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PULM: Business And Financial Update For Third Quarter 2017

By Anita Dushyanth, PhD


Financial Update

On November 9, 2017 Pulmatrix (NASDAQ:PULM) announced their third quarter financial results and provided operational highlights.

Revenue of $0.3 million was recorded for the quarter which was related to the grant received from the Cystic Fibrosis Foundation Therapeutics, Inc (CFFT).  

R&D expenses for Q3 2017 came in at $2.6 million and was significantly lower (60%) than our estimate of $4.2 million.  Seventy-one percent of Pulmatrix’s staff belongs to the R&D department.  Their 12,000 square foot R&D facility includes capital equipment for the manufacture and in vitro/in vivo evaluation of iSPERSE powders for pipeline programs.  The firm anticipates expanding their staff and increasing capital as they continue their efforts to identify opportunities employing the iSPERSE technology.  The company has made consistent progress and are now entering the clinical study phase in PUR1900’s development.  They are gearing towards filing an Investigational New Drug (IND) application with the FDA for PUR1900.  Hence, we had expected the company to incur R&D expenses around $4 million.  While we were originally expecting a bulk of these expenses to be incurred in Q3 of 2017, we now think these expenses are likely to be spread out in the near term and we have correspondingly updated our financial model based on Q3 results.
G&A expenses, related to employment and consulting costs, came in at $2 million which was close to our estimate.  Net loss for the quarter was $4.5 million.  Pulmatrix exited the quarter with cash and cash equivalents of $6.4 million.

Business Update

Phase 1/1b is a critical milestone establishing PUR1900 safety, tolerability and PK profile versus ABPA-Asthma oral antifungal standard of care (Sporanox).  The clinical plan for Phase 1/1b PUR1900 is a three-part study comprised of single ascending dose (SAD), multiple ascending dose (MAD) as well as single dose comparing inhaled versus oral dose of the drug.  The studies will be conducted in parallel.  The SAD study will recruit six healthy volunteers who will be administered escalating doses of PUR1900 (dose: 5mg, 10mg and 25mg) to assess safety and tolerability along with 96h PK profile.  The MAD trial will also recruit six healthy volunteers to study the PK profile as well as safety and tolerability over a 14-day dosing period (10mg and 20mg).  Part 3 of the Phase 1/1b trial is a cross-over study designed to determine the PK and safety/tolerability of 20mg of PUR1900 (inhaled route) as compared to 200mg of Sporanox (oral route) in 12 asthma patients.  This study is intended to gain a better understanding of the single and repeat dose pharmacology of itraconazole when delivered to the lung.  Pulmatrix anticipates data read-out in mid-2018 and plans to use the Phase 1/1b data to support initiation of a Phase 2 program in patients with ABPA, which is expect to initiate in 2H 2018.  

As a reminder, the global ABPA-asthma market is a multi-billion dollar opportunity with the U.S. representing close to two-thirds (~60%) of this industry.  Management expects the Phase I studies supporting the PUR1900 program in both CF and severe asthma patients to create partnership opportunities for both indications.

Earlier in 2016, PUR1900 was granted Orphan Drug Designation and in the beginning of 2017 it was awarded a Qualified Infectious Disease Product (QIDP) status for treatment of fungal infections in patients with cystic fibrosis (CF).  These two designations together provide up to 12 years of market exclusivity for PUR1900 if approved for cystic fibrosis patients.  QIDP also gives PUR1900 fast-track status under FDA's review guidelines.  Back in August 2017 management was seeking a similar QIDP status for PUR1900 to treat allergic bronchopulmonary aspergillosis (ABPA) in severe asthma patients, a second population with high unmet need.  In October the company announced that their product had been awarded the second QIDP in this other indication.  The FDA status expands the potential population who could be treated with PUR1900 given that approximately 1.5% of adults with asthma have ABPA.  This is incremental to the  2-15% of CF patients that suffer from ABPA.

Pulmatrix recently partnered with Vectura group (LSE: VEC), an industry-leading device and formulation business for inhaled airways products, to develop PUR0200 (VR410) for the U.S. market.  PUR0200 is a combination of tiotropium bromide, the active component in Spiriva, with iSPERSE™ drug delivery platform.  As per the agreement, Pulmatrix will provide the data for PUR0200 and assist with the transfer of development and manufacturing activities to Vectura.  Vectura will pay a technology access fee of $1 million to Pulmatrix upon achieving pre-agreed pharmaceutical development criteria.  The plan is to commence development immediately and then license VR410 and future VR410 assets to partners who would fund the remaining development and undertake commercialization activities.  In addition, Vectura will pay Pulmatrix a mid-teen percentage share of any future revenues that it receives relating to the development and sale of VR410 and VR410-related products, including any future combinations.

Vectura has positioned itself uniquely as one of the leading respiratory airways device and formulation specialists with a proven track record of developing a broad portfolio of successful products utilizing its proprietary DPI drug delivery technology.  Vectura plans to leverage thistechnology, which is validated from both a regulatory and commercial perspective, for use in the development of Pulmatrix’s PUR0200.  

This is the second partnering deal for Vectura from the new generics program following VR2081 with Sandoz.  Vectura has 8 inhaled, 4 non-inhaled and 10 oral products marketed by partners with growing global royalty streams.  The group has a diverse portfolio of drugs in clinical development, including a number of novel and generic programs which are partnered with several global pharmaceutical and biotechnology companies including Hikma, Novartis, Sandoz, Baxter, GSK, Bayer, Almirall, Janssen, Dynavax and Tianjin KingYork along with two wholly owned nebulised development programs.

Pulmatrix received two additional patents for the iSPERSE technology and PUR0200 program.  A drug is typically formulated in the iSPERSE matrix using excipients (inert substances such as salts that enhance the drug's utility).  The technology already had intellectual property protection for the use of two such excipients and the new patent (US 9744130) adds protection for the use of two more excipients.  The U.S. Patent 9737518 expands protection for PUR0200 to include the composition and certain dose ranges of the drug.

The company strengthened its management team with the addition of Dr. James Roach in early November.  Dr. Roach will be leading the clinical development of Pulmatrix's inhaled drugs for ABPA and COPD.  Dr. Roach was most recently the Chief Medical Officer at Veristat.  Prior to joining Veristat, he served as Senior Vice President, Development and Chief Medical Officer of Momenta Pharmaceuticals, Senior Vice President, Medical Affairs at Sepracor Pharmaceuticals, and Head of Medical Affairs at Millennium Pharmaceuticals.

The firm now has two lead candidates in mid-stage clinical development.  By year-end, Pulmatrix plans to file an IND application for PUR1900.  The next potential value-driving opportunity for Pulmatrix will come from the data readout from the Phase 1 trial involving PUR1900, expected in mid-2018 and from the Phase 2 trial involving PUR1800 which is anticipated before the end of 2018.  


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