Phio Pharmaceuticals Corp. — Q2 2023 Form 10-Q
Reporting period: Three and six months ended June 30, 2023. Phio is a clinical-stage biotechnology company developing cancer therapies using its INTASYL RNAi platform. It had no product revenue.
Financial results and position
| Metric | Q2 2023 | Q2 2022 | Six months 2023 | Six months 2022 |
|---|---|---|---|---|
| Revenue | None reported | None reported | None reported | None reported |
| Research and development expense | $1.383 million | $1.304 million | $3.517 million | $2.890 million |
| General and administrative expense | $1.164 million | $1.217 million | $2.632 million | $2.271 million |
| Total operating expenses | $2.547 million | $2.521 million | $6.149 million | $5.161 million |
| Net loss | $2.549 million | $2.531 million | $6.151 million | $5.173 million |
| Basic and diluted loss per share | $1.47 | $2.22 | $4.28 | $4.56 |
| Net cash used in operating activities | Not provided quarterly | $5.479 million | $5.898 million |
At June 30, cash was $11.307 million, restricted cash $0.050 million, and current assets $12.035 million. Current liabilities were $2.392 million; total liabilities were $2.392 million, including $0.104 million of current lease liabilities. The company reported no debt balance. Stockholders’ equity was $9.904 million. Operating cash burn was partly funded by $5.048 million of net financing proceeds; cash and restricted cash declined $0.474 million over the first half to $11.357 million. Gross profit and operating margins are not meaningful because the company reported no revenue.
Changes versus comparable periods
- Q2 operating expenses rose $0.026 million and net loss rose $0.018 million year over year. For the first half, operating expenses increased $0.988 million and net loss increased $0.978 million.
- First-half R&D expense increased $0.627 million, primarily reflecting higher clinical costs for PH-762 trials; Q2 R&D increased $0.079 million.
- First-half G&A expense increased $0.361 million, mainly due to higher legal fees, while Q2 G&A declined $0.053 million.
- First-half operating cash use improved by $0.419 million compared with 2022, though net loss increased; financing shifted from a $0.025 million outflow in 2022 to $5.010 million provided in 2023.
- Common shares outstanding were 1,985,211 at June 30 versus 1,139,024 at December 31, 2022. The cover reports 2,221,856 shares outstanding as of August 4, 2023.
Outlook, developments, and risks
- The FDA cleared the PH-762 IND in May 2023. Management planned to initiate a U.S. Phase 1b intratumoral study in cutaneous squamous cell carcinoma, melanoma, and Merkel cell carcinoma in the second half of 2023. The company was winding down its French first-in-human PH-762 trial; the initial three-patient safety review reported no dose-limiting toxicity or drug-related severe or serious adverse events.
- AgonOx’s Phase 1 study of PH-762-treated tumor-infiltrating lymphocytes was open for enrollment. Phio recognized $0.300 million of related expense in the first half of 2023 and had approximately $3.570 million of remaining potential costs under its commitment of up to $4 million.
- PH-894 IND submission was deferred as the company prioritized PH-762; IND-enabling studies were completed, with study reports still being finalized.
- Management expects R&D spending to increase as clinical programs advance. Phio has recurring losses, negative operating cash flows, and no product revenue. The filing states that current cash may not fund operations for at least 12 months from the financial-statement release date, raising substantial doubt about the company’s ability to continue as a going concern. Additional financing or a strategic transaction is necessary, with no assurance of success.
- April and June 2023 equity financings generated $5.048 million in combined net proceeds and included substantial warrant issuance. At June 30, 3,671,270 warrants were outstanding, with weighted-average exercise price of $9.09 and expirations from October 2023 through December 2028. Future equity issuance and warrant exercises may dilute shareholders.
- The headquarters lease expires March 31, 2024; the recorded lease liability was $0.104 million. Management reported disclosure controls were effective at a reasonable-assurance level and no material change in internal control over financial reporting.
Most important facts for investors to verify
- Whether the planned U.S. PH-762 Phase 1b trial began on schedule and its enrollment, safety, and early response updates.
- Available cash runway, cash burn, and timing and terms of any further financing, given the going-concern warning.
- Fully diluted share count and potential dilution from pre-funded warrants, other warrants, and equity compensation; reconcile the June 30 and August 4 share counts.
- AgonOx trial progress and the amount and timing of Phio’s remaining collaboration funding commitment.
- Whether PH-894 development remains deferred and how management’s clinical spending plans affect liquidity.