Phio Pharmaceuticals Corp. 10-Q

ITEM 1. FINANCIAL STATEMENTS PHIO PHARMACEUTICALS CORP. CONDENSED CONSOLIDATED BALANCE SHEETS (Amounts in thousands, except share and per share data) (Unaudited) June 30, 2022 December 31, 2021 ASSETS Current assets: Cash $ 18,020 $ 24,057 Restricted cash 50 50 Prepaid expenses 1,618 620 Total current assets 19,688 24,727 Right of use asset, net 223 283 Property and equipment, net 206 133 Other assets 27 27 Total assets $ 20,144 $ 25,170 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable $ 1,148 $ 283 Accrued expenses 1,759 2,660 Lease liability 130 125 Total current liabilities 3,037 3,068 Lease liability, net of current portion 104 170 Total liabilities 3,141 3,238 Commitments and contingencies (Note 9) – – Stockholders’ equity: Preferred stock, $ 0.0001 par value, 10,000,000 shares authorized – – Common stock, $ 0.0001 par value, 100,000,000 shares authorized; 13,658,722 and 13,534,996 shares issued and outstanding at June 30, 2022 and December 31, 2021, respectively 1 1 Additional paid-in capital 139,075 138,831 Accumulated deficit ( 122,073 ) ( 116,900 ) Total stockholders’ equity 17,003 21,932 Total liabilities and stockholders’ equity $ 20,144 $ 25,170 The accompanying notes are an integral part of these condensed consolidated financial statements. 3 PHIO PHARMACEUTICALS CORP. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Amounts in thousands, except share and per share data) (Unaudited) Three Months Ended June 30, Six Months Ended June 30, 2022 2021 2022 2021 Operating expenses: Research and development $ 1,304 $ 1,559 $ 2,890 $ 3,988 General and administrative 1,217 1,125 2,271 2,334 Total operating expenses 2,521 2,684 5,161 6,322 Operating loss ( 2,521 ) ( 2,684 ) ( 5,161 ) ( 6,322 ) Total other (expense) income, net ( 10 ) ( 3 ) ( 12 ) 228 Net loss $ ( 2,531 ) $ ( 2,687 ) $ ( 5,173 ) $ ( 6,094 ) Net loss per common share: Basic $ ( 0.19 ) $ ( 0.20 ) $ ( 0.38 ) $ ( 0.50 ) Diluted $ ( 0.19 ) $ ( 0.20 ) $ ( 0.38 ) $ ( 0.50 ) Weighted average number of common shares outstanding Basic 13,658,722 13,534,389 13,611,687 12,115,276 Diluted 13,658,722 13,534,389 13,611,687 12,115,276 The accompanying notes are an integral part of these condensed consolidated financial statements. 4 PHIO PHARMACEUTICALS CORP. CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (Amounts in thousands, except share data) (Unaudited) For the Three and Six Months Ended June 30, 2022 Common Stock Additional Paid-in Accumulated Shares Amount Capital Deficit Total Balance at December 31, 2021 13,534,996 $ 1 $ 138,831 $ ( 116,900 ) $ 21,932 Issuance of common stock upon vesting of restricted stock units 155,317 – – – – Shares withheld for payroll taxes ( 31,591 ) ( 25 ) – ( 25 ) Stock-based compensation expense – – 186 – 186 Net loss – – – ( 2,642 ) ( 2,642 ) Balance at March 31, 2022 13,658,722 $ 1 $ 138,992 $ ( 119,542 ) $ 19,451 Stock-based compensation expense – – 83 – 83 Net loss – – – ( 2,531 ) ( 2,531 ) Balance at June 30, 2022 13,658,722 $ 1 $ 139,075 $ ( 122,073 ) $ 17,003 For the Three and Six Months Ended June 30, 2021 Common Stock Additional Paid-in Accumulated Shares Amount Capital Deficit Total Balance at December 31, 2020 5,780,973 $ 1 $ 116,629 $ ( 103,613 ) $ 13,017 Issuance of common stock, pre-funded warrants and warrants in connection with private placement, net of offering costs 4,420,863 – 12,669 – 12,669 Issuance of common stock in registered direct offering, net of offering costs 2,246,784 – 6,908 – 6,908 Issuance of common stock upon the exercise of warrants 1,083,321 – 2,146 – 2,146 Issuance of common stock upon vesting of restricted stock units 2,570 – – – – Shares withheld for payroll taxes ( 122 ) – – – – Stock-based compensation expense – – 67 – 67 Net loss – – – ( 3,407 ) ( 3,407 ) Balance at March 31, 2021 13,534,389 1 138,419 ( 107,020 ) 31,400 Stock-based compensation expense – – 132 – 132 Net loss – – – ( 2,687 ) ( 2,687 ) Balance at June 30, 2021 13,534,389 $ 1 $ 138,551 $ ( 109,707 ) $ 28,845 The accompanying notes are an integral part of these condensed consolidated financial statements. 5 PHIO PHARMACEUTICALS CORP. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Amounts in thousands) (Unaudited) Six Months Ended June 30, 2022 2021 Cash flows from operating activities: Net loss $ ( 5,173 ) $ ( 6,094 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 41 36 Non-cash lease expense 60 58 Non-cash stock-based compensation 269 199 Forgiveness of debt – ( 233 ) Changes in operating assets and liabilities: Prepaid expenses and other assets ( 998 ) ( 810 ) Accounts payable 865 ( 380 ) Accrued expenses ( 901 ) 760 Lease liability ( 61 ) ( 57 ) Net cash used in operating activities ( 5,898 ) ( 6,521 ) Cash flows from investing activities: Cash paid for purchase of property and equipment ( 114 ) ( 21 ) Net cash used in investing activities ( 114 ) ( 21 ) Cash flows from financing activities: Net proceeds from the issuance of common stock and warrants – 19,577 Net proceeds from the exercise of warrants – 2,146 Payment of taxes for net share settled restricted stock unit issuances ( 25 ) – Net cash (used in) provided by financing activities ( 25 ) 21,723 Net (decrease) increase in cash and restricted cash ( 6,037 ) 15,181 Cash and restricted cash at the beginning of period 24,107 14,294 Cash and restricted cash at the end of period $ 18,070 $ 29,475 The following table provides a reconciliation of cash and restricted cash reported within the Condensed Consolidated Balance Sheets to the totals above: Schedule of cash and restricted cash June 30, 2022 2021 Cash $ 18,020 $ 29,425 Restricted cash 50 50 Total cash and restricted cash $ 18,070 $ 29,475 The accompanying notes are an integral part of these condensed consolidated financial statements. 6 PHIO PHARMACEUTICALS CORP. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 1. Organization and Significant Accounting Policies Nature of Operations Phio Pharmaceuticals Corp. (“ Phio ,” “ we ,” “ our ” or the “ Company ”) strives to address the biggest challenges in immuno-oncology by working to create new pathways to a cancer-free future for patients. We are developing therapeutics that leverage our INTASYL™ technology to target both tumor and immune cells by regulating genes to strengthen a patient’s immune system while weakening tumor defense mechanisms. With our INTASYL self-delivering RNAi technology, we aim to bring the benefits of RNA therapeutics into cancer care where other modalities may fall short. The Company continues to respond to and monitor the ongoing coronavirus pandemic. The Company’s corporate headquarters and research facility have seen limited impact and, during the three and six months ended June 30, 2022, continued to operate with safety measures in place for the health and well-being of its employees, such as working remotely and flexible scheduling, in accordance with guidance from federal, state and local authorities. The Company believes that the coronavirus pandemic has not had a significant impact on its financial condition and results of operations for the three and six months ended June 30, 2022. However, the extent to which the coronavirus pandemic may materially impact our financial results and operations will depend on a number of factors, including the availability of supplies and services we rely on, the ability to enroll subjects in our clinical trials and the duration of the coronavirus pandemic, which remain difficult to predict and are highly uncertain. Liquidity The Company has reported recurring losses from operations since its inception and expects to continue to have negative cash flows from operations for the foreseeable future. Historically, the Company’s primary source of funding has been from sales of its securities. The Company’s ability to continue to fund its operations is 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 its operations. This is dependent on a number of factors, including the market demand or liquidity of the Company’s common stock, which may be adversely impacted by the coronavirus pandemic and the ongoing conflict between Russia and Ukraine. There is no guarantee that debt, additional equity or other funding will be available to us on acceptable terms, or at all. If we fail to obtain additional funding when needed, we would be forced to scale back or terminate our operations or seek to merge with or to be acquired by another company. While we believe that the coronavirus pandemic has not had a significant impact on our financial condition and results of operations at this time, the potential economic impact brought by the coronavirus pandemic, which may be exacerbated by the global macroeconomic uncertainty from the ongoing conflict between Russia and Ukraine, is difficult to assess or predict. There may be developments outside of our control that require us to adjust our operating plans. Given the nature of the situation, we cannot reasonably estimate the impact of the coronavirus pandemic on our financial condition, results of operations or cash flows in the future. The Company believes that its existing cash should be sufficient to fund operations for at least the next 12 months from the date of the release of these financial statements. Basis of Presentation The accompanying financial statements are unaudited and have been prepared in accordance with accounting principles generally accepted in the United States (“ GAAP ”). Certain information and footnote disclosures included in the Company’s annual financial statements have been condensed or omitted. Additionally, certain prior year amounts have been reclassified for consistency with the current year presentation. The Company made an adjustment to reflect patent costs within general and administrative operating expenses in the condensed consolidated statements of operations. The reclassification increased general and administrative operating expenses and reduced research and development operating expenses by $ 104,000 for the three months ended June 30, 2021 and by $ 296,000 for the six months ended June 30, 2021. This reclassification had no effect on total operating expenses, net loss, net loss per common share and had no impact on the Company’s condensed consolidated balance sheets, statement of stockholders’ equity and statement of cash flows for the prior year period. 