10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2020

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.)
99 Hayden Avenue, Suite 390 Lexington, MA	02421
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code (781) 357-2333

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 [X] 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 [X] 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	[X]	Smaller reporting company	[X]
		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 [X]

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 November 10, 2020, the registrant had 34,407,483 shares of common stock outstanding.

PULMATRIX, INC.

FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2020

TABLE OF CONTENTS

PART I — FINANCIAL INFORMATION
Item 1. Financial Statements	3
Condensed Consolidated Balance Sheets as of September 30, 2020 (unaudited) and December 31, 2019	3
Condensed Consolidated Statements of Operations for the Three Months and Nine Months Ended September 30, 2020 and 2019 (unaudited)	4
Condensed Consolidated Statements of Stockholders’ Equity for the Three Months and Nine Months Ended September 30,2020 and 2019 (unaudited)	5
Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2020 and 2019 (unaudited)	6
Notes to Condensed Consolidated Financial Statements (unaudited)	7
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	14
Item 3. Quantitative and Qualitative Disclosures About Market Risk	26
Item 4. Controls and Procedures	26
PART II — OTHER INFORMATION	27
Item 1. Legal Proceedings	27
Item 1A. Risk Factors	27
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	29
Item 3. Defaults Upon Senior Securities	29
Item 4. Mine Safety Disclosures	29
Item 5. Other Information	29
Item 6. Exhibits	29
SIGNATURES	30

2

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements.

PULMATRIX, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share data)

	At September 30, 2020			At December 31, 2019
		(unaudited)
Assets
Current assets:
Cash and cash equivalents	$	34,508		$	23,440
Accounts receivable		1,217			7,200
Prepaid expenses and other current assets		1,394			777
Total current assets		37,119			31,417
Property and equipment, net		332			270
Operating lease right-of-use asset		1,724			630
Long-term restricted cash		204			204
Goodwill		3,577			3,577
Total assets	$	42,956		$	36,098
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	630		$	600
Accrued expenses		2,389			2,514
Common stock payable		2,292			—
Operating lease liability		997			675
Deferred revenue		4,258			13,411
Total current liabilities		10,566			17,200
Operating lease liability, net of current portion		898			—
Deferred revenue, net of current portion		7,992			7,879
Total liabilities		19,456			25,079
Commitments (Note 9)
Stockholders’ equity:
Preferred stock, $0.0001 par value — 500,000 authorized and 0 issued and outstanding at September 30, 2020 and December 31, 2019		—			—
Common stock, $0.0001 par value — 200,000,000 shares authorized; 34,407,483 and 19,994,560 shares issued and outstanding at September 30, 2020 and December 31, 2019, respectively.		3			2
Additional paid-in capital		255,067			226,178
Accumulated deficit		(231,570	)		(215,161	)
Total stockholders’ equity		23,500			11,019
Total liabilities and stockholders’ equity	$	42,956		$	36,098

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

3

PULMATRIX, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)

(in thousands, except share and per share data)

	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2020			2019			2020			2019
Revenues	$	4,372		$	1,406		$	10,634		$	6,225
Operating expenses
Research and development		3,873			3,297			12,344			8,637
General and administrative		1,776			1,785			5,478			6,900
Impairment of goodwill		—			—			—			7,268
Total operating expenses		5,649			5,082			17,822			22,805
Loss from operations		(1,277	)		(3,676	)		(7,188	)		(16,580	)
Other income (expense)
Interest income		13			121			78			227
Settlement expense		—			—			—			(200	)
Warrant inducement expense		(9,289	)		—			(9,289	)		—
Other income/(expense), net		—			—			(10	)		(2	)
Net loss	$	(10,553	)	$	(3,555	)	$	(16,409	)	$	(16,555	)
Net loss per share, basic and diluted	$	(0.31	)	$	(0.18	)	$	(0.62	)	$	(1.07	)
Weighted average shares of common stock used to compute basic and diluted net loss per share		33,924,499			20,294,560			26,284,826			15,533,983

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

4

PULMATRIX, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

For the three and nine months ended September 30, 2020 and 2019

(in thousands, except share data)

	Common Stock				Additional Paid-In		Accumulated
	Shares		Amount		Capital		Deficit			Total
Balance — December 31, 2019		19,994,560	$	2	$	226,178	$	(215,161	)	$	11,019
Exercise of pre-funded warrants		300,000		—		—		—			—
Exercise of common stock options		19,997		—		21		—			21
Exercise of warrants		206,747		—		239		—			239
Share-based compensation		—		—		343		—			343
Net loss		—		—		—		(4,686	)		(4,686	)
Balance — March 31, 2020		20,521,304		2		226,781		(219,847	)		6,936
Issuance of common stock, net of issuance costs		4,787,553		1		7,313					7,314
Exercise of common stock options		2,500		—		3		—			3
Exercise of warrants		437,999		—		536		—			536
Share-based compensation		—		—		266		—			266
Net loss		—		—		—		(1,170	)		(1,170	)
Balance —June 30, 2020		25,749,356		3		234,899		(221,017	)		13,885
Exercise of warrants, net of issuance costs		8,658,127		—		10,576		—			10,576
Warrant inducement expense						9,289					9,289
Share-based compensation		—		—		303		—			303
Net loss		—		—		—		(10,553	)		(10,553	)
Balance —September 30, 2020		34,407,483	$	3	$	255,067	$	(231,570	)	$	23,500

	Common Stock				Additional Paid-In		Accumulated
	Shares		Amount		Capital		Deficit			Total
Balance — December 31, 2018		4,932,723	$	—	$	206,409	$	(194,565	)	$	11,844
Adjustment for reverse stock split		2,717		—		—		—			—
Issuance of common stock, net of issuance costs		2,394,955		1		2,978		—			2,979
Exercise of pre-funded warrants		697,500		—		70		—			70
Share-based compensation		—		—		459		—			459
Net loss		—		—		—		(5,156	)		(5,156	)
Balance — March 31, 2019		8,027,895		1		209,916		(199,721	)		10,196
Issuance of common stock, net of issuance costs		3,319,553				14,566		—			14,566
Exercise of pre-funded warrants		8,277,112		1		82		—			83
Share-based compensation		—		—		1,091		—			1,091
Net loss		—		—		—		(7,844	)		(7,844	)
Balance —June 30, 2019		19,624,560		2		225,655		(207,565	)		18,092
Exercise of pre-funded warrants		370,000		—		4		—			4
Share-based compensation		—		—		185		—			185
Net loss		—		—		—		(3,555	)		(3,555	)
Balance —September 30, 2019		19,994,560	$	2	$	225,844	$	(211,120	)	$	14,726

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

5

PULMATRIX, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

(in thousands)

	For the Nine Months Ended September 30,
	2020			2019
Cash flows from operating activities:
Net loss	$	(16,409	)	$	(16,555	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		157			139
Amortization of operating lease right-of-use asset		593			433
Share-based compensation		912			1,735
Impairment of goodwill		—			7,268
Gain on disposal of property and equipment		—			(1	)
Warrant inducement expense		9,289			—
Changes in operating assets and liabilities:
Accounts receivable		5,983			—
Prepaid expenses and other current assets		(617	)		(243	)
Accounts payable		9			(24	)
Accrued expenses		(125	)		(414	)
Operating lease liability		(467	)		(450	)
Deferred revenue		(9,040	)		15,775
Net cash (used in)/provided by operating activities		(9,715	)		7,663
Cash flows from investing activities:
Purchases of property and equipment		(198	)		(49	)
Net cash used in investing activities		(198	)		(49	)
Cash flows from financing activities:
Proceeds from issuance of common stock, net of issuance costs		7,314			17,545
Proceeds from exercise of common stock options		24			—
Proceeds from exercise of common stock warrants, net of issuance costs		11,351			—
Proceeds from exercise of common stock warrants, shares to be issued		2,292			—
Proceeds from exercise of pre-funded warrants		—			157
Proceeds from Paycheck Protection Program loan		617			—
Repayment of Paycheck Protection Program loan		(617	)		—
Net cash provided by financing activities		20,981			17,702
Net increase in cash, cash equivalents and restricted cash		11,068			25,316
Cash, cash equivalents and restricted cash — beginning of period		23,644			2,767
Cash, cash equivalents and restricted cash — end of period	$	34,712		$	28,083
Supplemental disclosures of non-cash investing and financing information:
Fixed asset purchases in accounts payable	$	21			—
Operating lease right-of-use asset obtained in exchange for operating lease obligation	$	1,687		$	1,213

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

6

PULMATRIX, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2020

(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 biotechnology company focused on the discovery and development of a novel class of inhaled therapeutic products. The Company’s proprietary dry powder delivery platform, iSPERSE™ (inhaled Small Particles Easily Respirable and Emitted), 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 is developing a pipeline of iSPERSE^™-based therapeutic candidates targeted at prevention and treatment of a range of respiratory and other diseases with significant unmet medical needs.

2. Summary of Significant Accounting Policies and Recent Accounting Standards

Basis of Presentation

Principles of Consolidation

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 (“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 financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019, filed with the SEC on March 26, 2020 (the “Annual Report”). 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. When preparing financial statements in conformity with GAAP, the Company must make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, expenses, and related disclosures at the date of the financial statements. Actual results could differ from those estimates. Additionally, operating results for the nine months ended September 30, 2020, are not necessarily indicative of the results that may be expected for any other interim period or for the fiscal year ending December 31, 2020. For further information, refer to the financial statements and footnotes included in the Company’s annual financial statements for the fiscal year ended December 31, 2019, which are included in the Annual Report.

Use of Estimates

In preparing condensed consolidated financial statements in conformity with 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 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. These estimates and assumptions include revenue recognition, estimating the fair value of equity securities, estimating the useful lives of depreciable and amortizable assets, interest borrowing rate, valuation allowance against deferred tax assets, goodwill impairment, and estimating the fair value of long-lived assets to assess whether impairment charges may apply.

7

Concentrations of Credit Risk and Off-Balance Sheet Arrangements

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 an account at a single financial institution that management believes is creditworthy. 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. The Company has not incurred any losses to date.

We have no 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.

Cash, Cash Equivalents and Restricted Cash

Cash and cash equivalents consist of cash, checking accounts and money market accounts. Restricted cash consists of two security deposits with a financial institution.

The following table provides a reconciliation of cash, cash equivalents and restricted cash as reported in the condensed consolidated balance sheets that sum to the total of the same amounts in the statement of cash flows.

	Nine months ended September 30
	2020		2019
Cash and cash equivalents	$	34,508	$	27,879
Restricted cash		204		204
Total cash, cash equivalents and restricted cash	$	34,712	$	28,083

Goodwill

Goodwill represents the difference between the consideration transferred and the fair value of the net assets acquired, and liabilities assumed under the acquisition method of accounting for push-down accounting. Goodwill is not amortized but is evaluated for impairment within the Company’s single reporting unit on an annual basis during the fourth quarter, or more frequently if an event occurs or circumstances change that would more likely than not reduce the fair value of the Company’s reporting unit below its carrying amount. When performing the impairment assessment, the accounting standard for testing goodwill for impairment permits a company to first assess the qualitative factors to determine whether the existence of events and circumstances indicates that it is more likely than not that the goodwill is impaired. If the Company believes, as a result of the qualitative assessment, that it is more likely than not that the fair value of goodwill is impaired, the Company then must perform a quantitative analysis to determine if the carrying value of the reporting entity exceeds its fair value. The impact of the novel coronavirus pandemic was considered in the Company’s periodic qualitative assessment. Currently, there has not been a significant impact on the carrying value of the Company, but this factor will continue to be evaluated.

Recently Adopted Accounting Standards

In August 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-06, “Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815 – 40)” (“ASU 2020-06”). ASU 2020-06, which simplifies the guidance on accounting for convertible debt instruments by removing the separation models for (1) convertible debt with a cash conversion feature and (2) convertible instruments with a beneficial conversion feature. As a result, the Company will not separately present in equity an embedded conversion feature in such debt. Instead, we will account for a convertible debt instrument wholly as debt, unless certain other conditions are met. We expect the elimination of these models will reduce reported interest expense and increase reported net income for the Company’s convertible instruments falling under the scope of those models before the adoption of ASU 2020-06. Also, ASU 2020-06 requires the application of the if-converted method for calculating diluted earnings per share and the treasury stock method will be no longer available. The provisions of ASU 2020-06 are applicable for fiscal years beginning after December 15, 2021, with early adoption permitted no earlier than fiscal years beginning after December 15, 2020. The Company is currently evaluating the impact of ASU 2020-06 on its consolidated financial statements.

In August 2018, the FASB issued ASU 2018-15, Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract. The new standard will align the requirements for capitalizing implementation costs for hosting arrangements (services) with costs for internal-use software (assets). As a result, certain implementation costs incurred in hosting arrangements will be deferred and amortized. The new standard became effective for the Company on January 1, 2020. The Company has adopted ASU 2018-13, and adoption of this ASU has no significant impact on its condensed consolidated financial statements.

In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement. ASU 2018-13 modifies the disclosure requirements for fair value measurements by removing, modifying or adding certain disclosures. The amendments in ASU 2018-13 became effective for fiscal years beginning after December 15, 2019. The Company has adopted ASU 2018-13, and adoption of this ASU has no significant impact on its condensed consolidated financial statements.

8

3. Accounts Receivable

Accounts receivable of $1,217 results from JJEI and relates to the PUR1800 program.

4. Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consisted of the following:

	At September 30, 2020		At December 31, 2019
Prepaid insurance	$	410	$	202
Prepaid clinical trials		770		322
Prepaid other		183		221
Deferred operating costs		31		32
Total prepaid and other current assets	$	1,394	$	777

5. Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consisted of the following:

	At September 30, 2020		At December 31, 2019
Accrued vacation	$	93	$	42
Accrued wages and incentive		898		527
Accrued clinical & consulting		1,198		1,820
Accrued legal & patent		59		85
Accrued other expenses		141		40
Total accrued expenses	$	2,389	$	2,514

6. Common Stock

On July 9, 2020, the Company entered into letter agreements with certain existing accredited investors to exercise certain existing and outstanding warrants (“Existing Warrants”) to purchase through a cash exercise up to an aggregate of 10,085,741 shares of the Company’s common stock at the existing exercise price per share of $1.35. The Existing Warrants were issued in an underwritten public offering pursuant to a registration statement on Form S-1 (File No. 333-230395) and an additional registration statement on Form S-1 (File No. 333-230714) filed pursuant to Rule 462(b) under the Securities Act of 1933, as amended, that was consummated in April 2019.

In consideration for the exercise of the Existing Warrants for cash, the Company agreed to issue the exercising holders new unregistered warrants (“Inducement Warrants”) to purchase up to an aggregate of 10,085,741 shares of common stock at an exercise price of $1.80 per share and with an exercise period of five years from July 14, 2020. The gross proceeds to the Company from the exercise of 8,388,127 warrants was approximately $11,324. The gross proceeds to the Company from the exercise of 1,697,614 warrants that remain in abeyance was approximately $2,292 and was recorded as a common stock payable in the accompanying condensed consolidated balance sheet as of September 30, 2020. After deducting placement agent fees and offering expenses of approximately $1,112, the Company recorded net proceeds of $12,504.

As compensation, the Company issued warrants to designees of the placement agent on substantially the same terms as the Inducement Warrants to purchase up to an aggregate of 655,573 shares of common stock at an exercise price per share of $2.25 with an exercise period of five years from July 14, 2020.

All Inducement Warrants and the placement warrants were registered pursuant to a registration statement on Form S-3 (File No. 333-242341), which was declared effective on August 13, 2020. At issuance, the Inducement Warrants and the placement agent warrants had a weighted average fair value of approximately $0.92 and $0.87 per award, respectively. These weighted average fair values were estimated using the Black-Scholes option-pricing model with the following assumptions: expected life of 5 years, expected volatility of 98.9%, risk-free interest rate of 0.28% and expected dividend yield of 0.0%. The weighted average grant date fair value of approximately $9,289 associated with the Inducement Warrants, was recorded as a warrant inducement expense in the accompanying condensed statements of operations for the three and nine months ended September 30, 2020 with an offset to additional paid-in capital.

