Pulmatrix(PULM) - 2022 Q3 - Quarterly Report

PART I — FINANCIAL INFORMATION Item 1. Condensed Consolidated Financial Statements This section presents the unaudited condensed consolidated financial statements for the three and nine months ended September 30, 2022, detailing financial position, operational performance, and cash flows Consolidated Balance Sheets Consolidated Balance Sheet Highlights (in thousands) | Metric | September 30, 2022 | December 31, 2021 | | :--- | :--- | :--- | | Cash and cash equivalents | $40,683 | $53,840 | | Total current assets | $43,225 | $54,778 | | Total assets | $46,450 | $58,817 | | Total liabilities | $11,404 | $11,368 | | Total stockholders' equity | $35,046 | $47,449 | Consolidated Statements of Operations Statement of Operations Highlights (in thousands, except per share data) | Metric | Three Months Ended Sep 30, 2022 | Three Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2021 | | :--- | :--- | :--- | :--- | :--- | | Revenues | $1,872 | $1,069 | $4,363 | $4,713 | | Research and development | $5,287 | $4,026 | $13,773 | $12,423 | | General and administrative | $1,685 | $1,656 | $5,212 | $4,837 | | Goodwill impairment | $0 | $3,577 | $0 | $3,577 | | Loss from operations | $(5,100) | $(8,190) | $(14,622) | $(16,124) | | Net loss | $(5,052) | $(8,184) | $(14,620) | $(16,140) | | Net loss per share | $(1.45) | $(2.91) | $(4.32) | $(6.08) | Consolidated Statements of Cash Flows Cash Flow Highlights for the Nine Months Ended September 30 (in thousands) | Metric | 2022 | 2021 | | :--- | :--- | :--- | | Net cash used in operating activities | $(14,310) | $(15,331) | | Net cash used in investing activities | $(77) | $(118) | | Net cash provided by financing activities | $1,230 | $37,283 | | Net (decrease)increase in cash | $(13,157) | $21,834 | | Cash, cash equivalents and restricted cash — end of period | $42,308 | $53,695 | Notes to Condensed Consolidated Financial Statements - The company is a clinical-stage biotechnology company focused on developing inhaled therapeutic products using its proprietary iSPERSE dry powder delivery platform[19] - A 1-for-20 reverse stock split was effectuated on February 28, 2022. All common stock and per share data have been retrospectively restated for all periods presented[20] - For the nine months ended September 30, 2022, one customer (Cipla) accounted for 99% of revenue[25] - The collaboration agreement with Cipla for PUR1900 is the primary source of revenue. For the nine months ended September 30, 2022, the company recognized $4.4 million in revenue related to this agreement. As of September 30, 2022, the remaining unsatisfied performance obligation was $6.2 million[35][44] - During the nine months ended September 30, 2022, the company sold 252,013 shares of common stock under an At-The-Market (ATM) Sales Agreement, resulting in net proceeds of approximately $1.4 million[49] - As of September 30, 2022, the company had aggregate commitments of approximately $4.4 million for research and development activities, of which it expects to be reimbursed $1.9 million by partners[58] - The company executed a lease for a new corporate headquarters in Bedford, MA, which is expected to commence in May 2023 with a ten-year term[63] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's clinical pipeline progress, including PUR1900, PUR1800, and PUR3100, and analyzes financial results, highlighting increased R&D expenses and liquidity, with cash expected to fund operations into Q2 2024 Business Overview and Pipeline Update - Pulmatrix is a clinical-stage biotech company developing inhaled therapeutics based on its proprietary iSPERSE dry powder delivery technology[76][77] - PUR1900 (for ABPA): In partnership with Cipla, a Phase 2 study is anticipated to begin dosing subjects in Q1 2023, with top-line data expected in mid-2024[82][91] - PUR1800 (for AECOPD): A Phase 1b study was completed, and top-line data received in Q1 2022 showed the drug was well tolerated. Results will be submitted for presentation at a medical conference in 2023 and will inform a potential Phase 2 study[92][94] - PUR3100 (for acute migraine): Patient dosing in a Phase 1 trial was completed in September 2022, with top-line data anticipated to be released in early Q1 2023[100] Results of Operations Comparison of Three