Phio Pharmaceuticals issues going-concern warning
Management said current cash may not fund planned operations for at least 12 months, and additional capital will be required.
Sentiment and the balance of points
Rhea-AI Sentiment reads the wording of the document, how positive or negative its language is on a 1 to 5 scale. The balance of points shown with the takes weighs what the document actually discloses, so the two can disagree, for example when a trial that missed its main goal is described in upbeat language.
Phio Pharmaceuticals Corp. reported a third-quarter net loss of $4.160 million, versus $2.392 million a year earlier; nine-month net loss was $12.301 million, versus $6.327 million. Nine-month operating cash use was $10.318 million, compared with $5.900 million. Cash and equivalents were $10.609 million at September 30, 2026, versus $21.031 million at December 31, 2025.
Management said recurring losses and negative operating cash flow raise substantial doubt about continuing as a going concern; existing cash may not fund planned operations for at least the next 12 months. Under its ATM agreement, Phio may offer and sell shares at prevailing market prices for an aggregate offering price of up to $6,360,000; no shares had been sold through the report date.
In the completed PH-762 Phase 1b trial, the reported overall response rate for cSCC was 65%, including 9 complete responses among 20 cSCC patients. FDA feedback on the proposed development strategy was expected by the end of November 2026, and a Phase 2b trial was expected to begin in the first quarter of 2027. Phio deferred the PH-894 IND submission. As of the report date, shares had closed below Nasdaq’s $1.00 minimum bid price for 21 consecutive business days.
How this balance works
Rhea-AI gives every point it takes from this document a weight. Minor counts 1, Moderate 3 and Major 9, so one Major point outweighs several Minor ones. The bar adds up the weights on each side, and when neither side holds more than 65% of the total the balance reads Mixed.
It reads the document as published, with the same rules for every company, and it does not look at what the market expected or at how the stock traded, so a point can be objectively good on a day the stock falls.
Rhea-AI Sentiment measures something else, the tone of the wording.
Hollow bars mark forward-looking points. How the balance works
Positive
- Moderate pointPH-762: Phase 1b cSCC overall response rate was 65%.
Negative
- Major point. Forward-looking: it has not happened yet and may not happen.Going-concern warning: $10.609 million may not fund planned operations for at least 12 months.
- Moderate pointNine-month net loss: $12.301 million, versus $6.327 million in 2025.
- Moderate pointOperating cash use: $10.318 million, versus $5.900 million for the nine months.
- Moderate pointMinimum bid price: Shares closed below Nasdaq’s $1.00 threshold for 21 consecutive business days.
Filing Explained
At September 30, 2026, 13,363,561 warrants and 1,083,500 unvested RSUs remained potential additional shares alongside 11,951,632 outstanding shares.
This unaudited quarterly report shows Phio Pharmaceuticals issued 438,700 common shares as restricted stock units vested and withheld 104,318 shares for payroll taxes; common shares outstanding were 11,951,632 at
At September 30, the company also listed 13,363,561 outstanding warrants and 1,083,500 unvested restricted stock units. If exercised or settled in shares, these could increase the share count and reduce existing holders’ percentage ownership; they are potential shares, not shares already issued.
Nasdaq’s minimum-bid rule sets a deficiency after the stock closes below
For PH-762, the company reports release of its first commercial-scale cGMP drug-substance batch and completion of the treatment phase of its pivotal GLP toxicology study in September; preliminary study results are expected before the end of 2026.
Key Figures
Key Terms
going concern financial
At the Market Agreement financial
pathologic responders medical
GLP toxicology study medical
anti-dilutive financial
FAQ
AI-generated questions and answers. How Rhea-AI works. Not financial advice.
What was PHIO’s net loss in the third quarter and first nine months of 2026?
What were the PH-762 Phase 1b results for PHIO?
When does PHIO expect FDA feedback and the PH-762 Phase 2b trial?
What is PHIO’s ATM offering limit, and has it sold shares under the program?
How long does PHIO say its cash may fund planned operations?
AI-generated analysis. How Rhea-AI works. Not financial advice.
Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
For the quarterly period ended
OR
For the transition period from to
Commission File Number:
Phio Pharmaceuticals Corp.
(Exact name of registrant as specified in its charter)
| | |
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
(Address of principal executive office) (Zip code)
Registrant’s telephone number, including area code: (
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
| | | The |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | Accelerated filer | ☐ | |
| | ☒ | Smaller reporting company | | |
| Emerging growth company | |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by checkmark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
As of November 3, 2026, Phio Pharmaceuticals Corp. had
PHIO PHARMACEUTICALS CORP.
FORM 10-Q — QUARTER ENDED September 30, 2026
INDEX
| Part No. |
Item No. |
Description |
Page |
|||
| I |
FINANCIAL INFORMATION |
3 |
||||
| 1 |
Financial Statements (Unaudited) |
3 |
||||
| Condensed Consolidated Balance Sheets as of September 30, 2026 and December 31, 2025 |
3 |
|||||
| Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2026 and 2025 |
4 |
|||||
| Condensed Consolidated Statements of Stockholders’ Equity for the Three and Nine Months Ended September 30, 2026 and 2025 |
5 |
|||||
| Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2026 and 2025 |
6 |
|||||
| Notes to Condensed Consolidated Financial Statements |
7 |
|||||
| 2 |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
17 |
||||
| 3 |
Quantitative and Qualitative Disclosures About Market Risk |
24 |
||||
| 4 |
Controls and Procedures |
24 |
||||
| II |
OTHER INFORMATION |
26 |
||||
| 1 |
Legal Proceedings |
26 |
||||
| 1A |
Risk Factors |
26 |
||||
| 2 |
Unregistered Sales of Equity Securities and Use of Proceeds |
27 |
||||
| 3 |
Defaults Upon Senior Securities |
27 |
||||
| 4 |
Mine Safety Disclosures |
27 |
||||
| 5 |
Other Information |
27 |
||||
| 6 |
Exhibits |
28 |
||||
| Signatures |
31 |
|||||
PART I — FINANCIAL INFORMATION
| ITEM 1. |
FINANCIAL STATEMENTS |
PHIO PHARMACEUTICALS CORP.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except share and per share data)
| (Unaudited) | ||||||||
| September 30, | December 31, | |||||||
| ASSETS | 2026 | 2025 | ||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Prepaid expenses and other current assets | ||||||||
| Total current assets | ||||||||
| Property and equipment, net | ||||||||
| Total assets | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | $ | ||||||
| Accrued expenses | ||||||||
| Total liabilities | ||||||||
| Commitments and contingencies (Note 3) | ||||||||
| Stockholders' equity: | ||||||||
| Series D Preferred stock, $0.0001 par value, 10,000,000 shares authorized; 0 issued and outstanding at each of September 30, 2026 and December 31, 2025 | ||||||||
| Common stock, $0.0001 par value, 100,000,000 shares authorized; 11,951,632 and 11,617,250 shares issued and outstanding at September 30, 2026 and December 31, 2025, respectively | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total stockholders' equity | $ | $ | ||||||
| Total liabilities and stockholders' equity | $ | $ | ||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
PHIO PHARMACEUTICALS CORP.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands, except share and per share data)
(Unaudited)
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Operating expenses: | ||||||||||||||||
| Research and development | $ | $ | $ | $ | ||||||||||||
| General and administrative | ||||||||||||||||
| Total operating expenses | ||||||||||||||||
| Operating loss | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Interest income, net | ||||||||||||||||
| Other income (expense), net | ||||||||||||||||
| Net loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Net loss per common share: | ||||||||||||||||
| Basic and diluted | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Weighted average number of common shares outstanding | ||||||||||||||||
| Basic and diluted | ||||||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
PHIO PHARMACEUTICALS CORP.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(Amounts in thousands, except share data)
(Unaudited)
| Common Stock | Additional | |||||||||||||||||||
| Paid in | Accumulated | |||||||||||||||||||
| For the Three and Nine Months Ended September 30, 2026 | Shares | Amount | Capital | Deficit | Total | |||||||||||||||
| Balance at December 31, 2025 | $ | $ | $ | ( | ) | $ | ||||||||||||||
| Stock-based compensation expense | - | |||||||||||||||||||
| Net loss | - | ( | ) | ( | ) | |||||||||||||||
| Balance at March 31, 2026 | $ | $ | $ | ( | ) | $ | ||||||||||||||
