PHIO 10-K & 10-Q changes, risk factors and insider trading
Phio Pharmaceuticals Corp. · Nasdaq · Pharmaceutical Preparations · CIK 1533040 · All filings on SEC.gov
At a glance
What changed in the latest 10-K
Risk Factors
New heading “Our ability to use net operating loss carryforwards and other tax benefits may be limited.”
Removed heading “Changes in U.S. and international trade policies may adversely impact our business and operating results.”
Removed heading “Unstable market and economic conditions, including elevated and sustained inflation, may have serious adverse consequences on our business, financial condition and stock price.”
Removed heading “We expect to continue to incur significant research and development expenses, which may make it difficult for us to attain profitability, and may lead to uncertainty as to our ability to continue as a going concern.”
Removed heading “Our ability to utilize net operating loss carryforwards and other tax benefits may be limited.”
Removed heading “We may acquire other businesses or form joint ventures that may be unsuccessful and could dilute your ownership interest in the Company.”
Largest changes
“A cybersecurity incident or other interruption could result in unauthorized, unlawful, or accidental acquisition, modification, destruction, loss, alteration, encryption, disclosure of, or access to confidential or other information. …”see in full comparison
“Despite the implementation of security measures, our internal computer systems and those of our third-party contractors and collaborators are vulnerable to damage from computer viruses, unauthorized access, natural disasters, terrorism, war and telecommunication and electrical failures, cyberattacks or cyber-intrusions over the Internet, attachments to emails, persons inside our organization, or persons with access to systems inside our organization. …”see in full comparison
“As has been widely reported, we are currently operating in a period of economic uncertainty and capital markets disruption, which has been significantly impacted by domestic and global monetary and fiscal policy, geopolitical instability, ongoing military conflicts, and high domestic and global inflation. The U.S. Federal Reserve and other central banks may be unable to contain inflation through more restrictive monetary policy and inflation may increase or continue for a prolonged period of time. …”see in full comparison
“We expect to continue to incur significant research and development expenses, which may make it difficult for us to attain profitability, and may lead to uncertainty as to our ability to continue as a going concern.”see in full comparison
“Despite the implementation of security measures, our information technology systems and those upon which we rely are vulnerable to damage from cybersecurity incidents or disruptions, including social engineering (e.g., phishing), cyber-attacks (including ransomware, malware attacks, unauthorized access attempts, and denial of service and other unintentional intrusions or malicious cyber-attacks), cyber extortion or other fraudulent schemes, or attempts to exploit vulnerabilities, and may be predicated by natural disasters, terrorism, war and telecommunication and electrical failures. …”see in full comparison
“As part of our business strategy, we may pursue future acquisitions of other complementary businesses and technology licensing arrangements. We also may pursue strategic alliances. We have limited experience with respect to acquiring other companies and with respect to the formation of collaborations, strategic alliances and joint ventures. We may not be able to integrate such acquisitions successfully into our existing business, and we could assume unknown or contingent liabilities. …”see in full comparison
Full comparison: every changed paragraph (46)
We have used substantial funds to develop our product candidates and will need to raise additional substantial funds to continue our drug development efforts and support our operations. Our future capital requirements and the period for which our existing resources are able to support our operations may vary significantly from what we expect. We will need to raise substantial amounts of money to fund a variety of future activities integral to the development of our business, which may include but is not limited to the following:
We have generated significant losses to date, have not generated any product revenue and may not generate product revenue in the foreseeable future, or ever. We expect to incur significant operating losses as we advance our product candidates through drug development and the regulatory process. Our ability to achieve profitability, if ever, will depend on, among other things, us obtaining regulatory approvals and successfully commercializing our drug candidates. Even if we are able to successfully commercialize our drug candidates, we may not be able to achieve or sustain profitability, which could have a material adverse effect on our business, financial condition and results of operations.
If we raise funds through the issuance of debt or equity, any debt securities or preferred stock issued will have rights, preferences and privileges senior to those of holders of our Common Stock in the event of a liquidation. In such event, there is a possibility that once all senior claims are settled, there may be no assets remaining to pay out to the holders of Common Stock. The terms of debt securities may also impose restrictions on our operations, which may include limiting our ability to incur additional indebtedness, to pay dividends on or repurchase our capital stock, or to make certain acquisitions or investments. In addition, we may be subject to covenants requiring us to satisfy certain financial tests and ratios, and our ability to satisfy such covenants may be affected by events outside of our control. If we raise funds through the issuance of additional equity, whether through private placements or public offerings, which we have done in the past, such issuances would dilute current stockholders’ ownership in us, perhaps substantially. The issuance of a significant amount of shares of Common Stock could cause the market price of our Common Stock to decline or become highly volatile.
Our ability to use net operating loss carryforwards and other tax benefits may be limited.
We have in the past completed assessments of the available net operating loss and tax credit carryforwards under Sections 382 and 383 of the Code through the year ended December 31, 2024 and determined that we underwent multiple ownership changes during the period from inception to December 31, 2024. As a result, our net operating losses and tax credit carryforwards are subject to substantial annual limitations under Sections 382 and 383 of the Code due to these ownership changes. We have adjusted our net operating loss and tax credit carryforwards to address the impact of the ownership changes. We assess the need to conduct an ownership change analysis to determine whether any changes occurred in ownership that would limit net operating loss or tax credit carryforwards on an annual basis. We may experience ownership changes in the future as a result of subsequent shifts in our stock ownership, some of which may be outside of our control. If an ownership change occurs and our ability to use our net operating loss and tax credit carryforwards is materially limited, it could harm our future operating results by effectively increasing our future tax obligations.
Further, the FDA may not accept the results of our
preclinical non-clinical studies or clinical trials and may require us to complete additional studies or impose stricter approval conditions than we
expect, which could impact the value of a particular program, the approvability or commercialization of the particular product candidate
or product and our Company in general. Because of these factors, it is difficult to predict the time and cost of the development of our
product candidates. Any delay or failure in obtaining required approvals may prevent us from completing our preclinicalnon-clinical studies or clinical
trials and could have a material adverse effect on our ability to initiate or commercialize drug or biologic candidatecandidates on a timely basis,
or at all. Additionally, preclinicalnon-clinical studies and clinical trials are lengthy and expensive and if our cash resources become limited, we
may not be able to commence, continue or complete such preclinicalnon-clinical studies or clinical trials.
Clinical trials of a new drug orcandidate biologic candidate
require the enrollment of a sufficient number of patients, including patients who are suffering from the disease or condition the drug
or biologic candidate is intended to treat and who meet other eligibility criteria. Rates of patient enrollment are affected by many factors,
and delays in patient enrollment can result in increased costs and longer development times, which could materially and adversely impact
our business and financial condition. We may experience slower than expected patient enrollment in our current or future clinical trials.
In addition, clinical trials for drug or biologic candidates that treat the same indications as our product candidates may result in patients
who would otherwise be eligible for our clinical trials instead enrolling in clinical trials for other drug or biologic candidates.
From time to time, we may publicly disclose topline or interim data from our clinical trials based on a preliminary analysis of then-available data, of which the results, related findings and conclusions are subject to change following a more comprehensive review of the data related to the particular trial. We also make assumptions, estimations, calculations and conclusions as part of our analyses of data, and we may not have received or had the opportunity to fully and carefully evaluate all data. Preliminary observations made in early stages of clinical trials are not necessarily indicative of results that will be obtained when full data sets are analyzed or in subsequent clinical trials. As a result, topline or interim data may differ from future results from the same studies or different conclusions may qualify such results once additional data has been received and evaluated. Topline or interim data also remain subject to audit and verification procedures that may result in the final data being materially different from the preliminary data that we publicly disclose and should be viewed with caution until the complete data is available. If the topline data we report differs from future analysis of results, or if others, including regulatory authorities, disagree with the conclusions reached, our business, financial condition, and results of operations could be materially and adversely affected.
We rely upon third-party CROs,contract research organizations ("CROs"), medical institutions,
collaborators, clinical investigators, consultants and other third-parties to support and conduct our clinical trials and we rely on these
third-party CROs for the execution of certain of our preclinicalnon-clinical studies and expect to continue to do so. Because we rely on these third-parties,
we cannot necessarily control the timing, quality of work or amount of resources that our contract partners will devote to these activities.
We, our collaborators,We and our CROs are responsible for ensuring that our clinical trials are conducted in accordance with applicable
regulations and protocols. If we, our collaborators,we or our CROs fail to comply with these applicable regulations, the FDA may not accept
these data and may require us to complete additional preclinicalnon-clinical studies and clinical trials, which could result in significant additional
costs and delays to us.
As we only control certain aspects of their activities,
we cannot guarantee that theseour partnersCROs will fulfill their obligations to us under these arrangements. If these third-parties do not successfully
carry out their responsibilities, as well as within a timely fashion, our clinical trials and preclinicalnon-clinical studies may be delayed, unsuccessful
or otherwise adversely affected. If we have to enter into alternative arrangementsarrangements, it may delay or adversely affect the development of
our product candidates and our business operations. This could be difficult, costly or impossible, and our preclinicalnon-clinical studies or clinical
trials may need to be extended, delayed, terminated or repeated, and we may not be able to obtain regulatory approval in a timely fashion,
or at all, for the applicable drug or biologic candidate, or to commercialize such drug or biologic candidate being tested in such studies
or trials.
