Phio Pharmaceuticals Corp.

Previous wording

This management’s discussion and analysis of financial condition as of September 30, 2025 and results of operations for the three and nine months ended September 30, 2025 and 2024 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, 2024, which was filed with the Securities and Exchange Commission (the“SEC”) on March 31, 2025 (the“2024 Form 10-K”).

Current wording

This management’s discussion and analysis of financial condition as of March 31, 2026 and results of operations for the three months ended March 31, 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”).

Previous wording

Our preclinical studies have demonstrated that direct-to-tumor application of PH-762 resulted in potent anti-tumoral effects and have shown that direct-to-tumor treatment with PH-762 inhibits tumor growth in a dose dependent fashion in PD-1 responsive and refractory models. Importantly, direct-to-tumor administration of PH-762 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.

Current wording

Our non-clinical studies have demonstrated that direct-to-tumor application of PH-762 resulted in potent anti-tumoral effects and have shown that direct-to-tumor treatment with PH-762 inhibits tumor growth in a dose dependent fashion in PD-1 responsive and refractory models. Importantly, direct-to-tumor administration of PH-762 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.

Previous wording

To date, there were no dose-limiting toxicities or clinically relevant treatment-emergent adverse effects in the patients receiving intratumoral PH-762 in this trial. Moreover, PH-762 has been well tolerated in all enrolled patients in each escalating dose cohort. Phio may continue to screen and treat additional patients as part of the fifth cohort.

Current wording

In the trial, 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. PH-762 has been evaluated in patients within five dose-escalating cohorts, increasing drug concentration 20-fold from the first to the final cohort. Safety data through an extended follow-up period is expected to be reported in the second quarter of 2026.

Previous wording

In July 2025, we entered into a comprehensive drug substance development services agreement with a U.S. manufacturing company pursuant to which the manufacturer will provide analytical and process development and cGMP manufacture of clinical supplies for Phio's lead development compound, PH-762.

Current wording

In July 2025, we entered into a comprehensive drug substance development services agreement with a U.S. manufacturing company pursuant to which the manufacturer will provide analytical and process development activity, and cGMP manufacture of drug substance to manufacture clinical supplies for our lead development compound, PH-762.

Previous wording

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, preclinical studies have also shown that direct-to-tumor 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 preclinical data indicate that PH-894 can reprogram T cells and other cells in the tumor microenvironment to provide enhanced immunotherapeutic activity. We have completed the IND-enabling studies and are in the process of finalizing the study reports required for an IND submission with PH-894. 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.

Current wording

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 direct-to-tumor 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 the IND-enabling 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.

Previous wording

Our portfolio includes 59 issued patents, 53 of which cover our INTASYL platform, and of those 29 cover immuno-oncology compounds and therapeutic uses. There are 19 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 forex vivo cell-based cancer immunotherapies. The INTASYL platform patents are scheduled to expire between 2029 and 2038.

Current wording

Our portfolio includes 55 issued patents, 50 of which cover our INTASYL platform, and of those 28 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 forex vivo cell-based cancer immunotherapies. The INTASYL platform patents are scheduled to expire between 2029 and 2038.

Previous wording

Furthermore, there are 23 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).

Current wording

Furthermore, there are 20 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).

Previous wording

Comparison of the Three and Nine Months Ended September 30, 2025 and 2024

Current wording

Comparison of the Three Months Ended March 31, 2026 and 2025

Previous wording

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 preclinical 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.

Current wording

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.

Previous wording

Research and development expenses for the three months ended September 30, 2025 increased 83% or $500 thousand as compared with the three months ended September 30, 2024. This increase in research and development expenses was primarily driven by a $400 thousand increase in clinical trial costs, chemistry, manufacturing and controls (CMC) costs in connection with advancing our PH-762 program and a $100 thousand increase in R&D employee personnel related costs.

