Phio Pharmaceuticals Corp. (PHIO:NASDAQ) had research coverage picked up by Dr. Matthew Keller, who assigned it a Buy rating and a value of $14 per share, the H.C. Wainwright & Co. analyst wrote in a June 5 research note. Previously, the company was rated Under Review.
"We believe Phio is flying under the radar with investors, and we have a bullish outlook for the stock," Keller wrote. "The stock is undervalued and has significant potential upside on a near-term horizon."
567% Return Implied
At time of the analyst's report, Phio was trading at about US$2.10 per share, noted Keller. From that price, the return to the US$14 per share target is 567%.
The Massachusetts-based biotech had 4.8 million shares outstanding. Its market cap was $10 million. Its 52-week range was US$0.97–9.79 per share.
First-in-Class Potential
Keller discussed five reasons H.C. Wainwright likes Phio.
The biotech, based on its patented INTASYL precision small interfering RNA (siRNA) immunotherapy platform, is developing compounds to silence genes that tumors use to evade the immune system. Phio has one compound in the clinic, PH-762.
1) Compelling lead asset. PH-762, a next generation siRNA therapy, targets PD-1, a validated and clinically relevant molecule in cancer immunotherapy. PD-1 acts as an immune checkpoint, but when PD-1 binds to its ligands, it prevents T-cells from attacking cancer cells.
2) Efficacy and safety shown. Already, PH-762 has shown impressive clinical activity and exhibited favorable safety in the multicenter, dose escalation, Phase 1b clinical trial underway. PH-762 is being evaluated in cutaneous carcinomas, including stages 1, 2 and 4 cutaneous squamous cell carcinoma (cSCC), stage 4 melanoma and stage 4 Merkel cell carcinoma. There are five cohorts, each of which receives a higher dose of PH-762. To date, Phio has announced results for the 10 patients comprising cohorts 1, 2 and 3.
PH-762 exhibited about a 60% response rate, encompassing complete and partial responses. No dose-limiting toxicities or clinically relevant treatment-emergent adverse effects were reported thus far. PH-762 was well tolerated in all patients in the first three cohorts.
"Although still early in clinical development, an approximate 60% response rate in tandem with a clean safety profile is an impressive result," the analyst wrote. "Based on these positive preliminary data, PH-762 has the potential to become a first-in-class product in terms of both safety and efficacy in skin cancers and beyond."
How This Compound Differs
Several factors make PH-762 stand out among immunomodulating agents. The therapeutic is administered via intratumoral injection rather than systemic infusion. Delivery directly to the targeted site enhances antitumor efficacy, preserves healthy tissue and promotes faster healing. Administration of PH-762 is done with only a buffered sterile saline solution, thereby avoiding potential toxicities associated with formulation enhancers used in other therapies. An siRNA, the compound boasts a short half-life and does not alter any genes permanently.
"Safety is a key differentiating factor for PH-762, in our opinion," Keller wrote.
Meeting High Unmet Need
3) Filling a gap. Though the skin cancer therapy market is becoming increasingly crowded, a high unmet need persists. This is due to cSCC's high incidence rate, the paucity of U.S. Food and Drug Administration (FDA)-approved therapies for stages 1 and 2 cSCC, subpar efficacy of treatment options that are available and drug resistance to systemic therapies.
"We think PH-762 could become a best-in-therapy for invasive cSCC, in combination with surgery/radiation and/or in lesions unamenable to these techniques, if these response rates and favorable safety data continue or improve in later stage clinical trials," Keller wrote.
More Shots on Goal
4) Pipeline of assets. Phio has a preclinical portfolio of assets with significant long-term clinical and value-generating potential. One such asset is PH-894, a self-delivering RNA interference compound that targets the BRD4 protein, to enhance the body's immune system in fighting cancer. Phio's target indications for PH-894 will be advanced melanoma, Merkel cell carcinoma, hepatocellular carcinoma and triple-negative breast cancer.
"We believe there is strong scientific and medical evidence justifying [PH-894's] development and provides another shot on goal for the technology," noted Keller.
5) Options moving forward. As Phio advances its portfolio, it remains open to business development, mergers and acquisitions and partnering opportunities and thus has options for further advancing its assets.
Coming Up Next
Enrollment of the fifth cohort in the Phase 1b trial of PH-762 is underway and expected to be completed in H2/25. New study results could be released as early as H1/26.
Phio plans to meet with the FDA soon to discuss a clinical and regulatory path toward approval of PH-762.
"Given the positive preliminary data, we anticipate the company conducting a Phase 2b/3 following the current study," wrote Keller.
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