Months Ended September 30 (in thousands) | Metric | 2022 | 2021 | Change | Reason for Change | | :--- | :--- | :--- | :--- | :--- | | Revenues | $1,872 | $1,069 | $803 | Increase primarily due to revenue from the Cipla Agreement for the PUR1900 program | | R&D Expenses | $5,287 | $4,026 | $1,261 | Increase due to higher clinical costs for the PUR1900 program, partially offset by decreased spend on the PUR1800 program | | Net Loss | $(5,052) | $(8,184) | $3,132 | Net loss decreased mainly due to higher revenue and the absence of a goodwill impairment charge recorded in 2021 | Comparison of Nine Months Ended September 30 (in thousands) | Metric | 2022 | 2021 | Change | Reason for Change | | :--- | :--- | :--- | :--- | :--- | | Revenues | $4,363 | $4,713 | $(350) | Decrease due to no revenue from the PUR1800 program in 2022, partially offset by higher revenue from the PUR1900 program | | R&D Expenses | $13,773 | $12,423 | $1,350 | Increase due to higher employment costs and clinical costs for the PUR1900 program, partially offset by decreased spend on PUR1800 and PUR3100 programs | | Net Loss | $(14,620) | $(16,140) | $1,520 | Net loss decreased mainly due to the absence of a goodwill impairment charge recorded in 2021 | Liquidity and Capital Resources - As of September 30, 2022, the company had cash and cash equivalents of $40.7 million[119] - Management expects that existing cash and cash equivalents will be sufficient to fund projected operating expenses and capital expenditures into the second quarter of 2024[122] - Net cash used in operating activities for the nine months ended September 30, 2022, was $14.3 million, compared to $15.3 million for the same period in 2021[123][124][125] - Net cash provided by financing activities was $1.2 million for the nine months of 2022, a significant decrease from $37.3 million in the same period of 2021, which included a $40.0 million registered direct offering[127][131] Item 3. Quantitative and Qualitative Disclosures About Market Risk This section is not applicable for the company as a smaller reporting company - Not applicable[135] Item 4. Controls and Procedures Management concluded that the company's disclosure controls and procedures were effective as of September 30, 2022, with no material changes in internal control over financial reporting during the quarter - The company's management concluded that disclosure controls and procedures were effective as of the end of the period covered by this report[136] - There were no changes in internal control over financial reporting during the quarter ended September 30, 2022, that have materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[139] PART II — OTHER INFORMATION Item 1. Legal Proceedings The company reports that it is not aware of any material legal proceedings against it - As of the filing date, the company is not aware of any material legal proceedings to which it is a party[142] Item 1A. Risk Factors This section highlights risks concerning the volatility of the company's common stock and its ability to maintain Nasdaq listing compliance, despite regaining minimum bid price adherence in March 2022 - The market price of the company's common stock is subject to extreme price and volume fluctuations, influenced by industry trends, clinical trial developments, and general market conditions[146] - The company regained compliance with the Nasdaq minimum bid price requirement on March 15, 2022, after receiving a deficiency notice in August 2021; however, future non-compliance could result in delisting[150][151] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company reports no unregistered sales of its equity securities and no repurchases of its equity securities during the third quarter of 2022 - There were no unregistered sales of equity securities during the quarter[152] - The company did not repurchase any of its equity securities during the quarter ended September 30, 2022[153] Item 3. Defaults Upon Senior Securities None reported - None[154] Item 4. Mine Safety Disclosures Not applicable - Not applicable[155] Item 5. Other Information None reported - None[156] Item 6. Exhibits This section provides a reference to the index of exhibits filed with the Form 10-Q - Refers to the Index to Exhibits for a list of documents filed with the report[157]