9

Exercise of Warrants

During the three months ended September 30, 2020 and 2019, the Company issued 8,658,127, which does not include 1,697,614 shares of common stock held in abeyance and 370,000 shares of common stock, respectively, upon exercise of 10,355,741 warrants and exercise of 370,000 pre-funded warrants to purchase 10,355,741 and 370,000 shares of common stock, respectively. The Company collected net proceeds of $12,868, which includes proceeds of $2,292 related to 1,697,614 shares of common stock held in abeyance and recorded as a common stock payable in the accompanying condensed consolidated balance sheet as of September 30, 2020, and $4, upon the exercise of these warrants during the three months ended September 30, 2020 and 2019, respectively.

During the nine months ended September 30, 2020 the Company issued 9,302,873 and 300,000 shares of common stock upon exercise of 11,202,925 warrants and 300,000 pre-funded warrants respectively. The Company collected net proceeds of $13,643 which includes proceeds of $2,292 related to 1,697,614 common shares held in abeyance and recorded as a common stock payable in the accompanying condensed consolidated balance sheet as of September 30, 2020.

During the nine months ended September 30, 2019, the Company issued 9,344,612 shares of common stock upon exercise of 9,344,612 pre-funded warrants and collected proceeds of $157.

7. Warrants

A rollforward of the common stock warrants outstanding at September 30, 2020 is as follows.

	Number of Warrants			Weighted Average Exercise Price			Weighted Average Remaining Contractual Term (Years)		Aggregate Intrinsic Value
Outstanding December 31, 2019		18,953,195		$	3.55			4.17	$	—
Warrants issued		15,840,058		$	1.75
Warrants exercised		(11,202,925	)	$	(1.32	)
Pre-funded warrants exercised		(300,000	)	$	(0.01	)
Warrants expired		(5,515	)	$	(102.27	)
Outstanding September 30, 2020		23,284,813		$	3.41			3.59	$	—

The following represents a summary of the warrants outstanding at each of the dates identified:

					Number of Shares Underlying Warrants
					For the Period Ended September 30,
Issue Date	Classification	Exercise Price		Expiration Date	2020		2019
August 07, 2020	Equity	$	2.25	July 14, 2025		218,713		—
July 13, 2020	Equity	$	2.25	July 14, 2025		436,860		—
July 13, 2020	Equity	$	1.80	July 14, 2025		10,085,741		—
April 20, 2020	Equity	$	1.55	April 20, 2022		4,787,553		—
April 20, 2020	Equity	$	2.0888	April 20, 2022		311,191		—
April 8, 2019	Equity	$	0.01	—		—		300,000
April 8, 2019	Equity	$	1.35	April 8, 2024		1,336,777		12,266,665
April 8, 2019	Equity	$	1.6875	April 3, 2024		797,334		797,334
February 12, 2019	Equity	$	1.8313	February 7, 2024		110,922		110,922
February 12, 2019	Equity	$	1.34	August 12, 2024		1,433,447		1,706,484
February 04, 2019	Equity	$	2.125	January 30, 2024		34,605		34,605
January 31, 2019	Equity	$	2.125	January 26, 2024		10,151		10,151
December 3, 2018	Equity	$	3.90	June 3, 2024		937,500		937,500
April 3, 2018	Equity	$	7.50	April 3, 2023		2,350,011		2,350,011
April 4, 2018	Equity	$	7.50	April 4, 2023		115,000		115,000
August 31, 2015	Equity	$	118.00	August 31, 2020		—		3,000
June 15, 2015	Equity	$	75.50	Five years after milestone achievement		319,008		319,008
June 15, 2015	Equity	$	83.50	June 16, 2020		—		2,515
Total Outstanding						23,284,813		18,953,195

10

8. Share-Based Compensation

The Company sponsors the Pulmatrix, Inc. 2013 Employee, Director and Consultant Equity Incentive Plan (the “2013 Plan). As of September 30, 2020, the 2013 Plan provides for the grant of up to 4,060,000 shares of common stock, of which 1,112,582 shares remain available for future grant.

In addition, the Company has two legacy plans: The Pulmatrix Operating’s 2013 Employee, Director and Consultant Equity Incentive Plan (the “Original 2013 Plan”) and Pulmatrix Operating’s 2003 Employee, Director, and Consultant Stock Plan (the “2003 Plan”). As of September 30, 2020, a total of 8,627 shares of common stock may be delivered under options outstanding under the Original 2013 Plan and the 2003 Plan, however no additional awards may be granted under the Original 2013 Plan or the 2003 Plan.

Stock Options

During the three months ended September 30, 2020, the Company granted 16,400 options to employees. The awards vest over four years, expire ten years from the grant date and on the date of the grant have a weighted average fair value of $20. There were no stock options granted during the three months ended September 30, 2019.

During the nine months ended September 30, 2020, the Company granted 2,265,504 options to employees, directors, and consultants. The awards vest over four years, expire ten years from the grant date and on the date of grant have a weighted average fair value of $2,634.

During the nine months ended September 30, 2019, the Company granted 651,600 options to employees and directors. The awards vest over four years, expire ten years from the grant date and on the date of the grant had a fair value of $456.

The following table summarizes stock option activity for the nine months ended September 30, 2020:

	Number of Options			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (Years)		Aggregate Intrinsic Value
Outstanding — December 31, 2019		900,003		$	11.63		8.52	$	—
Granted		2,265,504		$	1.53
Exercised		(22,497	)	$	1.06
Forfeited or expired		(263,779	)	$	15.83
Outstanding — September 30, 2020		2,879,231		$	3.38		8.96	$	58
Exercisable — September 30, 2020		859,409		$	7.59		8.45	$	21

The estimated fair values of employee stock options granted during the three months and nine months ended September 30, 2020 and 2019, were determined on the date of grant using the Black-Scholes option-pricing model with the following assumptions:

	Three Months Ended September 30,					Nine Months Ended September 30,
	2020			2019		2020			2019
Expected option life (years)		6.03			—		5.92			6.02
Risk-free interest rate		0.40	%		—		1.61	%		2.22	%
Expected volatility		94.41	%		—		93.91	%		74.14	%
Expected dividend yield		0	%		—		0	%		0	%

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The risk-free interest rate was obtained from U.S. Treasury rates for the applicable periods. The Company’s expected volatility was based upon the average of the historical volatility for industry peers and its own volatility. The expected life of the Company’s options was determined using the simplified method as a result of limited historical data regarding the Company’s activity. The dividend yield considers that the Company has not historically paid dividends and does not expect to pay dividends in the foreseeable future.

As of September 30, 2020, there was $2,290 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 2.8 years.

The following table presents total stock-based compensation expense for the three and nine months ended September 30, 2020 and 2019:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Research and development	$	46	$	14	$	142	$	81
General and administrative		257		171		770		1,654
Total share-based compensation expense	$	303	$	185	$	912	$	1,735

9. Commitments and Contingencies

Research and Development Activities

The Company contracts with various other organizations to conduct research and development activities. As of September 30, 2020, the Company had aggregate commitments to pay approximately $1,502 remaining on these contracts. 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.

Operating Leases

The Company has limited leasing activities as a lessee and are primarily related to its corporate headquarters located at 99 Hayden Avenue, Suite 390, Lexington, Massachusetts. The Company currently leases approximately 22 thousand square feet of office and lab space in Lexington, Massachusetts under a lease with an original expiration date of December 31, 2020. On April 23, 2020, an extension to the Company’s operating lease for office and lab space was signed between the Company and 99 Hayden LLC. The extension to the original lease executed on May 31, 2007, has an annual base rent of $1,194 which is adjusted annually by 3%, and will expire on June 30, 2022. The lease provides for base rent, and the Company is responsible for real estate taxes, maintenance, and other operating expenses applicable to the leased premises.

Operating lease liabilities and corresponding right-of-use assets are recorded based on the present value of lease payments over the expected remaining lease term. Certain adjustments to the right-of-use asset may be required for items such as prepaid rent. The interest rate implicit in lease contracts is typically not readily determinable. As a result, the Company utilizes its incremental borrowing rates, which are the rates incurred to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment. To estimate the Company’s specific incremental borrowing rates over the respective lease terms, a comparable market yield curve consistent with the Company’s credit quality was used. As of September 30, 2020, the weighted average incremental borrowing rate and the weighted average remaining lease term for the operating leases held by the Company were 5.23% and 2 years, respectively.

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The components of lease expense for the Company as of September 30, 2020 were as follows:

	For the three months ended				For the nine months ended
	September 30,				September 30,
	2020		2019		2020		2019
Lease Cost
Fixed lease cost	$	259	$	163	$	650	$	490
Variable lease cost		99		97		317		284
Total lease cost	$	358	$	260	$	967	$	774

Maturities of lease liabilities due under these lease agreements as of September 30, 2020 are as follows:

	Operating Leases
Maturity of lease liabilities:
2020 (excluding the nine months ended September 30, 2020)	$	174
2021		1,194
2022 (lease expiration on June 30, 2022)		615
Total lease payments		1,984
Less imputed interest		(89	)
Total operating lease liabilities	$	1,895

10. Net Loss Per Share

The Company computes basic and diluted net loss per share using a methodology that gives effect to the impact of outstanding participating securities (the “two-class method”). The three and nine months ended September 30, 2020 and 2019, respectively, resulted in net losses attributable to common stockholders and as a result, there is no income allocation required under the two-class method or dilution attributed to weighted average shares outstanding in the calculation of diluted net loss per share. Included in the weighted average earnings per share calculation are 1,697,614 shares held in abeyance.

The following potentially dilutive securities outstanding prior to the use of the treasury stock method have been excluded from the computation of diluted weighted-average shares outstanding, as they would be anti-dilutive.

	As of September 30,
	2020		2019
Options to purchase common stock		2,879,231		1,088,676
Warrants to purchase common stock		23,284,813		18,653,195
Total		26,164,044		19,741,871

11. Subsequent Events

On October 1, 2020, a stock option grant of 30,000 shares of common stock was issued to Todd Bazemore. Mr. Bazemore was appointed to the board of directors on September 25, 2020 and his appointment became effective October 1, 2020. The grant vests over four years, expires ten years from the grant date and on the date of the grant had a fair value of $26.

On October 14, 2020, a stock option grant of 18,800 shares of common stock was issued to an employee. The grant vests over four years, expires ten years from the grant date and on the date of the grant had a fair value of $17.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

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 financial statements and the notes thereto contained in our annual report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on March 26, 2020. 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, or projections involving anticipated revenues, earnings or other aspects of our operating results, are forward-looking statements. Words such as “anticipates,” “assumes,” “believes,” “can,” “could,” “estimates,” “expects,” “forecasts,” “guides,” “intends,” “is confident that,” “may,” “plans,” “seeks,” “projects,” “targets,” and “would,” and their opposites and similar expressions, as well as statements in future tense, are intended to identify forward-looking statements. Forward-looking statements should not be read as a guarantee of future performance or results and may not be accurate indications of when such performance or results will actually be achieved. Forward-looking statements are based on information we have when those statements are made or our management’s good faith belief as of that time with respect to future events and are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking statements. Important factors that could cause such differences include, but are not limited to:

● the impact of the novel coronavirus (“COVID-19”) on the Company’s ongoing and planned clinical trials;

● the geographic, social and economic impact of COVID-19 on the Company’s ongoing and planned clinical trials;

● 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 renegotiate our development and commercialization agreement with Cipla Technologies, LLC (“Cipla”) with respect to Pulmazole;

● 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;

● the termination of strategically important 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;

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● entry of new competitors and products and potential technological obsolescence of our products;

● adverse market and economic conditions;

● 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 factors that may affect our business and that could cause the actual results to differ materially from those projected in these forward-looking statements, see the risk factors and uncertainties set forth in Part II, Item 1A of this Quarterly Report. Any one or more of these uncertainties, risks and other influences could materially affect our results of operations and whether forward-looking statements made by us ultimately prove to be accurate. We undertake no obligation to publicly update or revise any forward-looking statements, whether from new information, future events or otherwise, except as required by law.

Overview

Business

We are a clinical stage biotechnology company focused on the discovery and development of novel inhaled therapeutic products intended to prevent and treat respiratory and other diseases with significant unmet medical needs.

We design and develop inhaled therapeutic products based on our proprietary 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. The iSPERSE^™ powders are engineered to be small, dense particles with highly efficient dispersibility and delivery to airways. iSPERSE^™ powders can be used with an array of dry powder inhaler technologies and can be formulated with a broad range of drug substances including small molecules and biologics. We believe the iSPERSE^™ dry powder technology offers enhanced drug loading and delivery efficiency that outperforms traditional lactose-blend inhaled dry powder therapies. We believe the advantages of using the iSPERSE^™ technology include reduced total inhaled powder mass, enhanced dosing efficiency, reduced cost of goods and improved safety and tolerability profiles. We are developing iSPERSE^™-based therapeutic candidates targeted at the prevention and treatment of a range of diseases, including allergic bronchopulmonary aspergillosis in patients with asthma and in patients with cystic fibrosis, lung cancer and the treatment of acute migraine.

Our goal is to develop breakthrough therapeutic products that are safe, convenient and more efficient than the existing therapeutic products for respiratory and other diseases where iSPERSE^™ properties are advantageous. Our current pipeline is aligned to this goal with the Pulmazole inhaled antifungal therapy to treat pulmonary infections, the PUR3100 inhaled therapy for acute migraine and the novel PUR1800 therapy with potential application in both lung cancer and chronic obstructive pulmonary disease (“COPD”). The Pulmazole antifungal program and PUR3100 acute migraine program leverage iSPERSE^™ technology to potentially improve upon the known efficacy and safety profile of currently available therapies. The PUR1800 program is a new therapy that is enabled by iSPERSE^™ when traditional dry powder lactose blend technologies have historically failed. 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 with significant unmet medical needs and to build our product pipeline beyond our existing candidates. In order to advance our clinical trials for our therapeutic candidates for respiratory and neurological diseases, and leverage the iSPERSE^™ platform to enable delivery of partnered compounds, we intend to form strategic alliances with third parties, including pharmaceutical, biotechnology companies or academic or private research institutes.

We expect to continue to incur significant expenses and operating losses for at least the next several years based on our drug development plans. We expect our expenses and capital requirements will increase substantially in connection with our ongoing activities, as we:

● initiate and expand clinical trials for Pulmazole, PUR1800, PUR3100 and other product candidates under development;

● seek regulatory approval for our product candidates;

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● hire personnel to support our product development, commercialization and administrative efforts; and

● advance the research and development related activities for inhaled therapeutic products in our pipeline.

We do not have any products approved for sale and have not generated any revenue from product sales. We will not generate product sales unless and until we successfully complete clinical developments and obtain regulatory approvals for our product candidates. Additionally, we currently utilize third-party contract research organizations (“CROs”) to carry out our clinical development activities and third-party contract manufacturing organizations (“CMOs”) to carry out our clinical manufacturing activities as we do not yet have a commercial organization. If we obtain regulatory approval for any of our product candidates, we expect to incur significant expenses related to developing our internal commercialization capability to support product sales, marketing and distribution. Accordingly, we anticipate that we will seek to fund our operations through public or private equity or debt financings, licensing agreements, collaborations with third parties, non-dilutive grants or other sources, potentially including collaborative commercial arrangements. Likewise, we intend to seek to limit our commercialization costs by partnering with other companies with complementary capabilities or larger infrastructure including sales and marketing.

Because of the numerous risks and uncertainties associated with product development, we are unable to predict the timing or amount of increased expenses or when or if we will be able to achieve or maintain profitability. Even if we are able to generate product sales, we may not become profitable. If we fail to become profitable or are unable to sustain profitability on a continuing basis, we may be unable to continue our operations at planned levels and be forced to reduce or terminate our operations.

Recent Developments

COVID-19

In December 2019, a novel strain of coronavirus, COVID-19, was reported to have surfaced in Wuhan, China and has reached multiple other countries, resulting in government-imposed quarantines, travel restrictions and other public health safety measures in China and such other countries. On March 12, 2020, the World Health Organization (“WHO”) declared COVID-19 to be a global pandemic, and the COVID-19 pandemic has resulted in significant financial market volatility and uncertainty in recent months. A continuation or worsening of the levels of market disruption and volatility seen in the recent past could have an adverse effect on our ability to access capital, on our business, results of operations and financial condition, and on the market price of our common stock.

