Phio Pharmaceuticals Corp. (NASDAQ: PHIO) is a clinical-stage biotechnology company at the forefront of developing innovative immuno-oncology therapeutics. The company’s proprietary INTASYL™ technology platform leverages the power of small interfering RNA (siRNA) to enhance the effectiveness of the body’s own immune cells in fighting cancer.
Business Overview and History Phio was incorporated in 2011 as RXi Pharmaceuticals Corporation, initially focused on developing RNAi-based therapeutics. In November 2018, the company underwent a name change to Phio Pharmaceuticals Corp., marking its transition to become a fully committed immuno-oncology player.
The company’s INTASYL technology is a unique self-delivering RNAi platform that can precisely target specific proteins to improve the functionality of immune cells, such as T cells, natural killer (NK) cells, and tumor-infiltrating lymphocytes (TILs). By silencing the expression of key immune-inhibitory proteins, INTASYL compounds enhance the ability of these cells to recognize and destroy cancer cells more effectively.
Phio’s lead product candidate, PH-762, is an INTASYL compound designed to reduce the expression of the cell death protein 1 (PD-1). PD-1 is a protein that inhibits T cells’ ability to kill cancer cells, and decreasing its expression can increase the capacity of T cells to fight cancer. PH-762 is currently being evaluated in a Phase 1b dose-escalating clinical trial for the treatment of patients with cutaneous squamous cell carcinoma, melanoma, and Merkel cell carcinoma. The trial is designed to assess the safety, tolerability, and anti-tumor activity of intratumoral injections of PH-762. In November 2023, the company dosed the first patient under a previously cleared Investigational New Drug (IND) application by the U.S. Food and Drug Administration (FDA).
In February 2021, Phio entered into a clinical co-development collaboration agreement with AgonOx, Inc., a private company developing a pipeline of novel immunotherapy drugs. Under the agreement, Phio and AgonOx were working to develop a T cell-based therapy using PH-762 and AgonOx’s double positive tumor infiltrating lymphocytes (DP TIL) technology. However, in May 2024, Phio terminated the agreement with AgonOx, effective immediately. Prior to the termination, PH-762 treated DP TIL were being evaluated in a Phase 1 clinical trial in the United States with up to 18 patients with advanced melanoma and other advanced solid tumors by AgonOx. The primary trial objectives were to evaluate the safety and to study the potential for enhanced therapeutic benefit from the administration of PH-762 treated DP TIL. AgonOx had enrolled three patients in the trial before the agreement was terminated.
In May 2024, a safety monitoring committee reviewed data from the first dose cohort and recommended escalation to the next dose concentration. Five patients with cutaneous carcinomas have enrolled in Cohorts 1 and 2 to date, and the intratumoral injection of PH-762 has been well-tolerated with no related adverse events, serious adverse events, or dose-limiting toxicities.
Phio has also explored the versatility of its INTASYL platform beyond immuno-oncology. In June 2024, the company announced a new patent in South Korea covering the use of its INTASYL compound RXI-185 for the treatment of aging and skin disorders, including photo-aging. RXI-185 is designed to slow the progression of UV-induced collagen breakdown, potentially improving and/or slowing the appearance of aging skin.
Financial Overview As a clinical-stage company, Phio has not yet generated any revenue from product sales. The company has historically funded its operations through the sale of its securities, raising over $30 million in various financing rounds since its inception.
For the nine months ended September 30, 2024, Phio reported a net loss of $5.52 million, compared to a net loss of $8.93 million for the same period in 2023. The decrease in net loss was primarily driven by the company’s cost rationalization measures, including personnel reductions and the expiration of its corporate headquarters lease.
Financials As of September 30, 2024, Phio had cash and cash equivalents of $5.39 million, compared to $8.49 million as of December 31, 2023. The company received an estimated $2.65 million in net proceeds from its July 2024 financing activities, which involved the exercise of existing warrants at a reduced price in exchange for the issuance of new warrants.
