Check-Cap Ltd. (CHEK): 5 FORCES Analysis [Nov-2025 Updated]

You're analyzing Check-Cap Ltd. (CHEK) at a critical juncture: the company has just executed a massive pivot from its legacy med-tech C-Scan system to the embodied AI space via the MBody AI merger, and the numbers reflect that high-risk gamble, showing a forecasted $\text{0MM}$ revenue for FY 2025 against a $-\text{17MM}$ EBIT deficit. Honestly, this transition completely redefines the competitive landscape, moving the battleground from FDA hurdles to the hyper-speed, software-driven world of AI automation where switching costs are low and rivals are deep-pocketed. Before you decide on your next move, you need a clear view of the new forces at play-from supplier leverage in specialized chips to the intense rivalry in the AI sector-so we're breaking down Michael Porter's Five Forces for Check-Cap Ltd. as of late 2025 to show you exactly where the near-term risks and opportunities lie.

Check-Cap Ltd. (CHEK) - Porter's Five Forces: Bargaining power of suppliers

When you look at Check-Cap Ltd.'s position with its suppliers, you've got to consider the context of its current stage and the recent merger activity. For a company that is still largely in the R&D phase for its core medical device, supplier power is often high, and Check-Cap Ltd.'s financials definitely don't give them much leverage right now.

The reliance on specialized tech means certain vendors hold the cards. For the legacy C-Scan system, which uses an ingestible X-ray capsule, the components are not off-the-shelf items. This dependence on a few specialized component vendors for the ingestible X-ray capsule inherently increases their leverage over Check-Cap Ltd. You see this dynamic play out when a company has high switching costs or when the supplier is one of only a handful capable of meeting the stringent medical device specifications.

Here's the quick math on why negotiating power is weak: the forecasted annual revenue of Check-Cap Ltd. for FY 2025 is $0MM. Honestly, when you're projecting zero revenue for the fiscal year, you defintely have weak negotiating power with key vendors. You can't threaten to take your business elsewhere if there isn't much business to begin with, or if your cash position is tight.

This financial reality is stark when you map out a few key metrics:

The situation is complicated by the recent merger with MBody AI. The outline suggests that the new MBody AI platform is hardware-agnostic, which reduces dependence on single-source hardware suppliers for the new combined entity's AI focus. That's a positive structural shift for the future, but for the existing C-Scan technology, the supplier dynamics remain tied to the legacy business's small scale and cash burn.

The merger itself rebalances power dynamics, but not necessarily in favor of the legacy Check-Cap Ltd. suppliers. Under the definitive merger agreement, current MBody AI equityholders will own 90% of the combined company, with Check-Cap Ltd. shareholders retaining only 10%. This means the purchasing power for future components will be dictated by the MBody AI management team and their priorities, which are centered on embodied AI, not necessarily the medical capsule.

You should keep an eye on these specific supplier-related risks:

• AI development relies on high-power computing and specialized chip suppliers, increasing their leverage.
• Legacy C-Scan system depends on a few specialized component vendors for the ingestible X-ray capsule.
• Check-Cap's forecasted annual revenue of $0MM for FY 2025 gives them weak negotiating power with key vendors.
• The new MBody AI is hardware-agnostic, which reduces dependence on single-source hardware suppliers.

Finance: draft a sensitivity analysis on component cost increases for the C-Scan capsule assuming a 15% rise in the cost of the X-ray sensor by end of Q1 2026.

Check-Cap Ltd. (CHEK) - Porter's Five Forces: Bargaining power of customers

You're looking at Check-Cap Ltd. (CHEK) post-merger announcement, and the customer side of the equation is definitely a major lever. Honestly, the bargaining power of customers looks quite high right now, driven by both the legacy business's challenges and the new MBody AI focus.

For the legacy C-Scan business, which targets hospitals and clinics, customer power is inherently elevated. These institutions have numerous proven, FDA-approved screening alternatives already integrated into their workflows. They don't need to switch; they only switch if the value proposition is overwhelmingly better, which is tough when you are still proving commercial viability.

