Quarterly Report for Quarter Ending June 30, 2025 (Form 10-Q)

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 21, 2025 (the "Annual Report"). 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 risk that the conditions to closing (the "Closing") of the potential Merger with Cullgen (each as defined herein) are not satisfied, including failure to obtain stockholder approval for the transactions;
	●	the risk that we are unable to meet expectations regarding the timing and completion of the Merger;
	●	uncertainties as to the timing and costs of the consummation of the transactions contemplated by the Merger Agreement (as defined herein);
	●	the occurrence of any event, change or other circumstance or condition that could give rise to the termination of the Merger Agreement;
	●	the risk that the Merger Agreement may be terminated in circumstances that require us to pay a termination fee;
	●	the outcome of any legal proceedings that may be instituted against us, Cullgen, or any of each company's respective directors or officers related to the Merger Agreement or the transactions contemplated thereby;
	●	should we resume development of our product candidates, 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;
	●	should we resume development of our product candidates, our inability to carry out research, development and commercialization plans;
	●	should we resume development of our product candidates, our inability to manufacture our product candidates on a commercial scale on our own or in collaborations with third parties;

	●	should we resume development of our product candidates, our inability to complete preclinical testing and clinical trials as anticipated;
	●	should we resume development of our product candidates, our collaborators' inability to successfully carry out their contractual duties;
	●	should we resume development of our product candidates, termination of certain license agreements;
	●	should we resume development of our product candidates, our ability to adequately protect and enforce rights to intellectual property, or defend against claims of infringement by others;
	●	our ability to maintain compliance with the listing standards of the Nasdaq Capital Market;
	●	economic and market conditions; and
	●	should we resume development of our product candidates, difficulties in obtaining financing on commercially reasonable terms, or at all.

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 biopharmaceutical company that has focused on the development of novel inhaled therapeutic products intended to prevent and treat migraine and respiratory diseases with important unmet medical needs using our patented iSPERSE™ technology. Our proprietary product pipeline includes treatments for central nervous system ("CNS") disorders such as acute migraine and serious lung diseases such as Chronic Obstructive Pulmonary Disease ("COPD") and allergic bronchopulmonary aspergillosis ("ABPA"). 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™, 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.

After a comprehensive review of strategic alternatives, including identifying and reviewing potential candidates for a strategic transaction, on November 13, 2024, we entered into the Agreement and Plan of Merger and Reorganization, as amended by Amendment No. 1 ("Amendment No. 1") thereto on April 7, 2025 (as amended by Amendment No. 1, the "Merger Agreement"), pursuant to which, among other matters, PCL Merger Sub, Inc., our direct wholly owned subsidiary, will merge with and into Cullgen Inc. ("Cullgen"), with Cullgen surviving as our wholly owned subsidiary and the surviving corporation of the merger (the "Merger"). The Merger Agreement was unanimously approved by our board of directors, which resolved to recommend approval of the Merger Agreement to our stockholders.

On June 16, 2025, we held a special meeting in lieu of the annual meeting of Pulmatrix stockholders, at which special meeting our stockholders approved the Merger and related proposals. The Closing is subject to other customary closing conditions, including Nasdaq's approval of the listing of the shares of Pulmatrix common stock to be issued in connection with the Merger and approval from the China Security Regulatory Commission ("CSRC") pursuant to the Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Enterprises (the "Trial Measures"), No. 1 to No. 6 Supporting Guidance Rules, the Notice on Administration Arrangements for the Filing of Overseas Listings by Domestic Enterprises and the relevant CSRC Answers to Reporter Questions on the official website of the CSRC. These regulations established a filing-based regime to regulate overseas offerings and listings by Chinese domestic companies. As of the date of this filing, Pulmatrix has not yet received approval from the CSRC to complete the Merger. On August 1, 2025, Pulmatrix and Cullgen, as provided for in the Merger Agreement, mutually agreed to extend the term of the Merger Agreement by 60 days from an end date of August 13, 2025 to a new term end date of October 12, 2025.

If the Merger is completed, the business of Cullgen will continue as the business of the combined company. We are currently seeking opportunities to monetize iSPERSE™ and our existing clinical assets.

Our future operations are highly dependent on the success of the Merger and there can be no assurances that the Merger will be successfully consummated. There can be no assurance that the strategic review process or any transaction relating to a specific asset, including the Merger and any asset sale, will result in us pursuing such a transaction, or that any transactions, if pursued, will be completed on terms favorable to us and our stockholders in the existing Pulmatrix entity or any possible entity that results from a combination of entities. If the strategic review process is unsuccessful, and if the Merger is not consummated, the Pulmatrix board of directors may decide to pursue a dissolution and liquidation of the Company.

