What changed in this filing

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Item 7. Management’s Discussion and Analysis

2025-03-31 compared with 2024-04-01 · 239 added, 187 removed, 134 unchanged (76% of the section changed)

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“ we ,” “ our ” or the “ Company ”) is a clinical stage biotechnology company whose

proprietary INTASYL™ self-delivering RNAi technology platform is designed to make immune cells more effective in killing tumor cells.

We are developing therapeutics that are designed to leverage INTASYL to precisely target specific proteins that reduce the body’s

ability to fight cancer, without the need for specialized formulations or drug delivery systems.

Our efforts are focused on developing

immuno-oncology therapeutics using our INTASYL platform.

We have demonstrated preclinical efficacy in both direct-to-tumor injection and

adoptive cell therapy (“ ACT ”) applications with our INTASYL compounds.

proprietary INTASYL™ self-delivering RNAi® small interfering RNA gene silencing technology is designed to make immune cells

more effective in killing tumor cells.

We are developing therapeutics that are designed to leverage INTASYL to precisely target specific

proteins that reduce the body’s ability to fight cancer, without the need for specialized formulations or drug delivery systems.

We are committed to discovering and developing innovative cancer treatments for patients by creating new pathways toward a cancer-free

PH-762 is an INTASYL compound designed to reduce the

expression of cell death protein 1 (“ PD-1 ”).

PH-762 is currently being evaluated in a U.S.

multi-center Phase 1b dose-escalating

clinical trial through the intratumoral injection of PH-762 for the treatment of patients with cutaneous squamous cell carcinoma, melanoma

and Merkel cell carcinoma.

The trial (NCT 06014086) is designed to evaluate the safety and tolerability of neoadjuvant use of intratumorally

injected PH-762, assess the tumor response, and determine the dose or dose range for continued study of PH-762 and is expected to enroll

up to 30 patients.

In May and December 2024, respectively, a Safety Monitoring Committee (SMC) reviewed data from the first and second

dose cohorts treated with PH-762, and in both instances recommended escalation to the next dose concentration.

A total of 7 patients with

cutaneous carcinomas have been enrolled in dose cohorts 1 and 2.

The second cohort enrolled a total of 4 patients who were diagnosed with

cutaneous squamous cell carcinoma.

At Day 36 (tumor excision), while patients in the first cohort had stable disease, a complete response

(100% tumor clearance) was reported for 2 patients with cutaneous squamous cell carcinoma.

Partial response (90% tumor clearance) was

reported for 1 patient with cutaneous squamous cell carcinoma and 1 patient had stable disease, having not progressed.

In this trial to

date, intratumoral injection of PH-762 has been well tolerated in all enrolled patients and there were no dose-limiting toxicities or

clinically relevant treatment-emergent adverse effects in the patients receiving intratumoral PH-762.

The third dose cohort is fully enrolled

and patients in this cohort are currently in the treatment or follow-up phase of the study.

Phio expects to complete enrollment of all

patients in the study in the third quarter of 2025.

In 2023, the Company implemented a cost rationalization

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This resulted in a decision not to renew the lease for

office and laboratory space in Marlborough, Massachusetts, which will expire on March 31, 2024.

Beginning in April of 2024, we expect

to continue operations as a remote business with a small laboratory facility in Worcester, Massachusetts for 321 square feet of space

that commenced on March 1, 2024.

Additionally, we rationalized discovery research personnel resulting in headcount reduction by approximately

Expense reductions have been redirected to funding the Phase 1b clinical trial with PH-762 directed toward skin cancer.

PH-762 is an INTASYL compound designed to reduce

the expression of cell death protein 1 (“ PD-1 ”).

PD-1 is a protein that inhibits T cells’ ability to kill cancer

cells and is a clinically validated target in immunotherapy.

Decreasing the expression of PD-1 can thereby increase the capacity of T

cells, which protect the body from cancer cells and infections, to kill cancer cells.

