Pulmatrix (PULM) Plummets 24% Amid Merger Uncertainty: What’s Brewing in Biotech?

Summary
• Pulmatrix’s stock nosedives 24.19% intraday to $2.82, hitting a 52-week low of $2.71
• Merger with Cullgen faces regulatory hurdles as companies waive 'no solicitation' clause
• Technical indicators signal bearish momentum with RSI at 37.63 and MACD below signal line

The biotech sector is on edge as Pulmatrix’s stock collapses amid strategic shifts in its merger with Cullgen. With a 24% intraday drop and key technical indicators flashing red, investors are scrambling to decipher the implications of the company’s decision to explore alternative transactions while awaiting China Securities Regulatory Commission (CSRC) approval.

Merger Uncertainty Sparks Investor Flight
Pulmatrix’s 24% intraday plunge stems from its announcement to waive the 'no solicitation' clause in its merger agreement with Cullgen, permitting both parties to explore alternative transactions. This move, while not altering the core terms of the merger, has introduced regulatory and strategic ambiguity. Investors are reacting to the heightened risk of delayed or failed approval from the CSRC, compounded by the company’s dwindling cash reserves ($4.8M as of Q3 2025) and lack of near-term revenue drivers. The stock’s collapse reflects a loss of confidence in the merger’s viability and the company’s ability to execute its pipeline, particularly with PUR3100 and PUR1800 in early-stage trials.

Bearish Setup: ETFs and Technicals Signal Short-Term Downtrend
• MACD: -0.178 (bearish divergence from signal line at -0.150)
• RSI: 37.63 (oversold territory but lacks bullish reversal confirmation)
• Bollinger Bands: Price at $2.82 (below lower band at $3.757)
• 200D MA: $5.80 (price at 48% discount)

The technical landscape for PULM is overwhelmingly bearish. With RSI in oversold territory and MACD signaling bearish momentum, the stock is primed for further downside. Key support levels at $2.71 (intraday low) and $2.61 (52-week low) could trigger stop-loss cascades. While no options are listed for immediate trading, investors should monitor the 200-day MA ($5.80) as a critical resistance level. A break below $2.71 could accelerate the decline toward $2.61, testing the 52-week low. Aggressive short-sellers might consider ETFs like XBI (Biotech Select Sector SPDR) for sector exposure, though XBI’s 1.33% intraday gain highlights PULM’s divergence from sector peers.

Backtest Pulmatrix Stock Performance
The performance of PULM (iShares MSCI USA Momentum Factor ETF) after a -24% intraday plunge from 2022 to now has shown mixed results in the backtest. While the 3-day, 10-day, and 30-day win rates are above 40%, the maximum return during the backtest period was only 3.56%, indicating that the ETF has not fully recovered from the significant drop.

Act Now: Position for a Prolonged Downtrend
Pulmatrix’s 24% drop is a warning shot for investors. With the merger in limbo and technical indicators pointing to continued weakness, the stock is at risk of a prolonged bearish phase. The biotech sector’s resilience, led by Amgen (AMGN) with a 1.33% intraday gain, contrasts sharply with PULM’s struggles. Immediate action includes tightening stop-losses below $2.71 and avoiding long positions until the CSRC decision or a catalyst emerges. Watch for a breakdown below $2.61 to confirm a new downtrend, while the 200-day MA at $5.80 remains a distant psychological hurdle.