Changes in U.S. and international trade policies
may adversely impact our business and operating results.
From time to time, proposals are made to significantly
change existing trade agreements and relationships between the U.S. and other countries. In recent years, the U.S. government has implemented
substantial changes to U.S. trade policies, including import restrictions, increased import tariffs and changes in U.S. participation
in multilateral trade agreements. Because some of our vendors, manufactures and suppliers are located in other foreign countries, we are
exposed to the possibility of product supply disruption and increased costs in the event of changes in the policies, laws, rules and regulations
of the United States or foreign governments, as well as political unrest or unstable economic conditions in foreign countries. The U.S.
government has indicated its intent to adopt a new approach to trade policy and in some cases to renegotiate, or potentially terminate,
certain existing bilateral or multi-lateral trade agreements. For example, on February 1, 2025, President Donald Trump signed executive
orders imposing a 25% tariff on certain imports from Mexico and Canada, and a 10% tariff on certain imports from China, which were to
take effect on February 4, 2025. President Donald Trump also announced a plan for reciprocal tariffs which are to take effect on April
2. Our supply may in the future be subject to these tariffs, which could increase our manufacturing costs and could make our products,
if successfully developed and approved, less competitive than those of our competitors whose inputs are not subject to these tariffs.
We may otherwise experience supply disruptions or delays, and our suppliers may not continue to provide us with clinical supply in our
required quantities, to our required specifications and quality levels or at attractive prices. Such disruption could have adverse effects
on the development of our product candidates and our business operations.
Before obtaining regulatory approval for the sale of
any drug or biologic candidate, we must conduct extensive preclinical tests and successful clinical trials to demonstrate the safety and
efficacy of our product candidates in humans. Before human clinical trials may commence, we must submit to the FDA an IND. An IND involves
the completion of preclinical studies and the submission of the results, together with proposed clinical protocols, manufacturing information,
analytical data and other data in the IND submission. The FDA may require us to complete additional preclinical studies or disagree with
our clinical trial study design. Also, animal models may not exist for some of the disease areas we choose to develop our product candidates
for. As a result, our clinical trials may be delayed or we may be required to incur more expense than we anticipated.
Preclinical studies and clinical trials are lengthy
and expensive, and their outcome is highly uncertain. Historical failure rates are high due to a number of factors, such as safety and
efficacy of drug or biologic candidates. We, our collaborators, the FDA, or an IRB may suspend clinical trials of a drug orcandidate biologic candidate
at any time for various reasons, including if we or they believe the patients participating in such trials are being exposed to unacceptable
health risks. Among other reasons, adverse side effects of a drug or biologic candidate on patients in a clinical trial could result in
the FDA suspending or terminating the clinical trial and refusing to approve a particular drug or biologic candidate for any or all indications
of use.
A failure of any preclinical study or clinical trial
can occur at any stage of testing. Any delay or failure in obtaining required approvals may prevent us from completing our preclinical
studies or clinical trials and could have a material adverse effect on our ability to initiate or commercialize any drug orcandidate biologic candidate
on a timely basis, or at all. Additionally, preclinical studies and clinical trials are lengthy and expensive and if our cash resources
become limited we may not be able to commence, continue or complete our clinical trials, which could have a material impact on our business,
financial condition, and results of operations.
The ability of the FDA to review and approve new products
or review other regulatory submissions can be affected by a variety of factors, including statutory, regulatory and policy changes, inadequate
government budget and funding levels, a reduction in the FDA’s workforce and its ability to hire and retain key personnel. Disruptions
at the FDA and other agencies may also increase the time to meet with and receive agency feedback, review and/or approve our submissions,
conduct inspections, issue regulatory guidance, or take other actions that facilitate the development, approval and marketing of regulated
products, which would adversely affect our business. In addition, government proposals to reduce or eliminate budgetary deficits may include
reduced allocations to the FDA and other related government agencies. For example, the current President Trump administration (the “Trump
Administration”) recently established the Department of Government Efficiency, which implemented a federal government hiring
freeze and announced certain additional efforts to reduce federal government employee headcount and the size of the federal government.
It is unclearnot yet entirely clear how these executive actions or other potential actions by the Trump Administration or other parts of the federal government
have already impacted and will continue to impact the FDA or other regulatory authorities that oversee our business. These budgetary pressures may reduce the FDA’s ability
to perform its responsibilities. If a significant reduction in the FDA’s workforce occurs,continues, the FDA’s budget is significantly
reduced or aanother prolonged government shutdown occurs, it could significantly impact the ability of the FDA to timely review and process our
regulatory submissions or take other actions critical to the development or marketing of our products, if approved, which could have a
material adverse effect on our business.
We also face competition acquiring technologies complementary
to our INTASYL technology. Further, we may face competition with respect to product efficacy and safety, ease of use and adaptability
to modes of administration, acceptance by physicians, timing and scope of regulatory approvals, reimbursement coverage,coverage and price and patent
position, including dominant patent positions of others.position. If we are not able to successfully obtain regulatory approval or commercialize
our product candidates, we may not be able to establish market share and generate revenues from our technology.
We have a small core management team and are particularly
dependent on them. Accordingly, our business prospects are dependent on the principal members of our executive team, the loss of whose
services could make it difficult for us to manage our business successfully and achieve our business objectives. While we have entered
into an employment agreement with our Chief Executive Officer, he could leave at any time, in addition to our other employees, who are
all “at will” employees. Our ability to identify, attract, retain and integrate additional qualified key personnel is also
critical to our success. Competition for skilled research, product development, regulatory and technical personnel is intense, and we
may not be able to recruit and retain the personnel we need. The loss of the services of any key personnel, or our inability to hire new
personnel with the requisite skills, could restrict our ability to develop our product candidates.
The use of our product candidates in clinical trials
and, if any of our product candidates receive regulatory approval, the sale of our product candidates for commercial use exposes us to
the risk of product liability claims. Product liability claims may be brought against us by patients, healthcare providers, consumers
or others who come into contact with our product candidates or approved products. We have, and will seek to obtain, clinical trial insurance
for current and any future clinical trials that we conduct, as well as liability insurance for any products that we market. However, there
is no assurance that we will be able to obtain insurance in the amounts we seek, or at all. We anticipate that licensees who develop our
products will carry liability insurance covering the clinical testing of our product candidates and the marketing of those product candidates,
if approved. There is no assurance, however, that any insurance maintained by us or our licensees will prove adequate in the event of
a claim against us. If we cannot successfully defend against product liability claims, we could incur substantial liabilities. Even if
claims asserted against us are unsuccessful, they may divert management’s attention from our operations and we may have to incur
substantial costs to defend such claims. Any of these outcomes could materially impact our business and financial condition.
We rely on third-party suppliers and manufacturers
to provide us with the materials and services to manufacture our product candidates for certain preclinical studies and for our clinical
trials, and we expect that we will continue to rely on third-party manufacturers for the supply of our product candidates in the future.
We have limitedno in-house manufacturing capabilities and resources, and we do not own or lease manufacturing facilities or have our own
supply source for the required materials to manufacture our compounds. Further,Accordingly, we have limited cGMP manufacturing capabilities and limited
experience scaling up of clinical supply as our internal capabilities are limited to small-scale production of research material. Accordingly,
we are dependent upon third-party suppliers and contract manufacturers to obtain supplies and manufacture our product candidates and we
will need to either develop, contract for, or otherwise arrange for the necessary manufacturers for these supplies.candidates.
There are a limited number of manufacturers that make
oligonucleotides and we currently contract with multiple manufacturers for the supply of our product candidates to reduce the risk of
supply interruption or availability. However, there is no assurance that our supply of our product candidates will not be limited, interrupted,
of satisfactory quality or be available at acceptable prices. For example, constraints on the supply chain and availability of resources
have resulted in delays and shortages at manufacturing facilities. While we have engaged with multiple manufacturers for the supply of
our product candidates in order to mitigate the impact of the loss or delay of any one manufacturer, there can be no assurance that our
efforts will be successful. If for any reason we are unable to obtain the clinical supply of our product candidates from our current manufacturers,
we would have to seek to contract with another major manufacturer. If we or any of these manufacturers are unable or unwilling to increase
its manufacturing capacity or if we are unable to establish alternative arrangements on a timely basis or on acceptable terms, the development
and commercialization of such anproduct approved productcandidates may be delayed or there may be a shortage in supply. Any inability to manufacture our
product candidates or future approved drugs in sufficient quantities when needed would seriously harm our business.
Approval of any of our product candidates will not
occur unless the manufacturing facilities are in compliance with the FDA’s cGMP regulations in order to ensure that drug products
are safe and that they consistently meet applicable requirements and specifications. These requirements are enforced by the FDA through
periodic inspections of the manufacturing facilities and can result in enforcement action, such as warning letters, fines and suspension
of production if they are found not to be in compliance with the regulations. If our suppliers or manufacturers do not comply with the
FDA regulations for our product candidates, we may experience delays in timing or supply, be forced to manufacture our product candidates
ourselves or seek to contract with another supplier or manufacturer. If we are required to switch suppliers or manufacturers, we will
be required to verify that the new supplier or manufacturer maintains facilities and processes in line with cGMP regulations, which may
result in delays, additional expenses, and may have a material adverse effect on our ability to completeobtain the developmentapproval of our product
candidates.
Unstable market and economic conditions, including
elevated and sustained inflation, may have serious adverse consequences on our business, financial condition and stock price.
