PHIO PHARMACEUTICALS CORP. 10-K

 false 2023 FY 0001533040

 2024-03-15

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 UNITED STATES

 SECURITIES AND EXCHANGE COMMISSION

 Washington, D.C. 20549

 FORM 10-K

 (Mark One)

 ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 For the fiscal year ended December 31, 2023

 Or

 TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 For the transition period from
 to

 Commission File Number 001-36304

 (Exact name of registrant as specified in its charter)

 Delaware

 45-3215903

 (State or other jurisdiction of

 incorporation or organization)

 (I.R.S. Employer

 Identification No.)

Apex Drive, Suite 300A PMB 2006, Marlborough, Massachusetts 01752

 (Address of principal executive offices and Zip
Code)

 ( 508)
 767-3861

 (Registrant's telephone number, including
area code)

 Securities registered pursuant to Section 12(b) of the Act:

 Title of each class

 Trading Symbol(s)

 Name of each exchange on which registered

 Common Stock, par value, $0.0001 per share

 PHIO

 The Nasdaq Capital Market

 Securities registered pursuant to Section 12(g)
of the Act:

 None.

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes
 No

 Indicate by check mark if the registrant is not required to file reports
pursuant to Section 13 or Section 15(d) of the Act. Yes No

 Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for
such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements
for the past 90 days. Yes No

 Indicate by check mark whether the registrant has submitted electronically
every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the
preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes
No

 Indicate by check mark whether the registrant is a large accelerated
filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions
of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging
growth company" in Rule 12b-2 of the Exchange Act.

 Large accelerated filer

 Accelerated filer

 Non-accelerated filer

 Smaller reporting company

 Emerging growth company

 If an emerging growth company, indicate by check mark if the registrant
has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant
to Section 13(a) of the Exchange Act.

 Indicate by check mark whether the registrant has filed a report on
and attestation to its management's assessment of the effectiveness of its internal control over financial reporting under Section
404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.

 If securities are registered pursuant to Section 12(b) of the Act,
indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to
previously issued financial statements.

 Indicate by check mark whether any of those error corrections are restatements
that required a recovery analysis of incentive-based compensation received by any of the registrant's executive officers during
the relevant recovery period pursuant to §240.10D-1(b).

 Indicate by check mark whether the registrant is a shell company (as
defined in Rule 12b-2 of the Act). Yes No

 The aggregate market value of the registrant's common stock,
$0.0001 par value per share (" Common Stock "), held by non-affiliates of the registrant, based on the closing sale price
of the registrant's Common Stock on June 30, 2023, was approximately $ 5.7 million. Shares of Common Stock held by each officer and
director and by each person who is known to own 10% or more of the outstanding Common Stock have been excluded in that such persons may
be deemed to be affiliates of the registrant. This determination of affiliate status is not necessarily a conclusive determination for
other purposes.

 As of March 15, 2024, the registrant had 4,591,700
shares of Common Stock outstanding.

 DOCUMENTS INCORPORATED BY REFERENCE

 None.

 ANNUAL REPORT ON FORM 10-K

 For the Fiscal Year Ended December 31, 2023

 Page

 PART I.

 Item 1.

 BUSINESS

 Item 1A.

 RISK FACTORS

 Item 1B.

 UNRESOLVED STAFF COMMENTS

 Item 1C.

 CYBERSECURITY

 Item 2.

 PROPERTIES

 Item 3.

 LEGAL PROCEEDINGS

 Item 4.

 MINE SAFETY DISCLOSURES

 PART II.

 Item 5.

 MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

 Item 6.

 RESERVED

 Item 7.

 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 Item 7A.

 QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 Item 8.

 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

 Item 9.

 CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

 Item 9A.

 CONTROLS AND PROCEDURES

 Item 9B.

 OTHER INFORMATION

 Item 9C.

 DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

 PART III.

 Item 10.

 DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

 Item 11.

 EXECUTIVE COMPENSATION

 Item 12.

 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

 Item 13.

 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

 Item 14.

 PRINCIPAL ACCOUNTANT FEES AND SERVICES

 PART IV.

 Item 15.

 EXHIBIT AND FINANCIAL STATEMENT SCHEDULES

 Item 16.

 FORM 10-K SUMMARY

 Signatures

 i

 FORWARD-LOOKING STATEMENTS

 This Annual Report on Form 10-K contains forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by
words such as "intends," "believes," "anticipates," "indicates," "plans,"
"expects," "suggests," "may," "would," "should," "potential,"
"designed to," "will," "ongoing," "estimate," "forecast," "target,"
"predict," "could," and similar references, although not all forward-looking statements contain these words. Forward-looking
statements are neither historical facts nor assurances of future performance. These statements are based only on our current beliefs,
expectations and assumptions regarding the future of our business, future plans and strategies, projections, anticipated events and trends,
the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties,
risks and changes in circumstances that are difficult to predict and many of which are outside of our control. Our actual results may
differ materially from those indicated in the forward-looking statements as a result of a number of important factors, including, but
not limited to:

 we are dependent on the success of our INTASYL technology platform, and our product candidates based on this platform, which is unproven and may never lead to approved and marketable products;

 our product candidates are in an early stage of development and we may fail, experience significant delays, never advance in clinical development or not be successful in our efforts to identify or discover additional product candidates, which may materially and adversely impact our business;

 if we experience delays or difficulties in identifying and enrolling subjects in clinical trials, it may lead to delays in generating clinical data and the receipt of necessary regulatory approvals;

 topline data may not accurately reflect or may materially differ from the complete results of a clinical trial;

 we rely upon third parties for the manufacture of the
 clinical supply for our product candidates;

 our business and operations would suffer in the event of computer system failures, cyberattacks or a deficiency in our cybersecurity;

 we are dependent on the patents we own and the technologies we license, and if we fail to maintain our patents or lose the right to license such technologies, our ability to develop new products would be harmed;

 we will require substantial additional funds to complete our research and development activities;

 future financing may be obtained through, and future development efforts may be paid for by, the issuance of debt or equity, which may have an adverse effect on our stockholders or may otherwise adversely affect our business;

 we may not be able to regain compliance with the continued listing requirements of The Nasdaq Capital Market; and

 the price of our common stock has been and may continue to be volatile.

 The risks set forth above are not exhaustive and
additional factors, including those identified in this Annual Report on Form 10-K under the heading "Risk Factors," for reasons
described elsewhere in this Annual Report on Form 10-K and in other filings Phio Pharmaceuticals Corp. periodically makes with the Securities
and Exchange Commission, could adversely affect our business and financial performance. Therefore, you should not rely unduly on any of
these forward-looking statements. Forward-looking statements contained in this Annual Report on Form 10-K speak as of the date hereof
and Phio Pharmaceuticals Corp. does not undertake to update any of these forward-looking statements to reflect a change in its views or
events or circumstances that occur after the date of this report, except as required by law.

 Unless otherwise noted, (1) the term "Phio"
refers to Phio Pharmaceuticals Corp. and our subsidiary, MirImmune, LLC and (2) the terms "Company," "we,"
"us" and "our" refer to the ongoing business operations of Phio and MirImmune, LLC, whether conducted through
Phio or MirImmune, LLC.

 ITEM 1.

 BUSINESS

 Overview

 Phio Pharmaceuticals Corp. (" Phio,"
" 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. We are committed to discovering and developing
innovative cancer treatments for patients by creating new pathways toward a cancer-free future.

 In 2023, the Company implemented a cost rationalization
program driven by its transition from discovery research to product development. 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
36%. Expense reductions have been redirected to funding the Phase 1b clinical trial with PH-762 directed toward skin cancer.

 INTASYL Platform

 Overall, RNA is involved in the synthesis, regulation
and expression of proteins. RNA takes the instructions from DNA and turns those instructions into proteins within the body's cells.
RNA interference, or RNAi, is a biological process that inhibits the expression of genes or the production of proteins. Diseases are often
related to the incorrect protein being made, excessive amounts of a specific protein being made, or the correct protein being made, but
at the wrong location or time. RNAi offers a novel approach to drug development because RNAi compounds can be designed to silence any
one of the thousands of human genes, many of which are considered "undruggable" by traditional therapeutics.

 Our development efforts are based on our proprietary
INTASYL self-delivering RNAi technology platform. It is a patented platform from which specific patented compounds are developed. INTASYL
compounds are comprised of a unique sequence of chemically modified nucleotides (modified small interfering RNA, or siRNAs) that target
a broad range of cell types and tissues. The compounds are designed to effectively silence genes that tumors use to evade the immune system.

 Since the initial discovery of RNAi, drug delivery
has been the primary challenge in developing RNAi-based therapeutics. Other siRNA technologies require cell targeting chemical conjugates
which limit delivery to specific cell types. INTASYL is based on proprietary chemistry that is designed to maximize the activity and adaptability
of the compound and is unique in that it can be delivered to any cell type or tissue without the need to modify the chemistry. This is
designed to eliminate the need for formulations or delivery systems (for example, nanoparticles or electroporation). This provides efficient,
spontaneous, cellular uptake with potent, long-lasting intracellular activity.

 We
believe that our INTASYL platform provides the following benefits including, but not limited to:

 Ability to target a broad range of cell types and tissues;

 Ability to target both intracellular and extracellular protein targets;

 Efficient uptake by target cells, avoiding the need for assisted delivery;

 Sustained, or long-term, effect in vivo;

 Ability to target multiple genes in one drug product;

 Favorable clinical safety profile with local administration; and

 Readily manufactured under current good manufacturing practices.

 Our Pipeline

 INTASYL compounds are
designed to precisely target specific proteins that reduce the body's ability to fight cancer, without the need for specialized
formulations or drug delivery systems, and are designed to make immune cells more effective in killing tumor cells. Our efforts are focused
on developing immuno-oncology therapeutics using our INTASYL platform. We have demonstrated preclinical activity against multiple gene
targets including PD-1, BRD4, CTLA-4, TIGIT and CTGF and have demonstrated preclinical efficacy in both direct-to-tumor injection and
adoptive cell therapy (" ACT ") applications with our INTASYL compounds.

 The following table summarizes
our product pipeline. Below we provide important information and context regarding each compound.

 PH-762

 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. Importantly, direct-to-tumor administration
of PH-762 resulted in activity against distant untreated tumors, indicative of a systemic anti-tumor response. We believe these data further
support the potential for PH-762 to provide a strong local immune response without the dose immune-related adverse effects seen with systemic
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 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. 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, we have shown that our compounds can easily be incorporated into current ACT manufacturing processes. In ACT,
T cells are usually taken from a patient's own blood or tumor tissue, grown in large numbers in a laboratory, and then given back to the
patient to help the immune system fight cancer. By treating T cells with our INTASYL compounds while they are being grown in the laboratory,
we believe our INTASYL compounds can improve these immune cells to make them more effective in killing cancer. Preclinical data generated
in collaboration with AgonOx, Inc. (" AgonOx "), a private company developing a pipeline of novel immunotherapy drugs
targeting key regulators of the immune response to cancer, demonstrated that treating AgonOx's "double positive" tumor
infiltrating lymphocytes (" DP TIL ") with PH-762 increased their tumor killing activity by two-fold.

