Pulmatrix 10Q 2023 Q3 Quarterly report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2023

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___________ to __________

Commission file number: 001-36199

PULMATRIX, INC.

(Exact name of registrant as specified in its charter)

Delaware		46-1821392
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

36 Crosby Drive, Suite 100 Bedford, MA		01730
(Address of principal executive offices)		(Zip Code)

(781) 357-2333

Registrant’s telephone number, including area code

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer	☐	Accelerated filer	☐

Non-accelerated filer	☒	Smaller reporting company	☒

		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Securities registered pursuant to Section 12(b) of the Exchange Act:

Title of each Class		Trading Symbol(s)		Name of each exchange on which registered
Common Stock, par value $0.0001 per share		PULM		The NASDAQ Stock Market LLC

As of November 6, 2023, the registrant had 3,652,285 shares of common stock outstanding.

PULMATRIX, INC.

FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2023

TABLE OF CONTENTS

		Page No.

PART I—FINANCIAL INFORMATION

Item 1.	Condensed Consolidated Financial Statements (unaudited)	1
	Consolidated Balance Sheets as of September 30, 2023 and December 31, 2022	1
	Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2023 and 2022	2
	Consolidated Statements of Stockholders’ Equity for the Three and Nine Months Ended September 30, 2023 and 2022	3
	Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2023 and 2022	4
	Notes to Condensed Consolidated Financial Statements	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	14
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	24
Item 4.	Controls and Procedures	24

PART II—OTHER INFORMATION

Item 1.	Legal Proceedings	25
Item 1A.	Risk Factors	25
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	25
Item 3.	Defaults Upon Senior Securities	25
Item 4.	Mine Safety Disclosures	25
Item 5.	Other Information	25
Item 6.	Exhibits	25

SIGNATURES		26

PART I—FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements.

PULMATRIX, INC.

Consolidated Balance Sheets

(in thousands, except share and per share data)

	September 30, 2023			December 31, 2022
		(unaudited)
Assets
Current assets:
Cash and cash equivalents	$	21,336		$	35,628
Restricted cash		153			153
Accounts receivable		841			1,298
Prepaid expenses and other current assets		899			1,068
Total current assets		23,229			38,147
Property and equipment, net		1,166			235
Operating lease right-of-use asset		10,686			710
Long-term restricted cash		1,472			1,472
Other long-term assets		217			389
Total assets	$	36,770		$	40,953
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	707		$	1,188
Accrued expenses and other current liabilities		2,535			1,638
Operating lease liability		199			857
Deferred revenue		988			1,339
Total current liabilities		4,429			5,022
Deferred revenue, net of current portion		4,038			4,822
Operating lease liability, net of current portion		8,422			-
Total liabilities		16,889			9,844
Commitments and contingencies (Note 11)		-			-
Stockholders’ equity:
Preferred stock, $0.0001 par value — 500,000 shares authorized; 6,746 shares designated Series A convertible preferred stock; no shares issued and outstanding at September 30, 2023 and December 31, 2022		-			-
Common stock, $0.0001 par value — 200,000,000 shares authorized; 3,652,285 and 3,639,185 shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively		-			-
Additional paid-in capital		305,395			304,585
Accumulated deficit		(285,514	)		(273,476	)
Total stockholders’ equity		19,881			31,109
Total liabilities and stockholders’ equity	$	36,770		$	40,953

The accompanying footnotes are an integral part of these condensed consolidated financial statements.

PULMATRIX, INC.

Consolidated Statements of Operations

(in thousands, except share and per share data)

(unaudited)

	2023			2022			2023			2022
	Three Months Ended September 30,						Nine Months Ended September 30,
	2023			2022			2023			2022
Revenues	$	1,753		$	1,872		$	5,096		$	4,363

Operating expenses
Research and development		3,963			5,287			12,002			13,773
General and administrative		1,729			1,685			5,609			5,212
Total operating expenses		5,692			6,972			17,611			18,985
Loss from operations		(3,939	)		(5,100	)		(12,515	)		(14,622	)
Other income (expense)
Interest income		217			102			675			118
Other expense, net		(52	)		(54	)		(198	)		(116	)
Total other income, net		165			48			477			2
Net loss	$	(3,774	)	$	(5,052	)	$	(12,038	)	$	(14,620	)
Net loss per share attributable to common stockholders – basic and diluted	$	(1.03	)	$	(1.45	)	$	(3.30	)	$	(4.32	)
Weighted average common shares outstanding – basic and diluted		3,652,285			3,478,157			3,651,785			3,383,171

The accompanying footnotes are an integral part of these condensed consolidated financial statements.

PULMATRIX, INC.

Consolidated Statements of Stockholders’ Equity

(in thousands, except share data)

(unaudited)

	Shares		Amount		Shares		Amount		Capital		Deficit			Equity
	Preferred Stock				Common Stock				Additional Paid-in		Accumulated			Total Stockholders’
	Shares		Amount		Shares		Amount		Capital		Deficit			Equity
Balance — January 1, 2023		-	$	-		3,639,185	$	-	$	304,585	$	(273,476	)	$	31,109
Issuance of common stock, net of issuance costs		-		-		13,100		-		53		-			53
Stock-based compensation		-		-		-		-		296		-			296
Net loss		-		-		-		-		-		(4,448	)		(4,448	)
Balance — March 31, 2023		-	$	-		3,652,285	$	-	$	304,934	$	(277,924	)	$	27,010
Stock-based compensation		-		-		-		-		255		-			255
Net loss		-		-		-		-		-		(3,816	)		(3,816	)
Balance — June 30, 2023		-	$	-		3,652,285	$	-	$	305,189	$	(281,740	)	$	23,449
Stock-based compensation		-		-		-		-		206		-			206
Net loss		-		-		-		-		-		(3,774	)		(3,774	)
Balance — September 30, 2023		-	$	-		3,652,285	$	-	$	305,395	$	(285,514	)	$	19,881

	Preferred Stock						Common Stock				Additional Paid-in		Accumulated			Total Stockholders’
	Shares			Amount			Shares		Amount		Capital		Deficit			Equity
Balance — January 1, 2022		1,830		$	1,081			3,222,037	$	-	$	301,008	$	(254,640	)	$	47,449
Conversion of preferred stock to common stock		(915	)		(541	)		76,250		-		541		-			-
Adjustment due to reverse stock split		-			-			12,635		-		-		-			-
Stock-based compensation		-			-			-		-		281		-			281
Net loss		-			-			-		-		-		(4,973	)		(4,973	)
Balance — March 31, 2022		915		$	540			3,310,922	$	-	$	301,830	$	(259,613	)	$	42,757
Conversion of preferred stock to common stock		(915	)		(540	)		76,250		-		540		-			-
Stock-based compensation		-			-			-		-		277		-			277
Net loss		-			-			-		-		-		(4,595	)		(4,595	)
Balance — June 30, 2022		-		$	-			3,387,172	$	-	$	302,647	$	(264,208	)	$	38,439
Balance		-		$	-			3,387,172	$	-	$	302,647	$	(264,208	)	$	38,439
Issuance of common stock, net of issuance costs		-			-			252,013		-		1,382		-			1,382
Stock-based compensation		-			-			-		-		277		-			277
Net loss		-			-			-		-		-		(5,052	)		(5,052	)
Balance — September 30, 2022		-		$	-			3,639,185	$	-	$	304,306	$	(269,260	)	$	35,046
Balance		-		$	-			3,639,185	$	-	$	304,306	$	(269,260	)	$	35,046

The accompanying footnotes are an integral part of these condensed consolidated financial statements.

PULMATRIX, INC.

Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

	2023			2022
	Nine Months Ended September 30,
	2023			2022
Cash flows from operating activities:
Net loss	$	(12,038	)	$	(14,620	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		96			123
Amortization of operating lease right-of-use asset		1,171			1,033
Stock-based compensation		757			835
Loss on disposal of property and equipment		8			-
Changes in operating assets and liabilities:
Accounts receivable		457			(409	)
Prepaid expenses and other current assets		169			(1,042	)
Other long-term assets		172			(428	)
Accounts payable		(481	)		478
Accrued expenses and other current liabilities		233			1,515
Operating lease liability		(3,383	)		(1,007	)
Deferred revenue		(1,135	)		(788	)
Net cash used in operating activities		(13,974	)		(14,310	)
Cash flows from investing activities:
Purchases of property and equipment		(371	)		(77	)
Net cash used in investing activities		(371	)		(77	)
Cash flows from financing activities:
Proceeds from issuance of common stock, net of issuance costs		53			1,382
Preferred stock issuance costs		-			(152	)
Net cash provided by financing activities		53			1,230
Net decrease in cash, cash equivalents and restricted cash		(14,292	)		(13,157	)
Cash, cash equivalents and restricted cash — beginning of period		37,253			55,465
Cash, cash equivalents and restricted cash — end of period	$	22,961		$	42,308

Reconciliation of cash, cash equivalents and restricted cash to the consolidated balance sheets:
Cash and cash equivalents	$	21,336		$	40,683
Restricted cash		153			153
Long-term restricted cash		1,472			1,472
Total cash, cash equivalents and restricted cash	$	22,961		$	42,308

Supplemental disclosures of non-cash investing and financing information:
Operating lease right-of-use asset obtained in exchange for operating lease liability	$	9,323		$	-
Purchases of property and equipment not yet paid	$	664		$	-
Conversion of preferred stock to common stock	$	-		$	1,081

The accompanying footnotes are an integral part of these condensed consolidated financial statements.

PULMATRIX, INC.

Notes to Condensed Consolidated Financial Statements (Unaudited)

(in thousands, except share and per share data)

1. Organization

Pulmatrix, Inc. (the “Company”) was incorporated in 2013 as a Delaware corporation. The Company is a clinical-stage biopharmaceutical company focused on the development of a novel class of inhaled therapeutic products. The Company’s proprietary dry powder delivery platform, iSPERSE^™(inhaled Small Particles Easily Respirable and Emitted), is engineered to deliver small, dense particles with highly efficient dispersibility and delivery to the airways, which can be used with an array of dry powder inhaler technologies and can be formulated with a variety of drug substances. The Company is developing a pipeline of iSPERSE^™-based therapeutic candidates targeted at prevention and treatment of a range of respiratory and other diseases with significant unmet medical needs.

2. Summary of Significant Accounting Policies and Recent Accounting Standards

Basis of Presentation

The condensed consolidated financial statements of the Company included herein have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) have been condensed or omitted from this report, as is permitted by such rules and regulations. Accordingly, these condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022, filed with the SEC on March 30, 2023 (the “Annual Report”).

The financial information as of September 30, 2023, and for the three and nine months ended September 30, 2023 and 2022, is unaudited. In the opinion of management, all adjustments (including those which are normal and recurring) considered necessary for a fair presentation of the interim financial information have been included. The balance sheet data as of December 31, 2022 was derived from audited consolidated financial statements. The results of the Company’s operations for any interim periods are not necessarily indicative of the results that may be expected for any other interim period or for a full fiscal year.

Use of Estimates

In preparing the condensed consolidated financial statements in conformity with U.S. GAAP, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements, as well as the reported amounts of expenses during the reporting period. Due to inherent uncertainty involved in making estimates, actual results may differ from these estimates. On an ongoing basis, the Company evaluates its estimates and assumptions. The most significant estimates and assumptions in the Company’s condensed consolidated financial statements include, but are not limited to, estimates of future expected costs in order to derive and recognize revenue, estimates related to clinical trial accruals and upfront deposits, incremental borrowing rate, and accounting for income taxes and the related valuation allowance.

Concentrations of Credit Risk

Cash is a financial instrument that potentially subjects the Company to concentrations of credit risk. For all periods presented, substantially all of the Company’s cash was deposited in accounts at a single financial institution that management believes is creditworthy, and the Company has not incurred any losses to date. The Company is exposed to credit risk in the event of default by this financial institution for amounts in excess of the Federal Deposit Insurance Corporation insured limits.

For the three and nine months ended September 30, 2023, revenue from one customer accounted for 100% of revenue recognized in the accompanying condensed consolidated financial statements. For the three and nine months ended September 30, 2022, revenue from one customer accounted for approximately 99% of revenue recognized in the accompanying condensed consolidated financial statements. As of September 30, 2023 and December 31, 2022, one customer accounted for 100% of accounts receivable.

Summary of Significant Accounting Policies

The Company’s significant accounting policies are described in Note 2, Summary of Significant Accounting Policies and Recent Accounting Standards, in the Annual Report. During the nine months ended September 30, 2023, the Company did not make any changes to its significant accounting policies, except as described below with respect to recent accounting pronouncements.

Recent Accounting Pronouncements

From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (“FASB”) or other standard setting bodies that are adopted by the Company as of the specified effective date. Except as set forth below, the Company did not adopt any new accounting pronouncements during the nine months ended September 30, 2023 that had a material effect on its condensed consolidated financial statements.

In June 2016, the FASB issued Accounting Standards Update (“ASU”) ASU 2016-13, Financial Instruments—Credit Losses (Topic 326)—Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”), which has been subsequently amended. The provisions of ASU 2016-13 modify the impairment model for financial instruments to utilize an expected loss methodology in place of the currently used incurred loss methodology and require consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The Company adopted the standard as of January 1, 2023. The adoption of this standard did not have a material effect on the Company’s condensed consolidated financial statements.

As of September 30, 2023, there are no new, or existing recently issued, accounting pronouncements that are of significance, or potential significance, that impact the Company’s condensed consolidated financial statements.

3. Fair Value of Financial Instruments

As of September 30, 2023 and December 31, 2022, the Company did not hold any financial assets or liabilities that were measured at fair value on a recurring or nonrecurring basis. During the nine months ended September 30, 2023, there were no transfers between Level 1, Level 2 and Level 3.

4. Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consisted of the following:

Schedule of Prepaid Expenses and Other Current Assets

	September 30, 2023		December 31, 2022
Insurance	$	361	$	286
Software and hosting costs		83		99
Clinical and consulting		50		517
Other		405		166
Total prepaid expenses and other current assets	$	899	$	1,068

5. Property and Equipment, Net

Property and equipment, net consisted of the following:

Schedule of Property and Equipment

	September 30, 2023			December 31, 2022
Laboratory equipment	$	1,639		$	1,827
Capital in progress		600			-
Office furniture and equipment		387			217
Computer equipment		237			275
Leasehold improvements		-			664
Total property and equipment		2,863			2,983
Less accumulated depreciation and amortization		(1,697	)		(2,748	)
Property and equipment, net	$	1,166		$	235

Depreciation and amortization expense for the nine months ended September 30, 2023 and 2022 was $96 and $123, respectively. During the nine months ended September 30, 2023 and 2022, the Company disposed of certain property and equipment primarily in connection with moving to its new office, resulting in a loss on disposal of $8.

6. Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consisted of the following:

Schedule of Accrued Expenses and Other Current Liabilities

	September 30, 2023		December 31, 2022
Wages and incentives	$	904	$	1,130
Clinical and consulting		704		475
Accrued purchases of property and equipment		664		-
Legal and patents		49		-
Other		214		33
Total accrued expenses and other current liabilities	$	2,535	$	1,638

7. Significant Agreements

Development and Commercialization Agreement with Cipla Technologies LLC (“Cipla”)

On April 15, 2019, the Company entered into a Development and Commercialization Agreement (the “Cipla Agreement”) with Cipla for the co-development and commercialization, on a worldwide exclusive basis, of PUR1900, the Company’s inhaled iSPERSE^™drug delivery system (the “Product”) enabled formulation of the antifungal drug, itraconazole, which is only available as an oral drug, for the treatment of all pulmonary indications, including allergic bronchopulmonary aspergillosis (“ABPA”) in patients with asthma. The Company entered into an amendment to the Cipla Agreement on November 8, 2021 (the “Amendment”), and all references to the Cipla Agreement herein refer to the Cipla Agreement, as amended.

