UNITED

STATES

SECURITIES

AND EXCHANGE COMMISSION

Washington,

D.C. 20549

FORM

10-K

(Mark

One)

For

the fiscal year ended December 31, 2021

For

the transition period from __________to _____________

Commission

file number: 001-36199

PULMATRIX,

INC.

(Exact

name of registrant as specified in its charter)

99 Hayden Avenue, Suite 390

(Address of principal executive offices) (Zip Code)

Registrant’s

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

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

Securities

registered pursuant to Section 12(g) of the Exchange Act: None

Indicate

by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒

Indicate

by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes ☐

No ☒

Indicate

by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange

Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2)

has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate

by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule

405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant

was required to submit such files). Yes ☒ No ☐

Indicate

by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting

company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”,

“smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐ Accelerated filer ☐

Non-accelerated filer ☒ Smaller reporting company ☒

Emerging growth company ☐

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 ☒

Indicate

by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness

of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered

public accounting firm that prepared or issued its audit report. Yes ☐ No☒

The

aggregate market value of the registrant’s voting and non-voting common equity held by non-affiliates computed by reference to

the price at which the common equity was last sold, as of June 30, 2021, the last business day of registrants most recently completed

second fiscal quarter, was $58,465,863.

of March 25, 2022, the registrant had 3,310,922

shares of common stock outstanding.

DOCUMENTS

INCORPORATED BY REFERENCE

Specified

portions of Pulmatrix, Inc.’s Definitive Proxy Statement on Schedule 14A relating to the 2022 Annual Meeting of Stockholders are

incorporated by reference into PART III.

PULMATRIX,

INC.

TABLE

OF CONTENTS

Page No.

Forward-Looking Statements 1

PART I

Item 1. Business. 2

Item 1A. Risk Factors. 18

Item 1B. Unresolved Staff Comments. 37

Item 2. Properties. 37

Item 3. Legal Proceedings. 37

Item 4. Mine Safety Disclosures. 37

PART II

Item 6. Reserved. 38

Item 7A. Quantitative and Qualitative Disclosures About Market Risk. 49

Item 8. Financial Statements and Supplementary Data. 49

Item 9A. Controls and Procedures. 50

Item 9B. Other Information. 50

Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections. 50

PART III

Item 10. Directors, Executive Officers and Corporate Governance 51

Item 11. Executive Compensation 51

Item 14. Principal Accounting Fees and Services 51

PART IV

Item 15. Exhibits, Financial Statement Schedules. 52

Signatures 57

PART

Forward-Looking

Statements

This

Annual Report on Form 10-K contains forward-looking statements. All statements other than statements of historical fact contained herein,

including statements regarding our business plans or strategies, projected or anticipated benefits or other consequences of our plans

or strategies, projected or anticipated benefits from acquisitions to be made by us, or projections involving anticipated revenues, earnings,

or other aspects of our operating results, are forward-looking statements. Words such as “anticipates,” “assumes,”

“believes,” “can,” “could,” “estimates,” “expects,” “forecasts,”

“guides,” “intends,” “is confident that,” “may,” “plans,” “seeks,”

“projects,” “targets,” and “would,” and their opposites and similar expressions, as well as statements

in future tense, are intended to identify forward-looking statements. Forward-looking statements should not be read as a guarantee of

future performance or results and may not be accurate indications of when such performance or results will actually be achieved. Forward-looking

statements are based on information we have when those statements are made or our management’s good faith belief as of that time

with respect to future events and are subject to risks and uncertainties that could cause actual performance or results to differ materially

from those expressed in or suggested by the forward-looking statements. Important factors that could cause such differences include,

but are not limited to:

● our inability to carry out research, development and commercialization plans;

● termination of certain license agreements;

● 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 risks that may affect our business and that could cause our actual results to differentiate

equally from those projected in these forward-looking statements, see the risk factors and uncertainties described under the heading

“Risk Factors” in Part I, Item 1A of this Annual Report on Form 10-K. The forward-looking statements contained in this Annual

Report on Form 10-K are expressly qualified in their entirety by this cautionary statement. We do not undertake any obligation to update

any forward-looking statement to reflect events or circumstances after the date on which any such statement is made or to reflect the

occurrence of unanticipated events, except as required by law.

Unless

otherwise stated, references in this Annual Report on Form 10-K to “us,” “we,” “our,” or “Company”

refer to Pulmatrix, Inc., a Delaware corporation.

“iSPERSETM”

is one of our trademarks used in this Annual Report on Form 10-K. Other trademarks appearing in this report are the property of their

respective holders. Solely for convenience, these and other trademarks, trade names and service marks referred to in this report appear

without the ®, TM and SM symbols, but those references are not intended to indicate, in any way, we or the owners of such

trademarks will not assert, to the fullest extent under applicable law, their rights to these trademarks and trade names.

