Phio Pharmaceuticals Corp. — Q1 2021 Form 10-Q
Reporting period: Three months ended March 31, 2021. Financial statements are unaudited and amounts below are in U.S. dollars; financial statement amounts are in thousands unless otherwise noted.
Business context
Phio is a pre-revenue biotechnology company developing immuno-oncology treatments using its self-delivering RNAi INTASYL platform. Its programs include PH-762, PH-894 and PH-804 for adoptive cell therapy and potential direct treatment of the tumor micro-environment. The filing reports no revenue.
Financial performance and liquidity
| Metric | Q1 2021 | Q1 2020 / prior date |
|---|---|---|
| Revenue | None reported | None reported |
| Research and development expense | $2,621 | $1,218 |
| General and administrative expense | $1,017 | $1,138 |
| Total operating expenses / operating loss | $3,638 / $(3,638) | $2,356 / $(2,356) |
| Net loss | $(3,407) | $(2,351) |
| Net loss per share, basic and diluted | $(0.32) | $(1.33) |
| Net cash used in operating activities | $(3,033) | $(2,176) |
| Cash and restricted cash at quarter-end | $32,745 | $14,294 at December 31, 2020 |
| Total assets / total liabilities at quarter-end | $33,856 / $2,456 | $15,739 / $2,722 at December 31, 2020 |
Cash alone was $32.695 million at March 31, 2021; current assets were $33.322 million and current liabilities were $2.191 million. Long-term debt was zero at quarter-end, while lease liabilities totaled $383,000. The company reported no operating margin or profit because it had no revenue and incurred an operating loss.
Financing activities provided $21.490 million, primarily from equity offerings and warrant exercises. Investing activities used $6,000. Management said existing cash should fund operations for at least 12 months from the financial statement release date.
Material changes and unusual items
- R&D expense increased $1.403 million, or 115%, mainly due to manufacturing and required preclinical work supporting planned PH-762 clinical trials. G&A decreased $121,000, or 11%, primarily due to lower legal fees.
- The net loss increased by $1.056 million year over year. The 2021 loss included a $233,000 gain from forgiveness of the company’s PPP loan, approved in February 2021.
- Two 2021 equity transactions generated net proceeds of $12.669 million in a January private placement and $6.908 million in a February registered direct offering; warrant exercises generated another $2.146 million. Common shares outstanding rose from 5.781 million at December 31, 2020 to 13.534 million at March 31, 2021. A further 6.567 million warrants were outstanding at quarter-end.
- Weighted-average shares were 10.680 million versus 1.773 million in Q1 2020, so the change in reported loss per share should be read alongside the substantial change in share count.
Outlook, risks and contingencies
- Phio planned to submit an IND for a PH-762 adoptive cell therapy program with AgonOx in Q3 2021, with a clinical trial expected to begin soon afterward. It expected to start a separate PH-762 intratumoral melanoma trial in Q4 2021. These are forward-looking plans, not assurances.
- The company expects continued operating losses and negative operating cash flows and depends on future financing, equity issuance, debt or strategic opportunities. Management’s 12-month cash runway estimate does not remove longer-term funding risk.
- COVID-19 had not materially affected operations or financial condition to date, according to management, but supplier and service-provider disruptions could delay studies or increase costs. The company cited alternative providers and sufficient compound supply for ongoing preclinical and initial clinical work as mitigation.
- Clinical and product development depend on preclinical results, regulatory submissions, collaborators and suppliers; actual timing and outcomes may differ from expectations. The filing gives no quantified financial guidance.
- No material legal proceedings were reported. The company disclosed customary indemnification obligations related to licenses and other agreements, with no material costs to date and no related liability accrued. Management assessed disclosure controls as effective and reported no material change in internal control over financial reporting.
Important facts for investors to verify
- Whether cash, operating burn and financing access support the stated runway, and how much additional capital may be needed.
- Whether PH-762 IND submissions and the planned adoptive cell therapy and melanoma trial timelines were achieved.
- The dilution implications of the increased share count and 6.567 million outstanding warrants, including their exercise terms.
- Whether R&D spending, clinical progress and collaboration arrangements develop as management expects.
- Any subsequent changes in COVID-19-related supply availability, clinical execution, regulatory requirements or financing conditions.