 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.
As of December 31, 2023, there was approximately $2.8 million of remaining costs not yet incurred under the Clinical Co-Development Agreement.
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 U.S. with up to 18 patients with advanced melanoma and other advanced solid tumors by AgonOx. The 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 patients.

 PH-894

 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. 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. Similar
to 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. These preclinical data indicate that
PH-894 can reprogram T cells and other cells in the tumor microenvironment to provide enhanced immunotherapeutic activity. We have completed
the investigational new drug application (" 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 for PH-894.

 Synergies With Other Therapies

 Preclinical studies with our INTASYL compounds
in combination with antibodies resulted in enhanced potency in vivo. The combination of INTASYL with antibodies may also increase the
number of addressable drug targets. Unlike other antibody combination approaches, INTASYL can target multiple protein drug targets in
a specific therapeutic dose, thereby enhancing potency while maintain a favorable tolerability and safety profile.

 We have demonstrated preclinical efficacy with
INTASYL in ACT applications. In preclinical studies, INTASYL was shown to enhance the activity of ACT therapies, including with tumor
infiltrating lymphocytes and natural killer cells. As demonstrated in these preclinical studies, INTASYL is easily incorporated into current
ACT manufacturing processes.

 Intellectual Property

 INTASYL compounds have a single-stranded phosphorothioate
region, a short duplex region, and contain a variety of nuclease-stabilizing and lipophilic chemical modifications that we believe combine
the beneficial properties of both conventional RNAi and antisense technologies. We protect our proprietary information by means of United
States and foreign patents, trademarks and copyrights. In addition, we rely upon trade secret protection and contractual arrangements
to protect certain of our proprietary information and products. We have pending patent applications that relate to potential drug targets,
compounds we are developing to modulate those targets, methods of making or using those compounds, and proprietary elements of our drug
discovery platform.

 We have also obtained rights to various patents
and patent applications under licenses with third parties, which require us to pay royalties, milestone payments, or both.

 The degree
of patent protection for biotechnology products and processes, including ours, remains uncertain, both in the U.S. and in other important
markets, because the scope of protection depends on decisions of patent offices, courts and lawmakers in these countries. There is no
certainty that our existing patents or others, if obtained, will afford us substantial protection or commercial benefit. Similarly, there
is no assurance that our pending patent applications or patent applications licensed from third parties will ultimately be granted as
patents or that those patents that have been issued or are issued in the future will stand if they are challenged in court. We assess
our license agreements on an ongoing basis and may from time to time terminate licenses to technology that we do not intend to employ
in our technology platforms, or in our product discovery or development activities.

 Patents and Patent Applications

 We are actively seeking protection for our intellectual
property and are prosecuting a number of patents and pending patent applications covering our compounds and technologies. A combined summary
of these patents and patent applications is set forth below in the following table:

 Pending

 Applications

 Issued

 Patents

 United States

 Canada

 Europe

 Japan

 Other Markets

 Our portfolio includes 81 issued patents, 73 of
which cover our INTASYL platform. There are 13 patent families broadly covering both the composition and methods of use of our self-delivering
INTASYL platform technology and uses of our INTASYL compounds targeting immune checkpoint, cellular differentiation and metabolism targets
for ex vivo cell-based cancer immunotherapies. The INTASYL platform patents are scheduled to expire between 2029 and 2038.

 Furthermore, there are 40 patent applications,
encompassing what we believe to be important new RNAi compounds and their use as therapeutics, chemical modifications of RNAi compounds
that improve the compounds' suitability for therapeutic uses (including delivery) and compounds directed to specific targets ( i.e.,
that address specific disease states). The patents that may issue from these pending patent applications will, if issued, be set to expire
between 2029 and 2042, not including any patent term extensions that may be afforded under the Federal Food, Drug, and Cosmetic Act (" FFDCA ")
(and the equivalent provisions in foreign jurisdictions) for any delays incurred during the regulatory approval process relating to human
drug products (or processes for making or using human drug products).

 Key Intellectual Property License Agreements

 As we develop our own proprietary compounds, we
continue to evaluate our in-licensed portfolio as well as the field for new technologies that could be in-licensed to further enhance
our intellectual property portfolio and unique intellectual property position.

 In September 2011, the Company entered into an
agreement with Advanced RNA Technologies, LLC (" Advirna "), pursuant to which Advirna assigned to us its existing patent
and technology rights related to the INTASYL technology in exchange for an annual maintenance fee, a one-time milestone payment upon the
future issuance of the first patent with valid claims covering the assigned patent and technology rights and the issuance of shares of
common stock of the Company equal to 5% of the Company's fully-diluted shares outstanding at the time of issuance. In 2012, we issued
shares of common stock of the Company to Advirna equal to 5% of our fully-diluted shares outstanding at the time of issuance and paid
$350,000 to Advirna upon the issuance of the first patent in 2014. Additionally, we also pay to Advirna an annual maintenance fee of $100,000
and are required to pay low single-digit royalties on any licensing revenue received by us with respect to future licensing of the assigned
Advirna patent and technology rights. To date, any royalties owed to Advirna under the Advirna agreement have been minimal.

 Our rights under the Advirna agreement will expire
upon the later of: (i) the expiration of the last-to-expire of the "patent rights" (as defined therein) included in the
Advirna agreement or (ii) the abandonment of the last-to-be abandoned of such patents, unless earlier terminated in accordance with
the provisions of the Advirna agreement. Further, the Company also granted back to Advirna a license under the assigned patent and technology
rights for fields of use outside human therapeutics.

 Manufacturing and
Supply

 We
do not have any manufacturing capability and therefore we currently rely on and intend to continue to rely on contract manufacturing organizations
to produce our product candidates in accordance with regulatory requirements.

 We currently rely on and contract with third parties
for the manufacture of drug substances and drug products for use in our preclinical studies and clinical trials in accordance with regulatory
requirements. We expect that we will continue to rely on and contract with third parties to manufacture our product candidates in the
future.

 Competition

 The biotechnology and pharmaceutical industries,
including the immuno-oncology field, are a constantly evolving landscape with rapidly advancing technologies and significant competition.
There are a number of competitors in the immuno-oncology field including large and small pharmaceutical and biotechnology companies, academic
institutions, government agencies and other private and public research organizations. Many of these companies are larger than us and
have greater financial resources and human capital to develop competing products.

 Government Regulation

 Review and Approval of Drugs in the United States

 The United States and many other countries
extensively regulate the preclinical and clinical testing, manufacturing, labeling, storage, record-keeping, advertising, promotion, export,
marketing and distribution of drugs and biologic products. The U.S. Food and Drug Administration (" FDA ") regulates
pharmaceutical and biologic products under the FFDCA, the Public Health Service Act and other federal statutes and regulations.

 To obtain approval of our future product candidates
from the FDA, we must, among other requirements, submit data supporting safety and efficacy for the intended indication as well as detailed
information on the manufacture and composition of the product candidate. In most cases, this will require extensive laboratory tests,
preclinical studies and clinical trials. The collection of these data, as well as the preparation of applications for review by the FDA
involve significant time and expense. The FDA also may require post-marketing testing to monitor the safety and efficacy of approved products
or place conditions on any approvals that could restrict the therapeutic claims and commercial applications of these products. Regulatory
authorities may withdraw product approvals if we fail to comply with regulatory standards or if we encounter problems at any time following
initial marketing of our products.

 The first stage of the FDA approval process for
a new biologic or drug involves completion of preclinical studies and the submission of the results of these studies to the FDA. These
data, together with proposed clinical protocols, manufacturing information, analytical data and other information submitted to the FDA
through an IND, must become effective before human clinical trials may commence. Preclinical studies generally involve evaluation of product
characteristics and animal studies to assess the efficacy and safety of the product candidate. Many of these studies must be conducted
in accordance with the FDA's current Good Laboratory Practices, the Animal Welfare Act, and other applicable regulations.

 After the IND becomes effective, a company may
commence human clinical trials. These are typically conducted in three sequential phases, but the phases may overlap. Phase 1 trials consist
of testing the product candidate in a small number of patients or healthy volunteers, primarily for safety at one or more doses. Phase
2 trials, in addition to safety, evaluate the efficacy of the product candidate in a patient population somewhat larger than Phase 1 trials.
Phase 3 trials typically involve additional testing for safety and clinical efficacy in an expanded population at multiple test sites.
A company must submit to the FDA a clinical protocol, accompanied by the approval of the Institutional Review Board (" IRB ")
at the institutions participating in the trials, prior to commencement of each clinical trial.

 To obtain FDA marketing authorization, a company
must submit to the FDA the results of the preclinical and clinical testing, together with, among other things, detailed information on
the manufacture and composition of the product candidate, in the form of a new drug application (" NDA "), or, in the
case of a biologic, a biologics license application (" BLA ").

 The amount of time taken by the FDA to approve
a NDA or BLA will depend upon a number of factors, including whether the product candidate has received priority review, the quality of
the submission and studies presented, the potential contribution that the compound will make in improving the treatment of the disease
in question and agency resources.

 The FDA maintains several programs to facilitate
and expedite the development and review of applications that are intended for the treatment of a serious or life-threatening disease or
condition that meet certain other criteria, including Fast Track Designation, Breakthrough Designation, Priority Review, and the Accelerated
Approval pathway.

 We anticipate that our products will be manufactured
by our strategic partners, licensees or other third parties. Before approving an NDA or BLA, the FDA will inspect the facilities at which
the product is manufactured and will not approve the product unless the manufacturing facilities are in compliance with the FDA's
current good manufacturing practice regulations (" cGMP "), which are regulations that govern the manufacture, holding
and distribution of a product. Manufacturers of biologics also must comply with the FDA's general biological product standards.
Our manufacturers also will be subject to regulation under the Occupational Safety and Health Act, the Nuclear Energy and Radiation Control
Act, the Toxic Substance Control Act and the Resource Conservation and Recovery Act and other applicable environmental statutes. Following
approval, the FDA and certain state agencies periodically inspects drug and biologic manufacturing facilities to ensure continued compliance
with the cGMP. Our manufacturers will have to continue to comply with those requirements. Failure to comply with these requirements subjects
the manufacturer to possible legal or regulatory action, such as suspension of manufacturing or recall or seizure of product. Adverse
patient experiences with the product must be reported to the FDA and could result in the imposition of marketing restrictions through
labeling changes or market removal. Product approvals may be withdrawn if compliance with regulatory requirements is not maintained or
if problems concerning safety or efficacy of the product occur following approval.