ITEM 1. BUSINESS.

Overview

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.

design and develop inhaled therapeutic products based on our proprietary dry powder delivery technology, iSPERSETM

(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 iSPERSETM powders are engineered to be small, dense particles

with highly efficient dispersibility and delivery to airways. iSPERSETM 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 iSPERSETM dry powder technology offers enhanced drug loading and delivery efficiency that outperforms traditional

lactose-blend inhaled dry powder therapies.

believe the advantages of using the iSPERSETM technology include reduced total inhaled powder mass, enhanced dosing

efficiency, reduced cost of goods, and improved safety and tolerability profiles.

We were

incorporated in 2013 as a Delaware corporation.

Business

Strategy

Our

goal is to develop breakthrough therapeutic products that are safe, convenient, and more effective than the existing therapeutic products

for respiratory and other diseases where iSPERSETM properties are advantageous.

Our

current pipeline is aligned to this goal as we develop iSPERSETM-based therapeutic candidates which target the

prevention and treatment of a range of diseases. These therapeutic candidates include Pulmazole for the treatment of allergic bronchopulmonary

aspergillosis (“ABPA”) in patients with asthma, and in patients with cystic fibrosis (“CF”), PUR1800 for the

treatment of acute exacerbations of chronic obstructive pulmonary disease (“AECOPD”), and PUR3100 for the treatment of acute

migraine. Each program is enabled by its unique iSPERSETM formulation designed to achieve specific therapeutic

objectives.

intend to capitalize on our iSPERSETM 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 clinical trials for our therapeutic candidates and leverage the iSPERSETM

platform to enable delivery of partnered compounds, we intend to form strategic alliances with third parties, including pharmaceutical

and biotechnology companies or academic or private research institutes.

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:

will continue to direct resources to advance the research and development of Pulmazole for ABPA in patients with asthma and CF. In 2018,

we successfully conducted clinical testing of Pulmazole in normal healthy volunteers and asthma patients. In 2019, we began a Phase 2

study of Pulmazole with patients with asthma and are suffering from ABPA but stopped the Phase 2 study due to the COVID-19 pandemic

and its impact on enrollment. In January 2021, we conducted a Type-C meeting with the U.S Food and Drug Administration (“FDA”)

to discuss our plans for a Phase 2b study. Utilizing the FDA feedback, we now intend to advance Pulmazole into a Phase 2b efficacy study

that will include a sixteen-week dosing regimen with potential registration efficacy endpoints, rather than the four weeks dosing

regimen in the terminated Phase 2 safety biomarker study. The Phase 2b study is anticipated to begin dosing patients in the

first quarter of 2023.

completed preclinical safety studies for our lead iSPERSETM formulation in 2018 and advanced our formulation and

process development efforts to support clinical testing in stable moderate-severe chronic obstructive pulmonary disease (“COPD”)

patients. In February 2021, we successfully dosed the first patient with PUR1800, in a Phase 1b clinical study in patients

with stable moderate-severe COPD. We received top-line data from the Phase 1b clinical study in the first quarter

of 2022.

developed PUR3100, an iSPERSETM formulation of DHE in 2020 and completed a pharmacokinetic study in dogs in January

2021. We will continue to direct resources to advance the research and development of PUR3100 in treatment of acute migraine to enable

a Phase 1 clinical study start in the third quarter of 2022.

add additional inhaled therapeutics to our discovery pipeline and facilitate additional discovery collaborations, we are leveraging our

iSPERSETM technology and our management’s expertise in inhaled therapeutics and particle engineering to

identify potential product candidates. These potential product candidates are potentially safer and more effective than the current standard

of care for prevention and treatment of diseases with significant unmet medical needs.

The

status of our patent portfolio changes frequently in the ordinary course of patent prosecution. As of December 31, 2021, our patent portfolio

related to iSPERSETM included approximately 130 granted patents, 18 of which are granted US patents, with expiration

dates from 2024 to 2037, and approximately 54 additional pending patent applications in the US and other jurisdictions. Our in-licensed

portfolio related to kinase inhibitors included approximately 269 granted patents, 32 of which are granted US patents, with expiration

dates from 2029 to 2035, and approximately 31 additional pending patent applications in the US and other jurisdictions. On March 3, 2021,

we filed a provisional patent application in the United States Patent and Trademark Office (“USPTO”) that discloses and

claims certain formulations and methods of use relevant to our PUR3100 program. We plan to file an international patent application under

the patent cooperation treaty, or PCT, based on the provisional patent application by the applicable deadline.

