PULMATRIX, INC. The information set forth below should be read in conjunction with the condensed
consolidated financial statements and the notes thereto included elsewhere in
this Quarterly Report on Form 10-Q as well as the audited financial statements
and the notes thereto contained in our current report on Form 10-K filed with
the
Forward-Looking Statements
This Quarterly Report on Form 10-Q contains forward-looking statements. All statements other than statements of historical fact contained herein, including statements regarding our business plans or strategies, projected or anticipated benefits or other consequences of our plans or strategies, projected or anticipated benefits from acquisitions to be made by us, or projections involving anticipated revenues, earnings or other aspects of our operating results, are forward-looking statements. Words such as "anticipates," "assumes," "believes," "can," "could," "estimates," "expects," "forecasts," "guides," "intends," "is confident that," "may," "plans," "seeks," "projects," "targets," and "would," and their opposites and similar expressions, as well as statements in future tense, are intended to identify forward-looking statements. Forward-looking statements should not be read as a guarantee of future performance or results and may not be accurate indications of when such performance or results will actually be achieved. Forward-looking statements are based on information we have when those statements are made or our management's good faith belief as of that time with respect to future events and are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking statements. Important factors that could cause such differences include, but are not limited to:
? the impact of the novel coronavirus ("COVID-19") on the Company's ongoing and
planned clinical trials;
? the geographic, social and economic impact of COVID-19 on the Company's
ongoing and planned clinical trials;
? our history of recurring losses and negative cash flows from operating
activities, significant future commitments and the uncertainty regarding the
adequacy of our liquidity to pursue or complete our business objectives;
? our inability to carry out research, development and commercialization plans;
? our inability to manufacture our product candidates on a commercial scale on
our own or in collaborations with third parties;
? our inability to complete preclinical testing and clinical trials as
anticipated;
? our collaborators' inability to successfully carry out their contractual
duties;
? termination of certain license agreements;
? our ability to adequately protect and enforce rights to intellectual property,
or defend against claims of infringement by others;
? difficulties in obtaining financing on commercially reasonable terms,
or at all;
? intense competition in our industry, with competitors having
substantially greater financial, technological, research and
development, regulatory and clinical, manufacturing, marketing and
sales, distribution, personnel and resources than we do;
? entry of new competitors and products and potential technological
obsolescence of our products;
? adverse market and economic conditions;
? loss of one or more key executives or scientists; and
? difficulties in securing regulatory approval to market our product
candidates.
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For a more detailed discussion of these and other factors that may affect our business and that could cause the actual results to differ materially from those projected in these forward-looking statements, see the risk factors and uncertainties set forth in Part II, Item 1A of this Quarterly Report. Any one or more of these uncertainties, risks and other influences could materially affect our results of operations and whether forward-looking statements made by us ultimately prove to be accurate. We undertake no obligation to publicly update or revise any forward-looking statements, whether from new information, future events or otherwise, except as required by law.
Overview Business
We are a clinical stage biotechnology company focused on the discovery and development of novel inhaled therapeutic products intended to prevent and treat respiratory and other diseases with significant unmet medical needs.
We design and develop inhaled therapeutic products based on our proprietary dry powder delivery technology, iSPERSE™ (inhaled Small Particles Easily Respirable and Emitted), which enables delivery of small or large molecule drugs to the lungs by inhalation for local or systemic applications. The iSPERSE powders are engineered to be small, dense particles with highly efficient dispersibility and delivery to airways. iSPERSE powders can be used with an array of dry powder inhaler technologies and can be formulated with a broad range of drug substances including small molecules and biologics. We believe the iSPERSE dry powder technology offers enhanced drug loading and delivery efficiency that outperforms traditional lactose-blend inhaled dry powder therapies.
We believe the advantages of using the iSPERSE technology include reduced total inhaled powder mass, enhanced dosing efficiency, reduced cost of goods and improved efficacy, safety, and tolerability profiles. Our goal is to develop breakthrough therapeutic products that are safe, convenient, and more effective than the existing therapeutic products for respiratory and other diseases where iSPERSE properties are advantageous.
Our current pipeline is aligned to this goal as we develop iSPERSE-based therapeutic candidates which target the prevention and treatment of a range of diseases. These therapeutic candidates include Pulmazole for the treatment of allergic bronchopulmonary aspergillosis ("ABPA") in patients with asthma, and in patients with cystic fibrosis ("CF"), PUR1800 for the treatment of acute exacerbations of chronic obstructive pulmonary disease ("AECOPD"), and PUR3100 for the treatment of acute migraine. Each program is enabled by its unique iSPERSE formulation designed to achieve specific therapeutic objectives.
