Phio Pharmaceuticals(PHIO) - 2025 Q1 - Quarterly Report

Part I Financial Statements (Unaudited) This section presents the unaudited condensed consolidated financial statements for Phio Pharmaceuticals Corp. as of March 31, 2025, and for the three months ended March 31, 2025 and 2024 Condensed Consolidated Balance Sheets The company's cash and cash equivalents significantly increased to $13,278 thousand as of March 31, 2025, from $5,382 thousand at the end of 2024, primarily due to financing activities. Total assets grew to $13,440 thousand, and total stockholders' equity rose to $12,170 thousand from $4,723 thousand, reflecting the capital raised during the quarter Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2025 (in thousands) | December 31, 2024 (in thousands) | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $13,278 | $5,382 | | Total current assets | $13,436 | $5,736 | | Total assets | $13,440 | $5,738 | | Liabilities & Equity | | | | Total current liabilities | $1,270 | $1,015 | | Total liabilities | $1,270 | $1,015 | | Total stockholders' equity | $12,170 | $4,723 | Condensed Consolidated Statements of Operations For the three months ended March 31, 2025, the company reported a net loss of $1,769 thousand, an improvement from a net loss of $2,154 thousand in the same period of 2024. The reduced loss was driven by lower operating expenses, specifically a decrease in both Research and Development and General and Administrative costs Statement of Operations Summary (in thousands, except per share data) | Metric | Q1 2025 (in thousands) | Q1 2024 (in thousands) | | :--- | :--- | :--- | | Research and development | $886 | $1,148 | | General and administrative | $986 | $1,061 | | Total operating expenses | $1,872 | $2,209 | | Operating loss | ($1,872) | ($2,209) | | Interest income, net | $125 | $53 | | Net loss | ($1,769) | ($2,154) | | Net loss per share (basic and diluted) | ($0.41) | ($0.47) | Condensed Consolidated Statements of Stockholders' Equity Stockholders' equity increased from $4,723 thousand at the end of 2024 to $12,170 thousand at March 31, 2025, primarily driven by the issuance of common stock and warrants, which added $6,490 thousand to additional paid-in capital, and the exercise of warrants, which added another $2,680 thousand, offset by the net loss for the period - Key changes in stockholders' equity for Q1 2025 included $2,680 thousand from the exercise of warrants and $6,490 thousand from the issuance of common stock and warrants[14] - The net loss of $1,769 thousand for the quarter reduced the accumulated deficit[14] Condensed Consolidated Statements of Cash Flows The company experienced a net cash increase of $7,896 thousand in Q1 2025, a significant turnaround from a $2,015 thousand decrease in Q1 2024, due to $9,173 thousand in net cash provided by financing activities from stock and warrant issuances, which more than offset the $1,275 thousand cash used in operating activities Cash Flow Summary (in thousands) | Activity | Q1 2025 (in thousands) | Q1 2024 (in thousands) | | :--- | :--- | :--- | | Net cash used in operating activities | ($1,275) | ($2,011) | | Net cash used in investing activities | ($2) | $0 | | Net cash provided by (used in) financing activities | $9,173 | ($4) | | Net increase (decrease) in cash | $7,896 | ($2,015) | | Cash at end of period | $13,278 | $6,475 | Notes to Condensed Consolidated Financial Statements The notes detail the company's basis of accounting, its status as a clinical-stage biopharmaceutical company, and significant events, including a going concern warning due to recurring losses, the termination of the AgonOx collaboration, and extensive financing activities through stock and warrant offerings in January 2025 - The company is a clinical-stage biopharmaceutical firm focused on its proprietary INTASYL® self-delivering siRNA technology for immuno-oncology therapeutics[20] - The company has recurring losses and negative cash flows, which raises substantial doubt about its ability to continue as a going concern without raising additional capital[29] - In May 2024, the company terminated its Clinical Co-Development Agreement with AgonOx. A final settlement payment of $34,320 was made on March 21, 2025, settling all future obligations[34][35] - In January 2025, the company conducted three separate registered direct offerings and private placements, raising approximately $6,700 thousand in net proceeds[49][51][53] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's financial condition and operational results, highlighting its focus on the clinical development of PH-762 for cancer treatment, the implementation of a cost rationalization program, and the significant bolstering of its cash position by January 2025 offerings, extending the operational runway into the second quarter of 2026 Overview Phio is a clinical-stage biopharmaceutical company focused on its INTASYL® siRNA technology to make immune cells more effective at killing tumor cells, having shifted from discovery research to product development and implemented a cost rationalization program that included a >50% headcount reduction to redirect funds to the Phase 1b clinical trial for its lead candidate, PH-762 - The company is focused on developing therapeutics using its proprietary INTASYL® self-delivering siRNA technology to target proteins that inhibit the body's ability to fight cancer[75] - A cost rationalization program was implemented in 2023, involving a headcount reduction of over 50% and a shift to remote operations to fund the PH-762 clinical trial[76] Product Pipeline Update The lead product, PH-762, is in a Phase 1b trial for various skin cancers, with promising early results showing a pathologic complete