Phio Pharmaceuticals Announces $3.19 Million Registered Direct Offering Priced At-the-Market Under Nasdaq Rules

Rhea-AI Summary

Phio Pharmaceuticals (NASDAQ: PHIO) has announced a $3.19 million registered direct offering priced at-the-market. The company will sell 1,063,670 shares of common stock at $3.00 per share. Additionally, in a concurrent private placement, Phio will issue unregistered warrants to purchase up to 2,127,340 shares of common stock at an exercise price of $3.00 per share, exercisable upon issuance with a 24-month expiration.

The offering, expected to close around January 15, 2025, is being conducted with H.C. Wainwright & Co. as the exclusive placement agent. Phio intends to use the net proceeds for working capital and general corporate purposes. The common shares are being offered under a shelf registration statement, while the warrants are being issued through a private placement under Section 4(a)(2) of the Securities Act.

Positive

• Secured immediate funding of $3.19 million through registered direct offering
• Potential for additional capital through warrant exercise ($6.38 million if all warrants exercised)

Negative

• Dilution of existing shareholders through issuance of new shares
• Additional potential dilution if warrants are exercised
• Offering priced at market without premium

Insights

Financial Analyst

This $3.19 million registered direct offering represents a significant dilutive event for PHIO shareholders, with the company issuing 1,063,670 new shares at $3.00 per share, plus warrants for an additional 2,127,340 shares. The pricing at $3.00 appears to be at a discount to recent trading levels, which is typical for these types of offerings but puts immediate pressure on the stock price.

The warrant coverage ratio of 2:1 (two warrant shares for each common share) is notably aggressive and could lead to substantial additional dilution if exercised within the 24-month window. While the offering provides needed working capital, the total potential dilution if all warrants are exercised would be approximately 3,191,010 new shares, representing a substantial increase to the company's current float.

For a micro-cap biotech with a market cap of about $14.4 million, this financing, while necessary for operations, significantly impacts existing shareholders' ownership percentage. The use of proceeds for "working capital and general corporate purposes" suggests no immediate catalytic events that could offset the dilutive impact.

Legal Expert

The offering's structure reveals careful regulatory compliance, utilizing a shelf registration statement for the common shares while conducting a concurrent private placement of warrants under Section 4(a)(2) and Regulation D. This dual-track approach is a common strategy for micro-cap biotechs to maximize financing flexibility while maintaining regulatory compliance.

The involvement of H.C. Wainwright as exclusive placement agent adds credibility to the transaction, though their fees will reduce the net proceeds below the $3.19 million gross amount. The registration rights situation for the warrant shares remains pending, suggesting potential future registration obligations that could incur additional costs and compliance requirements for the company.

Marlborough, Massachusetts--(Newsfile Corp. - January 14, 2025) - Phio Pharmaceuticals Corp. (NASDAQ: PHIO), a clinical-stage biotechnology company that develops therapeutics using its INTASYL® siRNA gene silencing technology to make the body's immune cells more effective in killing cancer cells, today announced that it has entered into definitive agreements for the purchase and sale of an aggregate of 1,063,670 shares of its common stock at a purchase price of $3.00 per share in a registered direct offering priced at-the-market under Nasdaq rules. In addition, in a concurrent private placement, the Company will issue short-term unregistered warrants to purchase up to an aggregate of 2,127,340 shares of common stock. The short-term warrants will have an exercise price of $3.00 per share, will be exercisable upon issuance and expire twenty-four months following the date of issuance. The closing of the offering is expected to occur on or about January 15, 2025, subject to the satisfaction of customary closing conditions.

H.C. Wainwright & Co. is acting as the exclusive placement agent for the offering.

The aggregate gross proceeds to the Company from the offering are expected to be $3.19 million, before deducting the placement agent fees and other offering expenses payable by the Company. The Company currently intends to use the net proceeds from the offering for working capital and other general corporate purposes.

The shares of common stock (but not the short-term warrants issued in the private placement or the shares of common stock underlying such short-term warrants) are being offered by the Company pursuant to a "shelf" registration statement on Form S-3 (File No. 333-279557) filed with the Securities and Exchange Commission ("SEC") on May 20, 2024 and became effective on July 1, 2024. The registered direct offering of the shares of common stock is being made only by means of a prospectus, including a prospectus supplement, forming a part of the effective registration statement. The prospectus supplement and the accompanying prospectus relating to the shares of common stock being offered in the registered direct offering will be filed with the SEC and be available at the SEC's website at www.sec.gov. Electronic copies of the prospectus supplement and the accompanying prospectus relating to the registered direct offering may also be obtained, when available, by contacting H.C. Wainwright & Co., LLC at 430 Park Avenue, 3rd Floor, New York, NY 10022, by telephone at (212) 856-5711 or e-mail at placements@hcwco.com.