As has been widely reported, we are currently operating
in a period of economic uncertainty and capital markets disruption, which has been significantly impacted by domestic and global monetary
and fiscal policy, geopolitical instability, ongoing military conflicts, and high domestic and global inflation. The U.S. Federal Reserve
and other central banks may be unable to contain inflation through more restrictive monetary policy and inflation may increase or continue
for a prolonged period of time. Inflationary factors, such as increases in the cost of clinical supplies, interest rates, overhead costs
and transportation costs may adversely affect our operating results. We continue to monitor these events and the potential impact on our
business. Although we do not believe that inflation has had a material impact on our financial position or results of operations to date,
we may be adversely affected in the future due to domestic and global monetary and fiscal policy, supply chain constraints, consequences
associated with the coronavirus pandemic and the ongoing military conflicts, and such factors may lead to increases in the cost of manufacturing
our product candidates and delays in initiating studies. In addition, global credit and financial markets have experienced extreme volatility
and disruptions in the past several years and the foregoing factors have led to and may continue to cause diminished liquidity and credit
availability, declines in consumer confidence, declines in economic growth, uncertainty about economic stability and increased inflation.
There can be no assurance that deterioration in credit
and financial markets and confidence in economic conditions will not occur. Our general business strategy may be adversely affected by
any such economic downturn, volatile business environment or continued unpredictable and unstable market conditions. If the current equity
and credit markets deteriorate, or do not improve, it may make any necessary debt or equity financings more difficult, more costly, and
more dilutive. Failure to secure any necessary financing in a timely manner and on favorable terms could have a material adverse effect
on our growth strategy, financial performance and stock price and could require us to delay or abandon clinical development plans. In
addition, there is a risk that one or more of our current service providers, manufacturers and other partners may not survive these difficult
economic times, which could directly affect our ability to attain our operating goals.
Our business and operations would suffer in the
event of computer system failures, cyberattacks or a deficiencycybersecurity in our cybersecurity.incident.
Despite the implementation of security measures, our information technology systems and those upon which we rely are vulnerable to damage from cybersecurity incidents or disruptions, including social engineering (e.g., phishing), cyber-attacks (including ransomware, malware attacks, unauthorized access attempts, and denial of service and other unintentional intrusions or malicious cyber-attacks), cyber extortion or other fraudulent schemes, or attempts to exploit vulnerabilities, and may be predicated by natural disasters, terrorism, war and telecommunication and electrical failures. Such cybersecurity incidents or disruptions may be caused by third parties or by authorized individuals’ misconduct or error. The risk of a security breach or disruption, particularly through cyber-attacks or cyber intrusion, including by computer hackers, foreign governments, and cyber terrorists, has generally increased as the number, intensity and sophistication of attempted attacks and intrusions from around the world have increased. Such an event could cause interruption of our operations.
A cybersecurity incident or other interruption could result in unauthorized, unlawful, or accidental acquisition, modification, destruction, loss, alteration, encryption, disclosure of, or access to confidential or other information. If we or a third party upon whom we rely experience an actual or perceived cybersecurity incident, we may experience adverse consequences, which may include: potential regulatory scrutiny or enforcement actions (e.g., investigations, fines, penalties, audits and inspections), additional reporting requirements and/or oversight; restrictions on processing information (including personal information); litigation (including class action lawsuits and material claims for damages); interruption to our operations, damage to our reputation, delays in reporting our financial results, significant remediation expenses, or otherwise have a material adverse effect on our business, financial condition and operating results. An actual or perceived cybersecurity incident and attendant consequences may deter new clinical trial participants from participating in our services and negatively impact our ability to grow and operate our business. Although we have information security policies and controls in place designed to prevent and protect against unauthorized access, use AI, and disclosure of confidential information, including non-public personal information, there can be no assurance that such policies or controls will be effective or that a court or regulatory authority will consider them to be appropriate or reasonable. While we may be entitled to damages if our third-party service providers fail to satisfy their cybersecurity-related obligations to us, any award may be insufficient to cover our damages, or we may be unable to recover such award.
Despite the implementation of security measures, our
internal computer systems and those of our third-party contractors and collaborators are vulnerable to damage from computer viruses, unauthorized
access, natural disasters, terrorism, war and telecommunication and electrical failures, cyberattacks or cyber-intrusions over the Internet,
attachments to emails, persons inside our organization, or persons with access to systems inside our organization. The risk of a security
breach or disruption, particularly through cyber-attacks or cyber intrusion, including by computer hackers, foreign governments, and cyber
terrorists, has generally increased as the number, intensity and sophistication of attempted attacks and intrusions from around the world
have increased. Such an event could cause interruption of our operations. As part of our business, we and our third-party contractors
and collaborators maintain large amounts of confidential information, including non-public personal information on patients and our employees.
Breaches in security could result in the loss or misuse of this information, which could, in turn, result in potential regulatory actions
or litigation, including material claims for damages, interruption to our operations, damage to our reputation or otherwise have a material
adverse effect on our business, financial condition and operating results. We expect to have appropriate information security policies
and systems in place in order to prevent unauthorized use or disclosure of confidential information, including non-public personal information,
but there can be no assurance that such use or disclosure will not occur.
We have filed patent applications, have pending patents
that we have licensed and those that we own and expect to continue to file patent applications. We may also need to license patents and
patent applications from research sponsored by us with third-parties.third parties. There is no assurance that these applications will result in any
issued patents or that those patents would withstand possible legal challenges or protect our technologies from competition. The patent
granting authorities have upheld stringent standards for the RNAi patents that have been prosecuted so far and, consequently, pending
patents that we have licensed and those that we own may continue to experience long and difficult prosecution challenges and may ultimately
issue with much narrower claims than those in the pending applications.
Third-partiesThird parties may claim that we infringe their
patents, which may result in substantial liabilities and prevent us from pursuing the development of our product candidates.
Our success depends upon our ability to obtain and
maintain intellectual property protection for our product candidates. Any patents issued to us or our licensors may not provide us with
any competitive advantages, and there is no assurance that the patents of others will not have an adverse effect on our ability to do
business or to continue to develop our product candidates freely. Pending patents that we have licensed and those that we own may continue
to experience long and difficult prosecution challenges and may ultimately issue with much narrower claims than those in the pending applications.
Because of the extensive time required for development, testing, and regulatory review of a potential product, it is possible that, before
any of our product candidates can be commercialized, any related patent may expire or remain in force for only a short period following
commercialization, thus reducing any advantage provided by the patent. Further, even if our rights are valid, enforceable and broad in
scope, competitors may develop products based on technology that is not covered by our licenses or patents or patent applications that
we own. If we are unable to derive value from our licensed or owned intellectual property, it may have a material and adverse impact on
our business, results of operations and financial condition.
We have used substantial funds to develop our product
candidates and will need to raise additional substantial funds to continue our drug development efforts and support our operations. Our
future capital requirements and the period for which our existing resources are able to support our operations may vary significantly
from what we expect. We anticipate that we will need to raise substantial amounts of money to fund a variety of future activities integral
to the development of our business, which may include but is not limited to the following:
We have generated significant losses to date, have
not generated any product revenue and may not generate product revenue in the foreseeable future, or ever. We expect to incur significant
operating losses as we advance our product candidates through drug development and the regulatory process. Our ability to achieve profitability,
if ever, will depend on, among other things, us or our collaborators, obtaining regulatory approvals and successfully commercializing
our drug or biologic candidates. Even if we are able to successfully commercialize our drug or biologic candidates, we may not be able
to achieve or sustain profitability, which could have a material adverse effect on our business, financial condition and results of operations.
If we raise funds through the issuance of debt or equity,
any debt securities or preferred stock issued will have rights, preferences and privileges senior to those of holders of our Common Stock
in the event of a liquidation. In such event, there is a possibility that once all senior claims are settled, there may be no assets remaining
to pay out to the holders of Common Stock. The terms of debt securities may also impose restrictions on our operations, which may include
limiting our ability to incur additional indebtedness, to pay dividends on or repurchase our capital stock, or to make certain acquisitions
or investments. In addition, we may be subject to covenants requiring us to satisfy certain financial tests and ratios, and our ability
to satisfy such covenants may be affected by events outside of our control. If we raise funds through the issuance of additional equity,
whether through private placements or public offerings, such an issuance would dilute current stockholders’ ownership in us, perhaps
substantially. The issuance of a significant amount of shares of Common Stock could cause the market price of our Common Stock to decline
or become highly volatile.
We expect to continue to incur significant research
and development expenses, which may make it difficult for us to attain profitability, and may lead to uncertainty as to our ability to
continue as a going concern.
We expend substantial funds to develop our technologies,
and additional substantial funds will be required for further research and development, including preclinical testing and clinical trials
of any product candidates, and to manufacture and market any products that are approved for commercial sale. Because the successful development
of our products is uncertain, we are unable to precisely estimate the actual funds we will require to develop and potentially commercialize
them. In addition, we may not be able to generate enough revenue, even if we are able to commercialize any of our product candidates,
to become profitable.