During

2021, Pulmatrix was staffed to support one active clinical program and one pre-clinical program, PUR1800 and PUR3100, respectively.

With plans to advance both PUR3100 and Pulmazole into clinical trials, we plan to hire additional personnel in areas of

pharmaceutical and clinical development. In first quarter of 2022, we hired our Chief Medical Officer, among other personnel, to support

our two programs entering active clinical trials in the next year.

iSPERSETM

Technology

use simple, safe excipients, including proprietary cationic salt formulations, to create a robust and flexible dry powder platform technology

that can accommodate a wide range of drug loads in highly dispersible particles. Our initial delivery platform emerged from development

of iCALMTM (inhaled Cationic Airway Lining Modulators), a non-steroidal anti-inflammatory therapy. The high degree of aerosol efficiency

and the density profile of our dry powder iCALMTM formulations provided the foundation for our development of iSPERSETM

in 2012, which uses other monovalent and divalent salts.

iSPERSETM

particles are engineered with a small, dense and dispersible profile to exceed the performance of traditional dry powder particles

as the iSPERSETM particles have the dispersibility advantages of porous engineered particles. We believe this

results in superior drug delivery compared to traditional oral and injectable forms of treatment for certain diseases. Unlike lactose-blended

carrier formulations or low-density particles which disperse poorly, we believe that the iSPERSETM technology

platform offers several potential benefits, achieved through the following technological innovations:

iSPERSETM

particles can be engineered to include significantly less than one percent (1%) to greater than eighty percent (80%) active

pharmaceutical ingredients (“APIs”), which allows flexibility for dosing both high potency and high-drug load therapeutics.

● Superior flow rate independent lung delivery without carriers.

The

iSPERSETM technology enables pulmonary delivery independent of lactose or other carriers, which results in significantly

greater lung dose at a matched nominal dose of conventional lactose-based formulations. iSPERSETM formulations

are dispersible across a range of flow rates with consistent emitted dose and particle size. Performance across flow rates provides reliable

dose delivery across patient populations and reduces patient-to-patient variability.

● Delivery of macromolecules and biologics.

iSPERSETM

powders can be used with an array of dry powder inhaler technologies and can be formulated with a broad range of therapeutic

compounds ranging from small molecules to proteins for both local and systemic drug delivery applications.

● Homogenous combinations of multiple drugs.

iSPERSETM

creates homogenous particles including excipients and API, which allow for the consistent delivery of multiple APIs in a product.

We have successfully formulated iSPERSETM-based products with dual and triple API combinations.

● Strong safety profile.

Current

iSPERSETM products and planned clinical-stage products to be formulated in iSPERSETM are

supported by robust preclinical safety profiles. iSPERSETM excipients include those with inhalation precedent

and those that are generally regarded as safe by other routes of administration.

Therapeutic

Candidates

Pulmazole

are developing an iSPERSETM inhaled formulation of the anti-fungal drug itraconazole for

the prevention and treatment of fungal infections and allergic/hypersensitivity reactions to fungus in patients with severe lung disease,

including those with asthma and CF. On January 28, 2020, Pulmazole received Fast Track designation from the FDA for the treatment of

ABPA. Aspergillus colonization and infections are likely underdiagnosed and occur frequently in patients of all ages. Colonization

and infection with Aspergillus. can lead to clinical disease with differing severities and complications depending on the immune

status of the host. Invasive aspergillosis is a frequently fatal disease that occurs in patients that are typically immune suppressed

as a result of treatment for hematologic cancers or immunosuppression prior to solid organ transplantation. In patients with asthma and

CF, Aspergillus can cause chronic infections that may be associated with worsening disease and larger declines in lung function

than patients without infection. A subset of patients with asthma and CF with Aspergillus colonization and/or infection develop

ABPA, which is a complex hypersensitivity reaction to fungal antigens. ABPA is a disease resulting in mucus production, wheezing, pulmonary

infiltrates, worsening bronchiectasis, and fibrosis of the lung.

patients with both asthma and CF, ABPA is commonly treated with oral steroids to treat inflammation and with oral antifungals to reduce

fungal infection. The inhalation administration of a drug affords direct delivery of the drug to the infected parts of the lung, maximizing

the dose to the affected sites and minimizing systemic exposure to the rest of the body where it could cause significant side effects.

Therefore, treatment of lung infections by direct administration of anti-infective products to the lung may improve both the safety and

efficacy of treatment compared to systemic administration by other routes, as well as improving patient convenience as compared to oral

and injectable forms of the treatment. We believe that local lung delivery by inhalation of our iSPERSETM formulation

could provide convenient, effective and safe management of the debilitating and often life-threatening lung infections that are not currently

addressed by inhaled therapies.