| Stock-based compensation expense | - | |||||||||||||||||||
| Net loss | - | ( | ) | ( | ) | |||||||||||||||
| Balance at June 30, 2026 | $ | $ | $ | ( | ) | $ | ||||||||||||||
| Issuance of common stock upon vesting of restricted stock units | ||||||||||||||||||||
| Shares withheld for payroll taxes | ( | ) | ( | ) | ( | ) | ||||||||||||||
| Stock-based compensation expense | - | |||||||||||||||||||
| Net loss | - | ( | ) | ( | ) | |||||||||||||||
| Balance at September 30, 2026 | $ | $ | $ | ( | ) | $ | ||||||||||||||
| Common Stock | Additional | |||||||||||||||||||
| Paid in | Accumulated | |||||||||||||||||||
| For the Three and Nine Months Ended September 30, 2025 | Shares | Amount | Capital | Deficit | Total | |||||||||||||||
| Balance at December 31, 2024 | $ | $ | $ | ( | ) | $ | ||||||||||||||
| Issuance of common stock upon exercise of warrants | ||||||||||||||||||||
| Issuance of common stock and warrants, net of offering costs | ||||||||||||||||||||
| Stock-based compensation expense | - | |||||||||||||||||||
| Net loss | - | ( | ) | ( | ) | |||||||||||||||
| Balance at March 31, 2025 | $ | $ | $ | ( | ) | $ | ||||||||||||||
| Stock-based compensation expense | - | |||||||||||||||||||
| Issuance of common stock upon exercise of warrants | ||||||||||||||||||||
| Net loss | - | ( | ) | ( | ) | |||||||||||||||
| Balance at June 30, 2025 | $ | $ | $ | ( | ) | $ | ||||||||||||||
| Issuance of common stock upon exercise of warrants | ||||||||||||||||||||
| Issuance of common stock and warrants, net of offering costs of $435 | ||||||||||||||||||||
| Issuance of common stock upon vesting of restricted stock units | ||||||||||||||||||||
| Shares withheld for payroll taxes | ( | ) | ( | ) | ( | ) | ||||||||||||||
| Stock-based compensation expense | - | |||||||||||||||||||
| Net loss | - | ( | ) | ( | ) | |||||||||||||||
| Balance at September 30, 2025 | $ | $ | $ | ( | ) | $ | ||||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
PHIO PHARMACEUTICALS CORP.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
(Unaudited)
| Nine Months Ended | ||||||||
| September 30, | ||||||||
| 2026 | 2025 | |||||||
| Cash flows from operating activities: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation and amortization | ||||||||
| Net gain on disposal of property and equipment | ( | ) | ||||||
| Stock-based compensation | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Prepaid expenses and other assets | ( | ) | ( | ) | ||||
| Accounts payable | ||||||||
| Accrued expenses | ||||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| Cash flows from investing activities: | ||||||||
| Proceeds from sale of property and equipment | ||||||||
| Cash paid for purchase of property and equipment | ( | ) | ||||||
| Net cash provided by (used in) investing activities | ( | ) | ||||||
| Cash flows from financing activities: | ||||||||
| Net proceeds from the exercise of warrants | ||||||||
| Net proceeds from the issuance of common stock and warrants | ||||||||
| Payments of taxes for net shares settled restricted stock unit issuances | ( | ) | ( | ) | ||||
| Net cash (used in) provided by financing activities | ( | ) | ||||||
| Net (decrease) increase in cash and cash equivalents | ( | ) | ||||||
| Cash and cash equivalents at the beginning of period | ||||||||
| Cash and cash equivalents at end of period | $ | $ | ||||||
See accompanying notes to condensed consolidated financial statements.
PHIO PHARMACEUTICALS CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Organization and Significant Accounting Policies
Nature of Operations
Phio Pharmaceuticals Corp. (“Phio” or the “Company”) is a clinical stage biopharmaceutical company whose proprietary INTASYL® self-delivering small interfering RNAi(siRNA) technology is designed to make immune cells more effective in killing tumor cells. The Company is developing therapeutics that are designed to leverage INTASYL to precisely target specific proteins that reduce the body’s ability to fight cancer, without the need for specialized formulations or drug delivery systems. The Company is committed to discovering and developing innovative cancer treatments for patients by creating new pathways toward a cancer-free future.
Phio was incorporated in the state of Delaware in 2011 as RXi Pharmaceuticals Corporation. On November 19, 2018, the Company changed its name to Phio Pharmaceuticals Corp., to reflect its transition from a platform company to one that is fully committed to developing groundbreaking immuno-oncology therapeutics.
Basis of Presentation
The accompanying condensed consolidated financial statements are unaudited and have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). Certain information and footnote disclosures that are included in the Company’s annual consolidated financial statements, but that are not required for interim reporting purposes, have been condensed or omitted. In the opinion of management, the interim condensed consolidated financial statements reflect all adjustments necessary for a fair presentation of results for the periods presented.
These statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s most recent Annual Report on Form 10-K for the year ended December 31, 2025, as filed with the Securities and Exchange Commission (the “SEC”) on March 5, 2026 (the “2025 Form 10-K”). Interim results are not necessarily indicative of results for a full year.
Principles of Consolidation
The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary, MirImmune, LLC. All material intercompany accounts have been eliminated in consolidation.
Segments
The Company operates as one operating segment and all assets are located in the United States.
Use of Estimates
The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The areas subject to significant estimates and judgment include, among others, those related to the fair value of equity awards, accruals for research and development expenses, useful lives of property and equipment, and the valuation allowance on the Company’s deferred tax assets. On an ongoing basis the Company evaluates its estimates and bases its estimates on historical experience and other relevant assumptions that the Company believes are reasonable under the circumstances. Actual results could differ materially from these estimates.
Liquidity
The Company has reported recurring losses from operations since its inception and expects to continue to have negative cash flows from operations for the foreseeable future. Historically, the Company’s primary source of funding has been from sales of its securities. The Company’s ability to continue to fund its operations is dependent on obtaining funding from third parties, such as proceeds from the issuance of debt, sale of equity, or strategic opportunities, in order to maintain its operations. This is dependent on a number of factors, including the market demand or liquidity of the Company’s common stock ("Common Stock"). There is no guarantee that debt, additional equity or other funding will be available to the Company on acceptable terms, or at all. If the Company fails to obtain additional funding when needed, the Company would be forced to scale back or terminate its operations or seek to merge with or to be acquired by another company.
The Company has limited cash resources, has reported recurring losses from operations since inception, has negative operating cash flows and has not yet generated product revenues. As of September 30, 2026, the Company had cash and cash equivalents of approximately $
Summary of Significant Accounting Policies
The Company’s significant accounting policies as of September 30, 2026 are consistent with those described in the Company’s Annual Report on Form 10‑K for the year ended December 31, 2025. There have been no material changes during the current period.
Recent Accounting Pronouncements
In November 2024, the FASB issued ASU 2024-03, “Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosure (Subtopic 220-40): Disaggregation of Income Statement Expenses,” which requires additional disclosure about the specific expense categories in the notes to financial statements at interim and annual reporting periods. The amendments in this ASU do not change or remove current expense disclosure requirements but affect where this information appears in the notes to financial statements. This ASU is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027, with early adoption permitted. Upon adoption, the guidance can be applied prospectively or retrospectively. The Company is currently evaluating the impact that ASU 2024-03 will have on its consolidated financial statements.
Recent Tax Legislation
On July 4, 2025, the One Big Beautiful Bill Act (the “OBBBA”) was enacted in the U.S. The OBBBA includes significant provisions, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act, modifications to the international tax framework and the restoration of favorable tax treatment for certain business provisions and allows immediate expensing of certain domestic research and experimental expenditures under new Section 174A of the Internal Revenue Code. The Company has not had a material impact from the OBBBA to its consolidated financial statements.