We intend to capitalize on our iSPERSE technology platform and our expertise in inhaled therapeutics to identify new product candidates for the prevention and treatment of diseases with significant unmet medical needs and to build our product pipeline beyond our existing candidates. In order to advance clinical trials for our therapeutic candidates and leverage the iSPERSE platform to enable delivery of partnered compounds, we intend to form strategic alliances with third parties, including pharmaceutical and biotechnology companies or academic or private research institutes.
We expect to continue to incur significant expenses and increasing operating losses for at least the next several years based on our drug development plans. We expect our expenses and capital requirements will increase substantially in connection with our ongoing activities, as we:
? continue Pulmazole clinical trials focused on the development of an inhaled
anti-fungal therapy to prevent and treat allergic/hypersensitivity response to
fungus in the lungs of patients with asthma and CF;
? continue ongoing clinical and non-clinical trials for PUR1800, focusing on the
development of an inhaled kinase inhibitor for treatment of AECOPD;
? initiate and complete non-clinical studies for PUR3100, an orally inhaled
dihydroergotamine ("DHE") to support planned Ph1 and Ph2 clinical studies for
the treatment of acute migraine;
? seek regulatory approval for our product candidates;
? capitalize on our proprietary iSPERSE technology and our expertise in inhaled
therapeutics and particle engineering to identify new product candidates for
prevention and treatment of diseases with significant unmet medical needs;
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? invest in protecting and expanding our intellectual property portfolio and
file for additional patents to strengthen our intellectual property rights and
? hire personnel to support our product development, commercialization, and
administrative efforts
We do not have any products approved for sale and have not generated any revenue from product sales. We will not generate product sales unless and until we successfully complete clinical developments and obtain regulatory approvals for our product candidates. Additionally, we currently utilize third-party contract research organizations ("CROs") to carry out our clinical development activities and third-party contract manufacturing organizations ("CMOs") to carry out our clinical manufacturing activities as we do not yet have a commercial organization. If we obtain regulatory approval for any of our product candidates, we expect to incur significant expenses related to developing our internal commercialization capability to support product sales, marketing and distribution. Accordingly, we anticipate that we will seek to fund our operations through public or private equity or debt financings, licensing agreements, collaborations with third parties, non-dilutive grants or other sources, potentially including collaborative commercial arrangements. Likewise, we intend to seek to limit our commercialization costs by partnering with other companies with complementary capabilities or larger infrastructure including sales and marketing.
Because of the numerous risks and uncertainties associated with product development, we are unable to predict the timing or amount of increased expenses or when or if we will be able to achieve or maintain profitability. Even if we are able to generate product sales, we may not become profitable. If we fail to become profitable or are unable to sustain profitability on a continuing basis, we may be unable to continue our operations at planned levels and be forced to reduce or terminate our operations.
Recent Developments Pulmazole
On
We initiated a Phase 2 study in 2019, entitled: "A Randomized, Double-Blind,
Multicenter, Placebo-Controlled, Phase 2 Study to Evaluate the Safety,
Tolerability, and Pharmacokinetics of Itraconazole Administered as a Dry Powder
for Inhalation (PUR1900) in Adult Asthmatic Patients with ABPA. This study was
terminated in
We conducted a Type C meeting with the
On
Since the date of our letter to Cipla, we have received several correspondences from Cipla disputing that Cipla is in material breach of the Cipla Agreement and that we are entitled to terminate the Agreement. Accordingly, Cipla and we have initiated certain mandatory dispute resolution procedures under the Cipla Agreement, which remain ongoing. As of the date of this report, we have not terminated the Agreement and the Agreement remains in full force and effect. However, we intend to continue to seek Cipla's reaffirmation of all of its obligations under the Cipla Agreement and, in the absence of such reaffirmation, to pursue all available remedies.
20 PUR1800
On
As of the filing of this Quarterly Report, 18 patients have been dosed in a fully enrolled Phase 1b safety, tolerability and biomarker study targeting approximately 12 patients completing the study. Study subjects have stable moderate-severe chronic obstructive pulmonary disease ("COPD"). The Phase 1b study is a randomized, three-way crossover double-blind study with 14 days of daily dosing with placebo and one of two doses of PUR1800, and a 28 day follow up period between each crossover.