 The labeling, advertising, promotion, marketing
and distribution of a drug or biologic product also must be in compliance with FDA and Federal Trade Commission requirements which include,
among others, standards and regulations for off-label promotion, industry sponsored scientific and educational activities, promotional
activities involving the internet, and direct-to-consumer advertising. We also will be subject to state and local requirements governing
the manufacturing and distribution of pharmaceutical products. In addition, we will be subject to a variety of federal, state and local
regulations relating to the use, handling, storage and disposal of hazardous materials, including chemicals and radioactive and biological
materials. In addition, we will be subject to various laws and regulations governing laboratory practices and the experimental use of
animals. In each of these areas, failure to comply with the applicable requirements could result in administrative or judicial enforcement
action, which could include refusal to permit clinical trials, refusal to approve an application, withdrawal of an approval, issuance
of a warning letter, product recall, product seizure, suspension of production or distribution, fines, refusals of government contracts,
and restitution, disgorgement or civil or criminal penalties. Any agency or judicial enforcement action could have a material adverse
effect on us.

 In the future, we may also be subject to a variety
of regulations governing clinical trials and sales of our products outside the U.S. Whether or not FDA approval has been obtained, approval
of a product candidate by the comparable regulatory authorities of foreign countries and regions must be obtained prior to the commencement
of marketing the product in those countries. The approval process varies from one regulatory authority to another and the time may be
longer or shorter than that required for FDA approval. In the European Union, Canada and Australia, regulatory requirements and approval
processes are similar, in principle, to those in the U.S.

 European Union Data Laws For Review and Approval of Drugs in the
European Union Including France

 The collection and use of personal health data
and other personal information in the European Union (" EU ") is governed by the provisions of the General Data Protection
Regulation (" GDPR "), which came into force in May 2018, and related implementing laws in individual EU Member States.
In addition, following the United Kingdom's (" UK ") formal departure from the EU on January 31, 2020 and the end
of the transition period on December 31, 2020, the UK has become a "third country" for the purposes of EU data protection
law. A "third country" is a country other than the EU Member States and the three additional European Economic Area countries
(Norway, Iceland and Liechtenstein) that have adopted a national law implementing the GDPR. However, the trade and cooperation agreement
(" TCA ") entered into between the EU and UK following the end of the transition period includes a provision, whereby
the transfer of personal data from the EU to the UK will not be considered as a transfer to a "third country" for a period
of four months starting from the entry into force of the TCA. This period will be extended by two further months, unless the EU or the
UK objects. Under the GDPR, personal data can only be transferred to third countries in compliance with specific conditions for cross-border
data transfers. Appropriate safeguards are required to enable transfers of personal data from the EU Member States. This status has a
number of significant practical consequences, in particular for international data transfers, competent supervisory authorities and enforcement
of the GDPR. The GDPR increased responsibility and liability in relation to personal data that we process.

 The GDPR imposes a number of strict obligations
and restrictions on the ability to process (processing includes collection, analysis and transfer of) personal data, including health
data from clinical trials and adverse event reporting. The GDPR also includes requirements relating to the consent of the individuals
to whom the personal data relates, the information provided to the individuals prior to processing their personal data or personal health
data, notification of data processing obligations to the national data protection authorities and the security and confidentiality of
the personal data. The GDPR also prohibits the transfer of personal data to countries outside of the EU that are not considered by the
EU to provide an adequate level of data protection, except if the data controller meets very specific requirements. These countries include
the United States, and following the end of the six month period as laid out in the TCA, it may include the UK if no adequacy decision
is given prior to this. Following the Schrems II decision of the Court of Justice of the European Union on July 16, 2020, there is uncertainty
as to the general permissibility of international data transfers under the GDPR. In light of the implications of this decision we may
face difficulties regarding the transfer of personal data from the EU to third countries. The European Data Protection Board has adopted
draft recommendations for data controllers and processors who export personal data to third countries regarding supplementary measures
to ensure compliance with the GDPR when transferring personal data outside of the EU. These recommendations were submitted to public consultation
until December 21, 2020, however it is unclear when and in which form these recommendations will be published in final form.

 Failure to comply with the requirements of the
GDPR and the related national data protection laws of the EU Member States may result in significant monetary fines, other administrative
penalties and a number of criminal offenses (punishable by uncapped fines) for organizations and in certain cases their directors and
officers as well as civil liability claims from individuals whose personal data was processed. Data protection authorities from the different
EU Member States may still implement certain variations, enforce the GDPR and national data protection laws differently, and introduce
additional national regulations and guidelines, which adds to the complexity of processing personal data in the EU. Guidance developed
at both EU level and at the national level in individual EU Member States concerning implementation and compliance practices are often
updated or otherwise revised.

 There is, moreover, a growing trend towards required
public disclosure of clinical trial data in the EU which adds to the complexity of obligations relating to processing health data from
clinical trials. Such public disclosure obligations are provided in the new EU Clinical Trials Regulation, EMA disclosure initiatives
and voluntary commitments by industry. Failing to comply with these obligations could lead to government enforcement actions and significant
penalties against us, harm to our reputation, and adversely impact our business and operating results. The uncertainty regarding the
interplay between different regulatory frameworks, such as the Clinical Trials Regulation and the General Data Protection Regulation,
further adds to the complexity that we face with regard to data protection regulation.

 Environmental Compliance

 Our research and development activities involve
the controlled use of potentially harmful biological materials as well as hazardous materials, chemicals and various radioactive compounds.
We are subject to federal, state and local laws and regulations governing the use, storage, handling and disposal of these materials and
specific waste products. We are also subject to numerous environmental, health and workplace safety laws and regulations, including those
governing laboratory procedures, exposure to blood-borne pathogens and the handling of bio-hazardous materials. The cost of compliance
with these laws and regulations could be significant and may adversely affect capital expenditures to the extent we are required to procure
expensive capital equipment to meet regulatory requirements. However, to date, compliance with such environmental laws and regulations
has not had a material impact on our capital expenditures.

 Human Capital Management

 As of December 31, 2023, we had eight full-time
employees and one part-time employee at our facility in Marlborough, Massachusetts. None of our employees are represented by a labor union
or covered by a collective bargaining agreement, nor have we experienced any work stoppages.

 We continually evaluate our business needs and
weigh the use of in-house expertise and capacity with outsourced expertise and capacity. We currently outsource substantially all preclinical
and clinical trial work to third party contract research organizations and drug manufacturing contractors.

 Our ability to identify,
attract, retain and integrate additional qualified key personnel is also critical to our success and the competition for skilled research,
product development, regulatory and technical personnel is intense. To attract qualified applicants, we offer a total rewards package
consisting of base salary and cash target bonus, a comprehensive benefit package and equity compensation for every employee. Bonus opportunity
and equity compensation increase as a percentage of total compensation based on level of responsibility. Actual bonus payouts are
based on performance.

 A majority of Phio's
employees have obtained advanced degrees in their professions and we support our employees' further development with individualized
development plans, mentoring, coaching, group training, conference attendance and financial support including tuition reimbursement.

 Corporate Information

 Effective January 26, 2023, the Company completed
a 1-for-12 reverse stock split of the Company's outstanding common stock. The reverse stock split did not reduce the number of
authorized shares of the Company's common or preferred stock. All share and per share amounts have been adjusted to give effect
to the reverse stock split.

 We were incorporated in the state of Delaware in
2011 as RXi Pharmaceuticals Corporation. On November 19, 2018, we changed our name to Phio Pharmaceuticals Corp., to reflect our transition
from a platform company to one that is fully committed to developing groundbreaking immuno-oncology therapeutics. Our executive offices
are located at 257 Simarano Drive, Suite 101, Marlborough, MA 01752, and our telephone number is (508) 767-3861.

 The Company's website address is
We make available on our website, free of charge, copies of our annual reports on Form 10-K, our quarterly reports on Form 10-Q and our
current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934, as amended, (the " Exchange Act ") as soon as reasonably practicable after these reports are filed
electronically with, or otherwise furnished to, the Securities and Exchange Commission (the " SEC "). We also make available
on our website the charters of our audit, compensation, nominating and governance committees, as well as our corporate code of ethics
and conduct.

 The SEC maintains an internet site that contains
reports, proxy and information statements, and other information regarding Phio and other issuers that file electronically with the SEC.
The SEC's website address is  The contents of this website, and our website, are not incorporated by reference
into this report and should not be considered to be part of this report.

 ITEM 1A.

 RISK FACTORS

 Risks Relating to Our Business and Industry

 We are dependent on the success of our INTASYL
technology platform, and our product candidates based on this platform, which is unproven and may never lead to approved and marketable
products.

 Our efforts have been focused on the development
of product candidates based on our INTASYL technology platform. We have invested, and we expect to continue to invest, significant financial
resources and efforts developing our product candidates. Our ability to eventually generate revenue is highly dependent on the successful
development, regulatory approval and commercialization of our INTASYL product candidates by us or by collaborative partners, which may
not occur for the foreseeable future, if ever, and is highly uncertain and depends on a number of factors, many of which are beyond our
control. Therefore, it is difficult to accurately predict challenges we may face with our product candidates as they move through the
discovery, preclinical and clinical development stages. We will spend large amounts of money developing our INTASYL platform technology
and may never succeed in obtaining regulatory approval. In addition, our research methodology may be unsuccessful in identifying product
candidates and results from preclinical studies and clinical trials may not predict the results that will be obtained in later phase trials
of our product candidates or our product candidates may interact with patients in unforeseen or harmful ways that may make it impractical
or impossible to manufacture, receive regulatory approval or commercialize. If we are not successful in bringing an INTASYL product candidate
to market, it could negatively impact our business and financial condition and we may not be able to identify and successfully implement
an alternative product development strategy.

 Our product candidates
are in an early stage of development and we may fail, experience significant delays, never advance clinical development or not be successful
in our efforts to identify or discover additional product candidates, which may materially and adversely impact our business.

 Our success depends heavily on the successful development
of our product candidates, which may never occur. Our product candidates, which are in early stages of development, could be delayed,
not advance into the clinic, or unexpectedly fail at any stage of development. Our ability to identify, develop and commercialize product
candidates is dependent on extensive preclinical and other non-clinical tests in order to support an IND in the United States, or the
equivalent with regulatory authorities in other jurisdictions, if applicable. These research programs to identify new product candidates
require substantial financial and human resources, are difficult to design and can take many years to complete.

 We cannot be certain of the outcome of our research
studies and clinical trials and the results from these studies and clinical trials may not predict the results that will be obtained in
later stages of development and we may focus our efforts and resources on product candidates that may prove to be unsuccessful. There
is no assurance that we will be able to successfully develop our product candidates, and we may forego opportunities with certain product
candidates or for indications that later prove to have greater commercial potential. If we are not able to successfully develop our product
candidates, we may be forced to abandon or delay our development efforts, which may materially and adversely affect our business, financial
condition, and results of operations.

 Further, the FDA may not accept the results of
our preclinical studies or clinical trials and may require us to complete additional studies or impose stricter approval conditions than
we expect, which could impact the value of a particular program, the approvability or commercialization of the particular product candidate
or product and our Company in general. Because of these factors, it is difficult to predict the time and cost of the development of our
product candidates. Any delay or failure in obtaining required approvals may prevent us from completing our preclinical studies or clinical
trials and could have a material adverse effect on our ability to initiate or commercialize drug or biologic candidate on a timely basis,
or at all. Additionally, preclinical studies and clinical trials are lengthy and expensive and if our cash resources become limited we
may not be able to commence, continue or complete such preclinical studies or clinical trials.

