Pulmatrix(PULM) - 2025 Q2 - Quarterly Report

PART I—FINANCIAL INFORMATION This section presents the company's unaudited condensed consolidated financial statements and management's discussion and analysis for the interim period Item 1. Condensed Consolidated Financial Statements (unaudited) This section presents the unaudited condensed consolidated financial statements, including balance sheets, statements of operations, stockholders' equity, and cash flows, along with detailed notes explaining the company's organization, accounting policies, and specific financial line items. It highlights the company's financial position and performance for the periods ended June 30, 2025, and December 31, 2024 Consolidated Balance Sheets This section presents the company's financial position, detailing assets, liabilities, and equity as of June 30, 2025, and December 31, 2024 | Metric | June 30, 2025 (unaudited, in thousands) | December 31, 2024 (in thousands) | | :-------------------------------- | :-------------------------------------- | :------------------------------- | | Cash and cash equivalents | $5,825 | $9,521 | | Total current assets | $6,142 | $9,920 | | Total assets | $6,152 | $9,943 | | Total current liabilities | $548 | $929 | | Warrant liability | $- | $67 | | Total liabilities | $548 | $996 | | Total stockholders' equity | $5,604 | $8,947 | - Total assets decreased by $3,791k from December 31, 2024, to June 30, 2025[11] - Cash and cash equivalents decreased by $3,696k during the six months ended June 30, 2025[11] Consolidated Statements of Operations This section outlines the company's financial performance, including revenues, expenses, and net loss for the three and six months ended June 30, 2025, and 2024 | Metric | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :--------------------------------------- | :---------------------------------------------- | :---------------------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | Revenues | $- | $1,552 | $- | $7,437 | | R&D expenses | $14 | $2,834 | $33 | $6,346 | | G&A expenses | $1,534 | $2,001 | $3,362 | $3,627 | | Loss on MannKind Transaction | $- | $2,618 | $- | $2,618 | | Net loss | $(1,549) | $(5,811) | $(3,357) | $(4,986) | | Net loss per share (basic & diluted) | $(0.42) | $(1.59) | $(0.92) | $(1.37) | - Revenues decreased significantly to $0 for both the three and six months ended June 30, 2025, compared to $1,552k and $7,437k respectively in 2024[14] - Research and development expenses saw a substantial reduction, from $2,834k to $14k for the three months and from $6,346k to $33k for the six months ended June 30, 2025[14] Consolidated Statements of Stockholders' Equity This section details changes in stockholders' equity, including net loss and stock-based compensation, for the three and six months ended June 30, 2025, and 2024 | Metric | June 30, 2025 (in thousands) | June 30, 2024 (in thousands) | | :---------------------- | :--------------------------- | :--------------------------- | | Total Stockholders' Equity | $5,604 | $13,310 | | Accumulated Deficit | $(300,513) | $(292,583) | | Stock-based compensation | $14 (6M) | $301 (6M) | - Total stockholders' equity decreased from $8,947k at January 1, 2025, to $5,604k at June 30, 2025, primarily due to net losses[17] Consolidated Statements of Cash Flows This section presents the company's cash inflows and outflows from operating, investing, and financing activities for the six months ended June 30, 2025, and 2024 | Cash Flow Activity | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :--------------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | Net cash used in operating activities | $(3,696) | $(6,396) | | Net cash used in investing activities | $- | $(398) | | Net decrease in cash, cash equivalents, and restricted cash | $(3,696) | $(6,794) | | Cash, cash equivalents and restricted cash — end of period | $5,835 | $13,851 | - Net cash used in operating activities decreased by $2,700k, from $(6,396)k in 2024 to $(3,696)k in 2025[20] - No cash was used in investing activities for the six months ended June 30, 2025, compared to $(398)k in the prior year[20] Notes to Condensed Consolidated Financial Statements This section provides detailed explanations and disclosures supporting the condensed consolidated financial statements, covering accounting policies, organization, and specific financial line items 1. Organization This note describes Pulmatrix as a biopharmaceutical company and details the ongoing merger agreement with Cullgen Inc., including key terms and conditions - Pulmatrix is a biopharmaceutical Company focused on developing novel inhaled therapeutic products using its patented iSPERSE™ technology[23] - The Company entered into a Merger Agreement with Cullgen Inc. on November 13, 2024, which was amended on April 7, 2025[24] - Upon closing, pre-Merger Cullgen stockholders are expected to own approximately 96.4% and pre-Merger Pulmatrix stockholders 3.6% of the combined Company on a fully-diluted basis[29] - The Merger is subject to customary closing conditions, including Nasdaq listing approval and approval from the China Security Regulatory Commission (CSRC). The term was extended to October 12, 2025, due to pending CSRC approval[31] - If the Merger is not consummated, the Company's board of directors may decide to pursue a dissolution and liquidation[34] 2. Summary of Significant Accounting Policies and Recent Accounting Standards This note outlines the basis of financial statement preparation, significant accounting policies, and the impact of recent accounting pronouncements - The condensed consolidated financial statements are unaudited and prepared in accordance with SEC rules and U.S. GAAP, with certain information condensed or omitted[35][36] - The Company's future operations are highly dependent on the success of the Merger. If not consummated, existing cash is expected to fund operations for at least twelve months, but substantial additional funding would be needed for program development[37] - No revenue was recognized for the three and six months ended June 30, 2025. For the same periods in 2024, revenue from one customer accounted for 61% and 89% of total revenue, respectively[42] - The Company is evaluating the impact of new accounting pronouncements ASU 2023-09 (Income Taxes) and ASU 2024-03 (Expense Disaggregation Disclosures) on its annual and consolidated financial statements[45][46] 3. Prepaid Expenses and Other Current Assets This note provides a breakdown of prepaid expenses and other current assets, highlighting changes between reporting periods | Category | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :------------------ | :--------------------------- | :------------------------------- | | Insurance | $228 | $200 | | Software and hosting costs | $4 | $19 | | Other | $85 | $180 | | Total | $317 | $399 | - Total prepaid expenses and other current assets decreased by $82k from $399k at December 31, 2024, to $317k at June 30, 2025[48] 4. Accrued Expenses and Other Current Liabilities This note details the composition and changes in accrued expenses and other current liabilities, including legal and patent costs | Category | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :------------------ | :--------------------------- | :------------------------------- | | Legal and patents | $120 | $11 | | Wages and incentives | $30 | $38 | | Other | $14 | $71 | | Total | $164 | $120 | - Total accrued expenses and other current liabilities increased by $44k from $120k at December 31, 2024, to $164k at June 30, 2025, primarily due to an increase in legal and patent expenses[49] 5. Common Stock This note describes the company's common stock, including its At-The-Market sales agreement and share issuance activities - The Company has an At-The-Market (ATM) Sales Agreement to issue and sell up to $20.0 million of common stock, subject to public float limitations[50] - No shares of common stock were sold under the ATM Sales Agreement during the six months ended June 30, 2025, and 2024[52] 6. Warrants This note details the company's outstanding warrants, their classification, exercise prices, and the re-measurement of warrant liability - The warrant liability was re-measured to $0 as of June 30, 2025, resulting in a $67k gain recorded in the consolidated statements of operations for the six months ended June 30, 2025[53] | Classification | Adjusted Exercise Price | Expiration Date | Number of Shares Underlying Warrants | | :------------- | :---------------------- | :-------------- | :----------------------------------- | | Equity | $14.99 | Dec 15, 2026 | 36,538 | | Equity | $13.99 | Dec 17, 2026 | 281,047 | | Equity | $49.99 | Feb 11, 2026 | 65,003 | | Liability | $35.99 | July 14, 2025 | 90,743 | | Liability | $44.99 | July 14, 2025 | 10,939 | | Liability | $35.99 | July 14, 2025 | 77,502 | | Liability | $44.99 | July 14, 2025 | 21,846 | | Liability | $35.99 | July 14, 2025 | 334,800 | | Total | | | 918,418 | - Warrants to purchase up to 15,955 shares of common stock expired during the six months ended June 30, 2025[55] 7. Stock-based Compensation This note outlines the company's stock-based compensation plan, available shares for grant, and the expenses recognized for stock-based awards - As of June 30, 2025, 963,854 shares remained available for future grant under the Incentive Plan[56] - No