The Ph1b study is being conducted at the Medicines Evaluation Unit in
The toxicology studies for rats and dogs, with durations of 6 and 9 months
respectively, are complete. The data from both studies demonstrated that PUR1800
is safe and well tolerated with chronic dosing, with little to no progression of
findings from 28-day studies. This indicates potential for chronic dosing of
PUR1800, enabling
PUR3100
Nonclinical pharmacokinetic ("PK") and good laboratory practices ("GLP")
toxicology studies are underway to support a planned Ph1/Ph2 study.
Financial Overview Revenues
To date, we have not generated any product sales. The 2021 revenue was generated
by the collaboration agreement and license agreement with Cipla on our Pulmazole
program, the JJEI License Agreement for our PUR1800 kinase inhibitor, and
immaterial royalties recorded from the Sensory Cloud agreement. In April, 2021,
JJEI notified us that JJEI was exercising its option to terminate the Company's
license, development, and commercialization agreement. The agreement remained in
effect until the termination date of
For more discussion on the collaboration or licensing agreements, please see
Note 5 of the condensed consolidated financial statements in the Company's
annual report on Form 10-K filed with the
Research and Development Expenses
Research and development expenses consist primarily of costs incurred for the research and development of our preclinical and clinical candidates, and include:
? employee-related expenses, including salaries, benefits and share-based
compensation expense;
? expenses incurred under agreements with CROs or CMOs, and consultants that
conduct our clinical trials and preclinical activities;
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? the cost of acquiring, developing and manufacturing clinical trial materials
and lab supplies;
? facility, depreciation, and other expenses, which include direct and allocated
expenses for rent, maintenance of our facility, insurance, and other supplies;
? costs associated with preclinical activities and clinical regulatory
operations, and
? consulting and professional fees associated with research and development
activities
We expense research and development costs to operations as incurred. We recognize costs for certain development activities, such as clinical trials, based on an evaluation of the progress to completion of specific tasks using data such as patient enrollment, clinical site activations or information provided to us by our vendors.
Research and development activities are central to our business model. We utilize a combination of internal and external efforts to advance product development from early stage work to clinical trial manufacturing and clinical trial support. External efforts include work with consultants and substantial work at CROs and CMOs. We support an internal research and development team and facility for our pipeline programs. To move these programs forward along our development timelines, a large portion, approximately (81% of staff) are research and development employees. In addition, we maintain approximately a 22,000 square foot office and research and development facility which includes capital equipment for the manufacture and characterization of our iSPERSE™ powders for our pipeline programs. As we identify opportunities for iSPERSE™ in respiratory indications, we anticipate additional head count, capital, and development costs will be incurred to support these programs.
Because of the numerous risks and uncertainties associated with product development, however, we cannot determine with certainty the duration and completion costs of these or other current or future preclinical studies and clinical trials. The duration, costs and timing of clinical trials and development of our product candidates will depend on a variety of factors, including the uncertainties of future clinical and preclinical studies, uncertainties in clinical trial enrollment rates and significant and changing government regulation. In addition, the probability of success for each product candidate will depend on numerous factors, including competition, manufacturing capability and commercial viability.
General and Administrative Expenses
General and administrative expenses consist principally of salaries and related costs such as share-based compensation for personnel and consultants in executive, finance, business development, corporate communications and human resource functions, facility costs not otherwise included in research and development expenses, patent filing fees and professional legal fees. Other general and administrative expenses include travel expenses, expenses related to a publicly traded company and professional fees for consulting, auditing and tax services.
