Pulmatrix, Inc. — FY2022 Form 10-K
Reporting period: Fiscal year ended December 31, 2022; filed March 30, 2023. The filing reports annual results, not separate fourth-quarter financial results.
Business context
Pulmatrix is a clinical-stage biotechnology company developing inhaled therapies using its proprietary iSPERSE dry-powder platform. Its candidates are PUR1900 for pulmonary fungal disease, including allergic bronchopulmonary aspergillosis (ABPA); PUR3100 for acute migraine; and PUR1800 for acute exacerbations of COPD (AECOPD). The company had no approved products and no product-sales revenue. Reported revenue came from collaboration and licensing arrangements.
Key financial metrics
| Metric | FY2022 | FY2021 |
|---|---|---|
| Revenue | $6.1 million | $5.2 million |
| Research and development expense | $18.2 million | $15.4 million |
| General and administrative expense | $6.8 million | $6.4 million |
| Total operating expenses | $25.0 million | $25.3 million |
| Operating loss | $18.9 million | $20.2 million |
| Net loss | $18.8 million | $20.2 million |
| Net cash used in operating activities | $19.4 million | $19.7 million |
| Cash and cash equivalents at year-end | $35.6 million | $53.8 million |
FY2022 revenue increased $0.9 million, as higher PUR1900 collaboration revenue under the Cipla agreement more than offset lower JJEI license revenue. One customer represented approximately 99% of FY2022 revenue. The company reported no product-sales gross margin; product margins are not applicable at this development stage.
Cash, cash equivalents and restricted cash totaled $37.3 million at year-end, including $1.6 million of restricted cash. Total liabilities were $9.8 million and stockholders’ equity was $31.1 million. No borrowing or debt balance is separately reported on the balance sheet. The filing states existing cash was expected to fund operations for at least 12 months after filing, into the second quarter of 2024, subject to assumptions and execution risks.
Material changes and developments
- R&D expense rose $2.9 million, mainly from PUR1900 development and personnel/operating costs, partly offset by lower PUR1800 spending. FY2021 included a $3.6 million goodwill impairment; none was recorded in FY2022.
- Operating cash use remained substantial, while financing cash inflows fell to $1.2 million from $43.5 million in 2021. FY2022 ATM sales generated approximately $1.4 million net from 252,013 shares.
- All Series A convertible preferred stock was converted into common stock during 2022. The company effected a 1-for-20 reverse stock split in February 2022.
- PUR1900’s prior Phase 2 study was terminated in 2020 following COVID-related enrollment disruption. The replacement Phase 2b study began dosing in Q1 2023; topline data were anticipated in mid-2024.
- PUR3100 Phase 1 results announced in January 2023 indicated tolerability, lower nausea incidence than IV DHE, no vomiting in the inhaled-dose groups, and peak exposure at five minutes. A Phase 2 study was contingent on financing or a partnership.
- PUR1800 Phase 1b topline findings indicated tolerability, no observed safety signals, and low, consistent systemic exposure. The findings were intended to inform a potential Phase 2 study; no start date was stated.
Outlook, risks and unusual items
Management expects significant expenses and operating losses for at least several more years and says additional capital will be needed to pursue all planned programs. Financing may come from equity or debt, partnerships, licensing, grants, or other transactions; availability and terms are uncertain. Failure to secure funding could require delaying or reducing programs, including PUR1900, PUR3100, or PUR1800, and could threaten continued operations.
- Clinical, regulatory, manufacturing, enrollment, and partner-execution risks could delay development or prevent approval. The company relies on third-party research organizations, manufacturers, and suppliers.
- Cipla shares PUR1900 development costs under contract terms and has exclusive rights in specified territories. Missed development milestones can permit a party to stop funding and may trigger rights acquisition or asset monetization provisions.
- The 2022 audit opinion was unqualified. Management reported disclosure controls and internal control over financial reporting were effective as of year-end; the auditor was not engaged to express an opinion on internal controls.
- The company had an accumulated deficit of $273.5 million and a full valuation allowance against deferred tax assets. It disclosed approximately $53.2 million of federal net operating loss carryforwards, subject to potential ownership-change limitations.
- The new Bedford headquarters lease was expected to begin in July 2023, with a ten-year noncancellable term and base rent of $101,000 per month, increasing 3% annually. Management anticipated approximately $3.0 million of company-funded improvements, in addition to landlord funding.
Important facts for investors to verify
- Current cash, cash burn, and financing runway, including capital needs for PUR3100 and later-stage trials.
- Progress, enrollment, milestone compliance, and mid-2024 data timing for the PUR1900 Phase 2b trial, plus Cipla’s ongoing funding and obligations.
- Whether financing or a partnership is secured to start PUR3100 Phase 2 and whether later safety and regulatory requirements remain achievable.
- Plans and funding for a PUR1800 Phase 2 study, and whether its early safety and exposure findings translate into efficacy.
- Revenue concentration and the timing and sustainability of collaboration revenue, alongside potential dilution from future securities issuance.