Now, looking at the MBody AI side, which is the future, those enterprise customers in warehousing and hospitality are sophisticated buyers. They can easily switch between competing AI/automation platforms. MBody AI is targeting massive sectors, with Morgan Stanley forecasting the embodied-AI market to reach $40 Trillion by 2050, but that scale means big customers have options. The MBody AI Orchestrator platform is hardware-agnostic, which actually lowers the switching cost for a customer deciding between MBody AI and another robotics or IT integrator.

The new combined entity must prove its value proposition against established IT and robotics integrators to secure those large contracts. You see the pressure in the numbers; Check-Cap Ltd. is currently facing significant financial hurdles that make customers cautious about committing long-term capital.

Customer power is high because the company must first overcome its -$17MM forecasted annual EBIT deficit to gain trust. That negative outlook, coupled with a working capital position of -$1,546,000 as of September 15, 2025, and a Return on Assets (ROA) of -46.58%, signals operational strain. Customers know they are dealing with a company that needs to deliver immediate, tangible results to stabilize its financial footing.

Here's a quick look at how the financial reality of the combined entity compares to the scale of the market it is entering, which underscores why customers hold the cards:

To be fair, the merger itself is a strategic move to pivot into a high-growth area, but the immediate power dynamic remains with the buyer. You need to watch for contract announcements that show large, multi-year commitments from major players, as those are the only things that will shift this power balance.

The key factors amplifying customer power include:

• Availability of proven, approved screening alternatives.
• Hardware-agnostic platform increases competitor choice.
• Need to secure contracts against established IT integrators.
• Company's current negative financial trajectory.

Finance: draft 13-week cash view by Friday.

Check-Cap Ltd. (CHEK) - Porter's Five Forces: Competitive rivalry

Legacy C-Scan faces intense rivalry from established players like Exact Sciences (Cologuard) and Guardant Health.

The new MBody AI competes with numerous, well-funded tech giants and startups in the vast embodied AI market.

• Embodied AI market projection by Morgan Stanley: US$40 trillion by 2050.
• Check-Cap shareholders expected ownership in combined entity: 10%.
• MBody AI shareholders expected ownership in combined entity: 90%.

Rivalry in the AI sector is high due to rapid innovation cycles and aggressive pricing strategies.

• Check-Cap's negative EBITDA (last twelve months): $9.3 million.
• Check-Cap's negative total equity: $1.45M.
• Check-Cap's working capital: -$1,546,000.
• Check-Cap's current ratio: 0.15.

The company's stock volatility, like the 300%+ surge post-merger, reflects the high-risk, high-reward nature of this new rivalry.

• Stock price surge post-merger announcement: Over 300% or 323.65%.
• Stock price post-surge: $28.29.
• 52-week low prior to surge: $19.99.
• Stock price on Sep 12, 2025: $0.7459.
• Check-Cap's Market Cap (pre-surge context): $4.39 million.
• Check-Cap's Current Market Cap (post-surge): $13.34M.

Check-Cap Ltd. (CHEK) - Porter's Five Forces: Threat of substitutes

You're looking at the competitive landscape for Check-Cap Ltd. (CHEK), and the threat of substitutes is a major factor to consider, especially when your core product, the C-Scan system, is vying for space against procedures that have been standard for decades. Honestly, the established methods are deeply entrenched, and that presents a real hurdle.

The C-Scan system is easily substituted by established, reimbursed screening methods like colonoscopy and FIT. While Check-Cap Ltd. (CHEK) aims for a preparation-free advantage, the market for colon screening is dominated by these alternatives. For context on the broader, related market, the global Colon Capsule Endoscopy market is projected to reach an estimated \$227 million by 2025. Still, this segment is part of the larger Capsule Endoscopy Market, which was valued at \$443.84 million in 2024 and is projected to hit approximately \$953.79 million by 2034, growing at a CAGR of 7.95% from 2025 to 2034. This shows growth in the category, but Check-Cap Ltd. (CHEK) is fighting for share within it.