Changes in our operating plans, our existing and anticipated
working capital needs, the acceleration or modification of our expansion plans, increased expenses, potential acquisitions or other events
will all affect our ability to continue as a going concern. We have limited cash resources, have reported recurring losses from operations
since inception, negative operating cashflows and have not yet received product revenues. These factors raise substantial doubt regarding
our ability to continue as a going concern, and the Company’s current cash resources may not provide sufficient capital to fund
operations for at least the next 12 months from the date of the release of the consolidated financial statements included elsewhere in
this Annual Report. The continuation of the Company as a going concern depends upon our ability to raise additional capital through equity
offerings, debt offerings and/or strategic opportunities to fund our operations. There can be no assurance that we will be successful
in accomplishing these plans in order to continue as a going concern. Any such inability to continue as a going concern may result in
our common stockholders losing their entire investment. There is no guarantee that we will become profitable or secure additional financing.
Our ability to utilize
net operating loss carryforwards and other tax benefits may be limited.
We have completed multiple assessments of the available
net operating loss and tax credit carryforwards under Sections 382 and 383 of the Code through the year ended December 31, 2024 and determined
that we underwent multiple ownership changes during the period from inception to 2024. As a result, our net operating losses and tax credit
carryforwards are subject to substantial annual limitations under Sections 382 and 383 of the Code due to these ownership changes. The
Company has adjusted its net operating loss and tax credit carryforwards to address the impact of the ownership changes. We assess the
need to conduct an ownership change analysis to determine whether any changes occurred in ownership that would limit net operating loss
or tax credit carryforwards on an annual basis. We may experience ownership changes in the future as a result of subsequent shifts in
our stock ownership, some of which may be outside of our control. If an ownership change occurs and our ability to use our net operating
loss and tax credit carryforwards is materially limited, it could harm our future operating results by effectively increasing our future
tax obligations.
To maintain continued listing on The Nasdaq Capital Market, we must satisfy minimum financial and other requirements. For example, Nasdaq Listing Rule 5550(a)(2) requires a minimum bid price of at least $1.00 per share, and Nasdaq Listing Rule 5810(c)(3)(A) provides that a failure to meet the minimum bid price requirement exists if the deficiency continues for a period of 30 consecutive business days.
To maintain continued listing on The Nasdaq Capital
Market, we must satisfy minimum financial and other requirements. For example, Nasdaq Listing Rule 5550(b)(1) requires companies listed
on the Nasdaq Capital Market to maintain stockholders’ equity of at least $2.5 million for continued listing. As of December 31,
2024, our stockholders’ equity was $4.7 million and there can be no assurance that we will be able to maintain or increase our stockholders’
equity in the future. If our stockholders’ equity falls below $2.5 million, as a result of operating losses or for other reasons,
or if we are unable to demonstrate to Nasdaq’s satisfaction that we subsequently regained compliance with this requirement, Nasdaq
will notify us of such non-compliance. If we receive such notice from Nasdaq, in accordance with the Nasdaq Listing Rules, we will have
45 calendar days from the date of the notification to submit a plan to regain compliance with Nasdaq Listing Rule 5550(b)(1). If our compliance
plan is accepted, we may be granted up to 180 calendar days from the date of the initial notification to evidence compliance. If our compliance
plan is not accepted or we are otherwise unable to evidence compliance within Nasdaq’s allotted timeframe, Nasdaq may take steps
to delist our Common Stock.
In addition, Nasdaq Listing Rule 5550(a)(2) requires
a minimum bid price of at least $1.00 per share, and Nasdaq Listing Rule 5810(c)(3)(A) provides that a failure to meet the minimum bid
price requirement exists if the deficiency continues for a period of 30 consecutive business days. Although the Company is currently in
compliance with this requirement, there can be no assurance that we will be able to maintain compliance. We have in the past effected
reverse stock splits of our Common Stock in order to regain or maintain compliance with this requirement (most recently on July 5, 2024).
Nasdaq Listing Rule 5810(c)(3)(A)(iv) states that any listed company that fails to meet this requirement and has effected a reverse stock
split over the prior one-year period, or has effected one or more reverse stock splits over the prior two-year period with a cumulative
ratio of 250 shares or more to one, may not be eligible for an automatic 180-day grace compliance period and the Nasdaq Listing Qualifications
Department is obligated to immediately issue a delisting determination. Therefore, if we were to fall out of compliance with the minimum
bid price requirement prior to July 5, 2025, we would not be able to effect a reverse stock split and would immediately be issued a delisting
determination.
We may acquire other businesses or form joint
ventures that may be unsuccessful and could dilute your ownership interest in the Company.
As part of our business strategy, we may pursue future
acquisitions of other complementary businesses and technology licensing arrangements. We also may pursue strategic alliances. We have
limited experience with respect to acquiring other companies and with respect to the formation of collaborations, strategic alliances
and joint ventures. We may not be able to integrate such acquisitions successfully into our existing business, and we could assume unknown
or contingent liabilities. We also could experience adverse effects on our reported results of operations from acquisition related charges,
amortization of acquired technology and other intangibles and impairment charges relating to write-offs of goodwill and other intangible
assets from time to time following the acquisition. Integration of an acquired company requires management resources that otherwise would
be available for ongoing development of our existing business. We may not realize the anticipated benefits of any acquisition, technology
license or strategic alliance. There is no assurance that we will be successful in developing such assets, and a failure to successfully
develop such assets could diminish our prospects.
To finance future acquisitions, we may choose to issue
shares of our Common Stock or preferred stock as consideration, which would dilute current stockholders’ ownership interest in us.
Alternatively, it may be necessary for us to raise additional funds through public or private financings. Additional funds may not be
available on terms that are favorable to us and, in the case of equity financings, may result in dilution to our stockholders. Any future
acquisitions by us also could result in large and immediate write-offs, the incurrence of contingent liabilities or amortization of expenses
related to acquired intangible assets, any of which could harm our operating results.
Management's Discussion & Analysis (MD&A)
New heading “INTASYL Technology”
Removed heading “Impairment of Property and Equipment”
Largest changes
“We have limited cash resources, have reported recurring losses from operations since inception, negative operating cash flows and have not yet received product revenues. These factors raise substantial doubt regarding our ability to continue as a going concern, and our current cash resources may not provide sufficient capital to fund operations for at least the next 12 months from the date of the release of the consolidated financial statements included elsewhere in this Annual Report. …”see in full comparison
“Until such time, if ever, that we can generate program revenue sufficient to achieve profitability, we expect to finance our cash needs through a combination of public and private equity offerings, debt financings, other third-party funding, strategic alliances, licensing arrangements or marketing and distribution arrangements. …”see in full comparison
“We have reported recurring losses from operations since inception and expect that we will continue to have negative cash flows from our operations for the foreseeable future. At December 31, 2025, we had cash and cash equivalents of $21.0 million as compared with $5.4 million at December 31, 2024. …”see in full comparison
“The Company did not record loss on impairment in the year ended December 31, 2024. The impairment charge to our long-lived assets in the year ended December 31, 2023 was associated with our non-renewal of our office lease to operate as a remote business. The carrying value of these assets totaling $126,000 was deemed no longer recoverable and an impairment charge of $126,000 was recorded to adjust those assets to their fair value.”see in full comparison
Full comparison: every changed paragraph (51)
Phio Pharmaceuticals Corp. (“Phio,”
“we,” “our” or the “Company”) is a clinical stage biotechnologybiopharmaceutical company whose
proprietary INTASYL™ self-delivering RNAi® small interfering RNA gene silencing technology is designed to make immune cells
more effective in killing tumor cells. We are developing therapeutics that are designed to leverage INTASYL to precisely target specific
proteins that reduce the body’s ability to fight cancer, without the need for specialized formulations or drug delivery systems.
We are committed to discovering and developing innovative cancer treatments for patients by creating new pathways toward a cancer-free
future.
INTASYL Technology
Overall, RNA is involved in the synthesis, regulation and expression of proteins. RNA takes the instructions from DNA and turns those instructions into proteins within the body’s cells. RNA interference, or RNAi, is a biological process that inhibits the expression of genes or the production of proteins. Diseases are often related to the incorrect protein being made, excessive amounts of a specific protein being made, or the correct protein being made, but at the wrong location or time. RNAi offers a novel approach to drug development because RNAi compounds can be designed to silence any one of the thousands of human genes, many of which are considered “undruggable” by traditional therapeutics.
Our development efforts are based on our proprietary INTASYL small interfering RNA technology. It is a patented technology from which specific patented compounds are developed. INTASYL compounds are comprised of a unique sequence of chemically modified nucleotides (modified small interfering RNA, or siRNAs) that target a broad range of cell types and tissues. The compounds are designed to effectively silence genes that tumors use to evade the immune system.
PH-762 is an INTASYL compound designed to reduce the
expression of cell death protein 1 (“PD-1”). PH-762 is currently being evaluated in a U.S. multi-center Phase 1b dose-escalating
clinical trial through the intratumoral injection of PH-762 for the treatment of patients with cutaneous squamous cell carcinoma, melanoma
and Merkel cell carcinoma. The trial (NCT 06014086) is designed to evaluate the safety and tolerability of neoadjuvant use of intratumorally
injected PH-762, assess the tumor response, and determine the dose or dose range for continued study of PH-762 and is expected to enroll
up to 30 patients. In May and December 2024, respectively, a Safety Monitoring Committee (SMC) reviewed data from the first and second
dose cohorts treated with PH-762, and in both instances recommended escalation to the next dose concentration. A total of 7 patients with
cutaneous carcinomas have been enrolled in dose cohorts 1 and 2. The second cohort enrolled a total of 4 patients who were diagnosed with
cutaneous squamous cell carcinoma. At Day 36 (tumor excision), while patients in the first cohort had stable disease, a complete response
(100% tumor clearance) was reported for 2 patients with cutaneous squamous cell carcinoma. Partial response (90% tumor clearance) was
reported for 1 patient with cutaneous squamous cell carcinoma and 1 patient had stable disease, having not progressed. In this trial to
date, intratumoral injection of PH-762 has been well tolerated in all enrolled patients and there were no dose-limiting toxicities or
clinically relevant treatment-emergent adverse effects in the patients receiving intratumoral PH-762. The third dose cohort is fully enrolled
and patients in this cohort are currently in the treatment or follow-up phase of the study. Phio expects to complete enrollment of all
patients in the study in the third quarter of 2025.