Current wording

Research and development expenses for the three months ended March 31, 2026 increased 215% or $1.9 million as compared with the three months ended March 31, 2025. This increase in research and development expenses was primarily driven by a $1.6 million increase in nonclinical and clinical trial costs, chemistry, manufacturing and controls (CMC) costs in connection with advancing our PH-762 program and a $220 thousand increase in R&D employee personnel related costs for salary, bonus and stock compensation expense. Management believes that research and development expenses will continue to increase as we continue to advance our PH-762 program.

Previous wording

General and administrative expenses for the three months ended September 30, 2025 increased 40% or $400 thousand as compared with the three months ended September 30, 2024. The increase in general and administrative expenses was primarily driven by a $200 thousand increase in outsourced professional services related to accounting and legal and $77 thousand increase related to an increase in RSU compensation expense..

Current wording

General and administrative expenses for the three months ended March 31, 2026 increased 39% or $400 thousand as compared with the three months ended March 31, 2025. The increase in general and administrative expenses was primarily driven by a $98 thousand increase in bonus expense accrual, $228 thousand increase in stock-based compensation expense, $65 thousand increase in investor outreach and $66 thousand increase in professional fees. Additionally, there was an $115 thousand increase in finance employee-related costs that is offset by a reduction of $248 thousand for outsourced accounting fees in the first quarter of 2025.

Previous wording

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, 2025, we had cash and cash equivalents of $10,705,000 as compared with $5,382,000 at December 31, 2024.

Current wording

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 March 31, 2026, we had cash and cash equivalents of $17 million as compared with $21 million at December 31, 2025.

Previous wording

Based on current cash flow projections, the Company believes it has sufficient cash and cash equivalents, including net proceeds from the November 2025 Financing, to meet our current planned obligations for at least 12 months from the date these financial statements are issued. We have limited cash resources, have incurred recurring operating losses and negative cash flows from our operations since our inception and have not yet recognized any product revenues. These factors have previously raised doubt about the Company's ability to continue as a going concern. With the November 2025 Financing, combined with the net proceeds from the January 2025 and July 2025 Offerings, we were able to alleviate such doubt as of the date of the filing of this Quarterly Report on Form 10-Q.

Current wording

Based on current cash flow projections, we believe we have sufficient cash and cash equivalents, including net proceeds from our latest financing that occurred during November 2025, to meet our current planned obligations for at least 12 months. We have limited cash resources, have incurred recurring operating losses and negative cash flows from our operations since our inception and have not yet recognized any product revenues.

Previous wording

Net Cash Used in Investing Activities

Current wording

Net Cash Provided by or Used in Investing Activities

Previous wording

Net cash provided by financing activities for the nine months ended September 30, 2025 was $ 11.2 million as compared to the nine months ended September 30, 2024 where net cash provided by financing activities was $2.6 million. The increase in net cash provided by financing activities was primarily due to the issuance of common stock and warrants, and the exercise of warrants, both as described in Note 3 of the condensed consolidated financial statements.

Current wording

There was no cash provided by financing activities for the three months ended March 31, 2026. The $9.2 million decrease in net cash provided by financing activities as compared to the three months ended March 31, 2025, was primarily due to the issuance of Common Stock and warrants, and the exercise of warrants in the prior year, both as described in Note 3 of the condensed consolidated financial statements.

Previous wording

At September 30, 2025, we had cash and cash equivalents of $10.7 million, which includes aggregate net proceeds of approximately $6.7 million and $2.1 million after deducting fees and estimated offering expenses, from our January 2025 and July 2025 Financings, respectively. As described in our subsequent event disclosure, we expect to receive $12.1 million from our November 2025 Financing, after deducting placement agent fees and offering expenses. We expect that our cash and cash equivalents will enable us to fund our current operating plan for at least 12 months from the date these financial statements are issued. Due to the difficulty and uncertainty associated with the design and implementation of preclinical 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.

Current wording

At March 31, 2026, we had cash and cash equivalents of $17.0 million. We expect that our cash and cash equivalents will enable us to fund our current operating plan for at least 12 months. 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.

Previous wording

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, clinical trial expenses for PH-762, competing technological and market developments, 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:

Current wording

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: