Pulmatrix, Inc. — 2018 Form 10-K Summary
Reporting period: Fiscal year ended December 31, 2018; the filing is an annual report, not a standalone fourth-quarter report. Unless stated otherwise, financial amounts below are in millions of dollars. Share and per-share data reflect the 1-for-10 reverse stock split effected in February 2019.
Business context
Pulmatrix is a clinical-stage biotechnology company developing inhaled therapies using its proprietary iSPERSE dry-powder delivery platform. It had no products approved for sale and no product-sales revenue. Its reported revenue primarily reflected reimbursement of clinical-study costs under a Cystic Fibrosis Foundation Therapeutics award.
Financial performance and liquidity
| Metric | 2018 | 2017 |
|---|---|---|
| Revenue | $0.153 | $0.335 |
| Research and development expense | $12.966 | $10.243 |
| General and administrative expense | $7.518 | $7.567 |
| Total operating expenses | $20.484 | $17.810 |
| Net loss | $(20.563) | $(18.056) |
| Net loss per share, basic and diluted | $(4.98) | $(9.32) |
| Net cash used in operating activities | $(16.761) | $(14.477) |
- Revenue fell by $0.182 million as the CFFT award concluded. R&D spending rose by $2.723 million, mainly due to increased Pulmazole and PUR1800 program costs and employment costs. Net loss increased by $2.507 million.
- Cash and cash equivalents were $2.563 million at year-end, down from $3.550 million. Working capital was $0.4 million; total current liabilities were $2.879 million. The filing does not provide a meaningful commercial gross margin, given the absence of product sales.
- Net cash provided by financing was $15.793 million, including $19.297 million of net equity proceeds and debt principal and end-of-term payments. The $7 million Hercules term loan was fully repaid by June 30, 2018; there was no loan balance at year-end.
- Year-end total liabilities were $2.879 million. Contracted R&D obligations were approximately $2.9 million, and remaining lease payments were $1.374 million through 2020.
Programs, changes, and outlook
- Pulmazole: The Phase 1/1b study was completed in 2018. The company reported that the candidate appeared safe and well tolerated in healthy volunteers and asthma patients. After a single inhaled dose, sputum analysis showed approximately 70-fold higher maximum lung concentration than oral Sporanox despite a one-tenth dose, and approximately 66-fold lower total systemic exposure. Pulmatrix planned to initiate a Phase 2 study in asthmatic patients with ABPA in 2019.
- PUR1800: Preclinical safety studies were completed in 2018. The company planned to progress formulation and process development and conduct a Phase 2a study in stable moderate-to-severe COPD patients, building on prior Janssen clinical work.
- PUR0200: Pulmatrix and Vectura mutually terminated their development agreement in December 2018 and ceased joint development. Pulmatrix stated it retained rights to PUR0200 worldwide.
- Funding and going concern: Management stated that existing resources were expected to support planned operations only into the second quarter of 2019 and were insufficient to sustain operations for at least 12 months from the filing date. The auditor’s report includes a going-concern explanatory paragraph. Pulmatrix raised approximately $3.7 million gross in equity financings after year-end, but said further funding was needed; availability and terms were uncertain. Without additional capital, it could delay or reduce development, seek partners earlier, or relinquish assets.
- The company reported a $0.069 million goodwill impairment charge in 2018. The auditor issued an unqualified opinion on the financial statements, while emphasizing the going-concern uncertainty. Management reported effective disclosure controls and internal control over financial reporting as of year-end.
Key investor verification points
- Confirm cash runway and the net proceeds, costs, and dilution from post-year-end financings, including subsequent warrant exercises and issuances.
- Track funding needs and execution of the planned Pulmazole Phase 2 study and PUR1800 development; these plans depend on obtaining additional capital.
- Review the Pulmazole Phase 1/1b results and whether the reported exposure findings translate into clinical benefit and acceptable safety in ABPA patients.
- Assess the implications of the Vectura agreement termination for PUR0200’s development, funding, and commercialization prospects.
- Monitor the going-concern risk, contracted R&D and lease commitments, and potential dilution from outstanding warrants and equity awards.