In 2023, the Company implemented a cost rationalization
program driven by its transition from discovery research to product development. This resulted in a decision not to renew the lease for
office and laboratory space in Marlborough, Massachusetts, which expired on March 31, 2024. Beginning in April 2024, we have continued
operations as a remote business with a laboratory facility in Worcester, Massachusetts. Beginning in January 2024, we rationalized discovery
research personnel resulting in an overall headcount reduction by greater than 50%. Expense reductions have been redirected to funding
the Phase 1b clinical trial with PH-762.
PH-762 is an INTASYL compound designed to reduce the expression of cell death protein 1 ("PD-1”). PH-762 is currently being evaluated in a U.S. multi-center Phase 1b dose-escalating clinical trial through the intratumoral injection of PH-762 for the treatment of patients with cutaneous squamous cell carcinoma, melanoma and Merkel cell carcinoma. The trial (NCT 06014086) was designed to evaluate the safety and tolerability of neoadjuvant use of intratumorally injected PH-762, assess the tumor response, and determine the dose or dose range for continued study of PH-762.
Our preclinical studies havedemonstrated demonstrated
that direct-to-tumor application of PH-762 resulted in potent anti-tumoral effects and have shownshowed that direct-to-tumor treatment with
PH-762 inhibits tumor growth in a dose dependent fashion in PD-1 responsive and refractory models. Importantly, direct-to-tumor administration
of PH-762 resulted in activity against distant untreated tumors, indicative of a systemic anti-tumor response. We believe these data further
support the potential for PH-762 to provide a strong local immune response without the dose immune-related adverse effects seen with systemic
antibody therapy.
PH-762 is currently being evaluated
in a U.S. multi-center Phase 1b dose-escalating clinical trial through the intratumoral injection of PH-762 for the treatment of patients
with cutaneous squamous cell carcinoma, melanoma and Merkel cell carcinoma. The trial (NCT 06014086) is designed to evaluate the safety
and tolerability of neoadjuvant use of intratumorally injected PH-762, assess the tumor response, and determine the dose or dose range
for continued study of PH-762 and is expected to enroll up to 30 patients. In November 2023, we announced the dosing of the first patient
under a previously cleared Investigational New Drug (“IND”) application by the U.S. Food and Drug Administration. In
MayThe Phase 1b clinical trial is designed to evaluate the safety and Decembertolerability 2024,of respectively,neoadjuvant ause Safetyof Monitoringintratumoral CommitteePH-762 (SMC)in reviewedStages data1, from2 and 4 cSCC, Stage 4 melanoma, and Stage 4 Merkel cell carcinoma. Per the firsttrial’s protocol, patients received four injections of PH-762 at weekly intervals and secondpathologic doseresponse cohortswere treated
withassessed PH-762two andweeks recommended escalation tofollowing the nextfinal dose concentration. A totalinjection of 7PH-762. patientsThe withstudy cutaneouswas carcinomas havefully enrolled in
Cohorts 1November and2025 2. The second cohort enrolledwith a total of 422 patientspatients, who were diagnosed20 with cutaneous squamous cell carcinoma.carcinoma, At Day 36
(tumor excision), while patients in the first cohort had stable disease, the a complete response (100% tumor clearance) was reported for
2 patientsone with cutaneousmelanoma squamousand one with Merkel cell carcinoma. A partial response (90% tumor clearance) was reported for 1 patient with cutaneous
squamous cell carcinoma and 1 patient had stable disease, having not progressed.
While final study data is pending formal analysis, an FDA submission intended to propose and seek guidance for next steps in clinical study design for PH-762 is targeted for the second quarter of 2026. A total of 22 patients with cutaneous carcinomas completed treatment in the Phase 1b trial and underwent excision of the treated lesional site. Revised reported data supports an overall response rate of 65% for squamous cell carcinomas (cSCC). Among the 20 patients with cSCC, 13 patients were classified as pathologic responders, including 9 patients with complete response (100% clearance), 2 patients with major/near clear response (greater than 90% clearance), and 2 patients with partial response (greater than 50% clearance). A single patient with metastatic Merkel cell carcinoma had a partial response. Seven cSCC patients and one melanoma patient had responses of less than 50%, however, none of the patients experienced a progression of the disease.
IntratumoralIn this trial to date, intratumoral injection of PH-762
has been well tolerated in all enrolled patients enrolledand in the trial to date. Therethere were no dose-limiting toxicities or clinically relevant treatment-emergent
adverse effects in theany patients receivingwho received intratumoral PH-762. ThePH-762 thirdhas dosebeen cohortevaluated in patients within five dose-escalating cohorts, increasing drug concentration 20-fold from the first to the final cohort. Safety data through an extended follow-up period is fullyexpected enrolledto andbe patients in this cohort are
currentlyreported in the treatmentsecond or follow-up phase of the study. We expect to complete enrollment of all patients in the study in the third
quarter of 2025.2026.
In July 2025, we entered into a comprehensive drug substance development services agreement with a US manufacturer. This manufacturer will provide analytical and process development and cGMP manufacture of our lead development compound PH-762. The cGMP material will support future clinical development of PH-762.
In December 2025, we entered into a development services agreement with a US laboratory to conduct a non-clinical toxicology study, which is required by the FDA prior to commencing a human clinical trial for registration purposes.
Given our intention to focus our efforts
and resources on our U.S. clinical trial with PH-762, we have completed the winding down process for our first-in-human clinical trial
for PH-762 in France, which was limited to the treatment of patients with metastatic melanoma. Safety data from the initial cohort of
three patients in the French clinical trial were evaluated by a data monitoring committee in the first quarter of 2023. The safety data
review disclosed no dose-limiting toxicity, and no drug-related severe or serious adverse events.
Due to INTASYL’s ease of administration,
we have shown that our compounds can easily be incorporated into current ACT manufacturing processes. In ACT, T cells are usually taken
from a patient's own blood or tumor tissue, grown in large numbers in a laboratory, and then given back to the patient to help the immune
system fight cancer. By treating T cells with our INTASYL compounds while they are being grown in the laboratory, we believe our INTASYL
compounds can improve these immune cells to make them more effective in killing cancer. Preclinical data generated in collaboration with
AgonOx, Inc. (“AgonOx”), a private company developing a pipeline of novel immunotherapy drugs targeting key regulators
of the immune response to cancer, demonstrated that treating AgonOx’s “double positive” tumor infiltrating lymphocytes
(“DP TIL”) with PH-762 increased their tumor killing activity by twofold.
In February 2021, we entered into
a clinical co-development collaboration agreement (the “Clinical Co-Development Agreement”) with AgonOx to develop
a T cell-based therapy using PH-762 and AgonOx’s DP TIL. Under the Clinical Co-Development Agreement, we had agreed to reimburse
AgonOx up to $4 million in expenses incurred to conduct a Phase 1 clinical trial of PH-762 treated DP TIL in patients with advanced melanoma
and other advanced solid tumors. We were also eligible to receive certain future development milestones and low single-digit sales-based
royalty payments from AgonOx’s licensing of its DP TIL technology.
In May 2024, we terminated the Clinical
Co-Development Agreement with AgonOx, which such termination was effective immediately. Effective as of the date of termination, the Clinical
Co-Development Agreement and our continuing obligations and those of AgonOx thereunder were terminated in their entirety. We are no longer
required to provide financial support for the development of costs incurred un the Clinical Co-Development Agreement and we are no longer
entitled to future development milestones or royalty payments from AgonOx’s licensing of its DP TIL technology. We agreed to pay
to AgonOx all payment obligations that accured prior to the termination of the Clinical Co-Development Agreement. Remaining payments to
be made to AgonOx as of December 31, 2024 totaled $34,320, which primarily relate to accrued obligations for patient fees and other miscellaneous
costs as of the date of termination. Pursuant to the terms of the Clinical Co-Development Agreement, each of the Company and AgonOx shall
be responsible for its own costs and expenses incurred in connection with the wind-down of the Phase 1 clinical trial.
Prior to the termination of the Clinical
Co-Development Agreement with AgonOx, PH-762 treated DP TIL were being evaluated in a Phase 1 clinical trial in the U.S. with up to 18
patients with advanced melanoma and other advanced solid tumors by AgonOx. The primary trial objectives were to evaluate the safety and
to study the potential for enhanced therapeutic benefit from the administration of PH-762 treated DP TIL. AgonOx had enrolled three patients.
The first two patients were treated with DP TIL only and a third patient was treated with a combination of DP TIL and PH-762. Clinical
results for the single patient who received a combination of DP TIL and PH-762 showed tumor size reductions of 65%, 100% and 81%, respectively,
in three melanoma lesions.
