Pulmatrix, Inc. — Q1 2021 Form 10-Q
Reporting period: Three months ended March 31, 2021. The filing was signed May 11, 2021. Pulmatrix is a clinical-stage biotechnology company developing inhaled therapies using its iSPERSE platform; it had no approved products or product-sales revenue.
Financial performance and position
| Metric | Q1 2021 | Q1 2020 / comparison |
|---|---|---|
| Revenue | $1.390 million | $2.762 million; down $1.372 million (about 50%) |
| Research and development expense | $3.856 million | $5.287 million; down $1.431 million |
| General and administrative expense | $1.619 million | $2.212 million; down $0.593 million |
| Total operating expenses | $5.475 million | $7.499 million |
| Loss from operations | $4.085 million | $4.737 million |
| Net loss | $4.104 million | $4.686 million |
| Basic and diluted loss per share | $0.09 | $0.23 |
| Net cash used in operating activities | $5.495 million | Net cash provided of $0.798 million |
Amounts are in U.S. dollars; financial-statement amounts are reported in thousands unless stated otherwise. The filing does not present a gross margin measure. Revenue came from collaboration and license arrangements and immaterial royalties, not product sales.
At March 31, cash and cash equivalents were $63.445 million, versus $31.657 million at year-end 2020; total current assets were $64.494 million and current liabilities $7.088 million. Total liabilities were $13.204 million, including deferred revenue and operating lease liabilities. No financial borrowings are shown on the presented balance sheet. The company reported a $238.573 million accumulated deficit. Management stated that cash at March 31 was expected to fund operating and capital needs for at least 12 months following the filing, while cautioning that estimates depend on assumptions and cash could be used sooner.
Material changes and financing
- Revenue declined by $1.372 million year over year, primarily reflecting lower revenue from the Cipla and JJEI arrangements.
- R&D expense fell mainly because of lower PUR1800 manufacturing costs and reduced Pulmazole Phase 2 spending after the trial was halted in 2020; higher PUR3100 preclinical and manufacturing costs partly offset the decline.
- Operating cash use increased from the prior-year period, when working-capital movements provided cash. Q1 2021 operating cash use reflected the net loss and cash outflows, including a $1.381 million decrease in deferred revenue.
- A February registered direct offering of 20 million shares generated $40.0 million gross and $37.079 million net proceeds after fees and expenses. The company also issued 1.3 million placement-agent warrants at a $2.50 exercise price. Shares outstanding rose to 56,249,062 at March 31 from 36,105,097 at year-end 2020.
Outlook, programs, and risks
- Management expects continued losses and increasing development costs over the coming years. Pulmatrix has no product revenue and expects to rely on financing, collaborations, licensing, or other funding sources as needed.
- Pulmazole/Cipla: COVID-19 disrupted and led to termination of the Phase 2 study in July 2020. After FDA discussions in January 2021, the company planned a longer Phase 2b study, subject to acceptable trial conditions and agreement on a plan and budget. On May 10, 2021, Pulmatrix alleged Cipla was in material breach for refusing to fund its agreed 50% share. Pulmatrix gave Cipla 30 days to reaffirm performance or face termination and potential reacquisition of Pulmazole rights for 25% of fair market value. The dispute could delay development, lead to arbitration, costs or damages, or affect Pulmatrix’s rights.
- PUR1800/JJEI: As of the filing, five patients had been dosed in a planned 15-patient Phase 1b COPD study; top-line data were expected in Q4 2021, with COVID-19-related enrollment delays possible. In April 2021, JJEI exercised its termination option, effective July 6, 2021. Rights to the licensed kinase-inhibitor portfolio, including PUR1800 and PUR5700, were expected to revert to Pulmatrix; the company intended to continue PUR1800 development. The filing states no expected financial impact from JJEI’s termination.
- COVID-19 remains a risk to clinical-trial enrollment, patient safety, study timing, operations, and access to capital. Other stated risks include clinical or regulatory setbacks, dependence on collaborators and third parties, financing needs, intellectual-property matters, and competition.
- Management reported effective disclosure controls and procedures as of quarter-end and no material changes in internal control over financial reporting during the quarter.
Important facts for investors to verify
- The outcome of the Cipla dispute, including whether Pulmatrix terminates the agreement, reacquires Pulmazole rights, or enters arbitration.
- The effective completion of JJEI’s termination and the status, cost, and financing of PUR1800 development after rights revert.
- Actual cash burn and runway against management’s estimate, particularly as trial and development spending changes.
- Clinical-trial timelines and results for Pulmazole, PUR1800, and PUR3100, including any continuing COVID-19 effects.
- Potential dilution from the 20-million-share offering, outstanding warrants, and options; the filing reported 24,440,848 warrants outstanding at March 31.