For the three months ended September 30, 2024, Phio reported total operating expenses of $1.59 million, a decrease of 43% compared to the prior-year period. Research and development expenses decreased by 64% to $644,000, primarily driven by cost rationalization measures and the wind-down of preclinical studies. General and administrative expenses decreased by 2% to $946,000.
For the nine months ended September 30, 2024, Phio reported total operating expenses of $5.71 million, a decrease of 36% compared to the prior-year period. Research and development expenses decreased by 50% to $2.66 million, primarily due to the cost rationalization efforts and the wind-down of preclinical studies, as well as decreases in clinical consulting fees, clinical trial-related fees, and manufacturing costs. General and administrative expenses decreased by 15% to $3.06 million, mainly due to reductions in salary-related expenses, professional fees, and insurance premiums.
In the most recent quarter, Phio reported zero revenue, a net loss of $1.524 million, operating cash flow (OCF) of -$1.36 million, and free cash flow (FCF) of -$1.36 million. The decrease in revenue, net income, OCF, and FCF compared to the prior year quarter was primarily due to the company’s cost rationalization measures in transitioning from a research company to a product development company, including a reduction in headcount and the termination of the Clinical Co-Development Agreement with AgonOx.
Liquidity Phio expects its current cash resources to fund its operations into the second quarter of 2025. The company continues to actively monitor its cash position and explore various financing options, such as equity offerings, debt financing, and strategic partnerships, to support the ongoing development of its pipeline and maintain operations.
As of September 30, 2024, Phio’s debt-to-equity ratio was 0, indicating that the company has no significant long-term debt. The company’s current ratio and quick ratio both stand at 6.38, suggesting a strong short-term liquidity position. With $5.39 million in cash and cash equivalents, Phio maintains a solid financial foundation to support its ongoing operations and clinical trials.
Risks and Challenges As a clinical-stage biotechnology company, Phio faces several risks and challenges that are common in the industry. These include the inherent uncertainty of the drug development process, the ability to obtain regulatory approvals, the potential for clinical trial failures, and the need to secure additional funding to support its operations and pipeline development.
The company also faces competition from other immuno-oncology and skin care companies, as well as the potential for technological advancements that could render its INTASYL platform obsolete. Additionally, Phio’s reliance on key personnel and the potential for intellectual property disputes could also impact its business.
Outlook and Conclusion Phio Pharmaceuticals is at an exciting juncture, with its lead INTASYL candidate PH-762 progressing through a Phase 1b clinical trial and the company exploring the versatility of its technology platform in skin care applications. The positive safety data and the continued enrollment of patients in the PH-762 trial suggest the potential for this novel approach to enhance the body’s immune response against cancer.
As Phio navigates the challenges of a clinical-stage biotechnology company, its commitment to advancing its INTASYL technology and pipeline highlights its potential to become a leader in the rapidly evolving field of immuno-oncology. With a strong focus on innovation and a diversified approach, Phio Pharmaceuticals is well-positioned to continue its pioneering work in developing cutting-edge therapies that could significantly impact the lives of cancer patients.
The company’s transition from a research company to a product development company, as evidenced by its cost rationalization measures and focus on clinical trials, demonstrates its commitment to advancing its pipeline efficiently. While the company has reported no revenue and negative financial metrics in recent periods, this is not uncommon for clinical-stage biotechnology companies investing heavily in research and development.
Phio’s strong liquidity position, with a current ratio of 6.38 and no long-term debt, provides a stable foundation for its ongoing operations. However, the company will need to continue to carefully manage its cash resources and potentially seek additional funding to support its long-term development goals.
As Phio Pharmaceuticals progresses its clinical trials and explores new applications for its INTASYL technology, investors and industry observers will be watching closely for key milestones and data readouts that could potentially validate the company’s innovative approach to immuno-oncology and dermatology.
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