PULM Pulmatrix Inc

 

 

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 June 30, 2024

 

or

 

☐	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.)
945 Concord Street, Suite 1217 Framingham, MA		01701
(Address of principal executive offices)		(Zip Code)

 

(888) 355-4440

Registrant’s telephone number, including area code

 

36 Crosby Drive, Suite 100

Bedford, MA 01730

Former name, former address and former fiscal year, if changed since last report

 

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 August 8, 2024, the registrant had 3,652,285 shares of common stock outstanding.

 

 

 

PULMATRIX, INC.

FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2024

TABLE OF CONTENTS

 

		Page No.
PART I—FINANCIAL INFORMATION
Item 1.	Condensed Consolidated Financial Statements (unaudited)	1
	Consolidated Balance Sheets as of June 30, 2024 and December 31, 2023	1
	Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2024 and 2023	2
	Consolidated Statements of Stockholders’ Equity for the Three and Six Months Ended June 30, 2024 and 2023	3
	Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2024 and 2023	4
	Notes to Condensed Consolidated Financial Statements	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	15
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	24
Item 4.	Controls and Procedures	25
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	26
Item 5.	Other Information	26
Item 6.	Exhibits	26
SIGNATURES		27

 

 

PART I—FINANCIAL INFORMATION

 

Item 1. Condensed Consolidated Financial Statements.

 

PULMATRIX, INC.

Consolidated Balance Sheets

(in thousands, except share and per share data)

 

		June 30, 2024				December 31, 2023
		(unaudited)
Assets
Current assets:
Cash and cash equivalents		$	12,379			$	19,173
Restricted cash			1,421				-
Accounts receivable			635				928
Prepaid expenses and other current assets			1,201				742
Total current assets			15,636				20,843
Property and equipment, net			-				1,158
Operating lease right-of-use asset			-				10,309
Long-term restricted cash			51				1,472
Other long-term assets			93				176
Total assets		$	15,780			$	33,958
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable		$	393			$	1,915
Accrued expenses and other current liabilities			1,783				947
Operating lease liability			24				429
Deferred revenue			270				618
Total current liabilities			2,470				3,909
Deferred revenue, net of current portion			-				3,727
Operating lease liability, net of current portion			-				8,327
Total liabilities			2,470				15,963
Commitments and contingencies (Note 10)			-				-
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 June 30, 2024 and December 31, 2023			-				-
Common stock, $0.0001 par value — 200,000,000 shares authorized; 3,652,285 shares issued and outstanding at June 30, 2024 and December 31, 2023			-				-
Additional paid-in capital			305,893				305,592
Accumulated deficit			(292,583	)			(287,597	)
Total stockholders’ equity			13,310				17,995
Total liabilities and stockholders’ equity		$	15,780			$	33,958

 

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)

 

		2024				2023				2024				2023
		Three Months Ended June 30,								Six Months Ended June 30,
		2024				2023				2024				2023
Revenues		$	1,552			$	1,844			$	7,437			$	3,343
Operating expenses:
Research and development			2,834				4,165				6,346				8,039
General and administrative			2,001				1,670				3,627				3,880
Loss on disposal group held for sale			2,618				-				2,618				-
Total operating expenses			7,453				5,835				12,591				11,919
Loss from operations			(5,901	)			(3,991	)			(5,154	)			(8,576	)
Other income (expense):
Interest income			133				236				293				458
Other expense, net			(43	)			(61	)			(125	)			(146	)
Total other income, net			90				175				168				312
Net loss		$	(5,811	)		$	(3,816	)		$	(4,986	)		$	(8,264	)
Net loss per share attributable to common stockholders – basic and diluted		$	(1.59	)		$	(1.04	)		$	(1.37	)		$	(2.26	)
Weighted average common shares outstanding – basic and diluted			3,652,285				3,652,285				3,652,285				3,651,531

 

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, 2024			-			$	-				3,652,285			$	-			$	305,592			$	(287,597	)		$	17,995
Stock-based compensation			-				-				-				-				198				-				198
Net income			-				-				-				-				-				825				825
Balance — March 31, 2024			-			$	-				3,652,285			$	-			$	305,790			$	(286,772	)		$	19,018
Balance			-			$	-				3,652,285			$	-			$	305,790			$	(286,772	)		$	19,018
Stock-based compensation			-				-				-				-				103				-				103
Net loss			-				-				-				-				-				(5,811	)			(5,811	)
Balance — June 30, 2024			-			$	-				3,652,285			$	-			$	305,893			$	(292,583	)		$	13,310
Balance			-			$	-				3,652,285			$	-			$	305,893			$	(292,583	)		$	13,310

 

		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
Balance			-			$	-				3,652,285			$	-			$	304,934			$	(277,924	)		$	27,010
Stock-based compensation			-				-				-				-				255				-				255
Net loss			-				-				-				-				-				(3,816	)			(3,816	)
Net income (loss)			-				-				-				-				-				(3,816	)			(3,816	)
Balance — June 30, 2023			-			$	-				3,652,285			$	-			$	305,189			$	(281,740	)		$	23,449
Balance			-			$	-				3,652,285			$	-			$	305,189			$	(281,740	)		$	23,449

 

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

 

 

PULMATRIX, INC.

Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

 

		2024				2023
		Six Months Ended June 30,
		2024				2023
Cash flows from operating activities:
Net loss		$	(4,986	)		$	(8,264	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization			106				64
Amortization of operating lease right-of-use asset			329				777
Stock-based compensation			301				551
Loss on disposal group held for sale			2,618				-
Changes in operating assets and liabilities:
Accounts receivable			293				880
Prepaid expenses and other current assets			(459	)			49
Other long-term assets			83				(1,595	)
Accounts payable			(1,522	)			(309	)
Accrued expenses and other current liabilities			1,225				(437	)
Operating lease liability			(309	)			(843	)
Deferred revenue			(4,075	)			(705	)
Net cash used in operating activities			(6,396	)			(9,832	)
Cash flows from investing activities:
Purchases of property and equipment			(398	)			(58	)
Net cash used in investing activities			(398	)			(58	)
Cash flows from financing activities:
Proceeds from issuance of common stock, net of issuance costs			-				53
Net cash provided by financing activities			-				53
Net decrease in cash, cash equivalents and restricted cash			(6,794	)			(9,837	)
Cash, cash equivalents and restricted cash — beginning of period			20,645				37,253
Cash, cash equivalents and restricted cash — end of period		$	13,851			$	27,416
Reconciliation of cash, cash equivalents and restricted cash to the consolidated balance sheets:
Cash and cash equivalents		$	12,379			$	25,791
Restricted cash			1,421				153
Long-term restricted cash			51				1,472
Total cash, cash equivalents and restricted cash		$	13,851			$	27,416
Supplemental disclosures of non-cash investing and financing information:
Reduction of operating lease right-of-use asset and lease liability upon lease modification		$	8,423			$	-
Purchases of property and equipment not yet paid		$	-			$	50
Operating lease right-of-use asset obtained in exchange for operating lease obligation		$	-			$	344

 

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^™, 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 has developed a pipeline of iSPERSE^™-based therapeutic candidates targeted at prevention and treatment of a range of central nervous system, respiratory and other diseases with important 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, 2023, filed with the SEC on March 28, 2024 (the “Annual Report”).

 

The financial information as of June 30, 2024, and for the three and six months ended June 30, 2024 and 2023, 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, 2023 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.

 

Based on its current operating plan, the Company believes that its cash and cash equivalents as of June 30, 2024, will be adequate to fund its currently anticipated operating expenses for at least twelve months from the date these condensed consolidated financial statements are issued. The Company will need to secure additional funding in the future, from one or more equity or debt financings, collaborations, or other sources, in order to carry out all of the Company’s planned research and development activities and regulatory activities; commercialize product candidates; or conduct any substantial, additional development requirements requested by the FDA. Additional funding may not be available to the Company on acceptable terms, or at all. If the Company is unable to secure additional capital, it will be required to significantly decrease the amount of planned expenditures and may be required to cease operations. In addition, any disruption in the capital markets could make any financing more challenging, and there can be no assurance that Pulmatrix will be able to obtain such financing on commercially reasonable terms or at all. Curtailment of operations would cause significant delays in the Company’s efforts to develop and introduce its products to market, which is critical to the realization of its business plan and the future operations of the Company.

 

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 and estimates related to clinical trial accruals and upfront deposits.

 

5

 

 

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 six months ended June 30, 2024, revenue from one customer accounted for 61% and 89%, respectively, of revenue recognized in the accompanying condensed consolidated financial statements. For the three and six months ended June 30, 2023, revenue from one customer accounted for 100% of revenue recognized in the accompanying condensed consolidated financial statements. As of June 30, 2024, two customers accounted for 100% of accounts receivable. As of December 31, 2023, 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 six months ended June 30, 2024, the Company did not make any changes to its significant accounting policies.

 

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. The Company did not adopt any new accounting pronouncements during the six months ended June 30, 2024 that had a material effect on its condensed consolidated financial statements.

 

In December 2023, the FASB issued Accounting Standard Update 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”). The guidance in ASU 2023-09 improves the transparency of income tax disclosures by greater disaggregation of information in the rate reconciliation and income taxes paid disaggregated by jurisdiction. The standard becomes effective for the annual period beginning on January 1, 2025, with early adoption permitted. The Company is currently evaluating the impact that the adoption of ASU 2023-09 may have on its consolidated financial statements.

 

As of June 30, 2024, there are no other new, or existing recently issued, accounting pronouncements that are of significance, or potential significance, that impact the Company’s condensed consolidated financial statements.

 

3. Prepaid Expenses and Other Current Assets

 

Prepaid expenses and other current assets consisted of the following:

Schedule of Prepaid Expenses and Other Current Assets 

		June 30, 2024				December 31, 2023
Clinical and consulting		$	457			$	30
Insurance			438				232
Software and hosting costs			86				108
Other			220				372
Total prepaid expenses and other current assets		$	1,201			$	742

 

6

 

 

4. Property and Equipment, Net

 

The Company’s Property and equipment, net, were included in the disposal group as part of the MannKind Transaction (as defined in Note 6, Significant Agreements. Refer to that note for further details and accounting discussion). The Company recorded a full write-down of its net property and equipment balance as of June 30, 2024:

Schedule of Property and Equipment   

		June 30, 2024				December 31, 2023
Laboratory equipment		$	-			$	1,656
Leasehold improvements			-				-
Office furniture and equipment			-				401
Computer equipment			-				237
Capital in progress			-				600
Total property and equipment			-				2,894
Less accumulated depreciation and amortization			-				(1,736	)
Property and equipment, net		$	-			$	1,158

 

Depreciation and amortization expense for the six months ended June 30, 2024 and 2023 was $106 and $64, respectively.

 

5. Accrued Expenses and Other Current Liabilities

 

Accrued expenses and other current liabilities consisted of the following:

Schedule of Accrued Expenses and Other Current Liabilities 

		June 30, 2024				December 31, 2023
Wages and incentives		$	1,221			$	70
Clinical and consulting			296				347
Legal and patents			223				42
Accrued purchases of property and equipment			-				389
Other			43				99
Total accrued expenses and other current liabilities		$	1,783			$	947

 

6. 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 “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 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, at which point the Company and Cipla each became responsible for a portion of the development costs actually incurred as described below (the “Co-Development Phase”).

 

7

 

 

Pursuant to the Second Amendment, the Company and Cipla were each 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”). 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.

 

Pursuant to the Third Amendment, the Company and Cipla agreed that, during the period commencing on January 6, 2024 and ending July 30, 2024 (the “Wind Down Period”), the Company will complete all Phase 2b activities, assign or license all patents to Cipla and their registration with the appropriate authorities in regions other than the United States, complete a physical and demonstrable technology transfer and secure all data from the Phase 2b study for inclusion in the safety database. The Company will share costs with Cipla during the Wind Down Period in the same proportions in effect with the Second Amendment discussed above, but subject to a maximum reimbursement amount by Cipla as approved by the joint steering committee.

 

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.

 

Revenue is recognized for the 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.

 

The Company concluded that the Third Amendment is a contract modification that should be accounted for as part of the existing contract. During the three and six months ended June 30, 2024, the Company recognized $0.9 million and $6.6 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, as compared to $1.8 million and $3.3 million, respectively, recognized during the three and six months ended June 30, 2023. The revenue recognized during the six months ended June 30, 2024 was primarily associated with the cumulative catch-up recorded in the three months ended March 31, 2024, from the contract modification, that had been included in deferred revenue at the beginning of the period. As of June 30, 2024, the aggregate transaction price related to the Company’s unsatisfied obligations was $0.3 million and was recorded in deferred revenue, all of which was current.

 

8

 

 

Agreements with MannKind Corporation (“MannKind”)

 

On May 28, 2024, the Company executed certain agreements with MannKind and the Company’s landlord (collectively, the “MannKind Transaction”), all of which closed during July 2024. The agreements with MannKind included a Bill of Sale and Assignment Agreement (the “Bill of Sale”) with respect to the assignment of the Company’s rental facility at 36 Crosby Drive, Bedford, Massachusetts (the “Bedford Facility”) to MannKind along with the transfer of all leasehold improvements, laboratory equipment and other related personal property. In connection with the assignment of the Bedford Facility, the Company, MannKind and Cobalt Propco 2020, LLC (the “Landlord”) entered into an Amendment to Lease and Consent to Assignment of Lease (the “Lease Assignment Agreement”) pursuant to that certain Lease Agreement, dated as of January 7, 2022 (the “Lease Agreement”), by and between the Company and the Landlord. Pursuant to the Lease Assignment Agreement, MannKind assumed all of the Company’s obligations under the Lease Agreement, including all rent and other payments.

 

In connection with the transactions contemplated by the Bill of Sale and Lease Assignment Agreement, the Company and MannKind entered into an Intellectual Property Cross License Agreement (the “Cross License Agreement”). Pursuant to the Cross License Agreement, the Company granted to MannKind (i) an exclusive license to develop, use, manufacture, market, offer and sell iSPERSE formulations of Clofazimine, (ii) an exclusive license to develop, use, manufacture, market, offer and sell formulations of iSPERSE with one more active pharmaceutical ingredients for the treatment of nontuberculous mycobacteria lung disease in humans, (iii) an exclusive license to develop, use, manufacture, market, offer and sell iSPERSE formulations of insulin, (iv) a non-exclusive license to develop, use, manufacture, market, offer and sell formulations of iSPERSE with one more active pharmaceutical ingredients for the treatment of endocrine disease in humans, and (v) a non-exclusive license to develop, use, manufacture, market, offer and sell formulations of iSPERSE with one more active pharmaceutical ingredients for the treatment of interstitial lung diseases (including IPF, PPF and other related lung diseases) in humans (collectively, the “Out-License”).

