Check-Cap(US:CHEK)2025-08-27 00:59Financial Performance and Expenses - Research and development expenses for the years ended December 31, 2024, 2023, and 2022 were approximately $0, $8.3 million, and $14.3 million, respectively[285]. - A significant workforce reduction was announced in June 2023 to reduce cash burn and focus on essential research activities[332]. - The company does not currently have any outstanding investments and aims to preserve principal while maximizing interest income[713]. - The company is exposed to market risks from changes in interest rates related to financial investments in cash and deposits[714]. - The company does not use derivative financial instruments to limit exposure to interest rate risk[714]. Regulatory and Compliance - The company is subject to extensive regulation by the FDA and other regulatory bodies for the C-Scan medical device, which includes product design, testing, and compliance with safety standards[306]. - The FDA's 510(k) clearance process typically takes approximately 6 to 9 months, although it can take significantly longer[307]. - Special 510(k)s are processed within 30 days of receipt, aimed at devices with established evaluation methods[308]. - Class II devices generally require 510(k) premarket clearance before commercial marketing in the U.S.[309]. - A PMA application must be supported by extensive data, and the review process may take at least 12 to 18 months[314][315]. - The FDA has 45 days to determine if a PMA application is complete for substantive review[315]. - The Breakthrough Device Program allows expedited access for devices that provide significant advantages or represent breakthrough technology[318]. - Clinical trials are almost always required to support a PMA application or de novo reclassification petition[319]. - The FDA requires manufacturers to report any device-related deaths or serious injuries[321]. - Compliance with Quality Systems Regulation (QSR) is necessary to maintain FDA clearance or approval[322]. - The FDA has broad regulatory compliance and enforcement powers, including the ability to conduct inspections and impose sanctions[323]. - The company is subject to extensive regulatory scrutiny, including the federal Anti-Kickback Statute and the False Claims Act, which could impact operations[337]. Product Development and Clinical Trials - The company has expanded its manufacturing capacity to support larger clinical volumes expected in the early commercialization stage during 2022 and 2023[302]. - The company received an IIA grant approval in January 2021 amounting to $620,000 to support the transition from research and development to manufacturing[302]. - The C-Scan system has received FCC authorization, ensuring compliance with radio frequency emission standards[335]. - The C-Scan capsule is currently undergoing clinical trials in the U.S., with engagement at various sites progressing slower than expected due to compliance with regulatory requirements[346]. - In December 2019, a pilot study of C-Scan enrolled 45 patients, with 39 completing the procedure and reporting higher satisfaction compared to colonoscopy[326]. - The U.S. pivotal study design includes two parts: a calibration study with up to 200 patients and a randomized study comparing C-Scan to colonoscopy with up to 800 patients[328]. - As of March 2023, the initiation of the powered portion of the U.S. pivotal study was postponed due to efficacy results not meeting goals[331]. Market and Competitive Landscape - The company faces competition from established manufacturers of CRC screening technologies, including Olympus, GE Healthcare, and Exact Sciences, which have greater financial resources and distribution channels[289]. - The company must obtain reimbursement coverage from third-party payors for procedures using C-Scan to ensure commercial viability[300]. - Coverage and reimbursement for C-Scan will depend on various third-party payors and their interpretations of what is considered "reasonable and necessary" for coverage[336]. - The cost-effectiveness of CRC screening devices is influenced by patient adherence, which is crucial for obtaining third-party payer reimbursement[363]. Licensing and Agreements - The company has entered into an exclusive license agreement with the University of Missouri, agreeing to pay royalties ranging from $0.30 to $5.00 per C-Scan unit, with a total cap of $15 million[288]. - The company entered into a business combination agreement with Nobul on March 25, 2024, after previous agreements did not receive shareholder approval[332]. Regulatory Approvals and Market Potential - The company received the CE mark for C-Scan on January 9, 2018, and the renewal of this mark is valid until December 1, 2026[349]. - The AMAR approval for marketing and sale of C-Scan in Israel is valid until December 31, 2024[350]. - As of December 31, 2023, approximately 300 million people in the U.S. have coverage for capsule endoscopy of the small bowel, but there is currently no reimbursement for colon capsule endoscopy for CRC screening[368]. - Colorectal cancer (CRC) is expected to cause over 52,900 deaths in the U.S. in 2025, highlighting the importance of effective screening methods[358]. - The 5-year relative survival rate for localized CRC is 91.5%, emphasizing the critical nature of early detection[359]. - COVID-19 caused a significant decrease in CRC screening, with estimates of 1,176,942 to 2,014,164 fewer screenings between 2020 and 2023[360]. Financial Exchange Rates - The exchange rate between the U.S. dollar and the NIS increased by 1.09% in 2024, while the Euro increased by 5.25%[712]. - The exchange rate between the U.S. dollar and the NIS increased by 3.07% in 2023, while the Euro decreased by 4.26%[712]. - The exchange rate between the U.S. dollar and the NIS increased by 13.15% in 2022, while the Euro increased by 6.12%[712].