PHIO PHARMACEUTICALS CORP. In this document, "we," "our," "ours," "us," "Phio" and the "Company" refers to
This management's discussion and analysis of financial condition as of
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,"
"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. Risks that could cause actual
results to vary from expected results expressed in our forward-looking
statements include, but are not limited to, the impact to our business and
operations by the recent coronavirus outbreak, the development of our product
candidates, our ability to execute on business strategies, our ability to
develop our product candidates with collaboration partners, the timeline and
duration for advancing our product candidates into clinical development, results
from our preclinical and clinical activities and our ability to obtain future
financing. 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 those identified in our Annual Report on Form 10-K
for the year ended
Overview
Our development efforts are based on our broadly patented INTASYL technology platform. Our INTASYL compounds do not require a delivery vehicle to penetrate into tissues and cells and are designed to "silence" or down-regulate, the expression of a specific gene which is over-expressed in cancer. We believe that our INTASYL platform uniquely positions the Company in the field of immuno-oncology for the following reasons:
· Efficient uptake of INTASYL by target cells obviating the need for
facilitated delivery (mechanical or formulation);
· Does not require permanent genetic modification;
· Can target multiple genes (i.e. multiple immunosuppression pathways) in
a single therapeutic entity;
· Gene silencing by INTASYL has been shown to have a sustained, or
long-term, effect in vivo;
16
· Favorable clinical safety profile of INTASYL with local administration; and
· Can be readily manufactured under current good manufacturing practices.
In contrast to other RNA technologies and platforms, the self-delivering nature of our INTASYL platform makes it ideally suited for use with adoptive cell therapy ("ACT") treatments as well as for direct therapeutic use. ACT consists of the infusion of immune cells with antitumor properties, after growing them in a lab to large numbers. These cells can be derived from unmodified (i.e. naturally occurring) immune cells, immune cells isolated from resected tumors, or genetically engineered immune cells that recognize tumor cells. Regardless of the source of immune cells (ACT or naturally occurring immune cells), in patients with solid tumors, these cells have several shortcomings that inhibit their full therapeutic potential. By using INTASYL technology during the manufacturing of such ACT cell products we can improve the phenotype and function of these cells, potentially leading to better therapeutic outcomes. Multiple inhibitory mechanisms restrain immune cells from effectively eradicating tumors, including immune checkpoints, reduced cell fitness and cell persistence. Furthermore, the immunosuppressive tumor micro-environment (the "TME") can pose a formidable barrier to immune cell infiltration and function. By using INTASYL based drugs administered directly, we can also reprogram cells in the TME to help overcome these immunosuppressive mechanisms.
We have developed a product platform based on our INTASYL technology that allows easy, precise, rapid, and selective non-genetically modified programming of ACT cells (ex vivo, during manufacturing) and of the TME (in vivo, by local application), resulting in reduced immune inhibition and in improved immunotherapy.
INTASYL Use To Improve Adoptive Cell Therapy Products
ACT is a form of immune therapy based on the use of immune cells, isolated from patients, donors or retrieved from allogeneic immune cell banks. They are grown in a lab to large numbers, followed by administering them to the patient to fight cancer. Sometimes, immune cells that naturally recognize a tumor are used, while other times immune cells are modified or "genetically engineered" to make them recognize and kill the cancer cells. There are several types of ACT, including: a.) non-engineered cell therapy in which immune cells are grown from the patient's tumor or blood, such as tumor infiltrating lymphocytes ("TILs"), or from donor blood or tissue such as natural killer ("NK") cells, dendritic cells ("DC") and macrophages, and b.) genetically engineered immune cells that are genetically modified to recognize specific tumor proteins and to remain in an activated state (such as T cell receptor technology ("TCRs"), chimeric antigen receptor ("CAR") T cells, or CAR-NK cells).