 

Additionally, pursuant to the Cross License Agreement, MannKind granted to the Company (i) the exclusive right to develop, use, manufacture, market, offer and sell its single-use disposable dry powder inhaler (including all modifications or improvement thereto made by or on behalf of the Company, the “Cricket Device”) for the inhaled delivery of dihydroergotamine in any formulation whatsoever, including the Company’s PUR3100 treatment of acute migraine and (ii) a non-exclusive license to develop, use, manufacture, market, offer and sell the Cricket Device for the inhaled delivery of one more active pharmaceutical ingredients formulated with iSPERSE for the treatment of neurological disease in humans (collectively, the “In-License”).

 

Additionally, pursuant to the Master Services Agreement, by and between the Company and MannKind, MannKind shall provide certain development services to the Company, including but not limited to, activities to develop a dry powder formulation of the active pharmaceutical ingredient that the Company provides to MannKind for oral inhalation using iSPERSE.

 

To maintain continuity of iSPERSE platform knowledge, MannKind hired certain members of the Company’s research and development staff in July 2024.

 

Accounting Treatment

 

The Company determined that the MannKind Transaction represents a combined agreement for accounting purposes, as the individual components have the same overall commercial objectives and the consideration under each component is dependent on the other components.

 

The consideration due to the Company in the MannKind Transaction consists solely of the non-cash consideration in the form of the In-License. The fair value of the non-cash consideration received should be allocated to the other components of the MannKind Transaction to determine the consideration received for the other components. The Company determined that the fair value of the In-License is immaterial given that adequate alternative inhaler devices are already available on the market (and indeed, the Company has already established use of another third-party inhalation device in their PUR3100 Phase 1 trial that performed well as a DHE delivery device as reported in a peer-reviewed publication), and considering optional purchases of Cricket Devices are at market prices. Accordingly, the consideration allocated to other components of the MannKind Transaction was immaterial.

 

9

 

 

The Company accounted for the Lease Assignment Agreement upon execution as a lease modification that reduced the lease term to the assignment date in July 2024. Accordingly, the Company remeasured its operating lease liability as of the modification date to reflect the decrease in fixed lease payments, with the amount of the remeasurement, $8.4 million, adjusted by a corresponding reduction to the right-of-use asset. Refer to Note 11, Leases, for further details.

 

The Company concluded that the Out-License component of the MannKind Transaction was within the scope of ASC 606, as the monetization of its core technology represents an output of the Company’s ordinary activities. The Company transferred control of the combined licenses of iSPERSE to MannKind at a point in time in July 2024 upon closing of the MannKind Transaction; however, no revenue was recognized because the consideration allocated to the Out-License component was immaterial.

 

The Company determined that its operating lease right-of-use asset and property and equipment subject to the Bill of Sale represented a disposal group that became held for sale during the second quarter of 2024 and remained classified as held for sale as of June 30, 2024, which should be measured at the lower of its carrying value or fair value less costs to sell. Since the fair value of the disposal group was considered immaterial, the Company recorded a full write-down of the disposal group’s carrying value as of June 30, 2024, in the amount of $2.6 million.

 

Concurrent with the closing of the MannKind Transaction, the Company terminated and MannKind hired the majority of the Company’s research and development employees, representing approximately two-thirds of the Company’s workforce. During the quarter ended June 30, 2024, the Company agreed to provide termination benefits to these employees, which has been included in the balance of accrued expenses and other current liabilities on the consolidated balance sheet as of June 30, 2024, and was paid to the employees in July 2024.

 

7. 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”). Upon filing of the Annual Report, the Company continued to be subject to General Instruction I.B.6 of Form S-3, pursuant to which in no event will the Company sell its common stock in a registered primary offering using Form S-3 with a value exceeding more than one-third of its public float in any 12 calendar month period so long as its public float remains below $75,000,000. Therefore, the amount that may be able to be raised using the ATM Offering will be significantly less than $20,000,000, until such time as the Company’s 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 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 six months ended June 30, 2024, no shares of the Company’s common stock were sold under the Sales Agreement.

 

10

 

 

8. Warrants

 

There were no warrants issued or exercised during the six months ended June 30, 2024. During the six months ended June 30, 2024, warrants to purchase up to 160,445 shares of common stock at a weighted average exercise price of $44.12 per share expired. Subsequent to June 30, 2024, but before the date these condensed consolidated financial statements were issued, warrants to purchase up to 66,675 shares of common stock at a weighted average exercise price of $26.79 per share expired. The following represents a summary of the warrants outstanding and exercisable at June 30, 2024, 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
February 12, 2019		$	26.79			August 12, 2024			66,675				66,675
June 15, 2015		$	1,509.99			Five years after milestone achievement			15,955				-
Total									1,001,048				985,093

 

9. 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 June 30, 2024, the Incentive Plan provided for the grant of up to 818,936 shares of the Company’s common stock, of which 503,669 shares remained available for future grant. In addition, the Company sponsors two legacy plans under which no additional awards may be granted. As of June 30, 2024, the two legacy plans have a total of 8 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 during the six months ended June 30, 2024:

Schedule of Stock Option Activity 

		Number of Options				Weighted- Average Exercise Price				Weighted- Average Remaining Contractual Term (Years)				Aggregate Intrinsic Value
Outstanding — January 1, 2024			344,306			$	20.92				7.54			$	-
Forfeited or expired			(32,869	)		$	5.18
Outstanding — June 30, 2024			311,437			$	22.58				6.95			$	-
Exercisable — June 30, 2024			221,578			$	29.07				6.46			$	-

 

No stock options were granted during the six months ended June 30, 2024. The Company records stock-based compensation expense related to stock options based on their grant-date fair value. As of June 30, 2024, there was $0.5 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 1.6 years.

 

11

 

 

The following table presents total stock-based compensation expense for the three and six months ended June 30, 2024 and 2023:

Schedule of Stock-based Compensation Expenses 

		2024				2023				2024				2023
		Three Months Ended June 30,								Six Months Ended June 30,
		2024				2023				2024				2023
Research and development		$	29			$	59			$	145			$	131
General and administrative			74				196				156				420
Total stock-based compensation expense		$	103			$	255			$	301			$	551

 

10. Commitments and Contingencies

 

Research and Development Activities

 

The Company contracts with various other organizations to conduct research and development activities, including clinical trials. 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. As of June 30, 2024, the Company had no material noncancellable commitments not expected to be reimbursed under the Cipla Agreement.

 

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.

 

11. Leases

 

The Company has limited leasing activities as a lessee which are primarily related to its corporate headquarters, which were relocated during the third quarter of 2023 and again during the third quarter of 2024.

 

On January 7, 2022, the Company executed the Lease Agreement with the Landlord for its 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, payment of which began in March 2024. The Company is responsible for real estate taxes, maintenance, and other operating expenses applicable to the leased premises.

 

On May 28, 2024, as part of the MannKind Transaction (see further discussion in Note 6, Significant Agreements), the Company and the Landlord executed the Lease Assignment Agreement to assign the Lease Agreement to MannKind in July 2024. The Company accounted for the Lease Assignment Agreement as a lease modification that reduced the lease term to the assignment date in July 2024. Accordingly, the Company remeasured its lease liability as of the modification date to reflect the decrease in fixed lease payments, with the amount of the remeasurement, $8.4 million, adjusted by a corresponding reduction to the right-of-use asset.

 

As of June 30, 2024, the Company had $1.4 million of restricted cash held in a depository account at a financial institution to collateralize a conditional stand-by letter of credit related to the Lease Agreement, which was presented within current assets on the consolidated balance sheet. Following the closing of the MannKind Transaction, this collateral was released in August 2024, providing additional cash available for operations.

 

In June 2024, the Company entered into a short-term lease agreement for its new headquarters at 945 Concord Street, Framingham, Massachusetts. No lease liability or right-of-use asset has been recorded for this short-term lease.

 

12

 

 

The components of lease expense for the Company for the three and six months ended June 30, 2024 and 2023 were as follows:

 Schedule of Components of Lease Expenses

		2024				2023				2024				2023
		Three Months Ended June 30,								Six Months Ended June 30,
		2024				2023				2024				2023
Lease cost
Fixed lease cost		$	271			$	418			$	678			$	796
Variable lease cost			104				168				206				281
Total lease cost		$	375			$	586			$	884			$	1,077
Other information
Cash paid for amounts included in the measurement of lease liabilities		$	322			$	432			$	657			$	863
Weighted-average remaining lease term											7 days				0.2 years
Weighted-average discount rate											-				8.40	%

 

Maturities of lease liabilities due under these lease agreements as of June 30, 2024 are as follows:

Schedule of Maturities of Lease Liabilities 

		Operating Leases
Maturity of lease liabilities
2024 (7 days)		$	24
Total lease payments			24
Less: interest			-
Total lease liabilities		$	24
Reported as of June 30, 2024
Lease liabilities — short term		$	24
Lease liabilities — long term			-
Total lease liabilities		$	24

 

12. Income Taxes

 

The Company had no income tax expense due to operating losses incurred for the three and six months ended June 30, 2024 and 2023.

 

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 June 30, 2024 and December 31, 2023.

 

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 June 30, 2024 and December 31, 2023.

 

13. Net Loss Per Share

 

Basic net loss per share is calculated by dividing net loss by the weighted-average number of common shares outstanding during the period. Diluted net loss per share is calculated by dividing the weighted-average number common shares outstanding during the period, after taking into consideration any potentially dilutive effects from outstanding stock options or warrants.

 

Basic and diluted net loss per share were the same for the three and six months ended June 30, 2024 and 2023, as the effect of potentially dilutive securities would have been anti-dilutive.

 

13

 

  

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

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

		Three and Six Months Ended June 30,
		2024				2023
Options to purchase common stock			311,437				393,254
Warrants to purchase common stock			1,001,048				1,161,493
Total options and warrants to purchase common stock			1,312,485				1,554,747

 

14. Subsequent Events

 

Departure of Chief Executive Officer

 

On July 15, 2024, the Board of Directors (the “Board”) of the Company approved a General Release and Severance Agreement (the “Raad Severance Agreement”), by and between the Company and Teofilo Raad, dated as of July 19, 2024, and effective as of the same date (the “Separation Date”). Effective as of the Separation Date, Mr. Raad’s employment with the Company ceased and Mr. Raad relinquished all positions, offices, and authority with the Company and any affiliates, including as a member of the Board and all committees thereto, and the Amended and Restated Employment Agreement by and between the Company and Mr. Raad, dated as of June 28, 2019, was terminated.

 

Pursuant to the terms of the Raad Severance Agreement, the Company will provide to Mr. Raad certain termination-related payments totaling approximately $1.0 million, less all lawful and authorized withholdings and deductions. Any outstanding equity awards granted to Mr. Raad under the Company’s equity compensation plans and that would have vested during the 12-month period following the Separation Date became fully vested as of the Separation Date.

 

Appointment of Interim Chief Executive Officer

 

On July 15, 2024, the Board approved the appointment of Peter Ludlum as the Interim Chief Executive Officer (the “Interim CEO”), effective as of July 20, 2024 (“Ludlum Effective Date”), pursuant to an amendment to the consulting agreement, by and between the Company and Danforth Advisors, LLC, dated as of November 29, 2021, and amended on April 8, 2022, and October 20, 2022.

 

The Company has completed an evaluation of all other subsequent events after the balance sheet date of June 30, 2024 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 June 30, 2024, 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 28, 2024. 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:

 

	●	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 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.

 

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 of clinical assets 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 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 (“CF”). Each program is enabled by its unique iSPERSE^™ formulation designed to achieve specific therapeutic objectives.

 

Contingent on securing additional funding, 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, including those with considerable 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.

 

 

Contingent on securing additional funding, we expect to continue to incur substantial expenses and operating losses for at least the next several years based on our drug development plans and in connection with our ongoing activities, as we:

 

●

Pursue further clinical studies for PUR3100, an orally inhaled dihydroergotamine (“DHE”) including a Phase 2 clinical study for the treatment of acute migraine, contingent on securing financing or partnership arrangements. 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.
	●	Terminate the PUR1900 Phase 2b study and seek to monetize PUR1900 in the United States.
		In agreement with our partner Cipla, we stopped patient enrollment for in the Phase 2b study of PUR1900. The decision to stop the study was unrelated to any safety concerns. This study had been ongoing since the first quarter of 2023. We remain on track to complete all Phase 2b wind down activities within the third quarter of 2024.   After the study wind down, Pulmatrix will bear no further financial responsibility for the commercialization and development activities as related to PUR1900 outside the United States and 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, our inhaled iSPERSE™ formulation of the antifungal drug itraconazole for indications where an orally inhaled antifungal may provide a therapeutic benefit or fulfill an unmet medical need.

 

 

	●	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, 2024, our patent portfolio related to iSPERSE™ included approximately 144 granted patents, 18 of which are granted US patents, with expiration dates from 2024 to 2037, and approximately 52 additional pending patent applications in the US and other jurisdictions. Our in-licensed portfolio related to kinase inhibitors included approximately 278 granted patents, 33 of which are granted US patents, with expiration dates from 2029 to 2035, and approximately 19 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.

 

	●	Position the Company to be able to consider strategic alternatives.
		Continue our cost saving measures which have included the wind down of the Phase 2b study for PUR1900 and the assignment of our long-term lease of our Bedford facility pursuant to those certain agreements by and between us, MannKind Corporation (“MannKind”) and Cobalt Propco 2020, LLC (the “MannKind Transaction”) to conserve our cash resources as we consider strategic alternatives for the Company.

 

Therapeutic Candidates

 

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 a new drug application (“NDA”).

 

Our interactions with the FDA have indicated 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. 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 65^th 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.