PH-894 is an INTASYL compound that is designed to specifically silence
BRD4, a protein that controls gene expression in both T cells and tumor cells, thereby affecting the immune system as well as the tumor.
Intracellular and/or commonly considered “"undruggable” targets, such as BRD4, represent a challenge for small molecule and
antibody therapies. Therefore, what sets this compound apart is its dual mechanismmode of action: PH-894 suppression of BRD4 in T cells results in T
cell activation, and suppression of BRD4 in tumor cells results in tumors becoming more sensitive to being killed by T cells.
Preclinical studies conducted have demonstrated that
PH-894 resulted in a strong, concentration dependent and durable silencing of BRD4 in T cells and in various cancer cells. Similar to
PH-762, preclinical studies have also shown that direct-to-tumor application of PH-894 resulted in potent and statistically significant
anti-tumoral effects against distant untreated tumors, indicative of a systemic anti-tumor response. These preclinical data indicate that
PH-894 can reprogram T cells and other cells in the tumor microenvironment to provide enhanced immunotherapeutic activity. We have completed
the IND-enabling studies and are in the process of finalizing the study reports required for an IND submission with PH-894. As a result
of the reprioritization to advance our clinical trial with PH-762 in the U.S., we have elected to defer the IND submission for PH-894.
Research and development expenses
relate toconsist primarily of personnel expenses, including salaries, benefits and stock-based compensation and benefitsexpenses for employees engaged in research and development personnel,functions, facility-relatedconsultants expenses,and supplies,third-party external services,experts, costs
to acquire technology licenses, research activities under our research collaboration, expenses associated with preclinical studies and clinical
trial development activities, regulatory activities and other operating costs. Our research and development programs are focused on the development of immuno-oncology
therapeutics based on our INTASYL therapeutic platform. Since we commenced operations, research and development expenses have been a significant
portion of our total operating expenses and are expected to constitute the majority of our spending for the foreseeable future.
General and administrative
expenses relateconsist toprimarily of personnel expenses, including salaries, benefits and stock-based compensation expenses for employees and benefitsconsultants forin general and administrative personnel, facility-related expenses,functions, professional fees for
legal and patent-related activities,legal, audit, taxtax, andinformation consultingtechnology, services,insurance as well as other general corporateoperating expenses.
Research and development expenses for the year ended
December 31, 20242025 decreasedincreased 42%27% as compared with the year ended December 31, 2023.2024. The decreaseincrease in research and development expenses was
primarily driven by oura cost$740 rationalizationthousand measuresincrease in transitioningcosts fromfor our PH-762 clinical 1b clinical study and a research$250 companythousand toincrease in employee compensation costs including bonus and stock-based compensation expense. Overall, there was a product$975 developmentthousand company. These
actions resulted in a decrease of $1,044,000 of expenseincrease due to the wind-downadvancement of preclinicalour studies,PH-762 aclinical reduction of $804,000 in salary-related
costs including stock-based compensation expense,studies and $198,000 in lab supplies associated with the reduction in headcount. Additionally,
we experienced a reduction in clinical consulting fees and clinical trial-related fees of $350,000 incurred in connection with our IND
filingplanning for PH-762upcoming andnon-clinical ourtoxicology former PH-762 trials in ACT and European clinical trial, as well as a decrease of $245,000 in manufacturing
fees for PH-762 compared with 2023.studies.
General and administrative expenses for the year ended
December 31, 20242025 decreasedincreased 14%23% as compared to the year ended December 31, 2023.2024. The decreaseincrease of $858 thousand in general and administrative expenses was
primarily due to decreasesan increase of $400 thousand for outsourced professional accounting services, a $110 thousand increase in professionaloutsourced feeslegal costs and an increase of $300 thousand for astock-based totalcompensation of $430,000 primarily related to legal and patent expenses and in our D&O
insurance premium of $88,000 as compared to the prior year period.expense.
Impairment of Property and Equipment
The Company did not record loss on impairment in the
year ended December 31, 2024. The impairment charge to our long-lived assets in the year ended December 31, 2023 was associated with our
non-renewal of our office lease to operate as a remote business. The carrying value of these assets totaling $126,000 was deemed no longer
recoverable and an impairment charge of $126,000 was recorded to adjust those assets to their fair value.
We have reported recurring losses from operations since inception and expect that we will continue to have negative cash flows from our operations for the foreseeable future. At December 31, 2025, we had cash and cash equivalents of $21.0 million as compared with $5.4 million at December 31, 2024. Based on current cash flow projections, we believe we have sufficient cash and cash equivalents, including net proceeds from our January 2025 Offerings, July 2025 Financing and November 2025 Financing (each as defined below), to meet our current planned obligations for at least 12 months from the date these financial statements are issued.
Historically, our primary source of funding has been
through the sale of our securities. In the future, we will be dependent on obtaining funding from third parties, such as proceeds from
the issuance of debt, sale of equity or strategic opportunities, in order to maintain our operations. We have reported recurring losses
from operations since inception and expect that we will continue to have negative cash flows from our operations for the foreseeable future.
At December 31, 2024, we had cash of $5,382,000 as compared with $8,490,000 at December 31, 2023.
During the year ended December 31, 2024,2025, we completed
multiple financings and received total net proceeds of $4,001,000$20.6 million after deducting placement agent fees and offering expenses. For further
information regarding the financings, see Note 8 to our consolidated financial statements included elsewhere in this Annual Report.
We expect we will need to raise additional capital until we are profitable, which may never occur. Historically, our primary source of funding has been through the sale of our securities. If no additional capital is raised through either additional public or private equity financings, debt financings, strategic relationships, alliances and licensing agreements, or a combination thereof, we may delay, limit or reduce discretionary spending in areas related to research and development activities and other general and administrative expenses in order to fund our operating costs and working capital needs.
We have based these estimates on assumptions that may prove to be wrong, and we could utilize our available capital resources sooner than we expect. If we receive regulatory approvals for our program candidates, we expect to incur commercialization expenses related to program manufacturing, sales, marketing and distribution, depending on where we choose to commercialize or whether we commercialize jointly or on our own.
Because of the numerous risks and uncertainties associated with research, development and commercialization of our program candidates, we are unable to estimate the exact amount of our working capital requirements. Our future funding requirements will depend on and could increase significantly as a result of many factors, including:
• the scope, progress, results and costs of researching and developing our program candidates, and conducting preclinical studies and clinical trials;
• the costs, timing and outcome of regulatory review of our program candidates;
• the costs and timing of hiring new employees to support our continued growth;
• the costs of preparing, filing, and prosecuting patent applications, maintaining and enforcing our intellectual property rights and defending intellectual property-related claims; and
• our ability to generate cash, and successfully obtain additional working capital, to fund our operating, investing and financing activities.
Until such time, if ever, that we can generate program revenue sufficient to achieve profitability, we expect to finance our cash needs through a combination of public and private equity offerings, debt financings, other third-party funding, strategic alliances, licensing arrangements or marketing and distribution arrangements. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interest of our existing stockholders will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of our existing stockholders. Debt financing and preferred equity financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. If we raise additional funds through other third-party funding, strategic alliances, licensing arrangements, outright sales of program candidates or marketing and distribution arrangements, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or product candidates or grant licenses on terms that may not be favorable to us. If we are unable to raise additional funds through equity or debt financings when needed, we will be required to delay, limit, reduce or terminate our program development or future commercialization efforts or grant rights to develop and market programs or program candidates that we would otherwise prefer to develop and market ourselves.
Subsequent to year-end, we completed financings and
received total net proceeds of $6,800,000 after deducting placement agent fees and offering expenses. For further information regarding
the financings, see Note 13 to our consolidated financial statements included elsewhere in this Annual Report.
We have limited cash resources, have reported recurring
losses from operations since inception, negative operating cash flows and have not yet received product revenues. These factors raise
substantial doubt regarding our ability to continue as a going concern, and our current cash resources may not provide sufficient capital
to fund operations for at least the next 12 months from the date of the release of the consolidated financial statements included elsewhere
in this Annual Report. Our continuation as a going concern depends upon our ability to raise additional capital through equity offerings,
debt offerings and/or strategic opportunities to fund our operations. There can be no assurance that we will be successful in accomplishing
any of these plans in order to continue as a going concern. The consolidated financial statements included elsewhere in this Annual Report
do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that
might be necessary should we be unable to continue as a going concern.
Net cash used in operating activities for the year
ended December 31, 20242025 decreasedincreased 34%12% as compared with the year ended December 31, 2023.2024. This change of approximately$867 $3,600,000thousand reflects
a reduction$1.5 million increase in net lossloss, beforepartially subtractingoffset by an increase in the non-cash items of $3,200,000$330 thousand for stock-based compensation as well as changes in operating assets and liabilities, including a concurrent$300 reductionthousand ofincrease approximately $400,000 of cash outflows
driven by the reduction of outstandingin accounts payable and liquidationaccrued of various current assets primarilyexpenses as a result of liabilities
owed for the completion of preclinicalclinical studies in the prior year.
Net cash providedused byin investing activities for the year
ended December 31, 20242025 was approximately $8,000$12 thousand as compared to the year ended December 31, 20232024 where net cash usedprovided inby investing activities
was $5,000.$8 thousand. The increase in net cash providedused byin investing activities was primarily due to laboratory and computer equipment purchases
for our facility during the prior year and proceeds from the disposition of fixed assets in the current year.purchases.
