Business Overview and History Phio Pharmaceuticals Corp. (NASDAQ: PHIO) is a clinical-stage biotechnology company at the forefront of the fight against cancer. The company's proprietary INTASYL™ small interfering RNA (siRNA) gene silencing technology is designed to enhance the body's own immune system, empowering it to more effectively eliminate tumor cells. With a deep commitment to innovation and a steadfast focus on improving patient outcomes, Phio is charting a remarkable path in the realm of cancer immunotherapy.
Phio Pharmaceuticals was incorporated in the state of Delaware in 2011 as RXi Pharmaceuticals Corporation, initially focusing on developing its proprietary RNA interference (RNAi) technology called INTASYL. In November 2018, the company underwent a strategic shift, changing its name to Phio Pharmaceuticals Corp. to reflect its transition from a platform company to one fully committed to developing groundbreaking immuno-oncology therapeutics using the INTASYL technology.
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 this agreement, Phio and AgonOx were working to develop a T cell-based therapy using Phio's lead product candidate, PH-762, and AgonOx's double positive tumor infiltrating lymphocytes (DP TIL) technology. However, in May 2024, Phio terminated this agreement as the company shifted its focus to advancing PH-762 on its own.
To fund its operations, Phio has historically relied on the sale of its securities. The company has reported recurring losses from operations since its inception and has negative operating cash flows. In 2023, Phio implemented a cost rationalization program, which included not renewing the lease for its corporate headquarters and primary research facility and reducing its headcount by approximately 36%. These expense reductions have been redirected to funding the Phase 1b clinical trial for PH-762.
The core of Phio's technology is its proprietary INTASYL platform, which enables the direct delivery of siRNA to cells without the need for specialized formulations or delivery systems. This pioneering approach allows Phio to precisely target proteins that inhibit the body's natural cancer-fighting abilities, empowering the immune system to mount a more robust and effective response against tumors.
Phio's lead product candidate, PH-762, is a self-delivering siRNA compound designed to silence the expression of the PD-1 protein, a key regulator of the immune response. By reducing PD-1 levels, PH-762 aims to enhance the cancer-killing capacity of T cells, a critical component of the body's immune defenses. The company is currently evaluating PH-762 in a Phase 1b dose-escalation clinical trial for the treatment of advanced cutaneous malignancies, including squamous cell carcinoma, melanoma, and Merkel cell carcinoma.
Financial Snapshot As a clinical-stage biotechnology company, Phio Pharmaceuticals has not yet generated significant revenue from product sales. The company's primary sources of funding have been through the issuance of equity securities and strategic partnerships.
For the fiscal year ended December 31, 2023, Phio reported an annual net loss of $10.83 million, with no revenue reported. The company's annual operating cash flow was negative $10.75 million, and annual free cash flow was negative $10.75 million.
In the latest quarter ended September 30, 2024, the company reported a quarterly net loss of $1.52 million, with no revenue generated. Quarterly operating cash flow and free cash flow figures were not available for this period.
Total operating expenses for the three and nine months ended September 30, 2024, were $1.59 million and $5.71 million, respectively, compared to $2.78 million and $8.93 million for the same periods in 2023. The decrease in operating expenses was primarily driven by the company's cost rationalization measures, including a reduction in headcount and the wind-down of preclinical studies. Research and development expenses decreased by 64% and 50% for the three and nine-month periods, respectively, due to these cost-saving initiatives. General and administrative expenses also decreased by 2% and 15% for the three and nine-month periods, respectively, primarily due to reductions in salary-related expenses, professional fees, and insurance premiums.
Liquidity Phio's financial position is reflective of the company's stage of development, with a focus on advancing its lead candidate, PH-762, through clinical trials. The company has a history of successfully raising capital to support its research and development efforts, most recently completing a series of registered direct offerings in 2024 that raised approximately $12.08 million in gross proceeds.