 

PUR1800

 

Reduced responsiveness to corticosteroids represents an important barrier to effective treatment of COPD and AECOPD and provides a clear rationale to seek novel medicines to treat these respiratory diseases. In addition, current treatments generally fail to treat the underlying source of the AECOPD, in particular when a viral or bacterial infection is the cause, which occurs in approximately 80% of exacerbations. RV1162, the active ingredient of PUR1800, is a novel, potent anti-inflammatory that inhibits the phosphorylation of a narrow spectrum of kinases. In pre-clinical studies, RV1162 demonstrated direct anti-inflammatory activity in a model of viral induced respiratory inflammation. RV1162 also demonstrated a reduction in corticosteroid-resistant inflammatory responses in a model of cigarette smoke induced inflammation. These findings suggested that RV1162 has the potential to deliver effective anti-inflammatory outcomes in corticosteroid-resistant patients while also reducing the underlying source of inflammation in an exacerbation, such as a viral and/or bacterial respiratory infection.

 

Clinical studies conducted by RespiVert/Janssen with RV1162 formulated as a lactose blend for inhalation demonstrated that the molecule was well tolerated for up to 14 days of dosing in patients with COPD. Analysis of sputum collected from patients with COPD treated with RV1162 showed reduced levels of p38 phosphorylation in sputum cells and decreases in the number of neutrophils recovered in sputum after 12 days of dosing. These findings suggest that inhalation of RV1162 may confer anti-inflammatory benefits after a short dosing regimen. Long-term toxicology studies with RV1162 as a lactose blend suggested that this formulation was not suitable for chronic dosing.

 

Based upon the clinical results generated by RespiVert/Janssen for RV1162 and the anticipated benefits of an iSPERSE^™ formulation of RV1162, we entered into a License, Development and Commercialization Agreement with RespiVert Ltd. (“RespiVert”), a wholly owned subsidiary of Janssen Biotech, Inc. on June 9, 2017. RespiVert granted us an exclusive, royalty-bearing license in a portfolio of narrow spectrum kinase inhibitor compounds (“NSKI”). We subsequently formulated RV1162 into PUR1800 for development as a potential therapy for AECOPD.

 

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.

 

 

PUR1900

 

PUR1900 is our iSPERSE^™ inhaled formulation of itraconazole, an antifungal drug commercially available as an oral drug. We developed PUR1900 for the prevention and treatment of fungal infections and allergic/hypersensitivity reactions to fungus in patients with severe lung disease, including those with asthma and CF.

 

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^™ 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 Second Amendment to the Cipla Agreement on November 8, 2021 and the Third Amendment on January 6, 2024. 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.

 

Pursuant to the Third Amendment, we and Cipla stopped patient enrollment for the ongoing Phase 2b clinical study. During the Wind Down Period, we will 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.

 

For the duration of the Wind Down Period, we and Cipla are each responsible for 60% and 40%, respectively, of our Direct Costs. 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. Reimbursements from Cipla to us for these costs are subject to a maximum reimbursement amount as approved by the joint steering committee.

 

We remain on track to complete all Phase 2b wind down activities within the third quarter of 2024. After the conclusion of the Wind Down Period, Pulmatrix will bear no 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. We will receive 2% royalties on any potential future net sales by Cipla outside the United States.

 

Financial Overview

 

Revenues

 

To date, we have not generated any product sales. The revenues for the three and six months ended June 30, 2024 and 2023 were primarily generated from the Cipla Agreement as related to our PUR1900 program, which is currently in the process of winding down as previously discussed.

 

For more discussion on the Cipla Agreement, please see Note 6, Significant Agreements, to our 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 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 are 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 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 and professional fees for consulting, auditing and tax services.

 

Following the closing of the MannKind Transaction in the third quarter of 2024, we anticipate that our general and administrative expenses will decrease 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 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.

 

There were no changes to our critical accounting estimates during the six months ended June 30, 2024 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 estimates disclosed in our Annual Report.

 

 

Results of Operations

 

Comparison of the Three Months Ended June 30, 2024 and 2023

 

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

 

		Three Months Ended June 30,
		2024				2023				Change
Revenues		$	1,552				1,844			$	(292	)
Operating expenses:
Research and development			2,834				4,165				(1,331	)
General and administrative			2,001				1,670				331
Loss on disposal group held for sale			2,618				-				2,618
Total operating expenses			7,453				5,835				1,618
Loss from operations			(5,901	)			(3,991	)			(1,910	)
Other income (expense):
Interest income			133				236				(103	)
Other expense, net			(43	)			(61	)			18
Net loss		$	(5,811	)			(3,816	)		$	(1,995	)

 

Revenues — Revenues were $1.6 million for the three months ended June 30, 2024, as compared to $1.8 million for the three months ended June 30, 2023, a decrease of $0.3 million. The decrease is primarily related to the continued winding down of the PUR1900 Phase 2b clinical trial, for which the Company incurred fewer expenses eligible for reimbursement under the Cipla Agreement as compared to the corresponding period in the previous year.

 

Research and development expenses — Research and development expenses were $2.8 million for the three months ended June 30, 2024, as compared to $4.2 million for the three months ended June 30, 2023, a decrease of approximately $1.3 million. The decrease was primarily due to winding down the PUR1900 Phase 2b clinical trial.

 

General and administrative expenses — General and administrative expenses were $2.0 million for the three months ended June 30, 2024, as compared to $1.7 million for the three months ended June 30, 2023, an increase of approximately $0.3 million. The increase was primarily due to an increase in incurred legal costs.

 

Loss on disposal group held for sale — Loss on disposal group held for sale was $2.6 million on certain assets held for sale as of June 30, 2024, in connection with the MannKind Transaction, as compared to no loss on disposal group held for sale for the three months ended June 30, 2023.

 

Comparison of the Six Months Ended June 30, 2024 and 2023

 

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

 

		Six Months Ended June 30,
		2024				2023				Change
Revenues		$	7,437				3,343			$	4,094
Operating expenses:
Research and development			6,346				8,039				(1,693	)
General and administrative			3,627				3,880				(253	)
Loss on disposal group held for sale			2,618				-				2,618
Total operating expenses			12,591				11,919				672
Loss from operations			(5,154	)			(8,576	)			3,422
Other income (expense):
Interest income			293				458				(165	)
Other expense, net			(125	)			(146	)			21
Net loss		$	(4,986	)			(8,264	)		$	3,278

 

 

Revenues — Revenues were $7.4 million for the six months ended June 30, 2024, as compared to $3.3 million for the six months ended June 30, 2023, an increase of $4.1 million. The increase is primarily related to a contract modification of the Cipla Agreement which resulted in a cumulative catch-up adjustment recorded during the three months ended March 31, 2024. The amount of the cumulative catch-up had been included in deferred revenue at the beginning of the period.

 

Research and development expenses — Research and development expenses were $6.3 million for the six months ended June 30, 2024, as compared to $8.0 million for the six months ended June 30, 2023, a decrease of approximately $1.7 million. The decrease was primarily due to winding down the PUR1900 Phase 2b clinical trial.

 

General and administrative expenses — General and administrative expenses were $3.6 million for the six months ended June 30, 2024, as compared to $3.9 million for the six months ended June 30, 2023, a decrease of approximately $0.3 million. The decrease was primarily due to decreased employment and facilities costs, partially offset by an increase in incurred legal costs.

 

Loss on disposal group held for sale — Loss on disposal group held for sale was $2.6 million on certain assets held for sale as of June 30, 2024, in connection with the MannKind Transaction, as compared with no loss on disposal group held for sale for the six months ended June 30, 2023.

 

Liquidity and Capital Resources

 

Through June 30, 2024, we incurred an accumulated deficit of $292.6 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, 2024 was $12.4 million, and additionally $1.4 million in short-term restricted cash became available for operations in August 2024.

 

We anticipate that we will continue to incur losses over the next several years due to development costs associated with our iSPERSE^™ pipeline programs, contingent on obtaining financing or partnership to continue such development. We may raise capital 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 June 30, 2024 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 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,
		2024				2023
Net cash used in operating activities		$	(6,396	)		$	(9,832	)
Net cash used in investing activities			(398	)			(58	)
Net cash provided by financing activities			-				53
Net decrease in cash, cash equivalents, and restricted cash		$	(6,794	)		$	(9,837	)

 

Net cash used in operating activities

 

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 operating activities for the six months ended June 30, 2023 was $9.8 million, which was primarily the result of a net loss of $8.3 million and $3.0 million in cash outflows associated with changes in operating assets and liabilities, partially offset by $1.4 million of net non-cash adjustments.

 

Net cash used in investing activities

 

Net cash used in investing activities for the six months ended June 30, 2024 and 2023 was $0.4 million and $0.1 million, respectively, which was due to purchases of property and equipment.

 

Net cash provided by financing activities

 

No cash was provided by financing activities for the six months ended June 30, 2024. Net cash provided by financing activities for the six months ended June 30, 2023 resulted from proceeds from the issuance of common stock, net of issuance costs.

 

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. 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, 2024, no shares of our common stock were sold under the Sales Agreement.

 

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. 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 June 30, 2024 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, 2023, in addition to the other information included in this Quarterly Report on 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 Quarterly Report on 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: August 13, 2024	By:	/s/ Peter Ludlum
		Peter Ludlum
		Interim Chief Executive Officer and Interim Chief Financial Officer
		(Principal Executive, Financial and Accounting Officer)

 

 

INDEX TO EXHIBITS

 

Exhibit Number		Exhibit Description
10.1#		General Release and Severance Agreement, dated as of July 19, 2024, by and between Pulmatrix, Inc. and Teofilo Raad (incorporated by reference to Exhibit 10.1 of Pulmatrix, Inc.’s Current Report on Form 8-K, filed with the SEC on June 19, 2024).
10.2#		Amendment No. 3 to Consulting Agreement, dated as of July 15, 2024, by and between Pulmatrix, Inc. and Danforth Advisors, LLC (incorporated by reference to Exhibit 10.2 of Pulmatrix, Inc.’s Current Report on Form 8-K, filed with the SEC on June 19, 2024).
10.3#		Letter Agreement, dated as of July 15, 2024, by and between Pulmatrix, Inc. and Peter Ludlum (incorporated by reference to Exhibit 10.3 of Pulmatrix, Inc.’s Current Report on Form 8-K, filed with the SEC on June 19, 2024).
10.4*		Bill of Sale and Assignment Agreement, dated as of May 28, 2024, by and between Pulmatrix, Inc. and MannKind Corporation.
10.5*		Intellectual Property Cross License Agreement, dated as of May 28, 2024, by and between Pulmatrix, Inc. and MannKind Corporation.
10.6*		Master Services Agreement, dated as of May 28, 2024, by and between Pulmatrix, Inc. and MannKind Corporation.
31.1*		Certification of the Principal Executive Officer and 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.
#		These exhibits are management contracts or compensatory plans or arrangements.

 

 

 

 

Exhibit 10.4

 

BILL OF SALE AND ASSIGNMENT AGREEMENT

 

THIS BILL OF SALE AND ASSIGNMENT AGREEMENT (this “Agreement”), dated May 28, 2024 is entered into by and among Pulmatrix, Inc., a Delaware corporation (the “Seller”), and MannKind Corporation, a Delaware corporation (“Purchaser”). Seller and Purchaser are sometimes referred to collectively herein as the “Parties” and each individually a “Party.”

 

RECITALS:

 

WHEREAS, Seller has agreed to sell and Purchaser has agreed to purchase from Seller, Seller’s Premises (as defined below) and the Lab Assets (as defined below);

 

WHEREAS, Seller has agreed to assign, and Purchaser has agreed to assume from Seller, the Lab Contracts (as defined below) on the terms and conditions of this Agreement;

 

WHEREAS, in connection with the sale of the Lab Assets and the Assignment of the Lab Contracts, Seller and Purchaser have agreed to execute and deliver this Agreement; and

 

WHEREAS, simultaneously with the entry of this Agreement, the Parties have entered into that certain Intellectual Property Cross-License Agreement; (ii) Amendment to Lease and Consent to Assignment of Lease relating to that certain Lease Agreement dated as of January 7, 2022 (the “Lease”) pursuant to which Seller leases certain premises consisting of approximately 19,603 rentable square feet (the “Premises”) on the first floor of the building located at 36 Crosby Drive, Bedford, Massachusetts ; (iii) Assignment and Assumption of Lease; and (iv) the Master Service Agreement, each of which will become effective as of the closing of this transaction on July 8, 2024 (the “Effective Date”).

 

NOW, THEREFORE, for good and valuable consideration, the receipt, adequacy and legal sufficiency of which are expressly confessed and acknowledged, and intending to be legally bound hereby, the Parties agree as follows:

 

AGREEMENTS:

 

1. Sale of Lab Assets and Assignment of Lab Contracts. Effective upon the Effective Date, for and in consideration of the Parties simultaneously entering into that certain: (i) Intellectual Property Cross-License Agreement; (ii) Amendment to Lease and Consent to Assignment of Lease; (iii) Assignment and Assumption of Lease; and (iv) the Master Service Agreement, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, Seller hereby: (A) grants, bargains, sells, transfers, and conveys to Purchaser, and Purchaser hereby purchases, acquires and accepts from Seller, on an “AS IS, WHERE IS” basis and without any representation or warranty on the part of Seller of any kind, including without limitation, as to fitness, merchantability or otherwise, all right, title and interest of Seller as of the Effective Date in and to the assets as set forth on Exhibit A, including all manufacturer’s warranties, rights, or claims against third parties relating to such assets (collectively, the “Lab Assets”), free and clear of all liens or encumbrances of any kind, including security interests and (B) sell, convey, transfer and assign to Purchaser all of the contracts as set forth on Exhibit B (the “Lab Contracts”), free and clear of all liens and encumbrances of any kind, including security interests effective as of the Effective Date. Prior to the Effective Date, Seller shall provide to Purchaser a UCC-3 termination statement and other evidence of the release of all security interests, liens or other encumbrances on the Lease, Lab Assets or Lab Contracts.

 

 

2. Assumption of Liabilities. Effective as of the Effective Date (a) Purchaser hereby accepts the assignment of the Lab Contracts and assumes and agrees to perform all of Seller’s obligations under the Lab Contracts arising from and after the Effective Date provided that, to the extent a request for payment covers provision of services or supply of goods during a period starting prior to the Effective Date and ending on or after the Effective Date, (i) in the case of provision of services, such Liabilities shall be allocated between Purchaser and Seller on a pro rata basis based on the number of days when the service was performed before or after the Effective Date or (ii) in the case of supply of goods, such Liabilities shall be allocated to the party receiving the goods; provided further, that such Liabilities shall exclude any (x) Liabilities resulting from any breach of or non-compliance with any such Lab Contract by Seller or any of its Affiliates or (y) Seller tax Liabilities (the “Assumed Liabilities”). If the vendor under the Lab Contract does not pro rate the amounts payable under the Lab Contract between the parties, the party who pays the invoice shall invoice the other party for its pro rata share of such invoice, which will be payable within 30 days. For purposes of this Agreement, “Liability” or “Liabilities” means, with respect to any Person, any debt, liability or obligation of any kind (whether known or unknown, direct or indirect, contingent, accrued, due or to become due, secured or unsecured, matured or otherwise), including accounts payable, trade payables, royalties payable, accrued bonuses and commissions, accrued vacation and any other form of leave, termination payment obligations, employee expense obligations.