2. Accounts Payable and Accrued Liabilities
Accounts payable and accrued liabilities are comprised of the following:
| September 30, | December 31, | |||||||
| 2026 | 2025 | |||||||
| Accounts payable trade | $ | $ | ||||||
| Research and development accruals | ||||||||
| Payroll accruals | ||||||||
| Professional fees and other | ||||||||
| $ | $ | |||||||
3. Collaboration Agreement
AgonOx, Inc. (“AgonOx”)
In February 2021, the Company entered into a clinical co-development collaboration agreement (the “Clinical Co-Development Agreement”) with AgonOx, a private company developing a pipeline of novel immunotherapy drugs targeting key regulators of the immune response to cancer. Under the Clinical Co-Development Agreement, Phio and AgonOx were working to develop a T cell-based therapy using the Company’s lead product candidate, PH-762, and AgonOx’s “double positive” tumor infiltrating lymphocytes (“DP TIL”) technology. Per the terms of the Clinical Co-Development Agreement, the Company agreed to reimburse AgonOx up to $
In May 2024, the Company terminated the Clinical Co-Development Agreement with AgonOx, effective immediately. Effective as of the date of termination, the Clinical Co-Development Agreement and the continuing obligations of the Company and AgonOx thereunder were terminated in their entirety. The Company is no longer required to provide financial support for the development costs incurred in the Clinical Co-Development Agreement and the Company is no longer entitled to future development milestones or royalty payments from AgonOx’s licensing of its DP TIL technology.
The Company paid AgonOx all payment obligations that accrued prior to the termination of the Clinical Co-Development Agreement. Pursuant to the terms of the Clinical Co-Development Agreement, each of the Company and AgonOx were responsible for its own costs and expenses incurred in connection with the wind-down of the Phase 1 clinical trial. The Company made the remaining payment of $
4. Leases
The Company leases space for various corporate and research purposes and accounts for lease arrangements in accordance with the provisions of ASC 842, Leases. The Company calculates the lease liability as the present value of the lease’s cash flows using the interest rate implicit in the lease, if determinable. If the rate implicit in the lease is not determinable, the Company uses its incremental borrowing rate. The incremental borrowing rate is defined as the rate the Company would have to pay to borrow on a collateralized basis over the lease term. The Company has elected the accounting policy election available under ASC 842 to not record a lease liability for leases with a term of less than one year.
On March 1, 2024, the Company commenced an operating lease for a laboratory facility located at 17 Briden Street, Worcester, Massachusetts, which expired on February 28, 2026. The Company currently maintains shared office space at LifeSciences PA located at 411 Swedeland Road, King of Prussia, PA for access to full working space during normal business hours of operations for a monthly fee of $
Operating lease costs included in operating expense were approximately $
There was
5. Stockholders’ Equity
Financings
January 13, 2025 Concurrent Registered Direct Offering and Private Placement
On January 13, 2025, the Company entered into a securities purchase agreement (the “ January 13, 2025 Securities Purchase Agreement”) with certain institutional and accredited investors in connection with a registered direct public offering (the “ January 13, 2025 Registered Direct Offering”) and concurrent private placement (the “ January 13, 2025 Private Placement” and, together with the January 13, 2025 Registered Direct Offering, the “ January 13, 2025 Offerings”). The January 13, 2025 Offerings closed on January 14, 2025. In addition, the Company issued warrants to the placement agent, H.C. Wainwright & Co, LLC (“HCW”) to purchase a total of
Pursuant to the January 13, 2025 Securities Purchase Agreement, the Company offered and sold in the January 13, 2025 Registered Direct Offering
January 14, 2025 Concurrent Registered Direct Offering and Private Placement
On January 14, 2025, the Company entered into a securities purchase agreement (the “ January 14, 2025 Securities Purchase Agreement”) with certain institutional and accredited investors in connection with a registered direct public offering (the “ January 14, 2025 Registered Direct Offering”) and concurrent private placement (the “ January 14, 2025 Private Placement” and together with the January 14, 2025 Registered Direct Offering, the “ January 14, 2025 Offerings”). The January 14, 2025 Offerings closed on January 15, 2025. In addition, the Company issued warrants to the placement agent, HCW, to purchase a total of
Pursuant to the January 14, 2025 Securities Purchase Agreement, the Company offered and sold in the January 14, 2025 Registered Direct Offering
January 16, 2025 Concurrent Registered Direct Offering and Private Placement
On January 16, 2025, the Company entered into a securities purchase agreement (the “ January 16, 2025 Securities Purchase Agreement”) with certain institutional and accredited investors in connection with a registered direct public offering (the “ January 16, 2025 Registered Direct Offering”) and concurrent private placement (the “ January 16, 2025 Private Placement” and, together with the January 16, 2025 Registered Direct Offering, the “ January 16, 2025 Offerings” and the January 16, 2025 Offerings, together with the January 13, 2025 Offerings and the January 14, 2025 Offerings, the “ January 2025 Offerings”). The January 16, 2025 Offerings closed on January 17, 2025. In addition, the Company issued warrants to the placement agent, HCW, to purchase a total of
Pursuant to the January 16, 2025 Securities Purchase Agreement, the Company offered and sold in the January 16, 2025 Registered Direct Offering
July 2025 Financing
On July 25, 2025, the Company entered into inducement letter agreements (the “ July 2025 Inducement Letter Agreements”) with certain holders of certain of the Company’s existing warrants to purchase an aggregate of
Pursuant to the July 2025 Inducement Letter Agreements, in consideration for the immediate exercise of such warrants for cash and the payment of an additional $
In addition, the Company issued warrants to the placement agent, HCW, to purchase up to
November 2025 Financing
On November 3, 2025, the Company entered into inducement letter agreements (the “ November 2025 Inducement Letter Agreements”) with certain holders of the Company’s existing warrants to purchase an aggregate of
Pursuant to the November 2025 Inducement Letter Agreements, in consideration for the exercise of such warrants for cash and the payment of an additional $
Warrants
The Company first assesses warrants that are issued by the Company under the FASB ASC Topic 480, “Distinguishing Liabilities from Equity” (“ASC 480”) to determine whether the warrants are within the scope of ASC 480. If there are no instances outside of the Company’s control that could require cash settlement, the Company then applies and follows the applicable accounting guidance in the FASB ASC Topic 815, “Derivatives and Hedging” (“ASC 815”). Financial instruments are accounted for as either derivative liabilities or equity instruments depending on the specific terms of the agreement. Based on the assessment of the warrants issued by the Company under the guidance in ASC 480 and ASC 815, the warrants issued by the Company have been classified within stockholder’s equity.
During the three months ended September 30, 2026 and 2025, there were zero and
The following table summarizes the Company’s outstanding warrants, all of which are classified as equity instruments, at September 30, 2026 and 2025:
| 2026 | 2025 | |||||||||||||||
| Weighted- | Weighted- | |||||||||||||||
| Average | Average | |||||||||||||||
| Number | Exercise Price | Number | Exercise Price | |||||||||||||
| of Shares | Per Share | of Shares | Per Share | |||||||||||||
| Outstanding at January 1, | $ | $ | ||||||||||||||
| Issued | ||||||||||||||||
| Exercised | ( | ) | ||||||||||||||
| Expired | ( | ) | ( | ) | ||||||||||||
| Outstanding at September 30, | $ | $ | ||||||||||||||
On April 8, 2026, the Company entered into an At the Market Agreement ("Sales Agreement") with HCW pursuant to which the Company may offer and sell shares of Common Stock, having an aggregate price of up to $
The Company is not obligated to sell any shares under the ATM Program and may suspend or terminate the program at any time. Net proceeds from sales of shares under the ATM Program, after deducting sales commissions and other offering expenses, are intended to fund the development of PH-762 in an expected Phase 2b clinical trial for cutaneous squamous cell carcinoma, other development activities and for general working capital needs.