Pulmazole

is 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. Development of Pulmazole is focused on treatment of Aspergillus. colonization and infection

in patients with asthma and CF. In a Phase 1/1b clinical trial, Pulmazole appeared to be safe and well tolerated in healthy normal volunteers

(Parts 1 and 2) and in patients with asthma (Part 3). In Part 3 of the Phase 1/1b clinical study, following a single dose of Pulmazole,

the pharmacokinetics (“PK”) analysis of sputum samples demonstrated ~70-fold higher maximum lung concentration of itraconazole

following inhalation of Pulmazole compared to oral Sporanox® (Janssen Pharmaceuticals) despite inhaling only one tenth

the dose of itraconazole (20 mg) relative to the dose of oral Sporanox® (200 mg). Lung exposure, as measured by sputum

induction and analysis, was approximately 50-fold higher and plasma exposure was approximately 85-fold lower following inhalation of

20 mg of Pulmazole compared to 200 mg of oral Sporanox®. All endpoints from the Phase 1/1b clinical study

were successfully met.

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, except for the Cipla Territory defined below,

exclusive basis, of Pulmazole, our inhaled iSPERSETM drug delivery system (the “Product”) enabled

formulation of the antifungal drug, itraconazole, which is only available as an oral drug, for the treatment of all pulmonary indications,

including ABPA in patients with asthma. We entered into an amendment to the Cipla Agreement on November 8, 2021 (the “Amendment”),

and all references to the Cipla Agreement herein refer to the Agreement as amended.

The

Cipla Agreement will remain in effect in perpetuity, unless otherwise earlier terminated in accordance with its terms. In the event of

circumstances affecting the continuity of development of the Product in line with the Cipla Agreement or certain development milestones

are not achieved within a specified timeframe discussed in greater detail below, the joint steering committee (“JSC”) will

evaluate the cause and effect and make a recommendation as to the most optimal option available to Cipla and us. In such events, the

parties are not obligated to follow the recommendation of the JSC and, either party may elect to terminate (a “Terminating Party”)

its obligation to fund additional costs and expenses for the development and/or commercialization of the Product. If the non-Terminating

Party wishes to continue the development of the Product, it will have the right to purchase the rights of the Terminating Party in the

Product at its fair market value. If both Cipla and we abandon the development program, Cipla and we shall make commercially reasonable

efforts to monetize the Product and development program in connection with the Pulmonary indications. Cipla and we will equally

share the proceeds.

and Cipla will each be responsible for 60% and 40%, respectively, of our overhead costs and the time spent by our employees and consultants

on development of the Product (“Direct Costs”), provided, that Cipla will reimburse us an amount equal to 10% of aggregate

Direct Costs upon the achievement of certain development milestones set forth in the table below. We will continue to share all other

development costs with Cipla that are not Direct Costs, such as the cost of clinical research organizations, manufacturing costs and

other third-party costs, on a 50/50 basis.

Pursuant

to the Cipla Agreement, (i) all development and commercialization activities with respect to the Product in India, South Africa, Sri

Lanka, Nepal, Iran, Yemen, Myanmar and Algeria (such countries, the “Cipla Territory”) will be conducted exclusively by Cipla

at Cipla’s sole cost and expense, and (ii) Cipla shall be entitled to all profits from the sale of the Product in the Cipla Territory,

except that if Cipla successfully transfers manufacturing of the Product for the Cipla Territory to a manufacturing site determined by

Cipla, we will become entitled to a royalty equal to 2% of net sales in the Cipla Territory.

partnership with Cipla, we initiated a Phase 2 clinical

study in 2019, entitled: “A Randomized, Double-Blind, Multicenter, Placebo-Controlled, Phase 2 Study to Evaluate the Safety,

Tolerability, and Pharmacokinetics of Itraconazole Administered as a Dry Powder for Inhalation (PUR1900) in Adult Asthmatic Patients

with ABPA. This clinical study was terminated in July 2020 due to the ongoing impact of the COVID-19 pandemic on patient enrollment

and clincal study conduct.

Following

termination of the Phase 2 clinical study, Pulmatrix conducted a Type C meeting with the FDA on January 27, 2021, in order to

discuss the program overall development plan and the current Phase 2b clinical study design. The Phase 2b clinical study design

includes a 16-week dosing regimen with an 8-week follow up and is intended to explore potential efficacy endpoints, whereas the

terminated Phase 2 clinical study had comprised only a 4-week dosing regimen with safety and tolerability as its primary endpoint.