 We are dependent on our collaboration partner
for the successful development of our adoptive cell therapy product candidate.

 We are dependent on third parties that have direct
access to the patient or donor cells used in cell therapy and expect to depend on our third-party collaborator to support the clinical
development of our ACT product candidate. We have entered into a clinical co-development collaboration agreement with AgonOx, Inc. to
conduct a Phase 1 clinical trial of the evaluation of PH-762 treated "double positive" tumor infiltrating lymphocytes in patients
with advanced melanoma and other advanced solid tumors. The success of our collaboration depends upon the efforts of our collaboration
partner, and their performance in achieving the development activities to the extent they are responsible under our collaboration agreement.
Our partner may not be successful in performing these activities, including completing the required preclinical studies and other information
to be included in an IND application (or foreign equivalent), obtaining approval to initiate clinical trials, conducting the necessary
clinical trials and arranging for the manufacturing or contract research organization (" CRO ") relationships and obtaining
marketing authorization. Our partner works with other companies, potentially including some of our competitors, their corporate objectives
may not align with ours, and they may change their strategic focus or pursue alternative technologies. If our collaboration is not successful
or our partner terminates our collaboration agreement, our business, financial condition, and results of operations could be materially
and adversely affected.

 Further, we may not be successful in negotiating
agreements with this collaborator or with future collaborators for the development and commercialization of our ACT product candidates
through collaborations such as joint development or licensing agreements. Our ability to successfully negotiate such agreements will depend
on, among other things, potential partners' evaluation of the superiority of our technology over competing technologies, the quality
of preclinical data that we have generated, the perceived risks specific to developing our product candidates and our partners'
own strategic and corporate objectives. If we fail to negotiate these agreements, we may not be able commence clinical trials with our
ACT product candidates or we may be required to obtain licenses from cell therapy companies and our business, financial condition, and
results of operations could be materially and adversely affected.

 If we experience delays or difficulties in
identifying and enrolling patients in clinical trials, it may lead to delays in generating clinical data and the receipt of necessary
regulatory approvals.

 Clinical trials of a new drug or biologic candidate
require the enrollment of a sufficient number of patients, including patients who are suffering from the disease or condition the drug
or biologic candidate is intended to treat and who meet other eligibility criteria. Rates of patient enrollment are affected by many factors,
and delays in patient enrollment can result in increased costs and longer development times, which could materially and adversely impact
our business and financial condition. We may experience slower than expected patient enrollment in our current or future clinical trials.
In addition, clinical trials for drug or biologic candidates that treat the same indications as our product candidates may result in patients
who would otherwise be eligible for our clinical trials instead enrolling in clinical trials for other drug or biologic candidates.

 Topline data may not accurately reflect or
may materially differ from the complete results of a clinical trial.

 From time to time, we may publicly disclose topline
or interim data from our clinical trials based on a preliminary analysis of then-available data, of which the results, related findings
and conclusions are subject to change following a more comprehensive review of the data related to the particular trial. We also make
assumptions, estimations, calculations and conclusions as part of our analyses of data, and we may not have received or had the opportunity
to fully and carefully evaluate all data. Preliminary observations made in early stages of clinical trials are not necessarily indicative
of results that will be obtained when full data sets are analyzed or in subsequent clinical trials. As a result, topline data may differ
from future results from the same studies or different conclusions may qualify such results once additional data has been received and
evaluated. Topline or interim data also remain subject to audit and verification procedures that may result in the final data being materially
different from the preliminary data that we publicly disclose and should be viewed with caution until the complete data is available.
If the topline data we report differs from future analysis of results, or if others, including regulatory authorities, disagree with the
conclusions reached, our business, financial condition, and results of operations could be materially and adversely affected.

 We rely upon third-parties to conduct our
clinical trials and other studies for our product candidates, and if they do not successfully fulfill their obligations, the development
of our product candidates may be materially impacted.

 We rely upon third-party CROs, medical institutions,
collaborators, clinical investigators, consultants and other third-parties to support and conduct our clinical trials and we rely on these
third-party CROs for the execution of certain of our preclinical studies and expect to continue to do so. Because we rely on these third-parties,
we cannot necessarily control the timing, quality of work or amount of resources that our contract partners will devote to these activities.
We, our collaborators, and our CROs are responsible for ensuring that our clinical trials are conducted in accordance with applicable
regulations and protocols. If we, our collaborators, or our CROs fail to comply with these applicable regulations, the FDA may not accept
these data and may require us to complete additional preclinical studies and clinical trials, which could result in significant additional
costs and delays to us.

 As we only control certain aspects of their activities,
we cannot guarantee that these partners will fulfill their obligations to us under these arrangements. If these third-parties do not successfully
carry out their responsibilities, as well as within a timely fashion, our clinical trials and preclinical studies may be delayed, unsuccessful
or otherwise adversely affected. If we have to enter into alternative arrangements it may delay or adversely affect the development of
our product candidates and our business operations. This could be difficult, costly or impossible, and our preclinical studies or clinical
trials may need to be extended, delayed, terminated or repeated, and we may not be able to obtain regulatory approval in a timely fashion,
or at all, for the applicable drug or biologic candidate, or to commercialize such drug or biologic candidate being tested in such studies
or trials.

 A number of different factors could prevent
us from advancing into clinical development, obtaining regulatory approval, and ultimately commercializing our product candidates on a
timely basis, or at all.

 Before obtaining regulatory approval for the sale
of any drug or biologic candidate, we must conduct extensive preclinical tests and successful clinical trials to demonstrate the safety
and efficacy of our product candidates in humans. Before human clinical trials may commence, we must submit to the FDA an IND. An IND
involves the completion of preclinical studies and the submission of the results, together with proposed clinical protocols, manufacturing
information, analytical data and other data in the IND submission. The FDA may require us to complete additional preclinical studies or
disagree with our clinical trial study design. Also, animal models may not exist for some of the disease areas we choose to develop our
product candidates for. As a result, our clinical trials may be delayed or we may be required to incur more expense than we anticipated.

 Clinical trials require the review and oversight
of IRBs, which approve and continually review clinical investigations and protect the rights and welfare of patients. Before our clinical
trials can begin, we must also submit to the FDA a clinical protocol accompanied by the approval of the IRB at the institution(s) participating
in the clinical trial. An inability or delay in obtaining IRB approval could prevent or delay the initiation and completion of our clinical
trials, and the FDA may decide not to consider any data or information derived from a clinical investigation not subject to initial and
continuing IRB review and approval.

 Preclinical studies and clinical trials are lengthy
and expensive, and their outcome is highly uncertain. Historical failure rates are high due to a number of factors, such as safety and
efficacy of drug or biologic candidates. We, our collaborators, the FDA, or an IRB may suspend clinical trials of a drug or biologic candidate
at any time for various reasons, including if we or they believe the patients participating in such trials are being exposed to unacceptable
health risks. Among other reasons, adverse side effects of a drug or biologic candidate on patients in a clinical trial could result in
the FDA suspending or terminating the clinical trial and refusing to approve a particular drug or biologic candidate for any or all indications
of use.

 An additional number of factors could affect the
timing, cost or outcome of our drug development efforts, including the following:

 Delays in filing or acceptance of INDs, NDAs, or BLA for our product candidates;

 Difficulty in securing centers to conduct clinical trials;

 Conditions imposed on us by the FDA regarding the scope or design of our clinical trials;

 Problems in engaging IRBs to oversee trials or problems in obtaining or maintaining IRB approval of studies;

 Difficulty in enrolling patients in conformity with required protocols or projected timelines;

 Third-party contractors failing to comply with regulatory requirements or to meet their contractual obligations to us in a timely manner;

 Our drug or biologic candidates having unexpected and different chemical and pharmacological properties in humans than in laboratory testing and interacting with human biological systems in unforeseen, ineffective or harmful ways;

 The need to suspend or terminate clinical trials, for example, if the participants are being exposed to unacceptable health risks;

 Insufficient or inadequate supply or quality of our product candidates or other necessary materials necessary to conduct our clinical trials;

 Effects of our product candidates not having the desired effects or including undesirable side effects or the product candidates having other unexpected characteristics;

 The cost of our clinical trials being greater than we anticipate;

 Negative or inconclusive results from our clinical trials or the clinical trials of others for similar product candidates or inability to generate statistically significant data confirming the efficacy of the product being tested;

 Changes in the FDA's requirements or expectations for testing during the course of that testing;

 Reallocation of our limited financial and other resources to other clinical programs; and

 Adverse results obtained by other companies developing similar drugs.

 A failure of any preclinical study or clinical
trial can occur at any stage of testing. Any delay or failure in obtaining required approvals may prevent us from completing our preclinical
studies or clinical trials and could have a material adverse effect on our ability to initiate or commercialize any drug or biologic candidate
on a timely basis, or at all. Additionally, preclinical studies and clinical trials are lengthy and expensive and if our cash resources
become limited we may not be able to commence, continue or complete our clinical trials, which could have a material impact on our business,
financial condition, and results of operations.

 We are subject to significant competition
and may not be able to compete successfully.

 The biotechnology and pharmaceutical industries
are intensely competitive, contain a high degree of risk and there are many other companies actively engaged in the discovery, development
and commercialization of products that may compete with our product candidates. Many of our competitors have substantially greater experience
and greater research and development capabilities, staffing, financial, manufacturing, marketing, technical and other resources than us,
and we may not be able to successfully compete with them. These companies include large and small pharmaceutical and biotechnology companies,
academic institutions, government agencies and other private and public research organizations.

 In addition, even if we are successful in developing
our product candidates, in order to compete successfully we may need to be first to market or to demonstrate that our products are superior
to therapies based on different technologies. Some of our competitors may develop and commercialize products that are introduced to market
earlier than our product candidates or on a more cost-effective basis. A number of our competitors have already commenced clinical testing
of product candidates and may be more advanced than we are in the process of developing such product candidates. If we are not first to
market or are unable to demonstrate superiority, on a cost-effective basis or otherwise, any products for which we are able to obtain
approval may not be successful.

 We also face competition acquiring technologies
complementary to our INTASYL technology. Further, we may face competition with respect to product efficacy and safety, ease of use and
adaptability to modes of administration, acceptance by physicians, timing and scope of regulatory approvals, reimbursement coverage, price
and patent position, including dominant patent positions of others. If we are not able to successfully obtain regulatory approval or commercialize
our product candidates, we may not be able to establish market share and generate revenues from our technology.

 If we fail to attract, hire and retain qualified
personnel, we may not be able to design, develop, market or sell our products or successfully manage our business.

 We have a small core management team and are particularly
dependent on them. Accordingly, our business prospects are dependent on the principal members of our executive team, the loss of whose
services could make it difficult for us to manage our business successfully and achieve our business objectives. While we have entered
into an employment agreement with our Chief Executive Officer, he could leave at any time, in addition to our other employees, who are
all "at will" employees. Our ability to identify, attract, retain and integrate additional qualified key personnel is also
critical to our success. Competition for skilled research, product development, regulatory and technical personnel is intense, and we
may not be able to recruit and retain the personnel we need. The loss of the services of any key personnel, or our inability to hire new
personnel with the requisite skills, could restrict our ability to develop our product candidates.