Our goal has been 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 of clinical assets is aligned to this goal and includes 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 PUR3100 for the treatment of acute migraine, PUR1800 for the treatment of acute exacerbations of chronic obstructive pulmonary disease ("AECOPD"), and PUR1900 for the treatment of ABPA in patients with asthma and in patients with cystic fibrosis. Each program is enabled by its unique iSPERSE™ formulation designed to achieve specific therapeutic objectives.

In connection with the Merger, we are exploring opportunities to monetize these clinical assets and have paused the development of these product candidates. Continued development of these candidates, if that were to occur, would be contingent on securing additional funding and would require significant expenditures to advance. Thereafter, if development of such product candidates were to be continued and successfully advanced (of which there can be no assurance), it would be necessary to seek and obtain marketing approval to commercialize such product candidates, which could be expected to require the expenditure of significant additional resources and expenses related to regulatory, product sales, medical affairs, marketing, manufacturing and distribution.

Contingent on securing additional funding and continuing development of these candidates, we would expect to continue to incur substantial expenses and operating losses for at least the next several years, as we would:

●

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 Food and Drug Administration ("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 completed 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 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 Tmax and Cmax within the targeted therapeutic range for all three doses tested. The Phase 1 study data was presented at the American Headache Society 65th Annual Meeting in June 2023. In May 2024, we announced a peer-reviewed publication of Phase 1 clinical results in the publication Headache: The Journal of Head and Face Pain.
		In September 2023, we announced the FDA's acceptance of an 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. 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.
	●	Pursue partnership or other alternatives to monetize or advance PUR1800, focusing on the development of an orally inhaled kinase inhibitor for treatment of AECOPD.
		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. The results indicated PUR1800 was safe and well tolerated with no observed safety signals. The topline data, along with the results from chronic toxicology studies, support the continued development of PUR1800 for the treatment of AECOPD and other inflammatory respiratory diseases.
	●	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, including those with important unmet medical needs.
		To add additional inhaled therapeutics to our development pipeline and facilitate additional collaborations, we are leveraging our iSPERSE™ technology and our expertise in inhaled therapeutics and particle engineering to identify potential product candidates.
	●	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 June 30, 2025, our patent portfolio related to iSPERSE™ included approximately 146 granted patents, 18 of which are granted US patents, with expiration dates from 2026 to 2043, and approximately 54 additional pending patent applications in the US and other jurisdictions. Our in-licensed portfolio related to kinase inhibitors included approximately 283 granted patents, 33 of which are granted US patents, with expiration dates from 2029 to 2035, and approximately 13 additional pending patent applications in the US and other jurisdictions. We have national phase applications pending in Australia, Brazil, Canada, China, Europe, Israel, India, Japan, Korea, Mexico, New Zealand, Russia, and the United States that cover certain formulations and methods of use relevant to our PUR3100 program.
	●	Seek partnerships and license agreements to support the product development and commercialization of our product candidates.
		In order to advance our clinical programs, we may seek partners or licensees in areas of pharmaceutical and clinical development.

Therapeutic Candidates

PUR3100

We are currently exploring opportunities to monetize PUR3100.

In 2020, we developed PUR3100, the iSPERSE^™ formulation of DHE, for the treatment of acute migraine. Currently DHE is only available as subcutaneous, intravenous infusion or intranasal delivery. If approved for commercialization, PUR3100 has the opportunity to be the first orally inhaled DHE treatment for acute migraine and be an alternative to other acute therapies. Given the oral inhaled route of delivery, PUR3100 is anticipated to provide relief from the rapid onset of migraine symptoms and provide a favorable tolerability profile.

A total of three 14-day GLP toxicology studies have been completed with PUR3100 to support single-dose clinical studies. We are planning to conduct a chronic toxicology study to support long-term dosing. Based on discussions with the FDA, this would complete the non-clinical requirements to support an NDA.

Our interactions with the FDA have indicated that, in addition to 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. 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. This study may also provide preliminary comparative bioavailability data to support the use of the 505(b)(2) pathway for marketing authorization. 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. We presented the Phase 1 study data at the American Headache Society 65th Annual Meeting in June 2023. The study showed that PUR3100 achieved peak exposures in the targeted therapeutic range and time to maximum concentration occurred at five minutes after dosing at all dosing levels. The PUR3100 dose groups also showed a lower incidence of nausea and no vomiting compared to observations of nausea and vomiting in the IV administered DHE dose group.

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 known to be 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 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.

