Pulmatrix, Inc. — Q1 2018 Form 10-Q
Reporting period: Three months ended March 31, 2018. Amounts are in thousands of dollars unless otherwise noted. Pulmatrix is a clinical-stage biotechnology company developing inhaled therapies using its iSPERSE platform; it had no approved products and no product-sales revenue.
Financial results and liquidity
- Revenue: $153, versus none in Q1 2017, from reimbursement of clinical-study costs under a Cystic Fibrosis Foundation Therapeutics award.
- Operating expenses: $5,267, up $1,955 year over year. Research and development was $3,221, up $1,549; general and administrative was $2,046, up $406.
- Operating loss and net loss: Operating loss was $5,114 versus $3,312; net loss was $5,221 versus $3,483. Basic and diluted net loss per share was $0.24 versus $0.21.
- Cash flow: Operating activities used $3,125, compared with $2,992 in Q1 2017. Financing provided $1,128, including $1,847 net proceeds from stock sales, partly offset by $719 of loan principal payments. Cash declined $1,997 to $1,553.
- Balance sheet and debt: At March 31, cash and cash equivalents were $1,553; total assets were $13,724; current liabilities were $6,196; and stockholders’ equity was $7,528. Working capital was negative $4,144. The term loan’s carrying amount was $2,524 and principal outstanding was $2,540; the loan was due July 1, 2018, with a $245 end-of-term charge.
- Margins: The filing does not provide a meaningful product gross margin; reported revenue was limited to clinical-study cost reimbursement.
Changes versus Q1 2017
- R&D spending increased primarily due to Pulmazole ($0.6 million), PUR1800 ($0.5 million), employment costs ($0.2 million), and scientific consulting ($0.2 million).
- G&A increased mainly from employment and patent costs, partly offset by lower legal and professional consulting costs.
- Net loss increased by $1,738, while operating cash use was broadly similar. Financing cash inflow was substantially lower than in Q1 2017.
Outlook, risks and notable items
- Management expected continued and increasing losses and stated that additional capital would be needed by the end of 2018. The company reported substantial doubt about its ability to continue as a going concern, citing recurring losses, negative operating cash flows, and reliance on additional financing.
- After quarter-end, the company completed an underwritten offering in April 2018 that generated approximately $15.9 million in gross proceeds before fees. It included common shares and pre-funded, Series A, and Series B warrants, creating potential dilution. Management said available funding was expected to support Pulmazole through a Phase 1b trial and PUR1800 toxicology work expected to conclude in Q4 2018, but not additional clinical work for pipeline programs.
- Key risks include clinical-trial and regulatory uncertainty, ability to obtain financing, manufacturing and commercialization challenges, competition, and intellectual-property protection. The filing reported no material legal proceedings and no material changes to the risk factors in the prior Form 10-K.
- Management said disclosure controls were effective and reported no material change in internal control over financial reporting during the quarter.
Important facts for investors to verify
- Cash runway and expected use of the April offering proceeds against the company’s stated development plans and need for further funding.
- Loan repayment and end-of-term charge, including whether the July 2018 maturity was met or refinanced.
- Terms, accounting classification, exercise and potential dilution from the April offering warrants.
- Clinical progress, costs, and timelines for Pulmazole and PUR1800, including whether planned milestones were achieved.
- The filing text has inconsistent date references in places, including a contents heading and note heading that refer to March 31, 2017; the cover and financial statements identify the quarter ended March 31, 2018.