The Company received a non-refundable upfront payment of $22.0 million (the “Upfront Payment”) under the Cipla Agreement. Upon receipt of the Upfront Payment, the Company irrevocably assigned to Cipla the following assets, solely to the extent that each covers the Product in connection with any treatment, prevention, and/or diagnosis of diseases of the pulmonary system (“Pulmonary Indications”): all existing and future technologies, current and future drug master files, dossiers, third-party contracts, regulatory filings, regulatory materials and regulatory approvals, patents, and intellectual property rights, as well as any other associated rights and assets directly related to the Product, specifically in relation to Pulmonary Indications (collectively, the “Assigned Assets”), excluding most specifically the Company’s iSPERSE^™ technology. A portion of the Upfront Payment was deposited by the Company into a bank account, along with an equal amount from the Company, and was dedicated to the development of the Product (the “Initial Development Funding”). The Initial Development Funding was depleted during the year ended December 31, 2021, and the Company and Cipla are now each responsible for a portion of the development costs actually incurred as described below (the “Co-Development Phase”).

Pursuant to the Amendment, the Company and Cipla will each initially be responsible for 60% and 40%, respectively, of the Company’s overhead costs and the time spent by the Company’s employees and consultants on development of the Product (“Direct Costs”). Upon the achievement of each development milestone set forth in the table below, Cipla will reimburse the Company an amount equal to 10% of the cumulative aggregate Direct Costs incurred (each reimbursement referred to as a “Holdback Payment”), potentially bringing the sharing of Direct Costs to a 50/50 basis. If a development milestone is not achieved, the respective Holdback Payment will continue to aggregate and be reimbursed by Cipla to the Company if the Company achieves the subsequent development milestone for that trial set forth in the table below. The Company will share all other development costs with Cipla that are not Direct Costs, such as the cost of clinical research organizations, manufacturing costs and other third-party costs, on a 50/50 basis.

Phase 2b Development Plan – Development Milestones

Development Milestone		Milestone Date

25% of patients enrolled in Phase 2b clinical study are dosed		June 30, 2023

Company delivers summary of key efficacy and safety data to include FEV₁, IgE, ACQ-6, number of subjects withdrawn, any severe adverse events related to the medication and an overall summary table of adverse events (“Topline Results”) to the joint steering committee (“JSC”)		June 30, 2024

Phase 3 Development Plan – Development Milestones

Development Milestone		Milestone Date

25% of patients enrolled in Phase 3 clinical study dosed		To be proposed by JSC

Company delivers Topline Results to the JSC		To be proposed by JSC

The Prescription Drug User Fee Act		To be proposed by JSC

As of November 6, 2023, the Company has dosed 25% of patients by the date of this report but this first Phase 2b development milestone was not achieved by June 30, 2023. Delayed regulatory approval in certain foreign jurisdictions and slower than expected enrollment contributed to missing this milestone. The associated cumulative aggregated Holdback Payment (as defined herein) could still have been reimbursed by Cipla to the Company if the Company achieved the subsequent development milestone of delivering topline data by June 30, 2024. However, as the Company is currently anticipating topline results in the second half of 2024, after the related June 30, 2024 milestone date has passed, the Company currently expects that it will therefore not be reimbursed the aggregated Holdback Payment. All such previously referred to regulatory approvals in this paragraph have since been obtained and enrollment is ongoing.

Accounting Treatment

The Company concluded that because both it and Cipla are active participants in the arrangement and are exposed to the significant risks and rewards of the collaboration, the Company’s collaboration with Cipla is within the scope of Accounting Standards Codification (“ASC”) 808, Collaborative Arrangements (“ASC 808”). The Company concluded that Cipla is a customer since they contracted with the Company to obtain research and development services and a license to the Assigned Assets, each of which is an output of the Company’s ordinary activities, in exchange for consideration. Therefore, the Company has applied the guidance in ASC 606, Revenue from Contracts with Customers (“ASC 606”) to account for the research and development services and a license within the contract. The Company determined that the research and development services and license to the Assigned Assets are considered highly interdependent and highly interrelated and therefore are considered a single combined performance obligation because Cipla cannot benefit from the license without the performance by the Company of the research and development services. Such research and development services are highly specialized and proprietary to the Company and therefore not available to Cipla from any other third party.

The Company initially determined the total transaction price to be $22.0 million – comprised of $12.0 million for research and development services for the Product and $10.0 million for the irrevocable license to the Assigned Assets. Any consideration related to the Co-Development Phase was not initially included in the transaction price as such amounts are subject to the variable consideration constraint. Additionally, upon commercialization, Cipla and the Company will share equally, both positive and negative total free cash-flows earned by Cipla in respect of the Product. However, the Company has not included such free cash-flows in the transaction price as these milestones are constrained until after the commercialization of the Product.

The Company concluded that the Amendment represented a contract modification that is treated for accounting purposes as the termination of the Cipla Agreement and a creation of a new contract (the “Amended Cipla Agreement”). Accordingly, the modification is accounted for on a prospective basis. The total transaction price for the Amended Cipla Agreement includes variable consideration from the Amendment as well as $7.4 million deferred under the Cipla Agreement as of the Amendment execution date.

Revenue is recognized for the Amended Cipla Agreement as the research and development services are provided using an input method, according to the ratio of costs incurred to the total costs expected to be incurred in the future to satisfy the Company’s obligations. In management’s judgment, this input method is the best measure of the transfer of control of the combined performance obligation. The amounts received that have not yet been recognized as revenue are recorded in deferred revenue on the Company’s consolidated balance sheets, with amounts expected to be recognized in the next 12 months recorded as current.

During the three and nine months ended September 30, 2023, the Company recognized $1.8 million and $5.1 million, respectively, in revenue related to the research and development services and irrevocable license to the Assigned Assets in the Company’s consolidated statements of operations. Of the revenue recognized during the three and nine months ended September 30, 2023, $0.2 million and $0.8 million, respectively, was included in deferred revenue at the beginning of the period. As of September 30, 2023, the aggregate transaction price related to the Company’s unsatisfied obligations was $5.0 million and was recorded in deferred revenue, $1.0 million of which was current.

8. Common Stock

In May 2021, the Company entered into an At-The-Market Sales Agreement (the “Sales Agreement”) with H.C. Wainwright and Co., LLC (“HCW”) to act as the Company’s sales agent with respect to the issuance and sale of up to $20.0 million of the Company’s shares of common stock, from time to time in an at-the-market public offering (the “ATM Offering”). Sales of common stock under the Sales Agreement are made pursuant to an effective shelf registration statement on Form S-3, which was filed with the SEC on May 26, 2021, and subsequently declared effective on June 9, 2021 (File No. 333-256502), and a related prospectus. HCW acts as the Company’s sales agent on a commercially reasonable efforts basis, consistent with its normal trading and sales practices and applicable state and federal laws, rules and regulations and the rules of The NASDAQ Capital Market (“Nasdaq”). If expressly authorized by the Company, HCW may also sell the Company’s common stock in privately negotiated transactions. There is no specific date on which the ATM Offering will end, there are no minimum sale requirements and there are no arrangements to place any of the proceeds of the ATM Offering in an escrow, trust or similar account. HCW is entitled to compensation at a fixed commission rate of 3.0% of the gross proceeds from the sale of the Company’s common stock pursuant to the Sales Agreement.

During the nine months ended September 30, 2023, the Company sold 13,100 shares of its common stock under the Sales Agreement at a weighted-average price of approximately $4.25 per share, which resulted in net proceeds of approximately $53 thousand.