Moreover, the ongoing COVID-19 pandemic has caused indeterminable adverse effects on general commercial activity and the world economy, and the Company’s business and results of operations could be adversely affected to the extent that COVID-19 or any other epidemic harms the global economy generally.

The COVID-19 pandemic directly impacted the Pulmazole Ph 2 clinical study by both causing certain trial sites to suspend enrolling patients or us voluntarily suspending enrollment at other sites, as described in more detail below. The impact of the ongoing COVID-19 pandemic and its resurgence is currently uncertain and rapidly evolving, and, as such, we do not yet know the full extent of potential delays or impact on our business, our relationships with our business partners, our clinical trials or the global economy as a whole. However, any one or a combination of these events could have an adverse effect on the operation of and results from our clinical trials and on our other business operations.

Pulmazole

In July of 2019, we initiated a Ph 2 clinical investigation for Pulmazole, our inhaled formulation of itraconazole, an anti-fungal drug commercially available as an oral drug that we are developing to treat and prevent pulmonary fungal infections. Prior to the study termination, five subjects completed the 28-day dosing regimen, receiving either 10 mg, 20 mg, or 35 mg of Pulmazole or placebo in a randomized, double-blind treatment assignment. In the first quarter of 2020, we initiated the process of establishing additional study sites and amending the study protocol.

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Due to delays in patient enrollment in the Ph 2 clinical study, exacerbated by the ongoing COVID-19 pandemic, Cipla, with whom we entered into a development and commercialization agreement (the “Cipla Agreement”) on April 15, 2019 for the development and commercialization of Pulmazole, informed us that it desired to amend the Cipla Agreement. In connection with our renegotiation of the Cipla Agreement, on July 10, 2020, the joint steering committee established by us and Cipla terminated the Ph 2 study in order to facilitate the commencement of a newly designed Ph 2b study that would supersede the prior Ph 2 study. The Ph 2b study design is anticipated to include up to 4 months of dosing and efficacy endpoints, whereas the terminated Ph 2 study was of 28-day duration with safety and tolerability as its primary endpoint. The longer dosing regimen of the new Ph 2b study is supported by the 6-month inhalation toxicology study in dogs completed in April 2020. We plan to have a Type-C meeting with the U.S. Food and Drug Administration (“FDA”) during Q1 2021 to inform our final clinical design and timelines. We plan to commence the new Ph 2b study when the risk of insufficient patient enrollment presented by the ongoing COVID-19 pandemic is reduced to an acceptable level.

In addition to the re-design of the Ph 2b study, as part of the amendments to the Cipla Agreement that are being contemplated are assigning to Cipla the exclusive rights to develop and commercialize Pulmazole in India, South Africa and other regional markets where Cipla has strong clinical development and business capabilities. We have not agreed to any amendments to the Cipla Agreement as of the date of this Quarterly Report. However, we expect that discussions regarding amendments to the Cipla Agreement will continue. No assurance can be given that we will be able to reach a mutually acceptable arrangement with Cipla for the conduct of any proposed Ph 2b clinical study in the future. Accordingly, if we are unable to agree with Cipla on such matters such as cost sharing for the new study, we may be forced to suspend further development of Pulmazole. Furthermore, our failure to successfully renegotiate the development and commercialization agreement with Cipla may result in the initiation of arbitration proceedings between us and Cipla. Any arbitration proceedings between and us and Cipla may have a negative impact on our business, including the diversion of management attention from our other product candidates or result in rulings from the arbitration panel that are adverse to our interests or the continued development of Pulmazole.

PUR1800

Separately, we plan to initiate a Ph 1b study of PUR1800 in 15 stable moderate-severe COPD patients during the first half of 2021. The Ph 1b study will be randomized and double-blind and will include 14 days of daily dosing with a 28 day follow up period. The COVID-19 pandemic could delay this date or impact enrollment generally to the extent we cannot secure sites to enroll patients, patients remain or become subject to government “stay at home” mandates, patients feel like they cannot safely visit trial sites or patients drop out due to COVID-19 related issues.

PUR3100

We are developing a novel inhaled dry powder formulation product for the treatment of acute migraine and breakthrough migraine that leverages a proprietary iSPERSE^™ dry powder formulation technology. We anticipate the product will be potentially differentiated from currently available therapies in ease of use, onset of action, symptom control and tolerability.

We anticipate having a lead formulation for a non-clinical pharmacokinetics study by the end of 2020. Based on clinical and regulatory precedents and after completing a 14-day good laboratory practices toxicology study in 2021, we believe a Ph1/1b study can be initiated in the first half of 2022.

The acute migraine market includes over 1 billion worldwide and over 38 million U.S. sufferers where the majority of patients are not treated with prescription medication to the safety and efficacy profile of available therapies. In addition to acute migraine sufferers, greater than 50% of migraineurs suffering from chronic migraine also require acute care for treatment of breakthrough pain.

Sensory Cloud Agreement

On April 9, 2020, we entered into a Collaboration and License Agreement (the “Sensory Cloud Agreement”) with Sensory Cloud, Inc. (“Sensory Cloud”). Under the terms of the Sensory Cloud Agreement, we have granted Sensory Cloud an exclusive, worldwide, royalty bearing license to PUR003 and PUR006, our proprietary aerosol salt solution for delivery or administration to or through the nasal passages also known as NasoCalm, as well as related patents and know-how, for use in the field (the “Sensory Licensed Product”).

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Under the terms of the Sensory Cloud Agreement, Sensory Cloud may develop other over-the-counter (“OTC”) Sensory Licensed Products that contain other active pharmaceutical ingredients or therapeutic agents and combine the Sensory Licensed Product with one or more of Sensory Cloud’s proprietary delivery devices. In addition, we have granted Sensory Cloud an exclusive right of first refusal to any new OTC products in the field that may be developed by us.

Sensory Cloud commenced commercial sales of FEND in October 2020. FEND is the Sensory Cloud brand name for NasoCalm, an OTC nasal hygiene product that is comprised of sodium chloride and calcium chloride salts. NasoCalm was designed to provide, among other potential benefits, an ability to suppress the exhalation of droplets of airway lining fluid, which can transmit airborne infection.

Pulmatrix’s development data and additional data generated by Sensory Cloud utilizing its Nimbus delivery device were published in both the journal, Molecular Frontiers (September 2020) and the Quarterly Reviews of Biophysics Discovery (July 2020), demonstrating a significant reduction in airborne particles in exhaled air over time following FEND administration. Taken together, these data demonstrate that FEND provides potential hygienic benefit which may augment current social distancing and hygiene measures for addressing COVID-19 and other airborne pathogens.

Under the Sensory Cloud Agreement, we are entitled to royalties on net sales of Sensory Licensed Product in each country in which there is a valid claim of a patent within the licensed intellectual property covering the Sensory Licensed Product. Our rights to receive such royalties commence upon the first commercial sale of a Sensory Licensed Product in any such country and terminates upon the expiration of the last valid claim in such territory. The royalty rates are as follows: (1) 7% of net sales during calendar year 2020, (2) 14% of net sales during calendar year 2021, and (3) 17% of net sales during calendar year 2022 and each calendar year thereafter during the royalty term. In addition, we are entitled to receive a milestone payment of $1.0 million following the achievement of aggregate net sales of all Sensory Licensed Products of $20.0 million.

The Sensory Cloud Agreement will terminate at such time that we would no longer be entitled to royalties because there are no longer any valid claims of a patent within the licensed intellectual property covering any Sensory Licensed Product. Upon there being no more such royalty payments owed by Sensory Cloud for a Sensory Licensed Product, the licenses granted by us to Sensory Cloud shall become fully-paid up, royalty free, perpetual, irrevocable and non-exclusive licenses to such Sensory Licensed Product. The Sensory Cloud Agreement may also be terminated earlier by Sensory Cloud for convenience and by Sensory Cloud or us for material breach or upon the bankruptcy or insolvency of the other party.

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Financial Overview

Revenues

To date, we have not generated any product sales. The 2020 revenue was primarily generated by the Cipla Agreement and the license, development and commercialization agreement with Johnson & Johnson Enterprise Innovation, Inc. (“JJEI”, and such agreement with JJEI, the “JJEI License Agreement”), with respect to the collaboration on the Pulmazole program and licensing our PUR1800 kinase inhibitor, respectively. For more discussion on the collaboration agreements, please see Note 6 of the consolidated financial statements in our annual report on Form 10-K filed with the SEC on March 26, 2020 and “—Recent Developments—Pulmazole” under this Item 2.

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 share-based compensation expense;

● expenses incurred under agreements with CROs or 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 utilize 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 include work with consultants and substantial work at CROs and CMOs. We support an internal research and development team and facility for our pipeline programs. To move these programs forward along our development timelines, a large portion, approximately (79% of staff) are research and development employees. In addition, we maintain a 22,000 square foot research and development facility which includes capital equipment for the manufacture and characterization of our iSPERSE^™ powders for our pipeline programs. As we identify opportunities for iSPERSE^™ in respiratory indications, additional head count, capital, and development costs may be incurred to support these programs.

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 clinical trials and development of our product candidates will depend on a variety of factors, including the uncertainties of future clinical and preclinical studies, uncertainties in clinical trial enrollment rates and significant 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.

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General and Administrative Expenses

General and administrative expenses consist principally of salaries and related costs such as share-based compensation for personnel and consultants in executive, finance, business development, intellectual property, corporate communications and human resource functions, facility costs not otherwise included in research and development expenses, patent filing fees and professional legal fees. Other general and administrative expenses include expenses related to a publicly-traded company, travel expenses, professional fees for consulting, auditing and tax services.

We anticipate that our general and administrative expenses will increase 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, increases in staffing and related expenses may result as we prepare for commercial operations, especially as it relates to the sales and marketing of our product candidates.

Critical Accounting Policies

This management’s discussion and analysis of our financial condition and results of operations is based on our financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, and expenses and the disclosure of contingent assets and liabilities in our financial statements. On an ongoing basis, we evaluate our estimates and judgments, including those related to accrued expenses and share-based compensation. We base our estimates on historical experience, known trends and events, and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

While our significant accounting policies are described in more detail in the notes to our condensed consolidated financial statements appearing elsewhere in this Form 10-Q and in our audited financial statements included in our current report on Form 10-K filed with the SEC on March 26, 2020, we believe the following accounting policies to be most critical to the judgments and estimates used in the preparation of our financial statements.

Revenue Recognition

Effective January 1, 2019, we adopted ASU No. 2014-09 (Topic 606) “Revenue from Contracts with Customers.” The adoption of Topic 606 did not have any material impact on our consolidated financial statements. We only apply the five-step model to contracts when it is probable that we will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. At contract inception, once the contract is determined to be within the scope of ASC 606, we assesses the goods or services promised within each contract and determines those that are performance obligations and assesses whether each promised good or service is distinct. We then recognize as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied.

Amounts received prior to revenue recognition are recorded as deferred revenue. Amounts expected to be recognized as revenue within the 12 months following the balance sheet date are classified as current portion of deferred revenue in the accompanying consolidated balance sheets. Amounts not expected to be recognized as revenue within the 12 months following the balance sheet date are classified as deferred revenue, net of current portion.

Our principal sources of revenue during the reporting period were income that resulted through our collaborative arrangements and license agreements that related to the development and commercialization of Pulmazole and from reimbursement of clinical study costs. In all instances, revenue is recognized only when the price is fixed or determinable, persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, and collectability of the resulting receivable is reasonably assured.

During the three months and nine months ended September 30, 2020, our principal source of revenue was income that resulted from the Cipla Agreement and the JJEI License Agreement.

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Milestone Payments

At the inception of each arrangement that includes research or development milestone payments, we evaluate whether the milestones are considered probable of being achieved and estimates the amount to be included in the transaction price using the most likely amount method. If it is probable that a significant revenue reversal would not occur, the associated milestone value is included in the transaction price. Milestone payments that are not within the control of the Company or the licensee, such as regulatory approvals, are not considered probable of being achieved until those approvals are received. We evaluate factors such as the scientific, clinical, regulatory, commercial, and other risks that must be overcome to achieve the particular milestone in making this assessment. There is considerable judgment involved in determining whether it is probable that a significant revenue reversal would not occur. At the end of each subsequent reporting period, we reevaluate the probability of achievement of all milestones subject to constraint and, if necessary, adjusts its estimate of the overall transaction price. Any such adjustments are recorded on a cumulative catch-up basis, which would affect revenues and earnings in the period of adjustment. As of September 30, 2020, we have an active arrangement that contains a research or development milestone.

Royalties

For arrangements that include sales-based royalties, including milestone payments upon first commercial sales and milestone payments based on a level of sales, which are the result of a customer-vendor relationship and for which the license is deemed to be the predominant item to which the royalties relate, we recognize revenue at the later of (i) when the related sales occur, or (ii) when the performance obligation to which some or all of the royalty has been allocated has been satisfied or partially satisfied. To date, we have not recognized any royalty revenue resulting from any of its licensing arrangements.

Use of Estimates

In preparing financial statements in conformity with 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 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, we evaluate our estimates and assumptions. These estimates and assumptions include valuing equity securities in share-based payments, estimating fair value of equity instruments recorded as derivative liabilities, estimating the useful lives of depreciable and amortizable assets, valuation allowance against deferred tax assets, goodwill impairment, interest borrowing rate, and estimating the fair value of long-lived assets to assess whether impairment charges may apply.

Research and Development Costs

Research and development costs are expensed as incurred and include: salaries, benefits, bonus, share-based compensation, license fees, milestone payments due under license agreements, costs paid to third-party contractors to perform research, conduct clinical trials, and develop drug materials and delivery devices; and associated overhead and facilities costs. Clinical trial costs are a significant component of research and development expenses and include costs associated with third-party contractors, CROs and CMOs. Invoicing from third-party contractors for services performed can lag several months. We accrue the costs of services rendered in connection with third-party contractor activities based on our estimate of fees and costs associated with the contract that were rendered during the period and they are expensed as incurred. Research and development costs that are paid in advance of performance are capitalized as prepaid expenses and amortized over the service period as the services are provided. As of September 30, 2020, we have an active arrangement with JJEI that contains a research or development milestone. For more discussion on the milestones related to the JJEI License Agreement, please see Note 6 of the consolidated financial statements in the Company’s annual report on Form 10-K filed with the SEC on March 26, 2020.

Goodwill

Goodwill represents the difference between the consideration transferred and the fair value of the net assets acquired, and liabilities assumed under the acquisition method of accounting for push-down accounting. Goodwill is not amortized but is evaluated for impairment within our single reporting unit on an annual basis during the fourth quarter, or more frequently if an event occurs or circumstances change that would more likely than not reduce the fair value of our reporting unit below our carrying amount. When performing the impairment assessment, the accounting standard for testing goodwill for impairment permits a company to first assess the qualitative factors to determine whether the existence of events and circumstances indicates that it is more likely than not that the goodwill is impaired. If we believe, as a result of the qualitative assessment, that it is more likely than not that the fair value of goodwill is impaired we then must perform a quantitative analysis to determine if the carrying value of the reporting entity exceeds its fair value. The impact of the COVID-19 pandemic was considered in our qualitative assessment for the three months ended September 2020. Currently, there has not been a significant impact on our carrying value, but this factor will continue to be evaluated.

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Based on the qualitative assessment for the nine months ended September 30, 2020, there was no impairment necessary. Given our common stock value decline during the nine months ended September 30, 2019, and based on the quantitative assessment, we determined that goodwill was impaired as of September 30, 2019, and a charge of $7,268 was recorded.

Results of Operations

Three Months Ended September 30, 2020 Compared with Three Months Ended September 30, 2019

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

	For the Three Months Ended September 30,
	2020			2019			Change
Revenues	$	4,372		$	1,406		$	2,966
Operating expenses
Research and development		3,873			3,297			576
General and administrative		1,776			1,785			(9	)
Total operating expenses		5,649			5,082			567
Loss from operations		(1,277	)		(3,676	)		2,399
Other income (expense)
Interest income		13			121			(108	)
Warrant exercise inducement expense		(9,289	)		—			(9,289	)
Net loss	$	(10,553	)	$	(3,555	)	$	(6,998	)

Revenue — Revenue of $4.4 million was recorded for the three months ended September 30, 2020 as compared to $1.4 million for the three months ended September 30, 2019, an increase of $3.0 million. The $3.0 million increase was the result of the JJEI License Agreement which was executed at the end of 2019 and includes reimbursed pass through expenses.

