Pulmatrix (PULM) risk factors, FY2025 10-K

Risks Related to the Merger with Cullgen

1. 01There is no assurance when or if the Merger will be completed. Any delay in completing the Merger may substantially reduce the potential benefits that we and Cullgen expect to obtain from the Merger33% rewritten
2. 02We may engage in the sale, license, transfer, disposition, divestiture or other monetization transaction Pulmatrix Legacy Business
3. 03The issuance of shares of our common stock to Cullgen stockholders in the Merger will substantially dilute the voting power of our current stockholders. Having a minority share position will reduce the influence that current stockholders have on our management
4. 04The issuance, or expected issuance, of our common stock in connection with the Merger could decrease the market price of our common stock
5. 05The intended benefits of the Merger may not be realized
6. 06Because the lack of a public market for Cullgen common stock makes it difficult to evaluate the fairness of the Merger, Cullgen stockholders may receive consideration in the Merger that is greater than or less than the fair market value of Cullgen common stock
7. 07Transfers of the Combined Company’s securities utilizing Rule 144 of the Securities Act may be limited
8. 08Our expected disposal of our historical assets and operations in connection with our proposed Merger with Cullgen will make us a shell company. As a result, we will be subject to more stringent reporting requirements, offering limitations and resale restrictions
9. 09Directors and officers of us and Cullgen may have interests in the Merger that are different from, or in addition to, those of our stockholders and Cullgen stockholders generally that may influence them to support or approve the Merger
10. 10The announcement and pendency of the Merger could have an adverse effect on our or Cullgen’s business, financial condition, results of operations or business prospects
11. 11The rights of Cullgen stockholders who become our stockholders in the Merger and our stockholders following the Merger will be governed by the Certificate of Incorporation, as amended
12. 12The Exchange Ratio is not adjustable based on the market price of our common stock, so the Merger consideration at the Closing may have a greater or lesser value than at the time the Merger Agreement was signed
13. 13We are expected to incur substantial expenses related to the Merger with Cullgen
14. 14Failure to complete the Merger could negatively affect the value of our common stock and the future business and financial results of both us and Cullgen
15. 15The Merger is expected to result in a limitation on the Combined Company’s ability to utilize its net operating loss carryforward
16. 16The analysis received by our board of directors from Lucid Capital Markets, LLC has not been, and is not expected to be, updated to reflect changes in circumstances that may have occurred since the date of the analysis
17. 17The Merger may be completed even though material adverse changes may result from the announcement of the Merger, industry-wide changes or other causes
18. 18We have never paid and, except the potential Cash Dividend in connection with the Merger, do not intend to pay any cash dividends in the foreseeable future
19. 19We are substantially dependent on our remaining employees, key contractors and consultants to facilitate the consummation of the Merger

Risks Related to the Proposed Reverse Stock Split

1. 20The proposed reverse stock split may not increase the Combined Company’s common stock price over the long term
2. 21The proposed reverse stock split would have the effect of increasing the amount of common stock that the Combined Company is authorized to issue without further approval by the Combined Company stockholders
3. 22The proposed reverse stock split may decrease the liquidity of our common stock
4. 23The proposed reverse stock split may lead to a decrease in overall market capitalization of the Combined Company