 

3. Nonassignable Assets. Nothing in this Agreement nor the consummation of the transactions contemplated hereby shall be construed as an attempt or agreement to assign or transfer any Lab Contracts to Purchaser (i) which by its terms or by requirement of law is not assignable or transferable without a consent or is cancellable by a third party in the event of an assignment or transfer and (ii) for which such consent has not been obtained or such requirement of law has not been satisfied as of the Effective Date, unless and until such consent shall have been obtained or such requirement of law satisfied (as applicable) (such Lab Contracts, the “Nonassignable Contract”). Both parties shall as promptly as practicable use their respective reasonable best efforts to obtain any consent that may be required and satisfy any requirement of law necessary to the assignment or transfer of a Nonassignable Contract to Purchaser; provided that neither Purchaser nor Seller shall be obligated to make any payments to any such third parties in order to obtain any such consent. Until a consent to assignment of a Nonassignable Contract is obtained, Seller shall use reasonable best efforts to provide Purchaser the use of or economic benefits of the Nonassignable Contract.

 

4. Excluded Liabilities. The Parties acknowledge and agree that Purchaser will not, and in no event will Purchaser assume, be required to pay, perform, or discharge any Liabilities other than the Assumed Liabilities, and that, as between the Parties, Seller shall remain responsible for all Excluded Liabilities. For purposes of this Agreement, “Excluded Liabilities” means all Liabilities of Seller and its Affiliates not expressly included in the definition of Assumed Liabilities, including:

 

(a) any Liabilities arising from Seller’s ownership or use of the Lab Assets or Lab or the conduct of its business at or prior to Effective Date;

 

(b) any Liabilities arising out of Seller’s business, including any assets other than the Lab Assets or Lab Contracts or Seller’s ongoing operations, including those arising after the Effective Date;

 

(c) all federal, state, municipal, local, foreign and other taxes of Seller or its Affiliates, or for which the Seller or any of its Affiliates is or are liable (including as a transferee or successor, pursuant to Treasury Regulations Section 1.1502-6, by contract or otherwise), for any taxable period (including any Tax of Seller or any of its Affiliates that becomes a Liability of Purchaser under transferee or successor liability or otherwise by operation of contract or law);

 

(d) all Liabilities incurred under any Lab Contract (i) whereby provision of services or supply of goods arose on or prior to Effective Date or (ii) resulting from any breach of or non-compliance with any such Lab Contract by Seller or any of its Affiliates at or prior to Effective Date;

 

 

(e) all Liabilities arising from Seller’s lease occupancy of the Premises at or prior to the Effective Date or arising under the Lease on or prior to the Effective Date;

 

(f) all accounts payable or other trade payables due or owed by Seller or any of its Affiliates to any third party;

 

(g) any Liabilities relating to or in any way arising out of any present and past employees, officers, directors, temporary employees, independent contractors or consultants of Seller or its Affiliates or who have provided services to Seller or its Affiliates and/or the employment or service (and any termination thereof) of any such person, including any Liability relating to: (i) payroll or any accrued wages, salaries or fees; (ii) any employee benefit plan and any contract or insurance policy or other funding medium with respect thereto; (iii) workers’ compensation for injuries and (iv) any obligations or Liability arising from Seller or its Affiliates’ failure to comply with applicable law;

 

(h) any Liabilities related to the provision of notice or payment in lieu of notice and any applicable penalties under the WARN Act and any comparable state or local Law for which the initial provision of notice occurs on or prior to the Effective Date, including any required due to the sale of the Premises;

 

(i) all Liabilities relating to, resulting from, or arising out of or in connection with a failure to comply with any applicable bulk sale or bulk transfer laws with respect to the sale and purchase of the Lab Assets and Lab Contracts pursuant to this Agreement; and

 

(j) any Liabilities arising from Seller or its Affiliates’ non-compliance with applicable law.

 

5. Indemnification. Seller shall indemnify and hold harmless Purchaser, Purchaser’s affiliates, and their respective officers, directors, managers, employees, agents, successors, and permitted assigns (collectively, the “Purchaser Indemnified Parties”) against and in respect of any Losses suffered or incurred by any Purchaser Indemnified Party resulting from or arising out of any Excluded Liabilities. “Losses” means any actual debts, demands, damages, losses, expenses, costs, settlement payments, judgments, fines or penalties, including reasonable attorneys’ fees and taxes.

 

6. Payment of Transfer Taxes and Fees. Effective upon the Effective Date, Purchaser hereby assumes and agrees to be responsible for: (i) the preparation, completion and filing of any and all documents related to the transfer of the Lab Assets from Seller to Purchaser and (ii) performance or discharge, when payment or performance is due or required, of all transfer, documentary, sales, use, stamp, registration and other such taxes and fees incurred in connection with the transfer of the Lab Assets from Seller to Purchaser. Title to all Lab Assets is conveyed by delivery of the Lab Assets at the Premises.

 

7. General Provisions.

 

(a) Governing Law. This Agreement shall be governed by and construed and enforced in accordance with the Laws of the State of Delaware without regard to the conflicts of laws provisions thereof.

 

(b) Waiver of Trial by Jury. EACH OF THE PARTIES HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY.

 

 

(c) Further Assurances. From time to time following the Effective Date, Seller and Purchaser shall, and shall cause their respective affiliates to, execute, acknowledge and deliver all such further conveyances, notices, licensure and permit filings, assumptions, releases and acquaintances and such other instruments, and shall take such further actions, as may be reasonably necessary or appropriate to assure fully to Purchaser and its successors or assigns, all of the properties, rights, titles, interests, estates, remedies, powers and privileges intended to be conveyed to Purchaser under this Agreement, and to otherwise make effective the transactions contemplated hereby and thereby.

 

(d) Amendments. No amendment of any provision of this Agreement shall be valid unless the same shall be in writing and duly executed by Purchaser and Seller.

 

(e) Non-Waiver. No waiver by any Party of any default, misrepresentation, or breach of warranty or covenant hereunder, whether intentional or not, shall be deemed to extend to any prior or subsequent default, misrepresentation, or breach of warranty or covenant hereunder or affect in any way any rights arising by virtue of any prior or subsequent such occurrence.

 

(f) Severability. Any term or provision of this Agreement that is invalid or unenforceable in any situation in any jurisdiction shall not affect the validity or enforceability of the remaining terms and provisions hereof or the validity or enforceability of the offending term or provision in any other situation or in any other jurisdiction.

 

(g) Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the Parties named herein and their respective successors and permitted assigns. Seller may not assign this Agreement or any of their rights, interests or obligations hereunder without the prior written consent of the Purchaser.

 

(h) Rights of Third Parties. This Agreement shall not confer any rights or remedies upon any Person other than the Parties and their respective successors and permitted assigns.

 

(i) Entire Agreement. This Agreement (together with the Exhibits hereto) between Seller and Purchaser, supersede all prior discussions and agreements between the Parties with respect to the subject matter hereof and thereof, and contain the sole and entire agreement between the Parties with respect to the subject matter hereof and thereof, and there are no agreements, understandings, representations or warranties between the Parties other than those set forth herein or therein. No oral statements or prior written material not specifically incorporated in this Agreement shall be of any force and effect. The Parties represent and acknowledge that in executing this Agreement, the Parties did not rely, and have not relied, on any communications, promises, statements, inducements, or representation(s), oral or written, by any other Party, except as expressly contained in this Agreement.

 

(j) Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Any facsimile or other electronic copies hereof or signature hereon shall, for all purposes, be deemed originals.

 

[Signatures appear on the following page]

 

 

IN WITNESS WHEREOF, Seller and Purchaser have duly executed and delivered this Agreement to be effective as of the Effective Date.

 

SELLER:
PULMATRIX, INC.
By:	/s/ Teofilo Raad
Name:	Teofilo Raad
Title:	Chief Executive Officer

 

PURCHASER:
MANNKIND CORPORATION
By:	/s/ Michael Castagna
Name:	Michael Castagna
Title:	Chief Executive Officer

 

 

EXHIBIT A

(LAB ASSETS)

 

 

 

 

EXHIBIT B

 

Cobalt JV 2020 LLC		Lease Agreement between Cobalt Propco 2020, LLC and Pulmatrix, Inc. dated January 7, 2022.
Reliable Building Solutions, Inc.		Janitorial Cleaning Specifications contract between Reliable Building Solutions and Pulmatrix, Inc. dated July 19, 2023.
Airgas Inc		Product Sale Agreement between Airgas USA, LLC and Pulmatrix, Inc. dated March 16, 2023.
TA Instruments		Service Agreement between TA Instruments - Waters L.L.C. and Pulmatrix, Inc. dated April 25, 2023.
TA Instruments		Service Agreement between TA Instruments - Waters L.L.C. and Pulmatrix, Inc. dated December 13, 2022.
Brinkmann Instruments / Metrohm		Service Agreement between Metrohm USA, Inc. and Pulmatrix, Inc. dated April 6, 2023.
Bostonbean Coffee Co Inc		Equipment Rental and Supplies Agreement between BonstonBean Coffee Company and Pulmatrix, Inc. dated April 6, 2023.
Bostonbean Coffee Co Inc		Equipment Rental and Supplies Agreement between BonstonBean Coffee Company and Pulmatrix, Inc. dated April 24, 2023.
American Alarm & Communications, Inc.		Professional Services Agreement between American Alarm and Communications, Inc. and Pulmatrix, Inc. dated July 19, 2023.
Vestis (f/k/a Aramark)		Service Agreement between Aramark Uniform Services and Pulmatrix, Inc. dated June 8, 2020.
Macquarie Equipment Capital Inc		Lease Agreement between Macquarie Equipment Capital Inc. and Pulmatrix, Inc. dated August 1, 2023.
Boston Document Systems		Customer Service Maintenance Agreement between Boston Document Systems, Inc. and Pulmatrix, Inc. dated June 15, 2023.
Comcast (Internet)		Business Internet Service Order Agreement between Comcast Cable Communications Management, LLC and Pulmatrix, Inc. dated June 1, 2023.
Comcast Business (Telephone)		Business VoiceEdge Service Order Agreement between Comcast Cable Communications Management, LLC and Pulmatrix, Inc. dated June 1, 2023.

 

 

 

Exhibit 10.5

 

INTELLECTUAL PROPERTY CROSS-LICENSE AGREEMENT

 

This INTELLECTUAL PROPERTY CROSS-LICENSE AGREEMENT (this “Agreement”), dated as of July 8, 2024 is made between MANNKIND CORPORATION, a Delaware corporation company (“MannKind”) and PULMATRIX, INC., a Delaware corporation (“Pulmatrix”). MannKind and Pulmatrix are each referred to individually as a “Party” and collectively as the “Parties”.

 

WHEREAS, MannKind owns or has valid rights in certain intellectual property and technology (the “MannKind Technology”) relating to its “Cricket” single-use disposable dry powder inhaler (including any modifications or improvements thereto made by or on behalf of MannKind, the “Cricket Device”);

 

WHEREAS, Pulmatrix has developed an inhaled formulation of dihydroergotamine (“DHE”) for the treatment of acute migraine known as PUR3100 (“PUR3100”);

 

WHEREAS, Pulmatrix owns certain intellectual property and technology for its 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 (including any modifications or improvements thereto made by or on behalf of Pulmatrix, “iSPERSE”);

 

WHEREAS, the parties wish to enter into a technology exchange as set forth herein;

 

WHEREAS, MannKind desires to grant Pulmatrix the exclusive right to develop, use, manufacture, market, offer and sell the Cricket Device for the inhaled delivery of DHE in any formulation whatsoever, including PUR31000;

 

WHEREAS, MannKind desires to grant Pulmatrix a non-exclusive license to develop, use, manufacture, market, offer and sell the Cricket Device for the inhaled delivery of one more active pharmaceutical ingredients formulated with iSPERSE for the treatment of neurological disease in humans (“Neurological Disease”);

 

WHEREAS, Pulmatrix desires to grant to MannKind an exclusive license to develop, use, manufacture, market, offer and sell iSPERSE formulations of Clofazimine;

 

WHEREAS, Pulmatrix desires to grant to MannKind an exclusive license to develop, use, manufacture, market, offer and sell formulations of iSPERSE with one more active pharmaceutical ingredients for the treatment of nontuberculous mycobacteria lung disease in humans (“NTM”);

 

WHEREAS, Pulmatrix desires to grant to MannKind an exclusive license to develop, use, manufacture, market, offer and sell iSPERSE formulations of insulin;

 

 

WHEREAS, Pulmatrix desires to grant to MannKind a non-exclusive license to develop, use, manufacture, market, offer and sell formulations of iSPERSE with one more active pharmaceutical ingredients for the treatment of endocrine disease in humans (“Endocrine Disease”);

 

WHEREAS, Pulmatrix desires to grant to MannKind a non-exclusive license to develop, use, manufacture, market, offer and sell formulations of iSPERSE with one more active pharmaceutical ingredients for the treatment of interstitial lung diseases (including IPF, PPF and other related lung diseases) in humans (“ILD”);

 

WHEREAS, Pulmatrix has provided to MannKind certain development services related to the development of an iSPERSE formulation of Clofazimine as specified in a master services agreement dated March 1, 2024 (the “Pulmatrix Services Agreement”); and

 

WHEREAS, concurrent with the execution of this Agreement, the Parties are executing (i) that certain Lease Assignment and Assumption Agreement pursuant to which Pulmatrix will assign to MannKind a specified lease agreement and certain assets related thereto as specified therein (the “Lease Assignment”) and (ii) that certain Master Services Agreement pursuant to which MannKind will provide specified development services for Pulmatrix as specified therein (the “MannKind Services Agreement”).