Our preclinical studies have demonstrated that

direct-to-tumor application of PH-762 resulted in potent anti-tumoral effects and have shown that direct-to-tumor treatment with PH-762

inhibits tumor growth in a dose dependent fashion in PD-1 responsive and refractory models.

office and laboratory space in Marlborough, Massachusetts, which expired on March 31, 2024.

Beginning in April 2024, we have continued

operations as a remote business with a laboratory facility in Worcester, Massachusetts.

Beginning in January 2024, we rationalized discovery

research personnel resulting in an overall headcount reduction by greater than 50%.

Expense reductions have been redirected to funding

the Phase 1b clinical trial with PH-762.

PH-762 is an INTASYL compound designed

to reduce the expression of PD-1.

PD-1 is a protein that inhibits T cells’ ability to kill cancer cells and is a clinically validated

target in immunotherapy.

Decreasing the expression of PD-1 can thereby increase the capacity of T cells, which protect the body from cancer

cells and infections, to kill cancer cells.

Our preclinical studies have demonstrated

that direct-to-tumor application of PH-762 resulted in potent anti-tumoral effects and have shown that direct-to-tumor treatment with

PH-762 inhibits tumor growth in a dose dependent fashion in PD-1 responsive and refractory models.

Importantly, direct-to-tumor administration

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antibody therapy.

PH-762 is currently being evaluated in a U.S.

multi-center Phase 1b

dose-escalating clinical trial through the intratumoral injection of PH-762 for the treatment of patients with cutaneous squamous cell

carcinoma, melanoma and Merkel cell carcinoma.

The trial is designed to evaluate the safety and tolerability of neoadjuvant use of intratumorally

injected PH-762, assess the tumor response, and determine the dose or dose range for continued study of PH-762 and is expected to enroll

up to 30 patients.

In November 2023, we announced the dosing of the first patient under a previously cleared Investigational New Drug

application (“ IND ”) application by the Food and Drug Administration and the trial is currently open for the continued

enrollment of patients.

Given our intention to

focus our efforts and resources on our U.S.

clinical trial with PH-762, we have completed the winding down process for our first-in-human

clinical trial for PH-762 in France, which was limited to the treatment of patients with metastatic melanoma.

Safety data from the initial

cohort of three patients in the French clinical trial were evaluated by a data monitoring committee in the first quarter of 2023.

safety data review disclosed no dose-limiting toxicity, and no drug-related severe or serious adverse events.

PH-762 is currently being evaluated

multi-center Phase 1b dose-escalating clinical trial through the intratumoral injection of PH-762 for the treatment of patients

with cutaneous squamous cell carcinoma, melanoma and Merkel cell carcinoma.

The trial (NCT 06014086) is designed to evaluate the safety

and tolerability of neoadjuvant use of intratumorally injected PH-762, assess the tumor response, and determine the dose or dose range

for continued study of PH-762 and is expected to enroll up to 30 patients.

In November 2023, we announced the dosing of the first patient

under a previously cleared Investigational New Drug (“ IND ”) application by the U.S.

Food and Drug Administration.

May and December 2024, respectively, a Safety Monitoring Committee (SMC) reviewed data from the first and second dose cohorts treated

with PH-762 and recommended escalation to the next dose concentration.

A total of 7 patients with cutaneous carcinomas have enrolled in

Cohorts 1 and 2.

The second cohort enrolled a total of 4 patients who were diagnosed with cutaneous squamous cell carcinoma.

(tumor excision), while patients in the first cohort had stable disease, the a complete response (100% tumor clearance) was reported for

2 patients with cutaneous squamous cell carcinoma.

A partial response (90% tumor clearance) was reported for 1 patient with cutaneous

squamous cell carcinoma and 1 patient had stable disease, having not progressed.

Intratumoral injection of PH-762

has been well tolerated in all patients enrolled in the trial to date.

There were no dose-limiting toxicities or clinically relevant treatment-emergent

adverse effects in the patients receiving intratumoral PH-762.

The third dose cohort is fully enrolled and patients in this cohort are

currently in the treatment or follow-up phase of the study.

We expect to complete enrollment of all patients in the study in the third

quarter of 2025.

