What changed in this filing

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Item 5. Market for Registrant’s Common Equity

2021-03-25 compared with 2020-03-26 · 372 added, 359 removed, 158 unchanged (82% of the section changed)

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Capital Market under the symbol “PHIO.”

At March 20, 2020, there were approximately

18 holders of record of our common stock.

Because many of our shares are held by brokers and other institutions on behalf of stockholders,

we are unable to estimate the total number of individual stockholders represented by these holders of record.

At March 18, 2021, there were

approximately 19 holders of record of our common stock.

Because many of our shares are held by brokers and other institutions

on behalf of stockholders, we are unable to estimate the total number of individual stockholders represented by these holders

We have never paid any cash dividends and

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”) 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 efforts are focused on silencing tumor-induced suppression of the

immune system through our proprietary INTASYL platform with utility in immune cells and the tumor micro-environment.

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 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”

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);

We believe that our INTASYL platform uniquely positions the Company in the field of immuno-oncology for the following

Efficient uptake of INTASYL to immune 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.

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.

nature of our compounds makes INTASYL 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 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.

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.

the immunosuppressive tumor micro-environment (the “

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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”

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

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 (“

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 (“

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 (“

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).

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.

Our approach 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

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.

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

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 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.

In 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™

does not require genetic engineering, its

use is not limited to specific cell types and can be easily integrated with cell manufacturing approaches.

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, to date 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.

PH-762, our most

advanced program, has 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.

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 mRNA expression and an increase in cytotoxic

effector T cells in the TME.

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 nearly full cell

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.

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.

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 increase).

As a result, the use of PH-762 treated DP TILs is expected to enhance therapeutic

responses in cancer data.

Based on 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

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 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-804showed 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.

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.

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

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.

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.

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

2019, a novel strain of coronavirus that causes COVID-19 was reported to have surfaced in Wuhan, China and has since spread

to other parts of the world, including the United States.

In March 2020, the World Health Organization (the

WHO ”) declared the outbreak a pandemic.

Health and Safety

first signs of the outbreak, we have taken proactive measures intended to protect the health and safety of our employees.

have implemented safety measures following the guidance provided by the WHO, the Centers for Disease Control (the

CDC ”) and governmental authorities, which include formal policies related to working remotely for

employee personnel who do not need to be physically present in our offices, the wearing of face masks while in the office,

physically distancing workspaces, cleaning protocols, staggered scheduling and social distancing protocols, and suspending

The Company has also implemented protocols to address actual and suspected cases of COVID-19 and encourages sick

employees to remain home.

We expect to continue following these safety measures and may take further actions as we

require, as government authorities require or recommend, or as we determine to be in the best interests of our

operations have continued to operate with limited impact and are operating in accordance with federal and state government,

WHO and CDC guidelines.

We have implemented enhanced safety measures, as discussed above, and have experienced limited

absenteeism from our employees due to the coronavirus pandemic and we do not currently expect that our operations

will be significantly impacted by employee absenteeism.

While the measures to contain and prevent the spread of

coronavirus may be modified or extended, we expect that our activities, including our internal research and development

functions, will continue to remain largely operational.

We believe the impact to our operations has been minimal

thus far, however current and future restrictions may further impact our operations and may slow or diminish our

research and development activities.

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

We previously had been able to engage with third-party service providers in areas with limited or no impact

countries with limited or no restrictions), but with the global spread of the virus and associated restrictions,

this has been no longer possible.

The Company does not expect a material impact to its program’s anticipated timelines

as a result of potential delays from our third-party service providers and believes that we have a sufficient supply of our

INTASYL compounds to conduct our ongoing preclinical studies and initial clinical activities.

The Company has also undertaken

efforts to mitigate potential future impact by identifying and engaging alternative third-party service providers and

However, the ultimate impact to the third parties on which we rely is highly uncertain and subject to change.

the measures to contain the outbreak are extended or further expanded, it could reduce or delay the availability of supplies

and services that we purchase and outsource, which may in turn slow or delay our preclinical and clinical activities, and/or

result in higher costs.