 We are subject to potential liabilities from
clinical testing and future product liability claims.

 The use of our product candidates in clinical trials
and, if any of our product candidates receive regulatory approval, the sale of our product candidates for commercial use expose us to
the risk of product liability claims. Product liability claims may be brought against us by patients, healthcare providers, consumers
or others who come into contact with our product candidates or approved products. We have, and will seek to obtain, clinical trial insurance
for current and any future clinical trials that we conduct, as well as liability insurance for any products that we market. However, there
is no assurance that we will be able to obtain insurance in the amounts we seek, or at all. We anticipate that licensees who develop our
products will carry liability insurance covering the clinical testing of our product candidates and the marketing of those product candidates,
if approved. There is no assurance, however, that any insurance maintained by us or our licensees will prove adequate in the event of
a claim against us. If we cannot successfully defend against product liability claims, we could incur substantial liabilities. Even if
claims asserted against us are unsuccessful, they may divert management's attention from our operations and we may have to incur
substantial costs to defend such claims. Any of these outcomes could materially impact our business and financial condition.

 We rely upon third parties for the manufacture
of the clinical supply for our product candidates.

 We rely on third-party suppliers and manufacturers
to provide us with the materials and services to manufacture our product candidates for certain preclinical studies and for our clinical
trials, and we expect that we will continue to rely on third-party manufacturers for the supply of our product candidates in the future.
We have limited in-house manufacturing capabilities and resources, and we do not own or lease manufacturing facilities or have our own
supply source for the required materials to manufacture our compounds. Further, we have limited cGMP manufacturing capabilities and limited
experience scaling up of clinical supply as our internal capabilities are limited to small-scale production of research material. Accordingly,
we are dependent upon third-party suppliers and contract manufacturers to obtain supplies and manufacture our product candidates and we
will need to either develop, contract for, or otherwise arrange for the necessary manufacturers for these supplies.

 There are a limited number of manufacturers that
make oligonucleotides and we currently contract with multiple manufacturers for the supply of our product candidates to reduce the risk
of supply interruption or availability. However, there is no assurance that our supply of our product candidates will not be limited,
interrupted, of satisfactory quality or be available at acceptable prices. For example, constraints on the supply chain and availability
of resources have resulted in delays and shortages at manufacturing facilities. While we have engaged with multiple manufacturers for
the supply of our product candidates in order to mitigate the impact of the loss or delay of any one manufacturer, there can be no assurance
that our efforts will be successful. If for any reason we are unable to obtain the clinical supply of our product candidates from our
current manufacturers, we would have to seek to contract with another major manufacturer. If we or any of these manufacturers are unable
or unwilling to increase its manufacturing capacity or if we are unable to establish alternative arrangements on a timely basis or on
acceptable terms, the development and commercialization of such an approved product may be delayed or there may be a shortage in supply.
Any inability to manufacture our product candidates or future approved drugs in sufficient quantities when needed would seriously harm
our business.

 Approval of any of our product candidates will
not occur unless the manufacturing facilities are in compliance with the FDA's cGMP regulations in order to ensure that drug products
are safe and that they consistently meet applicable requirements and specifications. These requirements are enforced by the FDA through
periodic inspections of the manufacturing facilities and can result in enforcement action, such as warning letters, fines and suspension
of production if they are found to not be in compliance with the regulations. If our suppliers or manufacturers do not comply with the
FDA regulations for our product candidates, we may experience delays in timing or supply, be forced to manufacture our product candidates
ourselves or seek to contract with another supplier or manufacturer. If we are required to switch suppliers or manufacturers, we will
be required to verify that the new supplier or manufacturer maintains facilities and processes in line with cGMP regulations, which may
result in delays, additional expenses, and may have a material adverse effect on our ability to complete the development of our product
candidates.

 Unstable market and economic conditions,
including elevated and sustained inflation, may have serious adverse consequences on our business, financial condition and stock price.

 As has been widely reported, we are currently operating
in a period of economic uncertainty and capital markets disruption, which has been significantly impacted by domestic and global monetary
and fiscal policy, geopolitical instability, ongoing military conflicts, and high domestic and global inflation. The U.S. Federal Reserve
and other central banks may be unable to contain inflation through more restrictive monetary policy and inflation may increase or continue
for a prolonged period of time. Inflationary factors, such as increases in the cost of clinical supplies, interest rates, overhead costs
and transportation costs may adversely affect our operating results. We continue to monitor these events and the potential impact on our
business. Although we do not believe that inflation has had a material impact on our financial position or results of operations to date,
we may be adversely affected in the future due to domestic and global monetary and fiscal policy, supply chain constraints, consequences
associated with the coronavirus pandemic and the ongoing military conflicts, and such factors may lead to increases in the cost of manufacturing
our product candidates and delays in initiating studies. In addition, global credit and financial markets have experienced extreme volatility
and disruptions in the past several years and the foregoing factors have led to and may continue to cause diminished liquidity and credit
availability, declines in consumer confidence, declines in economic growth, uncertainty about economic stability and increased inflation.

 There can be no assurance that deterioration in
credit and financial markets and confidence in economic conditions will not occur. Our general business strategy may be adversely affected
by any such economic downturn, volatile business environment or continued unpredictable and unstable market conditions. If the current
equity and credit markets deteriorate, or do not improve, it may make any necessary debt or equity financings more difficult, more costly,
and more dilutive. Failure to secure any necessary financing in a timely manner and on favorable terms could have a material adverse effect
on our growth strategy, financial performance and stock price and could require us to delay or abandon clinical development plans. In
addition, there is a risk that one or more of our current service providers, manufacturers and other partners may not survive these difficult
economic times, which could directly affect our ability to attain our operating goals.

 Our business and operations would suffer
in the event of computer system failures, cyberattacks or a deficiency in our cybersecurity.

 Despite the implementation of security measures,
our internal computer systems and those of our third-party contractors and collaborators are vulnerable to damage from computer viruses,
unauthorized access, natural disasters, terrorism, war and telecommunication and electrical failures, cyberattacks or cyber-intrusions
over the Internet, attachments to emails, persons inside our organization, or persons with access to systems inside our organization.
The risk of a security breach or disruption, particularly through cyber-attacks or cyber intrusion, including by computer hackers, foreign
governments, and cyber terrorists, has generally increased as the number, intensity and sophistication of attempted attacks and intrusions
from around the world have increased. Such an event could cause interruption of our operations. As part of our business, we and our third-party
contractors and collaborators maintain large amounts of confidential information, including non-public personal information on patients
and our employees. Breaches in security could result in the loss or misuse of this information, which could, in turn, result in potential
regulatory actions or litigation, including material claims for damages, interruption to our operations, damage to our reputation or otherwise
have a material adverse effect on our business, financial condition and operating results. We expect to have appropriate information security
policies and systems in place in order to prevent unauthorized use or disclosure of confidential information, including non-public personal
information, but there can be no assurance that such use or disclosure will not occur.

 Risks Relating to Our Intellectual Property

 We may be involved in litigation to protect
our patents and intellectual property rights and our ability to protect our patents and intellectual property rights is uncertain and
may subject us to potential liabilities.

 We have filed patent applications, have pending
patents that we have licensed and those that we own and expect to continue to file patent applications. We may also need to license patents
and patent applications from research sponsored by us with third-parties. There is no assurance that these applications will result in
any issued patents or that those patents would withstand possible legal challenges or protect our technologies from competition. The patent
granting authorities have upheld stringent standards for the RNAi patents that have been prosecuted so far and, consequently, pending
patents that we have licensed and those that we own may continue to experience long and difficult prosecution challenges and may ultimately
issue with much narrower claims than those in the pending applications.

 In addition, others may challenge the patents or
patent applications that we currently license or may license in the future or that we own and, as a result, these patents could be narrowed,
invalidated or rendered unenforceable, which would negatively affect our ability to exclude others from using the technologies described
in these patents. There is no assurance that these patents or other pending applications or issued patents we license or that we own will
withstand possible legal challenges. Moreover, the laws of some foreign countries may not protect our proprietary rights to the same extent
as do the laws of the United States. Our efforts to enforce and maintain our intellectual property rights may not be successful and may
result in substantial costs and diversion of management and key employee's time. If we are unable to defend our licensed or owned
intellectual property, it may have a materially and adverse impact on our business, results of operations and financial condition.

 Third-parties may claim that we infringe
their patents, which may result in substantial liabilities and prevent us from pursuing the development of our product candidates.

 Because the field we operate in is constantly changing
and patent applications are still being processed by government patent offices around the world, there is a great deal of uncertainty
about which patents will issue, when, to whom and with what claims. Although we are not aware of any blocking patents or other proprietary
rights, it is likely that there will be significant litigation and other proceedings, such as interference and opposition proceedings
in various patent offices, relating to patent rights in the field we operate. Further, many patents in the fields we are pursuing have
already been exclusively licensed to third-parties, including our competitors. It is possible that we may become a party to such proceedings.

 If a claim should be brought against us and we
are found to infringe the rights of others, we may be required to pay substantial damages, be forced to stop the development of product
candidates affected by the claim, and/or establish licenses or similar arrangements. Furthermore, any such licenses may not be available
when needed, on commercially reasonable terms or at all. Whether an infringement claim is successful or not, the cost of these proceedings
may be significant and divert the attention of management and other key employees. As a result, we cannot be certain that our patents
or those we license will not be challenged by others, which could have a material adverse effect on our business, results of operations
and financial condition.

 We are dependent on the patents we own and
the technologies we license, and if we fail to maintain our patents or lose the right to license such technologies, our ability to develop
new products would be harmed.

 Our success depends upon our ability to obtain
and maintain intellectual property protection for our product candidates. Any patents issued to us or our licensors may not provide us
with any competitive advantages, and there is no assurance that the patents of others will not have an adverse effect on our ability to
do business or to continue to develop our product candidates freely. Pending patents that we have licensed and those that we own may continue
to experience long and difficult prosecution challenges and may ultimately issue with much narrower claims than those in the pending applications.
Because of the extensive time required for development, testing, and regulatory review of a potential product, it is possible that, before
any of our product candidates can be commercialized, any related patent may expire or remain in force for only a short period following
commercialization, thus reducing any advantage provided by the patent. Further, even if our rights are valid, enforceable and broad in
scope, competitors may develop products based on technology that is not covered by our licenses or patents or patent applications that
we own. If we are unable to derive value from our licensed or owned intellectual property, it may have a materially and adverse impact
on our business, results of operations and financial condition.

 Third parties may hold or seek to obtain additional
patents that could make it more difficult or impossible for us to develop products based on our technologies without obtaining a license
to such patents, which licenses may not be available on attractive terms, or at all. If there is any dispute or issue of non-performance
between us and the respective licensing partner regarding the rights or obligations under the license agreements, the ability to develop
and commercialize the affected product candidate may be adversely affected. Moreover, if any of our existing licenses are terminated,
the development of the product candidates contemplated by the licenses could be delayed or terminated and we may not be able to negotiate
additional licenses on acceptable terms, if at all, which would have a material adverse effect on our business. To the extent that we
are required and are able to obtain multiple licenses from third parties to develop or commercialize a product candidate, the aggregate
licensing fees and milestones and royalty payments made to these parties may materially reduce our economic returns or even cause us to
abandon development or commercialization of a product candidate.

