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Item 1. Business

2021-03-25 compared with 2020-03-26 · 287 added, 303 removed, 228 unchanged (72% of the section changed)

Phio Pharmaceuticals

is a biotechnology company developing the next generation of immuno-oncology therapeutics based on our self-delivering RNAi

Pharmaceuticals Corp.

Phio ,”

Company ”) is a biotechnology company developing the next generation of immuno-oncology therapeutics based

on its self-delivering RNAi (“

INTASYL™

”) therapeutic platform.

The Company's efforts are focused on silencing tumor-induced suppression

of the immune system through our proprietary INTASYL™

platform with utility in immune cells and/or the tumor micro-environment.

goal is to develop powerful INTASYL™

therapeutic compounds that can weaponize immune effector cells to overcome tumor immune

escape, thereby providing patients a powerful new treatment option that goes beyond current treatment modalities.

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

We believe that our INTASYL™

platform uniquely positions the Company in the field of immuno-oncology because of

this and the following reasons:

Efficient uptake of INTASYL™

to immune cells obviating the need for facilitated delivery (mechanical or formulation);

The Company's efforts are

focused on silencing tumor-induced suppression of the immune system through its proprietary INTASYL platform

with utility in immune cells and the tumor micro-environment.

The Company’s goal

is to develop powerful INTASYL therapeutic compounds that can weaponize immune effector cells to overcome tumor immune

escape, thereby potentially providing patients a powerful new treatment option that goes beyond current treatment

Our Development Pipeline

We have developed a

product platform based on our INTASYL technology that allows easy, precise, rapid, and selective non-genetically modified

programming of adoptive cell therapy (“

ACT ”) cells ( ex vivo , during manufacturing) and of the tumor

micro-environment (the “

TME ”) ( in vivo , by local application), resulting in reduced immune

inhibition and in improved immunotherapy.

The table below sets forth the Company’s stage of development for its

programs and product candidates:

We believe 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 ;

Favorable clinical safety profile of INTASYL™

with local administration;

Gene silencing by INTASYL has been shown to have a sustained, or long-term, effect in vivo ;

Favorable clinical safety profile of INTASYL with local administration;

Can be readily manufactured under current good manufacturing practices.

Our Development Pipeline

The table below sets forth the Company’s

stage of development for its programs and product candidates:

The self-delivering

nature of our compounds makes INTASYL™

ideally suited for use with

adoptive cell transfer (“

ACT ”) treatments and direct therapeutic use.

ACT consists of the infusion of immune

cells with antitumor properties.

The self-delivering nature of our compounds makes INTASYL ideally

suited for use with 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 recognizing tumor neoantigen/neoepitope cells.

Currently, ACT

therapies for the treatment of solid tumors face several hurdles.

Multiple inhibitory mechanisms restrain immune cells used in

ACT from effectively eradicating tumors, including immune checkpoints, reduced cell fitness and cell persistence.

the immunosuppressive tumor micro-environment (the “

TME ”) can pose a formidable barrier to immune cell infiltration

and function.

Phio has 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 improved immunotherapy.

Adoptive Cell Transfer

ACT includes a number of different types

of immunotherapy treatments.

These treatments use immune cells, that are grown in a lab to large numbers, followed by administering

them to the body to fight the cancer cells.

Sometimes, immune cells that naturally recognize a tumor are used, while other times

immune cells are modified or “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 (“

cells, dendritic cells (“

DC ”) and macrophages, and b.) 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).

ACT, immune cells are isolated from patients, donors or retrieved from allogeneic immune cell banks.

The immune cells are then

expanded and modified before being returned and used to treat the patient.

We believe our INTASYL™

compounds are

ideally suited to be used in combination with ACT, in order to make these immune cells more effective.

to immunotherapy builds on well-established methodologies of ACT and involves the treatment of immune cells with our INTASYL™

while they are grown in the lab and before administering them to the patient.

Because our INTASYL™

do not require a delivery vehicle to penetrate into the cells, we are able to enhance the function of these cells (for

example, by inhibiting the expression of immune checkpoint genes) by merely adding our INTASYL™

during the expansion process and without the need for genetic engineering.