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.

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 $231,252 in May 2020 under the Paycheck

Protection Program (the “

PPP ”) as part of the Coronavirus Aid, Relief and Economic Security (the

CARES Act ”).

The Company carefully assessed the requirements at the time of applying for the PPP loan and

believed it was necessary to support our operations.

The PPP loan matures in May 2022, bears an interest rate of 1% per year

and monthly principal and interest payments are deferred to that date that the amount of loan forgiveness is remitted to the

The Company believes it has used the loan proceeds for the eligible purposes allowed and applied for full loan

On February 18, 2021, the Small Business Administration determined that the Company’s application for full

loan forgiveness was fully approved and the full amount of the PPP loan was remitted to the lender for forgiveness.

connection with and addition to the PPP, the Company took other proactive steps to control costs in response to the

coronavirus pandemic, which included the reduction of senior management salaries by 10% from May to December 2020.

believe these savings helped to mitigate the financial impact of the coronavirus pandemic on our financial condition.

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.

Corporate Information

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condition and results of operations is based upon our consolidated financial statements, which have been prepared in accordance

with accounting principles generally accepted in the United States.

The preparation of these consolidated financial statements

requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and

related disclosure of contingent assets and liabilities.

On an ongoing basis, we evaluate our estimates and base our estimates

on historical experience and various other assumptions that are believed to be reasonable under the circumstances.

Actual results

may differ from these estimates under different assumptions or conditions and could have a material impact on our reported results.

While our significant accounting policies are more fully described in the notes to our consolidated financial statements included

elsewhere in this Annual Report, we believe the following accounting policies to be the most critical in understanding the judgments

and estimates we use in preparing our financial statements.

with accounting principles generally accepted in the United States (“

GAAP ”).

The preparation of these consolidated

financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues

and expenses, and related disclosure of contingent assets and liabilities.

On an ongoing basis, we evaluate our estimates and base

our estimates on historical experience and various other assumptions that are believed to be reasonable under the circumstances.

Actual results may differ from these estimates under different assumptions or conditions and could have a material impact on our

reported results.

While our significant accounting policies are more fully described in the notes to our consolidated financial

statements included elsewhere in this Annual Report, we believe the following accounting policies to be the most critical in understanding

the judgments and estimates we use in preparing our financial statements.

Research and Development Expenses

are required to estimate our accrued research and development expenses, of which a significant portion related to third party providers

the Company has contracted with to perform various preclinical and clinical

activities on our behalf for the continued development of our

product candidates.

This process includes reviewing open contracts and purchase orders, estimating

the service performed and the associated cost incurred for research and development

services not yet billed or otherwise notified of actual cost.

Examples of estimated accrued expenses related to research and development

expenses include fees connected with clinical trial sites, third-party clinical research organizations and other preclinical

and clinical-related activities and include such items as subject-related fees, laboratory work, investigator fees and analysis

and development expenses are charged to expense as incurred.

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has been performed or when the goods have been received.

Accrued liabilities are recorded related to those expenses for which vendors

have not yet billed the Company with respect to services provided and/or materials that it has received.

The financial terms of

these contracts are subject to negotiation, vary from provider to provider and may result in uneven payment flows.

instances in which payments made to our vendors exceed the level of services provided and result in a prepayment of the expense.

In other instances, payment depends on factors such as the successful completion of the enrollment of subjects or milestones.

and expenses are recorded during the period incurred based on such estimates and assumptions as expected cost, passage of time

over which services will be performed, the level of effort to be expended in each period, the achievement of milestones and adjustment

Estimates of our research and development accruals are assessed on a quarterly basis based on the facts and circumstances

known to us at that time and other information available to us.

We recognize costs for certain development activities based on

an evaluation of the progress to completion of specific tasks using information and data provided to us by our vendors.

We periodically

confirm the accuracy of the estimates with our third party contractors and make adjustments, if necessary.

Actual results may differ

from these estimates and could have a material impact on our reported results.