 Risks Relating to Our Financial Condition

 We will require substantial additional funds
to complete our research and development activities.

 We have used substantial funds to develop our product
candidates and will need to raise additional substantial funds to continue our drug development efforts and support our operations. Our
future capital requirements and the period for which our existing resources are able to support our operations may vary significantly
from what we expect. We anticipate that we will need to raise substantial amounts of money to fund a variety of future activities integral
to the development of our business, which may include but is not limited to the following:

 To conduct research and development to successfully develop our product candidates;

 To obtain regulatory approval for our product candidates;

 To file and prosecute patent applications and to defend and assess patents to protect our technologies;

 To retain qualified employees, particularly in light of intense competition for qualified personnel;

 To manufacture products ourselves or through third parties;

 To market our products, either through building our own sales and distribution capabilities or relying on third parties; and

 To acquire new technologies, licenses or products.

 We are 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
cannot assure you that additional financing will be available to us on acceptable terms, or at all. If we cannot, or are limited in the
ability to, issue equity, incur debt or enter into strategic collaborations, we may be unable to fund the discovery and development of
our product candidates or improve our technology. If we fail to obtain additional funding when needed, we may ultimately be unable to
continue to develop and potentially commercialize our product candidates, and we may be forced to scale back or terminate our operations
or seek to merge with or be acquired by another company.

 We have a history
of net losses, and we expect to continue to incur net losses for the foreseeable future and may not achieve or maintain profitability.

 We have generated significant losses to date, have
not generated any product revenue and may not generate product revenue in the foreseeable future, or ever. We expect to incur significant
operating losses as we advance our product candidates through drug development and the regulatory process. Our ability to achieve profitability,
if ever, will depend on, among other things, us or our collaborators, obtaining regulatory approvals and successfully commercializing
our drug or biologic candidates. Even if we are able to successfully commercialize our drug or biologic candidates, we may not be able
to achieve or sustain profitability, which could have a material adverse effect on our business, financial condition and results of operations.

 Future financing may be obtained through,
and future development efforts may be paid for by, the issuance of debt or equity, which may have an adverse effect on our stockholders
or may otherwise adversely affect our business.

 If we raise funds through the issuance of debt
or equity, any debt securities or preferred stock issued will have rights, preferences and privileges senior to those of holders of our
common stock in the event of a liquidation. In such event, there is a possibility that once all senior claims are settled, there may be
no assets remaining to pay out to the holders of common stock. The terms of debt securities may also impose restrictions on our operations,
which may include limiting our ability to incur additional indebtedness, to pay dividends on or repurchase our capital stock, or to make
certain acquisitions or investments. In addition, we may be subject to covenants requiring us to satisfy certain financial tests and ratios,
and our ability to satisfy such covenants may be affected by events outside of our control. If we raise funds through the issuance of
additional equity, whether through private placements or public offerings, such an issuance would dilute current stockholders' ownership
in us, perhaps substantially. The issuance of a significant amount of shares of common stock could cause the market price of our common
stock to decline or become highly volatile.

 We expect to continue to incur significant
research and development expenses, which may make it difficult for us to attain profitability, and may lead to uncertainty as to our ability
to continue as a going concern.

 We expend substantial funds to develop our technologies,
and additional substantial funds will be required for further research and development, including preclinical testing and clinical trials
of any product candidates, and to manufacture and market any products that are approved for commercial sale. Because the successful development
of our products is uncertain, we are unable to precisely estimate the actual funds we will require to develop and potentially commercialize
them. In addition, we may not be able to generate enough revenue, even if we are able to commercialize any of our product candidates,
to become profitable.

 Changes in our operating plans, our existing and anticipated
working capital needs, the acceleration or modification of our expansion plans, increased expenses, potential acquisitions or other events
will all affect our ability to continue as a going concern. We have limited cash resources, have reported recurring losses from operations
since inception, negative operating cashflows and have not yet received product revenues. These factors raise substantial doubt regarding
our ability to continue as a going concern, and the Company's current cash resources may not provide sufficient capital to fund
operations for at least the next 12 months from the date of the release of the consolidated financial statements included elsewhere in
this Annual Report. The continuation of the Company as a going concern depends upon our ability to raise additional capital through equity
offerings, debt offerings and/or strategic opportunities to fund our operations. There can be no assurance that we will be successful
in accomplishing these plans in order to continue as a going concern. Any such inability to continue as a going concern may result in
our common stockholders losing their entire investment. There is no guarantee that we will become profitable or secure additional financing.

 Our ability to utilize
net operating loss carryforwards and other tax benefits may be limited.

 We have historically incurred
net losses and may never achieve or sustain profitability. Under the Internal Revenue Code of 1986, as amended (the " Code "),
a corporation is generally allowed a deduction for net operating losses carried forward from a prior taxable year. Under that provision,
we can carryforward our net operating losses to offset our future taxable income, if any, until such net operating losses are used or
expire. Net operating losses incurred in tax years beginning after December 31, 2017 may be carried forward indefinitely, but are limited
to offset up to 80% of future taxable income. Certain of our net operating loss carryforwards predating December 31, 2017 could expire
unused before offsetting potential future income tax liabilities.

 Additionally, an ownership
change, as defined by Section 382 and 383 of the Code, results from transactions increasing the ownership of certain stockholders or public
groups in the stock of a corporation by more than 50% over a three-year period. Pursuant to Section 382 and 383 of the code, if the Company
has experienced a change of control at any time since inception, utilization of the Company's net operating loss or tax credit carryforwards
then in existence would be subject to an annual limitation. Any limitation may result in expiration of a portion of the net operating
loss or tax credit carryforwards before utilization.

 We have completed multiple assessments of the
available net operating loss and tax credit carryforwards under Sections 382 and 383 of the Code through the year ended December 31,
2023 and determined that we underwent multiple ownership changes during the period from inception to 2023. As a result, our net operating
losses and tax credit carryforwards are subject to substantial annual limitations under Sections 382 and 383 of the Code due to these
ownership changes. The Company has adjusted its net operating loss and tax credit carryforwards to address the impact of the ownership
changes. We assess the need to conduct an ownership change analysis to determine whether any changes occurred in ownership that would
limit net operating loss or tax credit carryforwards on an annual basis. We may experience ownership changes in the future as a result
of subsequent shifts in our stock ownership, some of which may be outside of our control. If an ownership change occurs and our ability
to use our net operating loss and tax credit carryforwards is materially limited, it could harm our future operating results by effectively
increasing our future tax obligations.

 Risks Relating to Our Securities

 The price of our common stock has been and
may continue to be volatile.

 Our stock price has historically fluctuated widely
and is likely to continue to be volatile. Because we are at an early stage of development and in the absence of product revenue as a measure
of operating performance, we anticipate that the market price for our common stock may be influenced by, but not limited to, such factors
as:

 Announcements regarding the initiation or completion, and the results of preclinical studies and clinical trials of our product candidates;

 Announcements regarding clinical trial results or development announcements concerning our competitors product candidates;

 Regulatory or legal developments in the United States;

 The recruitment or departure of key personnel;

 The issuance of competitive patents or disallowance or loss of our patent rights;

 Our ability to raise additional capital and the terms on which additional capital is raised;

 To acquire new technologies, licenses or products; and

 General economic, industry and market conditions.

 The stock markets, in general, and the markets
for drug delivery and pharmaceutical company stocks, in particular, have experienced extreme volatility, that has often been unrelated
to the operating performance of these particular companies. These broad market fluctuations may adversely affect the trading price of
our common stock and could result in the loss of all or part of your investment. In addition, the limited trading volume of our stock
may contribute to its volatility. Moreover, if we are unable to trade above $1.00 for a certain period of time, or fulfill the other continued
listing standards, The Nasdaq Stock Market (" Nasdaq ") may delist our common stock. Delisting our common stock from
Nasdaq would adversely affect our trading volume and would likely negatively impact our trading price.

 We may not be able to regain compliance with
the continued listing requirements of The Nasdaq Capital Market.

 On January 24, 2024, we received notice (the " Notification
Letter ") from Nasdaq notifying us that we are not in compliance with the minimum bid price requirements set forth in Nasdaq
Listing Rule 5550(a)(2) for continued listing on The Nasdaq Capital Market. Nasdaq Listing Rule 5550(a)(2) requires listed securities
to maintain a minimum bid price of $1.00 per share, and Listing Rule 5810(c)(3)(A) provides that a failure to meet the minimum bid price
requirement exists if the deficiency continues for a period of 30 consecutive business days. Based on the closing bid price of our common
stock for the 30 consecutive business days prior to the date of the Notification Letter, we no longer meet the minimum bid price requirement.

 The Notification Letter does not impact our listing
on The Nasdaq Capital Market at this time. The Notification Letter states that we have 180 calendar days, or until July 22, 2024, to regain
compliance. To regain compliance, the bid price of our common stock must have a closing bid price of at least $1.00 per share for a minimum
of 10 consecutive business days at any time prior to July 22, 2024. In the event that we do not regain compliance by July 22, 2024, we
may be eligible for additional time to reach compliance with the minimum bid price requirement. However, if we fail to regain compliance
with the minimum bid price listing requirement or fail to maintain compliance with all other applicable continued listing requirements
and Nasdaq determines to delist our common stock, the delisting could adversely impact us by, among other things, reducing the liquidity
and market price of our common stock; reducing the number of investors willing to hold or acquire our common stock; limiting our ability
to issue additional securities in the future; and limiting our ability to fund our operations.

 Our Board of Directors has the authority
to issue shares of "blank check" preferred stock and the terms of the preferred stock may reduce the value of our common stock.

 We are authorized to issue up to 10,000,000 shares
of preferred stock in one or more series. Our Board of Directors (the " Board ") may determine the terms of future preferred
stock offerings without further action by our stockholders. The issuance of our preferred stock could affect the rights of existing stockholders
or reduce the value of our outstanding preferred stock or common stock. In particular, rights granted to holders of certain series of
preferred stock may include voting rights, preferences as to dividends and liquidation, conversion and redemption rights and restrictions
on our ability to merge with or sell our assets to a third party.

 We may acquire other businesses or form joint
ventures that may be unsuccessful and could dilute your ownership interest in the Company.

 As part of our business strategy, we may pursue
future acquisitions of other complementary businesses and technology licensing arrangements. We also may pursue strategic alliances. We
have limited experience with respect to acquiring other companies and with respect to the formation of collaborations, strategic alliances
and joint ventures. We may not be able to integrate such acquisitions successfully into our existing business, and we could assume unknown
or contingent liabilities. We also could experience adverse effects on our reported results of operations from acquisition related charges,
amortization of acquired technology and other intangibles and impairment charges relating to write-offs of goodwill and other intangible
assets from time to time following the acquisition. Integration of an acquired company requires management resources that otherwise would
be available for ongoing development of our existing business. We may not realize the anticipated benefits of any acquisition, technology
license or strategic alliance. There is no assurance that we will be successful in developing such assets, and a failure to successfully
develop such assets could diminish our prospects.