On May 15, 2024, we announced publication of, "Safety, tolerability, and pharmacokinetics of a single orally inhaled dose of PUR3100, a dry powder formulation of dihydroergotamine versus intravenous dihydroergotamine: A Phase 1 randomized, double-blind study in healthy adults" in the peer-reviewed publication Headache: The Journal of Head and Face Pain.

We believe that in this trial, PUR3100 demonstrated the potential for rapid pain relief and improved DHE tolerability versus IV DHE. With a T_max of 5 minutes and a C_max in the therapeutic window for all doses tested, we believe that PUR3100 has the potential to address an unmet need for acute migraine sufferers and we are pursuing different options to advance PUR3100 into a Phase 2 clinical trial to further investigate its promising profile in treating acute migraine.

The completed Phase 1 study demonstrated optimal pharmacokinetics and improved tolerability of PUR3100 compared to IV DHE. The Phase 1 trial was a randomized, double-dummy, double-blinded design to assesses the safety, tolerability, and pharmacokinetics (PK) of three dose groups treated with inhaled PUR3100 with intravenous (IV) placebo, compared to a single dose of IV DHE (DHE mesylate injection) with inhaled placebo in healthy volunteers. All doses of PUR3100 were generally well tolerated with a lower incidence of nausea (21% vs. 86%), vomiting (0% vs. 29%), and headache (16% vs. 57%) compared to IV DHE. The PK profile of PUR3100 versus IV DHE was characterized by a similar mean time to C_max (5 vs. 5.5 min), with reduced AUC0-2h (1120-4320 vs. 6340), and a lower C_max (3620-14,400 vs. 45,000). All doses of PUR3100 were associated with mean C_max above the minimum level required to achieve efficacy (1000 pg/mL).

PUR1800

We are currently exploring opportunities to monetize 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 a Phase 1b safety, tolerability, and pharmacokinetics of PUR1800 for patients with stable moderate-severe COPD. Topline data was delivered in the first quarter of 2022 and presented at the American Academy of Allergy, Asthma and Immunology conference in the first quarter of 2023.

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 COPD were enrolled. Safety and tolerability, as well as systemic pharmacokinetics ("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, support the continued development of PUR1800 for the treatment of AECOPD and other inflammatory respiratory diseases. These data will inform the design of a potential Phase 2 study in the treatment of AECOPD.

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 diseases such as steroid resistant asthma, COPD, or idiopathic pulmonary fibrosis. While the program is currently in development for treatment of acute exacerbation of COPD, these positive toxicology study results could expand potential indications and value of the program.

PUR1900

We are currently exploring opportunities to monetize PUR1900 within the United States.

On April 15, 2019, we entered into a Development and Commercialization Agreement (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 an amendment to the Cipla Agreement on November 8, 2021 (the "Second Amendment") and a subsequent amendment on January 6, 2024 (the "Third Amendment"). All references to the Cipla Agreement herein refer to the Cipla Agreement, as amended. The Cipla Agreement will remain in effect in perpetuity, unless otherwise earlier terminated in accordance with its terms.

Pursuant to the Third Amendment, all development and commercialization activities with respect to the Product in all markets other than the United States (the "Cipla Territory") will be conducted exclusively by Cipla at Cipla's sole cost and expense, and Cipla shall be entitled to all profits from the sale of the Product in the Cipla Territory, except that we will receive 2% royalties on any potential future net sales by Cipla outside the United States.

Also pursuant to the Third Amendment, we and Cipla stopped patient enrollment for the ongoing Phase 2b clinical study. We agreed that during the period commencing on January 6, 2024 and ending July 30, 2024 (the "Wind Down Period"), we would complete all Phase 2b activities, assign or license all patents to Cipla and their registration with the appropriate authorities in the Cipla Territory, complete a physical and demonstrable technology transfer and secure all data from the Phase 2b study for inclusion in the safety database for the Cipla Territory.

We completed all Phase 2b wind down activities in the third quarter of 2024. As such, we no longer bear further financial responsibility for the commercialization and development with respect to the Product in the Cipla Territory, with such commercialization and development expenses of the Product in the Cipla Territory to be borne at Cipla's sole cost and expense after January 6, 2024.

Our partner Cipla has continued clinical development outside the United States and India's Central Drug Standard Control Organization has accepted Cipla's Phase 2 clinical trial results for inhaled itraconazole dry powder formulation and approved the company's proposal to proceed with Phase 3 trials. Should Cipla successfully market PUR1900 outside the United States, Pulmatrix will receive 2% royalties on any potential future net sales by Cipla outside the United States. Within the United States, we and Cipla will seek to monetize PUR1900 for indications where an orally inhaled antifungal may provide a therapeutic benefit or fulfill an unmet medical need.