Our historical accrual estimates have not been materially

different from our actual costs.

Due to the nature of estimates, we cannot provide assurance that we will not make changes to our

estimates in the future as we become aware of additional information about the conduct of our preclinical or clinical activities.

Accrued liabilities are recorded with respect to services provided and/or

materials received for which vendors have not yet billed the Company.

The financial terms of these contracts are subject to negotiation,

vary from provider to provider and may result in uneven payment flows.

There may be instances in which payments made to our vendors

exceed the level of services provided and result in a prepayment of the expense.

In other instances, payment depends on factors

such as the successful completion of milestones.

are required to estimate our accrued research and development expenses, of which a significant portion relate to third party providers

the Company has contracted with to perform various research activities on our

behalf for the continued development of our product candidates.

process includes reviewing open contracts and purchase orders, estimating the service performed and the associated cost

incurred for research and development services not yet billed or otherwise notified of actual

Accrued liabilities for the services provided by contract research organizations are recorded during the period incurred

based on such estimates and assumptions as expected cost, passage of time over which services will be performed, the level of effort

to be expended in each period, the achievement of milestones and other information available to us.

Estimates of our research and

development accruals are assessed on a quarterly basis based on an evaluation of the progress to completion of specific tasks using

information and data provided to us by our vendors and facts and circumstances known to us at that time, and adjusted accordingly.

results may differ from these estimates and could have a material impact on the Company’s reported results.

The Company’s

historical accrual estimates have not been materially different from its actual costs.

Due to the nature of estimates, we cannot

provide assurance that we will not make changes to our estimates in the future as we become aware of additional information about

the conduct of our research activities.

Stock-based Compensation

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and recognition of compensation expense for all stock-based payment awards.

Stock compensation expense based on the grant date

fair value estimated in accordance with the provisions of ASC 718 is recognized as an expense over the requisite service period.

We determine the

fair value of restricted stock and restricted stock units based on the fair value of our common stock on the date of grant.

estimate the fair value of our stock option using the Black-Scholes option pricing model, which requires us to develop subjective

estimates to be used in calculating the grant date fair value of stock options.

The use of the model requires us to make estimates

of highly subjective assumptions, such as expected stock price volatility and the estimated expected term of each award.

We determine the fair value of restricted stock units

based on the fair value of our common stock on the date of grant.

We estimate the fair value of our stock options using the Black-Scholes

option pricing model, which requires us to develop subjective estimates to be used in calculating the grant date fair value of

stock options.

The use of the model requires us to make estimates of highly subjective assumptions, such as expected stock price

volatility and the estimated expected term of each award.

Stock-based compensation expense based on the grant date fair value estimated

in accordance with the provisions of ASC 718 is recognized as an expense over the requisite service period.

Derivative Financial Instruments

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period income or loss.

In connection with our adoption on January

1, 2019, the Company follows the provisions of the FASB ASC 842, “

Leases ”

ASC 842 ”).

the inception of a contract, the Company determines whether the contract is or contains a lease based on all relevant facts and

circumstances.

For contracts that contain a lease, the Company identifies the lease and non-lease components, determines the consideration

in the contract and recognizes the classification of the lease as operating or financing.

At the commencement date of the lease,

the Company recognizes a liability to make lease payments and an asset representing the right to use the underlying asset during

the lease term.

The Company has elected not to recognize leases with a term less than one year on the balance sheet.

At the inception of a contract, the Company

determines whether the contract is or contains a lease based on all relevant facts and circumstances.

For contracts that contain

a lease, the Company identifies the lease and non-lease components, determines the consideration in the contract and recognizes

the classification of the lease as operating or financing.

For leases with a term greater than one year, the Company recognizes

a liability to make lease payments and an asset representing the right to use the underlying asset during the lease term at the

commencement date of the lease.

Lease liabilities and the corresponding

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borrowing rate.

The Company’s incremental borrowing rate is the rate of interest that we would have to pay to borrow on a

collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment.

Certain adjustments

to the right of use asset may be required for items such as initial direct costs or incentives received.