Multiple inhibitory mechanisms restrain immune cells used in ACT from effectively eradicating tumors, including immune checkpoints, reduced cell fitness and cell persistence, and other barriers to immune cell infiltration and function mainly in solid tumors. We believe our INTASYL compounds are ideally suited to be used in ACT products. With INTASYL compounds, we can unlock the full potential of ACT, by improving the immune cell function, differentiation and metabolism, in order to make these immune cells more effective without the need for additional complicated manufacturing steps and/or genetic engineering.
Our approach builds on well-established methodologies of ACT and involves the treatment of immune cells with our INTASYL compounds ex vivo while they are grown in the lab and before administering them to the patient. Because our INTASYL compounds do not require a delivery vehicle, in contrast to other RNA technologies, to penetrate into the cells, we are able to enhance the function of these cells by merely adding our INTASYL compounds during the expansion process and without the need for genetic engineering, without the need for complex delivery vehicles or formulations, and without additional needed complex manufacturing steps. By adding INTASYL to the cell culture media used during the cell expansion, we can reduce or eliminate the expression of genes that make the immune cells less effective. For example, with our INTASYL compounds, we can reduce the expression of immunosuppressive proteins by the therapeutic immune cells, potentially enabling them to overcome tumor resistance mechanisms and thus improving their ability to destroy the tumor cells. In various types of immune cells tested to date, INTASYL treatment results in potent silencing with close to 100% transfection efficiency and while maintaining cell viability and cell growth rate. After expanding these cells and enhancing them with INTASYL ex vivo, they are returned to the patient for treatment.
Our lead product candidate and most advanced program being developed in ACT is PH-762, an INTASYL compound that targets the checkpoint protein PD-1. Checkpoint proteins, such as PD-1, normally act as a type of "off switch" that prevent T cells from attacking certain cells, such as cancer cells, in the body. T cells are immune cells that protect the body from cancer cells and infections.
17
Data developed by Phio and with collaborators has shown that PH-762 silences PD-1 checkpoint expression, thereby removing the "off switch" and resulting in enhanced T cell activation and tumor cytotoxicity. Experimental data shows that PH-762 can silence the expression of PD-1 in target human T cells in a potent and durable manner, and can increase the function of patient derived TILs for use in ACT, and of CAR-T cells used in ACT, showing that PH-762 is applicable for use in both ACT and as a standalone direct therapeutic.
In
Our second product candidate in ACT is PH-894, an INTASYL compound that targets
BRD4 which is a regulator of gene expression impacting cell differentiation. In
previous studies, PH-894 has been shown to improve T cell function and
persistence by differentiating T cells into a more active state (stem-cell like
memory phenotype). Data, completed in partnership with the
We are also developing our INTASYL compound PH-804 for use in ACT. PH-804 targets the suppressive immune receptor TIGIT, which is a checkpoint protein present on T cells and NK cells. We have shown that PH-804 can silence the expression of TIGIT in NK cells and T cells, overcoming their "off switch" and the cells becoming "weaponized" to kill cancer cells.
Direct Therapeutic Use of INTASYL Towards the Tumor Micro-Environment
The TME is the environment that surrounds and feeds a tumor, including normal cells, blood vessels, immune cells, and the extracellular matrix. The TME is an immunosuppressive environment that inhibits the immune system's natural ability to recognize and destroy tumor cells by negatively impacting how immunosuppressive cells are being attracted and activated. Reprogramming different components of the TME may overcome resistance to immunotherapy. Such reprogramming of the TME by INTASYL compounds through direct local administration into the tumor could potentially become an important form of therapy. The Company has previously shown in a clinical setting that our INTASYL compounds are safe and well-tolerated following local administration, therefore we believe that our INTASYL technology can not only be used with ACT, but can also be used as an independent therapeutic platform.
We are developing our PH-762, PH-894 and PH-804 INTASYL compounds also for use as direct therapeutics to reprogram the TME, for example by in situ transfection and activation of immune cells in the TME.