Financial Overview

Revenues

To date, we have not generated any product sales. No revenues were recognized for the six months ended June 30, 2025, and the revenues for the three and six months ended June 30, 2024, were primarily generated from the Cipla Agreement as related to our PUR1900 program, for which wind down activities have been completed.

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 contract research organizations ("CROs") or contract manufacturing organizations ("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 have been central to our business model. We have utilized 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 have included work with consultants and substantial work at CROs and CMOs. We have historically supported an internal research and development team and facility for our pipeline and other potential development programs, however following the closing of the transaction with MannKind Corporation ("MannKind" and such transactions, the "MannKind Transaction") in the third quarter of 2024, in which the majority of our research and development employees were terminated and our facility lease was assigned to MannKind, we expect to utilize external resources for further development.

To continue development of existing programs or opportunities identified for iSPERSE™ in any new indications, we will need to secure additional funding and anticipate additional development costs would be incurred. 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 our future clinical trials and development of our product candidates will depend on a variety of factors, including the selected development path and uncertainties associated with clinical and preclinical studies, clinical trial enrollment rates 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, professional fees for consulting, auditing and tax services, and expenses related to the Company's exploration of strategic alternatives, including the Merger.

Critical Accounting 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, revenues and expenses and the disclosure of contingent assets and liabilities in our condensed consolidated financial statements. We base our estimates on historical experience, known trends and events, and other assumptions that we believe are reasonable under the circumstances, and we evaluate these estimates on an ongoing basis. Actual results may differ from these estimates under different assumptions or conditions.

Results of Operations

Comparison of the Three Months Ended June 30, 2025, and 2024

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

		Three Months Ended June 30,
		2025				2024				Change
Revenues		$	-				1,552				(1,552	)
Operating expenses:
Research and development			14				2,834				(2,820	)
General and administrative			1,534				2,001				(467	)
Loss on MannKind Transaction			-				2,618				(2,618	)
Total operating expenses			1,548				7,453				(5,905	)
Loss from operations			(1,548	)			(5,901	)			4,353
Other income (expense):
Interest income			41				133				(92	)
Fair value adjustment of warrants			1				-				1
Other expense, net			(43	)			(43	)			-
Net loss		$	(1,549	)			(5,811	)			4,262

Revenues - No revenues were recognized for the three months ended June 30, 2025, as compared to $1.6 million for the three months ended June 30, 2024, a decrease of $1.6 million. The decrease is primarily related to completion of the wind down of the PUR1900 Phase 2b clinical trial during the year ended December 31, 2024.

Research and development expenses - Research and development expenses were less than $0.1 million for the three months ended June 30, 2025, as compared to $2.8 million for the three months ended June 30, 2024, a decrease of approximately $2.8 million. The decrease was primarily due to $2.2 million less employment and other operating cost following the MannKind Transaction and $0.6 million less cost incurred on the PUR1900 program, for which the winding down of the Phase 2b clinical trial was completed during the year ended December 31, 2024.

General and administrative expenses - General and administrative expenses were $1.5 million for the three months ended June 30, 2025, as compared to $2.0 million for the three months ended June 30, 2024, a decrease of approximately $0.5 million. The decrease was primarily due to $0.9 million of decreased employment and other operating costs, partially offset by $0.4 million of costs related to the Merger.

Comparison of the Six Months Ended June 30, 2025, and 2024

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

		Six Months Ended June 30,
		2025				2024				Change
Revenues		$	-				7,437				(7,437	)
Operating expenses:
Research and development			33				6,346				(6,313	)
General and administrative			3,362				3,627				(265	)
Loss on MannKind Transaction			-				2,618				(2,618	)
Total operating expenses			3,395				12,591				(9,196	)
Loss from operations			(3,395	)			(5,154	)			1,759
Other income (expense):
Interest income			94				293				(199	)
Fair value adjustment of warrants			67				-				67
Other expense, net			(123	)			(125	)			2
Net loss		$	(3,357	)			(4,986	)			1,629

Revenues - No revenues were recognized for the six months ended June 30, 2025, as compared to $7.4 million for the six months ended June 30, 2024, a decrease of $7.4 million. The decrease is primarily related to completion of the wind down of the PUR1900 Phase 2b clinical trial during the year ended December 31, 2024.