Lease payments on operating

leases are recognized on a straight-line basis over the expected term of the lease.

Lease payments on financing leases are recognized

using the effective interest method.

The Company’s incremental borrowing rate is the rate of interest that the Company would have to pay to borrow

on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment.

adjustments to the right of use asset may be required for items such as initial direct costs or incentives received.

Lease payments

on operating leases are recognized on a straight-line basis over the expected term of the lease.

Lease payments on financing leases

are recognized using the effective interest method.

Financial Operations Overview

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expenses relate to compensation and benefits for research and development personnel, facility-related expenses, supplies, external

services, costs to acquire technology licenses, expenses associated with preclinical and clinical development activities and other

operating costs.

Research and development expenses are charged to expense as incurred.

Payments made by the Company in advance

for research and development services not yet provided and/or for materials not yet received are recorded as prepaid expenses and

expensed when the service has been performed or when the goods have been received.

liabilities are recorded related to those expenses for which vendors have not yet billed the Company with respect to services provided

and/or materials that it has received.

Our research and

development programs are focused on the development of the next generation of immuno-oncology therapeutics based on INTASYL™

therapeutic platform.

Since we commenced operations, research and development has composed a significant portion of our total operating

expenses and is expected to compose the majority of our spending for the foreseeable future.

There are risks

in any new field of drug discovery that preclude certainty regarding the successful development of a product.

We cannot reasonably

estimate or know the nature, timing and costs of the efforts necessary to complete the development of, or the period in which material

net cash inflows are expected to commence from, any product candidate.

Our inability to make these estimates results from the uncertainty

of numerous factors, including but not limited to:

Our ability to advance product candidates into preclinical research and clinical trials;

The scope and rate of progress of our preclinical programs and other research and development activities;

The scope, rate of progress and cost of any clinical trials we commence;

The cost of filing, prosecuting, defending and enforcing patent claims and other intellectual property rights;

Clinical trial results;

The terms and timing of any collaborative, licensing and other arrangements that we may establish;

The cost and timing of regulatory approvals;

The cost of establishing clinical and commercial supplies of our product candidates and any products that we may develop;

The cost and timing of establishing sales, marketing and distribution capabilities;

The effect of competing technological and market developments;

The effect of government regulation and insurance industry efforts to control healthcare costs through reimbursement policy and other cost management strategies.

Failure to complete

any stage of the development of our product candidates in a timely manner could have a material adverse effect on our results of

operations, financial position and liquidity.

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.

Since we commenced operations, research

and development has composed a significant portion of our total operating expenses and is expected to compose the majority of our

spending for the foreseeable future.

General and Administrative Expenses

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Comparison of the Years Ended December 31, 2020 and

The following table summarizes our total revenues,

for the periods indicated, in thousands:

Revenues for the years ended December 31, 2019 and 2018 related

to the work performed by the Company as a sub-awardee under the government grant issued to our collaborator BioAxone Biosciences,

from the National Institute of Neurological Disorders and Stroke.

The grant provided funding for the development of a novel

INTASYL™

compound, BA-434, that targets PTEN for the treatment of spinal cord

Work performed by the Company as a sub-awardee under the grant was completed during the first quarter of 2019.

Operating Expenses

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Research and development expenses for the

year ended December 31, 2019 decreased less than 1% compared with the year ended December 31, 2018.

Overall, research and development

expenses were consistent year over year which was driven in part by the reduction in the Company’s legacy clinical trial-related

fees as these trials ended in 2018 offset by the increase in the use of third-party CROs to support the Company’s preclinical

immuno-oncology research during 2019.

year ended December 31, 2020 increased 3% compared with the year ended December 31, 2019 primarily

due to an increase in the use of sponsored research organizations to support the development of the Company’s pipeline programs

as compared to the prior year period .

