Phio Pharmaceuticals Corp. — Q3 2022 Form 10-Q
Reporting period: Quarter and nine months ended September 30, 2022. Phio is a pre-revenue immuno-oncology biotechnology company developing therapeutics using its INTASYL self-delivering RNAi platform.
Financial results and liquidity
| Metric | Q3 2022 | Q3 2021 | Nine months 2022 | Nine months 2021 |
|---|---|---|---|---|
| Revenue | No revenue reported | No revenue reported | No revenue reported | No revenue reported |
| Research and development expense | $2.508 million | $2.673 million | $5.398 million | $6.661 million |
| General and administrative expense | $1.063 million | $1.066 million | $3.334 million | $3.400 million |
| Total operating expenses / operating loss | $3.571 million / $(3.571) million | $3.739 million / $(3.739) million | $8.732 million / $(8.732) million | $10.061 million / $(10.061) million |
| Net loss | $(3.576) million | $(3.742) million | $(8.749) million | $(9.836) million |
| Basic and diluted loss per share | $(0.26) | $(0.28) | $(0.64) | $(0.78) |
At September 30, 2022, cash was $14.484 million and restricted cash was $50,000, versus cash of $24.057 million and restricted cash of $50,000 at December 31, 2021. Current assets were $15.377 million and current liabilities were $2.194 million. Total liabilities were $2.264 million, including $202,000 in lease liabilities; the filing reports no other outstanding debt. The company recorded $9.424 million of operating cash outflow and $121,000 of investing outflow for the nine months. Financing used $28,000, leaving cash and restricted cash down $9.573 million to $14.534 million. The filing does not present meaningful revenue or profit margins for this pre-revenue business.
Management said existing cash should fund operations for at least 12 months from the release of the financial statements. The company nevertheless expects recurring losses and negative operating cash flow and says continued operations depend on future financing or strategic opportunities; additional funding may not be available on acceptable terms, or at all.
Changes versus the prior comparable periods
- Operating expenses decreased $168,000 in Q3 and $1.329 million for the first nine months. Year-to-date R&D expense fell $1.263 million, mainly reflecting lower prior-year PH-762 manufacturing and preclinical costs, partly offset by PH-894 preclinical work and PH-762 clinical-trial costs in 2022.
- Year-to-date net loss narrowed by $1.087 million. The 2021 comparison included $233,000 of income from PPP loan forgiveness; this also contributed to lower other income in 2022.
- Operating cash use was broadly similar year over year: $9.424 million in 2022 versus $9.387 million in 2021. 2021 financing included $21.723 million of proceeds from equity offerings and warrant exercises; no comparable financing proceeds were reported in 2022.
- Cash declined from year-end 2021, while stockholders’ equity fell to $13.527 million from $21.932 million, primarily reflecting the year-to-date net loss.
Outlook, programs, and risks
- PH-762: The company reported that its Phase 1b melanoma trial in France had begun dosing and remained open for enrollment. Management anticipated initial top-line data in Q1 2023; enrollment and timing could be affected by the pandemic.
- PH-894: Management expected to complete IND-enabling studies in Q4 2022. The filing describes preclinical development, not a clinical-stage trial.
- AgonOx collaboration: Phio committed to reimburse up to $4 million of clinical-trial expenses for a PH-762/DP TIL program. No related R&D expense had been incurred through September 30, 2022, and financial support had not commenced. Management expected the trial to begin in Q4 2022. Phio may receive future development milestones and low-single-digit sales-based royalties under specified circumstances.
- Nasdaq listing: The company had received an extension through February 20, 2023 to regain compliance with the $1.00 minimum bid-price requirement. Failure to regain compliance could lead to delisting, with potential adverse effects on share liquidity, price, and access to capital. The filing’s later reference to a February 20, 2022 deadline appears inconsistent with the stated extension date.
- Key risks include development and clinical-trial uncertainty, financing needs, inflation and macroeconomic conditions, the Russia-Ukraine conflict, and possible pandemic-related effects on supplies and trial enrollment. Management said inflation had not materially affected results to date and that the pandemic had not significantly affected reported-period results, while noting future effects remain uncertain.
- No material legal proceedings were reported. Management concluded disclosure controls were effective at the reasonable-assurance level and reported no material quarterly change in internal control over financial reporting.
Important facts for investors to verify
- Current cash use and runway, and whether additional financing or a strategic transaction is required.
- Actual enrollment, safety, and data timing for the PH-762 Phase 1b trial, alongside progress on PH-894 IND-enabling work.
- Whether the AgonOx trial began and whether Phio has started incurring its potential reimbursement commitment of up to $4 million.
- Nasdaq bid-price compliance and the status of any listing extension or delisting process.
- Potential dilution: 6.544 million warrants were outstanding at September 30, 2022, in addition to 684,201 unvested restricted stock units; the filing excluded these potential shares from diluted loss per share as antidilutive.