 

NOW THEREFORE, in consideration of the ongoing financial and other support provided by the Parties to each other and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, MannKind and Pulmatrix hereby agree as follows:

 

ARTICLE 1 DEFINITIONS

 

In addition to terms defined elsewhere in this Agreement, the following terms shall have the following meanings:

 

“Affiliate” means, with respect to a Party, any Person that controls, is controlled by, or is under common control with such Party, where “control” (including, with correlative meaning, the terms “controlled by” or “under common control with”) means the possession, directly or indirectly, through one or more intermediaries, of the power to direct or cause the direction of the management or policies of a Person, whether through ownership of more than fifty percent (50%) of voting securities, controlling interests or similar arrangement.

 

 

“Change of Control” shall mean, with respect to an Entity (including a Party): (a) the sale or disposition of all or substantially all of the assets of such Entity or its direct or indirect controlling Affiliate to another Entity, other than to an Entity of which more than fifty percent (50%) of the voting capital stock are owned after such sale or disposition by shareholders of such Entity or its direct or indirect controlling Affiliate (in either case, whether directly or indirectly through any parent Entity) or (b) (i) the acquisition by another Entity, alone or together with any of its Affiliates, other than an employee benefit plan (or related trust) sponsored or maintained by such Entity or any of its Affiliates, of more than fifty percent (50%) of the outstanding shares of voting capital stock of such Entity or its direct or indirect controlling Affiliate, or (ii) the acquisition, merger or consolidation of such Entity or its direct or indirect controlling Affiliate with or into another Entity, other than, in the case of subclause (i) or (ii), an acquisition or a merger or consolidation of such Entity or its controlling Affiliate in which the holders of shares of voting capital stock of such Entity or its controlling Affiliate, as the case may be, immediately prior to such acquisition, merger or consolidation will beneficially own, directly or indirectly, at least fifty percent (50%) of the shares of voting capital stock of the acquiring Entity or the surviving corporation in such acquisition, merger or consolidation, as the case may be, immediately after such acquisition, merger or consolidation; and, in each case ((a) or (b)), whether through a single transaction or a series of related transactions but excluding any and all bona fide financing transactions.

 

“Control” means with respect to any material, Know-How, or intellectual property right, that a Party or its Affiliate (a) owns or (b) has a license (other than a license granted to such Party under this Agreement) to such material, Know-How, or intellectual property right and, in each case, has the ability to grant to the other Party access, a license, or a sublicense (as applicable) to the foregoing on the terms and conditions set forth in this Agreement without violating the terms of any then-existing agreement or other legally enforceable arrangement with any Third Party. In the event of a Change of Control of a Party, any Know-How, Patents, or other intellectual property rights that are owned or controlled by a Third Party that becomes an Affiliate of such Party as a result of such Change of Control will not be deemed to be Controlled by such Party or its Affiliates for purposes of this Agreement.

 

“Cover” means, with respect to a claim of a Patent and a product, that such claim would be infringed, absent a license, by the manufacture, use, offer for sale, sale or importation of such product (considering claims of patent applications to be issued as then pending).

 

“Effective Date” means the date that the “Closing” (as defined in the Lease Assignment) has occurred under the Lease Assignment and the Lease Assignment has gone into effect.

 

“Entity” means an individual, corporation, partnership, joint venture, limited liability company, governmental authority, unincorporated organization, trust, association or other entity.

 

“Exploit” means to make, have made, import, use, sell or offer for sale, including to research, develop, commercialize, register, manufacture, have manufactured, hold or keep (whether for disposal or otherwise), have used, export, transport, distribute, promote, market, sell, have sold, dispose of, copy, distribute, create derivative works of, publicly perform or publicly display.

 

“Governmental Body” means any federal, national, state, provincial, or local government, or political subdivision thereof, or any multinational organization, or any authority, agency, regulatory body, or commission entitled to exercise any administrative, executive, judicial, legislative, police, regulatory, or taxing authority or power, or any court or tribunal (or any department, bureau or division of any of the foregoing, or any governmental arbitrator or arbitral body).

 

 

“Know-How” means any data, results, technology, business or financial information or information of any type whatsoever, in any tangible or intangible form, including know-how, trade secrets, practices, techniques, methods, processes, designs, manuals, guidelines, inventions, developments, specifications, formulations, formulae, software, algorithms, marketing reports, expertise, technology, test data (including pharmacological, biological and chemical, biochemical, clinical test data and data resulting from non-clinical studies), CMC information, stability data and other study data and procedures.

 

“Licensed Technology” means the MannKind Technology and/or the Pulmatrix Technology, as the context may require.

 

“Licensee” means the Party receiving rights under a license grant pursuant to this Agreement. Depending on the context, Licensee may mean either or both of MannKind and Pulmatrix.

 

“Licensor” means the Party granting rights under a license grant pursuant to this Agreement. Depending on the context, Licensor may mean either or both of MannKind and Pulmatrix.

 

“MannKind Know-How” means Know-How Controlled by MannKind as of the Effective Date or during the Term that is necessary or reasonably useful to Exploit the Cricket Device.

 

“MannKind Patents” means all Patents Controlled by MannKind as of the Effective Date or during the Term to the extent that such Patents Cover the Cricket Device. The MannKind Patents existing as of the Effective Date are listed in Schedule 2 attached hereto.

 

“MannKind Regulatory Approvals” means all Regulatory Approvals owned by MannKind specifically relating to the Cricket Device.

 

“MannKind Technology” means the MannKind Know-How, the MannKind Patents, the MannKind Trademarks and all MannKind Regulatory Approvals.

 

“MannKind Trademarks” means any Trademarks used by MannKind to designate the Cricket Device. For clarity, MannKind Trademarks does not include any Trademarks used to designate MannKind’s or any of its Affiliates’ corporate name(s).

 

“Patent Owner” means, with respect to each Patent within the Licensed Technology, the Party that Controls such Patent. In the event any Patent is owned by both MannKind and Pulmatrix, then for purposes of this Agreement MannKind shall be deemed the Patent Owner of such Patent.

 

“Product” means, (a) with respect to a product Exploited by MannKind, any pharmaceutical product or medical device that incorporates any Pulmatrix Technology whether alone or in combination with any other active ingredient and (b) with respect to a product Exploited by Pulmatrix, any pharmaceutical product or medical device that incorporates any MannKind Technology whether alone or in combination with any other active ingredient.

 

“Prosecute and Maintain” means with regard to a Patent, the preparing, filing, prosecuting and maintenance of such Patent, as well as handling re-examinations and reissues with respect to such Patent, together with the conduct of interferences, the defense of oppositions and other similar proceedings with respect to the particular Patent. For clarification, Prosecute and Maintain does not include any other enforcement actions taken with respect to a Patent.

 

 

“Pulmatrix Know-How” means Know-How Controlled by Pulmatrix as of the Effective Date or during the Term that is necessary or reasonably useful to Exploit iSPERSE.

 

“Pulmatrix Patents” means all Patents Controlled by Pulmatrix as of the Effective Date or during the Term that Cover iSPERSE. The Pulmatrix Patents existing as of the Effective Date are listed in Schedule 1 attached hereto.

 

“Pulmatrix Regulatory Approvals” means all Regulatory Approvals owned by Pulmatrix specifically relating to iSPERSE.

 

“Pulmatrix Technology” means the Pulmatrix Know-How, the Pulmatrix Patents, the Pulmatrix Trademarks and all Pulmatrix Regulatory Approvals.

 

“Pulmatrix Trademarks” means any Trademark used by Pulmatrix to designate iSPERSE. For clarity, Pulmatrix Trademarks does not include any Trademarks used to designate Pulmatrix’s or any of its Affiliates’ corporate name(s).

 

“Regulatory Approvals” means the technical, medical and scientific licenses, registrations, authorizations and approvals issued by or under the jurisdiction of a Governmental Body, as necessary for the distribution, marketing, promotion, offer for sale, supply, use, import, export or sale of a pharmaceutical product or medical device in a regulatory jurisdiction.

 

“Third Party” means any entity other than Pulmatrix or MannKind or an Affiliate of either of them.

 

“Trademark” means any word, name, symbol, color, shape, designation or device or any combination thereof, including any trademark, service mark, trade name, trade dress, brand name, product configuration, domain name, logo, design or business symbol, that functions as an identifier of source, origin or membership, whether or not registered, and all statutory and common law rights therein, and all registrations and applications therefor, together with all goodwill associated with, or symbolized by, any of the foregoing.

 

“Valid Claim” means (a) a claim of an issued, unexpired Patent that has not been revoked, disclaimed, abandoned or held invalid or unenforceable by a court or other body of competent jurisdiction in an unappealed or unappealable decision and (b) a claim of any patent application which has not been abandoned or finally disallowed without the possibility of appeal or re-filing of the application.

 

ARTICLE 2 LICENSE GRANTS

 

Section 2.1: MannKind Exclusive License Grant to Pulmatrix.

 

Subject to the terms and conditions of this Agreement, MannKind hereby grants to Pulmatrix, and Pulmatrix hereby accepts, a worldwide, fully paid up, royalty-free, exclusive, sub-licensable (through multiple tiers) license to the MannKind Technology in order for Pulmatrix to Exploit the Cricket Device for the inhaled delivery of DHE in any formulation whatsoever, including PUR31000, for the treatment or prevention of any disease or condition in humans.

 

 

Section 2.2: MannKind Non-Exclusive License Grant to Pulmatrix.

 

Subject to the terms and conditions of this Agreement, MannKind hereby grants to Pulmatrix, and Pulmatrix hereby accepts, a worldwide, fully paid up, royalty-free, non-exclusive, sub-licensable (through multiple tiers) license to the MannKind Technology in order for Pulmatrix to Exploit the Cricket Device for the inhaled delivery of any dry powder formulation of one more active pharmaceutical ingredients formulated for the treatment or prevention of Neurological Disease.

 

Section 2.3: Pulmatrix Exclusive License Grants to MannKind.

 

(a) Subject to the terms and conditions of this Agreement, Pulmatrix hereby grants to MannKind, and MannKind hereby accepts, a worldwide, fully paid up, royalty-free, exclusive, sub-licensable (through multiple tiers) license to the Pulmatrix Technology in order for MannKind to Exploit formulations of iSPERSE formulation with Clofazimine for inhalation by humans for the treatment or prevention of infection.

 

(b) Subject to the terms and conditions of this Agreement, Pulmatrix hereby grants to MannKind, and MannKind hereby accepts, a worldwide, fully paid up, royalty-free, exclusive, sub-licensable (through multiple tiers) license to the Pulmatrix Technology in order for MannKind to Exploit formulations of iSPERSE with one more active pharmaceutical ingredients for inhalation for the treatment or prevention of NTM.

 

(c) Subject to the terms and conditions of this Agreement, Pulmatrix hereby grants to MannKind, and MannKind hereby accepts, a worldwide, fully paid up, royalty-free, exclusive, sub-licensable (through multiple tiers) license to the Pulmatrix Technology in order for MannKind to Exploit formulations of iSPERSE with insulin for inhalation by humans for the treatment or prevention of diabetes.

 

Section 2.4: Pulmatrix Non-Exclusive License Grants to MannKind.

 

(a) Subject to the terms and conditions of this Agreement, Pulmatrix hereby grants to MannKind, and MannKind hereby accepts, a worldwide, fully paid up, royalty-free, non-exclusive, sub-licensable (through multiple tiers) license to the Pulmatrix Technology in order for MannKind to Exploit formulations of iSPERSE with one or more active pharmaceutical ingredients for inhalation for the treatment or prevention of Endocrine Disease.

 

(b) Subject to the terms and conditions of this Agreement, Pulmatrix hereby grants to MannKind, and MannKind hereby accepts, a worldwide, fully paid up, royalty-free, non-exclusive, sub-licensable (through multiple tiers) license to the Pulmatrix Technology in order for MannKind to Exploit formulations of iSPERSE with one or more active pharmaceutical ingredients for inhalation for the treatment or prevention of ILD.

 

 

Section 2.5: No Implied Licenses; Negative Covenant.

 

Except as otherwise specifically set forth herein, only the licenses granted pursuant to the express terms of this Agreement shall be of any legal force and effect. No license or other intellectual property rights shall be created by implication in any Patents, technology and/or proprietary information owned by a Party, even if such Patents, technology, or proprietary information is necessary to exploit the Licensed Technology. Neither Party shall, and neither Party shall permit any of its Affiliates or sublicensees to, practice any Licensed Technology licensed to it by the other Party outside the scope of the licenses granted to it under this Agreement.

 

Section 2.6: Scope

 

(a) For the avoidance of doubt, the foregoing licenses set forth in this Article 2 are royalty free and not limited by territory.

 

(b) The licenses set forth in this Article 2 to Pulmatrix do not include the right for Pulmatrix to manufacture or have manufactured the Cricket Device.

 

(c) The licenses set forth in this Article 2 to Pulmatrix do not include rights to any Know-How, Patents or other rights covering any active ingredient, formulation technology or other proprietary product other than the Cricket Device itself.

 

(d) The licenses set forth in this Article 2 shall not include rights to any Know-How, Patents or other intellectual property rights in-licensed or acquired by Licensor from a Third Party after the Effective Date unless the applicable Licensee agrees in writing (i) to be bound by the terms and conditions of any applicable Third Party agreement granting Licensor Control of such Know-How, Patents or other intellectual property rights and (ii) to pay all payments owed to such Third Party that are attributable to Licensee’s use of such Know-How, Patents or other intellectual property rights under this Agreement.

 

Section 2.7 Sublicenses.

 

Subject to the terms and conditions of this Agreement, each Party may grant sublicenses through multiple tiers, under any or all of the rights granted in Section 2.1, Section 2.2, Section 2.3 and Section 2.4, as applicable, to its Affiliates and to Third Parties (each such Affiliate or Third Party, a “Sublicensee” and each such agreement, a “Sublicense”). Each Sublicense shall be consistent with the terms and conditions of this Agreement applicable to the scope of the sublicense granted to such Sublicensee. Each Party shall promptly notify the other Party in writing of any Sublicense granted to a Third Party (other than non-exclusive Sublicenses granted to Third Party service providers or vendors providing services on such Party’s behalf) and shall provide the other Party with a copy of such Sublicense; provided, that such Party may redact any confidential or financial information contained therein that is unnecessary for the other Party to confirm compliance with this Agreement.

 

Section 2.8 Trademarks.