Research and development expenses — Research and development expenses were $3.9 million for the three months ended September 30, 2020 as compared to $3.3 million for the three months ended September 30, 2019, an increase of $0.6 million. The increase was primarily due to pre-clinical toxicology and Chemistry, Manufacturing and Controls (“CMC”) costs for the PUR1800 program and PUR3100 program, of $1.4 million and $0.1 million, respectively, an increase of $0.3 million in employment related costs in support of our programs which were partially offset by a decrease in the Ph 2 Pulmazole clinical trial costs of $1.2 million.

General and administrative expenses — General and administrative expenses which include general operating expenses were $1.8 million for the three months ended September 30, 2020 and 2019.

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Nine months ended September 30, 2020 Compared with Nine Months Ended September 30, 2019

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

	For the Nine Months Ended September 30,
	2020			2019			Change
Revenues	$	10,634		$	6,225		$	4,409
Operating expenses
Research and development		12,344			8,637			3,707
General and administrative		5,478			6,900			(1,422	)
Impairment of goodwill		—			7,268			(7,268	)
Total operating expenses		17,822			22,805			(4,983	)
Loss from operations		(7,188	)		(16,580	)		9,392
Other income (expense)
Interest income		78			227			(149	)
Settlement expense		—			(200	)		200
Warrant exercise inducement expense		(9,289	)		—			(9,289	)
Other income (expense), net		(10	)		(2	)		(8	)
Net loss	$	(16,409	)	$	(16,555	)	$	146

Revenue — Revenue of $10.6 million was recorded for the nine months ended September 30, 2020 as compared to $6.2 million for the three months ended September 30, 2019, an increase of $4.4 million. The increase resulted from an increase in revenue recorded of $5.3 million as a result of the JJEI License Agreement which was executed in late 2019 and includes reimbursement of pass through expenses, partially offset by a decrease in revenue recorded of $0.9 million as a result of the Cipla Agreement. For the nine months ended September 30, 2019, $6.2 million was recorded in revenue which was the result of the Cipla Agreement.

Research and development expenses — Research and development expenses were $12.3 million for the nine months ended September 30, 2020 compared to $8.6 million for the nine months ended September 30, 2019, an increase of $3.7 million. The increase was primarily due to increased spending of $4.3 million and $0.1 million, on the PUR1800 and PUR3100 programs, respectively, due primarily to manufacturing and clinical study costs, $1.1 million on employment costs in support of our programs, and $0.3 in allocated fixed expenses which were partially offset by a decrease of $2.1 million on the Ph 2 Pulmazole clinical trial costs.

General and administrative expenses — General and administrative expenses were $5.5 million for the nine months ended September 30, 2020 compared to $6.9 million for the nine months ended September 30, 2019, a decrease of $1.4 million. The decrease was primarily due to decreased employment costs of $1.0 million because of lower share-based compensation expense, $0.3 million of a milestone payment and $0.1 million in allocated fixed expenses.

Impairment of goodwill — There was no impairment charge for the nine months ended September 30, 2020 compared to $7.3 million for the nine months ended September 30, 2019. The 2019 charge was as a result of a decline in the Company’s common stock value.

Liquidity and Capital Resources

Through September 30, 2020, we have incurred an accumulated deficit of $231.6 million, primarily due to 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 as of September 30, 2020 was $34.5 million.

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We anticipate that we will continue to incur losses, and that such losses will increase over the next several years due to development costs associated with our iSPERSE^™ pipeline programs. We expect that our research and development and general and administrative expenses will continue to increase and, as a result, we will need additional capital to fund our operations, which we may raise through a combination of equity offerings, debt financings, other third-party funding and other collaborations and strategic alliances.

We expect that our existing cash and cash equivalents at September 30, 2020 and anticipated interest income will enable us to fund our operating expenses and capital expenditure requirements 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 and commercialization of pharmaceutical products, we are unable to estimate the exact amount of our operating capital requirements.

The ultimate impact of the COVID-19 pandemic on the Company’s operations is unknown and will depend on future developments, which are highly uncertain and cannot be predicted with confidence. These include but are not limited to including the duration of the COVID-19 pandemic, new information which may emerge concerning the severity of the COVID-19 pandemic, the resurgence of the COVID-19 cases in multiple jurisdictions, and any additional preventative and protective actions that regulators, or the board or management of the Company, may determine are needed.

The COVID-19 pandemic has created significant economic uncertainty and volatility in the credit and capital markets. The Company 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.

In addition, as previously discussed, in connection with our renegotiation of the Cipla Agreement, on July 10, 2020, the joint steering committee established by us and Cipla terminated the Ph 2 study in order to facilitate the commencement of a newly designed Ph 2b study that would supersede the prior Ph 2 study. In addition to the re-design of the Ph 2b study, as part of the amendments to the Cipla Agreement that are being contemplated are assigning to Cipla the exclusive rights to develop and commercialize Pulmazole in India, South Africa and other regional markets where Cipla has strong clinical development and business capabilities. We have not agreed to any amendments to the Cipla Agreement as of the date of this Quarterly Report. There can be no assurance that we will be able to renegotiate the Cipla Agreement on favorable terms, or at all.

Our future funding requirements will depend on many factors, including, but not limited to:

● the impact of the COVID-19 on the Company’s ongoing and planned clinical trials;

● the geographic, social and economic impact of COVID-19 on the Company’s ongoing and planned clinical trials;

● our ability to renegotiate the Cipla Agreement;

● whether our current and/or future corporate partnerships are successful in generating revenue for us;

● the initiation, progress, timing, costs and results of clinical studies for existing and new pipeline programs based on iSPERSE^™;

● the outcome, timing and cost of regulatory approvals by the FDA and European regulatory authorities, including the potential for these agencies to require that we perform studies in addition to those that we currently have planned;

● the cost of filing, prosecuting, defending and enforcing any patent claims and other intellectual property rights;

● our need to expand our research and development activities;

● our need and ability to hire additional personnel;

● our need to implement additional infrastructure and internal systems;

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● the cost of establishing and maintaining a commercial-scale manufacturing line; and

● the cost of establishing sales, marketing and distribution capabilities for any products for which we may receive regulatory approval.

If we cannot expand our operations or otherwise capitalize on our business opportunities because we lack sufficient capital, our business, financial condition and results of operations could be materially adversely affected.

The following table sets forth the major sources and uses of cash for each of the periods set forth below (in thousands):

	Nine months ended September 30,
	2020			2019
Net cash (used in)/ provided by operating activities	$	(9,715	)	$	7,663
Net cash used in investing activities		(198	)		(49	)
Net cash provided by financing activities		20,981			17,702
Net increase in cash and cash equivalents	$	11,068		$	25,316

Cash Flows from Operating Activities

Net cash used in operating activities for the nine months ended September 30, 2020 was $9.7 million which was primarily the result of a net loss of $16.4 million and $4.2 million in cash outflows associated with changes in operating assets and liabilities partially offset by $10.9 million of net non-cash adjustments. Our non-cash adjustments were primarily comprised of $9.3 million in warrant exercise inducement expense, $0.9 million of share-based compensation expense, $0.6 million of amortization of operating lease right-of-use asset and $0.1 million of depreciation expense. The net cash outflows associated with changes in operating assets and liabilities were primarily due to decreases of $9.1 million in deferred revenue, $0.6 million in prepaid expenses and other current assets, and $0.5 million in operating lease liability partially offset by increases of $6.0 million in accounts receivable.

Net cash provided by operating activities for the nine months ended September 30, 2019 was $7.7 million, which was primarily the result of a net loss of $16.5 million, offset by $9.6 million of net non-cash adjustments and $14.6 million in cash inflows associated with changes in operating assets and liabilities. Our non-cash adjustments were primarily comprised of $7.3 million of goodwill impairment, $1.7 million of stock-based compensation expense, $0.4 million of amortization of operating lease right-of-use asset and $0.2 million of depreciation and amortization expense. The net cash inflows associated with changes in operating assets and liabilities were primarily due to an increase of $15.7 million of deferred revenue, partially offset by decreases in prepaid assets, accrued expenses, accounts payable and operating lease liability totaling $1.1 million.

Cash Flows from Investing Activities

Net cash used in investing activities for the nine months ended September 30, 2020 and 2019 were entirely due to the purchases of property and equipment.

Cash Flows from Financing Activities

Net cash provided by financing activities for the nine months ended September 30, 2020 was $21.0 million as compared to $17.7 million for the nine months ended September 30, 2019. Net cash provided for the nine months ended September 30, 2020 resulted from the issuance of common stock, net of issuance costs, of $7.3 million which was as a result of a registered direct offering to certain investors and $13.7 million from warrant and stock option exercises. Net cash provided by financing activities for the nine months ended September 30, 2019 resulted from the issuance of common stock, net of issuance costs of $17.5 million, and pre-funded warrant exercises of $0.2 million.

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Financings

On July 9, 2020, we entered into letter agreements with certain existing accredited investors to exercise certain existing and outstanding warrants (“Existing Warrants”) to purchase up to an aggregate of 10,085,741 shares of our common stock at the existing exercise price per share of $1.35. The Existing Warrants were issued in an underwritten public offering pursuant to a registration statement on Form S-1 (File No. 333-230395) and an additional registration statement on Form S-1 (File No. 333-230714) filed pursuant to Rule 462(b) under the Securities Act of 1933, as amended that was consummated in April 2019. In consideration for the exercise of the Existing Warrants for cash, the exercising holders received new unregistered warrants to purchase up to an aggregate of 10,085,741 shares of common stock at an exercise price of $1.80 per share and with an exercise period of five years from July 14, 2020. The gross proceeds to the Company from the exercise were approximately $13.6 million, prior to deducting placement agent fees and offering expenses. In addition, we issued s 655,573 unregistered warrants to placement agent designees at an exercise price of $2.25 and with an exercise period of five years from July 14, 2020. All warrants issued in the financing were subsequently registered pursuant to a registration statement on Form S-3 (File No. 333-242341) which was declared effective on August 13, 2020.

Off-Balance Sheet Arrangements

We have no 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.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Not applicable.

Item 4. Controls and Procedures.

(a) Evaluation of 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 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 and principal financial officers, or persons performing similar functions, 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.

(b) Changes in Internal Controls. There were no changes in our internal control over financial reporting, identified in connection with the evaluation of such internal control that occurred during the quarter ended September 30, 2020 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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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

The following description of risk factors includes any material changes to, and supersedes the description of, risk factors associated with our business, financial condition and results of operations previously disclosed in “Item 1A. Risk Factors” of our annual report on Form 10-K for the fiscal year ended December 31, 2019, as filed with the SEC on March 26, 2020 and of our quarterly reports on Form 10-Q for the periods ended March 31, 2020 and June 30, 2020, as filed with the SEC on May 14, 2020 and August 7, 2020, respectively . Our business, financial condition and operating results can be affected by a number of factors, whether currently known or unknown, including but not limited to those described below, any one or more of which could, directly or indirectly, cause our actual financial condition and operating results to vary materially from past, or from anticipated future, financial condition and operating results. Any of these factors, in whole or in part, could materially and adversely affect our business, financial condition, operating results and stock price.

The following discussion of risk factors contains forward-looking statements. These risk factors may be important to understanding other statements in this Form 10-Q. The following information should be read in conjunction with the condensed consolidated financial statements and related notes in Part I, Item 1, “Financial Statements” and Part I, Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this Form 10-Q.

Risk Related to Our Business

The recent coronavirus outbreak has caused interruptions or delays of our clinical studies and may have a significant adverse effect on our business.

In December 2019, a novel strain of Covid, COVID-19, was reported to have surfaced in Wuhan, China and has reached multiple other countries, resulting in government-imposed quarantines, travel restrictions and other public health safety measures in China and such other countries. On March 12, 2020, the WHO declared COVID-19 to be a global pandemic, and the COVID-19 pandemic has resulted in significant financial market volatility and uncertainty in recent months. A continuation or worsening of the levels of market disruption and volatility seen in the recent past could have an adverse effect on our ability to access capital, on our business, results of operations and financial condition, and on the market price of our common stock.

In July of 2019, we initiated a Ph 2 clinical investigation for Pulmazole, our inhaled formulation of itraconazole, an anti-fungal drug commercially available as an oral drug that we are developing to treat and prevent pulmonary fungal infections. Prior to the termination of the Ph 2 trial, five subjects completed the 28-day dosing regimen, having received either 10 mg, 20 mg, or 35 mg of Pulmazole or placebo in a randomized, double-blind treatment assignment. In the first quarter of 2020, we initiated the process of establishing additional study sites and amending the study protocol in order to improve enrollment. However, as the COVID-19 pandemic escalated in late March and early April 2020, we were notified that 11 out of 21 clinical sites suspended enrollment in the Pulmazole study due to issues associated with COVID-19. Subsequently, we communicated with each of the remaining study sites as to their ability to ensure subject safety and completion of the study as per protocol. Following these discussions, we requested that each of these sites pause enrollment in the study pending further developments regarding the COVID-19 pandemic. Furthermore, the delay in patient enrollment due to COVID-19 have led to the termination of the Ph 2 clinical study of Pulmazole. For more discussion on the termination of the Ph 2 clinical study, see “—If our collaborators are not successful, we may not effectively develop and market some of our therapeutic candidates.”

27

Separately, we plan to initiate a Ph 1b study of PUR1800 in stable moderate-severe COPD patients in the first half of 2021. The COVID-19 pandemic could delay this date or impact enrollment generally to the extent we cannot secure sites to enroll patients, patients remain or become subject to government “stay at home” mandates, patients feel like they cannot safely visit trial sites or patients drop out due to COVID-19 related issues.

Moreover, the ongoing COVID-19 pandemic has had and may have indeterminable adverse effects on general commercial activity and the world economy, and our business and results of operations has been and may continue to be adversely affected to the extent that COVID-19 or any other epidemic harms the global economy generally.

We do not yet know the full extent of potential delays or impact on our business, our relationship with our business partners, our clinical trials or the global economy as a whole. However, any one or a combination of these events could have an adverse effect on the operation of and results from our clinical trials and on our other business operations.

If collaborations are not successful, we may not effectively develop and market some of our therapeutic candidates.

We have entered into co-development agreements regarding two of our therapeutic candidates and, as a result, no longer have complete control over the development of these candidates. If our collaborators do not successfully carry out their contractual duties or meet expected deadlines, we may be delayed or may not obtain regulatory approval for or commercialize our product candidates. If our relationships with these collaborators terminate, we believe that we would be able to enter into arrangements with alternative third parties. However, replacing any of these collaborators could delay our clinical trials and could jeopardize our ability to obtain regulatory approvals and commercialize our product candidates on a timely basis, if at all. On April 15, 2019, we entered into a Development and Commercialization Agreement (the “Cipla Agreement”) with Cipla Technologies LLC (“Cipla”) for the co-development and commercialization, on a worldwide exclusive basis, of Pulmazole. Due to delays in patient enrollment in the Ph 2 clinical study, exacerbated by the ongoing COVID-19 pandemic, Cipla informed us that it desires to amend the Cipla Agreement. Accordingly, on July 10, 2020, the joint steering committee established by us and Cipla terminated the Ph 2 study. We are currently renegotiating the terms of the amendment to the Cipla Agreement to initiate a new Ph 2b clinical study. In addition to the re-design of the Ph 2b study, as part of the amendments to the Cipla Agreement that are being contemplated are assigning to Cipla the exclusive rights to develop and commercialize Pulmazole in India, South Africa and other regional markets where Cipla has strong clinical development and business capabilities. .However, there can be no assurance that we will be able to renegotiate the Cipla Agreement on favorable terms, or at all. If Cipla does not agree to initiate a new Ph 2b study or we and Cipla cannot agree on how the costs of such new Ph 2b study should be allocated among us and Cipla, we may be forced to suspend the continued development of Pulmazole. In addition, our failure to successfully renegotiate the Cipla Agreement may result in the initiation of arbitration proceedings between us and Cipla. Any arbitration proceedings between and us and Cipla may have a negative impact on our business, including the diversion of management attention from our other product candidates or result in rulings from the arbitration panel that are adverse to our interests or the continued development of Pulmazole.

28

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

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.

