Phio Pharmaceuticals(PHIO) - 2021 Q1 - Quarterly Report

Part I - Financial Information Financial Statements (Unaudited) Phio Pharmaceuticals reported an increased net loss for Q1 2021, primarily due to higher R&D expenses, while significantly strengthening its balance sheet through substantial financing activities Condensed Consolidated Balance Sheets As of March 31, 2021, total assets significantly increased to $33.9 million, primarily driven by a rise in cash, while stockholders' equity more than doubled due to financing activities Condensed Consolidated Balance Sheets (in thousands) | | March 31, 2021 | December 31, 2020 | | :--- | :--- | :--- | | Assets | | | | Cash | $32,695 | $14,244 | | Total current assets | $33,322 | $15,164 | | Total assets | $33,856 | $15,739 | | Liabilities & Stockholders' Equity | | | | Total current liabilities | $2,191 | $2,196 | | Total liabilities | $2,456 | $2,722 | | Total stockholders' equity | $31,400 | $13,017 | | Total liabilities and stockholders' equity | $33,856 | $15,739 | Condensed Consolidated Statements of Operations For Q1 2021, the company reported a net loss of $3.4 million, an increase from the prior year, primarily due to a significant rise in Research and Development expenses Condensed Consolidated Statements of Operations (in thousands, except per share data) | | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :--- | :--- | :--- | | Research and development | $2,621 | $1,218 | | General and administrative | $1,017 | $1,138 | | Total operating expenses | $3,638 | $2,356 | | Operating loss | $(3,638) | $(2,356) | | Gain on extinguishment of debt | $233 | $– | | Net loss | $(3,407) | $(2,351) | | Net loss per common share (Basic and diluted) | $(0.32) | $(1.33) | Condensed Consolidated Statements of Stockholders' Equity Stockholders' equity significantly increased to $31.4 million by March 31, 2021, primarily driven by substantial net proceeds from private placements, direct offerings, and warrant exercises - Total stockholders' equity increased from $13.0 million to $31.4 million in Q1 2021[15] - The company raised net proceeds of $12.7 million from a private placement and $6.9 million from a registered direct offering[15] - Net proceeds from the exercise of warrants amounted to $2.1 million during the quarter[15] Condensed Consolidated Statements of Cash Flows Net cash used in operating activities was $3.0 million for Q1 2021, offset by $21.5 million in net cash from financing activities, resulting in a $18.5 million net increase in cash Condensed Consolidated Statements of Cash Flows (in thousands) | | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :--- | :--- | :--- | | Net cash used in operating activities | $(3,033) | $(2,176) | | Net cash used in investing activities | $(6) | $(10) | | Net cash provided by financing activities | $21,490 | $8,536 | | Net increase in cash and restricted cash | $18,451 | $6,350 | | Cash and restricted cash at end of period | $32,745 | $13,334 | Notes to Condensed Consolidated Financial Statements The notes detail the company's immuno-oncology operations, its belief in sufficient cash for the next 12 months, the forgiveness of its PPP loan, and significant equity financing activities - The company is a biotechnology firm developing immuno-oncology therapeutics based on its self-delivering RNAi (INTASYL™) platform[22] - Management believes existing cash is sufficient to fund operations for at least the next 12 months from the report's release date[44] - In February 2021, the company's PPP loan of $231,252 was fully forgiven, resulting in a gain on debt extinguishment of $233,000[52] - The company completed a private placement in January 2021 and a registered direct offering in February 2021, raising net proceeds of $12.7 million and $6.9 million, respectively[53][54] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's immuno-oncology platform and lead candidate PH-762, noting an increased operating loss driven by R&D expenses, yet significantly improved liquidity from financing activities Overview Phio is a biotechnology company developing immuno-oncology therapeutics using its INTASYL™ platform, with lead candidate PH-762 advancing towards clinical trials for direct therapeutic use and in collaboration with AgonOx - The company's development efforts are based on its self-delivering RNAi (INTASYL™) therapeutic platform, which does not require a delivery vehicle to penetrate tissues and cells[75][76] - Lead product candidate PH-762 targets the checkpoint protein PD-1, with a clinical study for advanced melanoma expected to start in Q4 2021[82][91] - The company entered a clinical development collaboration with AgonOx to develop T cell-based therapies using PH-762, with regulatory submission planned for Q3 2021[84] Results of Operations Operating loss for Q1 2021 increased to $3.6 million, primarily driven by a 115% rise in R&D expenses for clinical trial preparation, partially offset by lower G&A expenses and increased other income from PPP loan forgiveness Operating Expenses Comparison (in thousands) | Description | Q1 2021 | Q1 2020 | Dollar Change | | :--- | :--- | :--- | :--- | | Research and development | $2,621 | $1,218 | $1,403 | | General and administrative | $1,017 | $1,138 | $(121) | | Total operating expenses | $3,638 | $2,356 | $1,282 | - The 115% increase in R&D expenses was primarily due to manufacturing costs and fees for preclinical studies supporting the planned clinical trials for PH-762[107] - Other income increased by $226,000 compared to the prior year, primarily due to the full forgiveness of the Company's PPP loan[110] Liquidity and Capital Resources The company's cash position significantly increased to $32.7 million by March 31, 2021, driven by $21.5 million in net cash from financing activities, which management believes is sufficient for at least the next 12 months - The company believes its existing cash of $32.7 million at March 31, 2021, is sufficient to fund operations for at least the next 12 months[111][113] Cash Flow Summary (in thousands) | | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :--- | :--- | :--- | | Net cash used in operating activities | $(3,033) | $(2,176) | | Net cash provided by financing activities | $21,490 | $8,536 | | Net increase in cash and restricted cash | $18,451 | $6,350 | - The increase in cash from financing activities was primarily due to net proceeds from capital raise activities and warrant exercises[117] Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, Phio Pharmaceuticals is not required to provide information for this item - The company is a smaller reporting company and is not required to provide this information[119] Controls and Procedures Management concluded that disclosure controls and procedures were effective as of March 31, 2021, with no material changes to internal control over financial reporting during the quarter - Management, including the CEO and Principal Accounting Officer, concluded that the company's disclosure controls and procedures were effective as of March 31, 2021[121] - No changes in internal control over financial reporting occurred during the quarter that materially affected, or are reasonably likely to materially affect, internal controls[122] Part II - Other Information Legal Proceedings The company reports that it is not currently a party to any material legal proceedings - There are no material legal proceedings at this time[125] Risk Factors This section directs readers to the detailed risk factors disclosed in the company's Annual Report on Form 10-K for the year ended December 31, 2020 - The report refers to the risk factors section in the Annual Report on Form 10-K for the year ended December 31, 2020[126] Unregistered Sales of Equity Securities and Use of Proceeds The company reports no sales or issues of unregistered securities that have not been previously disclosed in a Current Report on Form 8-K - No sales or issues of unregistered securities occurred that have not previously been disclosed[127][132] Defaults Upon Senior Securities The company reports no defaults upon senior securities - None[127] Mine Safety Disclosures This item is not applicable to the company - Not applicable[128] Other Information The company reports no other information for this item - None[129] Exhibits This section provides an index of the exhibits filed with the Form 10-Q, including Sarbanes-Oxley certifications and XBRL data files - Lists exhibits filed with the report, including Sarbanes-Oxley certifications (31.1, 32.1) and XBRL financial data (101)[131]