As of September 30, 2026, and through the date of issuance of these financial statements, the Company has not sold any shares of Common Stock under the ATM Program and has not received any proceeds therefrom.
6. Stock-based Compensation
Restricted Stock Units
Restricted stock units (“RSUs”) are issued under the Company’s 2020 Long-Term Incentive Plan (the “2020 Plan”). RSUs are generally subject to the satisfaction of certain service requirements. RSUs granted by the Company to employees generally cliff vest one year after the grant date. Upon vesting, each outstanding RSU will be settled for one share of Common Stock. Employee RSU recipients may elect to net share settle upon vesting, in which case the Company pays the employee’s withholding taxes due upon vesting and withholds a number of shares of equal value. The Company does not expect to repurchase shares to satisfy RSU vests. The fair value of the RSUs awarded is based upon the Company’s closing stock price at the grant date and is expensed over the requisite service period.
The following table summarizes the activity of the Company’s RSUs for the nine months ended September 30, 2026:
| Weighted- | ||||||||
| Average | ||||||||
| Grant Date | ||||||||
| Number | Fair Value | |||||||
| of Shares | Per Share | |||||||
| Unvested units at December 31, 2025 | $ | |||||||
| Granted | ||||||||
| Vested | ( | ) | ||||||
| Forfeited | ( | ) | ||||||
| Unvested units at September 30, 2026 | $ | |||||||
There were
Stock-based compensation expense related to RSUs was $
The aggregate fair value of RSUs that vested during both the three and nine months ended September 30, 2026 was $452,000, which represents the market value of the Company's common stock on the date that the applicable RSU vested. The aggregate fair value of RSUs that vested during both the three and nine months ended September 30, 2025 was $
Stock Options
Stock options are available for issuance under the 2020 Plan. Stock options granted by the Company to participants generally vest annually over four years from the grant date and expire ten years from the date of the grant. All outstanding stock options continue to be accounted for in accordance with ASC 718.
The Company did not grant any stock options during the nine months ended September 30, 2026 or 2025. As of September 30, 2026, there were
The Company did not have any stock-based compensation expense related to stock options for both the three and nine months ended September 30, 2026 and 2025, respectively.
Compensation Expense Related to Equity Awards
The following table sets forth total stock-based compensation expense for the three and nine months ended September 30, 2026 and 2025, in thousands:
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Research and development | $ | $ | $ | $ | ||||||||||||
| General and administrative | ||||||||||||||||
| Total stock-based compensation | $ | $ | $ | $ | ||||||||||||
As of September 30, 2026, the total unrecognized compensation cost related to non-vested RSUs was approximately $
7. Net Loss per Common Share
Basic net loss per share is computed by dividing net loss by the weighted average number of common shares outstanding. Diluted net loss per share is computed by dividing the Company’s net loss by the weighted average number of common shares outstanding and the impact of the dilutive effect of potential common stock equivalents, except when the inclusion of such potential common stock equivalents would be anti-dilutive. Dilutive potential common stock equivalents primarily consist of stock options, RSUs and warrants. Therefore, basic and diluted net loss per share applicable to common stockholders were the same for all periods presented because the impact of these items is generally anti-dilutive during periods of net loss.
The following table sets forth the potential common shares excluded from the calculation of net loss per common share because their inclusion would be anti-dilutive:
| September 30, | ||||||||
| 2026 | 2025 | |||||||
| Stock options | ||||||||
| Unvested RSUs | ||||||||
| Warrants | ||||||||
| Total | ||||||||
8. Segment Information
The Company has one reportable segment and operates as a clinical stage biopharmaceutical company. To date, the Company has yet to generate operating revenues and does not expect to generate any revenue in the foreseeable future. The Company's chief operating decision maker (CODM) is the President and Chief Executive Officer (CEO). The accounting policies of the single segment are the same as those described in the summary of significant accounting policies. The CODM assesses performance for the single segment and decides how to allocate resources based on net loss as reported on the condensed consolidated statements of operations. The CODM uses net loss to monitor budget versus actual results and to evaluate overall cash burn of the business. All of the Company’s operations occur within the United States.
The following table presents selected financial information with respect to the Company's single operating segment (in thousands):
| Three Months Ended | Nine Months Ended | ||||||||||||||||
| September 30, | September 30, | ||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||
| Research and development | |||||||||||||||||
| PH-762 | $ | $ | $ | $ | |||||||||||||
| PH-894 | |||||||||||||||||
| Employee expense, lab supplies and overhead | |||||||||||||||||
| Total research and development | |||||||||||||||||
| General and administrative | General and administrative | ||||||||||||||||
| Total operating expenses | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||||
| Other income, net | |||||||||||||||||
| Net loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||||
| ITEM 2. |
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
In this report, “we,” “our,” “ours,” “us,” “Phio” and the “Company” refers to Phio Pharmaceuticals Corp. and our subsidiary, MirImmune, LLC and the ongoing business operations of Phio Pharmaceuticals Corp. and MirImmune, LLC, whether conducted through Phio Pharmaceuticals Corp. or MirImmune, LLC.
This management’s discussion and analysis of financial condition as of September 30, 2026 and results of operations for the three and nine months ended September 30, 2026 and 2025 should be read in conjunction with the audited financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2025, which was filed with the Securities and Exchange Commission (the “SEC”) on March 5, 2026 (the “2025 Form 10-K”).
This report 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. Forward-looking statements are neither historical facts nor assurances of future performance. These statements are based only on our current beliefs, expectations and assumptions regarding the future of our business, our beliefs regarding the potential of our INTASYL technology, the timing, progress, results and plans of our discovery programs, preclinical studies and clinical trials of our current and future product candidates, including PH-762 and PH-894, our expectations regarding the timing and outcome of our planned regulatory communication and interactions with the FDA, our expectations regarding our manufacturing plans for PH-762, our expectations regarding our future expenses and capital expenditures, anticipated events and trends, the economy and other future conditions. Because forward-looking statements relate to the future, they 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 and financial condition 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:
| ● |
we are dependent on the success of our INTASYL technology, and our product candidates based on this technology, which is unproven and may never lead to approved and marketable products; |
| ● |
our product candidates are in an early stage of development and we may fail, experience significant delays, never advance in clinical development or not be successful in our efforts to identify or discover additional product candidates, which may materially and adversely impact our business; |
| ● | the timing, outcome and impact of any meetings with, or feedback from, the FDA related to the clinical development of any of our product candidates, including the possibility that the FDA’s feedback with respect to the Company’s proposed development strategy of PH-762 may be delayed or may require modifications to the Company’s proposed development plans; | |
| ● |
disruptions at the FDA, including due to a reduction in the FDA’s workforce and/or inadequate funding for the FDA, could prevent the FDA from performing normal functions on which our business relies, which could negatively impact our business; |
| ● | if we experience delays or difficulties in identifying and enrolling subjects in clinical trials, it may lead to delays in generating clinical data and the receipt of necessary regulatory approvals; | |
| ● |
interim and topline data may not accurately reflect or may materially differ from the complete results of a clinical trial; |
| ● |
we rely upon third parties for the manufacture of the clinical supply for our product candidates; |
| ● |
our business and operations would suffer in the event of computer system failures, cyberattacks or a deficiency in our cybersecurity; |
| ● |
we are dependent on the patents we own and the technologies we license, and if we fail to maintain our patents or lose the right to license such technologies, our ability to develop new products would be harmed; |
| ● |
we will require substantial additional funds to complete our research and development activities; |
| ● |
future financing may be obtained through, and future development efforts may be paid for by, the issuance of debt or equity, which may have an adverse effect on our stockholders or may otherwise adversely affect our business; |
| ● |
we may not be able to remain compliant with the continued listing requirements of The Nasdaq Capital Market; and |
| ● |
the price of our Common Stock ("Common Stock") has been and may continue to be volatile. |
Therefore, you should not rely on any of these forward-looking statements. Forward-looking statements contained in this Quarterly Report on Form 10-Q speak as of the date hereof and the Company does not undertake to update any of these forward-looking statements to reflect a change in its views or events or circumstances that occur after the date of this report except as required by law.
