance
typically involves the following:
To
obtain 510(k) clearance, Microbot must submit a notification to the FDA demonstrating that its proposed device is substantially equivalent
to a predicate device (i.e., a device that was in commercial distribution before May 28, 1976, a device that has been reclassified from
Class III to Class I or Class II, or a 510(k)-cleared device). The FDA’s 510(k) clearance process generally takes from three to
12 months from the date the application is submitted but also can take significantly longer. If the FDA determines that the device or
its intended use is not substantially equivalent to a predicate device, the device is automatically placed into Class III, requiring
the submission of a PMA.
There
is no guarantee that the FDA will grant Microbot 510(k) clearance for its pipeline medical device products, and failure to obtain the
necessary clearances for its products would adversely affect Microbot’s ability to grow its business. Delays in receipt or failure
to receive the necessary clearances, or the failure to comply with existing or future regulatory requirements, could reduce its business
prospects.
Devices
that cannot be cleared through the 510(k) process due to lack of a predicate device but would be considered low or moderate risk may
be eligible for the 510(k) de-novo process. In 1997, the Food and Drug Administration Modernization Act, or FDAMA added the de novo classification
pathway now codified in section 513(f)(2) of the FD&C Act. This law established an alternate pathway to classify new devices into
Class I or II that had automatically been placed in Class III after receiving a Not Substantially Equivalent, or NSE, determination in
response to a 510(k) submission. Through this regulatory process, a sponsor who receives an NSE determination may, within 30 days of
receipt, request FDA to make a risk-based classification of the device through what is called a “de novo request.” In 2012,
section 513(f)(2) of the FD&C Act was amended by section 607 of the Food and Drug Administration Safety and Innovation Act (FDASIA),
in order to provide a second option for de novo classification. Under this second pathway, a sponsor who determines that there is no
legally marketed device upon which to base a determination of substantial equivalence can submit a de novo request to FDA without first
submitting a 510(k).
In
the event that Microbot receives a Not Substantially Equivalent determination for either of its device candidates in response to a 510(k)
submission, the Microbot device may still be eligible for the 510(k) de-novo classification process.
Devices
that cannot be cleared through the 510(k) or 510(k) de-novo classification process require the submission of a PMA. The PMA process is
much more time consuming and demanding than the 510(k) notification process. A PMA must be supported by extensive data, including but
not limited to data obtained from preclinical and/or clinical studies and data relating to manufacturing and labeling, to demonstrate
to the FDA’s satisfaction the safety and effectiveness of the device. After a PMA application is submitted, the FDA’s in-depth
review of the information generally takes between one and three years and may take significantly longer. If the FDA does not grant 510(k)
clearance to its products, there is no guarantee that Microbot will submit a PMA or that if Microbot does, that the FDA would grant a
PMA approval of Microbot’s products, either of which would adversely affect Microbot’s business.
Foreign
Regulation
In
addition to regulations in the United States, Microbot will be subject to a variety of foreign regulations governing clinical trials,
marketing authorization and commercial sales and distribution of its products in foreign countries. The approval process varies from
country to country, and the time may be longer or shorter than that required for FDA approval or clearance. The requirements governing
the conduct of clinical trials, product licensing, pricing and reimbursement vary greatly from country to country.
International
sales of medical devices are subject to foreign governmental regulations which vary substantially from country to country. Whether or
not Microbot obtains FDA approval or clearance for its products, Microbot will be required to make new regulatory submissions to the
comparable regulatory authorities of foreign countries before Microbot can commence clinical trials or marketing of the product in such
countries. The time required to obtain certification or approval by a foreign country may be longer or shorter than that required for
FDA clearance or approval, and the requirements may differ. Below are summaries of the regulatory systems for medical devices in Europe
and Israel, where Microbot currently anticipates marketing its products. However, its products may also be marketed in other countries
that have different systems or minimal requirements for medical devices.
Europe.
The primary regulatory body in Europe is the European Union, or E.U., which consists of 27 member states and has a coordinated system
for the authorization of medical devices.
The
E.U. has adopted legislation, in the form of directives to be implemented in each member state, concerning the regulation of medical
devices within the European Union. The directives include, among others, the Medical Device Regulation, or MDR, that establishes certain
requirements with which medical devices must comply before they can be commercialized in the European Economic Area, or EEA (which comprises
the member states of the E.U. plus Norway, Liechtenstein and Iceland). Under the MDR, medical devices are classified into four Classes,
I, IIa, IIb, and III, with Class I being the lowest risk and Class III being the highest risk.
In
order to commercialize medical devices in the European Union, a CE Mark certificate is needed. This certification verifies that a device
meets all regulatory requirements for medical devices under the new Medical Devices Regulation (MDR 2017/745). The CE approval process
in Europe is summarized below:
Microbot
intends to apply for the CE Mark for each of its medical device products. There is no guarantee that Microbot will be granted a CE Mark
for all or any of its pipeline products and failure to obtain the CE Mark would adversely affect its ability to grow its business.
Israel.
Israel’s Medical Devices Law generally requires the registration of all medical products with the Ministry of Health, or MOH, Registrar
as a precondition for production and distribution in Israel. Special exemptions may apply under limited circumstances and for purposes
such as the provision of essential medical treatment, research and development of the medical device, and personal use, among others.
Registration
of medical devices requires the submission of an application to the Ministry of Health Medical Institutions and Devices Licensing Department,
or AMAR. An application for the registration of a medical device includes the following:
● Name and address of the manufacturer, and of the importer as applicable;
● Details of the standards to which the device complies;
If
the application includes a certificate issued by a competent authority of one of the following “recognized” countries: Australia,
Canada, European Community (CE) Member States (MSs), Japan, or the United States, the registration process is generally expedited, but
could still take 6-9 months for approval. If such certificate is not available, the registration process will take significantly longer
and a license is rarely issued. Furthermore, the MOH will determine what type of testing is needed. In general, in the case of Israeli
manufactured devices that are not registered or authorized in any “recognized” country, the application requires presentation
of a risk analysis, a clinical evaluation, a summary of the clinical trials, and expert opinions regarding the device’s safety
and effectiveness. Additional requirements may apply during the registration period, including follow-up reviews, to improve the quality
and safety of the devices.
According
to regulations issued by Israel’s Minister of Health in June 2013, a decision on a request to register a medical device must be
delivered by AMAR within 120 days from the date of the request, although this rarely occurs. The current rules for the registration of
medical devices do not provide for an expedited approval process.
Once
granted by the MOH, a license (marketing authorization) for a medical device is valid for five years from the date of registration of
the device, except for implants with a life-supporting function, for which the validity is for only two years from the date of registration.
Furthermore, the holder of the license, the Israeli Registration Holder, or IRH, must do the following to maintain its license:
● Respond to questions from AMAR concerning the registered products.
● Report adverse events to AMAR.
● Renew the registration on time to keep the market approval active.
Comply
with post-marketing requirements, including reporting of adverse and unexpected events occurring in Israel or in other countries where
the device is in use.
Getting
a device listed on Israel’s four major Sick Funds (health insurance entities) is also necessary in order for Israeli hospitals
and health care providers to order such products.
Microbot
intends to apply for a license from the MOH for each of its medical devices. There is no guarantee that Microbot will be granted licenses
for its pipeline products and failure to obtain such licenses would adversely affect its ability to grow its business.
Human