Given our intention to focus our efforts

and resources on our U.S.

clinical trial with PH-762, we have completed the winding down process for our first-in-human clinical trial

for PH-762 in France, which was limited to the treatment of patients with metastatic melanoma.

Safety data from the initial cohort of

three patients in the French clinical trial were evaluated by a data monitoring committee in the first quarter of 2023.

The safety data

review disclosed no dose-limiting toxicity, and no drug-related severe or serious adverse events.

Due to INTASYL’s ease of administration,

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(“ DP TIL ”) with PH-762 increased their tumor killing activity by twofold.

In February 2021, we entered into a clinical co-development

collaboration agreement (the “ Clinical Co-Development Agreement ”) with AgonOx to develop a T cell-based therapy using

PH-762 and AgonOx’s DP TIL.

Under the Clinical Co-Development Agreement, we agreed to reimburse AgonOx up to $4 million in expenses

incurred to conduct a Phase 1 clinical trial of PH-762 treated DP TIL in patients with advanced melanoma and other advanced solid tumors.

We are also eligible to receive certain future development milestones and low single-digit sales-based royalty payments from AgonOx’s

licensing of its DP TIL technology.

PH-762 treated DP TIL are being evaluated in a

Phase 1 clinical trial in the United States with up to 18 patients with advanced melanoma and other advanced solid tumors by AgonOx.

primary trial objectives are to evaluate the safety and to study the potential for enhanced therapeutic benefit from the administration

of PH-762 treated DP TIL.

We announced the first patient was dosed in August 2023 and the trial is open for the continued enrollment of

As of December 31, 2023,

there is approximately $2,757,000 of remaining costs not yet incurred under the Clinical Co-Development Agreement.

PH-894 is an INTASYL compound that is designed

to silence BRD4, a protein that controls gene expression in both T cells and tumor cells, thereby effecting the immune system as well

as the tumor.

Intracellular and/or commonly considered “undruggable” targets, such as BRD4, represent a challenge for small

molecule and antibody therapies.

In February 2021, we entered into

a clinical co-development collaboration agreement (the “ Clinical Co-Development Agreement ”) with AgonOx to develop

a T cell-based therapy using PH-762 and AgonOx’s DP TIL.

Under the Clinical Co-Development Agreement, we had agreed to reimburse

AgonOx up to $4 million in expenses incurred to conduct a Phase 1 clinical trial of PH-762 treated DP TIL in patients with advanced melanoma

and other advanced solid tumors.

We were also eligible to receive certain future development milestones and low single-digit sales-based

royalty payments from AgonOx’s licensing of its DP TIL technology.

In May 2024, we terminated the Clinical

Co-Development Agreement with AgonOx, which such termination was effective immediately.

Effective as of the date of termination, the Clinical

Co-Development Agreement and our continuing obligations and those of AgonOx thereunder were terminated in their entirety.

We are no longer

required to provide financial support for the development of costs incurred un the Clinical Co-Development Agreement and we are no longer

entitled to future development milestones or royalty payments from AgonOx’s licensing of its DP TIL technology.

We agreed to pay

to AgonOx all payment obligations that accured prior to the termination of the Clinical Co-Development Agreement.

Remaining payments to

be made to AgonOx as of December 31, 2024 totaled $34,320, which primarily relate to accrued obligations for patient fees and other miscellaneous

costs as of the date of termination.

Pursuant to the terms of the Clinical Co-Development Agreement, each of the Company and AgonOx shall

be responsible for its own costs and expenses incurred in connection with the wind-down of the Phase 1 clinical trial.

Prior to the termination of the Clinical

Co-Development Agreement with AgonOx, PH-762 treated DP TIL were being evaluated in a Phase 1 clinical trial in the U.S.

with up to 18

patients with advanced melanoma and other advanced solid tumors by AgonOx.

The primary trial objectives were to evaluate the safety and

to study the potential for enhanced therapeutic benefit from the administration of PH-762 treated DP TIL.

AgonOx had enrolled three patients.

The first two patients were treated with DP TIL only and a third patient was treated with a combination of DP TIL and PH-762.

results for the single patient who received a combination of DP TIL and PH-762 showed tumor size reductions of 65%, 100% and 81%, respectively,

in three melanoma lesions.