Risks Related to Our Business

1. 24We have a history of net losses and may experience future losses53% rewritten
2. 25We will need to raise additional capital to meet our business requirements in the future and such capital raises may be costly or difficult to obtain and could dilute our stockholders’ ownership interests
3. 26Any additional capital raised through the sale of equity or equity backed securities will dilute our stockholders’ ownership percentages and could also result in a decrease in the market value of our equity securities
4. 27We have historically been a clinical development stage biopharmaceutical company and have never been profitable. We expect to incur additional losses in the future and may never be profitable
5. 28All of our product candidates are still under development, and there can be no assurance of successful commercialization of any of our products
6. 29Drug development is a long, expensive and inherently uncertain process with a high risk of failure at every stage of development, and results of earlier studies and trials may not be predictive of future trial results
7. 30If our collaborators are not successful, or breach their agreements with us, we may not effectively develop and market some of our therapeutic candidates
8. 31We may not be able to attract, retain, or manage highly qualified personnel, which could adversely impact our business
9. 32We face substantial competition in the development of our product candidates and may not be able to compete successfully, and our product candidates may be rendered obsolete by rapid technological change
10. 33If the third parties on which we rely to conduct our clinical trials and to assist us with preclinical development do not perform as contractually required or expected, we may not be able to obtain regulatory clearance or approval for, or to commercialize, our products
11. 34We rely on third-party contract vendors to manufacture and supply us with high quality active pharmaceutical ingredients and manufacture our therapeutic candidates in the quantities we require on a timely basis
12. 35Supply chain and shipping disruptions may result in shipping delays, a significant increase in shipping costs, and could increase product costs and result in lost sales and reputational damage, which may have a material adverse effect on our business, operating results and financial condition
13. 36We may not be successful in negotiating for an appropriate price in a future sale or assignment of our rights related to our current drug candidates
14. 37Our failure to successfully acquire, develop and market additional drug candidates or approved drug products could impair our ability to grow
15. 38Our business strategy may include entry into additional collaborative or license agreements. We may not be able to enter into collaborative or license agreements or may not be able to negotiate commercially acceptable terms for these agreements
16. 39We may be subject to claims that our employees, independent consultants or agencies have wrongfully used or inadvertently disclosed confidential information of third parties
17. 40Market and economic conditions may negatively impact our business, financial condition and share price
18. 41If we fail to maintain proper and effective internal controls, our ability to produce accurate and timely financial statements could be impaired, which could harm our operating results, our ability to operate our business and investors’ views of us
19. 42Our ability to use our net operating loss carryforwards to offset future taxable income may be subject to certain limitations
20. 43Our business is subject to cybersecurity risks

Risks Related to Regulatory Matters

1. 44We have limited experience in filing and pursuing applications necessary to gain regulatory approvals, which may impede our ability to obtain timely approvals from the FDA or foreign regulatory agencies, if at all
2. 45Any failure by us to comply with existing or future regulations could harm our reputation and operating results
3. 46We and our third-party manufacturers are, and will be, subject to regulations of the FDA and other foreign regulatory authorities
4. 47Our employees may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements and insider trading
5. 48If we fail to comply with federal or state “fraud and abuse” laws, the failure to comply with these laws may adversely affect our business, financial condition and results of operations
6. 49Legislative or regulatory reform of the U.S. healthcare system may adversely affect our business55% rewritten

Risks Related to Our Financial Position and Need for Additional Capital

1. 50We will be required to raise additional capital to fund our operations, and we may not be able to continue as a going concern if we are unable to do so
2. 51Our long-term capital requirements are subject to numerous risks
3. 52We may engage in strategic transactions that could impact our liquidity, increase our expenses and present significant distractions to our management

Risks Related to Our Intellectual Property

1. 53We may be unable to adequately protect or enforce our rights to intellectual property, causing us to lose valuable rights. Loss of patent rights may lead us to lose market share and anticipated profits
2. 54If we are unable to protect the confidentiality of our trade secrets or know-how, such proprietary information may be used by others to compete against us
3. 55Legal proceedings or third-party claims of intellectual property infringement and other challenges may require us to spend substantial time and money and could prevent us from developing or commercializing our product candidates
4. 56We may be subject to other patent-related litigation or proceedings that could be costly to defend and uncertain in their outcome
5. 57Obtaining and maintaining patent protection depends on compliance with various procedures and other requirements, and our patent protection could be reduced or eliminated in case of non-compliance with these requirements
6. 58If we fail to comply with our obligations under our license agreements, we could lose the rights to intellectual property that is important to our business
7. 59We may be subject to damages resulting from claims that we or our employees have wrongfully used or disclosed alleged trade secrets of their former employers

Risks Related to Our Common Stock

1. 60The price of our common stock is subject to fluctuation and has been and may continue to be volatile
2. 61Financial reporting obligations of being a public company in the United States are expensive and time-consuming, and our management may be required to devote substantial time to compliance matters
3. 62In the foreseeable future, we do not intend to pay cash dividends on shares of our common stock, except the potential Cash Dividend in connection with the Merger, so any investor gains will be limited to the value of our shares
4. 63We may be at risk of securities class action litigation
5. 64In the event that we fail to satisfy any of the listing requirements of Nasdaq, our common stock may be delisted, which could affect our market price and liquidity
6. 65We may issue additional equity securities in the future, which could result in dilution to existing investors43% rewritten
7. 66We currently take advantage of reduced disclosure and governance requirements applicable to smaller reporting companies, which could result in our common stock being less attractive to investors
8. 67Anti-takeover provisions under Delaware corporate law may make it difficult for our stockholders to replace or remove our board of directors and could deter or delay third parties from acquiring us, which may be beneficial to our stockholders
9. 68Protective provisions in our charter and bylaws could prevent a takeover which could harm our stockholders