EXHIBIT INDEX

Exhibit No.	Description
3.1	Amended and Restated Certificate of Incorporation of Pulmatrix, Inc., as amended through June 15, 2015 (incorporated by reference to Exhibit 3.1 to Quarterly Report on Form 10-Q filed with the Securities and Exchange commission on August 14, 2015).
3.2	Certificate of Amendment to Amended and Restated Certificate of Incorporation of Pulmatrix, Inc., dated as of June 5, 2018 (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on June 7, 2018).
3.3	Restated Bylaws of Pulmatrix, Inc., as amended through June 15, 2015 (incorporated by reference to Exhibit 3.2 to Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on August 14, 2015).
4.1	Form of Warrant issued on July 13, 2020 (incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on July 9, 2020).
10.1	Form of Letter Agreement, dated April 16, 2020 (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed with the Securities and Exchange Commission on July 9, 2020).
10.2*#	Offer Letter, dated September 25, 2020, by and between Pulmatrix, Inc. and Todd Bazemore.
31.1*	Certification of the Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*	Certification of the 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*	The following materials from the Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2020, formatted in XBRL (eXtensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets as of September 30, 2020 (unaudited) and December 31, 2019, (ii) Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2020 and 2019 (unaudited), (iii) Condensed Consolidated Statements of Stockholders’ Equity for the three and nine months ended September 30, 2020 and 2019, (iv) Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2020 and 2019 (unaudited), and (v) Notes to Condensed Consolidated Financial Statements (unaudited).
*	Filed herewith.
#	Indicates a management contract or compensatory plan.

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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: November 12, 2020	By:	/s/ Teofilo Raad
		Teofilo Raad
		President and Chief Executive Officer (Principal Executive Officer)
Date: November 12, 2020	By:	/s/ Michelle S. Siegert.
		Michelle S. Siegert.
		Vice President, Finance (Principal Financial Officer)

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EX-10.2

Exhibit 10.2

PULMATRIX, INC.

September 25, 2020

Todd Bazemore

RE: Offer to Join the Board of Directors

Dear Mr. Bazemore,

On behalf of Pulmatrix, Inc. (the “Company”), in recognition of our belief that your skills, expertise and knowledge will prove helpful to the Company’s progress, I am pleased to extend to you an offer to join the Company’s Board of Directors (the “Board”), effective as of October 1, 2020 (the “Commencement Date”), to serve as a Class I director for a term expiring at the next annual meeting of the Company’s stockholders at which the term of the Class I directors expires, or until your successor shall be duly appointed and qualified or your earlier death, resignation or removal. Upon your acceptance of this offer, you will also be invited to join the Nomination and Corporate Governance Committee of the Board.

Pursuant to the Company’s director compensation policy and as consideration for your services to the Company as a director, the Company will provide you with the following:

(a)

Expenses. The Company agrees to reimburse you for the reasonable out-of-pocket expenses incurred by you in attending meetings of the Board and any committee on which you serve. Reimbursements will be paid within a reasonable time following receipt of reasonably detailed supporting documentation relating to such expenses and in accordance with the Company’s expense reimbursement policies and procedures as they may be in effect from time to time.

(b)

Cash Fees. The Company will pay you cash fees of $30,000 per year for your service as a director and your attendance at meetings of the Board, payable in accordance with the Company’s standard director fee payment practices. The Company also agrees to pay you the following cash fees to the extent you fill one or more of the following roles on the Board:

Position	Annual Cash Compensation ($)
Chair of the Audit Committee		15,000
Non-Chair Member of the Audit Committee		7,000
Chair of the Nomination and Corporate Governance Committee		10,000
Non-Chair Member of the Nomination and Corporate Governance Committee		5,000
Chair of the Compensation Committee		7,000
Non-Chair Member of the Compensation Committee		3,000

(c) Option Grant. Following approval by the Company’s Board or the Compensation Committee of the Board, as applicable, on the Commencement Date, you will be issued a stock option pursuant to the Incentive Plan (defined below) to purchase 30,000 shares (the “Initial Option”) of the Company’s common stock, $0.0001 par value per share (“Common Stock”), with (i) an exercise price equal to the fair market value of a share of Common Stock on the date of grant, determined in accordance with the terms of the Incentive Plan; (ii) a term of ten years and (iii) one-fourth of the Initial Option vesting on the first anniversary of the date of grant (the “First Vesting Date”) and an additional 2.083% of the Initial Option vesting on the last day of each of the 36 months that follow the First Vesting Date, in each case provided that you are providing services to the Company through the applicable vesting date. The Initial Option shall be subject to such further terms and conditions as are specified in the Pulmatrix, Inc. 2013 Employee, Director and Consultant Equity Incentive Plan (or any other applicable equity incentive plan that may be adopted in the future (the “Incentive Plan”)) and one or more non-qualified stock option agreements to be executed by you and the Company.

In accepting this offer, you are representing to the Company (i) that you will devote adequate time and effort to perform your duties in a manner consistent with prevailing professional standards, (ii) that you do not know of any conflict which would restrict your ability to consult with the Company or serve on the Board, and (iii) that you will not provide the Company with any documents, records, or other confidential information belonging to other parties. You further represent that during the term of your service on the Board, you will not engage in any activity that competes with or creates an actual conflict of interest with the Company, and that you will notify the Board before engaging in any activity that creates a potential conflict of interest with the Company.

As a condition of your service on the Board and in accordance with your fiduciary duty to the Company, you agree to hold in strict confidence and trust, and not to use or disclose, any confidential information you receive or learn in connection with your service on the Board. In the event your service on the Board is terminated for any reason, you agree to return to the Company any materials received by you in the course of your service relating to the Company or the Board.

Your service on the Board is entirely “at will” for both you and the Company. As a result, you are free to terminate your role as a Board member at any time, for any reason. Similarly, you may be removed by the Company as a Board member at any time, with or without cause, subject only to compliance with applicable law and the Company’s governing documents. Nothing in this letter creates any offer of employment or employment relationship between you and the Company.

If the foregoing terms are agreeable, please indicate your acceptance by signing this letter in the space provided below and returning this letter to the Company. We look forward to your serving as a member of the Board.

	Sincerely,
	Pulmatrix, Inc.
	By:	/s/ Michael J. Higgins
	Name:	Michael J. Higgins
	Title:	Chairman of the Board
Agreed and Accepted:
/s/ Todd Bazemore
Todd Bazemore
Date: September 27, 2020

EX-31.1

Exhibit 31.1

CERTIFICATIONS UNDER SECTION 302

I, Teofilo Raad, certify that:

1.	I have reviewed this Quarterly Report on Form 10-Q of Pulmatrix, Inc.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
	a)	designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
	b)	designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
	c)	evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
	d)	disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.	The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
	a)	all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
	b)	any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 12, 2020

/s/ Teofilo Raad

Teofilo Raad

President and Chief Executive Officer

(Principal Executive Officer)

EX-31.2

Exhibit 31.2

CERTIFICATIONS UNDER SECTION 302

I, Michelle S. Siegert., certify that:

1.	I have reviewed this Quarterly Report on Form 10-Q of Pulmatrix, Inc.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
	a)	designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
	b)	designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
	c)	evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
	d)	disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.	The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
	a)	all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
	b)	any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 12, 2020

/s/ Michelle S. Siegert.

Michelle S. Siegert.

Vice President, Finance

(Principal Financial Officer)

EX-32.1

Exhibit 32.1

CERTIFICATIONS UNDER SECTION 906

Pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350, chapter 63 of title 18, United States Code), each of the undersigned officers of Pulmatrix, Inc., a Delaware corporation (the “Company”), does hereby certify, to such officer’s knowledge and in the capacity of an officer, that:

The Quarterly Report for the quarter ended September 30, 2020 (the “Form 10-Q”) of the Company fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and the information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company as of, and for, the periods presented in the Form 10-Q.

Date: November 12, 2020	By:	/s/ Teofilo Raad
		Teofilo Raad
		President and Chief Executive Officer (Principal Executive Officer)
Date: November 12, 2020	By:	/s/ Michelle S. Siegert.
		Michelle S. Siegert.
		Vice President, Finance (Principal Financial Officer)

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Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2020	Nov. 10, 2020
Cover [Abstract]
Entity Registrant Name	Pulmatrix, Inc.
Entity Central Index Key	0001574235
Document Type	10-Q
Document Period End Date	Sep. 30, 2020
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business Flag	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		34,407,483
Document Fiscal Period Focus	Q3
Document Fiscal Year Focus	2020

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Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019
Current assets:
Cash and cash equivalents	$ 34,508	$ 23,440
Accounts receivable	1,217	7,200
Prepaid expenses and other current assets	1,394	777
Total current assets	37,119	31,417
Property and equipment, net	332	270
Operating lease right-of-use asset	1,724	630
Long-term restricted cash	204	204
Goodwill	3,577	3,577
Total assets	42,956	36,098
Current liabilities:
Accounts payable	630	600
Accrued expenses	2,389	2,514
Common stock payable	2,292
Operating lease liability	997	675
Deferred revenue	4,258	13,411
Total current liabilities	10,566	17,200
Operating lease liability, net of current portion	898
Deferred revenue, net of current portion	7,992	7,879
Total liabilities	19,456	25,079
Commitments (Note 9)
Stockholders' equity:
Preferred stock, $0.0001 par value - 500,000 authorized and 0 issued and outstanding at September 30, 2020 and December 31, 2019
Common stock, $0.0001 par value - 200,000,000 shares authorized; 34,407,483 and 19,994,560 shares issued and outstanding at September 30, 2020 and December 31, 2019, respectively.	3	2
Additional paid-in capital	255,067	226,178
Accumulated deficit	(231,570)	(215,161)
Total stockholders' equity	23,500	11,019
Total liabilities and stockholders' equity	$ 42,956	$ 36,098

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Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares	Sep. 30, 2020	Dec. 31, 2019
Statement of Financial Position [Abstract]
Preferred stock, par value	$ 0.0001	$ 0.0001
Preferred stock, shares authorized	500,000	500,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value	$ 0.0001	$ 0.0001
Common stock, shares authorized	200,000,000	200,000,000
Common stock, shares issued	34,407,483	19,994,560
Common stock, shares outstanding	34,407,483	19,994,560

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Condensed Consolidated Statements of Operations (Unaudited) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Income Statement [Abstract]
Revenues	$ 4,372	$ 1,406	$ 10,634	$ 6,225
Operating expenses
Research and development	3,873	3,297	12,344	8,637
General and administrative	1,776	1,785	5,478	6,900
Impairment of goodwill				7,268
Total operating expenses	5,649	5,082	17,822	22,805
Loss from operations	(1,277)	(3,676)	(7,188)	(16,580)
Other income (expense)
Interest income	13	121	78	227
Settlement expense				(200)
Warrant inducement expense	(9,289)		(9,289)
Other income/(expense), net			(10)	(2)
Net loss	$ (10,553)	$ (3,555)	$ (16,409)	$ (16,555)
Net loss per share, basic and diluted	$ (0.31)	$ (0.18)	$ (0.62)	$ (1.07)
Weighted average shares of common stock used to compute basic and diluted net loss per share	33,924,499	20,294,560	26,284,826	15,533,983

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Condensed Consolidated Statements of Stockholders' Equity - USD ($) $ in Thousands	Common Stock [Member]	Additional Paid-In Capital [Member]	Accumulated Deficit [Member]	Total
Balance at Dec. 31, 2018		$ 206,409	$ (194,565)	$ 11,844
Balance, shares at Dec. 31, 2018	4,932,723
Adjustment for reverse stock split, shares	2,717
Issuance of common stock, net of issuance costs	$ 1	$ 2,978		$ 2,979
Issuance of common stock, net of issuance costs, shares	2,394,955
Exercise of pre-funded warrants		70		70
Exercise of pre-funded warrants, shares	697,500
Share-based compensation		459		459
Net loss			(5,156)	(5,156)
Balance at Mar. 31, 2019	$ 1	209,916	(199,721)	10,196
Balance, shares at Mar. 31, 2019	8,027,895
Balance at Dec. 31, 2018		206,409	(194,565)	11,844
Balance, shares at Dec. 31, 2018	4,932,723
Warrant inducement expense
Net loss				(16,555)
Balance at Sep. 30, 2019	$ 2	225,844	(211,120)	14,726
Balance, shares at Sep. 30, 2019	19,994,560
Balance at Mar. 31, 2019	$ 1	209,916	(199,721)	10,196
Balance, shares at Mar. 31, 2019	8,027,895
Issuance of common stock, net of issuance costs		14,566		14,566
Issuance of common stock, net of issuance costs, shares	3,319,553
Exercise of pre-funded warrants	$ 1	82		83
Exercise of pre-funded warrants, shares	8,277,112
Share-based compensation		1,091		1,091
Net loss			(7,844)	(7,844)
Balance at Jun. 30, 2019	$ 2	225,655	(207,565)	18,092
Balance, shares at Jun. 30, 2019	19,624,560
Exercise of pre-funded warrants		4		4
Exercise of pre-funded warrants, shares	370,000
Warrant inducement expense
Share-based compensation		185		185
Net loss			(3,555)	(3,555)
Balance at Sep. 30, 2019	$ 2	225,844	(211,120)	14,726
Balance, shares at Sep. 30, 2019	19,994,560
Balance at Dec. 31, 2019	$ 2	226,178	(215,161)	11,019
Balance, shares at Dec. 31, 2019	19,994,560
Exercise of pre-funded warrants
Exercise of pre-funded warrants, shares	300,000
Exercise of common stock options		21		21
Exercise of common stock options, shares	19,997
Exercise of warrants, net of issuance costs		239		239
Exercise of warrants, net of issuance costs, shares	206,747
Share-based compensation		343		343
Net loss			(4,686)	(4,686)
Balance at Mar. 31, 2020	$ 2	226,781	(219,847)	6,936
Balance, shares at Mar. 31, 2020	20,521,304
Balance at Dec. 31, 2019	$ 2	226,178	(215,161)	11,019
Balance, shares at Dec. 31, 2019	19,994,560
Warrant inducement expense				9,289
Net loss				(16,409)
Balance at Sep. 30, 2020	$ 3	255,067	(231,570)	23,500
Balance, shares at Sep. 30, 2020	34,407,483
Balance at Mar. 31, 2020	$ 2	226,781	(219,847)	6,936
Balance, shares at Mar. 31, 2020	20,521,304
Issuance of common stock, net of issuance costs	$ 1	7,313		7,314
Issuance of common stock, net of issuance costs, shares	4,787,553
Exercise of common stock options		3		3
Exercise of common stock options, shares	2,500
Exercise of warrants, net of issuance costs		536		536
Exercise of warrants, net of issuance costs, shares	437,999
Share-based compensation		266		266
Net loss			(1,170)	(1,170)
Balance at Jun. 30, 2020	$ 3	234,899	(221,017)	13,885
Balance, shares at Jun. 30, 2020	25,749,356
Exercise of warrants, net of issuance costs		10,576		10,576
Exercise of warrants, net of issuance costs, shares	8,658,127
Warrant inducement expense		9,289		9,289
Share-based compensation		303		303
Net loss			(10,553)	(10,553)
Balance at Sep. 30, 2020	$ 3	$ 255,067	$ (231,570)	$ 23,500
Balance, shares at Sep. 30, 2020	34,407,483

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Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019
Cash flows from operating activities:
Net loss	$ (16,409)	$ (16,555)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	157	139
Amortization of operating lease right-of-use asset	593	433
Share-based compensation	912	1,735
Impairment of goodwill		7,268
Gain on disposal of property and equipment		(1)
Warrant inducement expense	9,289
Changes in operating assets and liabilities:
Accounts receivable	5,983
Prepaid expenses and other current assets	(617)	(243)
Accounts payable	9	(24)
Accrued expenses	(125)	(414)
Operating lease liability	(467)	(450)
Deferred revenue	(9,040)	15,775
Net cash (used in)/provided by operating activities	(9,715)	7,663
Cash flows from investing activities:
Purchases of property and equipment	(198)	(49)
Net cash used in investing activities	(198)	(49)
Cash flows from financing activities:
Proceeds from issuance of common stock, net of issuance costs	7,314	17,545
Proceeds from exercise of common stock options	24
Proceeds from exercise of common stock warrants, net of issuance costs	11,351
Proceeds from exercise of common stock warrants, shares to be issued	2,292
Proceeds from exercise of pre-funded warrants		157
Proceeds from Paycheck Protection Program loan	617
Repayment of Paycheck Protection Program loan	(617)
Net cash provided by financing activities	20,981	17,702
Net increase in cash, cash equivalents and restricted cash	11,068	25,316
Cash, cash equivalents and restricted cash - beginning of period	23,644	2,767
Cash, cash equivalents and restricted cash - end of period	34,712	28,083
Supplemental disclosures of non-cash investing and financing information:
Fixed asset purchases in accounts payable	21
Operating lease right-of-use asset obtained in exchange for operating lease obligation	$ 1,687	$ 1,213

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Organization

9 Months Ended

Sep. 30, 2020

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Organization

1. Organization

Pulmatrix, Inc. (the “Company”) was incorporated in 2013 as a Delaware corporation. The Company is a clinical stage biotechnology company focused on the discovery and development of a novel class of inhaled therapeutic products. The Company’s proprietary dry powder delivery platform, iSPERSE™ (inhaled Small Particles Easily Respirable and Emitted), 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 is developing a pipeline of iSPERSE^™-based therapeutic candidates targeted at prevention and treatment of a range of respiratory and other diseases with significant unmet medical needs.