9. Warrants

There were no warrants issued or exercised during the nine months ended September 30, 2023. Warrants to purchase up to 123,310 shares of common stock at $149.99 per share expired during the nine months ended September 30, 2023. The following represents a summary of the warrants outstanding and exercisable at September 30, 2023, all of which are equity-classified:

Schedule of Warrants Outstanding

	Adjusted			Number of Shares Underlying Warrants
Issue Date	Exercise Price		Expiration Date	Outstanding		Exercisable
December 17, 2021	$	14.99	December 15, 2026		36,538		36,538
December 17, 2021	$	13.99	December 17, 2026		281,047		281,047
February 16, 2021	$	49.99	February 11, 2026		65,003		65,003
August 7, 2020	$	35.99	July 14, 2025		90,743		90,743
August 7, 2020	$	44.99	July 14, 2025		10,939		10,939
July 23, 2020	$	35.99	July 14, 2025		77,502		77,502
July 13, 2020	$	44.99	July 14, 2025		21,846		21,846
July 13, 2020	$	35.99	July 14, 2025		334,800		334,800
April 8, 2019	$	26.99	April 8, 2024		65,907		65,907
April 8, 2019	$	33.74	April 3, 2024		39,871		39,871
February 12, 2019	$	36.62	February 7, 2024		5,548		5,548
February 12, 2019	$	26.79	August 12, 2024		66,675		66,675
February 4, 2019	$	42.49	January 30, 2024		1,732		1,732
January 31, 2019	$	42.49	January 26, 2024		511		511
December 3, 2018	$	77.99	June 3, 2024		46,876		46,876
June 15, 2015	$	1,509.99	Five years after milestone achievement		15,955		-
Total					1,161,493		1,145,538

10. Stock-based Compensation

The Company sponsors the Pulmatrix, Inc. Amended and Restated 2013 Employee, Director and Consultant Equity Incentive Plan (the “Incentive Plan”). As of September 30, 2023, the Incentive Plan provided for the grant of up to 636,322 shares of the Company’s common stock, of which 267,541 shares remained available for future grant. In addition, the Company sponsors two legacy plans under which no additional awards may be granted. As of September 30, 2023, the two legacy plans have a total of 32 options outstanding, all of which are fully vested and for which common stock will be issued upon exercise.

The following table summarizes stock option activity for the nine months ended September 30, 2023:

Summary of Stock Option Activity

	Number of Options			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (Years)		Aggregate Intrinsic Value
Outstanding — January 1, 2023		304,823		$	28.66		7.98	$	-
Granted		118,472		$	3.98
Forfeited or expired		(58,320	)	$	19.96
Outstanding — September 30, 2023		364,975		$	22.04		7.74	$	-
Exercisable — September 30, 2023		208,835		$	32.51		7.02	$	-

The Company records stock-based compensation expense related to stock options based on their grant-date fair value. During the nine months ended September 30, 2023 and 2022, the Company used the Black-Scholes option-pricing model to estimate the fair value of stock option grants and to determine the related compensation expense. The assumptions used in calculating the fair value of stock-based payment awards represent management’s best estimates. The weighted-average grant-date fair value of options granted during the nine months ended September 30, 2023 was $3.27 per share. The weighted-average assumptions used in determining fair value of the stock options for the nine months ended September 30, 2023 and 2022 are as follows:

Schedule of Calculation of Fair Value Assumptions

	Nine Months Ended September 30,
	2023			2022
Expected option life (years)		6.0			6.0
Risk-free interest rate		3.53	%		2.03	%
Expected volatility		104.24	%		113.28	%
Expected dividend yield		-	%		-	%

The expected life of the Company’s options was determined using the simplified method as a result of limited historical data regarding the Company’s activity. The risk-free interest rate was obtained from U.S. Treasury rates for the expected life of the stock options. The Company’s expected volatility was based upon the historical volatility of the Company’s common stock. The dividend yield considers that the Company has not historically paid dividends and does not expect to pay dividends in the foreseeable future.

As of September 30, 2023, there was $1.0 million of unrecognized stock-based compensation expense related to unvested stock options granted under the Company’s stock award plans. This expense is expected to be recognized over a weighted-average period of approximately 2.0 years.

The following table presents total stock-based compensation expense for the three and nine months ended September 30, 2023 and 2022:

Schedule of Stock-based Compensation Expenses

	2023		2022		2023		2022
	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Research and development	$	57	$	65	$	188	$	189
General and administrative		149		212		569		646
Total stock-based compensation expense	$	206	$	277	$	757	$	835

11. Commitments and Contingencies

Research and Development Activities

The Company contracts with various other organizations to conduct research and development activities, including clinical trials. As of September 30, 2023, the Company had aggregate commitments to pay approximately $4.0 million remaining on these contracts, of which the Company expects to be reimbursed $2.0 million under the Cipla Agreement. Of the gross amount of $4.0 million in commitments, $3.8 million is expected to be incurred over the next 12 months. The scope of the services under contracts for research and development activities may be modified and the contracts, subject to certain conditions, may generally be cancelled by the Company upon written notice. In some instances, the contracts, subject to certain conditions, may be cancelled by the third party.

Legal Proceedings

In the ordinary course of its business, the Company may be involved in various legal proceedings involving contractual and employment relationships, patent or other intellectual property rights, and a variety of other matters. The Company is not aware of any pending legal proceedings that would reasonably be expected to have a material impact on the Company’s financial position or results of operations.

12. Leases

New Corporate Headquarters

The Company has limited leasing activities as a lessee which are primarily related to its corporate headquarters, which were relocated during the nine months ended September 30, 2023. On January 7, 2022, the Company executed a lease agreement with Cobalt Propco 2020, LLC for its new corporate headquarters at 36 Crosby Drive, Bedford, Massachusetts. The leased premises comprise approximately 20,000 square feet of office and lab space, and the lease provides for base rent of $0.1 million per month, expected to begin in December 2023, which will increase 3% each year over the ten-year noncancellable term. The Company has the option to extend the lease for one additional five-year term and is responsible for real estate taxes, maintenance, and other operating expenses applicable to the leased premises.

The lease commenced on August 1, 2023, following substantial completion of construction to prepare the premises for the Company’s use, and the Company has included the lease as a component of its operating lease right-of-use asset and operating lease liabilities upon commencement. The improvements to prepare the leased premises for the Company’s intended use have been funded by (i) the landlord, through a tenant allowance of $3.9 million, (ii) a landlord-funded advance on tenant improvements of $0.5 million which will be repaid over the lease term, and (iii) approximately $2.4 million funded by the Company.

Other Leasing Activities

During the first quarter of 2023, the Company executed a two-month lease extension for its previous corporate headquarters in Lexington, Massachusetts, through August 31, 2023. The Company terminated that lease extension, as planned, during the third quarter of 2023.

The Company also leases small office equipment which is primarily short-term or immaterial in nature. Therefore, no right-of-use assets and lease liabilities are recognized for these leases.

The components of lease expense for the Company for the three and nine months ended September 30, 2023 and 2022 were as follows:

Schedule of Components of Lease Expenses

	2023		2022		2023			2022
	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023			2022
Lease cost
Fixed lease cost	$	553	$	357	$	1,349		$	1,072
Variable lease cost		203		206		484			556
Total lease cost	$	756	$	563	$	1,833		$	1,628

Other information
Cash paid for amounts included in the measurement of lease liabilities	$	2,699	$	431	$	3,562		$	1,046
Weighted-average remaining lease term — operating leases						10.2 years
Weighted-average discount rate — operating leases						11.00	%

Maturities of lease liabilities due under these lease agreements as of September 30, 2023 are as follows:

Schedule of Maturities of Lease Liabilities

	Operating Leases
Maturity of lease liabilities
2023 (three months)	$	171
2024		1,289
2025		1,326
2026		1,364
2027		1,402
2028 and thereafter		9,154
Total lease payments		14,706
Less: interest		(6,085	)
Total lease liabilities	$	8,621

Reported as of September 30, 2023
Lease liabilities — short term	$	199
Lease liabilities — long term		8,422
Total lease liabilities	$	8,621

13. Income Taxes

The Company had no income tax expense due to operating losses incurred for the three and nine months ended September 30, 2023 and 2022.

Management of the Company evaluated the positive and negative evidence bearing upon the realizability of its deferred tax assets and determined that it is more likely than not that the Company will not recognize the benefits of the deferred tax assets. As a result, a full valuation allowance was recorded as of September 30, 2023 and December 31, 2022.

The Company applies ASC 740, Income Taxes, for the financial statement recognition, measurement, presentation, and disclosure of uncertain tax positions taken or expected to be taken in income tax returns. Unrecognized tax benefits represent tax positions for which reserves have been established. A full valuation allowance has been provided against the Company’s deferred tax assets, so that the effect of the unrecognized tax benefits is to reduce the gross amount of the deferred tax asset and the corresponding valuation allowance. The Company has no material uncertain tax positions as of September 30, 2023 and December 31, 2022.