Net cash provided by financing activities for the year
ended December 31, 20242025 decreasedincreased by 46%492% as compared to the year ended December 31, 2023,2024, primarily due to three separate financings by the lowerCompany, netwhich proceedsoccurred from
thein completionJanuary, ofJuly ourand securities offeringsNovember, during the prior year asended comparedDecember with31, the2025. currentOur year.financing activities in 2024 were at a significantly lower transaction volume.
In February 2021, we entered into a Clinical Co-Development Agreement with AgonOx to develop a T cell-based therapy using PH-762 and AgonOx’s DP TIL. Details of our obligations under the Clinical Co-Development Agreement as of December 31, 2024 can be found in Note 2 of the consolidated financial statements included elsewhere in this Annual Report. In May 2024, we terminated the Clinical Co-Development Agreement with AgonOx, which such termination was effective immediately.
Commitments
In February 2021, we entered into a
Clinical Co-Development Agreement with AgonOx to develop a T cell-based therapy using PH-762 and AgonOx’s DP TIL. Details of our
obligations under the Clinical Co-Development Agreement as of December 31, 2024 can be found in Note 2 of the consolidated financial statements
included elsewhere in this Annual Report. In May 2024, we terminated the Clinical Co-Development Agreement with AgonOx, which such termination
was effective immediately. Effective as of the date of termination, the Clinical Co-Development Agreement and our continuing obligations
and those of AgonOx thereunder were terminated in their entirety. We are no longer required to provide financial support for the development
costs incurred under the Clinical Co-Development Agreement and we are no longer entitled to future development milestones or royalty payments
from AgonOx’s licensing of its DP TIL technology. We will pay to AgonOx all payment obligations that occurred prior to the termination
of the Clinical Co-Development Agreement. Remaining payments to be made to AgonOx as of December 31, 2024 totaled $34,320, which primarily
relate to accrued obligations for patient fees and other miscellaneous costs as of the date of termination. Pursuant to the terms of the
Clinical Co-Development Agreement, each party shall be responsible for their own costs and expenses incurred in connection with the wind-down
of the Phase 1 clinical trial.
Prior to the termination of the Clinical
Co-Development Agreement with AgonOx, PH-762 treated DP TIL was being evaluated in a Phase 1 clinical trial in the U.S. with up to 18
patients with advanced melanoma and other advanced solid tumors by AgonOx. The primary trial objectives were to evaluate the safety and
to study the potential for enhanced therapeutic benefit from the administration of PH-762 treated DP TIL. AgonOx had enrolled three patients.
The first two patients were treated with DP TIL only and a third patient was treated with a combination of DP TIL and PH-762. Clinical
results for the single patient who received a combination of DP TIL and PH-762 showed tumor size reductions of 65%, 100% and 81% respectively,
in three melanoma lesions.
In September 2011, we entered into an agreement with Advanced RNA Technologies, LLC (“Advirna”), pursuant to which Advirna assigned to us its existing patent and technology rights related to the INTASYL technology in exchange for an annual maintenance fee of $100,000, until the patent's expiration date, a one-time milestone payment upon the future issuance of the first patent with valid claims covering the assigned patent and technology rights and the issuance of shares of our Common Stock equal to 5% of our fully-diluted shares outstanding at the time of issuance. The one-time milestone payment and the issuance of shares of Common Stock were completed in 2014 and 2012, respectively. Additionally, we are required to pay low single-digit royalties to Advirna on any licensing revenue received by us with respect to future licensing of the assigned Advirna patent and technology rights. To date, any royalties owed to Advirna under the Advirna agreement have been minimal.
Our contractual license obligations that will require
future cash payments as of December 31, 2024 are $500,000, which result from payments expected in connection with annual license
fees.
We did not renew the lease for
our corporate headquarters and primary research facility in Marlborough, Massachusetts, which expired on March 31, 2024. Beginning in
April 2024, we have continued operations as a remote business with a laboratory facilityspace in Worcester, Massachusetts. The new lease had
anexpired original expiration date of August 31, 2024, and was subsequently extended throughon February 28, 2025.2026. TheWe Companycurrently continueshave to
leaseshared theoffice space at Life Sciences of Pennsylvania, 411 Swedeland Rd, Suite 23-1080, in King of Prussia, Pennsylvania. This arrangement is $300 on a month-to-month basis.basis Monthly rentand is approximatelycancelable $2,500.at any time.
For further information regarding
our future cash commitments see NoteNotes 5 and 6 to our consolidated financial statements included elsewhere in this Annual Report.
What changed in the latest 10-Q
Risk Factors
No wording changes found in this section.
Full comparison: every changed paragraph (0)
Management's Discussion & Analysis (MD&A)
Largest changes
“Research and development expenses for the six months ended June 30, 2026 increased 200% or $3.9 million as compared with the six months ended June 30, 2025. The increase in research and development expenses was primarily driven by a $1.8 million increase in nonclinical toxicology study costs and a $1.5 million increase in CMC costs both of which were associated with advancing the PH-762 program. In addition, research and development expenses increased by approximately increase of $0.9 million related to higher consulting, patent and employee-related costs. …”see in full comparison
General and administrative expenses for the three months endedsee in full comparisonMarchJune31,30, 2026increaseddecreased39%slightlyorat$400 thousand4% as compared with the three months endedMarchJune31,30, 2025. General and administrative expenses for the six months ended June 30, 2026 increased 15% or $340 thousand as compared with the six months ended June 30, 2025. The increasein general and administrative expenseswas primarily driven by a$98 thousand increase in bonus expense accrual, $228$465 thousand increase in stock-based compensationexpense,expense$65and $170 thousand increase in investoroutreachrelationsand $66 thousand increase in professional fees. Additionally, there was an $115 thousand increase in finance employee-related costs that isactivities; offset by areduction of $248$250 thousandfornet decrease in financial outsourced accountingfees in the first quarter of 2025.fees.
In the trial, PH-762 was evaluated in patients in five dose-escalating cohorts, increasing drug concentration 20-fold from the first to the final cohort. On January 20, 2026, we reported that intratumoral injection of PH-762 was well tolerated in all enrolled patients and there were no dose-limiting toxicities or clinically relevant treatment-emergent adverse effects in any patients who received intratumoral PH-762.see in full comparisonPH-762 has been evaluated in patients within five dose-escalating cohorts, increasing drug concentration 20-fold from the first to the final cohort. Safety data through an extended follow-up period is expected to be reported in the second quarter of 2026.
Research and development expenses for the three months endedsee in full comparisonMarchJune31,30, 2026 increased215%187% or$1.9$2.0 million as compared with the three months endedMarchJune31,30, 2025.ThisThe increase in research and development expenses was primarily driven by a$1.6$0.9 million increase in nonclinical toxicology study costs andclinicalatrial$1.5costs,million increase in CMC (chemistry, manufacturing and controls(CMC)costscosts. Both increases were in connection with advancing our PH-762 program;andoffset by a$220$0.3thousandmillionincreasedecrease inR&Dclinicalemployeetrialpersonnel related costs for salary, bonus and stock compensation expense.costs. Management believes that research and development expenses will continue to increase as we continue to advance our PH-762 program.
see in full comparisonWhile final study data is pending formal analysis, an FDA submission intended to propose and seek guidance for next steps in clinical study design for PH-762 is targeted for the second quarter of 2026.A total of 22 patients with cutaneous carcinomas completed treatment in the Phase 1b trial and underwent excision of the treated lesional site. Reported data supports an overall response rate of 65% for squamous cell carcinomas (cSCC). Among the 20 patients with cSCC, 13 patients were classified as pathologic responders, including 9 patients with complete response (100% clearance), 2 patients with major/near clear response (greater than 90% clearance), and 2 patients with partial response (greater than 50% clearance). A single patient with metastatic Merkel cell carcinoma had a partial response. Seven cSCC patients and one melanoma patient had responses of less than 50%, however, none of these patients experienced a progression of the disease.
In July 2025, we entered into a comprehensive drug substance development services agreement with a U.S. manufacturing company pursuant to which the manufacturer will provide analytical and process development activity, and cGMP manufacture of drug substance to manufacture clinical supplies for our lead development compound, PH-762. In June 2026, production of the first batch of drug substance was initiated. This batch will be used to manufacture clinical supplies for the next clinical trial.see in full comparison
Full comparison: every changed paragraph (17)
This management’s discussion and analysis of financial condition as of MarchJune 31,30, 2026 and results of operations for the three and six months ended MarchJune 31,30, 2026 and 2025 should be read in conjunction with the audited financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2025, which was filed with the Securities and Exchange Commission (the “SEC”) on March 5, 2026 (the “2025 Form 10-K”).
Phio Pharmaceuticals Corp. (“Phio,” “we,” “our” or the “Company”) is a clinical stage biopharmaceutical company whose proprietary INTASYL® self-delivering small interfering RNAi (siRNA) technology is designed to make immune cells more effective in killing tumor cells. We are developing therapeutics that are designed to leverage INTASYL to precisely target specific proteins that reduce the body’s ability to fight cancer, without the need for specialized formulations or drug delivery systems. We are committed to discovering and developing innovative cancer treatments for patients by creating new pathways toward a cancer-free future.