PH-894 is an INTASYL compound that is designed to silence

BRD4, a protein that controls gene expression in both T cells and tumor cells, thereby affecting the immune system as well as the tumor.

Intracellular and/or commonly considered “undruggable” targets, such as BRD4, represent a challenge for small molecule and

antibody therapies.

Therefore, what sets this compound apart is its dual mechanism:

PH-894 suppression of BRD4 in T cells

results in T cell activation, and suppression of BRD4 in tumor cells results in tumors becoming more sensitive to being killed by T cells.

Preclinical studies conducted have demonstrated

that PH-894 resulted in a strong, concentration dependent and durable silencing of BRD4 in T cells and in various cancer cells.

to PH-762, preclinical studies have also shown that direct-to-tumor application of PH-894 resulted in potent and statistically significant

PH-894 suppression of BRD4 in T cells results in T

cell activation, and suppression of BRD4 in tumor cells results in tumors becoming more sensitive to being killed by T cells.

Preclinical studies conducted have demonstrated that

PH-894 resulted in a strong, concentration dependent and durable silencing of BRD4 in T cells and in various cancer cells.

PH-762, preclinical studies have also shown that direct-to-tumor application of PH-894 resulted in potent and statistically significant

anti-tumoral effects against distant untreated tumors, indicative of a systemic anti-tumor response.

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We have completed

the IND-enabling studies and are in the process of continuing to finalize the study reports required for an IND submission with PH-894.

As a result of the reprioritization to advance our clinical trial with PH-762 in the U.S., we have elected to defer the IND submission

the IND-enabling studies and are in the process of finalizing the study reports required for an IND submission with PH-894.

of the reprioritization to advance our clinical trial with PH-762 in the U.S., we have elected to defer the IND submission for PH-894.

Critical Accounting Policies and Estimates

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Research and Development Expenses

Research and development expenses are charged to

expense as incurred.

Payments made by us 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 with respect to services provided and/or materials that we have received for which vendors have not yet billed

The financial terms of these contracts are subject to negotiation, vary from provider to provider and may result in uneven payment

There may be instances in which payments made to our vendors exceed the level of services provided and result in a prepayment of

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

We are required to estimate our accrued research

and development expenses, of which a significant portion relate to third party providers we have contracted with to perform various research

Research and development expenses are charged to expense

Payments made by us 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.

Accrued liabilities

are recorded with respect to services provided and/or materials that we have received for which vendors have not yet billed us.

The financial

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

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

other instances, payment depends on factors such as the successful completion of milestones.

We are required to estimate our accrued research and

development expenses, of which a significant portion relate to third party providers we have contracted with to perform various research

activities on our behalf for the continued development of our product candidates.

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our vendors and facts and circumstances known to us at that time and adjusted accordingly.

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 research activities.

Collaborative Arrangements

We follow the provisions of the Financial Accounting

Standards Board (the “ FASB ”) Accounting Standards Codification (“ ASC ”) Topic 808, “ Collaborative

Arrangements ,” (“ Topic 808 ”) when collaboration agreements involve joint operating activities in which both

parties are active participants and that are also both exposed to significant risks and rewards.

We also consider the guidance in the

FASB ASC Topic 606, “ Revenue from Contracts with Customers ,” (“ Topic 606 ”) in determining the appropriate

treatment for activities between us and our collaborative partners that are more reflective of a vendor-customer relationship and therefore,

within the scope of Topic 606, as well as other accounting literature.

Under Topic 808, we determine an appropriate recognition method,

either by analogy to appropriate accounting literature or by applying a reasonable accounting policy election.

Generally, the classification

of transactions under the collaborative arrangement is determined based on the nature and contractual terms of the arrangement along with

the nature of the operations of the participants.

We recognize our share of costs arising from research and development activities performed

by collaborators in the period our collaborators incur such expense.

Reimbursements that are the

result of a collaborative relationship instead of a customer relationship, such as co-development activities, are evaluated on a quarterly

basis and recorded as an offset to research and development expense incurred.

