Pulmatrix, Inc. — Form 10-Q Summary
Reporting period: Quarter and nine months ended September 30, 2023. Financial statement amounts are in thousands of dollars, except per-share data. Pulmatrix is a clinical-stage biopharmaceutical company developing inhaled therapies using its iSPERSE platform; it reported no product-sales revenue.
Financial results and liquidity
| Metric | Q3 2023 | Q3 2022 | Nine months 2023 | Nine months 2022 |
|---|---|---|---|---|
| Revenue | $1,753 | $1,872 | $5,096 | $4,363 |
| Research and development | $3,963 | $5,287 | $12,002 | $13,773 |
| General and administrative | $1,729 | $1,685 | $5,609 | $5,212 |
| Operating loss | $(3,939) | $(5,100) | $(12,515) | $(14,622) |
| Net loss | $(3,774) | $(5,052) | $(12,038) | $(14,620) |
| Basic and diluted loss per share | $(1.03) | $(1.45) | $(3.30) | $(4.32) |
Operating margin, calculated as operating loss divided by revenue, was approximately negative 225% in Q3 2023 and negative 272% in Q3 2022; for the nine-month periods it was approximately negative 246% and negative 335%, respectively. Revenue is generated primarily under the Cipla collaboration. One customer accounted for 100% of revenue in 2023 and 100% of accounts receivable at September 30, 2023.
- Cash and cash equivalents: $21.336 million at September 30, 2023, down from $35.628 million at December 31, 2022. Including restricted cash, total cash was $22.961 million.
- Cash flows, nine months: $13.974 million used in operations, $0.371 million used in investing, and $0.053 million provided by financing; cash, cash equivalents and restricted cash decreased by $14.292 million.
- Balance sheet: Total assets were $36.770 million; current liabilities were $4.429 million; total liabilities were $16.889 million; stockholders’ equity was $19.881 million. Operating lease liabilities totaled $8.621 million. No conventional borrowing balance is shown on the balance sheet.
- Accumulated deficit: $285.514 million. The company has recurring losses and negative operating cash flows.
Changes versus the prior comparable period
- Q3 revenue declined $0.119 million year over year; nine-month revenue increased $0.733 million, reflecting Cipla Agreement revenue recognition.
- R&D expense fell $1.324 million in Q3 and $1.771 million over nine months. Management attributed the nine-month decline mainly to lower PUR3100 and PUR1800 spending, partly offset by higher PUR1900 costs.
- Nine-month G&A increased $0.397 million, primarily due to legal and professional services costs. Interest income rose to $0.675 million from $0.118 million over nine months.
- Net loss narrowed to $12.038 million from $14.620 million for the nine-month period. Operating cash use was broadly similar: $13.974 million versus $14.310 million.
- The company commenced its new Bedford headquarters lease in August 2023. It recorded a $9.323 million right-of-use asset and lease liability in exchange; base rent of approximately $0.1 million per month is expected to begin in December 2023 under the ten-year lease.
Outlook, developments and risks
- Management expects existing cash at September 30, 2023, together with spending prioritization and operational efficiencies, to fund operating and capital requirements for at least 12 months after the report date and into Q1 2025. Management cautions that assumptions may prove incorrect and additional capital may be needed; no assurance of financing is given.
- PUR1900’s Phase 2b study is ongoing, with topline data anticipated in the second half of 2024. The company missed the June 30, 2023 milestone for dosing 25% of patients, citing delayed foreign regulatory approvals and slower enrollment. By November 6, 2023, the 25% dosing threshold had been reached and the approvals had been obtained. Because topline data are expected after the June 30, 2024 milestone date, Pulmatrix expects it will not receive the accumulated Cipla holdback reimbursement.
- PUR3100 received FDA acceptance of its Phase 2 IND and a “study may proceed” letter in September 2023. The study is expected to begin only after financing or a partnership arrangement. Management is pursuing potential partners.
- PUR1800 has completed Phase 1b and related data analysis; the company plans to seek a partner to advance it to Phase 2.
- Under the Cipla Agreement, remaining research and development contract commitments were approximately $4.0 million, of which the company expects $2.0 million to be reimbursed by Cipla; $3.8 million was expected to be incurred over the next 12 months.
- Key risks include dependence on a single customer and collaborator, clinical and regulatory uncertainty, recurring losses and need for additional financing, trial enrollment and execution, manufacturing and commercialization challenges, intellectual-property protection, competition, and Nasdaq listing compliance. The filing reports no material pending legal proceedings. Disclosure controls were assessed as effective, with no material change in internal control over financial reporting during the quarter.
Important facts for investors to verify
- Whether PUR1900 enrollment and the anticipated second-half 2024 topline schedule remain on track, and the financial and collaboration consequences of the missed Cipla milestone.
- Whether Pulmatrix secures financing or a partner for PUR3100 and advances the planned Phase 2 study, and how its cash runway changes with spending and trial costs.
- Whether Cipla remains the sole source of recognized revenue and accounts receivable, and whether collaboration revenue and reimbursements continue as expected.
- Potential dilution: 3,652,285 common shares were outstanding at November 6, 2023; 1,161,493 warrants and 364,975 options were outstanding at September 30, 2023. These instruments were excluded from diluted loss per share as antidilutive.