After enhancing these cells ex vivo , they

are returned to the patient for treatment.

Our method introduces an important

step in the ex vivo processing of immune cells.

This step uses our INTASYL™

technology to 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 receptors or proteins by the therapeutic immune cells, potentially enabling them

to overcome tumor resistance mechanisms and thus improving their ability to destroy the tumor cells.

various types of immune cells tested to date, INTASYL™

treatment results in potent silencing while maintaining

close to 100% transfection efficiency and nearly full cell viability.

One of the main

issues with ACT is that the cells are very susceptible to the cancer signals that turn down the immune response and continuous

activation of these cells causes them to become exhausted.

These factors, among others, may reduce their efficacy and lifespan.

A technology that can reprogram the immune cells used in ACT, such as with INTASYL™

technology, is of key interest now in

the current immuno-oncology world.

In comparison to other technologies available, reprogramming cells with INTASYL™

not require genetic engineering, its use is not limited to specific cell types and can be easily integrated with cell manufacturing

We currently have two product candidates

that are being developed for use in ACT, PH-762 and PH-804.

PH-762, our most advanced program and lead pipeline compound, targets

the checkpoint protein PD-1, a checkpoint protein on immune cells.

PD-1 normally acts as a type of “off switch”

helps keep the T cells from attacking other cells in the body.

T cells are immune cells that protect the body from cancer cells

and are important for the activation of immune cells to fight infection.

Our second pipeline compound, PH-804, targets the suppressive

immune receptor TIGIT, which is a checkpoint protein present on T cells and NK cells.

Data developed in-house and with our collaborators,

which include both leading academic centers and corporate institutions, has shown that PH-762 can elicit PD-1 checkpoint blockade

by silencing PD-1 receptor expression resulting in enhanced T cell activation and tumor cytotoxicity.

We have also shown with studies

completed with our collaborators that PH-804 can silence the expression of TIGIT in NK cells and T cells, overcoming their exhaustion

and thereby becoming “weaponized.”

Recent data shown by the Company as well

as with our collaborators, Iovance Biotherapeutics, Inc.

and the Karolinska Institutet, at the 2019 Society for Immunotherapy

of Cancer annual meeting further supports the application of INTASYL™

technology in immunotherapy of cancer.

shown to silence the expression of checkpoint molecule PD-1 in target human T cells in a potent and durable manner suitable for

both ACT and intra-tumoral injection, and increases function of patient derived TILs for ACT.

The application of INTASYL™

compounds to novel immuno-oncology targets was shown by the silencing of BRD4, a regulator of gene expression impacting cell differentiation

and function, by a BRD4 targeting INTASYL™

compound in human T cells during expansion for ACT, which has the potential to

confer superior anti-tumor activity.

We expect that

PH-762 can be ready to enter into the clinic with a partner in ACT therapy in the second half of 2020 and we are developing PH-804

with the aim to enter the clinic with a partner in ACT in 2021.

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.

A tumor can change the microenvironment

and the microenvironment can affect how a tumor grows and spreads and can create an immunosuppressive microenvironment that inhibits

the immune system’s natural ability to recognize and destroy tumor cells.

This attracts immunosuppressive cells, induces

and activates immune checkpoint expression and excludes and exhausts T cells.

Reprogramming different components of the TME may

overcome its 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 (neo)adjuvant therapy.

We believe that this will also show that our contributions with our INTASYL™

in immuno-oncology are not limited to use with a cell therapy platform.

Additionally, the Company has shown in a clinical setting

that its INTASYL™

compounds are safe and well-tolerated following

local administration.

Our INTASYL™

compounds being developed

for use in ACT, are also being developed for use directly towards the TME, including PH-762 and PH-804.

We are also working on

other relevant compounds for TME targets, such as PH-790, an INTASYL™

compound targeting PD-L1.

PD-L1 is a protein that keeps

immune cells from attacking nonharmful cells in the body.

If cancer cells have large amounts of PD-L1, this “tricks”

the immune system into not recognizing and attacking the tumor.

Our approach with PH-790 is to block the PD-L1 protein, which may

prevent cancer cells from inactivating T cells and attack the cancer.