Animal studies conducted by the Company showed that local administration of PH-894 or the mouse version of PH-762 through intra-tumoral injection resulted in potent anti-tumoral effects. The treated animals showed a complete and statistically significant inhibition of tumor growth, whereas placebo treated animals displayed exponential tumor growth. In vivo studies performed by the Company with PH-804 showed that intra-tumoral injection of a mouse version of PH-804 reduced the tumor growth in colorectal carcinoma tumor bearing mice, which was shown to inhibit tumor growth and was correlated with the silencing of TIGIT mRNA expression and in increase in cytotoxic effector T cells in the TME.
18
The combined PH-804, PH-762, and PH-894 data further shows that INTASYL compounds can trigger associated changes in the TME such as an increase of TILs, including CD8+ T cells responsible for tumor cell killing, and an increase of activation markers on these cells. These preclinical findings demonstrate that direct injection of INTASYL compounds can successfully infiltrate solid tumors and impact the TME by activating the immune response in animal models of solid tumors resulting in reduced tumor growth. A key challenge for many other immunotherapy platforms is to be able to achieve an adequate therapeutic effect in solid tumors with an acceptable safety profile. Many of the available systemic immuno-therapeutics indeed come with dose limiting immune-related adverse events, which we believe can be mitigated with local INTASYL treatment.
Based on our positive preclinical data, the Company is preparing for a clinical
study with PH-762 using intra-tumoral administration for patients with advanced
melanoma. The required preclinical studies and regulatory submission needed to
initiate the clinical trial with PH-762 as a direct therapeutic are being
finalized. The clinical trial will be conducted at the
We are also investigating other relevant compounds for TME targets, such as PH-790, an INTASYL compound targeting PD-L1. PD-L1 is a protein formed by cancer cells that activate the PD-1 "off switch" on immune cells. Our approach with PH-790 is to block the formation of the PD-L1 protein, which may prevent cancer cells from inactivating T cells and attack the cancer. Recent data presented demonstrated that the antitumoral efficacy of our individual pipeline products, PH-762, PH-790 and PH-804, can be further improved by combining them in a single drug treatment. We have shown that we can efficiently and potently target multiple proteins in a single drug treatment. Animal data showed that the combination of our INTASYL compounds in a single formulation (at suboptimal doses of the individual agents) inhibited tumor growth without having a negative impact on the tolerability of the treatment.
Impact of COVID-19 on our Business
In
Health and Safety
From the first signs of the outbreak, we have taken proactive measures intended
to protect the health and safety of our employees. We have implemented safety
measures following the guidance provided by the
Operations
Our operations have continued to operate with limited impact and are operating
in accordance with federal and state government,
Supply and Services
As a result of the coronavirus pandemic, certain of our third-party suppliers and service providers on which we rely have seen impacts to their operations. If the impact to their operations continue or extend, it may in turn affect our operations. The Company has undertaken efforts to mitigate potential future impacts by identifying and engaging alternative third-party service providers and suppliers, and because of that, to date the Company has not seen a material impact to its program's anticipated timelines resulting from delays from our third-party service providers. For example, by engaging different contract manufacturers, we believe that we have a sufficient supply of our INTASYL compounds to conduct our ongoing preclinical studies and initial clinical activities. However, the ultimate impact to the third parties on which we rely is highly uncertain and subject to change. Without a swift and sustained improvement of the impacts experienced by our third-party suppliers and service providers, the effects of our mitigation efforts will diminish and may result in material impacts to our operations. If the global measures to contain the pandemic are insufficient, it could reduce or delay the availability of supplies and services that we purchase and rely on, which may in turn slow or delay our preclinical and clinical activities, and/or result in higher costs.
19
With the global spread of the coronavirus and the associated safety measures to contain the spread by governmental authorities, a delay in the commencement of new clinical trials and in the enrollment and participation of patients in clinical trials may occur. The steps required for us to initiate our clinical trials with PH-762 in the second half of 2021 are continuing and ongoing, however, the Company does not yet know the full extent of potential delays or impacts related to its planned clinical activities.