General and Administrative Expenses

General and administrative expenses for

the year ended December 31, 2019 increased 48% compared with the year ended December 31, 2018, primarily due to professional

fees for legal related expenses, recruiting fees to support employee hiring activities and increased proxy-related fees as a result

of the Company’s annual and special stockholder meetings held in 2019 as compared to the prior year period .

the year ended December 31, 2020 decreased 7% compared with the year ended December 31, 2019, primarily due to decreases in legal-related

expenses and recruiting fees to support employee hiring activities as compared to the prior year period.

Liquidity and Capital Resources

On August 8, 2017, the Company entered into

a purchase agreement (the “

2017 Purchase Agreement ”) and a registration rights agreement with Lincoln Park Capital,

LPC ”), pursuant to which the Company has the right to sell to LPC up to $15,000,000 in shares of the Company’s

common stock, subject to certain limitations and conditions set forth in the 2017 Purchase Agreement.

To date, the Company has

sold 9,000 shares of common stock to LPC for net proceeds of $1,602,000.

The Company has approximately $13,300,000 remaining under

the 2017 Purchase Agreement, which expires on April 1, 2020.

On August 7, 2019, the Company entered into

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 December 31, 2020, we had cash

of $14,244,000 as compared with $6,934,000 at December 31, 2019.

In August 2017, the Company entered into

a purchase agreement (the “

2019 Purchase Agreement ”) and a registration rights agreement with LPC, pursuant

to which the Company has the right to sell to LPC up to $10,000,000 in shares of the Company’s common stock over the 30-month

term of the 2019 Purchase Agreement, subject to certain limitations and conditions.

The 2019 Purchase Agreement initially limits

the Company’s issuance of shares of common stock to LPC to 19.99% of the Company’s shares outstanding on the date of

the 2019 Purchase Agreement unless stockholder approval is obtained to issue more than such amount or the average price of all

sales under the 2019 Purchase Agreement exceed certain amounts as set forth in the 2019 Purchase Agreement.

To date, no shares

of common stock have been sold to LPC under the 2019 Purchase Agreement.

On February 6, 2020, the Company closed

a registered direct offering of 197,056 shares of the Company’s common stock at a purchase price of $8.705 and in a concurrent

private placement, sold warrants to purchase an aggregate of 197,056 shares of the Company’s common stock at a purchase

price of $0.125 per underlying warrant share and with an exercise price of $8.71 per share (the “

February 2020 Registered

Offering ”).

Net proceeds to the Company from the February 2020 Registered Offering are estimated to be $1,400,000 after

deducting placement agent fees and offering expenses.

On February 13,

2020, the Company closed an underwritten public offering of 993,633 shares of the Company’s common stock and pre-funded warrants

2020 Pre-Funded Warrants ”) to purchase an aggregate of 1,006,367 shares of the Company’s common

stock (the “

February 2020 Underwritten Offering ”).

The 2020 Pre-Funded Warrants were immediately exercisable

at an exercise price per share of $0.001.

Each share of common stock or 2020 Pre-Funded Warrant,

as applicable, was sold as a unit with a warrant to purchase one share of common stock at an exercise price of $4.00 per share.

The combined public offering price was $4.00 per common stock unit or $3.999 per 2020 Pre-Funded Warrant unit.

Net proceeds from

the February 2020 Underwritten Offering are estimated to be $7,000,000 after deducting underwriting discounts and commissions and

offering expenses paid by the Company.

We had cash of $6,934,000 as of

December 31, 2019, compared with $14,879,000 as of December 31, 2018.

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.

Historically,

the Company’s primary source of funding has been the sale of its securities.

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.

There is no guarantee that debt, additional equity or other funding

will be available to us on acceptable terms, or at all.

Moreover, the global coronavirus pandemic has led to significant

uncertainty and increased volatility in the capital markets.

If these conditions in the capital markets continue for an extended

period of time it may impact our ability to raise capital.

we fail to obtain additional funding when needed, we would be forced to scale back or terminate our operations or to seek to merge

with or to be acquired by another company.

We believe that our existing cash and the proceeds from the Company’s

February 2020 Registered Offering and February 2020 Underwritten Offering, should be sufficient to fund operations for at least

the next 12 months f rom the date this Annual Report on Form 10-K is filed .