Research and development expenses - Research and development expenses were less than $0.1 million for the six months ended June 30, 2025, as compared to $6.3 million for the six months ended June 30, 2024, a decrease of approximately $6.3 million. The decrease was primarily due to $4.5 million less employment and other operating cost following the MannKind Transaction, $1.7 million less cost incurred on the PUR1900 program, for which the winding down of the Phase 2b clinical trial was completed during the year ended December 31, 2024, and $0.1 million less cost incurred on the PUR3100 and PUR1800 programs.

General and administrative expenses - General and administrative expenses were $3.4 million for the six months ended June 30, 2025, as compared to $3.6 million for the six months ended June 30, 2024, a decrease of approximately $0.3 million. The decrease was primarily due to $1.4 million of decreased employment and other operating costs, partially offset by $1.1 million of costs related to the Merger.

Liquidity and Capital Resources

Through June 30, 2025, we incurred an accumulated deficit of $300.5 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 June 30, 2025, was $5.8 million.

We anticipate that we will continue to incur significant expenses in connection with pursuing strategic alternatives, including as related to and in connection with the Merger. Contingent on securing additional funding and continuing development of our program candidates, we anticipate that we would continue to incur losses over the next several years due to development costs associated with our iSPERSE™ pipeline programs. We expect that we would need additional capital to fund our operations as we continue to incur research and development and general and administrative expenses. We may raise such capital through a combination of equity offerings, debt financings, other third-party funding and other collaborations and strategic alliances.

We expect that our existing cash and cash equivalents as of June 30, 2025, will enable us to fund our corporate operating expenses for at least the next 12 months following the date of this Quarterly Report on Form 10-Q. 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 the Merger, 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):

		Six Months Ended June 30,
		2025				2024
Net cash used in operating activities		$	(3,696	)		$	(6,396	)
Net cash used in investing activities			-				(398	)
Net decrease in cash, cash equivalents, and restricted cash		$	(3,696	)		$	(6,794	)

Net cash used in operating activities

Net cash used in operating activities for the six months ended June 30, 2025, was $3.7 million, which was primarily the result of $3.4 million of net loss, $0.3 million of cash outflows associated with changes in operating assets and liabilities and less than $0.1 million in net non-cash adjustments.

Net cash used in operating activities for the six months ended June 30, 2024, was $6.4 million, which was primarily the result of $5.0 million of net loss and $4.8 million in cash outflows associated with changes in operating assets and liabilities, partially offset by $3.4 million of net non-cash adjustments.

Net cash used in investing activities

No cash was used in investing activities for the six months ended June 30, 2025. Net cash used in investing activities for the six months ended June 30, 2024, was $0.4 million, which was due to purchases of property and equipment.

Financings

In May 2021, we entered into the At The Market Offering Agreement (the "Sales Agreement") with H.C. Wainwright ("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 "at-the-market" offering (the "ATM Offering"). Upon filing of the Annual Report, we continued to be subject to General Instruction I.B.6 of Form S-3, pursuant to which in no event will we sell our common stock in a registered primary offering using Form S-3 with a value exceeding more than one-third of our public float in any 12 calendar month period so long as our public float remains below $75,000,000. Therefore, the amount we may be able to raise using the ATM Offering will be significantly less than $20,000,000, until such time as our public float held by non-affiliates exceeds $75,000,000.

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 17, 2024, and subsequently declared effective on May 30, 2024 (File No. 333-279491), 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 six months ended June 30, 2025, and 2024, no shares of our common stock were sold under the Sales Agreement.

Known Trends, Events and Uncertainties

The Company is subject to risks and uncertainties including, should it resume development of its product candidates, risks and uncertainties common to companies in the biopharmaceutical industry, including but not limited to, risks associated with completing preclinical studies and clinical trials, receiving regulatory approvals for product candidates, development by competitors of new biopharmaceutical products, dependence on key personnel, protection of proprietary technology, compliance with government regulations and the ability to secure additional capital to fund operations. Should the Company resume development of its product candidates, significant additional research and development efforts, including preclinical and clinical testing and regulatory approval, prior to commercialization, would be required. These efforts would require significant amounts of additional capital, adequate personnel and infrastructure and extensive compliance-reporting capabilities. Even if the Company's product development efforts are successful, should the Company resume development of its product candidates, it is uncertain when, if ever, the Company would realize revenue from product sales. Additionally, recent changes to U.S. policy implemented by the U.S. Congress, the Trump administration or any new administration have impacted and may in the future impact, among other things, the U.S. and global economy, tariffs, international trade relations, unemployment, immigration, healthcare, taxation, the U.S. regulatory environment, inflation and other areas. Although we cannot predict the impact, if any, of these changes to our business, they could adversely affect our business.