Phio Pharmaceuticals Corp.

Previous 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”).

Current wording

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”).

Previous wording

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, future plans and strategies, projections, 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:*

Current wording

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:*

Previous wording

PH-762 is an INTASYL compound designed to reduce the expression of 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.

Current wording

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.

Previous 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.

Current wording

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.

Previous 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.

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 (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.

Previous 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.

Current wording

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.

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. 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.

Current wording

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.

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. In May 2026, the Company initiated the pivotal GLP toxicology study to support the continued clinical development of PH-762.

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. 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.

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, 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.

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 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.

Previous 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.

Current wording

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 forex vivo cell-based cancer immunotherapies. The INTASYL platform patents are scheduled to expire between 2029 and 2038.

Previous 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).

Current wording

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).

Previous wording

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

Current wording

Comparison of the Three and Nine Months Ended September 30, 2026 and 2025

Previous wording

Research and development expenses for the six months ended June 30, 2026 increased 200% or $3.9 million as compared with the six months ended June 30, 2025. The increase in research and development expenses was primarily driven by a $1.8 million increase in nonclinical toxicology study costs and a $1.5 million increase in CMC costs both of which were associated with advancing the PH-762 program. In addition, research and development expenses increased by approximately increase of $0.9 million related to higher consulting, patent and employee-related costs. These increases were offset by a $0.3 million decrease in clinical trial costs due to trial wind-down activities.

Current wording

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.

Previous 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.

Current wording

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.

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 June 30, 2026, we had cash and cash equivalents of $13.0 million as compared with $21.0 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 September 30, 2026, we had cash and cash equivalents of $10.6 million as compared with $21.0 million at December 31, 2025.

Previous wording

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.

Current wording

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.

Previous 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.

Current wording

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.

Previous 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.

Current wording

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.

Previous wording

Net Cash Provided by Financing Activities

Current wording

Net Cash Used in or Provided by Financing Activities

Previous 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.

Current wording

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.

Previous 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.

Current wording

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.