options were granted or exercised during the six months ended June 30, 2025[57] | Expense Category | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :------------------------ | :---------------------------------------------- | :---------------------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | Research and development | $- | $29 | $- | $145 | | General and administrative | $6 | $74 | $14 | $156 | | Total | $6 | $103 | $14 | $301 | 8. Commitments and Contingencies This note discloses the company's material noncancellable commitments and any pending legal proceedings - As of June 30, 2025, the Company had no material noncancellable commitments related to research and development activities[59] - The Company is not aware of any pending legal proceedings that would reasonably be expected to have a material impact on its financial position or results of operations[60] 9. Income Taxes This note explains the company's income tax position, including the absence of tax expense due to operating losses and the valuation allowance against deferred tax assets - The Company had no income tax expense for the three and six months ended June 30, 2025, and 2024, due to operating losses incurred since inception[61] - A full valuation allowance was recorded against deferred tax assets as of June 30, 2025, and December 31, 2024, as it is more likely than not that the Company will not recognize the benefits of these assets[62] - The Company has no material uncertain tax positions as of June 30, 2025, and December 31, 2024[63] 10. Net Loss Per Share This note details the calculation of basic and diluted net loss per share, including the impact of potentially dilutive securities - Basic and diluted net loss per share were the same for the three and six months ended June 30, 2025, and 2024, as the effect of potentially dilutive securities would have been anti-dilutive[65] | Potentially Dilutive Securities | Three and Six Months Ended June 30, 2025 | Three and Six Months Ended June 30, 2024 | | :------------------------------ | :--------------------------------------- | :--------------------------------------- | | Options to purchase common stock | 33,858 | 311,437 | | Warrants to purchase common stock | 918,418 | 1,001,048 | | Total | 952,276 | 1,312,485 | 11. Segment Reporting This note clarifies that the company operates in a single reportable segment and how the chief operating decision maker assesses performance - The Company operates in a single reportable segment[66] - The chief executive officer, as the chief operating decision maker, reviews financial information on a consolidated basis and uses net loss, operating forecasts, and clinical results to assess financial performance and allocate resources[67] 12. Subsequent Events This note discloses events occurring after the balance sheet date that may require adjustment or disclosure in the financial statements - The Company has evaluated all subsequent events through the date of financial statement issuance and concluded that no other events require disclosure beyond those already presented[68] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on the company's financial condition, results of operations, and liquidity. It discusses the ongoing merger with Cullgen, the strategic shift in product development, and the financial impact of these changes, including significant reductions in revenue and operating expenses Forward-Looking Statements This section cautions readers about forward-looking statements, outlining inherent risks and uncertainties related to business plans and the merger - This report contains forward-looking statements regarding business plans, strategies, and anticipated operating results, which are subject to risks and uncertainties[70] - Key risks include the failure to satisfy closing conditions for the Merger with Cullgen, uncertainties in timing and costs, potential termination fees, and the outcome of legal proceedings[70] - Additional risks, should product development resume, include recurring losses, inability to carry out R&D, manufacturing challenges, and difficulties in obtaining financing[70][76] Overview This section provides a high-level summary of the company's business, the ongoing merger agreement, strategic alternatives, and therapeutic candidates Business This section describes Pulmatrix's core business as a biopharmaceutical company developing inhaled therapeutic products using its iSPERSE™ technology - Pulmatrix is a biopharmaceutical Company focused on developing novel inhaled therapeutic products for migraine and respiratory diseases using its patented iSPERSE™ technology[73] - The iSPERSE™ dry powder delivery platform is engineered for efficient