Overview
Phio Pharmaceuticals Corp. (“Phio,” “we,” “our” or the “Company”) is a clinical stage biopharmaceutical company whose proprietary INTASYL self-delivering small interfering RNAi (siRNA) technology is designed to make immune cells more effective in killing tumor cells. We are developing therapeutics that are designed to leverage INTASYL to precisely target specific proteins that reduce the body’s ability to fight cancer, without the need for specialized formulations or drug delivery systems. We are committed to discovering and developing innovative cancer treatments for patients by creating new pathways toward a cancer-free future.
The Company operates as a remote business under a streamlined cost structure and continues to focus its resources on advancing its clinical development programs.
PH-762
PH-762 is an INTASYL compound designed to reduce the expression of programmed cell death protein 1 (“PD-1”). PD-1 is a protein that inhibits T cells’ ability to kill cancer cells and is a clinically validated target in immunotherapy. Decreasing the expression of PD-1 can thereby increase the capacity of T cells, which protect the body from cancer cells and infections, to kill cancer cells.
Our non-clinical studies have demonstrated that intratumoral application of PH-762 resulted in potent anti-tumoral effects and have shown that intratumoral treatment with PH-762 inhibits tumor growth in a dose dependent fashion in PD-1 responsive and refractory models. Importantly, intratumoral administration of PH-762 observed in mice resulted in activity against distant untreated tumors, indicative of a systemic anti-tumor response. We believe these data further support the potential for PH-762 to provide a strong local immune response without the dose immune-related adverse effects seen with systemic antibody therapy.
PH-762 was evaluated in a U.S. multi-center Phase 1b dose-escalating clinical trial assessing intratumoral administration of PH-762 for the treatment of patients with cutaneous squamous cell carcinoma (cSCC), melanoma and Merkel cell carcinoma. The trial (NCT 06014086) was designed to evaluate the safety and tolerability of neoadjuvant use of intratumorally injected PH-762, assess the tumor response, and determine the dose or dose range for continued study of PH-762. The study was fully enrolled in November 2025 with a total of 22 patients, 20 with cutaneous squamous cell carcinoma, one with melanoma and one with Merkel cell carcinoma. The clinical trial was completed in June 2026, and the final clinical study report was submitted to FDA with a meeting request and briefing document outlining the nonclinical and clinical pharmacology programs, scientific rationale for continued development, completed Phase 1b results, and proposed Phase 2b neoadjuvant study in cSCC. The submission seeks FDA feedback on the proposed development strategy and next steps, with a response expected from the FDA by the end of November 2026.
A total of 22 patients with cutaneous carcinomas completed treatment in the Phase 1b trial and underwent excision of the treated lesion site. Reported data supports an overall response rate of 65% for squamous cell carcinomas (cSCC). Among the 20 patients with cSCC, 13 patients were classified as pathologic responders, including 9 patients with complete response (100% clearance), 2 patients with major/near clear response (greater than 90% clearance), and 2 patients with partial response (greater than 50% clearance). A single patient with metastatic Merkel cell carcinoma had a partial response. Seven cSCC patients and one melanoma patient had responses of less than 50%, however, none of these patients experienced a progression of the disease.
In the trial, PH-762 was evaluated in patients in five dose-escalating cohorts, increasing drug concentration 20-fold from the first to the final cohort. On January 20, 2026, we reported that intratumoral injection of PH-762 was well tolerated in all enrolled patients and there were no dose-limiting toxicities or clinically relevant treatment-emergent adverse effects in any patients who received intratumoral PH-762.
In July 2025, we entered into a comprehensive drug substance development services agreement with a U.S. manufacturer. Analytical and process development activities were completed in the second quarter of 2026, followed by cGMP manufacturing and release of PH-762 drug substance, including certificates of analysis and compliance, in the third quarter of 2026. This milestone represents the successful release of our first commercial-scale cGMP batch of PH-762 drug substance (active pharmaceutical ingredient), which will be used to manufacture clinical supplies for the planned Phase 2b clinical trial, which is expected to be initiated in the first quarter of 2027.
In December 2025, we entered into a development services agreement with a U.S. laboratory to conduct a nonclinical toxicology study for PH-762, which is required by the FDA prior to commencing a human clinical trial for registration purposes. In May 2026, the Company initiated the pivotal GLP toxicology study to support the continued clinical development of PH-762. The treatment phase of this program was completed in September 2026. A comprehensive preliminary report on study outcomes is expected before the end of 2026.
In March 2026, we entered into a cGMP drug product manufacturing services agreement with a U.S. manufacturer for clinical supplies and to satisfy strategic objectives associated with advancement of PH-762.
In September 2026, we announced the successful release of our first commercial-scale cGMP batch of PH-762 drug substance (active pharmaceutical ingredient). The active batch of clinical supplies is expected to be manufactured in the fourth quarter of 2026 in preparation for the Phase 2b clinical study, which is expected to be initiated in the first quarter of 2027.
PH-894
PH-894 is an INTASYL compound that is designed to silence BRD4, a protein that controls gene expression in both T cells and tumor cells, thereby affecting the immune system as well as the tumor. Intracellular and/or commonly considered “undruggable” targets, such as BRD4, represent a challenge for small molecule and antibody therapies. Therefore, what sets this compound apart is its dual mechanism: PH-894 suppression of BRD4 in T cells results in T cell activation, and suppression of BRD4 in tumor cells results in tumors becoming more sensitive to being killed by T cells.
Preclinical studies conducted have demonstrated that PH-894 resulted in a strong, concentration dependent and durable silencing of BRD4 in T cells and in various cancer cells. Similar to PH-762, nonclinical studies have also shown that intratumoral application of PH-894 resulted in potent and statistically significant anti-tumoral effects against distant untreated tumors, indicative of a systemic anti-tumor response. These nonclinical data indicate that PH-894 can reprogram T cells and other cells in the tumor microenvironment to provide enhanced immunotherapeutic activity. We have completed IND-enabling toxicology studies. As a result of the reprioritization to advance our clinical trial with PH-762 in the U.S., we have elected to defer the IND submission for PH-894.
Synergies With Other Therapies
Preclinical studies with our INTASYL compounds in combination with antibodies resulted in enhanced potency in vivo. The combination of INTASYL with antibodies may also increase the number of addressable drug targets. Unlike other antibody combination approaches, INTASYL can target multiple protein drug targets in a specific therapeutic dose, thereby enhancing potency while maintaining a favorable tolerability and safety profile.
We have demonstrated nonclinical activity with INTASYL in adoptive cell therapy ("ACT") applications. In preclinical studies, INTASYL was shown to enhance the activity of ACT therapies, including with tumor infiltrating lymphocytes and natural killer cells. As demonstrated in these preclinical studies, INTASYL can be efficiently incorporated into current ACT manufacturing processes.
Patents and Patent Applications
INTASYL compounds have a single-stranded phosphorothioate region, a short duplex region, and contain a variety of nuclease-stabilizing and lipophilic chemical modifications that we believe combine the beneficial properties of both conventional RNAi and antisense technologies. We protect our proprietary information by means of United States and foreign patents, trademarks, and copyrights. In addition, we rely upon trade secret protection and contractual arrangements to protect certain of our proprietary information and products. We have pending patent applications that relate to potential drug targets, compounds we are developing to modulate those targets, methods of making or using those compounds, and proprietary elements of our drug discovery platform.
We have also obtained rights to various patents and patent applications under assignment and/or license agreements with third parties, which require us to pay royalties, milestone payments, or both. We assess our license agreements on an ongoing basis and may from time to time terminate licenses to technology that we do not intend to employ in our technology platforms, or in our product discovery or development activities.
