Pulmatrix Inc (NASDAQ: PULM) is making a run for the top in the market this morning, and for good reason. The company announced that it has entered into a Binding Term Sheet, exciting investors and sending the stock toward the top. Today, we’ll talk about:
- The term sheet;
- what we’re seeing from PULM stock as a result; and
- what we’ll be watching for ahead.
PULM Stock Gains On Binding Term Sheet
As mentioned above, Pulmatrix is having an incredibly strong start to the trading session this morning after announcing that it has entered into a Binding Term Sheet. The announcement came early this morning by way of press release.
In the release, the company said that the Binding Term Sheet was signed with Cipla Technologies, a subsidiary of Cipla Limited. The agreement surrounds the co-development and commercialization of Pulmazole.
Pulmazole is an inhaled iSPERSE formulation of the anti-fungal drug itraconazole. The treatment is currently being developed as an option for allergic bronchopulmonary aspergillosis in patients with asthma.
In the release, PULM said that the Binding Term Sheet lays the groundwork for entry into a definitive agreement with Cip Tec during the second quarter of 2019. According to the Term Sheet and subject to an entry into a definitive agreement, Cip Tec will make an upfront payment of $22 million to the compny in exchange for an assignment of all rights to Pulmazole to Cip Tec.
Following the assigning, PULM will retain the right to receive 50% of the free cash flow from future sales of Pulmazole. Also, the company will remain primarily responsible for the implementation of the clinical development of Pulmazole while Cip Tec will be responsible for implementation of the commercialization of the product.
The entry into a definitive agreement is contingent upon Pulmatrix having at least $15 million in unencumbered funds. Following the execution of the definitive agreement, the company believes that it will be in a position to complete its Phase 2 study of the drug. The study is expected to start in the second quarter of 2019.
In a statement, Robert W. Clarke, Ph.D., CEO at PULM, had the following to offer:
With the FDA review of the IND complete, allowing us to proceed into ABPA patients, we are excited to take this important step forward in financing the Pulmazole program. In addition to securing a 50% commitment from Cip Tec for future Pulmazole development and commercialization costs, Cipla’s deep experience in respiratory drug development, device, manufacturing, and commercialization of Respiratory products should further strengthen the program. This important milestone brings us one step closer towards providing an improved novel therapeutic option to patients suffering from ABPA.
What We’re Seeing From The Stock
One of the first lessons that we learn when we start to work in the market is that the news leads to moves. When it comes to Pulmatrix, the news proved to be overwhelmingly positive.
With this term sheet in place, chances are likely that a definitive agreement will be signed. Once this happens, the company will receive meaningful funding that will allow it to continue the development of a product that seems to be promising.
So, it’s not surprising to see that excited investors are pushing the stock on a run for the top. As is just about always the case, our partners at Trade Ideas were the first to alert us to the gains. Currently (10:33), PULM is trading at $2.14 per share after a gain of $0.87 per share or 68.50% thus far today.
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What We’ll Be Watching For Ahead
Moving forward, the CNA Finance team will continue to keep a close eye on PULM. In particular, we’re interested in following the continued work to bring Pulmazole through development and to patients in need. Nonetheless, we’ll continue to follow the story closely and bring the news to you as it breaks!
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