Phio Pharmaceuticals(PHIO) - 2022 Q1 - Quarterly Report

Part I Financial Statements (Unaudited) Presents Phio Pharmaceuticals Corp.'s unaudited condensed consolidated financial statements, showing reduced net loss and sufficient cash Condensed Consolidated Balance Sheets The balance sheet reflects a decrease in total assets and stockholders' equity, primarily due to reduced cash balances Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2022 | December 31, 2021 | | :--- | :--- | :--- | | Assets | | | | Cash | $20,459 | $24,057 | | Total current assets | $21,667 | $24,727 | | Total assets | $22,162 | $25,170 | | Liabilities & Equity | | | | Total current liabilities | $2,573 | $3,068 | | Total liabilities | $2,711 | $3,238 | | Total stockholders' equity | $19,451 | $21,932 | Condensed Consolidated Statements of Operations The company reported a reduced net loss for the quarter, primarily driven by decreased research and development expenses Condensed Consolidated Statements of Operations (in thousands, except per share data) | Metric | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :--- | :--- | :--- | | Research and development | $1,586 | $2,429 | | General and administrative | $1,054 | $1,209 | | Total operating expenses | $2,640 | $3,638 | | Operating loss | ($2,640) | ($3,638) | | Net loss | ($2,642) | ($3,407) | | Net loss per share (Basic & Diluted) | ($0.19) | ($0.32) | Condensed Consolidated Statements of Stockholders' Equity Stockholders' equity decreased due to the net loss, contrasting with prior year's increase from stock offerings - In Q1 2022, total stockholders' equity decreased by $2.48 million, mainly driven by the $2.64 million net loss[14] - In Q1 2021, the company raised a total of $19.58 million (net) from a private placement and a registered direct offering, significantly increasing stockholders' equity[15] Condensed Consolidated Statements of Cash Flows Net cash used in operating activities slightly increased, with no significant financing activities this quarter Condensed Consolidated Statements of Cash Flows (in thousands) | Cash Flow Activity | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :--- | :--- | :--- | | Net cash used in operating activities | ($3,469) | ($3,266) | | Net cash used in investing activities | ($104) | ($6) | | Net cash (used in) provided by financing activities | ($25) | $21,723 | | Net (decrease) increase in cash | ($3,598) | $18,451 | | Cash and restricted cash at end of period | $20,509 | $32,745 | Notes to Condensed Consolidated Financial Statements Notes detail accounting policies, immuno-oncology focus, cash sufficiency, and a clinical co-development - The company is developing therapeutics using its INTASYL™ self-delivering RNAi technology to regulate genes in tumor and immune cells for immuno-oncology applications[20] - Management believes that existing cash should be sufficient to fund operations for at least the next 12 months from the date of the financial statement release[44] - In March 2021, the company entered a clinical co-development agreement with AgonOx Inc. and committed to make future payments of up to $4.0 million to reimburse AgonOx for clinical trial expenses[67] Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) Management discusses financial condition, business strategy, and operational results, confirming sufficient cash reserves Overview Phio develops immuno-oncology therapeutics using its INTASYL™ platform, with lead product PH-762 in Phase 1b trials - The company's lead product candidate, PH-762, is being evaluated in a Phase 1b clinical trial for advanced melanoma, with top-line data from the first patient group anticipated in Q1 2023[86] - Phio is collaborating with AgonOx to develop T cell-based therapies using PH-762 and AgonOx's 'double positive' TIL (DP TIL) technology, with a clinical trial expected to start in Q3 2022[80] - The pipeline also includes PH-894 (targeting BRD4), for which IND-enabling studies are expected to be finalized in the second half of 2022, and PH-3861, a dual-targeting INTASYL for PD-1 and BRD4[87][88] Results of Operations Operating expenses decreased significantly due to lower research and development and general and administrative costs Operating Expenses Comparison (in thousands) | Expense Category | Q1 2022 | Q1 2021 | Dollar Change | | :--- | :--- | :--- | :--- | | Research and development | $1,586 | $2,429 | ($843) | | General and administrative | $1,054 | $1,209 | ($155) | | Total operating expenses | $2,640 | $3,638 | ($998) | - The decrease in R&D expenses was mainly due to preclinical studies and manufacturing costs for PH-762 occurring in the prior-year period[96] - The decrease in G&A expenses was primarily due to lower legal and patent fees[98] Liquidity and Capital Resources The company maintains $20.5 million in cash, sufficient for 12 months, primarily funded by security sales - The company had cash of $20.5 million at March 31, 2022, and believes this is sufficient to fund operations for at least the next 12 months[100][103] - Net cash used in operating activities increased slightly to $3.5 million in Q1 2022, mainly due to prepayments for IND-enabling studies for PH-894 and manufacturing of PH-762[104][105] - Net cash from financing activities was minimal in Q1 2022, compared to $21.7 million in net proceeds from capital raising and warrant exercises in Q1 2021[107] Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, Phio Pharmaceuticals is not required to provide market risk disclosures - As a smaller reporting company, Phio Pharmaceuticals is not required to provide information on quantitative and qualitative disclosures about market risk[108] Controls and Procedures Management concluded disclosure controls were effective, with no material changes in internal control - Management concluded that the company's disclosure controls and procedures were effective at the reasonable assurance level as of the end of the period covered by the report[110] - No changes in internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, internal controls[111] Part II Legal Proceedings The company is not currently involved in any material legal proceedings - The company is not currently involved in any material legal proceedings[114] Risk Factors New risk factors include Nasdaq minimum bid price non-compliance and potential impacts from the Russia-Ukraine conflict - On February 25, 2022, the company received a notice from Nasdaq for failing to meet the minimum bid price requirement of $1.00 per share[117] - The company has until August 24, 2022, to regain compliance with the Nasdaq minimum bid price requirement[118] - The ongoing conflict between Russia and Ukraine may cause global economic instability, disrupt supply chains, and create difficulties in obtaining future funding, which could adversely impact the business[119] Unregistered Sales of Equity Securities and Use of Proceeds No unregistered sales of equity securities occurred that were not previously reported - No unregistered sales of equity securities occurred that were not previously reported[120] Defaults Upon Senior Securities The company reports no defaults upon senior securities - None[121] Mine Safety Disclosures This item is not applicable to the company - Not applicable[122] Other Information The company reports no other information - None[123] Exhibits This section lists the exhibits filed with the Form 10-Q, including Sarbanes-Oxley certifications - Exhibits filed include Sarbanes-Oxley Act Section 302 and 906 certifications and various Inline XBRL documents[126] Signatures This section contains the required signatures for the financial report - The report was duly signed on behalf of the registrant on May 12, 2022, by Geert Cauwenbergh, Principal Executive and Financial Officer[130]