The longer dosing regimen of the new Phase 2b clinical study is supported by the 6-month inhalation toxicology study in dogs

completed in April 2020. The new development plan, including the planned Phase 2b clinical study, was approved on November 8, 2021.

addition to the terms of the Cipla Agreement described above, if any of the below development milestones are not met by the date

that is nine months after the applicable deadline for achieving such development milestone, either party may elect to terminate

its obligation to fund additional development costs, in which case either (i) the non-Terminating Party can acquire the rights of the

Terminating Party for fair market value or (ii) the parties will monetize the Product. The table below sets forth the development milestones.

Phase 2b Development Plan – Development Milestones

Development Milestone Milestone Date

25% of patients enrolled in Phase 2b clinical study are dosed June 30, 2023

Phase 3 Development Plan – Development Milestones

Development Milestone Milestone Date

25% of patients enrolled in Phase 3 clinical study dosed To be proposed by JSC

Company delivers Topline Results to the JSC To be proposed by JSC

The Prescription Drug User Fee Act (the “PDUFA”) To be proposed by JSC

Competition

and Market Opportunities

Current

treatments of pulmonary fungal infections highlight the limitations of oral or intravenous anti-infective treatments for lung infections.

Itraconazole is one of the most commonly prescribed therapies for treating Aspergillus. infections in patients with asthma and

CF. Itraconazole is available commercially as Sporanox® in both a capsule and oral solution form. Itraconazole is metabolized

in the liver by CYP3A4 and coadministration with a large number of drugs is contraindicated due to the potential for severe drug-drug

interactions.

have demonstrated that Pulmazole achieves higher local lung itraconazole concentrations with significantly lower systemic exposure relative

to oral dosing, thus allowing for the potential to improve upon both the efficacy and safety profiles observed with oral itraconazole.

Furthermore, administration by inhalation significantly reduces the exposure of the drug in the rest of the body, which may be beneficial

in reducing systemic side effects and the risk of potentially toxic drug-drug interactions.

There

is precedent for both dry powder and nebulized inhaled anti-infective therapy to address specific pulmonary infections in patients which

demonstrates potential utility of inhaled drug delivery and market opportunity. Mylan currently markets TOBI Podhaler for treatment of

Pseudomonas aeruginosa infection in the United States and Forest Laboratories U.K. Limited (a subsidiary of Actavis PLC) markets

inhaled colistin, Colobreathe, for the same infection in Europe. Insmed currently markets Amikacin Liposome Inhalation Suspension (Arikayce)

in the United States for the treatment of lung disease caused by a group of bacteria, Mycobacterium avium complex in a limited

population of patients with the disease who do not respond to conventional treatment (refractory disease). Arikayce was the first

drug to be approved under the Limited Population Pathway for Antibacterial and Antifungal Drugs, or LPAD pathway, established by Congress

under the 21st Century Cures Act to advance development and approval of antibacterial and antifungal drugs to treat serious or life-threatening

infections in a limited population of patients with unmet need. As required for drugs approved under the LPAD pathway, labeling for Arikayce

includes certain statements to convey that the drug has been shown to be safe and effective only for use in a limited population. Arikayce

was also approved under the accelerated approval pathway. Under this approach, the FDA may approve drugs for serious or life-threatening

diseases or conditions where the drug is shown to have an effect on a surrogate endpoint that is reasonably likely to predict a clinical

benefit to patients. The approval of Arikayce was based on achieving three consecutive negative monthly sputum cultures by month six

of treatment. Insmed was required by the FDA to conduct an additional, post-market study to describe the clinical benefits of Arikayce.

There are currently no products specifically approved for treatment of ABPA, however, there are several inhaled anti-fungal agents currently

in early stages of development for invasive aspergillosis that could also have efficacy for ABPA.

New

methods to detect Aspergillus. infection in sputum have improved the sensitivity of diagnosis and clinical appreciation for these

infections. Pulmonary Aspergillus. infections affect approximately 14 million patients worldwide according to the Global Action

Fund for Fungal Infections (Improving Outcomes for Patients with Fungal Infections across the World: A Road Map for the Next Decade).

The majority of these cases occur in patients with asthma who have allergic disease and also include invasive Aspergillus. infections

that are associated with a high rate of mortality in immunocompromised patients. We believe that Pulmazole compares favorably to the

products discussed above and has the potential to generate significant value based on treating and preventing pulmonary fungal infections

in multiple patient populations.