We anticipate that our general and administrative expenses will increase in the
future as they relate to audit, legal, regulatory, and tax-related services
associated with maintaining compliance with exchange listing and
Critical Accounting Policies
This management's discussion and analysis of our financial condition and results
of operations is based on our financial statements, which have been prepared in
accordance with
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In this Form 10-Q, in Part I, Item 1, Note 2, "Summary of Significant Accounting
Policies and Recent Accounting Standards" and in the 2020 Form 10-K filed with
the
Results of Operations
Three Months Ended
The following table sets forth our results of operations for each of the periods set forth below (in thousands):
For the Three Months Ended
June 30,
2021 2020 Change
Revenues $ 2,254 $ 3,500 $ (1,246 )
Operating expenses
Research and development 4,541 3,184 1,357
General and administrative 1,562 1,490 72
Total operating expenses 6,103 4,674 1,429
Loss from operations (3,849 ) (1,174 ) (2,675 )
Other income (expense)
Interest income 2 13 (11 )
Other expense, net (5 ) (9 ) 4
Net loss $ (3,852 ) $ (1,170 ) $ (2,682 ) Revenue - For the three months ended
Research and development expenses - For the three months ended
General and administrative expenses - General and administrative expenses were
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Six months ended
The following table sets forth our results of operations for each of the periods set forth below (in thousands):
For the Six Months Ended
June 30,
2021 2020 Change
Revenues $ 3,644 $ 6,262 $ (2,618 )
Operating expenses
Research and development 8,397 8,471 (74 )
General and administrative 3,181 3,702 (521 )
Total operating expenses 11,578 12,173 (595 )
Loss from operations (7,934 ) (5,911 ) (2,023 )
Other income (expense)
Interest income 5 65 (60 )
Other expense, net (27 ) (10 ) (17 )
Net loss $ (7,956 ) $ (5,856 ) $ (2,100 ) Revenue - For the six months ended
Research and development expenses - For the six months ended
General and administrative expenses - General and administrative expenses were
Liquidity and Capital Resources
Through
We anticipate that we will continue to incur losses, and that such losses will increase over the next several years due to development costs associated with our iSPERSE™ pipeline programs. We expect that our research and development and general and administrative expenses will continue to increase and, as a result, we will need additional capital to fund our operations, which we may raise through a combination of equity offerings, debt financings, other third-party funding and other collaborations and strategic alliances.
We expect that our existing cash and cash equivalents as of
In
HCW is entitled to compensation at a fixed commission rate of 3.0% of the gross proceeds from the sale of our common stock pursuant to the Sales Agreement.
There have been no sales of our common stock during the three months ended
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Impact of COVID-19 on the Company's Operations, Financial Condition and Liquidity
The ultimate impact of the COVID-19 pandemic on the Company's operations is unknown and will depend on future developments, which are highly uncertain and cannot be predicted with confidence. These include but are not limited to including the duration of the COVID-19 outbreak, new information which may emerge concerning the severity of the COVID-19 pandemic, and any additional preventative and protective actions that regulators, or the board or management of the Company, may determine are needed.
The COVID-19 pandemic has created significant economic uncertainty and volatility in the credit and capital markets. The Company may not be able to raise sufficient additional capital and may tailor our drug candidate development program based on the amount of funding we are able to raise in the future. Nevertheless, there is no assurance that these initiatives will be successful.
Our future funding requirements will depend on many factors, including, but not limited to:
? the impact of the COVID-19 on the Company's ongoing and planned clinical
trials;
? the geographic, social and economic impact of COVID-19 on the Company's
ongoing and planned clinical trials;
? the initiation, progress, timing, costs and results of clinical studies for
existing and new pipeline programs based on iSPERSE;
? the outcome, timing and cost of regulatory approvals by the FDA and European
regulatory authorities, including the potential for these agencies to require
that we perform studies in addition to those that we currently have planned;
? the cost of filing, prosecuting, defending and enforcing any patent claims and
other intellectual property rights;
? our need to expand our research and development activities;
? our need and ability to hire additional personnel;
? our need to implement additional infrastructure and internal systems;
? the cost of establishing and maintaining a commercial-scale manufacturing
line; and
? the cost of establishing sales, marketing and distribution capabilities for
any products for which we may receive regulatory approval.
If we cannot expand our operations or otherwise capitalize on our business opportunities because we lack sufficient capital, our business, financial condition and results of operations could be materially adversely affected.
The following table sets forth the major sources and uses of cash for each of the periods set forth below (in thousands):
Six months ended
June 30,
2021 2020
Net cash used in operating activities
(18 ) (98 )
Net cash provided by financing activities 37,283 8,113
Net increase in cash and cash equivalents
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Cash Flows from Operating Activities
Net cash used in operating activities for the six months ended
Net cash used in operating activities for the six months ended
Cash Flows from Investing Activities
Net cash used in investing activities for the six months ended
Cash Flows from Financing Activities
Net cash provided by financing activities for the six months ended
Financings 2021
On
On
In addition to the registered direct offering, during the six months ended
26 2020
During the six months ended
In addition to the registered direct offering, during the six months ended
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.
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