Our collaborative research agreement with

Gustave Roussy, a leading comprehensive cancer center in France, concentrates on determining the feasibility of our INTASYL™

to target the TME via intra-tumoral injection.

An in vivo study completed with Gustave Roussy demonstrated that

an INTASYL™

compound delivered via intra-tumoral injection showed

silencing of gene expression with our INTASYL™

compounds with greater

than 90% reduction of the target gene expression in a mouse model of melanoma.

Recent in vivo studies

performed by the Company showed that intra-tumoral injections of a mouse version of PH-804 reduced the tumor growth in colorectal

carcinoma tumor bearing mice, which was shown to be correlated with the silencing of TIGIT messenger RNA (“

mRNA ”)

expression and an increase in cytotoxic effector T cells in the TME.

The Company expects to move PH-762 for intra-tumoral

injection into the clinical development stage in 2021.

Our INTASYL™

naturally occurring)

immune cells, immune cells isolated from resected tumors, or genetically engineered immune cells that recognize tumor cells.

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.

inhibitory mechanisms restrain immune cells from effectively eradicating tumors, including immune checkpoints, reduced cell fitness

and cell persistence.

Furthermore, the immunosuppressive TME can pose a formidable barrier to immune cell infiltration and function.

By using INTASYL based drugs administered directly, we can reprogram cells in the TME to help overcome these immunosuppressive

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 (“

T cells, or CAR-NK cells).

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.

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.

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 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

In various types of immune cells tested to date, INTASYL treatment results in potent silencing with close to 100% transfection

efficiency and while maintaining nearly full cell viability.

After expanding these cells and enhancing them with INTASYL ex

vivo , they are returned to the patient for treatment.

Considering the significant growth of cell-based

immunotherapy, a technology that can reprogram the immune cells used in ACT, such as INTASYL technology, is of key interest.

comparison to other technologies available, reprogramming cells with INTASYL does not require genetic engineering, its use is not

limited to specific cell types and it can be easily integrated with cell manufacturing approaches.

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.

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.

Our T cells are immune cells that protect the body from cancer cells and infections.

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, showing that PH-762

is applicable for use in both ACT and as a standalone direct therapeutic.

In March 2021, the Company announced that

it entered into a clinical development collaboration with AgonOx, Inc.

AgonOx ”), a private company developing

a pipeline of novel immunotherapy drugs targeting key regulators of the immune response to cancer.

Under the agreement, the companies

will collaborate on the development of novel T cell-based therapies using PH-762 and AgonOx’s “double positive”

(DP) TIL technology.

AgonOx has demonstrated that their DP CD8+ T cells isolated from human solid tumors (DP TILs) have increased

tumor killing activity when compared to TILs that were not enriched prior to expansion.

Preclinical data from AgonOx in collaboration

with Phio has shown that treating DP TIL with PH-762 increases the tumor killing activity of the DP TILs even further (a two-fold

As a result, the use of PH-762 treated DP TILs is expected to enhance therapeutic responses in cancer data.

these data showing that the combination of our technologies can result in TIL therapeutics, our collaboration will focus on conducting

a clinical study for PH-762 treated DP TILs.

Under the terms of the collaboration agreement, AgonOx will receive financial support

for the clinical trial from Phio and Phio will be entitled to certain future development milestones and sales-related royalty payments

from AgonOx’s DP TIL technology.

The clinical trial in ACT with PH-762 and AgonOx’s DP TIL technology is expected to

start in the third quarter of 2021.

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 Karolinska Institutet in Sweden, demonstrated

that the application of PH-894, was shown to silence BRD4 in human T cells during expansion for ACT, which has the potential to

confer superior anti-tumor activity, for example by improving T cell persistence.

With this data, we expanded our collaboration

with the Karolinska Institutet to build upon these findings and develop INTASYL compounds for additional targets and cell types

toward clinical application in areas of the Karolinska Institutet’s ongoing clinical research.

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

TME is the environment that surrounds and feeds a tumor, including normal cells, blood vessels, immune cells, and the extracellular

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 through 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.

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 steps needed to initiate

the clinical trial with PH-762 as a direct therapeutic are continuing and ongoing.