2017 Purchase Agreement ”) with Lincoln Park Capital, LLC (“

LPC ”),

pursuant to which the Company had the right to sell to LPC up to $15,000,000 in shares of the Company’s common stock.

2017 Purchase Agreement expired on April 1, 2020 and a total of $1,602,000 in shares of common stock were sold to LPC under the

In August 2019, the Company entered into a purchase agreement (the “

2019 Purchase Agreement ”) with

LPC, pursuant to which the Company has the right to sell to LPC up to $10,000,000 in shares of the Company’s common stock,

subject to certain limitations and conditions set forth in the agreement.

The Company is initially limited to the issuance of 19.99%

of the Company’s shares outstanding on the date of the 2019 Purchase Agreement to LPC unless stockholder approval is obtained

to issue more than such amount or the average price of all sales under the 2019 Purchase Agreement exceed certain amounts as set

forth in the agreement.

To date, no shares of common stock have been sold to LPC under the 2019 Purchase Agreement.

On January 25, 2021, the Company sold 4,420,863

shares of Company common stock at a purchase price per share of $3.07, pre-funded warrants to purchase an aggregate of 140,065

shares of Company common stock at a purchase price per pre-funded warrant share of $3.069, and warrants to purchase an aggregate

of 3,420,696 shares of the Company’s common stock with an exercise price of $3.00 per warrant share in a private placement

Net proceeds to the Company are estimated to be $12,700,000 after deducting placement agent fees and offering expenses.

On February 12, 2021, the Company sold 2,246,784

shares of Company common stock at a purchase price of $3.42 per share in a registered direct offering under the Company’s

Form S-3 “shelf”

registration statement.

Net proceeds to the Company are estimated to be $6,900,000 after deducting

placement agent fees and offering expenses.

We believe that our existing cash

at December 31, 2020 and the net proceeds received from the Company’s financing activities subsequent to December 31, 2020,

as discussed above, should be sufficient to fund operations for at least the next 12 months from

the date of the release of the associated financial statements .

The following table summarizes our cash

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Net cash provided by financing activities

Net (decrease) increase in cash and restricted cash

Net increase (decrease) in cash and restricted cash

Net Cash Flow from Operating Activities

Net cash used in operating activities was

$8,645,000 for the year ended December 31, 2019, compared with $7,520,000 for the year ended December 31, 2018.

The increase of

$1,125,000 was primarily attributable to an increase in net loss as result of the increase in the Company’s operating expenses

as compared with the prior year, as discussed above, partially offset by a reduction in cash used for working

Net cash used in operating activities was $8,802,000 for the year ended December 31, 2020, as compared with $8,645,000 for

the year ended December 31, 2019.

The increase in cash used in operating activities was primarily due to an increase in the changes

in operating assets and liabilities as compared to the same period in the prior year.

Net Cash Flow from Investing Activities

Net cash used in investing activities was

$72,000 for the year ended December 31, 2019, compared with $5,000 for the year ended December 31, 2018.

The increase was

related to the purchase of office and lab equipment as compared with the prior year period.

$19,000 for the year ended December 31, 2020, as compared with $72,000 for the year ended December 31, 2019.

The decrease in net

cash flows from investing activities was primarily related to the amount of laboratory and computer equipment purchases year over

Net Cash Flow from Financing Activities

Net cash provided by financing activities

was $772,000 for the year ended December 31, 2019, compared with $18,823,000 for the year ended December 31, 2018.

decrease was primarily due to the timing and amount of capital raise activity completed by the Company during fiscal year 2019

as compared with fiscal year 2018.

was $16,131,000 for the year ended December 31, 2020, as compared with $772,000 for the year ended December 31, 2019.

in net cash flows from financing activities was primarily due to net proceeds received by the Company from the issuance of securities

and warrant exercises during year ended December 31, 2020 as compared to the same period in the prior year.

Off-Balance Sheet Arrangements

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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 5. Market for Registrant’s Common Equity