Phio Pharmaceuticals Corp. — Q1 2023 Form 10-Q
Reporting period: Three months ended March 31, 2023; balance-sheet comparisons are to December 31, 2022. Phio is a clinical-stage biotechnology company developing cancer therapeutics using its INTASYL self-delivering RNAi platform. It has not generated product revenue.
Financial results and liquidity
| Metric | Q1 2023 | Q1 2022 |
|---|---|---|
| Revenue | None reported | None reported |
| Research and development expense | $2.134 million | $1.586 million |
| General and administrative expense | $1.468 million | $1.054 million |
| Total operating expenses / operating loss | $3.602 million | $2.640 million |
| Net loss | $3.602 million | $2.642 million |
| Basic and diluted loss per share | $3.15 | $2.34 |
| Net cash used in operating activities | $2.708 million | $3.469 million |
At March 31, 2023, cash was $9.035 million and restricted cash was $50,000, versus cash of $11.781 million and restricted cash of $50,000 at year-end 2022. Total assets were $9.707 million, total liabilities $2.396 million, and stockholders’ equity $7.311 million. Current liabilities were $2.396 million; current assets were $9.404 million. Debt is not reported. Lease liabilities totaled $138,000, all current. With no revenue, a profit margin is not applicable.
Cash and restricted cash fell $2.746 million during the quarter. Investing cash flow was zero; financing cash flow was a $38,000 use. Management states that recurring losses, lack of product revenue, and limited cash raise substantial doubt about the company’s ability to continue as a going concern; cash resources may not fund operations for at least 12 months from the financial statements’ release. Additional capital or a strategic opportunity is required, with no assurance of success.
Changes and notable items
- Operating expenses rose $962,000 year over year. R&D increased $548,000 (35%), mainly from approximately $460,000 in higher clinical-related costs for planned PH-762 intratumoral and adoptive-cell-therapy trials. G&A increased $414,000 (39%), primarily due to approximately $420,000 in higher legal, patent, and public-relations professional fees.
- Net loss increased $960,000. Operating cash use nevertheless decreased by $761,000, primarily reflecting lower payments for prior-period PH-894 IND-enabling work and clinical-supply manufacturing, partly offset by the higher net loss.
- On April 20, 2023, after quarter-end, Phio completed an offering of 353,983 shares and warrants to purchase up to 707,966 shares, plus placement-agent warrants for 26,549 shares. Estimated net proceeds were approximately $1.654 million. The company also received $24,000 for repricing certain existing warrants; accounting for the financing and amended warrants was under review. The filing reports 1,504,565 common shares outstanding as of May 5, 2023.
- A 1-for-12 reverse stock split took effect January 26, 2023; share and per-share amounts in the filing reflect the split. The Series D preferred share issued for reverse-split voting was redeemed in January.
Programs, outlook, and risks
- PH-762: The Phase 1b dose-escalation study in advanced melanoma in France had no dose-limiting toxicities or drug-related serious or severe adverse events in the initial three-subject cohort; the monitoring committee recommended proceeding, and the next cohort was open for enrollment. Phio expected to begin a U.S. Phase 1b trial in the second half of 2023, focused on cutaneous squamous cell carcinoma and selected skin cancers.
- AgonOx collaboration: Phio committed up to $4 million toward a Phase 1 study of PH-762-treated DP TIL cells. Approximately $119,000 of expense was recognized in Q1 2023, and approximately $0.3 million cumulatively to date. Enrollment was expected to begin in Q2 2023. Phio may receive development milestones and low-single-digit sales royalties.
- PH-894: IND-enabling studies were completed, but submission was deferred as Phio prioritized advancing PH-762 into U.S. clinical development.
- Management expects R&D spending to increase as programs advance. Key risks include clinical and regulatory uncertainty, collaboration execution, manufacturing and supply, intellectual-property protection, financing availability, and broader economic conditions. The filing reports no material change to previously disclosed risk factors and no known material legal proceedings.
- The company reported effective disclosure controls at the reasonable-assurance level and no material change in internal control over financial reporting during the quarter.
Important facts for investors to verify
- Whether the April financing and any subsequent funding provide adequate runway given management’s going-concern warning.
- Actual timing, enrollment, safety findings, and progress for the PH-762 France and U.S. trials and the AgonOx study.
- The accounting treatment and potential dilution from the April warrants, repriced warrants, and the 545,401 pre-existing warrants disclosed at March 31.
- Whether spending, especially clinical R&D and G&A costs, tracks management’s expectations and available capital.