Phio Pharmaceuticals Corp.

Previous wording

This management’s discussion and analysis of financial condition as of March 31, 2025 and results of operations for the three months ended March 31, 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 June 30, 2025 and results of operations for the three and six months ended June 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”).

Previous wording

PH-762 is currently being 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) is 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 and is expected to enroll up to 30 patients. In November 2023, we announced the dosing of the first patient under a previously cleared Investigational New Drug (“IND”) application by the U.S. Food and Drug Administration. A Safety Monitoring Committee (SMC) reviewed data from the first, second and third dose cohorts treated with PH-762 and, in each case, recommended escalation to the next dose concentration. To date, a total of 10 patients with cutaneous carcinomas have been treated in Cohorts 1, 2 and 3. These cohorts included 9 patients with cutaneous squamous cell carcinoma (cSCC) and 1 patient with metastatic melanoma. At Day 36 (planned tumor excision), of the 9 patients with cSCC, 4 patients had a pathologic complete response (100% tumor clearance). One patient had a near complete response (>90% clearance) and 1 patient had a partial response (>50% clearance). The other 3 cSCC patients and one metastatic melanoma patient had a pathologic non-response (< 50% clearance). Patients with pathologic complete response (100% tumor clearance) may have visual signs of residual scar or subdermal inflammation prior to resection. No patients, however, exhibited clinical progression of disease. 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. The fourth cohort is currently enrolling patients, and we expect to complete enrollment in the trial in the third quarter of 2025.Given our intention to focus our efforts and resources on our U.S. clinical trial with PH-762, we have completed the winding down process for our first-in-human clinical trial for PH-762 in France, which was limited to the treatment of patients with metastatic melanoma. Safety data from the initial cohort of three patients in the French clinical trial were evaluated by a data monitoring committee in the first quarter of 2023. The safety data review disclosed no dose-limiting toxicity, and no drug-related severe or serious adverse events.

Current wording

PH-762 is currently being 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) is 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 and is expected to enroll up to 30 patients. In November 2023, we announced the dosing of the first patient under a previously cleared Investigational New Drug (“IND”) application by the U.S. Food and Drug Administration. A Safety Monitoring Committee (SMC) reviewed data from the first, second, third and fourth dose cohorts treated with PH-762 and, in each case, recommended escalation to the next dose concentration. To date, a total of 15 patients with cutaneous carcinomas have been treated in Cohorts 1, 2, 3 and 4. These cohorts included 13 patients with cutaneous squamous cell carcinoma (cSCC), one patient with metastatic melanoma and one patient with metastatic Merkel cell carcinoma. At Day 36 (planned tumor excision), of the 13 patients with cSCC, five patients had a pathologic complete response (100% tumor clearance). One patient had a near complete response (>90% clearance) and one patient had a partial response (>50% clearance). The other six cSCC patients and one metastatic melanoma patient had a pathologic non-response (< 50% clearance). The Merkel cell patient had a partial response (> 50% clearance). Patients with pathologic complete response (100% tumor clearance) may have visual signs of residual scar or subdermal inflammation prior to resection. No patients, however, exhibited clinical progression of disease. 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. On June 25, 2025, we announced that the SMC recommended dose escalation to the fifth cohort in our Phase 1b clinical trial. The fifth cohort is currently enrolling patients, and we expect to complete enrollment in the trial in the third quarter of 2025.

Previous wording

Research and development expenses for the three months ended March 31, 2025 decreased 23% as compared with the three months ended March 31, 2024. The decrease in research and development expenses was primarily driven by a $106,000 decrease in salary-related costs and a $94,000 decrease in consulting expense.

Current wording

General and administrative expenses for the three months ended June 30, 2025 increased 18% as compared with the three months ended June 30, 2024. The increase in general and administrative expenses was primarily driven by a $185,000 increase in salary-related costs for new hires.

Previous wording

Historically, our primary source of funding has been through the sale of our securities. In the future, we will be 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 our operations. We have reported recurring losses from operations since inception and expect that we will continue to have negative cash flows from our operations for the foreseeable future. At March 31, 2025, we had cash and cash equivalents of $13,278,000 as compared with $5,382,000 at December 31, 2024.

Current wording

Historically, our primary source of funding has been through the sale of our securities. In the future, we will be 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 our operations. We have reported recurring losses from operations since inception and expect that we will continue to have negative cash flows from our operations for the foreseeable future. At June 30, 2025, we had cash and cash equivalents of $10,775,000 as compared with $5,382,000 at December 31, 2024.

Previous wording

Net cash used in investing activities for the three months ended March 31, 2025 was approximately $2,000 as compared to the three months ended March 31, 2024 where net cash used in investing activities was $0. The increase in net cash used in investing activities was primarily due to computer equipment purchases during the three months ended March 31, 2025.

Current wording

Net cash used in investing activities for the six months ended June 30, 2025 was approximately $5,000 as compared to the six months ended June 30, 2024 where net cash used in investing activities was $0. The increase in net cash used in investing activities was primarily due to computer equipment purchases during the six months ended June 30, 2025.

Previous wording

Net Cash Flow Provided by Financing Activities

Current wording

Net Cash Provided by Financing Activities

Previous wording

Net cash provided by financing activities for the three months ended March 31, 2025 was approximately $9,173,000 as compared to the three months ended March 31, 2024 where net cash used in financing activities was $4,000. 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 2 of the condensed consolidated financial statements.

Current wording

Net cash provided by financing activities for the six months ended June 30, 2025 was approximately $9,213,000 as compared to the six months ended June 30, 2024 where net cash used in financing activities was $4,000. 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 2 of the condensed consolidated financial statements.

Previous wording

Details of our obligations under the Clinical Co-Development Agreement with our former collaboration partner AgonOx can be found in Note 2 of the condensed consolidated financial statements. Outside of the above, there have been no material changes to the contractual obligations as disclosed in our 2024 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 Form 10-K for the fiscal year ended December 31, 2024.

Current wording

There have been no material changes to the contractual obligations as disclosed in our 2024 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 2024 Form 10-K.

Previous wording

At March 31, 2025, we had cash and cash equivalents of $13,278,000, which includes aggregate net proceeds of approximately $6,700,000, after deducting fees and estimated offering expenses, from our January 2025 Financings. We expect that our cash and cash equivalents will enable us to fund our current operating plan into the second quarter of 2026. 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 June 30, 2025, we had cash and cash equivalents of $10,775,000, which includes aggregate net proceeds of approximately $6,700,000, after deducting fees and estimated offering expenses, from our January 2025 Financings. We expect that our cash and cash equivalents will enable us to fund our current operating plan into the second quarter of 2026. 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.