Payments in excess of our collaboration expense will be

recorded as revenue.

Derivative Financial Instruments

During the normal course of business we may issue

warrants as part of a debt or equity financing.

Warrants and other derivative financial instruments are accounted for either as equity

or as an asset or liability, depending on the characteristics of each derivative financial instrument.

Financial instruments that do not

meet the definition of a derivative are classified as equity and measured at fair value and recorded as additional paid in capital in

stockholders’ equity at the date of issuance.

No further adjustments to their valuation are made.

Financial instruments that meet

the definition of a derivative are classified as an asset or liability are measured at fair value on the issuance date and are revalued

on each subsequent balance sheet date.

The changes in the fair value are recognized as current period income or loss.

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

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.

Financial Operations Overview

To date, we have primarily

generated revenues through government grants.

We have not generated any commercial product revenue and do not expect to do so in the foreseeable

We have not generated any

commercial product revenue and do not expect to do so in the foreseeable future.

In the future, we may generate revenue from a combination

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commercialized by us or strategic collaborators and partners.

If we or any future partner fails to develop product candidates in a timely

If we or any future partner fail to develop product candidates in a timely

manner or obtain regulatory approval for them, then our ability to generate future revenue and our results of operations and financial

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Research and Development Expenses

Research and development

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

costs to acquire technology licenses, research activities under our research collaboration, 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 expenses

have been a significant portion of our total operating expenses and are expected to constitute the majority of our spending for the foreseeable

Research and development expenses

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

to acquire technology licenses, research activities under our research collaboration, 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 expenses have been a significant

portion of our total operating expenses and are expected to constitute the majority of our spending for the foreseeable future.

General and Administrative Expenses

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legal and patent-related activities, audit, tax and consulting services, as well as other general corporate expenses.

Other (Expense) Income, net

Other (expense) income

consists primarily of interest income and expense and various income or expense items of a non-recurring nature.

Interest Income (Expense), net

Interest Income (Expense)

consists of interest income and expense.

Results of Operations

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Research and Development Expenses

Research and development expenses for the year

ended December 31, 2023 decreased 10% as compared to the year ended December 31, 2022.

The decrease was primarily due to a decrease in

costs related to the completion of our IND-enabling preclinical studies for PH-894 of approximately $1,979,000 and

reduced lab supplies of approximately $298,000 as a result of a decrease in lab personnel and a shift in focus on clinical development

and, partially offset by an increase in clinical-related costs of approximately $1,580,000 for the two U.S.

PH-762 Phase 1 clinical trials

as compared to the prior year period.

Research and development expenses for the year ended

December 31, 2024 decreased 42% as compared with the year ended December 31, 2023.

The decrease in research and development expenses was

primarily driven by our cost rationalization measures in transitioning from a research company to a product development company.

actions resulted in a decrease of $1,044,000 of expense due to the wind-down of preclinical studies, a reduction of $804,000 in salary-related

costs including stock-based compensation expense, and $198,000 in lab supplies associated with the reduction in headcount.

Additionally,

we experienced a reduction in clinical consulting fees and clinical trial-related fees of $350,000 incurred in connection with our IND

filing for PH-762 and our former PH-762 trials in ACT and European clinical trial, as well as a decrease of $245,000 in manufacturing

fees for PH-762 compared with 2023.

General and Administrative Expenses

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December 31, 2024 decreased 14% as compared to the year ended December 31, 2023.

The decrease was primarily due to decreases in personnel-related

expenses of approximately $230,000 due to departmental organizational changes and one-time executive search-related fees of approximately

$78,000 for the Company’s President & CEO and reduced D&O insurance premiums of $92,000, partially offset by increased legal

fees of approximately $302,000.

The decrease in general and administrative expenses was

primarily due to decreases in professional fees for a total of $430,000 primarily related to legal and patent expenses and in our D&O

insurance premium of $88,000 as compared to the prior year period.

Impairment of Property and Equipment

Loss on impairment of property and equipment for

the year ended December 31, 2023 increased 100% as compared to the year ended December 31, 2022.

