Phio Pharmaceuticals(PHIO) - 2025 Q2 - Quarterly Report

PART I — FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS This section presents the unaudited condensed consolidated financial statements, including the balance sheets, statements of operations, stockholders' equity, and cash flows, along with their accompanying notes, providing a detailed financial overview for the periods ended June 30, 2025 and 2024 Condensed Consolidated Balance Sheets The balance sheet shows a significant increase in cash and cash equivalents and total stockholders' equity as of June 30, 2025, compared to December 31, 2024, while the accumulated deficit continued to grow | Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :------------------------------ | :----------------------------- | :------------------------------- | | Cash and cash equivalents | $10,775 | $5,382 | | Total current assets | $11,294 | $5,736 | | Total liabilities | $1,206 | $1,015 | | Total stockholders' equity | $10,095 | $4,723 | | Accumulated deficit | $(150,291) | $(146,356) | Condensed Consolidated Statements of Operations The statements of operations indicate an increased net loss for the three months ended June 30, 2025, but a slight decrease for the six months ended June 30, 2025, compared to the prior year, alongside a substantial increase in weighted average common shares outstanding | Metric (in thousands, except EPS) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Research and development | $1,074 | $866 | $1,960 | $2,014 | | General and administrative | $1,235 | $1,048 | $2,221 | $2,109 | | Total operating expenses | $2,309 | $1,914 | $4,181 | $4,123 | | Operating loss | $(2,309) | $(1,914) | $(4,181) | $(4,123) | | Net loss | $(2,166) | $(1,846) | $(3,935) | $(4,000) | | Net loss per common share (Basic and diluted) | $(0.45) | $(3.62) | $(0.86) | $(7.85) | | Weighted average common shares outstanding (Basic and diluted) | 4,794,857 | 510,188 | 4,551,061 | 509,542 | Condensed Consolidated Statements of Stockholders' Equity The statements of stockholders' equity reflect a substantial increase in total equity from December 31, 2024, to June 30, 2025, primarily driven by the issuance of common stock and warrants and the exercise of warrants, despite ongoing net losses | Metric (in thousands) | December 31, 2024 | June 30, 2025 | | :-------------------- | :---------------- | :------------ | | Total Stockholders' Equity | $4,723 | $10,095 | Key Changes (Six Months Ended June 30, 2025): * Issuance of common stock upon exercise of warrants: $2,680 * Issuance of common stock and warrants, net of offering costs: $6,493 * Stock-based compensation expense: $94 * Net loss: $(3,935) Condensed Consolidated Statements of Cash Flows Cash flows for the six months ended June 30, 2025, show a significant net increase in cash and cash equivalents, primarily due to substantial cash provided by financing activities, offsetting continued cash usage in operating activities | Cash Flow Activity (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :----------------------------- | :----------------------------- | | Net cash used in operating activities | $(3,815) | $(3,788) | | Net cash used in investing activities | $(5) | $0 | | Net cash provided by (used in) financing activities | $9,213 | $(4) | | Net increase (decrease) in cash and cash equivalents | $5,393 | $(3,792) | | Cash and cash equivalents at end of period | $10,775 | $4,698 | Notes to Condensed Consolidated Financial Statements These notes provide essential details and context for the condensed consolidated financial statements, covering organizational information, significant accounting policies, collaboration agreements, lease arrangements, equity financing activities, stock-based compensation, net loss per share calculations, segment reporting, and subsequent events 1. Organization and Significant Accounting Policies This section outlines Phio Pharmaceuticals Corp.'s nature of operations as a clinical-stage biopharmaceutical company, its history, the basis of financial statement presentation, consolidation principles, single operating segment, the impact of a reverse stock split, the use of estimates, and critical liquidity concerns, including a going concern warning. It also notes recent accounting pronouncements under evaluation - Phio Pharmaceuticals Corp. is a clinical stage biopharmaceutical company focused on developing immuno-oncology therapeutics using its proprietary INTASYL® self-delivering siRNA technology[19] - The Company completed a 1-for-9 reverse stock split of its common stock effective July 5, 2024, with all share and per share amounts adjusted retrospectively[25] - The Company has reported recurring losses and negative operating cash flows since inception, raising substantial doubt about its ability to continue as a going concern for at least the next 12 months without additional funding[27][28] - The Company is currently evaluating the impact of new accounting pronouncements: ASU 2023-09 (Income Tax Disclosures) and ASU 2024-03 (Income Statement Expense Disaggregation Disclosure)[30][31] 2. Collaboration Agreement The Company terminated its clinical co-development collaboration agreement with AgonOx in May 2024, settling all financial obligations by March 2025 and eliminating future financial support requirements and potential milestone/royalty payments - The Clinical Co-Development Agreement with AgonOx, Inc. was terminated in May 2024, effective immediately[33][85] - The Company made a final payment of $34,320 to AgonOx on March 21, 2025, settling all future obligations related to the terminated agreement[34][85] | Expense Type | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Agreement Expense | $0 | $56,000 | $0 | $106,000 | 3. Leases The Company's lease arrangements changed significantly, with the former headquarters lease expiring in March 2024. It now operates remotely with a month-to-month laboratory lease in Worcester, MA, and a flexible working space contract in King of Prussia, PA - The Company's former corporate headquarters and primary laboratory lease expired on March 31, 2024. Operations are now remote, supported by a month-to-month lease for a laboratory facility in Worcester, MA, and a flexible working space contract in King of Prussia, PA[37][79] | Operating Lease Costs (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Operating lease costs | $8.4 | $0 | $16.8 | $33.0 | 4. Stockholders' Equity This section details multiple financing activities from July 2024 to January 2025, including registered direct offerings and private placements of common stock and warrants, which significantly increased the company's capital and the number of outstanding warrants - In July 2024, the Company completed a financing round, generating approximately $2,646,000 in net proceeds from warrant exercises and the issuance of new Series C and D warrants[41] - The Company conducted several concurrent registered direct offerings and private placements in December 2024 and January 2025, issuing common stock and various series of warrants (Series E, F, G, H, I) and