Pulmatrix, Inc. — Q3 2018 Form 10-Q
Reporting period: Quarter and nine months ended September 30, 2018. Amounts below are in millions of dollars unless otherwise noted; financial statements are unaudited. Pulmatrix is a clinical-stage biotechnology company developing inhaled therapeutics using its iSPERSE platform. It had no approved products or product-sale revenue.
Financial performance
| Metric | Q3 2018 | Q3 2017 | Nine months 2018 | Nine months 2017 |
|---|---|---|---|---|
| Revenue | $0 | $0.335 | $0.153 | $0.335 |
| Research and development | $3.056 | $2.618 | $10.290 | $7.654 |
| General and administrative | $1.769 | $2.021 | $5.930 | $5.727 |
| Total operating expenses | $4.825 | $4.639 | $16.220 | $13.381 |
| Operating loss | $(4.825) | $(4.304) | $(16.067) | $(13.046) |
| Net loss | $(4.816) | $(4.452) | $(16.225) | $(13.532) |
| Basic and diluted net loss per share | $(0.10) | $(0.22) | $(0.42) | $(0.72) |
Revenue consisted of clinical-study cost reimbursement, primarily from a Cystic Fibrosis Foundation Therapeutics award supporting Pulmazole; there were no product sales. Product margins are not applicable, and the filing does not report a meaningful operating margin.
Cash, liquidity, and debt
- At September 30, cash and cash equivalents were $3.806 million, working capital was $1.069 million, and accumulated deficit was $190.227 million. Total assets were $16.285 million; current liabilities were $3.651 million.
- Operating cash use for the first nine months was $12.596 million, versus $11.265 million in 2017. Investing cash use was $0.008 million; financing provided $12.860 million. Cash increased $0.256 million from year-end 2017.
- The company raised $16.364 million net from common-stock and pre-funded-warrant issuances during the nine-month period. It repaid its Hercules term loan in full in June 2018, including a $0.245 million end-of-term charge; no debt remained at September 30.
Changes, outlook, and risks
- Q3 R&D expense rose $0.438 million year over year, largely from increased PUR1800 spending, partly offset by lower Pulmazole spending. Nine-month R&D rose $2.636 million, reflecting higher Pulmazole and PUR1800 program, consulting, and employment costs.
- Q3 G&A fell $0.252 million, primarily from lower consulting and employment costs, partly offset by higher legal and patent costs. Nine-month G&A increased $0.203 million.
- Nine-month net loss increased $2.693 million from 2017. The lower loss per share reflected a substantially higher weighted-average share count after financing; shares outstanding were 46,927,221 at September 30, 2018, versus 21,047,498 at December 31, 2017.
- Management said additional capital would be required by the end of 2018 to continue operations at then-current spending levels. The filing states substantial doubt about the company’s ability to continue as a going concern within one year from filing. Management said existing funds were expected to support Pulmazole through the Phase Ib final report and preparation for a planned Phase II trial, and the PUR1800 toxicology-study final report, but not further clinical work across the pipeline.
- Management expected losses and expenses to rise as development advances, including planned Pulmazole Phase II work and PUR1800 development. Additional financing might not be available on acceptable terms or at all; alternatives could include delaying or reducing programs, seeking earlier-stage collaborators, or disposing of rights on unfavorable terms. Equity financing could materially dilute shareholders.
- The April offering materially expanded potential dilution: 52,584,440 warrants were outstanding at quarter-end. Series A warrants expired October 3–4, 2018; Series B warrants had five-year terms. No material legal proceedings were reported. Management concluded disclosure controls were effective and reported no material changes in internal control over financial reporting.
Important facts for investors to verify
- Whether Pulmatrix obtained additional funding after September 30, 2018, and the resulting effect on liquidity, dilution, and going-concern risk.
- Actual cash runway and spending against the stated Pulmazole and PUR1800 milestone assumptions.
- Clinical progress, timing, and funding needs for Pulmazole and PUR1800, including any changes to planned trials or studies.
- Post-quarter warrant exercises or expirations and the fully diluted share count.
- Whether operating costs, clinical reimbursement revenue, and cash burn developed as management anticipated.