Phio Pharmaceuticals Corp.

Previous 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”).

Current wording

This management’s discussion and analysis of financial condition as of June 30, 2026 and results of operations for the three and six months ended June 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”).

Previous wording

PH-762 was evaluated in a U.S. multi-center Phase 1b dose-escalating clinical trial through the intratumoral injection of PH-762 for the treatment of patients with cutaneous squamous cell carcinoma, 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 phase of the trial is complete, and the final data is currently being analyzed.

Current wording

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, 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 phase of the trial has been completed, and the final data are being analyzed. The clinical study report is currently in the final stages of preparation.

Previous wording

While final study data is pending formal analysis, an FDA submission intended to propose and seek guidance for next steps in clinical study design for PH-762 is targeted for the second quarter of 2026. A total of 22 patients with cutaneous carcinomas completed treatment in the Phase 1b trial and underwent excision of the treated lesional 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.

Current wording

A total of 22 patients with cutaneous carcinomas completed treatment in the Phase 1b trial and underwent excision of the treated lesional 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.

Previous 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.

Current wording

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.

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 activity, and cGMP manufacture of drug substance to manufacture clinical supplies for our 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. In June 2026, production of the first batch of drug substance was initiated. This batch will be used to manufacture clinical supplies for the next clinical trial.

Previous wording

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.

Current wording

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.

Previous 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.

Current wording

Our portfolio includes 54 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 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).

Current wording

Furthermore, there are 31 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 Months Ended March 31, 2026 and 2025

Current wording

Comparison of the Three and Six Months Ended June 30, 2026 and 2025

Previous 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.

Current wording

Research and development expenses for the three months ended June 30, 2026 increased 187% or $2.0 million as compared with the three months ended June 30, 2025. The increase in research and development expenses was primarily driven by a $0.9 million increase in nonclinical toxicology study costs and a $1.5 million increase in CMC (chemistry, manufacturing and controls) costs. Both increases were in connection with advancing our PH-762 program; offset by a $0.3 million decrease in clinical trial costs. 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 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.

Current wording

General and administrative expenses for the three months ended June 30, 2026 decreased slightly at 4% as compared with the three months ended June 30, 2025. General and administrative expenses for the six months ended June 30, 2026 increased 15% or $340 thousand as compared with the six months ended June 30, 2025. The increase was primarily driven by a $465 thousand increase in stock-based compensation expense and $170 thousand increase in investor relations activities; offset by a $250 thousand net decrease in financial outsourced accounting fees.

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

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 June 30, 2026, we had cash and cash equivalents of $13.0 million as compared with $21.0 million at December 31, 2025.

Previous wording

Net cash used in operating activities for the three months ended March 31, 2026 increased by $2.7 million as compared to the three months ended March 31, 2025. This was primarily driven by net loss from operations in the first quarter of 2026 due to increased development spend.

Current wording

Net cash used in operating activities for the six months ended June 30, 2026 increased by $4.2 million as compared to the six months ended June 30, 2025. This was primarily driven by higher net losses from operations in the first two quarters of 2026 due to increased development spend.

Previous wording

Net cash provided by investing activities for the three months ended March 31, 2026 was $3 thousand for an equipment sale. Net cash used in investing activities was $2 thousand for the purchase of computer equipment for the three months ended March 31, 2025.

Current wording

Net cash provided by investing activities for the six months ended June 30, 2026 was $3 thousand resulting from proceeds from the sale of equipment. Net cash used in investing activities was $5 thousand for the purchase of computer equipment for the six months ended June 30, 2025.

Previous 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.

Current wording

There was no cash provided by financing activities for the six months ended June 30, 2026. The $9.2 million decrease in net cash provided by financing activities as compared to the six months ended June 30, 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 5 of the condensed consolidated financial statements.

Previous 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.

Current wording

At June 30, 2026, we had cash and cash equivalents of $13.0 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.