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Summary of Significant Accounting Policies and Recent Accounting Standards

9 Months Ended

Sep. 30, 2020

Accounting Policies [Abstract]

Summary of Significant Accounting Policies and Recent Accounting Standards

2. Summary of Significant Accounting Policies and Recent Accounting Standards

Basis of Presentation

Principles of Consolidation

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 (“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 financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019, filed with the SEC on March 26, 2020 (the “Annual Report”). 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. When preparing financial statements in conformity with GAAP, the Company must make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, expenses, and related disclosures at the date of the financial statements. Actual results could differ from those estimates. Additionally, operating results for the nine months ended September 30, 2020, are not necessarily indicative of the results that may be expected for any other interim period or for the fiscal year ending December 31, 2020. For further information, refer to the financial statements and footnotes included in the Company’s annual financial statements for the fiscal year ended December 31, 2019, which are included in the Annual Report.

Use of Estimates

In preparing condensed consolidated financial statements in conformity with 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 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. These estimates and assumptions include revenue recognition, estimating the fair value of equity securities, estimating the useful lives of depreciable and amortizable assets, interest borrowing rate, valuation allowance against deferred tax assets, goodwill impairment, and estimating the fair value of long-lived assets to assess whether impairment charges may apply.

Concentrations of Credit Risk and Off-Balance Sheet Arrangements

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 an account at a single financial institution that management believes is creditworthy. 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. The Company has not incurred any losses to date.

We have no 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.

Cash, Cash Equivalents and Restricted Cash

Cash and cash equivalents consist of cash, checking accounts and money market accounts. Restricted cash consists of two security deposits with a financial institution.

The following table provides a reconciliation of cash, cash equivalents and restricted cash as reported in the condensed consolidated balance sheets that sum to the total of the same amounts in the statement of cash flows.

	Nine months ended September 30
	2020		2019
Cash and cash equivalents	$	34,508	$	27,879
Restricted cash		204		204
Total cash, cash equivalents and restricted cash	$	34,712	$	28,083

Goodwill

Goodwill represents the difference between the consideration transferred and the fair value of the net assets acquired, and liabilities assumed under the acquisition method of accounting for push-down accounting. Goodwill is not amortized but is evaluated for impairment within the Company’s single reporting unit on an annual basis during the fourth quarter, or more frequently if an event occurs or circumstances change that would more likely than not reduce the fair value of the Company’s reporting unit below its carrying amount. When performing the impairment assessment, the accounting standard for testing goodwill for impairment permits a company to first assess the qualitative factors to determine whether the existence of events and circumstances indicates that it is more likely than not that the goodwill is impaired. If the Company believes, as a result of the qualitative assessment, that it is more likely than not that the fair value of goodwill is impaired, the Company then must perform a quantitative analysis to determine if the carrying value of the reporting entity exceeds its fair value. The impact of the novel coronavirus pandemic was considered in the Company’s periodic qualitative assessment. Currently, there has not been a significant impact on the carrying value of the Company, but this factor will continue to be evaluated.

Recently Adopted Accounting Standards

In August 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-06, “Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815 – 40)” (“ASU 2020-06”). ASU 2020-06, which simplifies the guidance on accounting for convertible debt instruments by removing the separation models for (1) convertible debt with a cash conversion feature and (2) convertible instruments with a beneficial conversion feature. As a result, the Company will not separately present in equity an embedded conversion feature in such debt. Instead, we will account for a convertible debt instrument wholly as debt, unless certain other conditions are met. We expect the elimination of these models will reduce reported interest expense and increase reported net income for the Company’s convertible instruments falling under the scope of those models before the adoption of ASU 2020-06. Also, ASU 2020-06 requires the application of the if-converted method for calculating diluted earnings per share and the treasury stock method will be no longer available. The provisions of ASU 2020-06 are applicable for fiscal years beginning after December 15, 2021, with early adoption permitted no earlier than fiscal years beginning after December 15, 2020. The Company is currently evaluating the impact of ASU 2020-06 on its consolidated financial statements.

In August 2018, the FASB issued ASU 2018-15, Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract. The new standard will align the requirements for capitalizing implementation costs for hosting arrangements (services) with costs for internal-use software (assets). As a result, certain implementation costs incurred in hosting arrangements will be deferred and amortized. The new standard became effective for the Company on January 1, 2020. The Company has adopted ASU 2018-13, and adoption of this ASU has no significant impact on its condensed consolidated financial statements.

In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement. ASU 2018-13 modifies the disclosure requirements for fair value measurements by removing, modifying or adding certain disclosures. The amendments in ASU 2018-13 became effective for fiscal years beginning after December 15, 2019. The Company has adopted ASU 2018-13, and adoption of this ASU has no significant impact on its condensed consolidated financial statements.

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Accounts Receivable

9 Months Ended

Sep. 30, 2020

Credit Loss [Abstract]

Accounts Receivable

3. Accounts Receivable

Accounts receivable of $1,217 results from JJEI and relates to the PUR1800 program.

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Prepaid Expenses and Other Current Assets

9 Months Ended

Sep. 30, 2020

Prepaid Expense and Other Assets, Current [Abstract]

Prepaid Expenses and Other Current Assets

4. Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consisted of the following:

	At September 30, 2020		At December 31, 2019
Prepaid insurance	$	410	$	202
Prepaid clinical trials		770		322
Prepaid other		183		221
Deferred operating costs		31		32
Total prepaid and other current assets	$	1,394	$	777

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Accrued Expenses and Other Current Liabilities

9 Months Ended

Sep. 30, 2020

Payables and Accruals [Abstract]

Accrued Expenses and Other Current Liabilities

5. Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consisted of the following:

	At September 30, 2020		At December 31, 2019
Accrued vacation	$	93	$	42
Accrued wages and incentive		898		527
Accrued clinical & consulting		1,198		1,820
Accrued legal & patent		59		85
Accrued other expenses		141		40
Total accrued expenses	$	2,389	$	2,514

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Common Stock

9 Months Ended

Sep. 30, 2020

Equity [Abstract]

Common Stock

6. Common Stock

On July 9, 2020, the Company entered into letter agreements with certain existing accredited investors to exercise certain existing and outstanding warrants (“Existing Warrants”) to purchase through a cash exercise up to an aggregate of 10,085,741 shares of the Company’s common stock at the existing exercise price per share of $1.35. The Existing Warrants were issued in an underwritten public offering pursuant to a registration statement on Form S-1 (File No. 333-230395) and an additional registration statement on Form S-1 (File No. 333-230714) filed pursuant to Rule 462(b) under the Securities Act of 1933, as amended, that was consummated in April 2019.

In consideration for the exercise of the Existing Warrants for cash, the Company agreed to issue the exercising holders new unregistered warrants (“Inducement Warrants”) to purchase up to an aggregate of 10,085,741 shares of common stock at an exercise price of $1.80 per share and with an exercise period of five years from July 14, 2020. The gross proceeds to the Company from the exercise of 8,388,127 warrants was approximately $11,324. The gross proceeds to the Company from the exercise of 1,697,614 warrants that remain in abeyance was approximately $2,292 and was recorded as a common stock payable in the accompanying condensed consolidated balance sheet as of September 30, 2020. After deducting placement agent fees and offering expenses of approximately $1,112, the Company recorded net proceeds of $12,504.

As compensation, the Company issued warrants to designees of the placement agent on substantially the same terms as the Inducement Warrants to purchase up to an aggregate of 655,573 shares of common stock at an exercise price per share of $2.25 with an exercise period of five years from July 14, 2020.

All Inducement Warrants and the placement warrants were registered pursuant to a registration statement on Form S-3 (File No. 333-242341), which was declared effective on August 13, 2020. At issuance, the Inducement Warrants and the placement agent warrants had a weighted average fair value of approximately $0.92 and $0.87 per award, respectively. These weighted average fair values were estimated using the Black-Scholes option-pricing model with the following assumptions: expected life of 5 years, expected volatility of 98.9%, risk-free interest rate of 0.28% and expected dividend yield of 0.0%. The weighted average grant date fair value of approximately $9,289 associated with the Inducement Warrants, was recorded as a warrant inducement expense in the accompanying condensed statements of operations for the three and nine months ended September 30, 2020 with an offset to additional paid-in capital.

Exercise of Warrants

During the three months ended September 30, 2020 and 2019, the Company issued 8,658,127, which does not include 1,697,614 shares of common stock held in abeyance and 370,000 shares of common stock, respectively, upon exercise of 10,355,741 warrants and exercise of 370,000 pre-funded warrants to purchase 10,355,741 and 370,000 shares of common stock, respectively. The Company collected net proceeds of $12,868, which includes proceeds of $2,292 related to 1,697,614 shares of common stock held in abeyance and recorded as a common stock payable in the accompanying condensed consolidated balance sheet as of September 30, 2020, and $4, upon the exercise of these warrants during the three months ended September 30, 2020 and 2019, respectively.

During the nine months ended September 30, 2020 the Company issued 9,302,873 and 300,000 shares of common stock upon exercise of 11,202,925 warrants and 300,000 pre-funded warrants respectively. The Company collected net proceeds of $13,643 which includes proceeds of $2,292 related to 1,697,614 common shares held in abeyance and recorded as a common stock payable in the accompanying condensed consolidated balance sheet as of September 30, 2020.

During the nine months ended September 30, 2019, the Company issued 9,344,612 shares of common stock upon exercise of 9,344,612 pre-funded warrants and collected proceeds of $157.

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Warrants

9 Months Ended

Sep. 30, 2020

Equity [Abstract]

Warrants

7. Warrants

A rollforward of the common stock warrants outstanding at September 30, 2020 is as follows.

	Number of Warrants			Weighted Average Exercise Price			Weighted Average Remaining Contractual Term (Years)		Aggregate Intrinsic Value
Outstanding December 31, 2019		18,953,195		$	3.55			4.17	$	—
Warrants issued		15,840,058		$	1.75
Warrants exercised		(11,202,925	)	$	(1.32	)
Pre-funded warrants exercised		(300,000	)	$	(0.01	)
Warrants expired		(5,515	)	$	(102.27	)
Outstanding September 30, 2020		23,284,813		$	3.41			3.59	$	—

The following represents a summary of the warrants outstanding at each of the dates identified:

					Number of Shares Underlying Warrants
					For the Period Ended September 30,
Issue Date	Classification	Exercise Price		Expiration Date	2020		2019
August 07, 2020	Equity	$	2.25	July 14, 2025		218,713		—
July 13, 2020	Equity	$	2.25	July 14, 2025		436,860		—
July 13, 2020	Equity	$	1.80	July 14, 2025		10,085,741		—
April 20, 2020	Equity	$	1.55	April 20, 2022		4,787,553		—
April 20, 2020	Equity	$	2.0888	April 20, 2022		311,191		—
April 8, 2019	Equity	$	0.01	—		—		300,000
April 8, 2019	Equity	$	1.35	April 8, 2024		1,336,777		12,266,665
April 8, 2019	Equity	$	1.6875	April 3, 2024		797,334		797,334
February 12, 2019	Equity	$	1.8313	February 7, 2024		110,922		110,922
February 12, 2019	Equity	$	1.34	August 12, 2024		1,433,447		1,706,484
February 04, 2019	Equity	$	2.125	January 30, 2024		34,605		34,605
January 31, 2019	Equity	$	2.125	January 26, 2024		10,151		10,151
December 3, 2018	Equity	$	3.90	June 3, 2024		937,500		937,500
April 3, 2018	Equity	$	7.50	April 3, 2023		2,350,011		2,350,011
April 4, 2018	Equity	$	7.50	April 4, 2023		115,000		115,000
August 31, 2015	Equity	$	118.00	August 31, 2020		—		3,000
June 15, 2015	Equity	$	75.50	Five years after milestone achievement		319,008		319,008
June 15, 2015	Equity	$	83.50	June 16, 2020		—		2,515
Total Outstanding						23,284,813		18,953,195

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Share-Based Compensation

9 Months Ended

Sep. 30, 2020

Share-based Payment Arrangement [Abstract]

Share-Based Compensation

8. Share-Based Compensation

The Company sponsors the Pulmatrix, Inc. 2013 Employee, Director and Consultant Equity Incentive Plan (the “2013 Plan). As of September 30, 2020, the 2013 Plan provides for the grant of up to 4,060,000 shares of common stock, of which 1,112,582 shares remain available for future grant.

In addition, the Company has two legacy plans: The Pulmatrix Operating’s 2013 Employee, Director and Consultant Equity Incentive Plan (the “Original 2013 Plan”) and Pulmatrix Operating’s 2003 Employee, Director, and Consultant Stock Plan (the “2003 Plan”). As of September 30, 2020, a total of 8,627 shares of common stock may be delivered under options outstanding under the Original 2013 Plan and the 2003 Plan, however no additional awards may be granted under the Original 2013 Plan or the 2003 Plan.

Stock Options

During the three months ended September 30, 2020, the Company granted 16,400 options to employees. The awards vest over four years, expire ten years from the grant date and on the date of the grant have a weighted average fair value of $20. There were no stock options granted during the three months ended September 30, 2019.

During the nine months ended September 30, 2020, the Company granted 2,265,504 options to employees, directors, and consultants. The awards vest over four years, expire ten years from the grant date and on the date of grant have a weighted average fair value of $2,634.

During the nine months ended September 30, 2019, the Company granted 651,600 options to employees and directors. The awards vest over four years, expire ten years from the grant date and on the date of the grant had a fair value of $456.

The following table summarizes stock option activity for the nine months ended September 30, 2020:

	Number of Options			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (Years)		Aggregate Intrinsic Value
Outstanding — December 31, 2019		900,003		$	11.63		8.52	$	—
Granted		2,265,504		$	1.53
Exercised		(22,497	)	$	1.06
Forfeited or expired		(263,779	)	$	15.83
Outstanding — September 30, 2020		2,879,231		$	3.38		8.96	$	58
Exercisable — September 30, 2020		859,409		$	7.59		8.45	$	21

The estimated fair values of employee stock options granted during the three months and nine months ended September 30, 2020 and 2019, were determined on the date of grant using the Black-Scholes option-pricing model with the following assumptions:

	Three Months Ended September 30,					Nine Months Ended September 30,
	2020			2019		2020			2019
Expected option life (years)		6.03			—		5.92			6.02
Risk-free interest rate		0.40	%		—		1.61	%		2.22	%
Expected volatility		94.41	%		—		93.91	%		74.14	%
Expected dividend yield		0	%		—		0	%		0	%

The risk-free interest rate was obtained from U.S. Treasury rates for the applicable periods. The Company’s expected volatility was based upon the average of the historical volatility for industry peers and its own volatility. The expected life of the Company’s options was determined using the simplified method as a result of limited historical data regarding the Company’s activity. The dividend yield considers that the Company has not historically paid dividends and does not expect to pay dividends in the foreseeable future.

As of September 30, 2020, there was $2,290 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 2.8 years.