We actively protect our intellectual property and are prosecuting a number of patents and pending patent applications covering our compounds and technologies. We continue to rationalize our intellectual property position to protect our lead clinical candidates in key geographic regions while abandoning patents or applications that do not pertain to INTASYL or are country-specific in regions that are not of strategic geographic focus. A combined summary of these patents and patent applications is set forth below in the following table:
| Pending |
Issued |
|||||||
| Applications |
Patents |
|||||||
| United States |
8 | 25 | ||||||
| Canada |
5 | 2 | ||||||
| Europe |
7 | 15 | ||||||
| Japan |
4 | 10 | ||||||
| Other Markets |
10 | 4 | ||||||
Our portfolio includes 56 issued patents, 51 of which cover our INTASYL platform, and of those 30 cover immuno-oncology compounds and therapeutic uses. There are 15 patent families broadly covering both the composition and methods of use of our self-delivering INTASYL platform technology and uses of our INTASYL compounds targeting immune checkpoint, cellular differentiation, and metabolism targets for ex vivo cell-based cancer immunotherapies. The INTASYL platform patents are scheduled to expire between 2029 and 2038.
Furthermore, there are 34 patent applications, encompassing what we believe to be important new RNAi compounds and their use as therapeutics, chemical modifications of RNAi compounds that improve the compounds’ suitability for therapeutic uses (including delivery) and compounds directed to specific targets (i.e., that address specific disease states). The patents that may issue from these pending patent applications will, if issued, be set to expire between 2029 and 2044, not including any patent term extensions that may be afforded under the Federal Food, Drug, and Cosmetic Act (“FFDCA”) (and the equivalent provisions in foreign jurisdictions) for any delays incurred during the regulatory approval process relating to human drug products (or processes for making or using human drug products).
Critical Accounting Policies and Estimates
The discussion and analysis of our financial condition and results of operations are based upon our condensed consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these condensed consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an ongoing basis, we evaluate and base our estimates on historical experience and various other assumptions that are believed to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions and could have a material impact on our reported results.
There have been no material changes to our critical accounting policies and estimates as compared to those disclosed in our 2025 Form 10-K. For a discussion of our critical accounting policies and estimates, refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Policies and Estimates” in Part II, Item 7 of our Form 10-K for the fiscal year ended December 31, 2025.
Results of Operations
The following data summarizes the results of our operations for the periods indicated, in thousands:
| Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||||||||||||||||
| Dollar |
Dollar |
|||||||||||||||||||||||
| Description |
2026 |
2025 |
Change |
2026 |
2025 |
Change |
||||||||||||||||||
| Operating expenses |
$ | 4,268 | $ | 2,505 | $ | 1,763 | $ | 12,703 | $ | 6,686 | $ | 6,017 | ||||||||||||
| Operating loss |
(4,268 | ) | (2,505 | ) | (1,763 | ) | (12,703 | ) | (6,686 | ) | (6,017 | ) | ||||||||||||
| Net loss |
$ | (4,160 | ) | $ | (2,392 | ) | $ | (1,768 | ) | $ | (12,301 | ) | $ | (6,327 | ) | $ | (5,974 | ) | ||||||
Comparison of the Three and Nine Months Ended September 30, 2026 and 2025
Operating Expenses
The following table summarizes our total operating expenses, for the periods indicated, in thousands:
| Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||||||||||||||||
| Dollar |
Dollar |
|||||||||||||||||||||||
| Description |
2026 |
2025 |
Change |
2026 |
2025 |
Change |
||||||||||||||||||
| Research and development |
$ | 3,062 | $ | 1,181 | $ | 1,881 | $ | 8,936 | $ | 3,141 | $ | 5,795 | ||||||||||||
| General and administrative |
1,206 | 1,324 | (118 | ) | 3,767 | 3,545 | 222 | |||||||||||||||||
| Total operating expenses |
$ | 4,268 | $ | 2,505 | $ | 1,763 | $ | 12,703 | $ | 6,686 | $ | 6,017 | ||||||||||||
Research and Development Expenses
Research and development expenses consist primarily of personnel expenses, including salaries, benefits and RSU stock compensation expense for research and development personnel, contract research organization (CRO) clinical trial costs, technology licenses and other expenses associated with nonclinical and clinical development activities. Our research and development programs are focused on the development of immuno-oncology therapeutics based on our INTASYL technology. Since we commenced operations, research and development expenses have been a significant portion of our total operating expenses and are expected to constitute the majority of our spending for the foreseeable future.
Research and development expenses for the three months ended September 30, 2026 increased 159% or $1.9 million as compared with the three months ended September 30, 2025. The increase in research and development expenses was primarily driven by a $1.5 million increase in nonclinical toxicology study costs, drug substance costs and clinical supplies costs, as compared to the clinical study costs that occurred during the prior year period. There was also increased regulatory costs of $0.2 million related to FDA communications and filings for the advancement of our PH-762 program and $0.1 million related to increased patent activity.
Research and development expenses for the nine months ended September 30, 2026 increased 180% or $5.8 million as compared with the nine months ended September 30, 2025. The increase in research and development expenses was primarily driven by a $4.5 million increase in nonclinical toxicology study costs, drug substance costs and clinical supplies costs, all of which were associated with advancing the PH-762 program. In addition, research and development expenses increased by approximately $0.3 million related to employee headcount costs, $0.6 million related to outside services and consultants and $0.2 million related to patent activity.
General and Administrative Expenses
General and administrative expenses consist primarily of personnel expenses, including salaries, benefits and RSU stock compensation expense for general and administrative personnel, professional fees for legal, audit, tax consulting services, as well as other general corporate expenses.
General and administrative expenses for the three months ended September 30, 2026 decreased slightly by 9% or $100 thousand as compared with the three months ended September 30, 2025. This decrease was primarily driven by a reduction in outsourced consulting services. General and administrative expenses for the nine months ended September 30, 2026 increased 6% or $200 thousand as compared with the nine months ended September 30, 2025. The increase was primarily driven by a $1.2 million increase in employee costs, of which $0.7 million was related to increased stock-based compensation expenses. This increase was partially offset by a $1.1 million decrease in outside services and consultant expenses as compared to the prior year period.
Liquidity and Capital Resources
Historically, we have primarily funded our operations through the sale of our securities. In the future, we expect to depend on external funding from third parties, such as proceeds from the sale of equity, debt financings or potential strategic opportunities, to support our operations. Since our inception we have incurred operating losses and expect that we will continue to have negative cash flows from our operations and for the foreseeable future. As of September 30, 2026, we had cash and cash equivalents of $10.6 million as compared with $21.0 million at December 31, 2025.
We have limited cash resources, have reported recurring losses from operations since inception, have negative operating cash flows and have not yet generated product revenues. These factors raise substantial doubt regarding our ability to continue as a going concern, and our current cash resources may not provide sufficient capital to fund operations for at least the next 12 months from the date of the release of the condensed consolidated financial statements included elsewhere in this Quarterly Report. Our continuation as a going concern depends upon our ability to raise additional capital through equity offerings, debt offerings and/or strategic opportunities to fund our operations. There can be no assurance that we will be successful in accomplishing any of these plans in order to continue as a going concern. The condensed consolidated financial statements included elsewhere in this Quarterly Report do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should we be unable to continue as a going concern.
To address our liquidity needs and strengthen our financial position, in April 2026, we established an At the Market Agreement ("Sales Agreement") with H.C. Wainwright & Co., LLC ("HCW") pursuant to which we may offer and sell shares of our Common Stock having an aggregate offering price of up to $6,360,000 from time to time through HCW, acting as sales agent, at prevailing market prices. No assurance can be given that any Common Stock will be sold under the Sales Agreement, or if such sales occur, no assurance can be given as to the price or number of shares of Common Stock that will be sold, or the dates on which any such sales will take place. As of September 30, 2026, and through the date of the filing of this Quarterly Report, we have not sold any shares of Common Stock under the ATM Program and have not received any proceeds therefrom.