14. Net Loss Per Share

Basic and diluted earnings (loss) per share are computed using the two-class method, which is an earnings allocation method that determines earnings (loss) per share for common shares and participating securities. The participating securities consist of the Company’s Series A Preferred Stock. The undistributed earnings are allocated between common shares and participating securities as if all earnings had been distributed during the period. In periods of loss, no allocation is made to the Series A Preferred Stock and diluted net loss per share is the same as basic net loss per share because common stock equivalents are excluded as their inclusion would be antidilutive.

The following potentially dilutive securities outstanding have been excluded from the computation of diluted weighted-average shares outstanding, because such securities had an antidilutive impact:

Schedule of Computation of Anti-Dilutive Weighted-Average Shares Outstanding

	Three and Nine Months Ended September 30,
	2023		2022
Options to purchase common stock		364,975		307,918
Warrants to purchase common stock		1,161,493		1,284,803
Total potentially dilutive securities excluded		1,526,468		1,592,721

15. Subsequent Events

The Company has completed an evaluation of all subsequent events after the balance sheet date of September 30, 2023 through the date the condensed consolidated financial statements were issued to ensure that the condensed consolidated financial statements include appropriate disclosure of events both recognized in the condensed consolidated financial statements as of September 30, 2023, and events which occurred subsequently but were not recognized in the condensed consolidated financial statements. The Company has concluded that no subsequent events have occurred that require disclosure, except as disclosed within the condensed consolidated financial statements.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Management’s Discussion and Analysis of Financial Condition and Results of Operations is intended to provide a reader of our financial statements with a narrative from the perspective of our management on our financial condition, results of operations, liquidity, and certain other factors that may affect our future results. 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 consolidated financial statements and the notes thereto contained in our Annual Report on Form 10-K filed with the SEC on March 30, 2023. Unless stated otherwise, references in this Quarterly Report on Form 10-Q to “us,” “we,” “our,” or our “Company” and similar terms refer to Pulmatrix, Inc., a Delaware corporation and its subsidiaries.

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 coronavirus (“COVID-19”) endemic and its continuing effects on the global economy and 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;

	●	our ability to maintain compliance with Nasdaq’s listing standards;

	●	loss of one or more key executives or scientists; and

	●	difficulties in securing regulatory approval to market our product candidates.

For a more detailed discussion of these and other risks that may affect our business and that could cause our actual results to differ from those projected in these forward-looking statements, see the risk factors and uncertainties described under the heading “Risk Factors” in Part II, Item 1A of this Quarterly Report on Form 10-Q and in Part I, Item 1A of our Annual Report on Form 10-K. The forward-looking statements contained in this Quarterly Report on Form 10-Q are expressly qualified in their entirety by this cautionary statement. We do not undertake any obligation to update any forward-looking statement to reflect events or circumstances after the date on which any such statement is made or to reflect the occurrence of unanticipated events, except as required by law.

“iSPERSE^™” is one of our trademarks used in this Quarterly Report on Form 10-Q. Other trademarks appearing in this report are the property of their respective holders. Solely for convenience, these and other trademarks, trade names and service marks referred to in this report appear without the ^®, TM and SM symbols, but those references are not intended to indicate, in any way, we or the owners of such trademarks will not assert, to the fullest extent under applicable law, their rights to these trademarks and trade names.

Overview

Business

We are a clinical-stage biopharmaceutical company focused on the development of novel inhaled therapeutic products intended to prevent and treat respiratory and other diseases with significant unmet medical needs using our patented iSPERSE™ technology. Our proprietary product pipeline includes treatments for serious lung diseases, such as allergic bronchopulmonary aspergillosis (“ABPA”) and Chronic Obstructive Pulmonary Disease (“COPD”), and central nervous system (“CNS”) disorders such as acute migraine. Our product candidates are based on our proprietary engineered dry powder delivery platform, iSPERSE™, which seeks to improve therapeutic delivery to the lungs by optimizing pharmacokinetics and reducing systemic side effects to improve patient outcomes.

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 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, including CNS disorders and pulmonary diseases. These therapeutic candidates include PUR1900 for the treatment of ABPA in patients with asthma and in patients with cystic fibrosis (“CF”), PUR3100 for the treatment of acute migraine, and PUR1800 for the treatment of acute exacerbations of chronic obstructive pulmonary disease (“AECOPD”). 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 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:

	●	Complete PUR1900 Phase 2b Study to Evaluate Itraconazole Administered as Inhaled Dry Powder in Adults With Asthma and Allergic Bronchopulmonary Aspergillosis (ABPA) (clinicaltrials.gov NCT05667662).

		The current Phase 2b study of PUR1900, our inhaled iSPERSE™ formulation of the antifungal drug itraconazole for ABPA in patients with asthma and CF, began dosing patients in the first quarter of 2023. The PUR1900 Phase 2b study includes a sixteen-week dosing regimen and is a randomized, double-blind, multi-center, placebo-controlled study to evaluate PUR1900’s safety and efficacy. The multi-center study is being conducted in the United States, United Kingdom, Australia and France. Endpoints include safety, tolerability, and potential efficacy outcomes to identify potential registrational endpoints in adult patients with asthma and ABPA. We currently anticipate topline data from this study in the second half of 2024. In June 2023, “Evaluation of the Potential for Drug-Drug Interactions with Inhaled Itraconazole Using Physiologically Based Pharmacokinetic Modelling, Based on Phase 1 Clinical Data” was published in the American Association of Pharmaceutical Scientists (AAPS) Journal. This study demonstrates the lower risk of drug-drug interaction with inhaled itraconazole (PUR1900) than with oral itraconazole. Thus, if effective, PUR1900 may be able to be safely administered even in patients taking drugs contraindicated with oral itraconazole, hence potentially improving treatment options for patients with ABPA and asthma.

	●	Pursue further clinical studies for PUR3100, an orally inhaled dihydroergotamine (“DHE”) including a Phase 2 clinical study for the treatment of acute migraine. We received FDA acceptance of our Investigational New Drug Application (“IND”) and a “study may proceed” letter in September 2023, positioning PUR3100 as Phase 2-ready for potential financing or partnership discussions.

		We developed PUR3100, an iSPERSE™ formulation of DHE in 2020. We completed good laboratory practice (“GLP”) toxicology studies in 2021 and 2022. In 2022, we initiated a Phase 1 study designed as a double-blinded trial to assess the safety, tolerability, and pharmacokinetics of three dose levels of single doses of inhaled PUR3100 with intravenous (“IV”) placebo, as compared to IV DHE (DHE mesylate injection) with inhaled placebo. On September 26, 2022, we announced that patient dosing was completed. On January 4, 2023, we announced the Phase 1 topline results, indicating that PUR3100 was safe and tolerated with fewer gastrointestinal side effects in all doses compared to IV DHE. PUR3100 showed a five-minute T_max and C_max within the targeted therapeutic range for all three doses tested. The Phase 1 study data were presented at the American Headache Society 65^th Annual Meeting in June 2023. Based on the rapid systemic exposure in the therapeutic range and the improved side effect profile relative to IV dosing, we believe the PUR3100 formulation of DHE may differentiate from approved DHE products or those in development. If effectiveness is demonstrated, PUR3100 may offer the convenience of being self-administered with a pharmacokinetic profile that may potentially provide rapid onset of action. In September 2023, we announced the FDA’s acceptance of our Phase 2 IND application for PUR3100 and receipt of a “study may proceed” letter for a Phase 2 study. The IND includes a Phase 2 clinical protocol where safety and preliminary efficacy of PUR3100 will be investigated in patients with acute migraine. The Company is currently pursuing potential partnership opportunities to further develop this product candidate.

	●	Continue to advance PUR1800, focusing on the development of an inhaled kinase inhibitor for treatment of AECOPD. The Company plans to pursue an appropriate partner as a path forward to advance PUR1800 into a Phase 2 clinical trial.

		We completed preclinical safety studies for PUR1800, our iSPERSE^™ formulation of RV1162, in 2018 and advanced our formulation and process development efforts to support clinical testing in stable moderate-severe COPD patients. We completed a Phase 1b safety, tolerability, and pharmacokinetics clinical study of PUR1800 for subjects with stable moderate-severe COPD and received topline data from the Phase 1b clinical study in the first quarter of 2022. We analyzed data from the completed Phase 1b clinical study of PUR1800 for AECOPD and presented study results at the American Academy of Allergy, Asthma & Immunology (AAAAI) conference in the first quarter of 2023. We completed all data analysis to inform a study design for a potential Phase 2 efficacy and safety study, treating subjects with AECOPD.

