Pulmatrix, Inc. — Q2 2021 Form 10-Q
Reporting period: Three and six months ended June 30, 2021. Pulmatrix is a clinical-stage biotechnology company developing inhaled therapies using its iSPERSE platform. It had no approved products and generated no product-sales revenue. Financial amounts below are in millions of dollars unless otherwise stated.
Financial performance and liquidity
| Metric | Q2 2021 | Q2 2020 | Six months 2021 | Six months 2020 |
|---|---|---|---|---|
| Revenue | $2.254 | $3.500 | $3.644 | $6.262 |
| Research and development expense | $4.541 | $3.184 | $8.397 | $8.471 |
| General and administrative expense | $1.562 | $1.490 | $3.181 | $3.702 |
| Operating loss | $(3.849) | $(1.174) | $(7.934) | $(5.911) |
| Net loss | $(3.852) | $(1.170) | $(7.956) | $(5.856) |
| Basic and diluted loss per share | $(0.07) | $(0.05) | $(0.16) | $(0.26) |
- Revenue declined approximately 36% year over year in Q2 and 42% for the six-month period. Revenue came principally from the Cipla and JJEI agreements, not product sales.
- Q2 R&D expense increased $1.357 million, mainly from PUR3100 preclinical and manufacturing costs, partly offset by lower Pulmazole clinical-trial spending. Six-month R&D was nearly flat; G&A declined $0.521 million.
- Cash and cash equivalents were $56.903 million at June 30, 2021, plus $0.204 million restricted cash. Current assets were $60.469 million and current liabilities $6.917 million. The balance sheet reports no conventional borrowings; liabilities include deferred revenue and lease obligations.
- Operating cash use was $12.019 million for the first half, versus $4.200 million in 2020. Investing cash use was $0.018 million; financing provided $37.283 million, primarily from an equity offering. Cash, cash equivalents and restricted cash increased $25.246 million to $57.107 million.
- Accumulated deficit was $242.425 million. Management said June 30 cash was expected to fund operating expenses and capital needs for at least 12 months following the report date, while warning actual cash needs could be higher.
- No gross margin is presented; the filing does not provide a clear product-margin measure. Revenues are collaboration/license-related, and the company remains loss-making.
Material changes and business developments
- In February 2021, Pulmatrix sold 20 million shares for gross proceeds of $40.0 million and net proceeds of $37.079 million. Shares outstanding rose from 36.105 million at year-end 2020 to 56.249 million at June 30, 2021. The company also established a $20 million at-the-market offering in May; no shares were sold under it through June 30.
- JJEI exercised its option to terminate the PUR1800 license agreement; termination became effective July 6, 2021, after quarter-end, and rights to the kinase-inhibitor portfolio reverted to Pulmatrix. Pulmatrix intends to continue PUR1800 development.
- Pulmatrix and Cipla are in a dispute over Cipla’s obligation to fund 50% of Pulmazole development costs. Mandatory dispute-resolution procedures were ongoing; the agreement remained in force as of the filing. Pulmatrix said it did not expect further Cipla-agreement revenue from the upfront payment until the dispute is resolved.
Outlook, risks and unusual items
- Pulmazole: The company planned a Phase 2b study with a 16-week dosing regimen, subject to acceptable COVID-19 conditions and agreement on the study budget. The filing cites a potential Q1 2022 start, but timing depends on Cipla and clinical-operating conditions.
- PUR1800: Eighteen patients had been dosed in a Phase 1b COPD study; top-line data was expected in Q1 2022. Six-month rat and nine-month dog toxicology studies were reported as showing the drug was safe and well tolerated with chronic dosing.
- PUR3100: Nonclinical pharmacokinetic and toxicology studies were underway; the company intended to begin a Phase 1/2 study in Q1 2022 and anticipated data in Q4 2022.
- Management expects continuing losses and increased development spending for several years and may need additional financing. Risks include clinical and regulatory uncertainty, COVID-19-related delays, dependence on collaborators and third parties, and the Cipla dispute.
- The 10-Q reports no material legal proceedings other than the described contractual dispute, no material off-balance-sheet arrangements, and no material change in internal controls.
Important facts for investors to verify
- Whether the Cipla dispute is resolved, who funds Pulmazole’s next study, and whether the agreement or Pulmatrix’s program rights change.
- Whether the PUR1800 and PUR3100 clinical milestones and data timelines remain achievable.
- Actual operating cash use and whether management’s stated 12-month liquidity expectation remains adequate as development spending evolves.
- Potential dilution from the outstanding warrants and options, and any future use of the $20 million ATM facility.
- Post-quarter developments associated with JJEI’s July 6 termination and the transition of PUR1800 development responsibilities.