7 The year-end condensed consolidated balance sheet data was derived from audited financial statements, but does not include all disclosures required by GAAP. These statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s most recent Annual Report on Form 10-K for the year ended December 31, 2021, as filed with the Securities and Exchange Commission (the “ SEC ”) on March 22, 2022. In the opinion of management, all adjustments (including normal recurring accruals) considered necessary for a fair presentation of the condensed consolidated financial statements have been included. Interim results are not necessarily indicative of results for a full year. Principles of Consolidation The condensed consolidated financial statements include the accounts of Phio and its wholly-owned subsidiary, MirImmune, LLC. All material intercompany accounts have been eliminated in consolidation. Uses of Estimates in Preparation of Financial Statements The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The areas subject to significant estimates and judgement include, among others, those related to the fair value of equity awards, accruals for research and development expenses, useful lives of property and equipment, income taxes, and our valuation allowance on our deferred tax assets. On an ongoing basis, we evaluate our estimates and base our estimates on historical experience and other relevant assumptions that we believe are reasonable under the circumstances, including as a result of new information that may emerge concerning the coronavirus pandemic and the ongoing conflict between Russia and Ukraine. Actual results could differ materially from these estimates. Summary of Significant Accounting Policies There have been no material changes to the Company’s significant accounting policies as compared to those disclosed in “Note 2. Summary of Significant Accounting Policies” in our most recent Annual Report on Form 10-K for the year ended December 31, 2021 as filed with the SEC on March 22, 2022. 2. Recent Accounting Pronouncements In May 2021, the Financial Accounting Standards Board (the “ FASB ”) issued ASU 2021-04, “ Earnings per Share (Topic 260), Debt – Modifications and Extinguishments (Subtopic 470-50), Compensation – Stock Compensation (Topic 718), and Derivatives and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40) ” (“ ASU 2021-04 ”). The amendments in the updates are intended to clarify and reduce diversity in an issuer’s accounting for modifications or exchanges of freestanding equity-classified written call options that remain equity classified after modification or exchange. The amendments in ASU 2021-04 are effective for all entities for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. An entity should apply the amendments prospectively to modifications or exchanges occurring on or after the effective date of the amendments. Early adoption is permitted for all entities, including within an interim period. The Company adopted ASU 2021-04 on January 1, 2022. The adoption of this standard had no impact on the Company’s condensed consolidated financial statements. 8 3. Fair Value of Financial Instruments The Company follows the provisions of the FASB Accounting Standards Codification (“ ASC ”) Topic 820, “ Fair Value Measurement ,” for the Company’s financial assets and liabilities that are re-measured and reported at fair value each reporting period and are re-measured and reported at fair value at least annually using a fair value hierarchy that is broken down into three levels. Level inputs are defined as follows: Level 1 – quoted prices in active markets for identical assets or liabilities. Level 2 – other significant observable inputs for the assets or liabilities through corroboration with market data at the measurement date. Level 3 – significant unobservable inputs that reflect management’s best estimate of what market participants would use to price the assets or liabilities at the measurement date. At June 30, 2022 and December 31, 2021, the Company categorized its restricted cash of $ 50,000 as Level 2 hierarchy. The assets classified as Level 2 have initially been valued at the applicable transaction price and subsequently valued, at the end of each reporting period, using other market observable data. Observable market data points include quoted prices, interest rates, reportable trades and other industry and economic events. 