Clinical

Development

Pulmazole

is our lead iSPERSETM development program. We successfully completed a Phase 1/1b clinical study in 2018 which

enabled us to initiate a Phase 2 clinical study in 2019, entitled: “A Randomized, Double-Blind, Multicenter, Placebo-Controlled,

Phase 2 Study to Evaluate the Safety, Tolerability, and Pharmacokinetics of Itraconazole Administered as a Dry Powder for Inhalation

(PUR1900) in Adult Asthmatic Patients with ABPA. This clinical study was terminated in July 2020 due to the ongoing impact of

the COVID-19 pandemic on patient enrollment and clinical study conduct. The completion of a 6-month inhalation toxicology study

in dogs in 2020 enables the conduct of a Phase 2b clinical study that will allow for a 16-week dosing regimen and exploration

of potential endpoints. We anticipate the first patient to be dosed in this Phase 2b clinical study during the first quarter of 2023

with top-line data expected in mid-2024. This clinical study start may be affected by conditions related to the COVID-19

pandemic with respect to clinical study conduct and patient enrollment. For more discussion of risks related to the COVID-19 pandemic,

please see “Item 1A. RISK FACTORS.—Risks Related to Our Business—Business interruptions could limit our ability

to operate our business.”

PUR1800

Reduced

responsiveness to corticosteroids represents an important barrier to effective treatment of COPD and AECOPD and provides a clear rationale

to seek novel medicines to treat these respiratory diseases. In addition, current treatments generally fail to treat the underlying

source of the AECOPD, in particular when a viral or bacterial infection is the cause, which occurs in approximately 80%

of exacerbations. RV1162, the active ingredient of PUR1800, is a novel, potent anti-inflammatory that inhibits the phosphorylation of

a narrow spectrum of kinases. In pre-clinical studies, RV1162 demonstrated direct anti-inflammatory activity in a model of

viral induced respiratory inflammation. RV1162 also demonstrated a reduction in corticosteroid-resistant inflammatory

responses in a model of cigarette smoke induced inflammation. These findings suggested that RV1162 has the potential

to deliver effective anti-inflammatory outcomes in corticosteroid-resistant patients while also reducing the underlying source of inflammation

in an exacerbation, such as a viral and/or bacterial respiratory infection.

Clinical

studies conducted by RespiVert/Janssen with RV1162

formulated as a lactose blend for inhalation demonstrated that the molecule was well tolerated for up to 14 days of

dosing in patients with COPD. Analysis of sputum collected from patients with COPD treated with RV1162 showed reduced levels of p38 phosphorylation

in sputum cells and decreases in the number of neutrophils recovered in sputum after 12 days of dosing. These findings suggest that inhalation

of RV1162 may confer anti-inflammatory benefits after a short dosing regimen.

Long-term

toxicology studies with RV1162 as a lactose blend suggested that this formulation was not suitable for chronic dosing.

Based

upon the clinical results generated by RespiVert/Janssen for RV1162 and the anticipated benfits of an iSPERSETM formulation of RV1162, Pulmatrix entered into a License, Development and

Commercialization Agreement with RespiVert Ltd. (“RespiVert”), a wholly owned subsidiary of Janssen Biotech, Inc. on

June 9, 2017. RespiVert granted Pulmatrix an exclusive, royalty-bearing license in a portfolio of narrow spectrum kinase inhibitor

compounds (“NSKI”). RV1162 was subsequently formulated into PUR1800 by Pulmatrix, for development as a potential therapy for

AECOPD.

conducted two 28-day good laboratory practices (“GLP”) toxicology studies in rats and dogs. Results from the two GLP toxicology studies supported the potential for

PUR1800 to improve lung exposure, with reduced lung accumulation, as compared to RV1162 as a lactose blend formulation, suggesting

potential for chronic dosing.

December 26, 2019, Pulmatrix entered into a License, Development and Commercialization Agreement (the “JJEI License

Agreement”) with Johnson & Johnson Enterprise Innovation, Inc. (“JJEI”). Under the JJEI License

Agreement, Pulmatrix granted JJEI an option to acquire (1) the Company’s rights to an intellectual property portfolio of

materials and technology related to NSKI and (2) an exclusive, worldwide, royalty bearing license to PUR1800. As part of the

agreement, Pulmatrix was to complete chronic toxicology studies in rats and dogs, with durations of six and nine months,

respectively. Pulmatrix was also to complete a Phase 1b clinical trial in stable COPD patients. JJEI had the right to execute its

option for licensure (option period) any time up to three months following the later of (i) receipt of the final report for the

clinical study, or (ii) receipt of the audited draft reports for the toxicology study. JJEI terminated the JJEI License Agreement

effective July 6, 2021, prior to delivery of any data from the ongoing toxicology studies and ongoing Phase1b clinical study. All

rights to the kinase inhibitor portfolio, including PUR1800 and PUR5700, reverted back to Pulmatrix along with all data generated

from the ongoing studies predominantly funded through proceeds from the terminated JJEI License Agreement.