The clinical trial will be conducted at the

Gustave Roussy Institute, which is France’s largest cancer center and Dr.

Caroline Robert will be our lead principal investigator.

The Company expects to start the clinical trial evaluating the use of PH-762 as a direct therapeutic in the fourth quarter of 2021.

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, in contrast to other technology platforms, we can efficiently target multiple

proteins, in a single drug treatment without negative consequences related to the potency of the individual components.

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.

Our INTASYL Platform

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

Diseases are often related to the wrong

protein being made, excessive amounts of a specific protein being made, or the correct protein being made but at the wrong location

Overall, RNA is involved in the synthesis, regulation and processing of proteins.

Overall, RNA is involved in the synthesis, regulation and expression of proteins.

RNA interference (“

RNAi ’)

is a biological process in which RNA molecules inhibit gene expression or translation into proteins by preventing certain RNA from

RNAi offers a novel approach to the drug development process because RNAi compounds can potentially be designed to

target any one of the thousands of human genes, many of which are “undruggable”

is a biological process in which specific RNA molecules inhibit gene expression or translation into proteins.

RNAi offers a novel

approach to drug development because RNAi compounds can be designed to silence any one of the thousands of human genes, many of

which are “undruggable”

by other modalities.

Supported by numerous

gene-silencing reports and our own research, we believe that this sequence information can be used to design RNAi compounds to

interfere with the expression of almost any specific gene.

The potential of RNAi as a powerful drug development platform has been

shown by several RNAi based drugs becoming approved over the last few years.

The first design of RNAi compounds to be

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in developing RNAi-based therapeutics.

One conventional solution to the delivery problem involves encapsulation of siRNA into a

lipid-based particle, such as a liposome, to improve circulation time and cellular uptake.

We have developed an alternative approach

where delivery and drug-like properties are built directly into the RNAi compound itself.

These novel compounds are termed self-delivering

RNAi compounds, or INTASYL™.

Our INTASYL™

compounds are hybrid

oligonucleotide compounds that the Company believes combines the beneficial properties of both conventional RNAi and antisense

technologies.

Traditional, single-stranded antisense compounds have favorable tissue distribution and cellular uptake properties.

However, they do not have the intracellular potency that is a hallmark of double-stranded RNAi compounds.

Conversely, the duplex

structure and hydrophilic character of traditional RNAi compounds results in poor tissue distribution and cellular uptake.

attempt to combine the best properties of both technologies, INTASYL™

compounds have a single-stranded phosphorothioate region,

One solution to the delivery problem involves encapsulation of siRNA into a lipid-based

formulations, such as liposomes, to improve cellular uptake.

Another approach is to use chemical conjugations of a ligand, such

as GalNAC, for cell specific delivery limited to hepatocytes.

We have developed an alternative approach where delivery and drug-like

properties are built directly into the RNAi compound itself, whereby the RNAi uptake is neither dependent on complex formulation

nor limited to addressing a specific cell type.

These novel compounds are termed self-delivering RNAi compounds, or INTASYL.

Our INTASYL compounds are hybrid oligonucleotide

compounds that the Company believes combines the beneficial properties of both conventional RNAi and antisense technologies.

an attempt to combine the best properties of both technologies, INTASYL compounds have a single-stranded phosphorothioate region,

a short duplex region, and contain a variety of nuclease-stabilizing and lipophilic chemical modifications.

The combination of

these features allows INTASYL™

compounds to achieve efficient spontaneous cellular uptake and potent, long-lasting intracellular

We believe that our next generation INTASYL™

compounds offer significant advantages over siRNAs used by other companies developing RNAi therapeutics, which are highlighted

by the following characteristics:

Efficient cellular uptake in the absence of a delivery vehicle;

Potent RNAi activity;

More resistant to nuclease degradation than unmodified oligonucleotides;

Ability to suppress long non-coding RNAs, both in cytoplasm and the nucleus;

Readily manufactured;

Potentially more specific for the target gene;

Reduced immune side effects compared to classic siRNA.

The route by which our INTASYL™

are brought into contact with the body depends on the intended organ or tissue to be treated.