 To finance future acquisitions, we may choose to
issue shares of our common stock or preferred stock as consideration, which would dilute current stockholders' ownership interest
in us. Alternatively, it may be necessary for us to raise additional funds through public or private financings. Additional funds may
not be available on terms that are favorable to us and, in the case of equity financings, may result in dilution to our stockholders.
Any future acquisitions by us also could result in large and immediate write-offs, the incurrence of contingent liabilities or amortization
of expenses related to acquired intangible assets, any of which could harm our operating results.

 Provisions of our certificate of incorporation
and bylaws and Delaware law might discourage, delay or prevent a change of control of the Company or changes in our management and, as
a result, depress the trading price of our common stock.

 Our certificate of incorporation and bylaws contain
provisions that could discourage, delay or prevent a change of control of the Company or changes in our management that the stockholders
of the Company may deem advantageous. These provisions:

 Authorize the issuance of "blank check" preferred stock that our Board could issue to increase the number of outstanding shares and to discourage a takeover attempt;

 Prohibit stockholder action by written consent, which requires all stockholder actions to be taken at a meeting of our stockholders;

 Provide that the Board is expressly authorized to adopt, alter or repeal our bylaws; and

 Establish advance notice requirements for nominations for election to our Board or for proposing matters that can be acted upon by stockholders at stockholder meetings.

 Although we believe these provisions collectively
provide for an opportunity to receive higher bids by requiring potential acquirers to negotiate with our Board, they would apply even
if the offer may be considered beneficial by some stockholders. In addition, these provisions may frustrate or prevent any attempts by
our stockholders to replace or remove our current management team by making it more difficult for stockholders to replace members of our
Board, which is responsible for appointing the members of our management.

 Moreover, because we are incorporated in Delaware,
we are governed by the provisions of Section 203 of the Delaware General Corporation Law, which prohibits a person who owns in excess
of 15% of our outstanding voting stock from merging or combining with us for a period of three years after the date of the transaction
in which the person acquired in excess of 15% of our outstanding voting stock, unless the merger or combination is approved in a prescribed
manner.

 ITEM 1B.

 UNRESOLVED STAFF COMMENTS

 None.

 ITEM
 1C.

 CYBERSECURITY

 We are increasingly dependent on sophisticated
software applications and computing infrastructure to conduct key operations. We depend on both our own systems, networks, and technology
as well as the systems, networks and technology of our contractors, consultants, vendors and other business partners.

 Cybersecurity Program

 Given the importance of cybersecurity to our business,
we maintain a robust cybersecurity program to support both the effectiveness of our systems and our preparedness for information security
risks. This program includes a number of safeguards, such as: continuous monitoring for internal and external threats; regular evaluations
of our cybersecurity program, including periodic external reviews; and industry benchmarking. We also require cybersecurity trainings
when onboarding new employees, as well as cybersecurity awareness training for our employees. Our program leverages standard industry
frameworks to strengthen our program effectiveness and reduce cybersecurity risks.

 We use a risk-based approach with respect to our
use and oversight of third-party service providers, tailoring processes according to the nature and sensitivity of the data accessed,
processed, or stored by such third-party service provider. We use a number of means to assess and manage cyber risks related to our third-party
service providers, including conducting due diligence in connection with onboarding new vendors and seeking to include appropriate security
terms in our contracts where applicable.

 Process for Assessing, Identifying and Managing Material Risks from
Cybersecurity Threats

 In the event of a cybersecurity incident, designated
personnel are responsible for assessing the severity of an incident and associated threat, containing the threat, remediating the threat,
including recovery of data and access to systems, analyzing any reporting obligations associated with the incident, and performing post-incident
analysis and program enhancements. We maintain a disaster recovery plan in the event of a significant cybersecurity incident.

 We have relationships with a number of third-party
service providers to assist with cybersecurity containment and remediation efforts, including insurance providers and various law firms.

 Governance

 Management Oversight

 The controls and processes employed to assess,
identify and manage material risks from cybersecurity threats are implemented and overseen by the use of consultants as the Company does
not have a full-time dedicated cybersecurity position in the Company. Our consultant has over 20 years of experience in information technology
matters and is responsible for the day-to-day management of the cybersecurity program, including the prevention, detection, investigation,
response to, and recovery from cybersecurity threats and incidents, and are regularly engaged to help ensure the cybersecurity program
functions effectively in the face of evolving cybersecurity threats.

 Board Oversight

 The Board of Directors (the " Board ")
has overall responsibility for risk oversight and cybersecurity risk matters. The Board is responsible for discussing with management
the Company's data privacy, information technology and security and cybersecurity risk exposures, including: (i) the potential impact
of those exposures on the Company's business, financial results, operations and reputation; (ii) the programs implemented by management
to monitor and mitigate any exposures; and (iii) major legislative and regulatory developments that could materially impact the Company's
data privacy and cybersecurity risk exposure.

 Cybersecurity Risks

 Our cybersecurity risk management processes are
integrated into our overall information technology (" IT ") processes. As part of our IT process, we identify, assess
and evaluate risks impacting our operations across the Company, including those risks related to cybersecurity. We also maintain cybersecurity
insurance providing coverage for certain costs related to cybersecurity-related incidents that impact our own systems, networks, and technology
or the systems, networks and technology of our contractors, consultants, vendors and other business partners.

 As of December 31, 2023, we are not aware of any material risks from
cybersecurity threats, including as a result of any previous cybersecurity incidents, that have materially affected the business strategy,
results of operations or financial condition of the Company or are reasonably likely to have such a material effect. While we maintain
a robust cybersecurity program, the techniques used to infiltrate information technology systems continue to evolve. Accordingly, we may
not be able to timely detect threats or anticipate and implement adequate security measures. For additional information, see "Item
1A—Risk Factors."

 ITEM 2.

 PROPERTIES

 On December 17, 2013, we entered into a lease
(the " Lease "), as subsequently amended on January 22, 2019, with 257 Simarano Drive, LLC, Brighton Properties, LLC,
Robert Stubblebine 1, LLC and Robert Stubblebine 2, LLC to lease office and laboratory space in the building known as the "Main
Building" located at 257 Simarano Drive, Marlborough, Massachusetts, covering 7,581 square feet. The premises are used by the Company
for office and laboratory space. The term of the Lease commenced on April 1, 2014 and expires on March 31, 2024, for a total
of a ten year lease term. The base rent for the premises is $124,865 per annum, payable on a monthly basis. Each year thereafter, the
base rent shall increase by approximately 3% over the base rent from the prior year.

 The Company does not intend to renew the Lease, which
will expire on March 31, 2024. Beginning in April of 2024, we expect to continue operations as a remote business with a laboratory facility
located at 17 Briden Street, Worcester, Massachusetts, covering 321 square feet. The term of the laboratory facility commenced on March
1, 2024 and expires on September 1, 2024. The total base rent for the premises over the term is expected to be $15,000.

 ITEM 3.

 LEGAL PROCEEDINGS

 From time to time, the Company may become a party
to various legal proceedings and complaints arising in the ordinary course of business. To our knowledge, we are not currently a party
to any actual or threatened material legal proceedings of which we are aware.

 ITEM 4.

 MINE SAFETY DISCLOSURES

 Not applicable.

 PART II.

 ITEM 5.

 MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

 Market Information

 Our common stock is listed on The Nasdaq Capital
Market under the symbol "PHIO."

 Holders

 At March 15, 2024, 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 of record.

 Dividends

 We have never paid any cash dividends and do not
anticipate paying any cash dividends on our common stock in the foreseeable future.

 Recent Sales of Unregistered Sales of Securities

 No sales or issues of unregistered securities occurred
that have not previously been disclosed in a Quarterly Report on Form 10-Q or in a Current Report on Form 8-K.

 Purchases of Equity Securities by the Issuer and Affiliated Purchases

 We did not repurchase any shares of our common
stock during the years ended December 31, 2023 or 2022.

 ITEM 6.

 RESERVED

 ITEM 7.

 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 The following discussion of our financial condition
and results of operations should be read in conjunction with our consolidated financial statements and the notes to those consolidated
financial statements included in Item 8 of this Annual Report on Form 10-K. This discussion contains forward-looking statements that
involve significant risks and uncertainties. As a result of many factors, such as those set forth under "Risk Factors" and
elsewhere in this Annual Report on Form 10-K, our actual results may differ materially from those anticipated in these forward-looking
statements. Please refer to the discussion under the heading "Forward-Looking Statements" above.

 Overview

 Phio Pharmaceuticals Corp. (" Phio,"
" 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.

 In 2023, the Company implemented a cost rationalization
program driven by its transition from discovery research to product development. 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
36%. Expense reductions have been redirected to funding the Phase 1b clinical trial with PH-762 directed toward skin cancer.

 PH-762

 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. Importantly, direct-to-tumor administration
of PH-762 resulted in activity against distant untreated tumors, indicative of a systemic anti-tumor response. We believe these data further
support the potential for PH-762 to provide a strong local immune response without the dose immune-related adverse effects seen with systemic
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. 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,
we have shown that our compounds can easily be incorporated into current ACT manufacturing processes. In ACT, T cells are usually taken
from a patient's own blood or tumor tissue, grown in large numbers in a laboratory, and then given back to the patient to help the immune
system fight cancer. By treating T cells with our INTASYL compounds while they are being grown in the laboratory, we believe our INTASYL
compounds can improve these immune cells to make them more effective in killing cancer. Preclinical data generated in collaboration with
AgonOx, Inc. (" AgonOx "), a private company developing a pipeline of novel immunotherapy drugs targeting key regulators
of the immune response to cancer, demonstrated that treating AgonOx's "double positive" tumor infiltrating lymphocytes
(" 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. The
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
patients.

 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

 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. 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. Similar
to 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. These preclinical data indicate that
PH-894 can reprogram T cells and other cells in the tumor microenvironment to provide enhanced immunotherapeutic activity. 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
for PH-894.

 Critical Accounting Policies and Estimates

 The discussion and analysis of our financial condition
and results of operations are based upon our consolidated financial statements, which have been prepared in accordance 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 Note 1 to our consolidated financial statements included elsewhere in this Annual Report, we believe the following
addresses our accounting policies to be the most critical in understanding the judgments and estimates we use in preparing our consolidated
financial statements.

 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. 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. 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.

 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. 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. 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, 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.

 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.

 Financial Operations Overview

 Revenues

 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
future.

 In the future, we may generate revenue from a combination
of government grants, research and development agreements, license fees and other upfront payments, milestone payments, product sales
and royalties in connection with future strategic collaborators and partners. We expect that any revenue we generate will fluctuate from
period to period as a result of the timing of the achievement of any preclinical, clinical or commercial milestones and the timing and
amount of payments received relating to those milestones and the extent to which any of our product candidates are approved and successfully
commercialized by us or strategic collaborators and partners. If we or any future partner fails 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
position would be adversely affected.

