Pulmatrix, Inc. — Q2 2023 Form 10-Q
Reporting period: Three and six months ended June 30, 2023. Financial statements are unaudited; dollar amounts below are in millions unless stated otherwise. Pulmatrix is a clinical-stage biopharmaceutical company developing inhaled therapies using its iSPERSE platform. It reported no product sales; revenue was generated primarily under its PUR1900 collaboration with Cipla.
Financial results and liquidity
| Metric | Q2 2023 | Q2 2022 | Six months 2023 | Six months 2022 |
|---|---|---|---|---|
| Revenue | $1.844 | $1.331 | $3.343 | $2.491 |
| Research and development | $4.165 | $4.337 | $8.039 | $8.486 |
| General and administrative | $1.670 | $1.553 | $3.880 | $3.527 |
| Operating loss | $(3.991) | $(4.559) | $(8.576) | $(9.522) |
| Net loss | $(3.816) | $(4.595) | $(8.264) | $(9.568) |
| Basic and diluted loss per share | $(1.04) | $(1.36) | $(2.26) | $(2.87) |
- Operating-loss margin was approximately -216% in Q2 2023 versus -343% in Q2 2022; for the first half it was approximately -257% versus -382%. These are calculated as operating loss divided by revenue.
- Cash and cash equivalents were $25.791 million at June 30, 2023; restricted cash was $1.625 million, for total cash, cash equivalents and restricted cash of $27.416 million. Cash and cash equivalents were $35.628 million at December 31, 2022.
- First-half operating cash use was $9.832 million; investing cash use was $0.058 million; financing provided $0.053 million. Total cash, cash equivalents and restricted cash declined $9.837 million.
- Total assets were $31.393 million; total liabilities were $7.944 million; stockholders’ equity was $23.449 million. The balance sheet does not list borrowings or debt.
- Accumulated deficit was $281.740 million. Management said available cash at June 30 was expected to fund operations and capital expenditures for at least 12 months after the filing date and into Q1 2025, based on assumptions including spending prioritization and operational efficiencies.
Changes versus prior comparable periods
- Q2 revenue increased $0.513 million and first-half revenue increased $0.852 million, attributed to the Cipla agreement.
- Operating losses narrowed in both periods, reflecting higher collaboration revenue and lower total operating expenses. First-half R&D expense declined $0.447 million, mainly from lower PUR3100 and PUR1800 spending, partly offset by higher PUR1900 and employment/operating costs.
- G&A expense rose $0.117 million in Q2 and $0.353 million in the first half, primarily due to professional services and legal costs.
- Interest income increased to $0.236 million in Q2 and $0.458 million in the first half, versus $0.015 million and $0.016 million, respectively, in 2022.
Outlook, developments and risks
- PUR1900: The Phase 2b study’s milestone requiring 25% of patients to be dosed by June 30, 2023 was missed, partly due to regulatory approval delays in foreign jurisdictions. The associated Cipla holdback reimbursement could be earned upon the next milestone, but management said the required topline summary is not expected by June 30, 2024. Topline data are anticipated in Q3 2024. Cipla accounted for 100% of recognized revenue in 2023, and one customer accounted for 100% of accounts receivable.
- PUR3100: The company submitted an IND in June 2023 for a proposed Phase 2 acute-migraine study. It expects the study to begin once financing or partnership arrangements are secured. Management described Phase 1 findings as showing rapid exposure and fewer gastrointestinal side effects than IV DHE.
- PUR1800: The company plans to seek a partner to advance the candidate into a Phase 2 study for acute exacerbations of COPD.
- Management expects significant expenses and operating losses for at least several years and says additional capital will be needed. Potential sources include equity, debt, third-party funding, collaborations and strategic alliances; there is no assurance financing or partnerships will be available on acceptable terms.
- Research and development contract commitments were approximately $4.8 million, of which $2.3 million was expected to be reimbursed under the Cipla agreement; $4.3 million was expected to be incurred over the next 12 months. Contracts may generally be modified or cancelled subject to conditions.
- The existing headquarters lease was due to expire August 31, 2023. The new Bedford headquarters lease commenced in July 2023; base rent of approximately $0.1 million per month was expected to begin in Q4 2023 under a ten-year noncancellable term.
- Other disclosed risks include recurring losses and negative operating cash flow, clinical and regulatory delays, manufacturing and collaboration risks, financing uncertainty, competition, intellectual-property protection, and Nasdaq listing compliance. The filing reported no material pending legal proceedings and no material off-balance-sheet arrangements.
Important facts for investors to verify
- Whether PUR1900 enrollment and the anticipated Q3 2024 topline data timeline remain achievable, and the financial implications of the missed milestone and foregone holdback payment.
- Whether Pulmatrix secures funding or a partner for PUR3100 and PUR1800, and how those plans affect cash runway and development spending.
- Cash burn, cash runway assumptions, and the timing and costs of the new headquarters lease and remaining development commitments.
- Revenue dependence on Cipla: all recognized revenue and all accounts receivable were concentrated in one customer.
- Potential dilution: 13,100 shares were sold through the ATM during the first half for net proceeds of about $53,000; 3,652,285 common shares were outstanding as of August 7, 2023. The filing also reported 1,161,493 outstanding warrants.