Pulmatrix, Inc. — 2021 Form 10-K
Reporting period: Fiscal year ended December 31, 2021. Filed March 29, 2022. Pulmatrix is a clinical-stage biotechnology company developing inhaled therapies using its iSPERSE dry-powder platform. It had no approved products and generated no product-sale revenue; reported revenue came from collaboration and license arrangements.
Financial performance and liquidity
| Metric | 2021 | 2020 |
|---|---|---|
| Revenue | $5.169 million | $12.634 million |
| Research and development expense | $15.382 million | $15.609 million |
| General and administrative expense | $6.377 million | $6.887 million |
| Goodwill impairment | $3.577 million | None |
| Operating loss | $20.167 million | $9.862 million |
| Net loss | $20.171 million | $19.308 million |
| Net loss attributable to common stockholders | $23.368 million | $19.308 million |
| Basic and diluted loss per share | $8.63 | $13.43 |
| Cash used in operating activities | $19.727 million | $12.483 million |
| Cash and cash equivalents at year-end | $53.840 million | $31.657 million |
Amounts are as reported; the filing retrospectively adjusted share and per-share data for a 1-for-20 reverse stock split effective February 28, 2022. No gross-margin measure is presented. The company reported an accumulated deficit of $254.640 million. It stated that available cash was expected to fund planned operations for at least 12 months after the filing date, but additional capital would be needed to pursue all objectives.
Year-end total current assets were $54.778 million and current liabilities were $4.442 million. Total liabilities were $11.368 million, including deferred revenue and operating lease liabilities; the balance sheet does not show a borrowing or debt balance. Cash, cash equivalents and restricted cash totaled $55.465 million. Financing activities provided $43.475 million in 2021, principally from equity offerings.
Material changes versus 2020
- Revenue fell $7.465 million, principally due to lower reimbursable costs and license-related revenue under the Cipla and JJEI arrangements.
- Operating loss increased by $10.305 million, reflecting lower revenue and the $3.577 million goodwill impairment. Net loss increased by $0.863 million; the comparison is affected by a $9.289 million warrant-inducement expense recorded in 2020.
- Operating cash outflow increased by $7.244 million. Year-end cash and cash equivalents rose by $22.183 million, supported by $43.475 million of financing cash inflows, including a February common-stock offering and a December preferred-stock offering.
- JJEI terminated its PUR1800 license agreement, effective July 6, 2021; rights to the kinase-inhibitor portfolio reverted to Pulmatrix. Cipla’s Pulmazole agreement was amended in November 2021.
Programs, outlook and key risks
- Pulmazole: The prior Phase 2 study was terminated in July 2020 after COVID-19 disrupted enrollment and study conduct. The company planned a 16-week Phase 2b study, with first dosing anticipated in Q1 2023 and topline data expected in mid-2024. Pulmazole has FDA Fast Track designation. Under the Cipla agreement, development costs and certain milestones are shared; missed milestones can trigger funding termination or rights-transfer/monetization provisions.
- PUR1800: The company reported after year-end that its Phase 1b study in 18 stable COPD patients was completed; preliminary results indicated tolerability without observed safety signals and low, consistent systemic exposure. Six- and nine-month rat and dog toxicology studies were also reported as supporting chronic dosing. These are preliminary findings, not evidence of efficacy in AECOPD.
- PUR3100: The company anticipated starting a Phase 1 study in Australia in Q3 2022, with topline data in Q4 2022, followed by a planned Phase 2 migraine study with dosing anticipated in Q2 2023. These were forward-looking targets, not completed milestones in this fiscal-year report.
- Funding and dilution: The February 2021 registered direct offering generated $37.1 million net. A December preferred-stock and warrant offering generated approximately $6.0 million net. The company also had an unused $20 million at-the-market facility at year-end. Preferred shares were convertible into common shares, and warrants and equity awards could add dilution.
- Principal risks: Recurring losses and operating cash burn; dependence on future financing; clinical, regulatory and manufacturing uncertainty; reliance on third-party CROs and manufacturers; possible COVID-19, enrollment and supply-chain delays; collaborator and milestone risks; and the uncertain protection and enforceability of intellectual property. Revenue recognition relies on estimates of costs to complete collaboration obligations; the auditor identified this as a critical audit matter. The audit opinion was unmodified; the auditor did not opine on internal-control effectiveness.
Investor verification checklist
- Check current cash, burn rate and financing needs against the filing’s stated 12-month runway expectation.
- Verify actual timing, enrollment, safety and efficacy results for the Pulmazole, PUR1800 and PUR3100 studies against the forward-looking timelines above.
- Review the amended Cipla agreement’s cost-sharing terms, development deadlines and consequences of missed milestones, as well as the implications of JJEI’s termination.
- Assess potential dilution from convertible preferred stock, outstanding warrants, equity awards and any use of the ATM facility.
- Reconcile collaboration revenue and deferred revenue, including the estimates underlying revenue recognition and the auditor’s critical audit matter.