4. Leases In January 2019, the Company amended the lease for its corporate headquarters and primary research facility in Marlborough, Massachusetts. The lease is for a total of 7,581 square feet of office and laboratory space and will expire on March 31, 2024 . The lease contains an option to terminate after two or three years by providing advance written notice of termination pursuant to the terms of the agreement. The exercise of this option was not determined to be reasonably certain and thus was not included in the lease liability on the Company’s balance sheet. The Company did not exercise its option to terminate in either the second or third year of the lease, and the option to terminate has expired. Additionally, the lease agreement did not contain information to determine the borrowing rate implicit in the lease. As such, the Company calculated its incremental borrowing rate based on what the Company would have to pay to borrow on a collateralized basis over the lease term for an amount equal to the remaining lease payments, taking into consideration such assumptions as, but not limited to, the U.S. treasury yield rate and borrowing rates from a creditworthy financial institution using the above lease factors. The lease for our corporate headquarters represents substantially all of our significant lease obligations. The amounts reported in the condensed consolidated balance sheets for operating leases in which the Company is the lessee and other supplemental balance sheet information is set forth as follows, in thousands, except the lease term (number of years) and discount rate: Schedule of lease and supplemental balance sheet information June 30, 2022 December 31, 2021 Assets Right of use asset $ 223 $ 283 Liabilities Lease liability, current 130 125 Lease liability, non-current 104 170 Total lease liability $ 234 $ 295 Lease Term and Discount Rate Weighted average remaining lease term 1.75 2.25 Weighted average discount rate 4.70 % 4.70 % Operating lease costs included in operating expense were $ 33,000 for the three months ended June 30, 2022 and 2021, respectively. Operating lease costs included in operating expense were $ 66,000 for the six months ended June 30, 2022 and 2021, respectively. 9 Cash paid for the amounts included in the measurement of the operating lease liability on the Company’s condensed consolidated balance sheets and included within changes in the lease liability in the operating activities of our condensed consolidated statements of cash flows was $ 34,000 and $ 33,000 for the three months ended June 30, 2022 and 2021, respectively. Cash paid for the six months ended June 30, 2022 and 2021 was $ 67,000 and $ 65,000 , respectively. Future lease payments for our non-cancellable operating leases and a reconciliation to the carrying amount of the operating lease liability presented in the condensed consolidated balance sheet as of June 30, 2022 is as follows, in thousands: Schedule of future minimum lease payments 2022 (remaining) $ 68 2023 140 2024 35 Total lease payments 243 Less: Imputed interest ( 9 ) Total operating lease liabilities (includes current portion) $ 234 5. Debt In May 2020, the Company received loan proceeds pursuant to the Paycheck Protection Program (the “ PPP ”) under the Coronavirus Aid, Relief, and Economic Security Act (the “ CARES Act ”). The Company followed the guidance under the FASB ASC Topic 470, “ Debt ,” (“ ASC 470 ”) in assessing the accounting for the PPP loan proceeds. Per ASC 470, the Company recorded a liability on the balance sheet for the full amount of the PPP loan proceeds received and accrued interest over the term of the loan. The Company believed it used the loan proceeds for eligible purposes and applied for full loan forgiveness. In February 2021, the Small Business Administration approved the Company’s application for full loan forgiveness, and the full amount of the PPP loan was remitted to the lender for forgiveness. Upon loan forgiveness, the Company recognized a gain on the extinguishment of debt of $ 233,000 for the loan proceeds received and interest accrued in the condensed consolidated statements of operations for the six months ended June 30, 2021. 