Executive Summary / Key Takeaways

• Strategic Transformation: Pulmatrix is undergoing a significant strategic pivot, with its future operations hinging on a proposed reverse merger with Cullgen Inc. This transaction, if completed, will see Cullgen stockholders owning approximately 96.4% of the combined entity, effectively transforming Pulmatrix into a targeted protein degradation company.
• Asset Monetization Focus: Concurrent with the merger, Pulmatrix plans to divest its proprietary iSPERSE technology and its existing clinical assets, including the Phase 2-ready acute migraine candidate PUR3100, PUR1800 for AECOPD, and its royalty interest in PUR1900.
• Challenging Financials & Liquidity: For the three and nine months ended September 30, 2025, Pulmatrix reported no revenue, a sharp decline from the prior year, and a net loss of $0.877 million and $4.23 million, respectively. The company held $4.8 million in cash and cash equivalents as of September 30, 2025, which is projected to fund operations into the fourth quarter of 2026, contingent on operational efficiencies and spending prioritization.
• Critical Regulatory Hurdle: The merger's completion remains subject to customary closing conditions, most notably approval from the China Security Regulatory Commission (CSRC), which was still pending as of the October 16, 2025 filing.
• High-Stakes Outlook: Should the merger not materialize, Pulmatrix's board may consider dissolution and liquidation, highlighting the critical nature of the current strategic path.

A Biotech Evolution: From Inhaled Therapies to a New Strategic Vision

Pulmatrix, Inc., founded in 2003 and incorporated in 2013, has historically positioned itself as a biopharmaceutical company dedicated to developing novel inhaled therapeutic products. The company's core strength lies in its patented iSPERSE technology, a proprietary dry powder delivery platform engineered to deliver small, dense particles with high dispersibility and efficient delivery directly to the airways. This technology is designed to optimize pharmacokinetics, reduce systemic side effects, and improve patient outcomes for both respiratory and non-respiratory diseases. The iSPERSE platform offers several tangible benefits, including enhanced drug loading and delivery efficiency that surpasses traditional lactose-blend inhaled dry powder therapies. It can deliver high drug payloads, up to 60-80% drug molecule(s) per powder volume, accommodating both large molecules like proteins and peptides, and low potency drugs. Furthermore, iSPERSE has demonstrated superior delivery efficiency, delivering over two times more lung dose of active pharmaceutical ingredients compared to conventional lactose-blended products like Advair Diskus in preclinical studies. This improved efficiency, coupled with flow rate independent performance, expands its applicability across a broad range of patient populations, including those with impaired lung function.

The company's pipeline, built upon iSPERSE, includes PUR3100 for acute migraine, PUR1800 for acute exacerbations of chronic obstructive pulmonary disease (AECOPD), and PUR1900 for allergic bronchopulmonary aspergillosis (ABPA). PUR3100, an orally inhaled dihydroergotamine (DHE), aims to be the first of its kind for acute migraine treatment. Phase 1 clinical results demonstrated rapid systemic exposure, with peak concentrations achieved within five minutes of dosing, and a significantly improved tolerability profile compared to intravenous DHE, showing a lower incidence of nausea (21% vs. 86%), no vomiting (0% vs. 29%), and reduced headache (16% vs. 57%). This positions PUR3100 as a Phase 2-ready asset with FDA Investigational New Drug (IND) acceptance. PUR1800, a Narrow Spectrum Kinase Inhibitor, completed Phase 1b studies for AECOPD, showing it was well-tolerated with low and consistent systemic exposure. Chronic toxicology studies further support its potential for chronic dosing, opening avenues for other inflammatory respiratory diseases. PUR1900, an inhaled itraconazole formulation, was previously co-developed with Cipla, with Pulmatrix now retaining a 2% royalty on net sales outside the United States.

Despite the promising technological foundation and early clinical data, Pulmatrix is currently undergoing a profound strategic transformation. The company's future is largely tied to a proposed reverse merger with Cullgen Inc., a privately-held, clinical-stage biopharmaceutical company focused on targeted protein degradation technology. This merger, approved by Pulmatrix stockholders in June 2025, is designed to create a Nasdaq-listed entity primarily focused on Cullgen's pipeline of three degrader programs in Phase 1 clinical trials for cancer and pain management. Upon closing, pre-merger Cullgen stockholders are expected to own approximately 96.4% of the combined company, with pre-merger Pulmatrix stockholders holding about 3.6%. This significant ownership shift underscores the transformative nature of the deal, effectively pivoting Pulmatrix's strategic direction.

Competitive Landscape and Strategic Positioning

Pulmatrix operates in a highly competitive biopharmaceutical landscape, particularly within inhaled therapies for respiratory and central nervous system disorders. Its iSPERSE technology offers a differentiated approach to drug delivery, potentially providing superior efficacy and tolerability compared to conventional methods. This technological edge is a key competitive advantage, allowing for more efficient drug targeting and reduced side effects. For instance, in the acute migraine space, PUR3100's rapid onset and improved tolerability profile against intravenous DHE could carve out a significant niche.

However, Pulmatrix faces formidable competition from established pharmaceutical giants such as GlaxoSmithKline (GSK), AstraZeneca (AZN), and Novartis (NVS), all of whom possess extensive portfolios in respiratory treatments, robust R&D capabilities, and vast global distribution networks. These larger players benefit from stronger revenue growth, higher profitability margins, and superior cash flow generation due to their scale and diversified product lines. While Pulmatrix's iSPERSE technology may offer notably better targeted delivery for specific conditions, its market positioning is significantly weaker due to its smaller scale and clinical-stage status. The company's strategy of developing specialized inhaled therapies for unmet needs provides a unique value proposition, but it lags behind these industry leaders in overall innovation speed, product diversity, and financial health.