PH-762 was evaluated in a U.S. multi-center Phase 1b dose-escalating clinical trial through theassessing intratumoral injectionadministration of PH-762 for the treatment of patients with cutaneous squamous cell carcinoma, melanoma and Merkel cell carcinoma. The trial (NCT 06014086) was designed to evaluate the safety and tolerability of neoadjuvant use of intratumorally injected PH-762, assess the tumor response, and determine the dose or dose range for continued study of PH-762. The study was fully enrolled in November 2025 with a total of 22 patients, 20 with cutaneous squamous cell carcinoma, one with melanoma and one with Merkel cell carcinoma. The clinical phase of the trial ishas complete,been completed, and the final data are being analyzed. The clinical study report is currently beingin analyzed.the final stages of preparation.
While final study data is pending formal analysis, an FDA submission intended to propose and seek guidance for next steps in clinical study design for PH-762 is targeted for the second quarter of 2026. A total of 22 patients with cutaneous carcinomas completed treatment in the Phase 1b trial and underwent excision of the treated lesional site. Reported data supports an overall response rate of 65% for squamous cell carcinomas (cSCC). Among the 20 patients with cSCC, 13 patients were classified as pathologic responders, including 9 patients with complete response (100% clearance), 2 patients with major/near clear response (greater than 90% clearance), and 2 patients with partial response (greater than 50% clearance). A single patient with metastatic Merkel cell carcinoma had a partial response. Seven cSCC patients and one melanoma patient had responses of less than 50%, however, none of these patients experienced a progression of the disease.
In the trial, PH-762 was evaluated in patients in five dose-escalating cohorts, increasing drug concentration 20-fold from the first to the final cohort. On January 20, 2026, we reported that intratumoral injection of PH-762 was well tolerated in all enrolled patients and there were no dose-limiting toxicities or clinically relevant treatment-emergent adverse effects in any patients who received intratumoral PH-762. PH-762 has been evaluated in patients within five dose-escalating cohorts, increasing drug concentration 20-fold from the first to the final cohort. Safety data through an extended follow-up period is expected to be reported in the second quarter of 2026.
An FDA meeting request is targeted for the third quarter of 2026 to propose next steps and seek Agency guidance on the clinical development program for PH-762.
In July 2025, we entered into a comprehensive drug substance development services agreement with a U.S. manufacturing company pursuant to which the manufacturer will provide analytical and process development activity, and cGMP manufacture of drug substance to manufacture clinical supplies for our lead development compound, PH-762. In June 2026, production of the first batch of drug substance was initiated. This batch will be used to manufacture clinical supplies for the next clinical trial.
In December 2025, we entered into a development services agreement with a U.S. laboratory to conduct a nonclinical toxicology study for PH-762, which is required by the FDA prior to commencing a human clinical trial for registration purposes. In May 2026, the Company initiated the pivotal GLP toxicology study to support the continued clinical development of PH-762.
Comparison of the Three and Six Months Ended MarchJune 31,30, 2026 and 2025
Research and development expenses for the three months ended MarchJune 31,30, 2026 increased 215%187% or $1.9$2.0 million as compared with the three months ended MarchJune 31,30, 2025. ThisThe increase in research and development expenses was primarily driven by a $1.6$0.9 million increase in nonclinical toxicology study costs and clinicala trial$1.5 costs,million increase in CMC (chemistry, manufacturing and controls (CMC) costscosts. Both increases were in connection with advancing our PH-762 program; andoffset by a $220$0.3 thousandmillion increasedecrease in R&Dclinical employeetrial personnel related costs for salary, bonus and stock compensation expense.costs. Management believes that research and development expenses will continue to increase as we continue to advance our PH-762 program.
Research and development expenses for the six months ended June 30, 2026 increased 200% or $3.9 million as compared with the six months ended June 30, 2025. The increase in research and development expenses was primarily driven by a $1.8 million increase in nonclinical toxicology study costs and a $1.5 million increase in CMC costs both of which were associated with advancing the PH-762 program. In addition, research and development expenses increased by approximately increase of $0.9 million related to higher consulting, patent and employee-related costs. These increases were offset by a $0.3 million decrease in clinical trial costs due to trial wind-down activities.
General and administrative expenses for the three months ended MarchJune 31,30, 2026 increaseddecreased 39%slightly orat $400 thousand4% as compared with the three months ended MarchJune 31,30, 2025. General and administrative expenses for the six months ended June 30, 2026 increased 15% or $340 thousand as compared with the six months ended June 30, 2025. The increase in general and administrative expenses was primarily driven by a $98 thousand increase in bonus expense accrual, $228$465 thousand increase in stock-based compensation expense,expense $65and $170 thousand increase in investor outreachrelations and $66 thousand increase in professional fees. Additionally, there was an $115 thousand increase in finance employee-related costs that isactivities; offset by a reduction of $248$250 thousand fornet decrease in financial outsourced accounting fees in the first quarter of 2025.fees.
Historically, we have primarily funded our operations through the sale of our securities. In the future, we expect to depend on external funding from third parties, such as proceeds from the sale of equity, debt financings or potential strategic opportunities, to support our operations. Since our inception we have incurred operating losses and expect that we will continue to have negative cash flows from our operations and for the foreseeable future. As of MarchJune 31,30, 2026, we had cash and cash equivalents of $17$13.0 million as compared with $21$21.0 million at December 31, 2025.
Net cash used in operating activities for the threesix months ended MarchJune 31,30, 2026 increased by $2.7$4.2 million as compared to the threesix months ended MarchJune 31,30, 2025. This was primarily driven by higher net losslosses from operations in the first quartertwo quarters of 2026 due to increased development spend.
Net cash provided by investing activities for the threesix months ended MarchJune 31,30, 2026 was $3 thousand forresulting anfrom equipmentproceeds sale.from the sale of equipment. Net cash used in investing activities was $2$5 thousand for the purchase of computer equipment for the threesix months ended MarchJune 31,30, 2025.
There was no cash provided by financing activities for the threesix months ended MarchJune 31,30, 2026. The $9.2 million decrease in net cash provided by financing activities as compared to the threesix months ended MarchJune 31,30, 2025, was primarily due to the issuance of Common Stock and warrants, and the exercise of warrants in the prior year, both as described in Note 35 of the condensed consolidated financial statements.
At MarchJune 31,30, 2026, we had cash and cash equivalents of $17.0$13.0 million. We expect that our cash and cash equivalents will enable us to fund our current operating plan for at least 12 months. Due to the difficulty and uncertainty associated with the design and implementation of nonclinical studies and clinical trials, we will continue to assess our cash and cash equivalents and future funding requirements. However, there is no assurance that additional funding will be achieved and that we will succeed in our future operations. We expect to continue to incur substantial additional operating losses for at least the next several years as we continue to develop our product candidates and seek marketing approval and, subject to obtaining such approval, the eventual commercialization of our product candidates. If we obtain marketing approval for any of our product candidates, we will incur significant sales, marketing and manufacturing expenses. We also expect to continue to incur significant costs to comply with corporate governance, internal controls and similar requirements associated with operating as a public reporting company.
PHIO insider buying and selling (Form 4)
Since 2026-04-11, insiders reported open-market purchases in 7 Form 4 filings (3 insiders, 8 trade dates, 65,500 shares, about $68.9K) and open-market sales in 0 filings. Net open-market shares: 65,500 (purchases minus sales); net value about $68.9K.Totals add up every open-market (code P and S) line in those filings, using the prices reported in the filings. Awards, option exercises, tax withholding and gifts are listed below but not counted.
| Trade date | Insider | Transaction | Shares | Price | Value |
|---|---|---|---|---|---|
| 2026-09-29 | Plott Ronald Todd |
Open-market purchase | 5,000 | $1.04 | $5.2K |
| 2026-09-28 | Plott Ronald Todd |
Open-market purchase | 5,000 | $1.03 | $5.2K |
| 2026-09-28 | Bitterman Robert J |
Grant/award | 400,000 | — | — |
| 2026-09-28 | Plott Ronald Todd |
Grant/award | 17,000 | — | — |
| 2026-09-28 | Carson Lisa Cabott |
Grant/award | 108,000 | — | — |
| 2026-09-24 | Bradford Patricia A |
Open-market purchase | 6,500 | $1.01 | $6.6K |
| 2026-09-22 | Bitterman Robert J |
Open-market purchase | 2,000 | $1.03 | $2.1K |
| 2026-09-15 | Bradford Patricia A |
Open-market purchase | 12,000 | $1.03 | $12.4K |
| 2026-09-11 | Bitterman Robert J |
Shares withheld for tax | 68,550 | $1.03 | $70.6K |
| 2026-09-11 | Carson Lisa Cabott |
Shares withheld for tax | 12,888 | $1.03 | $13.3K |
| 2026-08-19 | Plott Ronald Todd |
Open-market purchase | 15,000 | $1.14 | $17.1K |
| 2026-08-18 | Bitterman Robert J |
Open-market purchase | 10,000 | $1.06 | $10.6K |
| 2026-06-26 | Bitterman Robert J |
Open-market purchase | 10,000 | $0.99 | $9.9K |
Well-known investors holding PHIO (13F)
| Investor | Quarter | Shares | Reported value | % of their 13F | Change vs prior quarter |
|---|---|---|---|---|---|
| Citadel Advisors (Ken Griffin) | 2026-06-30 | 47,150 | $48.3K | 0.0% | New position |
| Two Sigma Investments | 2026-06-30 | 21,501 | $22.0K | 0.0% | Reduced 34% |