Delivery routes can be simplified

into two major categories:

(1) local, or when a drug is delivered directly to the tissue of interest, and (2) systemic,

when a drug accesses the tissue of interest through the circulatory system.

these features allows INTASYL compounds to achieve efficient spontaneous cellular uptake and potent, long-lasting intracellular

The key to therapeutic success with RNAi lies in delivering

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To accomplish this, our chemically synthesized

INTASYL™

compounds are optimized for stability and efficacy and have unique properties that improve tissue and cell uptake.

INTASYL compounds are optimized for stability and efficacy and have unique properties that improve tissue and cell uptake.

Intellectual Property

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agreements that require disclosure and assignment to us of ideas, developments, discoveries and inventions made by these employees,

consultants and advisors in the course of their service to us, and we vigorously defend that position with partners, as well as

with employees who leave the Company.

consultants and advisors in the course of their service to us.

We have also obtained rights to various

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Our portfolio includes 119 issued patents,

45 of which cover our INTASYL™

There are 16 patent families broadly covering both the composition and methods of

use of our self-delivering platform technology and uses of our INTASYL™

compounds targeting immune checkpoint, cellular differentiation

66 of which cover our INTASYL platform.

There are 16 patent families broadly covering both the composition and methods of use of

our self-delivering platform technology and uses of our INTASYL compounds targeting immune checkpoint, cellular differentiation

and metabolism targets for ex vivo cell-based cancer immunotherapies.

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to human drug products (or processes for making or using human drug products).

and License Agreements

AG and the Helmholtz Zentrum M ünchen.

March 6, 2020, we entered into a Collaboration and Option Agreement (the “

Collaboration Agreement ”) with Medigene

AG and the Helmholtz Zentrum M ünchen (“

HMGU ”).

The Collaboration Agreement

expands upon the Company’s outstanding research agreement with HMGU to design and develop novel candidates for the use of

INTASYL™

compounds in ACT to enhance immune cell function.

Under the Collaboration Agreement, Medigene will contribute expertise

regarding clinical development, as well as proprietary research material, and has an option to an exclusive license for the clinical

and/or commercial exploitation of the potential immune cell enhancers against certain fee payments.

We have secured exclusive and non-exclusive

rights to develop therapeutics by licensing key RNAi technologies and patent rights from third parties.

These rights relate to

chemistry and configuration of compounds, delivery technologies of compounds to cells and therapeutic targets.

As we continue to

develop our own proprietary compounds, we continue to evaluate both our in-licensed portfolio as well as the field for new technologies

that could be in-licensed to further enhance our intellectual property portfolio and unique position in the RNAi and immuno-oncology

In September 2011, we

entered into an agreement with Advirna, LLC (“

Property License Agreements

As we develop our own proprietary compounds,

we continue to evaluate our in-licensed portfolio as well as the field for new technologies that could be in-licensed to further

enhance our intellectual property portfolio and unique intellectual property position.

On September 24, 2011,

we entered into an agreement with Advirna, LLC (“

Advirna ”) pursuant to which Advirna assigned to us its existing

patent and technology rights related to the INTASYL™

technology in exchange for our agreement to issue to Advirna common

stock equal to 5% of the Company’s fully-diluted shares, pay an annual maintenance fee of $100,000 and pay a one-time milestone

payment of $350,000 upon the issuance of the first patent with valid claims covering the assigned technology.

The common shares

of the Company were issued to Advirna in 2012 upon the completion of the spin-out from our former parent company and the one-time

milestone payment was paid in 2014.

Additionally, we will be required to pay a 1% royalty to Advirna on any license revenue received

by us with respect to future licensing of the assigned Advirna patent and technology rights.

To date, royalties owed to Advirna

under the agreement have been minimal.

We also granted back to Advirna a license under the assigned patent and technology rights

for fields of use outside human therapeutics and diagnostics.

patent and technology rights related to the INTASYL technology and we granted back to Advirna a license for use of the assigned

patent and technology rights outside of human therapeutics and diagnostics.

Under the terms of the agreement, in April 2012, the

Company issued to Advirna shares of common stock equal to 5% of the Company’s fully-diluted shares outstanding at the time

of issuance and paid a one-time milestone payment of $350,000 in 2014 upon the issuance of the first patent under the agreement.

