Phio Pharmaceuticals Corp. — Q3 2023 Form 10-Q
Reporting period: Three and nine months ended September 30, 2023. Phio is a clinical-stage biotechnology company developing cancer immunotherapies using its INTASYL self-delivering RNAi platform. It has no product revenue and reports as a pre-commercial development-stage business.
Financial results
Amounts below are in millions of dollars except per-share data. The filing reports no revenue.
| Metric | Q3 2023 | Q3 2022 | Nine months 2023 | Nine months 2022 |
|---|---|---|---|---|
| Research and development expense | $1.808 | $2.508 | $5.325 | $5.398 |
| General and administrative expense | $0.968 | $1.063 | $3.600 | $3.334 |
| Total operating expenses | $2.776 | $3.571 | $8.925 | $8.732 |
| Operating loss | $(2.776) | $(3.571) | $(8.925) | $(8.732) |
| Net loss | $(2.780) | $(3.576) | $(8.931) | $(8.749) |
| Basic and diluted loss per share | $(1.14) | $(3.14) | $(5.03) | $(7.70) |
- Cash and liquidity: Cash was $8.407 million at September 30, 2023, down from $11.781 million at December 31, 2022. Cash plus restricted cash was $8.457 million.
- Cash flows, nine months: Operating activities used $8.379 million, investing activities used $0.005 million, and financing activities provided $5.010 million. Cash and restricted cash decreased $3.374 million.
- Balance sheet: Total assets were $9.539 million, current liabilities $2.326 million, and stockholders’ equity $7.213 million. The filing reports no borrowings; liabilities include a $0.070 million operating lease obligation.
- Margins: Not meaningful because the company reported no revenue.
Changes and financing
- Q3 operating expenses fell $0.795 million year over year, mainly as PH-894 IND-enabling work wound down; higher clinical costs partly offset the reduction. For the nine-month period, operating expenses rose $0.193 million: lower R&D was more than offset by higher G&A.
- Nine-month R&D expense decreased $0.073 million. Management attributed the decrease mainly to lower PH-894 preclinical costs and lab supplies, offset by increased costs for two U.S. PH-762 Phase 1 trials.
- Nine-month G&A expense increased $0.266 million, primarily due to higher legal and audit fees, partly offset by lower payroll-related costs.
- April and June 2023 equity financings generated combined net proceeds of $5.048 million. Common shares issued and outstanding rose from 1,139,024 at December 31, 2022 to 2,307,385 at September 30, 2023. The company also had 3,350,980 warrants outstanding at quarter-end.
- A 1-for-12 reverse stock split became effective January 26, 2023; presented share and per-share figures reflect the split.
Outlook, risks, and notable items
- Going concern: Management says recurring losses, no product revenue, and limited cash raise substantial doubt about the company’s ability to continue as a going concern. It states current cash may not fund operations for at least 12 months from issuance of the financial statements. Continued operations depend on raising additional capital or pursuing a strategic opportunity; success is not assured.
- Clinical programs: In November 2023, after quarter-end, Phio announced the first patient dosed in its U.S. multi-center Phase 1b intratumoral PH-762 trial, which remained open for enrollment. The French PH-762 trial was wound down; review of the initial three-patient cohort found no dose-limiting toxicity or drug-related serious or severe adverse events.
- AgonOx collaboration: The first patient in AgonOx’s Phase 1 trial of PH-762-treated tumor-infiltrating lymphocytes was dosed in August 2023. Phio recorded $0.606 million of collaboration expense in Q3 and $0.906 million for the nine months; approximately $2.964 million of committed costs remained unincurred at September 30.
- PH-894: IND-enabling studies were completed, but the IND submission was deferred as Phio prioritized U.S. PH-762 clinical development.
- Facility: The company plans not to renew its Marlborough, Massachusetts lease, which expires March 31, 2024, and expects to operate as a fully remote business beginning April 2024.
- Management reported effective disclosure controls and no material change in internal control over financial reporting during the quarter. The company reported no material legal proceedings and no material changes to the risk factors in its 2022 Form 10-K.
Important facts for investors to verify
- Whether cash resources and access to new financing are sufficient to fund operations and clinical commitments, given the disclosed going-concern uncertainty.
- Enrollment, safety findings, and timing for the U.S. PH-762 trial and AgonOx’s PH-762-treated cell-therapy trial.
- Actual remaining and future costs under the AgonOx agreement, and the financial implications of deferring PH-894.
- Potential dilution from outstanding warrants, future equity financing, and the increase in shares outstanding.
- Operational and cost effects of the planned transition to a remote business after the facility lease expires.