The impairment charge to our long-lived

assets was associated with our non-renewal of our office lease to operate as a remote business.

The carrying value of these assets totaling

$126,000 was deemed no longer recoverable and an impairment charge of $126,000 was recorded to adjust those assets to their fair value.

The Company did not record loss on impairment in the

year ended December 31, 2024.

The impairment charge to our long-lived assets in the year ended December 31, 2023 was associated with our

non-renewal of our office lease to operate as a remote business.

The carrying value of these assets totaling $126,000 was deemed no longer

recoverable and an impairment charge of $126,000 was recorded to adjust those assets to their fair value.

Liquidity and Capital Resources

Historically, our primary source of funding has

been through the sale of our securities.

In the future, we will be dependent on obtaining funding from third parties, such as proceeds

from the issuance of debt, sale of equity or strategic opportunities, in order to maintain our operations.

We have reported recurring

losses from operations since inception and expect that we will continue to have negative cash flows from our operations for the foreseeable

Historically, our primary source of funding has been

through the sale of our securities.

In the future, we will be dependent on obtaining funding from third parties, such as proceeds from

the issuance of debt, sale of equity or strategic opportunities, in order to maintain our operations.

We have reported recurring losses

from operations since inception and expect that we will continue to have negative cash flows from our operations for the foreseeable future.

At December 31, 2024, we had cash of $5,382,000 as compared with $8,490,000 at December 31, 2023.

During the year ended December 31, 2024, we completed

the April 2023 Financing, June 2023 Financing and December 2023 Financing (each as defined in Note 9 to our consolidated financial statements

included elsewhere in this Annual Report) and received total net proceeds of $7,452,000 after deducting placement agent fees and offering

For further information regarding the April 2023 Financing, June 2023 Financing and December 2023 Financing, see Note 9 to our

consolidated financial statements included elsewhere in this Annual Report.

multiple financings and received total net proceeds of $4,001,000 after deducting placement agent fees and offering expenses.

information regarding the financings, see Note 8 to our consolidated financial statements included elsewhere in this Annual Report.

Subsequent to year-end, we completed financings and

received total net proceeds of $6,800,000 after deducting placement agent fees and offering expenses.

For further information regarding

the financings, see Note 13 to our consolidated financial statements included elsewhere in this Annual Report.

We have limited cash resources, have reported recurring

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might be necessary should we be unable to continue as a going concern.

The following table summarizes our cash flows for

the periods indicated, in thousands:

The following table summarizes our cash flows for the

periods indicated, in thousands:

Net cash used in operating activities

Net cash used in investing activities

Net cash provided by (used in) financing activities

Net decrease in cash and restricted cash

Net cash provided by (used in) investing activities

Net cash provided by financing activities

Net decrease in cash and cash equivalents

Net Cash Flow from Operating Activities

Net cash used in operating activities for the year

ended December 31, 2023 decreased 11% as compared to the year ended December 31, 2022, primarily due to decreased cash outflows from changes

in operating assets and liabilities of $720,000 as a result of liabilities owed for the payments related to the IND-enabling studies with

PH-894 and clinical supply manufacturing of PH-762 and PH-894 in the prior year period and a decrease in net loss of $654,000.

ended December 31, 2024 decreased 34% as compared with the year ended December 31, 2023.

This change of approximately $3,600,000 reflects

a reduction in net loss before subtracting non-cash items of $3,200,000 and a concurrent reduction of approximately $400,000 of cash outflows

driven by the reduction of outstanding accounts payable and liquidation of various current assets primarily as a result of liabilities

owed for the completion of preclinical studies in the prior year.

Net Cash Flow from Investing Activities

Net cash used in investing activities for the year

ended December 31, 2023 decreased 96% as compared to the year ended December 31, 2022, primarily due to changes in laboratory and computer

equipment purchases for our facility over the comparative period.

Net cash provided by investing activities for the year

ended December 31, 2024 was approximately $8,000 as compared to the year ended December 31, 2023 where net cash used in investing activities

The increase in net cash provided by investing activities was primarily due to laboratory and computer equipment purchases

for our facility during the prior year and proceeds from the disposition of fixed assets in the current year.

