Phio Pharmaceuticals Corp. — FY2022 Form 10-K
Reporting period: Year ended December 31, 2022. Phio is a clinical-stage biotechnology company developing cancer therapeutics using its INTASYL self-delivering RNAi platform. It reported no commercial product revenue.
Financial results and liquidity
| Metric | 2022 | 2021 |
|---|---|---|
| Operating expenses | $11.462 million | $13.511 million |
| Research and development expense | $7.012 million | $8.886 million |
| General and administrative expense | $4.450 million | $4.625 million |
| Operating loss | $11.462 million | $13.511 million |
| Net loss | $11.480 million | $13.287 million |
| Net cash used in operating activities | $12.129 million | $11.858 million |
| Cash and restricted cash at year-end | $11.831 million | $24.107 million |
Research and development costs fell 21%, mainly because significant PH-762/PH-894 manufacturing and PH-762 preclinical work had been completed in 2021; increased clinical costs partly offset the decline. Net loss narrowed by $1.807 million, while operating cash use increased. The 2021 period included $21.722 million of net financing cash inflows, largely from securities offerings and warrant exercises; 2022 had net financing cash outflow of $26,000.
At December 31, 2022, current assets were $12.446 million and current liabilities were $1.939 million. Total liabilities were $1.974 million, including $170,000 of lease liabilities. The filing reports no outstanding conventional debt; the PPP loan was forgiven in 2021. No revenue-based margin is meaningful because the company had no product revenue.
Management and the auditor highlighted substantial doubt about the company’s ability to continue as a going concern. Management said current cash may not fund operations for at least 12 months from the financial-statement release date and that continued operations depend on raising capital or securing a strategic opportunity. The audited financial statements assume continued operations and include no adjustments that might be required if that assumption fails.
Programs, outlook and material developments
- PH-762: Being tested in a Phase 1b dose-escalation trial in France for advanced melanoma. The first three-subject cohort had no dose-limiting toxicity or drug-related severe or serious adverse events; the monitoring committee recommended advancing to the next cohort, which was open for enrollment. These were early safety observations, not evidence of efficacy.
- Management expected a U.S. Phase 1b PH-762 trial for cutaneous squamous cell carcinoma and other selected skin cancers to begin in the second half of 2023. Enrollment in a separate U.S. Phase 1 trial of PH-762-treated AgonOx DP TIL cells was expected to begin in the second quarter of 2023.
- AgonOx collaboration: Phio committed up to $4 million to support the DP TIL Phase 1 trial. The filing reports a $250,000 payment in 2022 in its commitments discussion; another section describes an approximately $300,000 upfront payment. Investors should check the underlying agreement and accounting detail to reconcile these disclosures.
- PH-894: IND-enabling studies were completed, but Phio deferred the IND submission to prioritize advancing PH-762’s U.S. clinical program. Other compounds, including PH-804 and PH-109, remained in discovery/preclinical development.
- Management anticipated R&D spending to increase as clinical programs progress. It said inflation and the coronavirus pandemic had not materially affected FY2022 results, but warned of possible future effects on costs, supplies and trial enrollment.
- The company relies on third parties for manufacturing and clinical research. Key risks include clinical and regulatory failure or delay, financing availability, collaboration execution, supply constraints, intellectual-property challenges, and potential dilution from future capital raising.
Other notable items
- Phio completed a 1-for-12 reverse stock split on January 26, 2023; share and per-share figures in the filing are adjusted for the split. The one outstanding Series D preferred share, issued in November 2022 for the reverse-split vote, was redeemed in January 2023.
- There were 545,401 common-stock warrants outstanding at year-end, in addition to 47,328 unvested restricted stock units. As of March 9, 2023, 1,150,582 common shares were outstanding.
- The auditor issued an unmodified opinion on the financial statements and reported no critical audit matters. Management concluded disclosure controls and internal control over financial reporting were effective; the auditor did not provide an internal-control attestation.
Important facts for investors to verify
- Current cash runway, near-term spending plans, and whether the company has secured financing sufficient to address the stated going-concern uncertainty.
- Enrollment, safety findings and timing for the French PH-762 trial and the anticipated U.S. PH-762 and PH-762/DP TIL trials; distinguish preliminary safety data from efficacy evidence.
- The AgonOx payment disclosure and remaining commitment under the up-to-$4 million agreement, plus the timing and conditions of any potential milestones or royalties.
- Potential dilution from warrants, equity awards and any future financing; confirm outstanding share and warrant counts and terms after the reverse split.
- Whether deferral of PH-894 or other program reprioritization changes the development plan, costs or expected timelines.