Pulmatrix and Cullgen amend merger agreement, switching to a one-step merger

Pulmatrix, Inc. (Nasdaq: PULM) and Cullgen Inc. have amended their merger agreement to turn a two-step merger into a one-step merger. Pulmatrix disclosed Amendment No. 1 to the Agreement and Plan of Merger and Reorganization in a Form 8-K filed April 10, 2025. The amendment is dated April 7, 2025. Under the new structure, Cullgen will survive the merger as a wholly owned subsidiary of Pulmatrix.

What changed in the structure

Pulmatrix signed the original merger agreement on November 13, 2024 with PCL Merger Sub, Inc., PCL Merger Sub II, LLC and Cullgen. The first plan had two steps. Merger Sub I would merge into Cullgen, and Cullgen would then merge into Merger Sub II, which would survive as a wholly owned Pulmatrix subsidiary.

Amendment No. 1 removes the second step, which the filing calls the Contemplated Second Merger. Merger Sub I will merge with and into Cullgen, and Cullgen will survive as a wholly owned subsidiary of Pulmatrix. The amendment also removes Merger Sub II as a party and clarifies the fractional shares provision. The amendment is Exhibit 2.1 to the 8-K.

The shares issued to Cullgen holders are set by allocation formulas, not by a fixed number in the 8-K. The agreement values Cullgen at $280,000,000. It values Pulmatrix at $10,500,000, reduced by the amount by which Pulmatrix's net cash falls below $2,500,000. Pulmatrix stockholders therefore bear the risk that a weaker cash balance at closing shrinks their share.

Approvals the deal still needs

The company's annual report on Form 10-K, filed March 21, 2025, lists the conditions to closing. They include approval by Pulmatrix stockholders and Cullgen stockholders, effectiveness of the registration statement filed with the SEC, Nasdaq's approval of the listing of the Pulmatrix shares to be issued, and approval from the China Security Regulatory Commission, along with other customary conditions.

The Pulmatrix board approved the agreement as amended and recommended that stockholders approve the issuance of Pulmatrix capital stock to Cullgen stockholders, the Constructive Issuance defined in the agreement, and the issuance of common stock under Nasdaq Listing Rule 5635. If needed, the board also recommended an amendment to the certificate of incorporation to carry out a Nasdaq reverse split. The 8-K says Pulmatrix has filed and intends to file more materials, including a Form S-4 registration statement with a proxy statement and prospectus.

Pulmatrix's own position

The 10-K describes Pulmatrix as a biopharmaceutical company that has focused on inhaled therapeutic products to prevent and treat migraine and respiratory diseases, using its iSPERSE technology. Its pipeline includes treatments for acute migraine and for lung diseases such as chronic obstructive pulmonary disease and allergic bronchopulmonary aspergillosis. The company says it entered the merger agreement after a comprehensive review of strategic alternatives.

The risk is stated plainly in the 10-K. The company says it will be required to raise additional capital to fund its operations, and that it may not be able to continue as a going concern if it cannot. The 10-K reports an accumulated deficit of $297.2 million as of December 31, 2024. It also says it has never been profitable and has incurred net losses each year since its inception. The 10-K warns that without additional funds, doubt may arise about its ability to continue, with increased risk of insolvency and loss of investment for holders of its securities.

The merger has not closed, and the filings give no completion date. The 8-K lists as risks the failure or delay of required approvals, and the continued listing of Pulmatrix on Nasdaq until closing.

Signatories

Interim Chief Executive Officer Peter Ludlum signed the 8-K for Pulmatrix, and signed the amendment as President of each merger sub. Ying Luo, President and Chief Executive Officer, signed for Cullgen.

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