dispersibility and delivery to the airways, suitable for various drug substances and inhaler technologies[74] - Advantages of iSPERSE™ include reduced total inhaled powder mass, enhanced dosing efficiency, reduced cost of goods, and improved safety and tolerability profiles[75] Merger Agreement and Strategic Alternatives This section details the status of the merger agreement with Cullgen Inc., including approvals, potential outcomes, and strategic implications - Pulmatrix entered into a Merger Agreement with Cullgen Inc. on November 13, 2024, which was approved by Pulmatrix stockholders on June 16, 2025[77][78] - The Merger is subject to Nasdaq listing approval and approval from the China Security Regulatory Commission (CSRC). The term was extended to October 12, 2025, due to pending CSRC approval[78] - If the Merger is completed, Cullgen's business will continue as the combined Company, and Pulmatrix will seek opportunities to monetize its iSPERSE™ technology and existing clinical assets[79] - If the Merger is not consummated, the Pulmatrix board of directors may decide to pursue a dissolution and liquidation of the Company[80] Therapeutic Candidates This section introduces the company's key therapeutic candidates, PUR3100, PUR1800, and PUR1900, and their development status PUR3100 This section describes PUR3100, an inhaled DHE formulation for acute migraine, highlighting its clinical development and safety profile - PUR3100 is an iSPERSE™ formulation of dihydroergotamine (DHE) for the treatment of acute migraine, aiming to be the first orally inhaled DHE treatment[91] - Phase 1 study results showed PUR3100 was safe and well-tolerated, achieving peak exposures in the targeted therapeutic range with a Tmax of five minutes and a lower incidence of nausea and no vomiting compared to IV DHE[86][95][100] - The FDA accepted the Investigational New Drug (IND) application for PUR3100 and issued a 'study may proceed' letter for a Phase 2 study in September 2023, but initiation is contingent on financing or partnership arrangements[87][97] PUR1800 This section details PUR1800, a Narrow Spectrum Kinase Inhibitor for AECOPD, outlining its clinical study results and potential for chronic dosing - PUR1800 is a Narrow Spectrum Kinase Inhibitor, engineered with iSPERSE™ technology, being developed for the treatment of acute exacerbations in chronic obstructive pulmonary disease (AECOPD)[101] - A Phase 1b clinical study demonstrated PUR1800 was well tolerated with no observed safety signals and resulted in low and consistent systemic exposure when administered via oral inhalation[104] - Chronic toxicology studies support the potential for chronic dosing of PUR1800, which could expand its potential indications beyond AECOPD[105] PUR1900 This section describes PUR1900, an inhaled itraconazole formulation, and the development and commercialization agreement with Cipla - Pulmatrix has a Development and Commercialization Agreement with Cipla for PUR1900, an inhaled iSPERSE™ formulation of itraconazole for pulmonary indications like ABPA[107] - Under a recent amendment, Cipla exclusively handles development and commercialization outside the United States, bearing all costs and profits, with Pulmatrix receiving 2% royalties on any potential future net sales by Cipla in those territories[108][111] - Cipla has received approval to proceed with Phase 3 trials for inhaled itraconazole dry powder formulation outside the United States[111] Financial Overview This section provides a summary of the company's financial performance, including revenues, research and development, and general and administrative expenses Revenues This section discusses the company's revenue recognition, noting the absence of revenues for the current period and the source of past revenues - No revenues were recognized for the six months ended June 30, 2025[112] - Revenues for the three and six months ended June 30, 2024, were primarily from the Cipla Agreement related to the PUR1900 program, for which wind-down activities have been completed[112] Research and Development Expenses This section analyzes the significant decrease in research and development expenses and future funding requirements for program development - Research and development expenses decreased significantly due to reduced employment and operating costs following the MannKind Transaction and the completion of PUR1900 wind-down activities[115][121][125] - Future development of existing programs or new iSPERSE™ opportunities will require additional funding and is expected to utilize external resources[115][116] General and Administrative Expenses This section explains the changes in general and administrative