Pulmatrix, Inc. — Q2 2022 Form 10-Q
Business context and reporting period
Clinical-stage biotechnology company developing inhaled therapies using its iSPERSE dry-powder platform. This unaudited report covers the quarter and six months ended June 30, 2022; financial statement amounts below are in millions unless noted. Pulmatrix reported no product sales; revenue was primarily from its Pulmazole collaboration with Cipla.
Financial and operating highlights
| Metric | Q2 2022 | Q2 2021 | Six months 2022 | Six months 2021 |
|---|---|---|---|---|
| Revenue | $1.331 | $2.254 | $2.491 | $3.644 |
| Research and development expense | $4.337 | $4.541 | $8.486 | $8.397 |
| General and administrative expense | $1.553 | $1.562 | $3.527 | $3.181 |
| Operating loss | $(4.559) | $(3.849) | $(9.522) | $(7.934) |
| Net loss | $(4.595) | $(3.852) | $(9.568) | $(7.956) |
| Basic and diluted loss per share | $(1.36) | $(1.37) | $(2.87) | $(3.10) |
| Operating cash used | — | — | $(10.706) | $(12.019) |
At June 30, cash and cash equivalents were $42.905 million, with restricted cash of $1.625 million, for total cash, cash equivalents and restricted cash of $44.530 million. Total assets were $49.398 million, total liabilities $10.959 million, and stockholders’ equity $38.439 million. The filing reports no debt balance. No gross margin was presented; the company has not generated product sales. Accumulated deficit was $264.208 million.
Changes versus the prior comparable period
- Q2 revenue declined $0.923 million and six-month revenue declined $1.153 million, primarily because the Johnson & Johnson Enterprise Innovation license agreement ended in July 2021. Higher Cipla revenue partly offset the decline.
- Q2 operating loss widened by $0.710 million; six-month operating loss widened by $1.588 million. Six-month R&D expense increased modestly, while G&A rose $0.346 million.
- Six-month operating cash use improved by $1.313 million year over year, while net loss increased by $1.612 million. Financing cash flow was $(0.152) million in 2022 versus $37.283 million provided in 2021, when the company completed an equity offering.
- Cash and cash equivalents decreased from $53.840 million at year-end 2021 to $42.905 million. All Series A preferred shares were converted into common stock during the first half; common shares outstanding were 3,387,172 at June 30. The company effected a 1-for-20 reverse stock split in February 2022, with per-share figures retrospectively adjusted.
Outlook, commentary, and risks
- Management expects continued losses and rising development expenses, and estimated that June 30 cash and cash equivalents would fund projected operating expenses and capital expenditures into the second quarter of 2024. The estimate depends on assumptions that may prove incorrect; additional financing may be needed.
- Pulmazole: management anticipated Phase 2b dosing to begin in Q1 2023, with topline data expected in mid-2024. The Cipla agreement sets a June 30, 2023 milestone for 25% of Phase 2b patients to be dosed and a June 30, 2024 topline-results milestone. The company and Cipla share specified development costs.
- PUR1800: Phase 1b topline results indicated tolerability with no observed safety signals and low, consistent systemic exposure. Further analysis and potential Phase 2 planning were ongoing.
- PUR3100: as of the filing, 23 of 24 planned Phase 1 participants had enrolled; topline data was anticipated in Q4 2022. A subsequent Phase 2 study was planned, subject to Phase 1 results and regulatory requirements.
- Research and development contract commitments totaled approximately $5.7 million, of which $2.4 million was expected to be reimbursed by partners; $4.4 million was expected to be current within 12 months. One customer accounted for 99% of Q2 and first-half revenue, and 99% of receivables at June 30.
- The current headquarters lease expires June 30, 2023. A new 10-year lease for approximately 20,000 square feet is expected to commence in May 2023, with base rent of $101,000 per month and planned company-funded improvements of approximately $1.5 million, in addition to landlord support.
- Key risks include recurring losses and negative operating cash flow, reliance on external financing and collaborators, clinical-trial enrollment and results, regulatory approval, manufacturing, intellectual-property protection, competition, and possible effects of COVID-19. Nasdaq bid-price compliance had been restored in March 2022, but the company cautioned that future compliance was not assured.
Most important facts for investors to verify
- Whether the cash runway estimate remains achievable given trial spending, contractual commitments, and potential financing needs.
- Progress and outcomes for PUR3100 Phase 1, Pulmazole Phase 2b readiness and milestones, and PUR1800 development plans.
- Future Cipla collaboration performance, cost-sharing and milestone terms, and continued concentration of revenue and receivables in one customer.
- Timing, funding, and financial impact of the new headquarters lease and improvements.
- Share dilution exposure: 1,284,803 warrants and 286,565 options were outstanding at June 30, 2022; the company also had an unused ATM offering authorization of up to $20 million.