InspireMD, Inc. (NASDAQ:NSPR) is a medical device company that has been making significant strides in the carotid revascularization market with its proprietary MicroNet™ stent platform technology. The company's flagship product, CGuard™ Embolic Prevention System (CGuard EPS), combines MicroNet and a self-expandable nitinol stent in a single device to treat carotid artery disease.
Financials
In the first quarter of 2024, InspireMD reported total revenue of $1,511,000, representing a 22% increase from the $1,239,000 reported in the same period of the previous year. This growth was predominantly driven by expansion in existing markets. Gross profit for the quarter was $292,000, a decrease of 21.6% from $373,000 in the first quarter of 2023, primarily due to higher training costs for new hires to build capacity for anticipated increased volume requirements. Gross margin decreased to 19.4% from 30.1% in the year-ago quarter.
The company's net loss for the first quarter of 2024 was $7,032,000, or $0.21 per basic and diluted share, compared to a net loss of $4,256,000, or $0.53 per basic and diluted share, in the first quarter of 2023. The increase in net loss was primarily due to a $2,952,000 rise in operating expenses, partially offset by a $257,000 increase in financial income.
Liquidity
InspireMD's financial position remains strong, with cash, cash equivalents, and marketable securities totaling $34,000,000 as of March 31, 2024, compared to $39,000,000 as of December 31, 2023. The company's current assets exceeded its current liabilities by a multiple of 7.9 as of the end of the first quarter.
Business Overview
InspireMD was founded in 2008 and is headquartered in Tel Aviv, Israel. The company's primary focus is on the development and commercialization of its proprietary MicroNet™ stent platform technology for the treatment of carotid artery disease and other vascular conditions.
MicroNet is a micron mesh sleeve that is wrapped over a stent to provide embolic protection in stenting procedures. The company's CGuard EPS combines MicroNet and a self-expandable nitinol stent in a single device to treat carotid artery disease. CGuard EPS originally received CE mark approval in the European Union in 2013 and was fully launched in Europe in 2015. The product is currently marketed through distributors in over 30 countries.
In September 2020, InspireMD received approval from the U.S. Food and Drug Administration (FDA) for an Investigational Device Exemption (IDE), allowing the company to proceed with a pivotal study of its CGuard™ Carotid Stent System, called C-GUARDIANS. The study, which completed enrollment in June 2023, evaluated the safety and efficacy of the CGuard Carotid Stent System in the treatment of carotid artery stenosis in both symptomatic and asymptomatic patients.
In November 2023, InspireMD announced positive 30-day follow-up results from the C-GUARDIANS trial, which demonstrated a DSMI (death, stroke, and myocardial infarction) rate of just 0.95% in the intent-to-treat analysis population. The company anticipates reporting primary endpoint results from the C-GUARDIANS trial at the end of May 2024, which may support the submission of a premarket approval (PMA) application to the FDA in the third quarter of 2024. If approved, the company expects to launch the CGuard Prime stent system in the U.S. market in the first half of 2025.
In addition to the CGuard Carotid Stent System, InspireMD is also developing the SwitchGuard™ neuroprotection system (SwitchGuard NPS) for transcarotid access and neuro protection. The SwitchGuard NPS is designed to prevent embolic debris generated during a carotid stenting procedure from traveling to the brain, passing the blood through an integrated filter and returning it to the patient in a closed circuit to minimize blood loss during the procedure.
The company's addressable market for the CGuard Carotid Stent System and SwitchGuard NPS is estimated to be approximately $1.3 billion, assuming full penetration of the intervention caseload. The total available market is estimated to be approximately $9.3 billion, which may grow over time if expanded treatment options lead to increased patient screening for carotid artery disease.
Risks and Challenges
InspireMD faces several risks and challenges, including:
1. Recurring losses and negative cash flows from operations
The company has a history of recurring losses and negative cash flows from operating activities, which may continue until its products, particularly CGuard EPS, reach commercial profitability.2. Need for additional capital
InspireMD may need to raise additional funds to meet its business requirements in the future, which could be costly or difficult to obtain and could dilute existing shareholders' ownership interests.3. Regulatory approvals
The company's ability to secure and maintain regulatory approvals for the sale of its products is critical to its success.4. Intense competition
InspireMD operates in a highly competitive industry, with competitors having substantially greater financial, technological, research and development, regulatory and clinical, manufacturing, marketing and sales, distribution, and personnel resources.5. Dependence on a single manufacturing facility
The company currently manufactures its CGuard product at a single facility in Tel Aviv, Israel, and any disruption to this facility could have a significant impact on its operations.6. Geopolitical risks
InspireMD's operations in Israel expose the company to security, political, and economic instability in the region, which could adversely affect its business.Outlook
InspireMD is well-positioned to capitalize on the industry's shift towards less invasive stenting procedures, as evidenced by the recent CMS decision to expand coverage of carotid artery stenting (CAS) and transcarotid artery revascularization (TCAR) to include both asymptomatic and standard-risk patients.
The company's key priorities for 2024 and beyond include:
- Reporting positive primary endpoint results from the C-GUARDIANS trial in May 2024 and submitting a PMA application to the FDA in the third quarter of 2024.
- Launching the CGuard Prime stent system in the U.S. market in the first half of 2025, pending FDA approval.
- Advancing the development of the SwitchGuard NPS, with plans to seek FDA clearance in the first half of 2026.
- Expanding the company's presence in the Asian markets through strategic partnerships.
- Continuing to invest in current and future potential new indications, products, and manufacturing enhancements for CGuard to reduce cost of goods and provide best-in-class performing delivery systems.
Financial Analysis
InspireMD's financial performance in the first quarter of 2024 was mixed, with revenue growth offset by a decline in gross profit and an increase in net loss. The company's annual financial results for 2023 showed a net loss of $19,916,000, revenue of $6,205,000, operating cash flow of -$16,376,000, and free cash flow of -$16,757,000.
The company's liquidity position remains strong, with $34,000,000 in cash, cash equivalents, and marketable securities as of March 31, 2024. However, the company's history of recurring losses and negative cash flows from operations may require it to raise additional capital in the future to fund its operations and growth initiatives.
Conclusion
InspireMD is well-positioned to capitalize on the growing demand for less invasive carotid revascularization procedures, with its innovative CGuard EPS and the upcoming SwitchGuard NPS. The company's positive results from the C-GUARDIANS trial and its plans to submit a PMA application to the FDA in 2024 are significant milestones that could pave the way for the U.S. launch of the CGuard Prime stent system in the first half of 2025. While the company faces several risks and challenges, its strong financial position and strategic focus on developing cutting-edge solutions for the carotid revascularization market make it an intriguing investment opportunity for investors.