Liquidity and Capital Resources
While we believe that the coronavirus pandemic has not had a significant impact on our financial condition at this time, the extent to which the coronavirus pandemic impacts our results will depend on future developments, which are highly uncertain and cannot be predicted, including new information which may emerge concerning the severity of the coronavirus pandemic and the actions to contain the coronavirus or treat its impact, among others.
Due to our uncertainty around our ability to access the capital markets to
provide the necessary working capital to fund our long-term operations as a
result of the coronavirus pandemic, the Company applied for and received a loan
of
Overall, we do not yet know the full extent of potential delays or the impact on our business, financial condition, or our preclinical and clinical trial activities and there may be developments outside of our control that require us to adjust our operating plans and, therefore, given the nature of the situation, cannot reasonably estimate the impact of the coronavirus on our financial condition, results of operations or cash flows in the future.
Critical Accounting Policies and Estimates
The discussion and analysis of our financial condition and results of operations
is based upon our condensed consolidated financial statements, which have been
prepared in accordance with accounting principles generally accepted in
There have been no significant changes to our critical accounting policies disclosed in the Company's most recent Annual Report on Form 10-K.
Results of Operations
The following data summarizes the results of our operations for the periods indicated, in thousands:
Three Months Ended March 31,
Dollar
Description 2021 2020 Change
Operating expenses $ 3,638 $ 2,356 $ 1,282
Operating loss (3,638 ) (2,356 ) (1,282 )
Net loss $ (3,407 ) $ (2,351 ) $ (1,056 )
20
Comparison of the Three Months Ended
Operating Expenses
The following table summarizes our total operating expenses, for the periods
indicated, in thousands:
Three Months Ended March 31,
Dollar
Description 2021 2020 Change
Research and development $ 2,621 $ 1,218 $ 1,403
General and administrative 1,017 1,138 (121 )
Total operating expenses $ 3,638 $ 2,356 $ 1,282 Research and Development Expenses
Research and development expenses relate to compensation and benefits for research and development personnel, facility-related expenses, supplies, external services, costs to acquire technology licenses, research activities under our research collaborations, expenses associated with preclinical and clinical development activities and other operating costs. Our research and development programs are focused on the development of immuno-oncology therapeutics based on our INTASYL therapeutic platform.
Research and development expenses for the three months ended
General and Administrative Expenses
General and administrative expenses relate to compensation and benefits for general and administrative personnel, facility-related expenses, professional fees for legal, audit, tax and consulting services, as well as other general corporate expenses.
General and administrative expenses for the three months ended
Other Income
Other income consists primarily of interest income and expense and various income or expense items of a non-recurring nature.
Other income for the three months ended
Liquidity and Capital Resources
Historically, the Company's primary source of funding has been through the sale
of its 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
In
21
We believe that our existing cash at
The following table summarizes our cash flows for the periods indicated, in
thousands:
Three Months Ended
March 31,
2021 2020
Net cash used in operating activities
(6 ) (10 )
Net cash provided by financing activities 21,490 8,536
Net increase in cash and restricted cash
Net cash used in operating activities was
Net cash used in investing activities was
Net cash provided by financing activities was
Off-Balance Sheet Arrangements
In connection with certain license agreements, we are required to indemnify the
licensor for certain damages arising in connection with the intellectual
property rights licensed under the agreement. In addition, we are a party to a
number of agreements entered into in the ordinary course of business that
contain typical provisions that obligate us to indemnify the other parties to
such agreements upon the occurrence of certain events. These indemnification
obligations are considered off-balance sheet arrangements in accordance with ASC
Topic 460, "Guarantor's Accounting and Disclosure Requirements for Guarantees,
Including Indirect Guarantees of Indebtedness of Others." To date, we have not
encountered material costs as a result of such obligations and have not accrued
any liabilities related to such obligations in our financial statements. See
Note 8 to our consolidated financial statements included in our Annual Report on
Form 10-K for the year ended
© Edgar Online, source