6. Stockholders’ Equity January 2021 Private Placement — On January 25, 2021, the Company completed a private placement of 4,420,863 shares of the Company’s common stock at a purchase price per share of $ 3.07 , pre-funded warrants to purchase an aggregate of 140,065 shares of the Company’s common stock (the “ January 2021 Pre-Funded Warrants ”) at a purchase price per pre-funded warrant 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 (the “ January 2021 Warrants ”) (the “ Private Placement ”). In connection with the Private Placement, the Company issued warrants to the placement agent, H.C. Wainwright & Co., LLC (“ HCW ”), to purchase a total of 342,070 shares of the Company’s common stock at an exercise price of $ 3.8375 per warrant (the “ January 2021 Placement Agent Warrants ”). Net proceeds to the Company from the Private Placement were $ 12,669,000 after deducting placement agent fees and offering expenses. February 2021 Registered Direct Offering — On February 17, 2021, the Company completed a registered direct offering of 2,246,784 shares of the Company’s common stock at a purchase price of $ 3.42 per share (the “ Offering ”). In connection with the Offering, the Company issued warrants to the placement agent, HCW, to purchase a total of 168,509 shares of the Company’s common stock at an exercise price of $ 4.275 per warrant (the “ February 2021 Placement Agent Warrants ”). Net proceeds to the Company from the Offering were $ 6,908,000 after deducting placement agent fees and offering expenses. Warrants The Company first assesses the warrants it issues under the FASB ASC Topic 480, “ Distinguishing Liabilities from Equity ” (“ ASC 480 ”) to determine whether they are within the scope of ASC 480. As there were no instances outside of the Company’s control that could require cash settlement from any of the warrant series issued in the Company’s financing transactions, the Company’s outstanding warrants are outside the scope of ASC 480. 10 The Company then applies and follows the applicable accounting guidance in the FASB ASC Topic 815, “ Derivatives and Hedging. ” Financial instruments are accounted for as either derivative liabilities or equity instruments depending on the specific terms of the agreement. The warrants issued by the Company do not meet the definition of a derivative instrument as they are indexed to the Company’s common stock and classified within stockholders’ equity. Based on this determination, the Company’s warrants are classified within stockholders’ equity. The following table summarizes the Company’s outstanding equity-classified warrants at June 30, 2022: Schedule of outstanding warrants Exercise Expiration Balance December 31, Warrants Warrants Warrants Balance June 30, Description Price Date 2021 Issued Exercised Expired 2022 April 2018 Warrants $ 173.25 5/31/2023 20,599 – – – 20,599 April 2018 Placement Agent Warrants $ 223.00 4/9/2023 1,373 – – – 1,373 October 2018 Warrants $ 10.45 10/3/2025 389,610 – – – 389,610 October 2018 Underwriter Warrants $ 13.06 10/1/2023 29,220 – – – 29,220 November 2019 Placement Agent Warrants $ 6.875 11/18/2024 13,636 – – – 13,636 February 2020 Registered Direct Warrants $ 8.71 8/6/2025 197,056 – – – 197,056 February 2020 Placement Agent Warrants $ 11.0375 2/4/2025 14,779 – – – 14,779 February 2020 Warrants $ 4.00 2/13/2025 1,326,500 – – – 1,326,500 February 2020 Underwriter Warrants $ 5.00 2/11/2025 150,000 – – – 150,000 April 2020 Warrants $ 2.21 10/2/2025 428,266 – – – 428,266 April 2020 Placement Agent Warrants $ 2.9188 3/31/2025 41,756 – – – 41,756 January 2021 Warrants $ 3.00 7/27/2026 3,420,696 – – – 3,420,696 January 2021 Placement Agent Warrants $ 3.8375 7/27/2026 342,070 – – – 342,070 February 2021 Placement Agent Warrants $ 4.275 2/12/2026 168,509 – – – 168,509 6,544,070 – – – 6,544,070 No warrants were exercised during the three months ended June 30, 2022 and 2021 and during the six months ended June 30, 2022. The Company received net proceeds of $ 2,146,000 from the exercise of warrants during the six months ended June 30, 2021. 7. Net Loss per Common Share The following table sets forth the potential common shares excluded from the calculation of net loss per common share because their inclusion would be anti-dilutive: Schedule of antidilutive stock June 30, 2022 2021 Options to purchase common stock 2,099 2,499 Unvested restricted stock units 686,974 335,379 Warrants to purchase common stock 6,544,070 6,567,303 Total 7,233,143 6,905,181 11 8. Stock-based Compensation Restricted Stock Units Restricted stock units (“ RSUs ”) are issued under the Company’s 2020 Long-Term Incentive Plan (the “ 2020 Plan ”) or as inducement grants issued outside of the 2020 Plan to new employees. RSUs are generally subject to graded vesting and the satisfaction of certain service requirements. Upon vesting, each outstanding RSU will be exchanged for one share of the Company’s common stock. Employee RSU recipients may elect to net share settle upon vesting, in which case the Company pays the employee’s income taxes due upon vesting and withholds a number of shares of equal value. The fair value of the RSUs awarded are based upon the Company’s closing stock price at the grant date and are expensed over the requisite service period. The following table summarizes the activity of the