	●	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.

		To add additional inhaled therapeutics to our development pipeline and facilitate additional collaborations, we are leveraging our iSPERSE^™technology and our management’s expertise in inhaled therapeutics and particle engineering to identify potential product candidates. These potential product candidates are potentially safer and more effective than the current standard of care for prevention and treatment of diseases with significant unmet medical needs.

	●	Invest in protecting and expanding our intellectual property portfolio and file for additional patents to strengthen our intellectual property rights.

		The status of our patent portfolio changes frequently in the ordinary course of patent prosecution. As of September 30, 2023, our patent portfolio related to iSPERSE^™ included approximately 142 granted patents, 19 of which are granted US patents, with expiration dates from 2024 to 2037, and approximately 57 additional pending patent applications in the US and other jurisdictions. Our in-licensed portfolio related to kinase inhibitors included approximately 276 granted patents, 33 of which are granted US patents, with expiration dates from 2029 to 2035, and approximately 23 additional pending patent applications in the US and other jurisdictions. On March 1, 2022, we filed a Patent Cooperation Treaty application that discloses and claims certain formulations and methods of use relevant to our PUR3100 program.

	●	Seek partnerships and license agreements to support the product development and commercialization of PUR3100 and PUR1800.

		In order to advance our clinical programs, we may seek partners or licensees in areas of pharmaceutical and clinical development.

Therapeutic Candidates

PUR1900

In 2018, we completed a Phase 1 study of PUR1900 in normal healthy volunteers and asthma patients. On April 15, 2019, we entered into the Cipla Agreement with Cipla for the co-development and commercialization, on a worldwide, except for the Cipla Territory defined below, exclusive basis, of PUR1900, our inhaled iSPERSE^™drug delivery system (the “Product”) enabled formulation of the antifungal drug, itraconazole, which is only available as an oral drug, for the treatment of all pulmonary indications, including ABPA in patients with asthma. We entered into the Amendment to the Cipla Agreement on November 8, 2021, and all references to the Cipla Agreement herein refer to the Agreement, as amended.

The Cipla Agreement will remain in effect in perpetuity, unless otherwise earlier terminated in accordance with its terms. In the event of circumstances affecting the continuity of development of the Product in line with the Cipla Agreement or certain development milestones are not achieved within a specified timeframe discussed in greater detail below, the JSC will evaluate the cause and effect and make a recommendation as to the most optimal option available to Cipla and us. In such events, the parties are not obligated to follow the recommendation of the JSC and, a Terminating Party may elect to terminate its obligation to fund additional costs and expenses for the development and/or commercialization of the Product. If the non-Terminating Party wishes to continue the development of the Product, it will have the right to purchase the rights of the Terminating Party in the Product at its fair market value. If both Cipla and we abandon the development program, Cipla and we shall make commercially reasonable efforts to monetize the Product and development program in connection with the Pulmonary Indications. Cipla and we will equally share the proceeds.

Pursuant to the Amendment, we and Cipla will each initially be responsible for 60% and 40%, respectively, of our Direct Costs. Upon the achievement of each development milestone set forth in the table below, Cipla will reimburse us an amount equal to 10% of the cumulative aggregate Direct Costs incurred (each reimbursement referred to as a “Holdback Payment”), potentially bringing the sharing of Direct Costs to a 50/50 basis. If a development milestone is not achieved, the respective Holdback Payment will continue to aggregate and be reimbursed by Cipla to us if we achieve the subsequent development milestone for that trial set forth in the table below. We will share all other development costs with Cipla that are not Direct Costs, such as the cost of clinical research organizations, manufacturing costs and other third-party costs, on a 50/50 basis.

Pursuant to the Cipla Agreement, (i) all development and commercialization activities with respect to the Product in the Cipla Territory will be conducted exclusively by Cipla at Cipla’s sole cost and expense, and (ii) Cipla shall be entitled to all profits from the sale of the Product in the Cipla Territory, except that if Cipla successfully transfers manufacturing of the Product for the Cipla Territory to a manufacturing site determined by Cipla, we will become entitled to a royalty equal to 2% of net sales in the Cipla Territory.

In partnership with Cipla, we initiated a Phase 2 clinical 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 clinical study was terminated in July 2020 due to the impact of the COVID-19 pandemic on patient enrollment and clinical study conduct at the time.

Following termination of the initial Phase 2 clinical study, we conducted a Type C meeting with the FDA on January 27, 2021, in order to discuss the program overall development plan and the current Phase 2b clinical study design. The current Phase 2b clinical study design includes a 16-week dosing regimen with an 8-week follow up and is intended to explore potential efficacy endpoints, whereas the terminated Phase 2 clinical study had comprised only a 4-week dosing regimen with safety and tolerability as its primary endpoint. The longer dosing regimen of the new Phase 2b clinical study is supported by the 6-month inhalation toxicology study in dogs completed in April 2020. The new development plan, including the planned current Phase 2b clinical study, was approved on November 8, 2021. On February 6, 2023, we announced the first patient dosed in the Phase 2b study.

In addition to the terms of the Cipla Agreement described above, if any of the below development milestones are not met by the date that is nine months after the applicable deadline for achieving such development milestone, either party may elect to terminate its obligation to fund additional development costs, in which case either (i) the non-Terminating Party can acquire the rights of the Terminating Party for fair market value or (ii) the parties will monetize the Product. The table below sets forth the development milestones.

Phase 2b Development Plan – Development Milestones

Development Milestone		Milestone Date

25% of patients enrolled in Phase 2b clinical study are dosed		June 30, 2023

Company delivers Topline Results to the JSC		June 30, 2024

Phase 3 Development Plan – Development Milestones

Development Milestone		Milestone Date

25% of patients enrolled in Phase 3 clinical study dosed		To be proposed by JSC

Company delivers Topline Results to the JSC		To be proposed by JSC

The Prescription Drug User Fee Act		To be proposed by JSC

As of November 6, 2023, we have dosed 25% of patients by the date of this report but this first Phase 2b development milestone was not achieved by June 30, 2023. Delayed regulatory approval in certain foreign jurisdictions and slower than expected enrollment contributed to missing this milestone. The associated cumulative aggregated Holdback Payment (as defined below) could still have been reimbursed by Cipla to us if we achieved the subsequent development milestone of delivering topline data by June 30, 2024. However, as we currently anticipate topline data in the second half of 2024, after the related June 30, 2024 milestone date has passed, we currently expect that we will therefore not be reimbursed the aggregated Holdback Payment. All such previously referred to regulatory approvals in this paragraph have since been obtained and enrollment is ongoing.

PUR3100

In 2020, we developed PUR3100, the iSPERSE^™ formulation of DHE, for the treatment of acute migraine. Over 38 million people suffer from migraine in the United States. Currently DHE is only available as intravenous infusion or intranasal delivery. If approved for commercialization, PUR3100 should be the first orally inhaled DHE treatment for acute migraine and be an alternative to other acute therapies, such as oral and intravenous triptans that currently represent the majority of the annual migraine prescriptions in the United States. Given the oral inhaled route of delivery, PUR3100 is anticipated to provide a rapid onset of migraine symptom relief with a favorable tolerability profile.

A total of three 14-day GLP toxicology studies have been completed with PUR3100 to support single dose clinical studies. Preparations are underway for chronic toxicology to support long-term dosing and an eventual new drug application (“NDA”).

We have completed several interactions with the FDA, and they have confirmed that, in addition to the planned Phase 2 and Phase 3 studies, long-term safety should be assessed in a minimum of one hundred patients for six months of dosing and fifty patients for twelve months of dosing. The FDA also confirmed that it will be necessary to perform a safety study administering PUR3100 to otherwise healthy patients with asthma before an NDA is submitted.