The following table presents total stock-based compensation expense for the three and nine months ended September 30, 2020 and 2019:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Research and development	$	46	$	14	$	142	$	81
General and administrative		257		171		770		1,654
Total share-based compensation expense	$	303	$	185	$	912	$	1,735

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Commitments and Contingencies

9 Months Ended

Sep. 30, 2020

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

9. Commitments and Contingencies

Research and Development Activities

The Company contracts with various other organizations to conduct research and development activities. As of September 30, 2020, the Company had aggregate commitments to pay approximately $1,502 remaining on these contracts. 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.

Operating Leases

The Company has limited leasing activities as a lessee and are primarily related to its corporate headquarters located at 99 Hayden Avenue, Suite 390, Lexington, Massachusetts. The Company currently leases approximately 22 thousand square feet of office and lab space in Lexington, Massachusetts under a lease with an original expiration date of December 31, 2020. On April 23, 2020, an extension to the Company’s operating lease for office and lab space was signed between the Company and 99 Hayden LLC. The extension to the original lease executed on May 31, 2007, has an annual base rent of $1,194 which is adjusted annually by 3%, and will expire on June 30, 2022. The lease provides for base rent, and the Company is responsible for real estate taxes, maintenance, and other operating expenses applicable to the leased premises.

Operating lease liabilities and corresponding right-of-use assets are recorded based on the present value of lease payments over the expected remaining lease term. Certain adjustments to the right-of-use asset may be required for items such as prepaid rent. The interest rate implicit in lease contracts is typically not readily determinable. As a result, the Company utilizes its incremental borrowing rates, which are the rates incurred to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment. To estimate the Company’s specific incremental borrowing rates over the respective lease terms, a comparable market yield curve consistent with the Company’s credit quality was used. As of September 30, 2020, the weighted average incremental borrowing rate and the weighted average remaining lease term for the operating leases held by the Company were 5.23% and 2 years, respectively.

The components of lease expense for the Company as of September 30, 2020 were as follows:

	For the three months ended				For the nine months ended
	September 30,				September 30,
	2020		2019		2020		2019
Lease Cost
Fixed lease cost	$	259	$	163	$	650	$	490
Variable lease cost		99		97		317		284
Total lease cost	$	358	$	260	$	967	$	774

Maturities of lease liabilities due under these lease agreements as of September 30, 2020 are as follows:

	Operating Leases
Maturity of lease liabilities:
2020 (excluding the nine months ended September 30, 2020)	$	174
2021		1,194
2022 (lease expiration on June 30, 2022)		615
Total lease payments		1,984
Less imputed interest		(89	)
Total operating lease liabilities	$	1,895

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Net Loss Per Share

9 Months Ended

Sep. 30, 2020

Earnings Per Share [Abstract]

Net Loss Per Share

10. Net Loss Per Share

The Company computes basic and diluted net loss per share using a methodology that gives effect to the impact of outstanding participating securities (the “two-class method”). The three and nine months ended September 30, 2020 and 2019, respectively, resulted in net losses attributable to common stockholders and as a result, there is no income allocation required under the two-class method or dilution attributed to weighted average shares outstanding in the calculation of diluted net loss per share. Included in the weighted average earnings per share calculation are 1,697,614 shares held in abeyance.

The following potentially dilutive securities outstanding prior to the use of the treasury stock method have been excluded from the computation of diluted weighted-average shares outstanding, as they would be anti-dilutive.

	As of September 30,
	2020		2019
Options to purchase common stock		2,879,231		1,088,676
Warrants to purchase common stock		23,284,813		18,653,195
Total		26,164,044		19,741,871

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Subsequent Events

9 Months Ended

Sep. 30, 2020

Subsequent Events [Abstract]

Subsequent Events

11. Subsequent Events

On October 1, 2020, a stock option grant of 30,000 shares of common stock was issued to Todd Bazemore. Mr. Bazemore was appointed to the board of directors on September 25, 2020 and his appointment became effective October 1, 2020. The grant vests over four years, expires ten years from the grant date and on the date of the grant had a fair value of $26.

On October 14, 2020, a stock option grant of 18,800 shares of common stock was issued to an employee. The grant vests over four years, expires ten years from the grant date and on the date of the grant had a fair value of $17.

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Summary of Significant Accounting Policies and Recent Accounting Standards (Policies)

9 Months Ended

Sep. 30, 2020

Accounting Policies [Abstract]

Basis of Presentation

Basis of Presentation

Principles of Consolidation

Principles of Consolidation

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 (“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 financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019, filed with the SEC on March 26, 2020 (the “Annual Report”). 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. When preparing financial statements in conformity with GAAP, the Company must make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, expenses, and related disclosures at the date of the financial statements. Actual results could differ from those estimates. Additionally, operating results for the nine months ended September 30, 2020, are not necessarily indicative of the results that may be expected for any other interim period or for the fiscal year ending December 31, 2020. For further information, refer to the financial statements and footnotes included in the Company’s annual financial statements for the fiscal year ended December 31, 2019, which are included in the Annual Report.

Use of Estimates

Use of Estimates

In preparing condensed consolidated financial statements in conformity with 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 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. These estimates and assumptions include revenue recognition, estimating the fair value of equity securities, estimating the useful lives of depreciable and amortizable assets, interest borrowing rate, valuation allowance against deferred tax assets, goodwill impairment, and estimating the fair value of long-lived assets to assess whether impairment charges may apply.

Concentrations of Credit Risk and Off-Balance Sheet Arrangements

Concentrations of Credit Risk and Off-Balance Sheet Arrangements

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 an account at a single financial institution that management believes is creditworthy. 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. The Company has not incurred any losses to date.

We have no 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.

Cash, Cash Equivalents and Restricted Cash

Cash, Cash Equivalents and Restricted Cash

Cash and cash equivalents consist of cash, checking accounts and money market accounts. Restricted cash consists of two security deposits with a financial institution.

The following table provides a reconciliation of cash, cash equivalents and restricted cash as reported in the condensed consolidated balance sheets that sum to the total of the same amounts in the statement of cash flows.

	Nine months ended September 30
	2020		2019
Cash and cash equivalents	$	34,508	$	27,879
Restricted cash		204		204
Total cash, cash equivalents and restricted cash	$	34,712	$	28,083

Goodwill

Goodwill

Goodwill represents the difference between the consideration transferred and the fair value of the net assets acquired, and liabilities assumed under the acquisition method of accounting for push-down accounting. Goodwill is not amortized but is evaluated for impairment within the Company’s single reporting unit on an annual basis during the fourth quarter, or more frequently if an event occurs or circumstances change that would more likely than not reduce the fair value of the Company’s reporting unit below its carrying amount. When performing the impairment assessment, the accounting standard for testing goodwill for impairment permits a company to first assess the qualitative factors to determine whether the existence of events and circumstances indicates that it is more likely than not that the goodwill is impaired. If the Company believes, as a result of the qualitative assessment, that it is more likely than not that the fair value of goodwill is impaired, the Company then must perform a quantitative analysis to determine if the carrying value of the reporting entity exceeds its fair value. The impact of the novel coronavirus pandemic was considered in the Company’s periodic qualitative assessment. Currently, there has not been a significant impact on the carrying value of the Company, but this factor will continue to be evaluated.

Recently Adopted Accounting Standards

Recently Adopted Accounting Standards

In August 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-06, “Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815 – 40)” (“ASU 2020-06”). ASU 2020-06, which simplifies the guidance on accounting for convertible debt instruments by removing the separation models for (1) convertible debt with a cash conversion feature and (2) convertible instruments with a beneficial conversion feature. As a result, the Company will not separately present in equity an embedded conversion feature in such debt. Instead, we will account for a convertible debt instrument wholly as debt, unless certain other conditions are met. We expect the elimination of these models will reduce reported interest expense and increase reported net income for the Company’s convertible instruments falling under the scope of those models before the adoption of ASU 2020-06. Also, ASU 2020-06 requires the application of the if-converted method for calculating diluted earnings per share and the treasury stock method will be no longer available. The provisions of ASU 2020-06 are applicable for fiscal years beginning after December 15, 2021, with early adoption permitted no earlier than fiscal years beginning after December 15, 2020. The Company is currently evaluating the impact of ASU 2020-06 on its consolidated financial statements.

In August 2018, the FASB issued ASU 2018-15, Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract. The new standard will align the requirements for capitalizing implementation costs for hosting arrangements (services) with costs for internal-use software (assets). As a result, certain implementation costs incurred in hosting arrangements will be deferred and amortized. The new standard became effective for the Company on January 1, 2020. The Company has adopted ASU 2018-13, and adoption of this ASU has no significant impact on its condensed consolidated financial statements.

In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement. ASU 2018-13 modifies the disclosure requirements for fair value measurements by removing, modifying or adding certain disclosures. The amendments in ASU 2018-13 became effective for fiscal years beginning after December 15, 2019. The Company has adopted ASU 2018-13, and adoption of this ASU has no significant impact on its condensed consolidated financial statements.

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Summary of Significant Accounting Policies and Recent Accounting Standards (Tables)

9 Months Ended

Sep. 30, 2020

Accounting Policies [Abstract]

Schedule of Reconciliation of Cash, Cash Equivalents and Restricted Cash

The following table provides a reconciliation of cash, cash equivalents and restricted cash as reported in the condensed consolidated balance sheets that sum to the total of the same amounts in the statement of cash flows.

	Nine months ended September 30
	2020		2019
Cash and cash equivalents	$	34,508	$	27,879
Restricted cash		204		204
Total cash, cash equivalents and restricted cash	$	34,712	$	28,083

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Prepaid Expenses and Other Current Assets (Tables)

9 Months Ended

Sep. 30, 2020

Prepaid Expense and Other Assets, Current [Abstract]

Schedule of Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consisted of the following:

	At September 30, 2020		At December 31, 2019
Prepaid insurance	$	410	$	202
Prepaid clinical trials		770		322
Prepaid other		183		221
Deferred operating costs		31		32
Total prepaid and other current assets	$	1,394	$	777

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Accrued Expenses and Other Current Liabilities (Tables)

9 Months Ended

Sep. 30, 2020

Payables and Accruals [Abstract]

Schedule of Accrued Expenses

Accrued expenses and other current liabilities consisted of the following:

	At September 30, 2020		At December 31, 2019
Accrued vacation	$	93	$	42
Accrued wages and incentive		898		527
Accrued clinical & consulting		1,198		1,820
Accrued legal & patent		59		85
Accrued other expenses		141		40
Total accrued expenses	$	2,389	$	2,514

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Warrants (Tables)

9 Months Ended

Sep. 30, 2020

Equity [Abstract]

Schedule of Rollforward of Common Stock Warrants Outstanding

A rollforward of the common stock warrants outstanding at September 30, 2020 is as follows.

	Number of Warrants			Weighted Average Exercise Price			Weighted Average Remaining Contractual Term (Years)		Aggregate Intrinsic Value
Outstanding December 31, 2019		18,953,195		$	3.55			4.17	$	—
Warrants issued		15,840,058		$	1.75
Warrants exercised		(11,202,925	)	$	(1.32	)
Pre-funded warrants exercised		(300,000	)	$	(0.01	)
Warrants expired		(5,515	)	$	(102.27	)
Outstanding September 30, 2020		23,284,813		$	3.41			3.59	$	—

Schedule of Warrants Outstanding

The following represents a summary of the warrants outstanding at each of the dates identified:

					Number of Shares Underlying Warrants
					For the Period Ended September 30,
Issue Date	Classification	Exercise Price		Expiration Date	2020		2019
August 07, 2020	Equity	$	2.25	July 14, 2025		218,713		—
July 13, 2020	Equity	$	2.25	July 14, 2025		436,860		—
July 13, 2020	Equity	$	1.80	July 14, 2025		10,085,741		—
April 20, 2020	Equity	$	1.55	April 20, 2022		4,787,553		—
April 20, 2020	Equity	$	2.0888	April 20, 2022		311,191		—
April 8, 2019	Equity	$	0.01	—		—		300,000
April 8, 2019	Equity	$	1.35	April 8, 2024		1,336,777		12,266,665
April 8, 2019	Equity	$	1.6875	April 3, 2024		797,334		797,334
February 12, 2019	Equity	$	1.8313	February 7, 2024		110,922		110,922
February 12, 2019	Equity	$	1.34	August 12, 2024		1,433,447		1,706,484
February 04, 2019	Equity	$	2.125	January 30, 2024		34,605		34,605
January 31, 2019	Equity	$	2.125	January 26, 2024		10,151		10,151
December 3, 2018	Equity	$	3.90	June 3, 2024		937,500		937,500
April 3, 2018	Equity	$	7.50	April 3, 2023		2,350,011		2,350,011
April 4, 2018	Equity	$	7.50	April 4, 2023		115,000		115,000
August 31, 2015	Equity	$	118.00	August 31, 2020		—		3,000
June 15, 2015	Equity	$	75.50	Five years after milestone achievement		319,008		319,008
June 15, 2015	Equity	$	83.50	June 16, 2020		—		2,515
Total Outstanding						23,284,813		18,953,195

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Share-Based Compensation (Tables)

9 Months Ended

Sep. 30, 2020

Share-based Payment Arrangement [Abstract]

Summary of Stock Option Activity

The following table summarizes stock option activity for the nine months ended September 30, 2020:

	Number of Options			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (Years)		Aggregate Intrinsic Value
Outstanding — December 31, 2019		900,003		$	11.63		8.52	$	—
Granted		2,265,504		$	1.53
Exercised		(22,497	)	$	1.06
Forfeited or expired		(263,779	)	$	15.83
Outstanding — September 30, 2020		2,879,231		$	3.38		8.96	$	58
Exercisable — September 30, 2020		859,409		$	7.59		8.45	$	21

Schedule of Calculation of Fair Value Assumptions

The estimated fair values of employee stock options granted during the three months and nine months ended September 30, 2020 and 2019, were determined on the date of grant using the Black-Scholes option-pricing model with the following assumptions:

	Three Months Ended September 30,					Nine Months Ended September 30,
	2020			2019		2020			2019
Expected option life (years)		6.03			—		5.92			6.02
Risk-free interest rate		0.40	%		—		1.61	%		2.22	%
Expected volatility		94.41	%		—		93.91	%		74.14	%
Expected dividend yield		0	%		—		0	%		0	%

Schedule of Stock-Based Compensation Expense

The following table presents total stock-based compensation expense for the three and nine months ended September 30, 2020 and 2019:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Research and development	$	46	$	14	$	142	$	81
General and administrative		257		171		770		1,654
Total share-based compensation expense	$	303	$	185	$	912	$	1,735

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Commitments and Contingencies (Tables)

9 Months Ended

Sep. 30, 2020

Commitments and Contingencies Disclosure [Abstract]

Schedule of Components of Lease Expense

The components of lease expense for the Company as of September 30, 2020 were as follows:

	For the three months ended				For the nine months ended
	September 30,				September 30,
	2020		2019		2020		2019
Lease Cost
Fixed lease cost	$	259	$	163	$	650	$	490
Variable lease cost		99		97		317		284
Total lease cost	$	358	$	260	$	967	$	774

Schedule of Maturities of Lease Liabilities

Maturities of lease liabilities due under these lease agreements as of September 30, 2020 are as follows:

	Operating Leases
Maturity of lease liabilities:
2020 (excluding the nine months ended September 30, 2020)	$	174
2021		1,194
2022 (lease expiration on June 30, 2022)		615
Total lease payments		1,984
Less imputed interest		(89	)
Total operating lease liabilities	$	1,895

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Net Loss Per Share (Tables)

9 Months Ended

Sep. 30, 2020

Earnings Per Share [Abstract]

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

The following potentially dilutive securities outstanding prior to the use of the treasury stock method have been excluded from the computation of diluted weighted-average shares outstanding, as they would be anti-dilutive.