The Company also pays to Advirna an annual maintenance fee of $100,000 and is required to pay a low single-digit royalties on any

license revenue received by the Company with respect to future licensing of the assigned Advirna patent and technology rights.

To date, royalties owed to Advirna have been minimal.

Our rights under the Advirna agreement will

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of the agreement.

We may terminate the Advirna agreement at

any time upon 90 days’

written notice to Advirna, and Advirna may terminate the agreement upon 90 days’

prior written

notice in the event that we cease using commercially reasonable efforts to research, develop, license or otherwise commercialize

the patent rights or “royalty-bearing products”

(as defined therein), provided that we may refute such claim within

such 90-day period by showing budgeted expenditures for the research, development, licensing or other commercialization consistent

with other technologies of similar stage of development and commercial potential as the patent rights or royalty-bearing products.

Further, either party at any time may provide to the other party written notice of a material breach of the agreement.

party fails to cure the identified breach within 90 days after the date of the notice, the aggrieved party may terminate the agreement

by written notice to the party in breach.

Legacy Dermatology and Ophthalmology Programs

In January 2018, the Company announced

that it was exploring strategic alternatives, including a potential sale or out-license, with respect to the Company’s legacy

dermatology and ophthalmology programs following the Company’s change in strategic direction to focus solely on immuno-oncology.

Due to resource constraints, the Company has significantly reduced its efforts to out-license or sell these programs and does

not expect to provide further updates on these assets going forward.

We may terminate the Advirna agreement at any time upon 90 days’

written notice to Advirna, and Advirna

may terminate the agreement upon 90 days’

prior written notice in the event that we cease using commercially reasonable efforts

to research, develop, license or otherwise commercialize the patent rights or “royalty-bearing products”

therein), provided that we may refute such claim within such 90-day period by showing budgeted expenditures for the research, development,

licensing or other commercialization consistent with other technologies of similar stage of development and commercial potential

as the patent rights or royalty-bearing products.

Further, either party at any time may provide to the other party written notice

of a material breach of the agreement.

If the other party fails to cure the identified breach within 90 days after the date of

the notice, the aggrieved party may terminate the agreement by written notice to the party in breach.

Research and Development

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academic institutions, government agencies and other private and public research organizations.

A variety of cell-based autologous and

allogeneic approaches are being researched and developed, including but not limited to:

CAR-T cells, TCR-T cells, Gamma Delta

T cells, CAR-NK cells, NK cells, NKT cells and cytotoxic T cells.

We believe that competitors in this field include, but are not

Adicet Bio, Inc., Allogene Therapeutics, Inc., Atara Biotherapeutics, Inc., Autolus Therapeutics plc, Baylor College

of Medicine, Bellicum Pharmaceuticals, Inc., bluebird bio, Inc., Celyad S.A., Celgene Corporation, Cell Medica Ltd., Cellectis

S.A., Celularity, Inc., CiMaas B.V., CRISPR Therapeutics AG, Fate Therapeutics, Inc., Formula Therapeutics, Inc., Fortress Biotech,

Inc., GAIA Biomedicine Inc., Glycostem Therapeutics BV, Immatics Biotechnologies GmbH, Iovance Biotherapeutics, Inc., Intrexon

Corporation, Janssen Biotech, Inc., Kite Pharma, Inc.(a Gilead company), Medigene AG, Mustang Bio, Inc., NantKwest, Inc., BioNTech

NE, Novartis International AG, Precigen, Inc., Refuge Biotechnologies, Inc., Sorrento Therapeutics, Inc., Tactiva Therapeutics,

Inc., TC BioPharm Limited and Ziopharm Oncology, Inc.

A variety of cell-based autologous and allogeneic

approaches are being researched and developed, including but not limited to:

CAR-T cells, TCR-T cells, Gamma Delta T cells, CAR-NK

cells, NK cells, NKT cells and cytotoxic T cells.

