Phio Pharmaceuticals Corp. — Q3 2021 Form 10-Q
Reporting period: Quarter and nine months ended September 30, 2021. Figures below are unaudited. Phio is a clinical-stage biotechnology company developing immuno-oncology therapeutics using its INTASYL self-delivering RNAi platform. The filing reports no revenue.
Financial performance and position
| Metric | Q3 2021 | Q3 2020 | Nine months 2021 | Nine months 2020 |
|---|---|---|---|---|
| Research and development expense | $2.807m | $1.256m | $7.091m | $3.253m |
| General and administrative expense | $0.932m | $1.050m | $2.970m | $3.078m |
| Total operating expenses / operating loss | $3.739m / ($3.739m) | $2.306m / ($2.306m) | $10.061m / ($10.061m) | $6.331m / ($6.331m) |
| Net loss | ($3.742m) | ($2.309m) | ($9.836m) | ($6.332m) |
| Basic and diluted loss per share | ($0.28) | ($0.40) | ($0.78) | ($1.51) |
- Cash was $26.529m at September 30, 2021, up from $14.244m at December 31, 2020; restricted cash was $0.050m. Total current assets were $27.450m and current liabilities $2.495m.
- For the first nine months, operating cash use was $9.387m, investing cash use $0.051m, and financing cash provided $21.723m. Financing included $19.577m net proceeds from stock and warrant issuances and $2.146m from warrant exercises.
- No long-term debt remained at quarter-end. The $0.231m Paycheck Protection Program loan, plus accrued interest, was forgiven in February 2021; Phio recorded a $0.233m gain on extinguishment.
- Gross profit and operating margins are not applicable based on the filing’s reported operations. The company reported recurring operating losses and expects negative operating cash flows for the foreseeable future.
Changes versus the prior comparable periods
- Q3 operating expenses rose $1.433m year over year; nine-month expenses rose $3.730m. R&D increased 123% for Q3 and 118% for the nine-month period, mainly reflecting manufacturing of PH-762 and PH-894, required preclinical work, and clinical-trial preparation.
- G&A declined $0.118m in Q3 and $0.108m for the nine months, primarily due to lower legal fees, partly offset by higher stock-based compensation.
- Nine-month net loss increased $3.504m year over year despite the PPP forgiveness gain. Operating cash use increased $3.208m, primarily reflecting higher spending on manufacturing and preclinical studies.
- Cash increased during the period, principally because of equity financing and warrant exercises. Common shares outstanding rose from 5.781m at December 31, 2020 to 13.535m at September 30, 2021. The company also reported 6.567m outstanding warrants at quarter-end.
Outlook, commentary, and risks
- Management believed available cash would fund operations for at least 12 months from the financial statements’ release. Longer-term operations depend on additional financing, strategic opportunities, or other funding; availability and terms are not assured. Failure to obtain funding could require scaling back or ending operations, or seeking a merger or acquisition.
- Phio expected R&D spending to continue increasing as PH-762 clinical activities commence. No revenue or formal financial guidance was provided.
- Management expected the PH-762/AgonOx DP TIL clinical study to start in Q2 2022 and a first-in-human direct-administration PH-762 melanoma study to start in Q1 2022. A PH-894 clinical trial application was expected in the second half of 2022. These were expectations, not assurances.
- COVID-19-related limits on supplier and service-provider availability had delayed clinical-program timelines beginning in Q2 2021. Further supply, service, trial-start, enrollment, and research delays remained possible.
- Pipeline claims described in the filing are primarily preclinical. Key risks include candidate development and clinical results, regulatory approvals, manufacturing and supply, intellectual-property protection, collaboration execution, and the company’s ability to raise capital.
- Other items: the filing reports no material legal proceedings and no material changes to previously disclosed risk factors. Management concluded disclosure controls were effective at a reasonable-assurance level; no material change in internal control over financial reporting was reported.
Important facts for investors to verify
- Current cash burn and whether the stated cash runway remains adequate as clinical and R&D spending increases.
- Progress, timing, trial authorization, and enrollment for the PH-762 studies, and the PH-894 development timetable, including any subsequent delays.
- Actual clinical evidence and whether preclinical efficacy claims translate into human safety and benefit.
- Potential dilution from the 6.567m outstanding warrants and any further equity financing; review warrant terms and the remaining availability under the Lincoln Park purchase agreement, which expires in May 2022.
- Continuing impacts from supplier constraints, COVID-19, and other factors affecting trial schedules and financing access.