The short-term warrants described above are being issued in a concurrent private placement under Section 4(a)(2) of the Securities Act of 1933, as amended (the "Securities Act"), and Regulation D promulgated thereunder and, along with the shares of common stock underlying the short-term warrants, have not been registered under the Securities Act, or applicable state securities laws. Accordingly, the short-term warrants and underlying shares of common stock may not be offered or sold in the United States except pursuant to an effective registration statement or an applicable exemption from the registration requirements of the Securities Act and such applicable state securities laws.

This press release shall not constitute an offer to sell or the solicitation of an offer to buy any of the securities described herein, nor shall there be any sale of these securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities laws of any such state or jurisdiction.

About Phio Pharmaceuticals Corp.

Phio Pharmaceuticals Corp. (NASDAQ: PHIO) is a clinical-stage biotechnology company advancing its proprietary INTASYL siRNA gene silencing technology to eliminate cancer.  INTASYL can target and silence virtually any gene with high degree of specificity across a wide range of cell types and tissues. INTASYL is designed to enhance the ability of immune cells to more effectively kill tumor cells.  INTASYL has also demonstrated enhancement adoptive cell therapy. Notably, INTASYL is a self-delivering RNAi technology focused on immuno-oncology therapeutics without the need for formulation enhancements or manipulations to reach its target. 

Phio's lead clinical program, PH-762, is an INTASYL compound that silences PD-1. PH-762 is a potential non-surgical treatment for skin cancers. The on-going Phase 1b trial (NCT# 06014086) received FDA clearance for an Investigational New Drug Application to evaluate PH-762 in the treatment of cutaneous SCC, melanoma and Merkel cell carcinoma in second quarter of 2023. 

For additional information, visit the Company's website, www.phiopharma.com.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by words such as "intends," "believes," "anticipates," "indicates," "plans," "expects," "suggests," "may," "would," "should," "potential," "designed to," "will," "ongoing," "estimate," "forecast," "target," "predict," "could" and similar references, although not all forward-looking statements contain these words. Examples of forward-looking statements contained in this press release include, among others, the ability of the Company to consummation of the offering, the satisfaction of the closing conditions of the offering and the use of proceeds therefrom, the possibility that our INTASYL® siRNA gene silencing technology will make the body's immune cells more effective in killing cancer cells and statements regarding our commercial and clinical strategy, development plans and timelines and other future events.  

These statements are based only on our current beliefs, expectations and assumptions and are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of our control.  Our actual results may differ materially from those indicated in the forward-looking statements as a result of a number of important factors, including, but not limited to, the impact to our business and operations by inflationary pressures, rising interest rates, recession fears, the development of our product candidates, results from our preclinical and clinical activities, our ability to execute on business strategies, our ability to develop our product candidates with collaboration partners, and the success of any such collaborations, the timeline and duration for advancing our product candidates into clinical development, the timing or likelihood of regulatory filings and approvals, the success of our efforts to commercialize our product candidates if approved, our ability to manufacture and supply our product candidates for clinical activities, and for commercial use if approved, the scope of protection we are able to establish and maintain for intellectual property rights covering our technology platform, our ability to obtain future financing, market and other conditions and those identified in our Annual Report on Form 10-K and subsequent Quarterly Reports on Form 10-Q under the caption "Risk Factors" and in other filings the Company periodically makes with the SEC. Readers are urged to review these risk factors and to not act in reliance on any forward-looking statements, as actual results may differ from those contemplated by our forward-looking statements. Phio does not undertake to update forward-looking statements to reflect a change in its views, events or circumstances that occur after the date of this release, except as required by law.  

Contact:
Phio Pharmaceuticals Corp. 
Jennifer Phillips: jphillips@phiopharma.com
Corporate Affairs  

To view the source version of this press release, please visit https://www.newsfilecorp.com/release/237108

FAQ

What is the size and price of Phio Pharmaceuticals' January 2025 offering?

Phio Pharmaceuticals announced a $3.19 million registered direct offering, selling 1,063,670 shares at $3.00 per share.

What are the terms of PHIO's warrants issued in January 2025?

The warrants allow purchase of up to 2,127,340 shares at $3.00 per share, are exercisable upon issuance, and expire after 24 months.

How will PHIO use the proceeds from the January 2025 offering?

Phio Pharmaceuticals intends to use the net proceeds for working capital and general corporate purposes.

When will PHIO's January 2025 registered direct offering close?

The offering is expected to close on or about January 15, 2025, subject to customary closing conditions.

What is the potential dilution impact of PHIO's January 2025 offering?

The offering includes 1,063,670 new shares plus potential dilution from 2,127,340 additional shares if all warrants are exercised.