Company’s RSUs for the six months ended June 30, 2022: Schedule of RSU activity Number of Shares Weighted- Average Grant Date Fair Value Per Share Unvested units at December 31, 2021 367,101 $ 3.21 Granted 675,000 0.86 Vested ( 155,317 ) 3.27 Forfeited ( 199,810 ) 1.61 Unvested units at June 30, 2022 686,974 $ 1.36 Stock-based compensation expense related to RSUs was $ 82,000 and $ 124,000 for the three months ended June 30, 2022 and 2021, respectively. Stock-based compensation expense related to RSUs was $ 261,000 and $ 181,000 for the six months ended June 30, 2022 and 2021, respectively. The aggregate fair value of awards that vested during the six months ended June 30, 2022 and 2021 was $ 128,000 and $ 8,000 , respectively, which represents the market value of the Company’s common stock on the date that the RSUs vested. As of June 30, 2022, the compensation expense for all unvested RSUs in the amount of approximately $768,000 will be recognized in the Company’s results of operations over a weighted average period of 2.08 years. Stock Options Stock options are issued under the 2020 Plan or as inducement grants issued outside of the 2020 Plan to new employees. Stock options are generally subject to graded vesting and the satisfaction of certain service requirements. Upon the exercise of a stock option, the Company issues new shares and delivers them to the recipient. The Company does not expect to repurchase shares to satisfy stock option exercises. The Company uses the Black-Scholes option-pricing model to determine the fair value of all its option grants. The risk-free interest rate used for each grant was based upon the yield on zero-coupon U.S. Treasury securities with a term similar to the expected life of the related option. The Company’s expected stock price volatility assumption is based upon the Company’s own implied volatility. As the Company has limited stock option exercise information, the expected life assumption used for option grants is based upon the simplified method provided for under ASC 718. The dividend yield assumption is based upon the fact that the Company has never paid cash dividends and presently has no intention of paying cash dividends. The Company did not grant stock options during the three and six months ended June 30, 2022 and 2021. 12 The following table summarizes the activity of the Company’s stock options for the six months ended June 30, 2022: Schedule of Stock Option Activity Number of Shares Weighted- Average Exercise Price Per Share Aggregate Intrinsic Value Balance at December 31, 2021 2,499 $ 3,401.90 Granted – – Exercised – – Cancelled ( 400 ) 13,349.97 Balance at June 30, 2022 2,099 $ 1,506.13 $ – Exercisable at June 30, 2022 1,826 $ 1,716.58 $ – Stock-based compensation expense related to stock options for the three months ended June 30, 2022 and 2021 was $ 1,000 and $ 8,000 , respectively. Stock-based compensation expense related to stock options for the six months ended June 30, 2022 and 2021 was $ 8,000 and $ 18,000 , respectively. As of June 30, 2022, the compensation expense for all unvested stock options in the amount of approximately $5,000 will be recognized in the Company’s results of operations over a weighted average period of 0.09 years. Compensation Expense Related to Equity Awards The following table sets forth total stock-based compensation expense for the three and six months ended June 30, 2022 and 2021, in thousands: Schedule of stock based compensation expense Three Months Ended Six Months Ended June 30, June 30, 2022 2021 2022 2021 Research and development $ 53 $ 31 $ 109 $ 44 General and administrative 30 101 160 155 Total stock-based compensation $ 83 $ 132 $ 269 $ 199 9. Collaboration Agreements In March 2021, the Company entered into a clinical co-development collaboration agreement 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 clinical development agreement, the companies are working to develop a T cell-based therapy using PH-762 and AgonOx’s “double positive” TIL (“ DP TIL ”) technology. Per the terms of the clinical development agreement, the Company committed to make future payments of up to $ 4,000,000 to reimburse AgonOx for expenses incurred to support a clinical trial with AgonOx’s DP TIL technology and PH-762. The Company will recognize its share of costs arising from research and development activities performed by AgonOx in the Company’s financial statements in the period AgonOx incurs such expense. Phio will be entitled to certain future development milestones and low single-digit sales-based royalty payments from AgonOx’s licensing of its DP TIL technology. There were no reimbursable costs incurred by AgonOx under the clinical development agreement during the three and six months ended June 30, 2022 and 2021. No milestone or sales-based royalty payments from AgonOx have been received to date. 13