To show you the current dynamics within the capsule space as of 2025, look at how the segments stack up:

MBody AI's platform faces substitution from in-house enterprise automation solutions or general-purpose robotics software. While specific numbers for MBody AI's direct substitution risk are not public, we know the general AI landscape is maturing rapidly. The AI Platform market is set to surpass \$100 billion with a CAGR exceeding 35% through 2027. However, a mid-2025 survey indicated that for most organizations, the transition from AI pilots to scaled impact remains a work in progress. This suggests that while the potential for in-house solutions is high, the actual deployment and competitive pressure from fully scaled, general-purpose systems might still be developing, which is a near-term risk factor.

The core screening problem is solved by less invasive alternatives, so the preparation-free advantage is not defintely enough. The established procedures, like colonoscopy, are the benchmark, and even within the less-invasive category, small bowel capsules hold a dominant position. As of 2025, small bowel capsule endoscopy accounted for over 70% of global procedures. This dominance shows where physician and patient trust-and likely, established reimbursement pathways-lie. The fact that Check-Cap Ltd. (CHEK)'s market capitalization is only US\$7.6 million compared to the overall market potential underscores the difficulty in displacing these alternatives.

You should review the latest reimbursement decisions from CMS and major private payers for the C-Scan system against the established codes for colonoscopy and FIT, as that financial barrier is often the ultimate determinant of substitution threat.

Check-Cap Ltd. (CHEK) - Porter's Five Forces: Threat of new entrants

You're looking at the entry landscape for Check-Cap Ltd. (CHEK) and the picture is split between two very different worlds: the heavily regulated medical device space and the rapidly funded AI sector. The threat level isn't uniform; it depends on which part of the business you're analyzing.

Regulatory Hurdles in Legacy C-Scan

The established C-Scan market presents a significant initial wall for new medical technology entrants, primarily due to the U.S. Food and Drug Administration (FDA) approval process. This regulatory experience is a quantifiable moat. For instance, in the second quarter of 2025, AI imaging software (product code QIH) saw 24 clearances via the 510(k) pathway, showing activity, but the process remains rigorous. Data from Q2 2025 indicates that 'expert-level' applicants, those with 6+ historical clearances, secure an average review time of 131.76 days. This is nearly 40 days faster than novice-level applicants, whose average review time clocked in at 171.35 days. As of July 2025, the FDA had authorized over 100 AI-enabled medical devices, underscoring the established, high-standard environment Check-Cap Ltd. operates within for its core technology. This regulatory experience gap definitely favors incumbents.

Capital Requirements in Embodied AI

The embodied AI market, which Check-Cap Ltd. is integrating into, shows a stark contrast with low capital requirements for software development, allowing startups to enter quickly. The sheer volume of capital flowing into this area suggests that while the initial software development cost might be lower than hardware, the cost to compete at the top tier is massive. For example, Skild AI, a key player, had raised a total of $814 million by January 2025, achieving a $4 billion valuation. Similarly, Physical Intelligence secured $600 million in Series B funding in late 2025, reaching a valuation of about $5.6 billion. In the domestic market for 'embodied intelligence' in 2025, the median financing amount for the top-funded companies was 1 billion yuan.

Here's the quick math on the capital disparity you are facing:

Leveraging Open-Source Models

New entrants in the AI space can often bypass the need for proprietary core technology development by using readily available open-source models. This accelerates time-to-market significantly, though the data shows that the top-tier competition is still raising hundreds of millions. The ability to deploy a functional AI system without the initial $100 million+ investment in foundational model training lowers the minimum viable entry point, even if the competitive entry point remains high due to massive funding rounds like the $500 million round for Skild AI in January 2025. Anyway, this speed of deployment is a key factor.

Inherited Patent Protection

The combined company's inherited patents offer a legal barrier, but this is definitely not insurmountable, especially given the financial realities of Check-Cap Ltd. The company reports a negative book value per share (bvps) of -$4.05 and a stock price around $1.30 as of November 21, 2025. While intellectual property provides a temporary shield, the company's current negative total equity of $1.45M suggests that financial stability, not just patent count, will dictate the long-term strength of that barrier against a well-capitalized entrant. Other companies, like SciSparc Ltd., have recently agreed to issue shares representing 19.99% of capital to acquire IP portfolios, showing that IP can be bought, but the cost is equity dilution.

If onboarding takes 14+ days longer for a new medical device firm, churn risk rises.

Finance: draft 13-week cash view by Friday.