Vertex Pharmaceuticals (VRTX), a specialist in cystic fibrosis, also represents a strong competitor in a potentially overlapping area for inhaled therapies. Vertex's dominance in its core market, characterized by rapid revenue growth and high profitability, highlights the challenge for smaller players like Pulmatrix to gain significant market share. Pulmatrix's niche expertise in inhalation technology could provide advantages in delivery for certain conditions, but it trails in revenue generation and market capture. The company's reliance on partnerships, such as the royalty agreement with Cipla for PUR1900, reflects a strategic response to these competitive pressures, leveraging external resources for commercialization while retaining a financial interest.

Financial Performance and Liquidity: A Company in Transition

Pulmatrix's recent financial performance reflects its strategic pivot and the winding down of certain development programs. For the three months ended September 30, 2025, the company reported no revenue, a decrease from $0.366 million in the same period of 2024. Similarly, for the nine months ended September 30, 2025, revenue was zero, a substantial drop from $7.803 million in the prior year. This decline is primarily attributed to the completion of the wind-down activities for the PUR1900 Phase 2b clinical trial.

Operating expenses have seen a significant reduction. Research and development expenses decreased to less than $0.1 million for the three months ended September 30, 2025, from $0.814 million in the prior year, and to $0.041 million for the nine months, from $7.160 million. This substantial decrease was largely due to reduced employment and other operating costs following the MannKind (MNKD) Transaction in the third quarter of 2024, which also involved the assignment of the company's facility lease. General and administrative expenses also fell to $0.858 million for the three months and $4.220 million for the nine months ended September 30, 2025, compared to $2.209 million and $5.836 million, respectively, in the prior year. These reductions were mainly driven by decreased employment, legal, and professional services costs, although the nine-month period saw some offset from costs related to the proposed merger.

The company reported a net loss of $0.877 million for the third quarter of 2025, a notable improvement from a $2.587 million loss in the same period last year. For the nine months ended September 30, 2025, the net loss was $4.234 million, compared to $7.573 million in 2024. Despite these reduced losses, Pulmatrix has accumulated a significant deficit of $301.40 million as of September 30, 2025, primarily from its historical research and development activities.

In terms of liquidity, Pulmatrix held $4.8 million in cash and cash equivalents as of September 30, 2025. Management anticipates this cash position, coupled with operational efficiencies and spending prioritization, will be sufficient to fund its operations into the fourth quarter of 2026. However, this projection is highly dependent on the successful consummation of the merger and the planned divestment of its assets. Net cash used in operating activities for the nine months ended September 30, 2025, was $4.70 million.

Outlook and Critical Risks

The immediate future of Pulmatrix is inextricably linked to the successful completion of its proposed merger with Cullgen. The company expects to declare a cash dividend to its pre-merger stockholders, derived from the amount by which its net cash exceeds $2.50 million, subject to certain adjustments. The merger's exchange ratio is based on a valuation of $10.50 million for Pulmatrix (comprising $8 million in enterprise value and $2.50 million in cash) and $280 million for Cullgen. This transaction represents a clear strategic shift, with the combined entity focusing on Cullgen's targeted protein degradation technology.

A critical risk to this outlook is the pending approval from the China Security Regulatory Commission (CSRC), which is a necessary closing condition for the merger. As of the October 16, 2025 filing, this approval had not yet been received, leading to an extension of the merger agreement's "End Date" to October 12, 2025. The merger agreement also includes termination rights for both parties, with potential termination fees ranging from $0.42 million payable by Pulmatrix to Cullgen, or $2.80 million to $8.40 million payable by Cullgen to Pulmatrix, depending on the circumstances.

Should the merger not be consummated, Pulmatrix faces significant challenges. While the company believes its current cash position could fund operations for at least twelve months if the merger fails, continuing the development of its product candidates would necessitate substantial additional funding from equity, debt, or collaborations. Such funding may not be available on acceptable terms, or at all. In such a scenario, the board of directors may consider a dissolution and liquidation of the company. Furthermore, if Pulmatrix were to resume independent development, it would encounter extensive regulatory processes, uncertainties in clinical trials, and the ongoing need to protect its intellectual property.

Conclusion

Pulmatrix stands at a pivotal juncture, with its destiny largely determined by the outcome of the proposed reverse merger with Cullgen Inc. This transaction represents a strategic reorientation, shifting the company's focus from its proprietary iSPERSE inhaled drug delivery technology and related clinical assets to Cullgen's targeted protein degradation platform. The planned divestment of its existing assets, including the promising PUR3100 for acute migraine, underscores this transformative pivot.

While the iSPERSE technology offers a compelling competitive advantage in efficient and targeted drug delivery, as evidenced by the positive clinical data for PUR3100 and PUR1800, the company's current financial state, marked by zero revenue and an accumulated deficit, necessitates this high-stakes strategic move. The successful completion of the merger, particularly obtaining the crucial CSRC approval, is paramount for Pulmatrix's future. Investors must closely monitor the progress of this regulatory hurdle, as its failure could lead to a challenging path, including the potential for dissolution. The investment thesis for Pulmatrix is thus a binary one, heavily weighted on the successful execution of this merger and the subsequent monetization of its valuable, albeit currently paused, technological portfolio.