As of September 30, 2024, Phio had $5.39 million in cash and cash equivalents, 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 activity, which involved the exercise of existing warrants and the issuance of new warrants. However, Phio expects its current cash resources will only fund its operations into the second quarter of 2025, and the company will need to seek additional funding, such as through equity or debt offerings or strategic opportunities, to maintain its operations and continue the development of its product candidates.
The company's debt-to-equity ratio is 0, indicating no long-term debt on its balance sheet. Phio's current ratio and quick ratio are both 6.38, suggesting a strong short-term liquidity position. However, given the company's pre-revenue status and ongoing clinical trials, continued access to capital markets will be crucial for its operations.
Operational Highlights and Milestones Phio's clinical development efforts have been marked by several key milestones and advancements. In November 2023, the company announced the dosing of the first patient in its Phase 1b dose-escalation study of PH-762 for the treatment of advanced cutaneous malignancies. The trial is designed to evaluate the safety and tolerability of the intratumoral administration of PH-762, as well as assess the tumor response and determine the optimal dose for continued development.
In May 2024, Phio reported that the Safety Monitoring Committee (SMC) had reviewed data from the first dose cohort and recommended escalation to the next higher dose concentration. The company subsequently completed enrollment of the second cohort and initiated screening for the third cohort in the ongoing clinical trial.
As of September 30, 2024, five patients with cutaneous carcinomas have enrolled in Cohorts 1 and 2, and the intratumoral injection of PH-762 has been well-tolerated in all patients enrolled in the trial to date, with no related adverse events, serious adverse events, or dose-limiting toxicities.
Phio has also made notable progress in expanding the clinical footprint of its PH-762 program, with the addition of a sixth clinical site in San Diego, California, to the Phase 1b study. This strategic expansion underscores the growing interest and enthusiasm surrounding Phio's innovative approach to cancer immunotherapy.
Risks and Challenges As a clinical-stage biotechnology company, Phio Pharmaceuticals faces several inherent risks and challenges that are common in the industry. The success of the company's lead candidate, PH-762, is heavily dependent on the outcomes of its ongoing and future clinical trials. Any delays, setbacks, or unfavorable results in the development process could significantly impact the company's prospects and shareholder value.
Additionally, Phio's reliance on external funding sources, such as equity offerings and partnerships, exposes the company to market volatility and the potential for dilution of existing shareholder interests. The ability to secure additional financing to support the company's research and development activities is a crucial factor for Phio's continued growth and success.
Phio also faces competition from other biotechnology and pharmaceutical companies pursuing similar approaches in the field of cancer immunotherapy. The company's ability to maintain its technological edge and differentiate its offerings in a crowded market will be crucial to its long-term success.
Outlook and Conclusion Phio Pharmaceuticals' pioneering work in the field of siRNA-based cancer immunotherapy holds significant promise for the future of cancer treatment. The company's INTASYL platform and lead candidate, PH-762, have demonstrated encouraging preclinical and early clinical results, positioning Phio as a formidable player in the fight against hard-to-treat malignancies.
Preclinical studies have shown that direct-to-tumor application of PH-762 resulted in potent anti-tumoral effects and inhibited tumor growth in a dose-dependent fashion in both PD-1 responsive and refractory models. Importantly, this administration method also demonstrated activity against distant untreated tumors, suggesting a systemic anti-tumor response.
As Phio continues to advance PH-762 through its Phase 1b clinical trial, the company's success will be heavily influenced by the safety and efficacy data generated from the study. Positive outcomes could pave the way for further clinical development and, ultimately, regulatory approval, transforming Phio into a key contributor to the global efforts to improve cancer patient outcomes.
The company's ability to secure additional funding, expand its partnerships, and navigate the competitive landscape will also be critical factors in determining Phio's long-term growth and sustainability. With a strong focus on innovation, a talented team, and a steadfast commitment to making a difference in the lives of cancer patients, Phio Pharmaceuticals is well-positioned to pioneer a cancer-free future.