On September 26, 2022, we announced the completion of patient dosing in a Phase 1 clinical study, performed in Australia, designed to assess not only safety, tolerability, and pharmacokinetics of PUR3100 in humans, but also provide preliminary comparative bioavailability data to support the use of the 505(b)(2) pathway for marketing authorization. The study design was a double-dummy, double-blinded trial to assess the safety, tolerability, and pharmacokinetics of three dose levels of single doses of inhaled PUR3100 with IV placebo, as compared to IV DHE (DHE mesylate injection) with inhaled placebo. Twenty-six healthy subjects were enrolled and each of the four groups contained at least six subjects. On January 4, 2023, we announced topline results. PUR3100 was well-tolerated and there was a lower incidence of nausea in PUR3100 dose groups compared to IV DHE, and we presented the Phase 1 study data at the American Headache Society 65^thAnnual Meeting in June 2023.

In contrast to IV DHE, no vomiting was observed in any of the PUR3100 dose groups. Oral inhalation of PUR3100 achieved peak exposures in the targeted therapeutic range at all doses and the T_max occurred at five minutes after dosing.

Based on the rapid systemic exposure in the therapeutic range and the improved side effect profile relative to IV dosing, we believe the PUR3100 formulation of DHE is highly differentiated from other DHE products already approved or in development. We believe PUR3100 can be immediately and conveniently self-administered and has a pharmacokinetic profile that may potentially advance the treatment of patients with acute migraine.

In September 2023, we announced that the FDA accepted the PUR3100 IND and the receipt of a “study may proceed” letter for the clinical study: “A Phase 2, Multicenter, Randomized, Double-Blind, Placebo-Controlled, Single Event Study to Evaluate the Safety, Tolerability, and Efficacy of PUR3100 (Dihydroergotamine Mesylate Inhalation Powder) in the Acute Treatment of Migraine”. We anticipate that this Phase 2 clinical study will initiate once financing or partnership arrangements have been made.

PUR1800

PUR1800 is a Narrow Spectrum Kinase Inhibitor, engineered with our iSPERSE™ technology, being developed for the treatment of acute exacerbations in chronic obstructive pulmonary disease (AECOPD). PUR1800 targets p38 MAP kinases (p38MAPK), Src kinases, and Syk kinases. These kinases play a critical role in chronic inflammation and airway remodeling.

We completed the Phase 1b safety, tolerability, and pharmacokinetics clinical study of PUR1800 for patients with stable moderate-severe COPD. Topline data was delivered in the first quarter of 2022.

The clinical study, performed at the Medicines Evaluation Unit in Manchester, UK, was a randomized, three-way crossover double-blind study with 14 days of daily dosing which included placebo and one of two doses of PUR1800, and included a 28-day follow up period after each treatment period. A total of 18 adults with stable chronic obstructive pulmonary disease COPD were enrolled. Safety and tolerability as well as systemic PK were evaluated.

PUR1800 was well tolerated and there were no observed safety signals. The PK data indicate that PUR1800 results in low and consistent systemic exposure when administered via oral inhalation. The topline data, along with the results from chronic toxicology studies, was delivered in the first quarter of 2022 and presented at the American Academy of Allergy, Asthma & Immunology (AAAAI) conference in the first quarter of 2023 and support the continued development of PUR1800 for the treatment of AECOPD and other inflammatory respiratory disease. We completed all data analysis to inform a study design for a potential Phase 2 efficacy and safety study, treating subjects with AECOPD. We plan to pursue an appropriate partner as a path forward to advance PUR1800 into a Phase 2 clinical trial.

Toxicology studies in rats and dogs, with durations of six and nine 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. We believe that this indicates potential for chronic dosing of PUR1800, enabling us to explore PUR1800 therapy for chronic respiratory disease such as steroid resistant asthma, COPD, or idiopathic pulmonary fibrosis. While the program is currently in development for treatment of acute exacerbation of AECOPD, these positive toxicology study results could expand potential indications and value of the program.

Financial Overview

Revenues

To date, we have not generated any product sales. The revenue for the three and nine months ended September 30, 2023 and 2022 was primarily generated by the collaboration and license agreement with Cipla on our PUR1900 program.

For more discussion on the collaboration or licensing agreements, please see Note 7, Significant Agreements, of the condensed consolidated financial statements included in this Quarterly Report on Form 10-Q.

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 stock-based compensation expense;

	●	expenses incurred under agreements with CROs or CMOs, and consultants that conduct our clinical trials and preclinical activities;

	●	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 and other potential development programs. To move these programs forward along our development timelines, a large portion (approximately 86%) of our staff are research and development employees. In addition, we maintain an office and research and development facility which includes capital equipment for the manufacture and characterization of our iSPERSE^™ powders for our development efforts. As we identify opportunities for iSPERSE^™ in additional indications, we anticipate additional headcount, 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, benefits and related costs such as stock-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 legal fees. Other general and administrative expenses include travel expenses, expenses related to being 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 SEC requirements, director and officer liability insurance, investor relations costs and other costs associated with being a public company. Additionally, if and when we believe a regulatory approval of a product candidate appears likely, we anticipate an increase in staffing and related expenses as a result of our preparation for commercial operations, especially as it relates to the sales and marketing of our product candidates.

Critical Accounting Policies, Judgments and Estimates

This management’s discussion and analysis of our financial condition and results of operations is based on our condensed consolidated financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of these condensed consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, and expenses and the disclosure of contingent assets and liabilities in our condensed consolidated financial statements. On an ongoing basis, we evaluate our most critical estimates and judgments, including those related to revenue recognition and the accrual and recognition of research and development expenses. We base our estimates on historical experience, known trends and events, and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

There were no changes to our critical accounting policies during the nine months ended September 30, 2023, including estimates, assumptions, and judgments as compared to those described in Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report. It is important that the discussion of our operating results that follow be read in conjunction with the critical accounting policies disclosed in our Annual Report.

Results of Operations

Comparison of the Three Months Ended September 30, 2023 and 2022

The following table sets forth our results of operations for each of the periods set forth below (in thousands):

	Three Months Ended September 30,
	2023			2022			Change
Revenues	$	1,753		$	1,872		$	(119	)

Operating expenses:
Research and development		3,963			5,287			(1,324	)
General and administrative		1,729			1,685			44
Total operating expenses		5,692			6,972			(1,280	)
Loss from operations		(3,939	)		(5,100	)		1,161
Other income (expense):
Interest income		217			102			115
Other expense, net		(52	)		(54	)		2
Net loss	$	(3,774	)	$	(5,052	)	$	1,278

Revenues — Revenues were $1.8 million for the three months ended September 30, 2023, as compared to $1.9 million for the three months ended September 30, 2022, a decrease of $0.1 million. The decrease is related to revenues under the Cipla Agreement during the period.

Research and development expenses — Research and development expenses were $4.0 million for the three months ended September 30, 2023, as compared to $5.3 million for the three months ended September 30, 2022, a decrease of approximately $1.3 million. The decrease was primarily due to decreased spend of $0.7 million in costs related to our PUR3100 program, $0.4 million in costs related to our PUR1900 program, $0.1 million in costs related to our PUR1800 program and $0.1 million of employment and operating costs.

General and administrative expenses — General and administrative expenses were $1.7 million for both the three months ended September 30, 2023 and 2022, as an increase in facilities costs was offset by a decrease in personnel costs.

Comparison of the Nine Months Ended September 30, 2023 and 2022

The following table sets forth our results of operations for each of the periods set forth below (in thousands):

	Nine Months Ended September 30,
	2023			2022			Change
Revenues	$	5,096		$	4,363		$	733

Operating expenses:
Research and development		12,002			13,773			(1,771	)
General and administrative		5,609			5,212			397
Total operating expenses		17,611			18,985			(1,374	)
Loss from operations		(12,515	)		(14,622	)		2,107
Other income (expense):
Interest income		675			118			557
Other expense, net		(198	)		(116	)		(82	)
Net loss	$	(12,038	)	$	(14,620	)	$	2,582

Revenues — Revenues were $5.1 million for the nine months ended September 30, 2023, as compared to $4.4 million for the nine months ended September 30, 2022, an increase of $0.7 million. The increase is related to revenues under the Cipla Agreement during the period.

Research and development expenses — Research and development expenses were $12.0 million for the nine months ended September 30, 2023, as compared to $13.8 million for the nine months ended September 30, 2022, a decrease of approximately $1.8 million. The decrease was primarily due to decreased spend of $2.1 million in costs related to our PUR3100 program and $0.5 million in costs related to our PUR1800 program, partially offset by increased spend of $0.7 million in costs related to our PUR1900 program and $0.1 million of employment and operating costs.