expenses, attributing decreases to reduced operating costs and increases to merger-related expenses - General and administrative expenses decreased primarily due to reduced employment and other operating costs[122][126] - This decrease was partially offset by costs related to the ongoing Merger[122][126] Critical Accounting Estimates This section highlights the importance of management's estimates and judgments in financial reporting and the potential for actual results to differ - The preparation of condensed consolidated financial statements requires management to make estimates and judgments that affect reported amounts of assets, liabilities, revenues, and expenses[118] - Actual results may differ from these estimates under different assumptions or conditions[118] Results of Operations This section provides a detailed comparison of the company's financial performance for the three and six months ended June 30, 2025, and 2024 Comparison of the Three Months Ended June 30, 2025, and 2024 This section compares key financial metrics for the three-month periods, highlighting changes in revenues, expenses, and net loss | Metric | 2025 (in thousands) | 2024 (in thousands) | Change (in thousands) | | :---------------------- | :------------------ | :------------------ | :-------------------- | | Revenues | $- | $1,552 | $(1,552) | | Research and development | $14 | $2,834 | $(2,820) | | General and administrative | $1,534 | $2,001 | $(467) | | Loss from operations | $(1,548) | $(5,901) | $4,353 | | Net loss | $(1,549) | $(5,811) | $4,262 | - Revenues decreased by $1.6 million due to the completion of the PUR1900 Phase 2b clinical trial wind-down[120] - Research and development expenses decreased by approximately $2.8 million, primarily due to reduced employment costs after the MannKind Transaction and lower costs for the PUR1900 program[121] Comparison of the Six Months Ended June 30, 2025, and 2024 This section compares key financial metrics for the six-month periods, detailing changes in revenues, expenses, and net loss | Metric | 2025 (in thousands) | 2024 (in thousands) | Change (in thousands) | | :---------------------- | :------------------ | :------------------ | :-------------------- | | Revenues | $- | $7,437 | $(7,437) | | Research and development | $33 | $6,346 | $(6,313) | | General and administrative | $3,362 | $3,627 | $(265) | | Loss from operations | $(3,395) | $(5,154) | $1,759 | | Net loss | $(3,357) | $(4,986) | $1,629 | - Revenues decreased by $7.4 million, primarily due to the completion of the PUR1900 Phase 2b clinical trial wind-down[124] - Research and development expenses decreased by approximately $6.3 million, mainly due to reduced employment costs after the MannKind Transaction and lower costs for the PUR1900, PUR3100, and PUR1800 programs[125] Liquidity and Capital Resources This section assesses the company's financial liquidity, cash position, accumulated deficit, and future capital requirements - The Company incurred an accumulated deficit of $300.5 million through June 30, 2025[127] - Cash and cash equivalents totaled $5.8 million as of June 30, 2025[127] - Existing cash and cash equivalents are expected to fund corporate operating expenses for at least the next 12 months, but additional capital will be needed for program development[129] | Cash Flow Activity | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | | :--------------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | Net cash used in operating activities | $(3,696) | $(6,396) | | Net cash used in investing activities | $- | $(398) | | Net decrease in cash, cash equivalents, and restricted cash | $(3,696) | $(6,794) | - No shares of common stock were sold under the At The Market Offering Agreement during the six months ended June 30, 2025, and 2024[137] Known Trends, Events and Uncertainties This section discusses the inherent risks and uncertainties facing the biopharmaceutical industry, including the need for regulatory approvals and additional capital - The Company is subject to risks common in the biopharmaceutical industry, including those related to completing preclinical studies and clinical trials, receiving regulatory approvals, competition, and securing additional capital[138] - Should product development resume, significant additional research and development efforts, capital, personnel, infrastructure, and compliance reporting would be required[138] - It is uncertain when, if ever, the Company would realize revenue from product sales[138] Item 3. Quantitative and Qualitative Disclosures About Market Risk This section states that the company has no material market risk disclosures to report - This item is not applicable to