Pulmatrix, Inc. — Q1 2022 Form 10-Q
Reporting period: Three months ended March 31, 2022; interim financial statements are unaudited. Pulmatrix is a clinical-stage biotechnology company developing inhaled therapies using its iSPERSE dry-powder delivery platform. It reported no product-sales revenue.
Financial performance and position
| Metric | Q1 2022 | Q1 2021 / prior date |
|---|---|---|
| Revenue | $1.160 million | $1.390 million |
| Research and development expense | $4.149 million | $3.856 million |
| General and administrative expense | $1.974 million | $1.619 million |
| Operating loss | $4.963 million | $4.085 million |
| Net loss | $4.973 million | $4.104 million |
| Basic and diluted loss per share | $1.51 | $1.78 |
| Net cash used in operating activities | $6.144 million | $5.495 million |
| Cash and cash equivalents, March 31 | $47.534 million | $53.840 million at Dec. 31, 2021 |
| Total assets / total liabilities, March 31 | $54.303 million / $11.546 million | $58.817 million / $11.368 million at Dec. 31, 2021 |
Amounts are in U.S. dollars; financial statement figures are in thousands except per-share data. Restricted cash of $1.625 million brings cash, cash equivalents and restricted cash to $49.159 million. Operating cash burn increased year over year. The balance sheet reports operating lease liabilities totaling $1.996 million; it does not present a separate borrowing or debt balance. No gross-margin measure is reported, and product sales have not begun.
Material changes and notable items
- Revenue decreased $230,000 year over year. Q1 2022 revenue was substantially from Cipla; in Q1 2021, revenue included $0.6 million from Cipla and $0.8 million from the JJEI agreement. Cipla revenue rose from $0.6 million to $1.2 million, while JJEI revenue did not recur.
- Operating expenses increased $648,000, with higher employment, rent, consulting, legal, audit and public-company costs partly offset by lower program-related preclinical, clinical and manufacturing spending.
- Cash and cash equivalents declined $6.306 million from year-end when considering cash flows, including restricted cash. Financing cash flow was a $152,000 use in Q1 2022; Q1 2021 included $37.283 million of financing inflows.
- A 1-for-20 reverse stock split took effect February 28, 2022; share and per-share information was retrospectively adjusted. Preferred shares were converted in part to common stock during the quarter. Common shares outstanding were 3,310,922 at March 31 and 3,387,172 as of May 9.
Outlook, programs and risks
- Management expects cash and cash equivalents at March 31 to fund projected operating expenses and capital expenditures into Q2 2024, while cautioning that assumptions may prove inaccurate and capital could be used sooner. The company expects continuing and increasing losses and may need additional financing.
- Pulmazole: management anticipated Phase 2b dosing in Q1 2023, with topline data expected mid-2024. Contract milestones include dosing 25% of Phase 2b patients by June 30, 2023 and delivering topline results by June 30, 2024. The prior Phase 2 study was terminated in 2020 amid COVID-related enrollment and conduct difficulties. Cipla collaboration rights, cost-sharing, and milestone provisions may affect development.
- PUR1800: Phase 1b topline data received in Q1 2022 indicated tolerability and no observed safety signals, with low and consistent systemic exposure. Further analysis was ongoing; no Phase 2 start date is specified in the filing.
- PUR3100: management anticipated initiating a Phase 1 study in Australia in Q3 2022 and topline data in Q4 2022. These are expectations, not guarantees, and depend on development and regulatory progress.
- Risks include clinical and regulatory failure or delay, COVID-related disruption, reliance on collaborators, manufacturing and intellectual-property challenges, competition, financing needs, and stock-price volatility. One customer accounted for 99% of Q1 revenue and 99% of accounts receivable at March 31.
- The company reported approximately $148,000 of remaining R&D contract commitments and no material pending legal proceedings. Its current headquarters lease expires June 2023; a new 10-year lease is expected to commence in May 2023, with base rent of $101,000 per month and annual 3% increases. Nasdaq minimum-bid compliance was restored in March 2022. Management assessed disclosure controls as effective.
Key facts for investors to verify
- Whether cash burn and development spending remain consistent with management’s runway estimate into Q2 2024, and whether additional financing or dilution will be required.
- Progress against the Pulmazole enrollment and data milestones, and the effect of Cipla’s collaboration terms and cost-sharing arrangements.
- Full PUR1800 Phase 1b results and subsequent development plans; actual PUR3100 trial timing and results versus stated expectations.
- Revenue and receivables concentration in a single customer, and the continuing contribution of collaboration revenue versus product sales.
- Expected costs and obligations associated with the planned headquarters move and new long-term lease.