 

(a) MannKind Trademarks. The licenses set forth in this Article 2 to Pulmatrix include the right for Pulmatrix to use the MannKind Trademarks solely in connection with the Exploitation of Products within the scope of the licenses granted to Pulmatrix under this Article 2. Pulmatrix shall, and shall ensure that its Affiliates and Sublicensees will not, adapt or make any use of any Trademark that is confusingly similar to any MannKind Trademark or any Trademark that MannKind or its Affiliates use to designate its corporate name. All use of the MannKind Trademarks shall be consistent with the MannKind Trademark style and usage provisions as identified by MannKind to Pulmatrix in writing. All goodwill generated from the use of the MannKind Trademarks shall inure to the benefit of and is hereby assigned to MannKind. MannKind shall have the sole right to prosecute, enforce and defend the MannKind Trademarks.

 

 

(b) Pulmatrix Trademarks. The licenses set forth in this Article 2 to MannKind include the right for MannKind to use the Pulmatrix Trademarks solely in connection with the Exploitation of Products within the scope of the licenses granted to MannKind under this Article 2. MannKind shall, and shall ensure that its Affiliates and Sublicensees will not, adapt or make any use of any Trademark that is confusingly similar to any Pulmatrix Trademark or any Trademark that Pulmatrix or its Affiliates use to designate its corporate name. All use of the Pulmatrix Trademarks shall be consistent with the Pulmatrix Trademark style and usage provisions as identified by Pulmatrix to MannKind in writing. All goodwill generated from the use of the Pulmatrix Trademarks shall inure to the benefit of and is hereby assigned to Pulmatrix. Pulmatrix shall have the sole right to prosecute, enforce and defend the Pulmatrix Trademarks.

 

Section 2.9 Technology Transfer.

 

(a) Transfer to MannKind. Within thirty (30) days after the Effective Date, Pulmatrix shall provide MannKind with the Pulmatrix Know-How and all regulatory materials (including Regulatory Approvals) specifically relating to iSPERSE. On an ongoing basis thereafter, at the reasonable request of MannKind, Pulmatrix shall provide MannKind with copies of any Pulmatrix Know-How generated since the last such transfer under this Section 2.8.

 

(b) Transfer to Pulmatrix. Within thirty (30) days after the Effective Date, MannKind shall provide Pulmatrix with the MannKind Know-How and all regulatory materials (including Regulatory Approvals) specifically relating to the Cricket Device. On an ongoing basis thereafter, at the reasonable request of Pulmatrix, MannKind shall provide Pulmatrix with copies of any MannKind Know-How generated since the last such transfer under this Section 2.8.

 

ARTICLE 3 PATENT PROSECUTION AND MAINTENANCE; PATENT ENFORCEMENT

 

Section 3.1: Patent Prosecution and Maintenance.

 

Each Party, as Patent Owner, shall have the first right to Prosecute and Maintain any and all Patents Controlled by such Party that are included in such Party’s Licensed Technology, at its own cost. If a Patent Owner decides not to: (i) prosecute certain patent applications within the Licensed Technology to issuance or (ii) maintain any United States or foreign issued Patent within the Licensed Technology, the Patent Owner shall timely notify the Licensee of such Patent in writing thereof and solely to the extent the Patent Owner owns such Patent, upon written request by the Licensee, the Parties shall cooperate to transfer the ownership of such Patent to the Licensee, provided, that the Patent Owner shall retain a worldwide, irrevocable, perpetual, fully paid up, royalty-free, exclusive, transferable, sublicensable (through multiple tiers) license to and under the transferred Patent in any field of use. The preceding sentence shall not apply to any patent applications within the Licensed Technology that will be abandoned for the pursuit of a utility application in the case of a provisional application, a divisional or continuation application in the case of any utility application, any national stage applications in the case of a Patent Cooperation Treaty (PCT) application, or countries not validated in the case of a European or other regional patent application. Before any Party makes a filing or extension on any Patent included in such Party’s Licensed Technology, the Patent Owner shall consider in good faith any reasonable comments thereto provided by the other Party in connection with the prosecution of such Patents. Pulmatrix shall promptly provide MannKind with copies of all material communications from any patent authority regarding the Pulmatrix Patents, and shall provide MannKind, for its review and comment, with drafts of any material filings or responses to be made to such patent authorities in a reasonable amount of time in advance of submitting such filings or responses.

 

 

Section 3.2: Infringement Procedures.

 

During the term of this Agreement, each Party shall promptly inform the other of any suspected infringement, misuse, misappropriation, theft or breach of confidence of other proprietary rights in the Licensed Technology by a Third Party in the other Party’s exclusive field of use as provided in Article 2 (collectively “Third Party Activities”), and with respect to such activities as are suspected. MannKind shall have the sole right, but not the obligation, to institute an action or proceeding against Third Party Activities related to the MannKind Patents and to defend any declaratory judgment action relating to the MannKind Patents. For Third Party Activities involving the Pulmatrix Patents in MannKind’s exclusive field of use as provided in Article 2, MannKind shall have the sole right, but not the obligation, to institute an action or proceeding against Third Party Activities and defend any declaratory judgment action relating thereto and Pulmatrix shall have the right, but not the obligation, to join any such suit, legal action or proceeding that is initiated by MannKind with respect to the Pulmatrix Patents, at MannKind’s cost. Pulmatrix shall, where necessary, furnish a power of attorney solely for such purpose, or be named as a necessary party, to such action, at MannKind’s cost. Pulmatrix will reasonably cooperate with MannKind in such action. In addition, notwithstanding anything to the contrary contained herein, if Pulmatrix cooperates in such action, such cooperation shall be at MannKind’s sole expense. All recoveries, whether by judgment, award, decree or settlement, from infringement or misuse of Licensed Technology under this Section 3.2 shall be apportioned as follows: (a) MannKind shall recover an amount equal the costs and expenses incurred by MannKind directly related to the prosecution of such action or proceeding and Pulmatrix shall recover any unreimbursed costs and expenses incurred by Pulmatrix, if any, directly related to its cooperation in the prosecution of such action or proceeding (which amounts shall be allocated pro rata if insufficient to cover the totality of such costs and expenses) and (b) the remainder shall be allocated to the Party bringing the action.

 

Section 3.3: Consent to Settle.

 

A settlement, consent judgment or other voluntary final disposition of an action covered by an action covered by Section 3.2 may be entered into by the party instituting such action without the consent of the non-enforcing Party; provided, however, that any such settlement, consent judgment or other disposition shall not, without the prior written consent of the non-enforcing Party, (a) impose any liability or obligation on the non-enforcing Party or any of its Affiliates, or (b) admit the invalidity or unenforceability of, or otherwise impair or materially adversely affect the scope of, any Patent owned or controlled by the non-enforcing Party, such consent to not be unreasonably withheld, conditioned or delayed.

 

 

Section 3.4: Defense of Infringement Claims.

 

If any Third Party asserts a claim, demand, action, suit or proceeding against a Licensee (or any of its sublicensees), alleging that the use or practice of the Licensed Technology, infringes, misappropriates or violates the intellectual property rights of any Person (any such claim, demand, action, suit or proceeding being referred to as an “Infringement Claim”), the Licensee shall promptly notify the Patent Owner in writing specifying the facts, to the extent known, in reasonable detail. In the case of any such Infringement Claim, the Licensee shall assume control of the defense and shall have the exclusive right to settle any Infringement Claim against the Licensee without the consent of the Patent Owner; provided, however, if such settlement requires any payment from the Patent Owner, imposes any obligation or liability on the Patent Owner or decreases the Patent Owner’s rights or interests under this Agreement, the Licensee shall be required to obtain the Patent Owner’s consent, which consent will not be unreasonably withheld.

 

ARTICLE 4 TERM; TERMINATION

 

Section 4.1: Term. This Agreement shall commence upon the Effective Date and, unless earlier terminated pursuant to this Article 4, shall expire, on a country-by-country basis, on the date of expiration of the last Valid Claim of the Patents in the Licensed Technology. Upon the expiration of the Term for a particular country, the licenses granted under Section 2.1 with respect to such country shall become perpetual and irrevocable. If the Effective Date has not occurred by July 31, 2024, then this Agreement shall be void ab initio as if it was never executed by the parties.

 

Section 4.2: Termination for Breach. If either Party believes that the other is in breach of its material obligations hereunder, then the non-breaching Party may deliver notice of such breach to the other Party. For all breaches other than a failure to make a payment as set forth in this Agreement, the allegedly breaching Party shall have sixty (60) days from such notice to dispute or cure such breach. If the Party receiving notice of breach fails to cure, or fails to dispute, that breach within the applicable period set forth above, then the Party originally delivering the notice of breach may terminate this Agreement effective on written notice of termination to the other Party.

 

Section 4.3: Termination for Bankruptcy. Either Party may terminate this Agreement in its entirety upon written notice to the other Party in the event that (a) a case is commenced by or against such other Party under applicable bankruptcy, insolvency or similar laws, which case, if commenced against (not by) such other Party, is not dismissed within ninety (90) days of the commencement thereof, (b) such other Party files for bankruptcy, reorganization, liquidation, receivership or similar proceedings, (c) such other Party assigns all or a substantial portion of its assets for the benefit of creditors, (d) a receiver or custodian is appointed for such other Party’s business, (e) a substantial portion of such other Party’s business is subject to attachment or similar process or (f) anything analogous to any of the events described in the foregoing clauses (a) through (f) occurs under the laws of any applicable jurisdiction.

 

 

Section 4.4: Effects of Termination.

 

(a) Termination by MannKind. Upon termination of this Agreement by MannKind pursuant to Section 4.2 or Section 4.3: (i) all rights and licenses granted by MannKind to Pulmatrix under this Agreement shall terminate and revert to MannKind, (ii) all rights and licenses granted by Pulmatrix to MannKind under this Agreement shall survive and become perpetual and irrevocable, and (iii) at the request of MannKind, Pulmatrix shall return, or at the election of MannKind, destroy, and thereafter provide MannKind with written certification evidencing such destruction, all data, files, records and other materials in its or its Affiliates’ or Sublicensees’, possession or control containing or comprising MannKind’s Confidential Information; provided, that Pulmatrix shall be entitled to retain one (1) copy MannKind’s Confidential Information solely for litigation or archival purposes and Pulmatrix shall not be required to delete any of MannKind’s Confidential Information that is stored automatically, such as through server backup processes.

 

(b) Termination by Pulmatrix. Upon termination of this Agreement by Pulmatrix pursuant to Section 4.2 or Section 4.3: (i) all rights and licenses granted by Pulmatrix to MannKind under this Agreement shall terminate and revert to Pulmatrix, (ii) all rights and licenses granted by MannKind to Pulmatrix under this Agreement shall survive and become perpetual and irrevocable, and (iii) at the request of Pulmatrix, MannKind shall return, or at the election of Pulmatrix, destroy, and thereafter provide Pulmatrix with written certification evidencing such destruction, all data, files, records and other materials in its or its Affiliates’ or Sublicensees’, possession or control containing or comprising Pulmatrix’s Confidential Information; provided, that MannKind shall be entitled to retain one (1) copy Pulmatrix’s Confidential Information solely for litigation or archival purposes and MannKind shall not be required to delete any of Pulmatrix’s Confidential Information that is stored automatically, such as through server backup processes.

 

ARTICLE 5 INDEMNIFICATION

 

Section 5.1: Pulmatrix Indemnity.

 

Pulmatrix shall indemnify, defend, and hold harmless MannKind and its Affiliates and their respective officers, shareholders, members, managers, directors, employees, personnel and agents (the “MannKind Indemnitees”) from and against all damages or other amounts payable to a Third Party claimant (including liabilities, costs, expenses, reasonable attorneys’ fees, damages and losses resulting from the foregoing) (collectively, “Losses”) resulting from any claims, actions, causes of action or demands, brought by or on behalf of a Third Party (collectively, “Claims”) arising out of or in connection with: (a) any breach of any of Pulmatrix’s representations, warranties, covenants, and obligations under this Agreement, (b) any violation of applicable law by Pulmatrix, its Affiliates or its sublicensees; (c) infringement of intellectual property rights of a Third Party arising from Pulmatrix’s use of the MannKind Technology; (d) the development, commercialization, marketing or sale of any Product by Pulmatrix, its Affiliates and Sublicensees, and (e) Pulmatrix’s, its Affiliates’ or its Sublicensees’ gross negligence, willful misconduct or fraudulent conduct. Pulmatrix shall not be responsible to, nor shall it indemnify, defend or hold harmless MannKind for any Claims to the extent arising from any negligent act or omission or willful misconduct of any MannKind Indemnitee or a Claim for which MannKind would be required to indemnify Pulmatrix under this Agreement. This Section 5.1 shall survive any termination or expiration of this Agreement.

 

 

Section 5.2: MannKind Indemnity.

 

MannKind shall indemnify, defend, and hold harmless Pulmatrix and its Affiliates and their respective officers, shareholders, members, managers, directors, employees, personnel and agents (the “Pulmatrix Indemnitees”) from and against all Losses resulting from any Third Party Claims arising out of or in connection with: (a) any breach of any of MannKind’s representations, warranties, covenants, and obligations under this Agreement, (b) any violation of applicable law by MannKind, its Affiliates or its sublicensees; (c) any Third Party claim of infringement of intellectual property rights of such Third Party arising from MannKind’s use of the Pulmatrix Technology; (d) the development, commercialization, marketing or sale of any Product by or on behalf of MannKind, its Affiliates or Sublicensees; and (e) MannKind’s, its Affiliates or its Sublicensees gross negligence, willful misconduct or fraudulent conduct. MannKind shall not be responsible to, nor shall it indemnify, defend or hold harmless Pulmatrix for any Claims to the extent arising from any negligent act or omission or willful misconduct of any Pulmatrix Indemnitee or a Claim for which Pulmatrix would be required to indemnify MannKind under this Agreement. This Section 5.2 shall survive any termination or expiration of this Agreement.

 

Section 5.3: Procedure.

 

The indemnified Party shall promptly notify the indemnifying Party in writing of any Claim for which it believes it is entitled to indemnification hereunder. Failure or delay in providing such notice shall not relieve the indemnifying Party of its indemnification obligations, except to the extent the indemnifying Party demonstrates that the defense or settlement of the Claim has been prejudiced thereby. Subject to the provisions below in this Section 5.3, the indemnifying Party shall have the right to control the defense and settlement of any Claim, or may at any time tender control of the defense or settlement of such Claim to the indemnified Party. The indemnified Party may, at its own cost, elect to participate in the defense or settlement of any Claim with counsel of its choice. No compromise or settlement may be committed to by the indemnifying Party without the indemnified Party’s prior written approval (which shall not be unreasonably withheld, conditioned or delayed).