Toxicology

studies in rats and dogs, with durations of six and nine months, respectively, were then completed. The data from both studies

demonstrated that PUR1800 is safe and well tolerated with chronic dosing, with no progression of findings from 28-day

studies. We believe this indicates potential for chronic dosing of PUR1800, enabling Pulmatrix to explore PUR1800 therapy for chronic

respiratory disease such as steroid resistant asthma, COPD, or idiopathic pulmonary fibrosis. While the program is currently in

development for treatment of AECOPD, these positive toxicology study results could expand potential

indications and value of the program.

Clinical

Development

completed the Phase 1b safety, tolerability, and pharmacokinetics of PUR1800 for patients with stable moderate-severe COPD. Topline data

was delivered in the first quarter of 2022.

The

clinical study, performed at the Medicines Evaluation Unit in Manchester, UK, was a randomized, three-way crossover double-blind

study with 14 days of daily dosing which includes placebo and one of two doses of PUR1800, and included a 28 day follow up period after

each treatment period. A total of 18 adults with stable COPD were enrolled. Safety and tolerability, as well as systemic PK were evaluated.

PUR1800 was well tolerated and there were no observed safety signals. The preliminary PK data indicate that PUR1800 results

in low and consistent systemic exposure when administered via oral inhalation. The complete datasets will be analyzed and we expect to

submit study results at a relevant medical conference later this year. This topline data, along with the results from chronic toxicology

studies, support the continued development of PUR1800 for the treatment of AECOPD and other inflammatory respitory disease.

Competition

and Market Opportunities

There

are 18 million moderate-to-severe episodes of AECOPD in the U.S. each year. AECOPD are sudden onset increases in symptoms, including

increased dyspnea, sputum purulence and volume, and wheezing, coughing, and shortness of breath that require medical intervention and

can lead to hospitalization. The occurrence of an exacerbation greatly increases the likelihood of a further exacerbation within the

following 6 months and creates a significant financial burden to healthcare systems.

Steroids

are standard of care for moderate-to-severe acute exacerbations, which occur across all patient severity types. We believe a significant

unmet need exists in AECOPD for those patients with underlying infection and/or steroid resistance.

Acumapimod

(BCT-197) is an oral p38 MAP kinase inhibitor being developed by Mereo BioPharma. BCT-197 completed Phase 2 development as

first-line therapy for severe AECOPD. In April 2019, Mereo BioPharma announced completion of an end of Phase 2 meeting with the FDA

and stated the company is continuing discussions with potential partners for BCT-197. Pulmatrix is not aware of any further progress

in either clinical development or partnership efforts on this product.

PUR3100

2020, Pulmatrix developed PUR3100, the iSPERSETM formulation of DHE, for the treatment of acute migraine. Over

38 million people suffer from migraine in the United States. Currently DHE is only available as intravenous infusion or intranasal

delivery. If approved for commercialization, PUR3100 should be the first orally inhaled DHE treatment for acute migraine and be an

alternative to other acute therapies, such as oral and intravenous triptans that currently represent the majority of the annual migraine

prescriptions in the United States. Given the oral inhaled route of delivery, PUR3100 is anticipated to provide a rapid onset of migraine

symptom relief with a favorable tolerability profile.

Competition

and Market Opportunities

Current

treatments for migraine include oral, intranasal, intravenous (“IV”) or intramuscular (“IM”) formulations of

triptans, dihydroergotamine, and calcitonin gene-related peptide (“CGRP”) antagonists. Studies show that people

with migraines are underdiagnosed, undertreated, and experience substantial decreases in functioning and productivity, which translates

into diminished quality of life for individuals, and financial burdens to patients, health-care systems, and employers.

All current treatments suffer from limited efficacy and/or tolerability and there exists a significant unmet need for safe and effective

alternatives to current treatments.

DHE

has been shown to be effective in the treatment of migraine and, in particular, hard to treat migraines, such as menstrual migraine,

migraine upon awakening, and severe migraine. Utilization of DHE has been limited due to its poor oral bioavailability, requiring IV

or intranasal dosing. IV dosing generally requires administration in a healthcare setting and the high exposure levels results in significant

nausea and emesis and as such has been limited to use only in patients with severe intractable migraine. Intranasal dosing with Migranal

(Bausch Health US LLC), approved in December 1997, has been poorly adopted due to poor exposure resulting in inconsistent efficacy.

Trudhesa (Impel NeuroPharma, Inc.), another nasal spray utilizing DHE, was approved by the FDA in September 2021.

