Phio Pharmaceuticals Corp. — Q2 2022 Form 10-Q
Reporting period: Quarter and six months ended June 30, 2022. Phio is a clinical-stage immuno-oncology company developing INTASYL self-delivering RNAi therapeutics. The filing reports no revenue; it is focused on research and development and clinical programs.
Financial performance and liquidity
| Metric | Q2 2022 | Q2 2021 | Six months 2022 | Six months 2021 |
|---|---|---|---|---|
| Research and development expense | $1.304 million | $1.559 million | $2.890 million | $3.988 million |
| General and administrative expense | $1.217 million | $1.125 million | $2.271 million | $2.334 million |
| Total operating expenses | $2.521 million | $2.684 million | $5.161 million | $6.322 million |
| Net loss | $2.531 million | $2.687 million | $5.173 million | $6.094 million |
| Loss per share, basic and diluted | $0.19 | $0.20 | $0.38 | $0.50 |
- Six-month operating cash use was $5.898 million, versus $6.521 million in 2021. Investing used $114,000; financing used $25,000, compared with $21.723 million of financing inflows in the prior-year period.
- Cash was $18.020 million at June 30, 2022, down from $24.057 million at year-end 2021. Including restricted cash, the ending balance was $18.070 million. Management said cash should fund operations for at least 12 months from the financial statements’ release date.
- Current assets were $19.688 million and current liabilities $3.037 million. Total liabilities were $3.141 million, primarily lease liabilities; the filing reports no outstanding borrowing debt. The headquarters lease runs through March 2024.
- No revenue or gross margin is reported. Profit margins are not meaningful given the operating losses and absence of reported revenue.
Changes versus the prior comparable periods
- Q2 net loss improved by $156,000 year over year; six-month net loss improved by $921,000. Lower R&D spending was the main factor, reflecting completion of PH-762 preclinical work and lower PH-762/PH-894 manufacturing costs compared with 2021.
- Q2 G&A expense increased $92,000, principally due to payroll and executive-search costs following the CEO’s departure. Six-month G&A decreased $63,000, as lower legal and patent fees offset those increases.
- Six-month 2021 other income included a $233,000 gain from PPP loan forgiveness; no comparable gain occurred in 2022. Prior-year financing inflows also included equity offerings and warrant exercises.
- Cash declined by $6.037 million in the first half of 2022. The filing attributes operating cash-flow movements in part to prepayments for PH-894 IND-enabling work and clinical supply manufacturing for PH-762 and PH-894.
Outlook, programs, and risks
- At filing, Phio expected to start an AgonOx collaboration trial of PH-762-treated double-positive TILs in Q4 2022. Phio committed to reimburse AgonOx for eligible trial expenses up to $4 million; no reimbursable costs had been incurred through June 30, 2022.
- Phio had begun dosing and enrollment in its Phase 1b intratumoral PH-762 melanoma trial in France. It anticipated top-line data from the first group in Q1 2023, while warning that pandemic-related enrollment delays could affect timing.
- The company expected to complete PH-894 IND-enabling studies in Q4 2022. These are management expectations stated in the filing, not confirmed outcomes.
- Phio reported recurring operating losses and expects negative operating cash flows for the foreseeable future. Continued operations depend on obtaining additional financing or strategic support; financing may be unavailable or dilutive, and failure to secure funding could force scaled-back or terminated operations.
- Disclosed risks include clinical development and regulatory uncertainty, trial enrollment and supply availability, inflation and rising costs, market and financing conditions, and the Russia-Ukraine conflict. The company said inflation had not materially affected results to date. It reported no material legal proceedings and no material changes to previously disclosed risk factors other than newly identified economic-condition risks.
- Management concluded disclosure controls were effective at the reasonable-assurance level; no material change in internal control over financial reporting was reported during the quarter.
Important facts for investors to verify
- Current cash use and runway against the stated minimum 12-month funding expectation, including whether additional financing will be needed.
- Actual progress, enrollment, safety findings, and data timing for the PH-762 melanoma and AgonOx collaborative trials.
- Completion and cost of PH-894 IND-enabling work and any resulting changes to development timelines.
- Potential dilution: 6,544,070 outstanding warrants at June 30, 2022, in addition to 686,974 unvested restricted stock units; the 2021 Lincoln Park equity purchase agreement expired in May 2022 without share sales.
- Whether the AgonOx reimbursement commitment, clinical supply costs, or changing economic conditions materially affect cash runway.