 

ARTICLE 6 LIMITATION OF LIABILITY

 

Section 6.1: WAIVER OF CONSEQUENTIAL DAMAGES.

 

EXCEPT FOR BREACHES OF ARTICLE 7, IN NO EVENT SHALL EITHER PARTY, ITS DIRECT OR INDIRECT SUBSIDIARIES, AFFILIATES, DIRECTORS, OFFICERS, AGENTS, EMPLOYEES OR REPRESENTATIVES BE LIABLE FOR ANY INDIRECT, INCIDENTAL, SPECIAL, PUNITIVE, EXEMPLARY OR CONSEQUENTIAL DAMAGES OF ANY KIND, NOR FOR ANY LOST PROFITS OR REVENUES, IN CONNECTION WITH OR ARISING OUT OF THIS AGREEMENT, EXCEPT TO THE EXTENT THAT A PARTY IS LIABLE TO A THIRD PARTY FOR THE SAME IN CONNECTION WITH A CLAIM FOR WHICH SUCH PARTY IS ENTITLED TO INDEMNIFICATION UNDER ARTICLE 5.

 

Section 6.2: LIMITATION OF LIABILITY.

 

EXCEPT FOR BREACHES OF ARTICLE 7 OR DAMAGES AVAILABLE TO A THIRD PARTY IN CONNECTION WITH A CLAIM FOR WHICH SUCH PARTY IS ENTITLED TO INDEMNIFICATION UNDER ARTICLE 5, THE MAXIMUM AGGREGATE LIABILITY OF EITHER PARTY TO THE OTHER, FOR ANY REASON AND UPON ANY CAUSE OF ACTION ARISING OUT OF OR RELATING TO THIS AGREEMENT SHALL BE LIMITED TO AN AMOUNT NOT TO EXCEED $1,000,000, EVEN IF A PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES OR SUCH DAMAGES ARE REASONABLY FORESEEABLE. THE FOREGOING LIMITATIONS SHALL APPLY REGARDLESS OF THE CAUSE OR FORM OF ACTION, WHETHER BASED IN CONTRACT, TORT, NEGLIGENCE, STRICT LIABILITY, WARRANTY OR OTHERWISE AND SHALL NEVER BE DEEMED TO FAIL IN THEIR ESSENTIAL PURPOSE.

 

 

Section 6.3: Insurance.

 

Each Party shall procure and maintain insurance, including product liability insurance, with respect to its activities hereunder that is consistent with normal business practices of prudent companies similarly situated at all times during which any product subject to a license granted to such Party under this Agreement is being clinically tested in human subjects or commercially distributed or sold. Each Party shall provide the other Party with evidence of such insurance upon request and shall provide the other Party with written notice at least sixty (60) days prior to the cancellation, non-renewal or material decrease in such insurance. Such insurance shall not be construed to create a limit of either Party’s liability with respect to its indemnification obligations under Article 5.

 

ARTICLE 7 CONFIDENTIALITY

 

Section 7.1: Definition of Confidentiality.

 

For purposes of this Agreement, “Confidential Information” of a Party means any non-public information or materials belonging to, concerning or in the possession or control of such Party or its Affiliates (the “Disclosing Party”) that is furnished, disclosed or otherwise made available (directly or indirectly) to the other Party (or Persons acting on such other Party’s behalf) (the “Receiving Party”) in connection with this Agreement and which is either marked or identified as confidential or proprietary or is of a type that a reasonable person would recognize it to be confidential or proprietary.

 

Section 7.2: Confidentiality Obligations.

 

The Receiving Party shall: (a) hold the Confidential Information in strict confidence and avoid the disclosure thereof to any Third Party by using the same degree of care as it uses to avoid the unauthorized use or disclosure of its own Confidential Information of a similar nature, but not less than reasonable care; and (b) not use the Confidential Information for any purpose except as contemplated under this Agreement. Should a Party become possessed of a trade secret of a Disclosing Party under the terms of this Agreement, the Receiving Party shall not, during the term and thereafter, disclose such trade secret to a Third Party. The Receiving Party shall restrict the possession and use of Confidential Information to its employees, agents, consultants, contractors, personnel, Affiliates and Sublicensees who have a need to know and are bound by confidentiality obligations no less stringent than those contained herein. The Receiving Party may disclose Confidential Information as required by applicable law, provided the Receiving Party discloses only such information as is required by applicable law and, if permitted by applicable law, uses reasonable efforts to notify the Disclosing Party of such disclosure and provides reasonable assistance to the Disclosing Party in seeking a protective order or similar confidential treatment at Disclosing Party’s expense. The Receiving Party shall promptly notify the Disclosing Party of any facts known to the Receiving Party regarding any unauthorized disclosure or use of Confidential Information. Each Party acknowledges that its breach of the obligations set forth in this Section 7.2 may cause irreparable harm for which the other Party shall be entitled to seek injunctive or other equitable relief. All Confidential Information shall remain the exclusive property of the Disclosing Party.

 

 

Section 7.3: Limitations.

 

Confidential Information shall not include any information to the extent that such information: (a) was demonstrably known by the Receiving Party before disclosure by the Disclosing Party, (b) becomes generally publicly known other than through any act or omission of the receiving Party in breach of this Agreement, (c) was disclosed to the Receiving Party free of any obligation of confidentiality by a Third Party who has a legal right to make such disclosure; or (d) is independently developed by the Receiving Party by persons without access to such information.

 

Section 7.4: Residual Rights.

 

Each Party acknowledges and agrees that the other Party, its Affiliates and their respective employees and agents shall be free to use and employ their general skills, ideas, concepts, know-how and expertise, and to use, disclose, and employ any generalized ideas, concepts, know-how, methods, techniques or skills gained or learned during the course of any activities performed hereunder, subject to its obligations respecting the other Party’s Confidential Information pursuant to this Article 7. Each Party acknowledges and agrees that to the extent any former employee of one Party becomes an employee of the other Party, such employee shall be free to use Confidential Information of such Party that was its former employer within the scope of the licenses granted under this Agreement to the Party that it is current employer.

 

Section 7.5: Terms of the Agreement.

 

(a) The Parties agree that the material terms of this Agreement are the Confidential Information of both Parties, subject to the special authorized disclosure provisions set forth in this Section 7.5 or Section 7.2. In addition, a Party may disclose such terms to the extent reasonably necessary to be disclosed to any bona fide potential or actual investor, acquiror, licensee or merger partner for the sole purpose of evaluating an actual or potential investment, acquisition, license or merger; provided that in connection with such disclosure, such Party shall inform each disclosee of the confidential nature of such Confidential Information and ensure that each such disclosee is contractually obligated to treat such Confidential Information as confidential.

 

(b) The Parties acknowledge that either or both Parties may be obligated to file under applicable laws a copy of this Agreement with the U.S. Securities and Exchange Commission or other Governmental Body. Each Party shall be entitled to make such a required filing, provided that it requests confidential treatment of the commercial terms and sensitive technical terms hereof and thereof to the extent such confidential treatment is reasonably available to such Party. In the event of any such filing, each Party will provide the other Party with a copy of this Agreement marked to show provisions for which such Party intends to seek confidential treatment and shall reasonably consider and incorporate the other Party’s reasonable comments thereon to the extent consistent with the legal requirements, with respect to the filing Party, governing disclosure of material agreements and material information that must be publicly filed. Each Party shall have the right to repeat disclosure any information that has already been publicly disclosed by such Party in accordance with this Section 7.5 without the obligation to repeat this process under this Section 7.5, provided such information remains accurate as of such time of repeated disclosure.

 

 

ARTICLE 8 REPRESENTATIONS AND WARRANTIES AND OTHER AGREEMENTS

 

Section 8.1: Mutual Representations and Warranties.

 

Each Party represents and warrants to the other Party as of the Effective Date that such first Party has: (a) all requisite legal and corporate power to execute and deliver this Agreement; (b) taken all corporate action necessary for the authorization, execution and delivery of this Agreement; (c) no agreement or understanding with any Third Party that interferes with or will interfere with the performance of their respective obligations under this Agreement; (d) obtained and shall maintain all rights, approvals and consents necessary to perform their respective obligations under this Agreement; (e) taken all action required or necessary to make such agreements legal, valid and binding obligations upon them; and (f) it has the right to grant the licenses to the other which are granted in this Agreement and it has not granted any license, option, right or interest in, to or under its Licensed Technology to any Third Party that is inconsistent with the license granted to the other Party under this Agreement. Each Party further represents and warrants to the other Party as of the Effective Date that, to its knowledge, none of its Licensed Technology infringes on the rights of any Third Party. MannKind further represents and warrants to Pulmatrix as of the Effective Date that (x) all of the Patents and Know-How controlled by MannKind that are necessary or reasonably useful to Exploit the Cricket Device in the fields of use licensed to Pulmatrix under Article 2 are owned by MannKind and not in-licensed from a Third Party and (y) all of the Patents owned by MannKind that are necessary or reasonably useful to Exploit the Cricket Device in the fields of use licensed to Pulmatrix under Article 2 are set forth on Schedule 2. Pulmatrix further represents and warrants to MannKind as of the Effective Date that (1) all of the Patents and Know-How controlled by Pulmatrix that are necessary or reasonably useful to Exploit iSPERSE in the fields of use licensed to MannKind under Article 2 are owned by Pulmatrix and not in-licensed from a Third Party and (2) all of the Patents owned by Pulmatrix that are necessary or reasonably useful to Exploit iSPERSE in the fields of use licensed to MannKind pursuant to Article 2 are set forth on Schedule 1.

 

Section 8.2: Disclaimer.

 

NEITHER PARTY MAKES ANY REPRESENTATION OR WARRANTY OF ANY KIND, WHETHER EXPRESS OR IMPLIED, EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES EXPRESSLY SET FORTH IN SECTION 8.1, AND EACH PARTY EXPRESSLY DISCLAIMS ANY IMPLIED OR STATUTORY WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, QUALITY, TITLE OR ANY REPRESENTATION OR WARRANTY ARISING FROM COURSE OF PERFORMANCE, COURSE OF DEALING OR USAGE OF TRADE.

 

 

Section 8.3 Other Agreements.

 

(a) Regulatory Assistance.

 

(i) Pulmatrix shall, at MannKind’s request and expense, provide reasonable assistance with respect to regulatory matters concerning the Exploitation of iSPERSE by or on behalf of MannKind or its Sublicensees within the scope of MannKind’s licenses under this Agreement, including (x) assistance with respect to regulatory filings required to obtain or maintain Regulatory Approval for MannKind’s or its Sublicensees’ Products and (y) providing MannKind with regulatory materials in its possession or control that are necessary or reasonably useful for MannKind to obtain or maintain Regulatory Approval for MannKind’s or its Sublicensees’ Products.

 

(ii) MannKind shall, at Pulmatrix’s request and expense, provide reasonable assistance with respect to regulatory matters concerning the Exploitation of the Cricket Device by or on behalf of Pulmatrix or its Sublicensees within the scope of Pulmatrix’s licenses under this Agreement, including (x) assistance with respect to regulatory filings required to obtain or maintain Regulatory Approval for Pulmatrix’s or its Sublicensees’ Products and (y) providing Pulmatrix with regulatory materials in its Control that are necessary or reasonably useful for Pulmatrix to obtain or maintain Regulatory Approval for Pulmatrix’s or its Sublicensees’ Products.

 

(b) Remedial Actions. Each Party will notify the other Party immediately, and promptly confirm such notice in writing, if it obtains information indicating that any Product being Exploited by such Party may be subject to any recall, market withdrawal, clinical hold, or any other similar corrective or other regulatory action with respect to such Product taken by virtue of applicable law (a “Remedial Action”). The Parties will reasonably assist each other in gathering and evaluating such information as is necessary to determine the necessity of conducting a Remedial Action and preparing and maintaining corresponding documentation, as well as, if necessary, making any required submissions to the applicable Governmental Body. The Party Exploiting such Product subject to the Remedial Action shall be solely responsible for all costs and expenses associated with such Remedial Action.

 

(c) Regulatory Approvals. Each Party shall have the right to apply for and maintain, at its own cost and expense, all regulatory approvals of the Products being developed by such Party. Subject to Section 8.3(a), each Party shall be responsible for and have sole discretion over the preparation of all regulatory materials and all communications and interactions with the applicable regulatory authorities or other Governmental Bodies with respect to the Products being developed by such Party, both prior to and subsequent to Regulatory Approval.

 

(d) Manufacture and Supply.

 

(i) At the request of Pulmatrix, the Parties agree to promptly negotiate in good faith and enter into supply agreements for the clinical and commercial supply of the Cricket Device to Pulmatrix.

 

(ii) Without limiting the generality of Section 2.9, at the request of MannKind, Pulmatrix will (x) transfer to MannKind all Know-How and materials related to manufacturing using iSPERSE (including all CMC related information) as necessary or reasonably useful to enable MannKind or its Third Party contract manufacturer to manufacture using iSPERSE and (y) provide MannKind with reasonable technical assistance and support at MannKind’s reasonable cost and expense with respect to manufacturing using iSPERSE.

 

 

(e) Pulmatrix Licensed Technology Transaction Notice. If, during the Term, Pulmatrix or any of its Affiliates determines to initiate or otherwise engages in discussions with a Third Party (other than Teva Pharmaceutical Industries Ltd) regarding the assignment, transfer or sale of Pulmatrix’s or its Affiliate’s right, title and interest in and to all or substantially all of the Pulmatrix Licensed Technology, then Pulmatrix shall provide notice thereof to MannKind. At the request of MannKind after receipt of any such notice, (i) Pulmatrix will, on a non-exclusive basis (unless otherwise agreed to by the Parties), engage in good faith negotiations with MannKind regarding such potential assignment, transfer or sale and (ii) Pulmatrix will provide MannKind with a high-level summary of data, results, and other material information that is relevant to the Pulmatrix Licensed Technology.

 

(f) Ownership of Inventions. As between the Parties, each Party shall own all right, title and interest in and to all inventions and intellectual property rights made solely by or on behalf of its or its Affiliates’ employees, agents, or independent contractors in exercising its rights under this Agreement.