The following table summarizes our cash flows for the periods indicated, in thousands:
| Nine Months Ended |
||||||||
| September 30, |
||||||||
| 2026 |
2025 |
|||||||
| Net cash used in operating activities |
$ | (10,318 | ) | $ | (5,900 | ) | ||
| Net cash provided by (used in) investing activities |
3 | (12 | ) | |||||
| Net cash (used in) provided by financing activities |
(107 | ) | 11,235 | |||||
| Net (decrease) increase in cash and cash equivalents |
$ | (10,422 | ) | $ | 5,323 | |||
Net Cash Used in Operating Activities
Net cash used in operating activities for the nine months ended September 30, 2026 increased by $4.4 million as compared to the nine months ended September 30, 2025. This was primarily driven by higher net losses from operations in the three quarters of 2026 due to increased development spend.
Net Cash Provided by or Used in Investing Activities
Net cash provided by investing activities for the nine months ended September 30, 2026 was $3 thousand resulting from proceeds from the sale of equipment. Net cash used in investing activities was $12 thousand primarily for the purchase of computer equipment for the nine months ended September 30, 2025.
Net Cash Used in or Provided by Financing Activities
Cash used in financing activities was $107 thousand during the nine months ended September 30, 2026 primarily related to the payment of payroll taxes associated with vested restricted stock awards. During the nine months ended September 30, 2025 we received $11.2 million of proceeds from the issuance of Common Stock and warrants, as well as from the exercise of warrants, as described in Note 5 to the condensed consolidated financial statements.
Contractual Obligations
There have been no material changes to the contractual obligations as disclosed in our 2025 Form 10-K. For a discussion of our critical accounting policies and estimates, refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Contractual Obligations” in Part II, Item 7 of our 2025 Form 10-K.
Future Funding Requirements
At September 30, 2026, we had cash and cash equivalents of $10.6 million. Based on our current operating plan, we believe our existing cash and cash equivalents may not be sufficient to fund operations for at least the next 12 months from the date of the release of the condensed consolidated financial statements included elsewhere in this Quarterly Report. As a result, we will require additional capital to support our ongoing operations and advance our development programs. We have reported recurring losses from operations since inception, have generated negative operating cash flows and have not yet generated product revenues. These conditions raise substantial doubt about our ability to continue as a going concern.
Due to the difficulty and uncertainty associated with the design and implementation of nonclinical studies and clinical trials, we will continue to assess our cash and cash equivalents and future funding requirements. However, there is no assurance that additional funding will be achieved and that we will succeed in our future operations. We expect to continue to incur substantial additional operating losses for at least the next several years as we continue to develop our product candidates and seek marketing approval and, subject to obtaining such approval, the eventual commercialization of our product candidates. If we obtain marketing approval for any of our product candidates, we will incur significant sales, marketing and manufacturing expenses. We also expect to continue to incur significant costs to comply with corporate governance, internal controls and similar requirements associated with operating as a public reporting company.
Actual cash requirements could differ from management’s projections due to many factors including additional investments in research and development programs such as PH-894, nonclinical and clinical trial expenses for PH-762, competing technological and market developments, personnel costs, general and administrative expenses, and the costs of any strategic acquisitions and/or development of complementary business opportunities. The amount of additional capital we will require will be influenced by many factors, including, but not limited to:
| ● |
the scope, progress, results, and costs of nonclinical and clinical trials of PH-762; |
| ● |
our expectations regarding the timing and clinical development of PH-762; |
| ● |
whether and to what extent we internally fund, whether and when we initiate, and how we conduct additional pipeline product development programs, including PH-894; |
| ● | the costs involved with manufacturing clinical supply of PH-762; | |
| ● |
whether and when we are able to enter into strategic arrangements for our product candidates and the nature of those arrangements; |
| ● |
the costs involved in preparing, filing, prosecuting, maintaining, defending, and enforcing any patent claims; |
| ● |
changes in our operating plan, resulting in increases or decreases in our need for capital; |
| ● | the outcome of any meetings with the FDA related to the clinical development of any of our product candidates; | |
| ● |
disruptions at the FDA, including due to a reduction in the FDA’s workforce and/or inadequate funding for the FDA; and |
| ● |
our views on the availability, timing, and desirability of raising capital. |
We expect to seek additional funding to sustain our future operations and while we have successfully raised capital in the past, the ability to raise capital in future periods is not assured. We do not know if additional capital will be available when needed or on terms favorable to us or our stockholders. Collaboration, licensing or other agreements may not be available on favorable terms, or at all. If we seek to sell our equity securities, we do not know whether and to what extent we will be able to do so, or on what terms. If available, additional equity financing may be dilutive to stockholders, debt financing may involve restrictive covenants or other unfavorable terms and dilute our existing stockholders’ equity, and funding through collaboration, licensing or other commercial agreements may be on unfavorable terms, including requiring us to relinquish rights to certain of our technologies or products. If adequate financing is not available if and when needed, we may delay, reduce the scope of, or eliminate research or development programs, if any, postpone or cancel the pursuit of product candidates, or otherwise significantly curtail our operations to reduce our cash requirements and extend our capital.
| ITEM 3. |
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
As a smaller reporting company, we are not required to provide this information.
| ITEM 4. |
CONTROLS AND PROCEDURES |
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our Principal Executive Officer and our Principal Financial Officer, evaluated the effectiveness of disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this report to ensure that information that we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms.
Our disclosure controls and procedures are designed to provide reasonable assurance of achieving their objectives. We believe that a control system, no matter how well designed and operated, cannot provide absolute assurance that the objectives of the control system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected. Based on the evaluation of our disclosure controls and procedures as of the end of the period covered by this report, management, with the participation of our Principal Executive Officer and Principal Financial Officer, concluded that our disclosure controls and procedures were effective at the reasonable assurance level as of such date.
Changes in Internal Control Over Financial Reporting
There have been no changes in our internal control over financial reporting that occurred during the quarter ending September 30, 2026 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II — OTHER INFORMATION
| ITEM 1. |
LEGAL PROCEEDINGS |
From time to time, we may become a party to various legal proceedings and complaints arising in the ordinary course of business. We are not currently a party to any actual or threatened material legal proceedings of which we are aware.
| ITEM 1A. |
RISK FACTORS |
Other than set forth below, there have been no material changes in our risk factors set forth in “Risk Factors in Part I, “Item 1A”. in our 2025 Form 10-K. The risk factor described therein and set forth below could materially adversely affect our business, financial condition, or results of operations. This Quarterly Report on Form 10-Q also contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including these risks. Additional risks not currently known or currently material to us may also harm our business.
Future financing may be obtained through, and future development efforts may be paid for by, the issuance of debt or equity, which may have an adverse effect on our stockholders or may otherwise adversely affect our business.
If we raise funds through the issuance of debt or equity, any debt securities or preferred stock issued will have rights, preferences and privileges senior to those of holders of Common Stock in the event of a liquidation. In such event, there is a possibility that once all senior claims are settled, there may be no assets remaining to pay out to the holders of Common Stock. The terms of debt securities may also impose restrictions on our operations, which may include limiting our ability to incur additional indebtedness, to pay dividends on or repurchase our capital stock, or to make certain acquisitions or investments. In addition, we may be subject to covenants requiring us to satisfy certain financial tests and ratios, and our ability to satisfy such covenants may be affected by events outside of our control. For example, in April 2026, we established an At the Market Agreement (the "Sales Agreement") with H.C. Wainwright & Co., LLC ("HCW”) pursuant to which we may offer and sell shares of Common Stock having an aggregate offering price of up to $6,360,000 from time to time through HCW, acting as sales agent, at prevailing market prices pursuant to one or more “at the market” offerings. As of the date of this filing, we have $6,360,000 million of Common Stock remaining available for sale under the Sales Agreement. If we raise funds through the issuance of additional equity, whether through private placements or public offerings, which we have done in the past, including through one or more “at the market” offerings under the Sales Agreement, such issuances would dilute current stockholders’ ownership in us, perhaps substantially. The issuance of a significant amount of shares of Common Stock could cause the market price of Common Stock to decline or become highly volatile.
We may not be able to maintain compliance with the continued listing requirements of The Nasdaq Capital Market.