the Company[139] Item 4. Controls and Procedures This section details the effectiveness of the company's disclosure controls and procedures and confirms no material changes in internal controls over financial reporting during the quarter Disclosure Controls and Procedures The Principal Executive Officer and Principal Financial Officer concluded that the Company's disclosure controls and procedures were effective as of June 30, 2025 - The Principal Executive Officer and Principal Financial Officer concluded that the Company's disclosure controls and procedures were effective as of June 30, 2025[140] - Management recognizes that controls provide only reasonable assurance and applies judgment in evaluating their cost-benefit relationship[141] Changes in Internal Controls over Financial Reporting This section confirms no material changes in internal controls over financial reporting during the quarter ended June 30, 2025 - There were no changes in internal control over financial reporting during the quarter ended June 30, 2025, that materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting[142] PART II—OTHER INFORMATION This section provides additional disclosures beyond the financial statements, covering legal proceedings, risk factors, equity sales, and other relevant information Item 1. Legal Proceedings This section confirms that the company is not currently involved in any material legal proceedings or aware of any threatened litigation that would significantly impact its financial position or operations - The Company is not aware of any material legal proceedings, threatened or pending litigation, or proceedings contemplated by governmental authorities that would reasonably be expected to have a material impact on its financial position or results of operations[145] - No directors, officers, affiliates, or major stockholders are party to adverse material proceedings or have a material interest adverse to the Company[146] Item 1A. Risk Factors This section directs readers to the comprehensive 'Risk Factors' discussion in the company's Annual Report on Form 10-K for a detailed understanding of the risks associated with investing in its common stock - Investing in the Company's common stock involves a high degree of risk[147] - Readers should carefully consider the risks and uncertainties described in Part I, Item 1A of the Annual Report on Form 10-K for the year ended December 31, 2024[147] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section reports that there were no unregistered sales of equity securities or issuer purchases of equity securities during the period covered by this report - There were no unregistered sales of equity securities during the period[148] - There were no issuer purchases of equity securities during the period[149] Item 3. Defaults Upon Senior Securities This section states that the company has no defaults upon senior securities to report - There are no defaults upon senior securities[151] Item 4. Mine Safety Disclosures This section indicates that mine safety disclosures are not applicable to the company - This item is not applicable to the Company[152] Item 5. Other Information This section provides an update on the pending merger with Cullgen, specifically noting that approval from the China Security Regulatory Commission (CSRC) is still outstanding, leading to an extension of the merger agreement term - Approval from the China Security Regulatory Commission (CSRC) to complete the Merger is still pending as of the filing date[153] - Pulmatrix and Cullgen mutually agreed to extend the term of the Merger Agreement by 60 days, from August 13, 2025, to October 12, 2025[153] - There can be no assurance that CSRC approval will be received prior to the extended term end date[153] Item 6. Exhibits This section refers readers to the 'Index to Exhibits' for a complete list of documents filed or furnished as part of this Quarterly Report on Form 10-Q - See the 'Index to Exhibits' following the signature page for a list of exhibits filed or furnished with this Quarterly Report on Form 10-Q[154] SIGNATURES This section contains the official signatures, certifying the due authorization and filing of the report on behalf of Pulmatrix, Inc - The report was signed on August 6, 2025, by Peter Ludlum, Interim Chief Executive Officer and Interim Chief Financial Officer[158] INDEX TO EXHIBITS This section provides a detailed list of all exhibits accompanying the Form 10-Q, including amendments to the merger agreement and various certifications - The index lists exhibits such as Amendment No. 1 to the Agreement and Plan of Merger and Reorganization, and certifications pursuant to the Sarbanes-Oxley Act[160]