General and administrative expenses — General and administrative expenses were $5.6 million for the nine months ended September 30, 2023, as compared to $5.2 million for the nine months ended September 30, 2022, an increase of $0.4 million. The increase was primarily due to an increase in incurred legal and professional services costs, partially offset by a decrease in personnel costs.

Liquidity and Capital Resources

Through September 30, 2023, we incurred an accumulated deficit of $285.5 million, primarily as a result of expenses incurred through a combination of research and development activities related to our various product candidates and general and administrative expenses supporting those activities. We have financed our operations since inception primarily through the sale of preferred and common stock, the issuance of convertible promissory notes, term loans, and collaboration and license agreements. Our total cash and cash equivalents balance as of September 30, 2023 was $21.3 million.

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 are currently exploring financing or partnership arrangements to develop and initiate a potential Phase 2 clinical study for PUR3100.

We expect that our existing cash and cash equivalents as of September 30, 2023 will enable us to fund our operating expenses and capital expenditure requirements for at least the next 12 months following the date of this Quarterly Report on Form 10-Q and into the first quarter of 2025. Such projections do not include any contingent milestone payments but do include operational efficiencies and prioritization of spending implemented in the second quarter of 2023. We have based our projections of operating capital requirements on assumptions that may prove to be incorrect, and we may use all of our available capital resources sooner than we expect. Because of the numerous risks and uncertainties associated with research, development, achievement of contingent milestones and commercialization of pharmaceutical products, we are unable to estimate the exact amount of our operating capital requirements.

We have no material 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.

The following table sets forth the major sources and uses of cash for each of the periods set forth below (in thousands):

	Nine Months Ended September 30,
	2023			2022
Net cash used in operating activities	$	(13,974	)		(14,310	)
Net cash used in investing activities		(371	)		(77	)
Net cash provided by financing activities		53			1,230
Net decrease in cash, cash equivalents, and restricted cash	$	(14,292	)		(13,157	)

Net cash used in operating activities

Net cash used in operating activities for the nine months ended September 30, 2023 was $14.0 million, which was primarily the result of a net loss of $12.0 million and $4.0 million in cash outflows associated with changes in operating assets and liabilities, partially offset by $2.0 million of net non-cash adjustments.

Net cash used in operating activities for the nine months ended September 30, 2022 was $14.3 million, which was primarily the result of a net loss of $14.6 million and $1.7 million in cash outflows associated with changes in operating assets and liabilities, partially offset by $2.0 million of net non-cash adjustments.

Net cash used in investing activities

Net cash used in investing activities for the nine months ended September 30, 2023 and 2022 was due to purchases of property and equipment.

Net cash provided by financing activities

Net cash provided by financing activities for the nine months ended September 30, 2023 resulted from proceeds from the issuance of common stock, net of issuance costs, under the ATM Offering.

Net cash provided by financing activities for the nine months ended September 30, 2022 resulted from proceeds from the issuance of common stock, net of issuance costs, partially offset by the payment of preferred stock issuance costs from a registered direct offering in December 2021.

Financings

In May 2021, we entered into the Sales Agreement with HCW to act as our sales agent with respect to the issuance and sale of up to $20,000,000 of our shares of common stock, from time to time in an ATM Offering. Sales of common stock under the Sales Agreement are made pursuant to an effective shelf registration statement on Form S-3, which was filed with the SEC on May 26, 2021, and subsequently declared effective on June 9, 2021 (File No. 333-256502), and a related prospectus. HCW acts as our sales agent on a commercially reasonable efforts basis, consistent with its normal trading and sales practices and applicable state and federal laws, rules and regulations and the rules of Nasdaq. If expressly authorized by us, HCW may also sell our common stock in privately negotiated transactions. There is no specific date on which the ATM Offering will end, there are no minimum sale requirements and there are no arrangements to place any of the proceeds of the ATM Offering in an escrow, trust or similar account. 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. During the nine months ended September 30, 2023, we sold 13,100 shares of common stock under the Sales Agreement at a weighted-average price of approximately $4.25 per share, which resulted in net proceeds of approximately $53 thousand.

Known Trends, Events and Uncertainties

In May 2023, the World Health Organization determined that COVID-19 no longer fit the definition of a public health emergency and the U.S. government announced its plan to let the declaration of a public health emergency associated with COVID-19 expire on May 11, 2023. The COVID-19 endemic and its ongoing effects are expected to remain a serious endemic threat for an indefinite future period and may continue to create significant economic uncertainty and volatility in the credit and capital markets, supply chain issues, global shortages of supplies, materials and products, and contribute to rising global inflation. In addition, the ongoing conflict between Russia and Ukraine and the ongoing conflict between Israel and Hamas, including related sanctions and countermeasures, are difficult to predict, and could adversely impact geopolitical and macroeconomic conditions, the global economy, and contribute to increased market volatility, which may in turn adversely affect our business and operations. We 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.

Other than as discussed above and elsewhere in this report, we are not aware of any trends, events or uncertainties that are likely to have a material effect on our financial condition.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Not applicable.

Item 4. Controls and Procedures.

Disclosure Controls and Procedures

Our Principal Executive Officer and Principal Financial Officer, after evaluating the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this Quarterly Report on Form 10-Q, have concluded that, based on such evaluation, our disclosure controls and procedures were effective to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms, and is accumulated and communicated to our management, including our Principal Executive Officer and Principal Financial Officer as appropriate to allow timely decisions regarding required disclosure.

In designing and evaluating our disclosure controls and procedures, our management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and our management necessarily is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

Changes in Internal Controls over Financial Reporting

There were no changes in our internal control over financial reporting that occurred during the quarter ended September 30, 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II—OTHER INFORMATION

Item 1. Legal Proceedings.

From time to time, we may be involved in litigation that arises through the normal course of business. As of the date of this filing, we are not aware of any material legal proceedings to which we or any of our subsidiaries is a party or to which any of our property is subject, nor are we aware of any such threatened or pending litigation or any such proceedings known to be contemplated by governmental authorities.

We are not aware of any material proceedings in which any of our directors, officers, or affiliates or any registered or beneficial stockholder of more than 5% of our common stock, or any associate of any of the foregoing, is a party adverse to or has a material interest adverse to, us or any of our subsidiaries.

Item 1A. Risk Factors.

Investing in our common stock involves a high degree of risk. You should carefully consider the risks and uncertainties described in Part I, Item 1A under the heading “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2022 in addition to the other information included in this Form 10-Q before making an investment decision regarding our common stock. If any of these risks actually occur, our business, financial condition, or operating results would likely suffer, possibly materially, the trading price of our common stock could decline, and you could lose part or all of your investment.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

(a)

Unregistered Sales of Equity Securities

None.

(b)

Issuer Purchases of Equity Securities.

None.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

None.

Item 6. Exhibits.

See “Index to Exhibits” following the signature page to this Form 10-Q for a list of exhibits filed or furnished with this Form 10-Q.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	PULMATRIX, INC.

Date: November 9, 2023	By:	/s/ Teofilo Raad
		Teofilo Raad
		Chief Executive Officer and President
		(Principal Executive Officer)

Date: November 9, 2023	By:	/s/ Peter Ludlum
		Peter Ludlum
		Interim Chief Financial Officer
		(Principal Financial and Accounting Officer)

INDEX TO EXHIBITS

Exhibit Number		Exhibit Description

31.1*		Certification of the Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2*		Certification of the Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1**		Certification of Principal Executive Officer and Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101. INS*		Inline XBRL Instance Document

101.SCH*		Inline XBRL Taxonomy Extension Schema Document

101.CAL*		Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF*		Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB*		Inline XBRL Taxonomy Extension Labels Linkbase Document

101.PRE*		Inline XBRL Taxonomy Extension Presentation Linkbase Document

104*		Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)

*		Filed herewith.

**		Furnished herewith.

Positive
Negative
Uncertain
Constraining
Legalese
Litigous
Readability	H.S. junior Avg

Pulmatrix (PULM) 10-Q2023 Q3 Quarterly report

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