We believe that competitors in this field include, but are not limited to:

Therapeutics UK Ltd., Adicet Bio, Inc., AgonOx, Inc., Allogene Therapeutics, Inc., Atara Biotherapeutics, Inc., Autolus Therapeutics

plc, Baylor College of Medicine, Bellicum Pharmaceuticals, Inc., bluebird bio, Inc., Celyad S.A., Celgene Corporation, Cell Medica

Ltd., Cellectis S.A., Celularity, Inc., CiMaas B.V., CRISPR Therapeutics AG, Fate Therapeutics, Inc., Fortress Biotech, Inc., GAIA

Biomedicine Inc., Glycostem Therapeutics BV, Green Cross LabCell Corp., Immatics Biotechnologies GmbH, Iovance Biotherapeutics,

Inc., Janssen Biotech, Inc., Kite Pharma, Inc.(a Gilead company), Medigene AG, Mustang Bio, Inc., NantKwest, Inc., BioNTech NE,

Novartis International AG, Precigen, Inc., Refuge Biotechnologies, Inc., Sorrento Therapeutics, Inc., Tactiva Therapeutics, Inc.,

TC BioPharm Limited, Turnstone Biologics Corp.

and Ziopharm Oncology, Inc.

A number of technological approaches to

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We believe that competitors in this field include, but are not limited to:

BioNTech NE, Cellectis S.A., CRISPR Therapeutics

AG, Dicerna Pharmaceuticals, Inc., Editas Medicine, Inc., eTheRna immunotherapies NV, Horizon Discovery Group plc, Intellia Therapeutics,

Inc., Kymera Therapeutics Inc., miRagen Therapeutics, Inc., Moderna, Inc., Noxxon Pharma N.V., Obsidian Therapeutics, Inc., OliPass

Corporation, OncoSec Medical Incorporated, Mateon Therapeutics, Inc., PTC Therapeutics, Inc., Sangamo Therapeutics, Inc., Sirnaomics,

Inc., Stemirna Therapeutics Co., Ltd.

Avidity Biosciences, BioNTech NE, Cellectis

S.A., CRISPR Therapeutics AG, Dicerna Pharmaceuticals, Inc., Editas Medicine, Inc., eTheRna immunotherapies NV, Exicure Inc., Horizon

Discovery Group plc, Intellia Therapeutics, Inc., Kymera Therapeutics Inc., miRagen Therapeutics, Inc., Moderna, Inc., Noxxon Pharma

N.V., Obsidian Therapeutics, Inc., OliPass Corporation, OncoSec Medical Incorporated, Mateon Therapeutics, Inc., PTC Therapeutics,

Inc., Sangamo Therapeutics, Inc., Sirnaomics, Inc., Stemirna Therapeutics Co., Ltd.

and Takara Bio Inc.

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to the extent we are required to procure expensive capital equipment to meet regulatory requirements.

As of March 20, 2020, we had eleven

full-time employees.

None of our employees are represented by a labor union or covered by a collective bargaining agreement nor

have we experienced any work stoppages.

Human Capital Management

As of December 31, 2020, we had ten full-time

employees at our facility in Marlborough, Massachusetts.

None of our employees are represented by a labor union or covered by a

collective bargaining agreement nor have we experienced any work stoppages.

We expect to add additional employees in

fiscal year 2021 to increase our expertise and resources available in our preclinical and clinical research and development.

continually evaluate our business needs and weigh the use of in-house expertise and capacity with outsourced expertise and capacity.

The Company currently outsources substantial preclinical and clinical trial work to third party contract research organizations

and drug manufacturing contractors.

Our ability to

identify, attract, retain and integrate additional qualified key personnel is also critical to our success and the competition

for skilled research, product development, regulatory and technical personnel is intense.

To attract qualified applicants to the

Company, we offer a total rewards package consisting of base salary and cash target bonus based on geography and size of company,

a comprehensive benefit package and equity compensation for every employee.

Bonus opportunity and equity compensation increase

as a percentage of total compensation based on level of responsibility.

Actual bonus payout is based on performance.

A large majority

of Phio’s employees have obtained advanced degrees in their professions and we support our employees’

further development

with individualized development plans, mentoring, coaching, group training, conference attendance and financial support including

tuition reimbursement.

Corporate Information

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business