	As of September 30,
	2020		2019
Options to purchase common stock		2,879,231		1,088,676
Warrants to purchase common stock		23,284,813		18,653,195
Total		26,164,044		19,741,871

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Summary of Significant Accounting Policies and Recent Accounting Standards - Schedule of Reconciliation of Cash, Cash Equivalents and Restricted Cash (Details) - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019	Sep. 30, 2019
Accounting Policies [Abstract]
Cash and cash equivalents	$ 34,508	$ 23,440	$ 27,879
Restricted cash	204		204
Total cash, cash equivalents and restricted cash	$ 34,712		$ 28,083

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Accounts Receivable (Details Narrative) - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019
Accounts receivable	$ 1,217	$ 7,200
JJEI [Member]
Accounts receivable	$ 1,217

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Prepaid Expenses and Other Current Assets - Schedule of Prepaid Expenses and Other Current Assets (Details) - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019
Prepaid Expense and Other Assets, Current [Abstract]
Prepaid insurance	$ 410	$ 202
Prepaid clinical trials	770	322
Prepaid other	183	221
Deferred operating costs	31	32
Total prepaid and other current assets	$ 1,394	$ 777

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Accrued Expenses and Other Current Liabilities - Schedule of Accrued Expenses (Details) - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019
Payables and Accruals [Abstract]
Accrued vacation	$ 93	$ 42
Accrued wages and incentive	898	527
Accrued clinical & consulting	1,198	1,820
Accrued legal & patent	59	85
Accrued other expenses	141	40
Total accrued expenses	$ 2,389	$ 2,514

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Common Stock (Details Narrative) $ / shares in Units, $ in Thousands			3 Months Ended		9 Months Ended
	Aug. 13, 2020 $ / shares	Jul. 09, 2020 USD ($) $ / shares shares	Sep. 30, 2020 USD ($) shares	Sep. 30, 2019 USD ($) shares	Sep. 30, 2020 USD ($) shares	Sep. 30, 2019 USD ($) shares
Warrants to purchase shares of common stock | shares			23,284,813	18,953,195	23,284,813	18,953,195
Proceeds from warrants exercised | $					$ 11,351
Proceeds from stock options | $					24
Existing Warrants [Member]
Warrants to purchase shares of common stock | shares		10,085,741
Warrant exercise price per share | $ / shares		$ 1.35
Inducement Warrants [Member]
Warrants to purchase shares of common stock | shares		10,085,741
Warrant exercise price per share | $ / shares		$ 1.80
Warrants term		5 years
Proceeds from warrants exercised | $		$ 11,324
Number of stock options shares exercised | shares		8,388,127
Weighted average fair value | $ / shares	$ 0.92
Weighted average grant date fair value | $			$ 9,289		$ 9,289
Abeyance Warrants [Member]
Proceeds from warrants exercised | $		$ 2,292
Number of stock options shares exercised | shares		1,697,614			1,697,614
Proceeds from sale of stock | $			$ 2,292
Number of common stock shares issued | shares			1,697,614
Warrants [Member]
Warrants to purchase shares of common stock | shares			10,355,741	370,000	10,355,741	370,000
Proceeds from warrants exercised | $						$ 157
Warrants [Member] | Placement Agents [Member]
Warrants to purchase shares of common stock | shares		655,573
Warrant exercise price per share | $ / shares		$ 2.25
Warrants term		5 years
Deducting fees and expenses | $		$ 1,112
Proceeds from sale of stock | $		$ 12,504
Placement Agent Warrants [Member]
Weighted average fair value | $ / shares	$ 0.87
Common Stock [Member]
Proceeds from warrants exercised | $			$ 4
Proceeds from sale of stock | $				$ 12,868		$ 13,643
Number of common stock shares issued | shares			8,658,127	370,000	9,302,873	9,344,612
Pre-funded Member [Member]
Number of common stock shares issued | shares					300,000
Warrants One [Member]
Warrants to purchase shares of common stock | shares			11,202,925	9,344,612	11,202,925	9,344,612
Inducement Warrants and Placement Warrants [Member] | Black-Scholes Option-Pricing Model [Member] | Measurement Input, Expected Term [Member]
Warrants term			5 years		5 years
Inducement Warrants and Placement Warrants [Member] | Black-Scholes Option-Pricing Model [Member] | Measurement Input, Price Volatility [Member]
Weighted average fair values estimated, measurement input			0.989		0.989
Inducement Warrants and Placement Warrants [Member] | Black-Scholes Option-Pricing Model [Member] | Measurement Input, Risk Free Interest Rate [Member]
Weighted average fair values estimated, measurement input			0.0028		0.0028
Inducement Warrants and Placement Warrants [Member] | Black-Scholes Option-Pricing Model [Member] | Measurement Input, Expected Dividend Rate [Member]
Weighted average fair values estimated, measurement input			0.0		0.0

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Warrants - Schedule of Rollforward of Common Stock Warrants Outstanding (Details) - Warrants [Member]	9 Months Ended
	Sep. 30, 2020 USD ($) $ / shares shares
Number of Warrants, Outstanding, Beginning Balance | shares	18,953,195
Number of Warrants, Warrants issued | shares	15,840,058
Number of Warrants, Warrants exercised | shares	(11,202,925)
Number of Warrants, Pre-funded warrants exercised | shares	(300,000)
Number of Warrants, Warrants expired | shares	(5,515)
Number of Warrants, Outstanding, Ending Balance | shares	23,284,813
Weighted Average Exercise Price, Outstanding, Beginning balance | $ / shares	$ 3.55
Weighted Average Exercise Price, Warrants issued | $ / shares	1.75
Weighted Average Exercise Price, Warrants exercised | $ / shares	(1.32)
Weighted Average Exercise Price, Pre-funded warrants exercised | $ / shares	(0.01)
Weighted Average Exercise Price, Warrants expired | $ / shares	(102.27)
Weighted Average Exercise Price, Outstanding, Ending balance | $ / shares	$ 3.41
Weighted Average Remaining Contractual Term (Years), Outstanding, Beginning Balance	4 years 2 months 1 day
Weighted Average Remaining Contractual Term (Years), Outstanding, Ending balance	3 years 7 months 2 days
Aggregate Intrinsic Value, Outstanding, Beginning balance | $
Aggregate Intrinsic Value, Outstanding, Ending balance | $

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Warrants - Schedule of Warrants Outstanding (Details) - $ / shares	9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019
Number of Shares Underlying Warrants	23,284,813	18,953,195
Warrant One [Member]
Warrants, Issue Date	Aug. 07, 2020
Warrants, Classification	Equity
Warrants, Exercise Price	$ 2.25
Warrants, Expiration Date	Jul. 14, 2025
Number of Shares Underlying Warrants	218,713
Warrant Two [Member]
Warrants, Issue Date	Jul. 13, 2020
Warrants, Classification	Equity
Warrants, Exercise Price	$ 2.25
Warrants, Expiration Date	Jul. 14, 2025
Number of Shares Underlying Warrants	436,860
Warrant Three [Member]
Warrants, Issue Date	Jul. 13, 2020
Warrants, Classification	Equity
Warrants, Exercise Price	$ 1.80
Warrants, Expiration Date	Jul. 14, 2025
Number of Shares Underlying Warrants	10,085,741
Warrant Four [Member]
Warrants, Issue Date	Apr. 20, 2020
Warrants, Classification	Equity
Warrants, Exercise Price	$ 1.55
Warrants, Expiration Date	Apr. 20, 2022
Number of Shares Underlying Warrants	4,787,553
Warrant Five [Member]
Warrants, Issue Date	Apr. 20, 2020
Warrants, Classification	Equity
Warrants, Exercise Price	$ 2.0888
Warrants, Expiration Date	Apr. 20, 2022
Number of Shares Underlying Warrants	311,191
Warrant Six [Member]
Warrants, Issue Date	Apr. 08, 2019
Warrants, Classification	Equity
Warrants, Exercise Price	$ 0.01
Number of Shares Underlying Warrants		300,000
Warrant Seven [Member]
Warrants, Issue Date	Apr. 08, 2019
Warrants, Classification	Equity
Warrants, Exercise Price	$ 1.35
Warrants, Expiration Date	Apr. 08, 2024
Number of Shares Underlying Warrants	1,336,777	12,266,665
Warrant Eight [Member]
Warrants, Issue Date	Apr. 08, 2019
Warrants, Classification	Equity
Warrants, Exercise Price	$ 1.6875
Warrants, Expiration Date	Apr. 03, 2024
Number of Shares Underlying Warrants	797,334	797,334
Warrant Nine [Member]
Warrants, Issue Date	Feb. 12, 2019
Warrants, Classification	Equity
Warrants, Exercise Price	$ 1.8313
Warrants, Expiration Date	Feb. 07, 2024
Number of Shares Underlying Warrants	110,922	110,922
Warrant Ten [Member]
Warrants, Issue Date	Feb. 12, 2019
Warrants, Classification	Equity
Warrants, Exercise Price	$ 1.34
Warrants, Expiration Date	Aug. 12, 2024
Number of Shares Underlying Warrants	1,433,447	1,706,484
Warrant Eleven [Member]
Warrants, Issue Date	Feb. 04, 2019
Warrants, Classification	Equity
Warrants, Exercise Price	$ 2.125
Warrants, Expiration Date	Jan. 30, 2024
Number of Shares Underlying Warrants	34,605	34,605
Warrant Twelve [Member]
Warrants, Issue Date	Jan. 31, 2019
Warrants, Classification	Equity
Warrants, Exercise Price	$ 2.125
Warrants, Expiration Date	Jan. 26, 2024
Number of Shares Underlying Warrants	10,151	10,151
Warrant Thirteen [Member]
Warrants, Issue Date	Dec. 03, 2018
Warrants, Classification	Equity
Warrants, Exercise Price	$ 3.90
Warrants, Expiration Date	Jun. 03, 2024
Number of Shares Underlying Warrants	937,500	937,500
Warrant Fourteen [Member]
Warrants, Issue Date	Apr. 03, 2018
Warrants, Classification	Equity
Warrants, Exercise Price	$ 7.50
Warrants, Expiration Date	Apr. 03, 2023
Number of Shares Underlying Warrants	2,350,011	2,350,011
Warrant Fifteen [Member]
Warrants, Issue Date	Apr. 04, 2018
Warrants, Classification	Equity
Warrants, Exercise Price	$ 7.50
Warrants, Expiration Date	Apr. 04, 2023
Number of Shares Underlying Warrants	115,000	115,000
Warrant sixteen [Member]
Warrants, Issue Date	Aug. 31, 2015
Warrants, Classification	Equity
Warrants, Exercise Price	$ 118.00
Warrants, Expiration Date	Aug. 31, 2020
Number of Shares Underlying Warrants		3,000
Warrant Seventeen [Member]
Warrants, Issue Date	Jun. 15, 2015
Warrants, Classification	Equity
Warrants, Exercise Price	$ 75.50
Warrants, Expiration Date, Description	Five years after milestone achievement
Number of Shares Underlying Warrants	319,008	319,008
Warrant Eighteen [Member]
Warrants, Issue Date	Jun. 15, 2015
Warrants, Classification	Equity
Warrants, Exercise Price	$ 83.50
Warrants, Expiration Date	Jun. 16, 2020
Number of Shares Underlying Warrants		2,515

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Share-Based Compensation (Details Narrative) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Number of shares provides for grant
Employees and Directors [Member]
Number of shares provides for grant	16,400			651,600
Award vesting period	4 years			4 years
Award expiration term	10 years			10 years
Fair value of granted shares awarded	$ 20			$ 456
Employees Directors and Consultants [Member]
Number of shares provides for grant			2,265,504
Award vesting period			4 years
Award expiration term			10 years
Fair value of granted shares awarded			$ 2,634
2013 Employee, Director and Consultant Equity Incentive Plan [Member]
Number of shares authorized to grant	4,060,000		4,060,000
Shares remain available for future grant	1,112,582		1,112,582
Number of common stock shares outstanding	8,627		8,627
Stock Award Plan [Member]
Unrecognized stock-based compensation expenses	$ 2,290		$ 2,290
Weighted-average period of unrecognized stock-based compensation expense			2 years 9 months 18 days

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Share-Based Compensation - Summary of Stock Option Activity (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended	9 Months Ended
	Sep. 30, 2019	Sep. 30, 2020
Number of Options, Granted
Stock Option [Member]
Number of Options, Outstanding, Beginning Balance		900,003
Number of Options, Granted		2,265,504
Number of Options, Exercised		(22,497)
Number of Options, Forfeited or expired		(263,779)
Number of Options, Outstanding, Ending Balance		2,879,231
Number of Options, Outstanding, Exercisable		859,409
Weighted Average Exercise Price, Outstanding, Beginning Balance		$ 11.63
Weighted Average Exercise Price, Granted		1.53
Weighted Average Exercise Price, Exercised		1.06
Weighted Average Exercise Price, Forfeited or Expired		15.83
Weighted Average Exercise Price, Outstanding, Ending Balance		3.38
Weighted Average Exercise Price, Outstanding, Exercisable		$ 7.59
Weighted Average Remaining Contractual Term (Years), Outstanding, Beginning Balance		8 years 6 months 7 days
Weighted Average Remaining Contractual Term (Years), Outstanding, Ending balance		8 years 11 months 15 days
Weighted Average Remaining Contractual Term (Years), Outstanding, Exercisable		8 years 5 months 12 days
Aggregate Intrinsic Value, Outstanding, Beginning Balance
Aggregate Intrinsic Value, Outstanding, Ending Balance		58
Aggregate Intrinsic Value, Outstanding, Exercisable		$ 21

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Share-Based Compensation - Schedule of Calculation of Fair Value Assumptions (Details) - Employee Stock Option [Member]	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected option life (years)	6 years 11 days	0 years	5 years 11 months 1 day	6 years 7 days
Risk-free interest rate	0.40%		1.61%	2.22%
Expected volatility	94.41%		93.91%	74.14%
Expected dividend yield	0.00%		0.00%	0.00%

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Share-Based Compensation - Schedule of Stock-Based Compensation Expense (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total share- based compensation expense	$ 303	$ 185	$ 912	$ 1,735
Research and Development [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total share- based compensation expense	46	14	142	81
General and Administrative [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total share- based compensation expense	$ 257	$ 171	$ 770	$ 1,654

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Commitments and Contingencies (Details Narrative) $ in Thousands		9 Months Ended
	Apr. 23, 2020 USD ($)	Sep. 30, 2020 USD ($) ft²
Payments for commitments		$ 1,502
Area of lease | ft²		22,000
Operating lease expiration date		Dec. 31, 2020
Weighted average incremental borrowing rate		5.23%
Weighted average remaining lease term		2 years
Hayden LLC [Member]
Operating lease expiration date	Jun. 30, 2022
Payments for rent	$ 1,194
Rent percentage	3.00%

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Commitments and Contingencies - Schedule of Components of Lease Expense (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Commitments and Contingencies Disclosure [Abstract]
Fixed lease cost	$ 259	$ 163	$ 650	$ 490
Variable lease cost	99	97	317	284
Total lease cost	$ 358	$ 260	$ 967	$ 774

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Commitments and Contingencies - Schedule of Maturities of Lease Liabilities (Details) $ in Thousands	Sep. 30, 2020 USD ($)
Commitments and Contingencies Disclosure [Abstract]
2020 (excluding the nine months ended September 30, 2020)	$ 174
2021	1,194
2022 (lease expiration on June 30, 2022)	615
Total lease payments	1,984
Less imputed interest	(89)
Total operating lease liabilities	$ 1,895

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Net Loss Per Share (Details Narrative) - shares		9 Months Ended
	Jul. 09, 2020	Sep. 30, 2020
Abeyance Warrants [Member]
Number of stock options shares exercised	1,697,614	1,697,614

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Net Loss Per Share - Schedule of Computation of Anti-Dilutive Weighted-Average Shares Outstanding (Details) - shares	9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019
Potential dilutive securities excluded from computation of diluted net loss per common share	26,164,044	19,741,871
Options to Purchase Common Stock [Member]
Potential dilutive securities excluded from computation of diluted net loss per common share	2,879,231	1,088,676
Warrants to Purchase Common Stock [Member]
Potential dilutive securities excluded from computation of diluted net loss per common share	23,284,813	18,653,195

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Subsequent Events (Details Narrative) - USD ($) $ in Thousands			3 Months Ended
	Oct. 14, 2020	Oct. 02, 2020	Sep. 30, 2019
Number of shares provides for grant
Subsequent Event [Member] | Todd Bazemore [Member]
Number of shares provides for grant		30,000
Award vesting period		4 years
Award expiration term		10 years
Fair value of granted shares awarded		$ 26
Subsequent Event [Member] | Employees [Member]
Number of shares provides for grant	18,800
Award vesting period	4 years
Award expiration term	10 years
Fair value of granted shares awarded	$ 17