To maintain continued listing on The Nasdaq Capital Market, we must satisfy minimum financial and other requirements. For example, Nasdaq Listing Rule 5550(b)(1) requires companies listed on The Nasdaq Capital Market to maintain stockholders’ equity of at least $2.5 million for continued listing. As of September 30, 2026, our stockholders’ equity was $8.6 million and there can be no assurance that we will be able to maintain or increase our stockholders’ equity in the future. If our stockholders’ equity falls below $2.5 million, as a result of operating losses or for other reasons, or if we are unable to demonstrate to Nasdaq’s satisfaction that we subsequently regained compliance with this requirement, Nasdaq will notify us of such non-compliance. If we receive such notice from Nasdaq, in accordance with the Nasdaq Listing Rules, we will have 45 calendar days from the date of the notification to submit a plan to regain compliance with Nasdaq Listing Rule 5550(b)(1). If our compliance plan is accepted, we may be granted up to 180 calendar days from the date of the initial notification to evidence compliance. If our compliance plan is not accepted or we are otherwise unable to evidence compliance within Nasdaq’s allotted timeframe, Nasdaq may take steps to delist our Common Stock.
In addition, Nasdaq Listing Rule 5550(a)(2) requires a minimum bid price of at least $1.00 per share, and Nasdaq Listing Rule 5810(c)(3)(A) provides that a failure to meet the minimum bid price requirement exists if the deficiency continues for a period of 30 consecutive business days. As of September 30, 2026, we were in compliance with this requirement. However, as of the date of the filing of this report, we have closed below the minimum bid price per share for 21 consecutive business days. We have in the past effected reverse stock splits of our Common Stock in order to regain or maintain compliance with this requirement (most recently on July 5, 2024).
Such a delisting would have an adverse effect on the market liquidity of our securities, decrease the market price of our securities, result in the potential loss of confidence by investors, suppliers, customers and employees and fewer business development opportunities, and adversely affect our ability to obtain financing for the continuation of our operations. We actively monitor our stockholders’ equity and minimum bid price and will consider any and all options available to us to maintain compliance with Nasdaq Listing Rules 5550(b)(1) and (a)(2).
| ITEM 2. |
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS |
No sales or issuances of unregistered securities occurred that have not previously been disclosed in a Current Report on Form 8-K.
| ITEM 3. |
DEFAULTS UPON SENIOR SECURITIES |
None.
| ITEM 4. |
MINE SAFETY DISCLOSURES |
Not applicable.
| ITEM 5. | OTHER INFORMATION |
Insider Trading Arrangements
During the three months ended September 30, 2026, no director or officer of the Company adopted or terminated a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement, as each term is defined in Item 408(a) of Regulation S-K.
| ITEM 6. |
EXHIBITS |
EXHIBIT INDEX
| Incorporated by Reference Herein | |||||
| Exhibit |
Description |
Form | Exhibit | Date | |
| 3.1 | Amended and Restated Certificate of Incorporation of Phio Pharmaceuticals Corp. |
Current Report on Form 8-K (File No. 001-36304) | Exhibit 3.2 | November 19, 2018 | |
| 3.2 | Certificate of Amendment to the Amended and Restated Certificate of Incorporation of Phio Pharmaceuticals Corp. |
Current Report on Form 8-K (File No. 001-36304) | Exhibit 3.1 | January 14, 2020 | |
| 3.3 | Certificate of Amendment to the Amended and Restated Certificate of Incorporation of Phio Pharmaceuticals Corp. |
Current Report on Form 8-K (File No. 001-36304) | Exhibit 3.1 | January 25, 2023 | |
| 3.4 | Certificate of Amendment to the Amended and Restated Certificate of Incorporation of Phio Pharmaceuticals Corp. |
Current Report on Form 8-K (File No. 001-36304) | Exhibit 3.1 | July 2, 2024 | |
| 3.5 | Certificate of Designation of Series D Preferred Stock, dated November 16, 2022. |
Current Report on Form 8-K (File No. 001-36304) | Exhibit 3.1 | November 16, 2022 | |
| 3.6 | Amended and Restated Bylaws of Phio Pharmaceuticals Corp. |
Current Report on Form 8-K (File No. 001-36304) | Exhibit 3.1 | May 2, 2022 | |
| 4.1 |
Form of Placement Agent Warrant |
Current Report on Form 8-K (File No. 001-36304) | Exhibit 4.2 | December 8, 2023 | |
| 4.2 | Form of Series C/D Warrant |
Current Report on Form 8-K (File No. 001-36304) | Exhibit 4.1 | July 12, 2024 | |
| 4.3 | Form of Placement Agent Warrant | Current Report on Form 8-K (File No. 001-36304) | Exhibit 4.2 | July 12, 2024 | |
| 4.4 | Form of Placement Agent Warrant |
Current Report on Form 8-K (File No. 001-36304) | Exhibit 4.2 | December 20, 2024 | |
| 4.5 | Form of Placement Agent Warrant |
Current Report on Form 8-K (File No. 001-36304) | Exhibit 4.2 | December 26, 2024 | |
| 4.6 |
Form of Placement Agent Warrant. |
Current Report on Form 8-K (File No. 001-36304) | Exhibit 4.2 | January 14, 2025 | |
| 4.7 |
Form of Placement Agent Warrant. |
Current Report on Form 8-K (File No. 001-36304) | Exhibit 4.2 | January 15, 2025 | |
| 4.8 |
Form of Placement Agent Warrant. |
Current Report on Form 8-K (File No. 001-36304) | Exhibit 4.2 | January 17, 2025 | |
| 4.9 |
Form of Series J/K Warrant | Current Report on Form 8-K (File No. 001-36304) | Exhibit 4.1 | July 30, 2025 | |
| 4.10 |
Form of Placement Agent Warrant | Current Report on Form 8-K (File No. 001-36304) | Exhibit 4.2 | July 30, 2025 | |
| 4.11 |
Form of Series A Warrant |
Current Report on Form 8-K (File No. 001-36304) | Exhibit 4.1 | November 6, 2025 | |
| 4.12 | Form of Placement Agent Warrant |
Current Report on Form 8-K (File No. 001-36304) | Exhibit 4.2 | November 13, 2025 | |
| 10.1 | Amendment No. 1 to Phio Pharmaceuticals Corp. 2020 Long Term Incentive Plan, as amended and restated. | Current Report on Form 8-K (File No. 001-36304) | Exhibit 10.1 | September 28, 2026 |
| 31.1 |
Sarbanes-Oxley Act Section 302 Certification of Principal Executive Officer. * |
||||
| 31.2 |
Sarbanes-Oxley Act Section 302 Certification of Principal Financial Officer. * |
||||
| 32.1 |
Sarbanes-Oxley Act Section 906 Certification of Principal Executive Officer and Principal Financial Officer. ** |
||||
| 101.INS |
Inline XBRL Instance Document.* |
||||
| 101.SCH |
Inline XBRL Taxonomy Extension Schema Document.* |
||||
| 101.CAL |
Inline XBRL Taxonomy Extension Calculation Linkbase Document.* |
||||
| 101.DEF |
Inline XBRL Taxonomy Extension Definition Linkbase Document.* |
||||
| 101.LAB |
Inline XBRL Taxonomy Extension Label Linkbase Document.* |
||||
| 101.PRE |
Inline XBRL Taxonomy Extension Presentation Linkbase Document.* |
||||
| 104 |
The cover page for this report, formatted in Inline XBRL (included in Exhibit 101).* |
| * |
Filed herewith. |
| ** |
Furnished herewith and not deemed “filed” for purposes of Section 18 of the Exchange Act or otherwise subject to the liability of that Section or incorporated by reference into any filing under the Securities Act or the Exchange Act. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized on November 5, 2026.
| Phio Pharmaceuticals Corp. |
|||
| By: |
/s/ Robert J. Bitterman |
||
| Robert J. Bitterman |
|||
| President and Chief Executive Officer (as Principal Executive Officer) |
|||
| By: |
/s/ Lisa C. Carson |
||
| Lisa C. Carson |
|||
| Chief Financial Officer (as Principal Financial Officer) |
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