Net Cash Flow from Financing Activities

Net cash provided by financing activities for the

year ended December 31, 2023 increased as compared to the net cash used in financing activities for the year ended December 31, 2022,

primarily due to the Company’s capital raise activities over the comparative period (see Note 9 to our consolidated annual consolidated

financial statements included elsewhere in this Annual Report).

Net cash provided by financing activities for the year

ended December 31, 2024 decreased by 46% as compared to the year ended December 31, 2023, primarily due to the lower net proceeds from

the completion of our securities offerings during the prior year as compared with the current year.

Contractual Obligations

In February 2021, we entered into a Clinical Co-Development

Agreement with AgonOx to develop a T cell-based therapy using PH-762 and AgonOx’s DP TIL.

Details of our obligations under the Clinical

Co-Development Agreement as of December 31, 2023 can be found in Note 2 of the consolidated financial statements included elsewhere in

this Annual Report.

As of December 31, 2023, there is approximately $2,757,000 of remaining costs not yet incurred under the Clinical

Co-Development Agreement.

In February 2021, we entered into a

Clinical Co-Development Agreement with AgonOx to develop a T cell-based therapy using PH-762 and AgonOx’s DP TIL.

Details of our

obligations under the Clinical Co-Development Agreement as of December 31, 2024 can be found in Note 2 of the consolidated financial statements

included elsewhere in this Annual Report.

In May 2024, we terminated the Clinical Co-Development Agreement with AgonOx, which such termination

was effective immediately.

Effective as of the date of termination, the Clinical Co-Development Agreement and our continuing obligations

and those of AgonOx thereunder were terminated in their entirety.

We are no longer required to provide financial support for the development

costs incurred under the Clinical Co-Development Agreement and we are no longer entitled to future development milestones or royalty payments

from AgonOx’s licensing of its DP TIL technology.

We will pay to AgonOx all payment obligations that occurred prior to the termination

of the Clinical Co-Development Agreement.

Remaining payments to be made to AgonOx as of December 31, 2024 totaled $34,320, which primarily

relate to accrued obligations for patient fees and other miscellaneous costs as of the date of termination.

Pursuant to the terms of the

Clinical Co-Development Agreement, each party shall be responsible for their own costs and expenses incurred in connection with the wind-down

of the Phase 1 clinical trial.

Prior to the termination of the Clinical

Co-Development Agreement with AgonOx, PH-762 treated DP TIL was being evaluated in a Phase 1 clinical trial in the U.S.

with up to 18

patients with advanced melanoma and other advanced solid tumors by AgonOx.

The primary trial objectives were to evaluate the safety and

to study the potential for enhanced therapeutic benefit from the administration of PH-762 treated DP TIL.

AgonOx had enrolled three patients.

The first two patients were treated with DP TIL only and a third patient was treated with a combination of DP TIL and PH-762.

results for the single patient who received a combination of DP TIL and PH-762 showed tumor size reductions of 65%, 100% and 81% respectively,

in three melanoma lesions.

License Commitments

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Lease Commitments

Future lease payments under our

non-cancellable operating lease are expected to be approximately $35,000 over the remaining duration of our lease, or through March 31,

We do not intend to renew the lease for our corporate headquarters and primary research facility in Marlborough, Massachusetts,

which will expire on March 31, 2024.

Beginning in April of 2024, we expect to continue operations as a remote business with a small laboratory

The term of the laboratory facility commenced on March 1, 2024 and has a 6-month term, with lease payments expected to be $15,000

over the term of the lease.

We did not renew the lease for

our corporate headquarters and primary research facility in Marlborough, Massachusetts, which expired on March 31, 2024.

April 2024, we have continued operations as a remote business with a laboratory facility in Worcester, Massachusetts.

The new lease had

an original expiration date of August 31, 2024, and was subsequently extended through February 28, 2025.

The Company continues to

lease the space on a month-to-month basis.

Monthly rent is approximately $2,500.

For further information regarding

4 unchanged sentences

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.

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Item 7. Management’s Discussion and Analysis