There

is precedent for an inhaled DHE therapy. MAP Pharmaceuticals, Inc. developed MAP0004, also known as Levadex or Semprana, a liquid suspension

formulation of DHE, designed to be dosed via a pMDI inhalation device. Their published data indicate a safe and well tolerated formulation

with rapid onset and long-lasting efficacy that compared very favorably to existing treatments. Development of MAP0004 led to a new drug

application (“NDA”) but was halted after multiple complete response letters from the FDA citing Chemistry, Manufacturing

and Controls (“CMC”) issues related to dose uniformity and stability issues. Regardless of the failure of MAP0004, the efficacy

and tolerability of the formulation reported by MAP Pharmaceuticals provides proof of concept for an inhaled DHE formulation. PUR3100,

the iSPERSETM formulation planned by Pulmatrix is anticipated to deliver DHE to the lung with efficacy and tolerability

that compares favorably with MAP0004, while avoiding the device CMC related issues of MAP0004 by delivering PUR3100 as an iSPERSETM

dry powder.

the best of our knowledge, there are no other orally inhaled DHE formulations currently in development. Migranal and Trudhesa

are the two currently FDA approved intranasal formulations. of DHE. Satsuma Pharmaceuticals has developed

a dry powder formulation of DHE for intranasal dosing and recently completed a Phase 3 clinical study (ClinicalTrials.gov NCT03901482).

Despite failure of this clinical study to achieve its primary endpoint, Satsuma announced that development of this formulation

will continue and is actively enrolling patients in another Phase 3 clinical study.

Clinical

Development

Two

14-day GLP toxicology studies have been conducted to support initial single dose clinical

studies have been completed. We intend to complete an additional 14-day

GLP-toxicology study in rats to fully characterize local toxicity in the lungs to enable species selection for a single species chronic

toxicology study to support longer-term clinical dosing.

submitted pre-IND questions to the FDA for which we have received written responses that have confirmed and/or clarified several manufacturing,

nonclinical, and clinical aspects of the PUR3100 development program. After consideration of the responses, we have updated the initial

clinical study from a 2-part Phase 1/Phase 2 clinical study to a Phase 1 double-blind matching placebo (double-dummy) clinical

study in which healthy volunteers will be randomized to receive either 1 of 3 doses of PUR3100 or IV DHE and a two dose Phase

2 efficacy clinical study in migraine patients. The Phase 1 clinical study is intended to assess not only safety, tolerability,

and pharmacokinetics of PUR3100 in humans, but also provide preliminary comparative bioavailability data to support the use of

the 505(b)(2) pathway for marketing authorization. The FDA also confirmed that long-term safety should be assessed in a minimum of

one hundred patients for six months of dosing and fifty patients for twelve months of dosing. The FDA also confirmed that it will be necessary to perform a

safety study administering PUR3100 to otherwise healthy patients with asthma before a NDA is submitted for PUR3100.

further conducted a Type C meeting with the FDA to add additional clarification around some of the written responses in relation to the

overall nonclinical and clinical program. Pulmatrix has concluded that conducting the Phase 1 clinical study in Australia allows

the Company to generate the most comprehensive dataset for inclusion in an IND for Phase 2 in the United States, while also providing

the most cost and time efficient path to Phase 1 data in 2022. We anticipate initiating patient dosing for the Phase 1 clinical

study in Australia in the third quarter of 2022, with top-line data anticipated in the fourth quarter

of 2022. Following the Australia Phase 1 clinical study completion, we plan to open an IND and conduct a randomized placebo-controlled

Phase 2 clinical study in patients with migraine to assess the safety and effectiveness of two doses of PUR3100, in which the selection

of the two doses has been informed by the initial Phase 1 clinical study. We anticipate that this Phase 2 clinical study will initiate

patient dosing in the second quarter of 2023 with top-line data expected in late fourth quarter of 2023.

Clinical

study starts may be affected by conditions related to the COVID-19 pandemic with respect to clinical study conduct and patient enrollment.

For more discussion of risks related to the COVID-19 pandemic, please see “Item 1A. RISK FACTORS.—Risks Related to Our Business—Business

interruptions could limit our ability to operate our business.”

Business

Development

April 15, 2019, Pulmatrix 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, except for the Cipla Territory

defined below, of Pulmazole, our inhaled iSPERSETM drug delivery system enabled formulation of the antifungal

drug, itraconazole, which is only available as an oral drug, for the treatment of all pulmonary indications, including ABPA

in patients with asthma. We entered into an amendment to the Cipla Agreement on November 8, 2021 (the “Amendment”), and all

references to the Cipla Agreement herein refer to the Agreement as amended.