response in 4 of 9 cSCC patients, with enrollment expected to complete in Q3 2025, while the collaboration with AgonOx for a T-cell therapy using PH-762 was terminated in May 2024, and development of a second candidate, PH-894, has been deferred to prioritize PH-762 - PH-762 is being evaluated in a U.S. Phase 1b trial for cutaneous squamous cell carcinoma (cSCC), melanoma, and Merkel cell carcinoma. Enrollment is expected to complete in Q3 2025[79] - Early data from the PH-762 trial showed that out of 9 cSCC patients, 4 had a pathologic complete response (100% tumor clearance) and the treatment was well tolerated with no dose-limiting toxicities[79] - The IND submission for PH-894 has been deferred to focus resources on the clinical advancement of PH-762[85] Results of Operations Operating expenses for Q1 2025 were $1,872 thousand, a decrease of $337 thousand from $2,209 thousand in Q1 2024, with Research and Development expenses falling by 23% ($262 thousand) due to lower salary and consulting costs, and General and Administrative expenses decreasing by 7% ($75 thousand), which the company considers an immaterial fluctuation Operating Expenses Comparison (in thousands) | Expense Category | Q1 2025 (in thousands) | Q1 2024 (in thousands) | Dollar Change (in thousands) | | :--- | :--- | :--- | :--- | | Research and development | $886 | $1,148 | ($262) | | General and administrative | $986 | $1,061 | ($75) | | Total operating expenses | $1,872 | $2,209 | ($337) | - The 23% decrease in R&D expenses was primarily driven by a $106,000 decrease in salary-related costs and a $94,000 decrease in consulting expense[91] Liquidity and Capital Resources As of March 31, 2025, the company had $13,278 thousand in cash and cash equivalents, but recurring losses and negative cash flows raise substantial doubt about its ability to continue as a going concern without additional funding, despite a significant inflow of $9,173 thousand from financing activities during the quarter - The company has limited cash resources and recurring losses, raising substantial doubt about its ability to continue as a going concern. Its continuation depends on raising additional capital[95] Cash Flow Summary (in thousands) | Activity | Q1 2025 (in thousands) | Q1 2024 (in thousands) | | :--- | :--- | :--- | | Net cash used in operating activities | ($1,275) | ($2,011) | | Net cash provided by financing activities | $9,173 | ($4) | - The company expects its current cash and cash equivalents of $13,278 thousand will fund operations into the second quarter of 2026[101] Quantitative and Qualitative Disclosures About Market Risk The company is a smaller reporting company and is not required to provide this information - As a smaller reporting company, Phio Pharmaceuticals is not required to provide quantitative and qualitative disclosures about market risk[105] Controls and Procedures Management, including the Principal Executive Officer and Principal Financial Officer, evaluated the company's disclosure controls and procedures as of March 31, 2025, concluding that these controls were effective at a reasonable assurance level, with no material changes to the company's internal control over financial reporting during the quarter - Management concluded that the company's disclosure controls and procedures were effective at the reasonable assurance level as of March 31, 2025[107] - No changes in internal control over financial reporting occurred during the quarter that materially affected, or are reasonably likely to materially affect, internal controls[108] Part II Legal Proceedings The company is not currently a party to any material legal proceedings - The company is not currently a party to any actual or threatened material legal proceedings[111] Risk Factors The company highlights significant risks, with a primary focus on maintaining compliance with Nasdaq's continued listing requirements, specifically the minimum stockholders' equity of $2,500 thousand and the $1.00 minimum bid price, noting that a recent reverse stock split limits its ability to use that measure again before July 2025 if the bid price falls, and also addressing potential adverse impacts from changes in U.S. and international trade policies - There is a risk of non-compliance with Nasdaq's continued listing requirement of maintaining at least $2,500 thousand in stockholders' equity. As of March 31, 2025, stockholders' equity was $12,170 thousand[113] - If the company's stock price falls below the $1.00 minimum bid requirement before July 5, 2025, it may face immediate delisting determination due to a reverse stock split effected on July 5, 2024[114] - Changes in U.S. and international trade policies, such as tariffs on imports from Mexico, Canada, or China, could increase manufacturing costs and disrupt the supply of clinical materials[116] Unregistered Sales of Equity Securities and Use of Proceeds There were no sales or issuances of unregistered securities during the period that have not been previously disclosed in a Current Report on Form 8-K - No unregistered sales of equity securities occurred that were not previously disclosed on a Form 8-K[117] Other Information During the first quarter of 2025, no director or officer of the company adopted or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement - No director or officer adopted or terminated a Rule 10b5-1 trading plan or other non-Rule 10b5-1 trading arrangement during the three months ended March 31, 2025[120] Exhibits This section provides an index of all exhibits filed with or incorporated by reference into the Form 10-Q report, including corporate governance documents, forms of warrants, securities purchase agreements, and Sarbanes-Oxley certifications