 

(g) Project Technology. Notwithstanding anything to the contrary under the Pulmatrix Services Agreement, Pulmatrix hereby assigns and transfers to MannKind all of its right, title and interest in and to Project Technology (as such term is defined in the Pulmatrix Services Agreement) generated by or on behalf of Pulmatrix in performance of the services under the Pulmatrix Services Agreement and Pulmatrix agrees to take, and to cause its employees, agents, and consultants to take, all further acts reasonably required to evidence such assignment and transfer to MannKind, at MannKind’s reasonable expense.

 

ARTICLE 9 ADDITIONAL PROVISIONS

 

Section 9.1: Further Assurances.

 

Each Party covenants and agrees to execute and deliver or cause to be executed and delivered to the other Party such instruments or further assurances as may, in the reasonable opinion of such other Party, be necessary or desirable to give effect to the provisions of this Agreement.

 

Section 9.2: Notices.

 

All notices required or permitted under this Agreement shall be in writing and delivered via overnight mail or overnight courier service, signature proof of receipt required. Notices shall be directed to the addresses set forth below and shall be deemed effective upon receipt. Either Party may change its address for notices from time to time by providing written notice to the other Party.

 

If to MannKind:

 

MannKind Corporation

Attn: General Counsel

30930 Russell Ranch Road, Suite 300

Westlake Village, CA 91362

Email: legal@mannkindcorp.com

 

 

If to Pulmatrix:

 

Pulmatrix, Inc.

Attn: Ted Raad, CEO

945 Concord Street

Framingham MA 01701

Email: traad@pulmatrix.com

 

Section 9.3: Assignment.

 

The Agreement shall be binding on the Parties and their successors and permitted assigns. Neither Party shall assign, transfer or delegate any of its rights, duties or obligations under this Agreement, or any part thereof, whether by operation of law or otherwise, without the prior written consent of the other Party, provided that either Party shall be entitled to assign or transfer this Agreement in connection with the sale or acquisition of all or substantially all of its business to which this Agreement relates, whether by merger, sale of stock, sale of assets or otherwise. Any assignment in violation of this paragraph shall be void ab initio.

 

Section 9.4: Publicity; Press Releases.

 

Except as permitted pursuant to Section 7.4 or as otherwise required by applicable law, (a) neither Party shall, without the prior written consent of the other Party which shall not be unreasonably withheld, issue any press releases or make any public statements concerning the existence of or activities under this Agreement and (b) the Parties will mutually agree upon the content and timing of any press release announcing the execution of this Agreement or otherwise relating to the terms of this Agreement.

 

Section 9.5: Modifications; Waiver.

 

This Agreement may be modified only pursuant to a writing executed by authorized representatives of both Parties. The Parties expressly disclaim the right to claim the enforceability of any oral modifications to this Agreement or any amendments based on course of dealing, waiver, reliance, estoppel or other similar legal theory. No delay or omission by either Party to exercise any right occurring upon any non-compliance or default of the other Party with respect to any of the terms of this Agreement shall impair any such right or be construed to be a waiver thereof.

 

Section 9.6: No Third Party Beneficiaries.

 

This Agreement is for the sole benefit of the Parties and their successors and permitted assigns and nothing herein, express or implied, shall give or be construed to give any Person other than the Parties any legal or equitable rights hereunder.

 

Section 9.7: Severability.

 

In the event any provision of this Agreement is determined by a court of competent jurisdiction to be invalid or unenforceable under applicable law, such provision shall be amended and interpreted to accomplish the objectives of such provision to the greatest extent possible under applicable law, and the remaining provisions of this Agreement shall continue in full force and effect.

 

 

Section 9.8: Governing Law.

 

This Agreement shall be governed by and construed in accordance with the laws of Delaware, without reference to the principles of conflicts of law that would apply the substantive laws of another jurisdiction. Notwithstanding the foregoing, nothing herein shall prevent either Party from commencing an action for the purpose of seeking immediate injunctive relief in the appropriate jurisdiction.

 

Section 9.9: Survival.

 

Termination or expiration of this Agreement shall not affect any rights or obligations of the Parties under this Agreement that have accrued prior to the date of termination or expiration. Any provision of this Agreement that contemplates performance or observance subsequent to any expiration or termination of this Agreement, or which is otherwise necessary to interpret the respective rights and obligations of the Parties hereunder, shall survive any expiration or termination of this Agreement and continue in full force and effect, including without limitation Section 4.1 (Term), Section 4.4 (Effects of Termination), Article 5 (Indemnification), Article 6 (Limitation of Liability), Article 7 (Confidentiality), and Article 9 (Additional Provisions).

 

Section 9.10: Headings; Construction.

 

The headings of the various sections in this Agreement are for convenience of reference only and shall not affect the construction or interpretation of this Agreement. The Parties acknowledge and agree that any principle of construction or rule of law that provides that an agreement shall be construed against the drafter of the agreement in the event of any inconsistency or ambiguity in such agreement shall not apply to the terms and conditions of this Agreement.

 

Section 9.11: Entire Agreement.

 

This Agreement, together with the Schedules attached hereto, sets forth the entire and exclusive agreement between the Parties as to the subject matter hereof and supersedes all prior and contemporaneous understandings, negotiations and agreements, written or oral, between the Parties.

 

Section 9.12: Rights in Bankruptcy

 

(a) The Parties intend to take advantage of the protections of Section 365(n) (or any successor provision) of the U.S. Bankruptcy Code or any analogous provisions in any other country or jurisdiction to the maximum extent permitted by applicable law. All rights and licenses granted under or pursuant to this Agreement, but only to the extent they constitute licenses of a right to “intellectual property” as defined in Section 101 of the U.S. Bankruptcy Code or in any analogous provisions in any other country or jurisdiction (as the case may be) shall be deemed to be “intellectual property” for the purposes of Section 365(n) or any analogous provisions in any other country or jurisdiction (as the case may be). The Parties shall retain and may fully exercise all of their rights and elections under the U.S. Bankruptcy Code or any analogous provisions in any other country or jurisdiction, including the right to obtain the intellectual property from another entity.

 

 

(b) During the Term, Licensor shall create and maintain current copies to the extent practicable of all such intellectual property. In the event of the commencement of a bankruptcy proceeding by or against either Party under the U.S. Bankruptcy Code or any analogous provisions in any other country or jurisdiction, the Party that is not subject to such proceeding shall be entitled to a complete duplicate of (or complete access to, as appropriate) all such intellectual property (including all embodiments of such intellectual property), which, if not already in the non-subject Party’s possession, shall be promptly delivered to it upon the non-subject Party’s written request (a) after commencement of a bankruptcy proceeding, unless the Party subject to such proceeding continues to perform all of its obligations under this Agreement, or (b) if not delivered pursuant to clause (a) above because the subject Party continues to perform, upon the rejection of this Agreement by or on behalf of the subject Party.

 

(c) All rights of the Parties under this Section 9.12 and under the U.S. Bankruptcy Code or any analogous provisions in any other country or jurisdiction (as the case may be) are in addition to and not in substitution of any and all other rights, powers, and remedies that each Party may have under this Agreement and any other applicable laws. If a case under the U.S. Bankruptcy Code or any analogous provisions in any other country or jurisdiction (as the case may be) is commenced by or against Licensor, Licensee shall have the right to perform the obligations of Licensor hereunder with respect to such intellectual property, but neither such provision nor such performance by Licensee shall release Licensor from any such obligation or liability for failing to perform it.

 

(b) The Parties agree that they intend the foregoing Licensee rights to extend to the maximum extent permitted by law and any provisions of applicable contracts with Third Parties, including for purposes of the U.S. Bankruptcy Code or any analogous provisions in any other country or jurisdiction (as the case may be), (i) the right of access to any intellectual property (including all embodiments thereof) of Licensor or any Third Party with whom Licensor contracts to perform an obligation of Licensor under this Agreement, and, in the case of the Third Party, which is necessary for the Exploitation of a product within the scope of the licenses granted to Licensee under this Agreement and (ii) the right to contract directly with any Third Party described in (i) in this sentence to complete the contracted work.

 

Section 9.13: Counterparts.

 

This Agreement may be executed in several counterparts, including by e-mail and with electronic signatures, each of which will be deemed an original, and all of which taken together shall constitute one single agreement between the Parties with the same effect as if all the signatures were upon the same instrument. An electronic signature shall be as legally effective as an original signature.

 

[SIGNATURE PAGE FOLLOWS]

 

 

IN WITNESS WHEREOF, the Parties have duly executed and delivered this Agreement as of the Effective Date.

 

MANNKIND CORPORATION
By:	/s/ Michael Castagna
Name:	Michael Castagna
Title:	Chief Executive Officer
PULMATRIX, INC.
By:	/s/ Teofilo Raad
Name:	Teofilo Raad
Title:	Chief Executive Officer

 

 

Schedule 1

 

Pulmatrix Licensed Technology

 

Family ID		Patent Application Title		Country		Application Number		Grant Date		Patent No.
PUL109		DRY POWDER FORMULATIONS AND METHODS FOR TREATING PULMONARY DISEASES		United States of America		61/267747
PUL109		DRY POWDER FORMULATIONS AND METHODS FOR TREATING PULMONARY DISEASES		Patent Cooperation Treaty		PCT/US2010/028961
PUL115		MONOVALENT METAL CATION DRY POWDERS		United States of America		61/387883
PUL117		DRY POWDER FORMULATIONS AND METHODS FOR TREATING PULMONARY DISEASES		United States of America		61/387925
PUL117		DRY POWDER FORMULATIONS AND METHODS FOR TREATING PULMONARY DISEASES		United States of America		61/431242
PUL115		MONOVALENT METAL CATION DRY POWDERS		United States of America		61/481879
PUL109		DRY POWDER FORMULATIONS AND METHODS FOR TREATING PULMONARY DISEASES		European Patent		10713283.9		15-Mar-2017		2410981
PUL109		DRY POWDER FORMULATIONS AND METHODS FOR TREATING PULMONARY DISEASES		European Patent		10713283.9_OPP		15-Mar-2017		2410981
PUL117		DRY POWDER FORMULATIONS AND METHODS FOR TREATING PULMONARY DISEASES		Patent Cooperation Treaty		PCT/US2011/049435
PUL109		DRY POWDER FORMULATIONS AND METHODS FOR TREATING PULMONARY DISEASES		Australia		2010229668		08-Sep-2016		2010229668

 

 

PUL109		DRY POWDER FORMULATIONS AND METHODS FOR TREATING PULMONARY DISEASES		Brazil		PI1011721-0		16-Nov-2021		PI1011721-0
PUL109		DRY POWDER FORMULATIONS AND METHODS FOR TREATING PULMONARY DISEASES		Canada		2754691		30-Jul-2019		2754691
PUL109		DRY POWDER FORMULATIONS AND METHODS FOR TREATING PULMONARY DISEASES		China		201080023554.3		23-Mar-2018		ZL201080023554.3
PUL109		DRY POWDER FORMULATIONS AND METHODS FOR TREATING PULMONARY DISEASES		Russian Federation		2011137960		16-Feb-2016		2577698
PUL109		DRY POWDER FORMULATIONS AND METHODS FOR TREATING PULMONARY DISEASES		India		7373/DELNP/2011		08-Sep-2021		376685
PUL109		DRY POWDER FORMULATIONS AND METHODS FOR TREATING PULMONARY DISEASES		Israel		215276		01-Dec-2016		215276
PUL109		DRY POWDER FORMULATIONS AND METHODS FOR TREATING PULMONARY DISEASES		Japan		2012-502314		26-Dec-2014		5671001
PUL109		DRY POWDER FORMULATIONS AND METHODS FOR TREATING PULMONARY DISEASES		Korea, Republic of (KR)		10-2011-7024843		06-Jul-2016		10-1639098
PUL109		DRY POWDER FORMULATIONS AND METHODS FOR TREATING PULMONARY DISEASES		Mexico		MX/a/2011/009957		22-Mar-2018		354829
PUL109		DRY POWDER FORMULATIONS AND METHODS FOR TREATING PULMONARY DISEASES		New Zealand		595281
PUL109		DRY POWDER FORMULATIONS AND METHODS FOR TREATING PULMONARY DISEASES		United States of America		13/259635
PUL115		MONOVALENT METAL CATION DRY POWDERS FOR INHALATION		Patent Cooperation Treaty		PCT/US2011/053829
PUL121		PROCESSABLE DRY POWDERS		United States of America		61/605083
PUL121		PROCESSABLE DRY POWDERS		United States of America		61/607928
PUL121		PROCESSABLE DRY POWDERS		United States of America		61/645927

 

 

PUL121		PROCESSABLE DRY POWDERS		United States of America		61/648506
PUL109		DRY POWDER FORMULATIONS AND METHODS FOR TREATING PULMONARY DISEASES		Hong Kong		12106373.0		05-Jan-2018		1165709
PUL121		PROCESSABLE DRY POWDERS		United States of America		61/707071
PUL117		DRY POWDER FORMULATIONS AND METHODS FOR TREATING PULMONARY DISEASES		Australia		2011296343		23-Mar-2016		2011296343
PUL117		DRY POWDER FORMULATIONS AND METHODS FOR TREATING PULMONARY DISEASES		Canada		2809666		22-Sep-2020		2809666
PUL117		DRY POWDER FORMULATIONS AND METHODS FOR TREATING PULMONARY DISEASES		China		201180052479.8		31-Jul-2018		ZL201180052479.8
PUL117		DRY POWDER FORMULATIONS AND METHODS FOR TREATING PULMONARY DISEASES		European Patent		11751775.5		01-Apr-2020		2611438
PUL117		DRY POWDER FORMULATIONS AND METHODS FOR TREATING PULMONARY DISEASES		Israel		224916
PUL117		DRY POWDER FORMULATIONS AND METHODS FOR TREATING PULMONARY DISEASES		Japan		2013-527146		29-Jan-2016		5877201
PUL117		DRY POWDER FORMULATIONS AND METHODS FOR TREATING PULMONARY DISEASES		New Zealand		607749
PUL117		DRY POWDER FORMULATIONS AND METHODS FOR TREATING PULMONARY DISEASES		United States of America		13/817963		23-Jun-2015		9061352
PUL115		MONOVALENT METAL CATION DRY POWDERS FOR INHALATION		Australia		2011308865		20-Apr-2017		2011308865
PUL115		MONOVALENT METAL CATION DRY POWDERS