 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
future.

 General and Administrative Expenses

 General and administrative
expenses relate to compensation and benefits for general and administrative personnel, facility-related expenses, professional fees for
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.

 Results of Operations

 The following table summarizes
our results of operations for the periods indicated, in thousands:

 Years Ended

 Dollar

 2023

 2022

 Change

 Operating expenses

 $
 10,824

 $
 11,462

 $
 (638
)

 Operating loss

 $
 (10,824
)

 $
 (11,462
)

 $

 $
 (10,826
)

 $
 (11,480
)

 $

 Comparison of the Years Ended December 31, 2023 and 2022

 Operating Expenses

 The following table summarizes our total operating
expenses, for the periods indicated, in thousands:

 Years Ended

 Dollar

 2023

 2022

 Change

 Research and development

 $
 6,332

 $
 7,012

 $
 (680
)

 General and administrative

 4,366

 4,450

 (84
)

 Impairment of property and equipment

 –

 Total operating expenses

 $
 10,824

 $
 11,462

 $
 (638
)

 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.

 General and Administrative Expenses

 General and administrative expenses for the year ended
December 31, 2023 decreased 2% as compared to the year ended December 31, 2022. 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.

 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.

 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
future. At December 31, 2023, we had cash of $8,490,000 as compared with $11,781,000 at December 31, 2022.

 During the year ended December 31, 2023, 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
expenses. 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.

 We have limited cash resources, have reported recurring
losses from operations since inception, negative operating cash flows and have not yet received product revenues. These factors raise
substantial doubt regarding our ability to continue as a going concern, and our current cash resources may not provide sufficient capital
to fund operations for at least the next 12 months from the date of the release of the consolidated financial statements included elsewhere
in this Annual Report. Our continuation as a going concern depends upon our ability to raise additional capital through equity offerings,
debt offerings and/or strategic opportunities to fund our operations. There can be no assurance that we will be successful in accomplishing
any of these plans in order to continue as a going concern. The consolidated financial statements included elsewhere in this Annual Report
do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that
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:

 Years Ended

 2023

 2022

 Net cash used in operating activities

 $
 (10,749
)

 $
 (12,129
)

 Net cash used in investing activities

 (5
)

 (121
)

 Net cash provided by (used in) financing activities

 7,413

 (26
)

 Net decrease in cash and restricted cash

 $
 (3,341
)

 $
 (12,276
)

 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.

 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 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).

 Contractual Obligations

 Commitments

 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.

 License Commitments

 We enter into licensing agreements with third parties
that often require milestone and royalty payments based on the progress of the asset through development stages. Milestone payments may
be required, for example, upon progress through clinical trials, upon approval of the product by a regulatory agency and/or upon a percentage
of sales of the product pursuant to such agreements. The expenditures required under these arrangements may be material individually in
relation to any product candidates covered by the intellectual property licensed under any such arrangement, and material in the aggregate
in the unlikely event that milestones for multiple products covered by these arrangements were reached in the same period. During the
years ended December 31, 2023 and 2022, we did not trigger any milestone payments.

 Our contractual license obligations that will require
future cash payments as of December 31, 2023 are $600,000, which result from payments expected in connection with annual license
fees.

 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,
2024. 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
facility. 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.

 For further information regarding
our future cash commitments see Note 7 to our consolidated financial statements included elsewhere in this Annual Report.

 ITEM 7A.

 QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 As a smaller reporting company, we are not required
to provide this information.

 ITEM 8.

 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

 INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

 Page

 Report of Independent Registered Public Accounting Firm (BDO USA, P.C.; Boston, Massachusetts; PCAOB ID# 243)

 Consolidated Balance Sheets as of December 31, 2023 and 2022

 Consolidated Statements of Operations for the Years Ended December 31, 2023 and 2022

 Consolidated Statements of Preferred Stock and Stockholders' Equity for the Years Ended December 31, 2023 and 2022

 Consolidated Statements of Cash Flows for the Years Ended December 31, 2023 and 2022

 Notes to Consolidated Financial Statements

 Report of Independent Registered Public Accounting
Firm

 Shareholders and Board of Directors

 Phio Pharmaceuticals, Corp.

 Marlborough,
Massachusetts

 Opinion
on the Consolidated Financial Statements

 We have audited
the accompanying consolidated balance sheets of Phio Pharmaceuticals, Corp. (the "Company") as of December 31, 2023 and 2022,
the related consolidated statements of operations, preferred stock and stockholders' equity, and cash flows for each of the years
then ended, and the related notes (collectively referred to as the "consolidated financial statements"). In our opinion,
the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31,
2023 and 2022, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles
generally accepted in the United States of America.

 Going Concern Uncertainty

 The accompanying consolidated
financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the consolidated
financial statements, the Company has suffered recurring losses from operations and negative cash flows from operations that raise substantial
doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also described in Note
1. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 Basis for
Opinion

 These consolidated
financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's
consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting
Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with
the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

 We conducted our audits in accordance
with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether
the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to
have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required
to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness
of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

 Our audits included performing procedures to
assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures
that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the
consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made
by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide
a reasonable basis for our opinion.

 Critical Audit Matter

 The critical audit matter communicated below is a matter arising from
the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee
and that: (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially
challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the
consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate
opinions on the critical audit matter or on the accounts or disclosures to which it relates.

 F- 1

 Accounting for Certain Warrants Issued in 2023

 As described in Note 9 to the consolidated
 financial statements, the Company completed each of two registered direct offerings of common stock and concurrent private placement
 offerings of warrants to purchase common stock in April and June 2023 (the "April 2023 Financing" and "June 2023
 Financing", respectively). In December 2023, the Company issued additional warrants to purchase common stock to certain
 holders of existing warrants in connection with an Inducement Letter Agreement (the "December 2023 Financing"). The
 Company assessed the warrants issued in the April 2023 Financing, June 2023 Financing and December 2023 Financing to determine
 whether the warrants should be accounted for as either liabilities or equity instruments depending on the specific terms of the
 agreements. The Company determined that the warrants issued in the April 2023 Financing, June 2023 Financing and December 2023
 Financing were classified within stockholders' equity.

 We identified the assessment of the accounting for certain warrants
to purchase common stock issued in connection with the April 2023 Financing, June 2023 Financing and December 2023 Financing as a critical
audit matter. Determining whether the certain warrants issued should be accounted for as either liabilities or equity instruments requires
significant judgment due to the application of complex technical accounting guidance. Auditing this element required especially challenging
and complex auditor judgement due to the nature and extent of the audit effort required to address the matter, including the need for
specialized knowledge and skill in assessing elements of the agreements.

 The primary procedures we performed to address this critical audit
matter included:

 Reading
 and analyzing agreements related to the certain warrants issued to identify relevant terms
 and conditions that affect whether the certain warrants issued should be accounted for as
 either liabilities or equity instruments.

 Evaluating
 whether the certain warrants issued should be accounted for as either liabilities or equity
 instruments.

 Utilizing
 personnel with specialized knowledge and skill in the relevant technical accounting guidance
 to evaluate the appropriateness of the Company's application of the relevant technical
 accounting guidance in determining whether the certain warrants issued should be accounted
 for as either liabilities or equity instruments.

 /s/ BDO USA, P.C.

 We have served as the Company's auditor since
2011.

 Boston, Massachusetts

 F- 2

 CONSOLIDATED BALANCE SHEETS

 (Amounts in thousands, except share data)

 2023

 2022

 ASSETS

 Current assets:

 Cash

 $
 8,490

 $
 11,781

 Restricted cash

 –

 Prepaid expenses and other current assets

 Total current assets

 9,322

 12,446

 Right of use asset

 Property and equipment, net

 Other assets

 Total assets

 $
 9,364

 $
 12,814

 LIABILITIES, PREFERRED STOCK AND STOCKHOLDERS' EQUITY

 Current liabilities:

 Accounts payable

 $

 $

 Accrued expenses

 1,025

 Lease liability

 Total current liabilities

 1,634

 1,939

 Lease liability, net of current portion

 –

 Total liabilities

 1,634

 1,974

 Commitments and contingencies (Footnote 7)

 –

 –

 Series D Preferred Stock, $ 0.0001 par value; 0 and 1 shares authorized, issued and outstanding at December 31, 2023 and December 31, 2022, respectively

 –

 Stockholders' equity:

 Common stock, $ 0.0001 par value, 100,000,000 shares authorized; 3,747,329 and 1,139,024 shares issued and outstanding at December 31, 2023 and December 31, 2022, respectively

 –

 –

 Additional paid-in capital

 146,936

 139,218

 Accumulated deficit

 ( 139,206
)

 ( 128,380
)

 Total stockholders' equity

 7,730

 10,838

 Total liabilities, preferred stock and stockholders' equity

 $
 9,364

 $
 12,814

 See accompanying notes to consolidated financial
statements.

 F- 3

 CONSOLIDATED STATEMENTS OF OPERATIONS

 (Amounts in thousands, except share and per
share data)

 Year Ended

 2023

 2022

 Operating expenses:

 Research and development

 $
 6,332

 $
 7,012

 General and administrative

 4,366

 4,450

 Loss on impairment of property and equipment

 –

 Total operating expenses

 10,824

 11,462

 Operating loss

 ( 10,824
)

 ( 11,462
)

 Total other expense, net

 ( 2
)

 ( 18
)

 $
 ( 10,826
)

 $
 ( 11,480
)

 Net loss per common share:

 Basic and diluted

 $
 ( 5.20
)

 $
 ( 10.10
)

 Weighted average number of common shares outstanding

 Basic and diluted

 2,083,569

 1,136,566

 See accompanying notes to consolidated financial
statements.

 F- 4

 CONSOLIDATED STATEMENTS OF PREFERRED STOCK AND
STOCKHOLDERS' EQUITY

 (Amounts in thousands, except share data)

 Series D Preferred Stock

 Common Stock

 Additional
 Paid-in

 Accumulated

 Shares

 Amount

 Shares

 Amount

 Capital

 Deficit

 Total

 Balance at December 31, 2021

 –

 $
 –

 1,127,917

 $
 –

 $
 138,832

 $
 ( 116,900
)

 $
 21,932

 Issuance of common stock upon vesting of restricted stock units

 –

 –

 14,043

 –

 –

 –

 –

 Shares withheld for payroll taxes

 –

 –

 ( 2,936
)

 –

 ( 28
)

 –

 ( 28
)

 Issuance of preferred stock

 –

 –

 –

 –

 –

 Stock-based compensation expense

 –

 –

 –

 –

 –

 –

 –

 –

 –

 –

 ( 11,480
)

 ( 11,480
)

 Balance at December 31, 2022

 $

 1,139,024

 $
 –

 $
 139,218

 $
 ( 128,380
)

 $
 10,838

 Cash-in-lieu of fractional shares for reverse stock split

 –

 –

 ( 1,706
)

 –

 ( 11
)

 –

 ( 11
)

 Redemption of preferred stock

 ( 1
)

 ( 2
)

 –

 –

 –

 –

 –

 Issuance of common stock and warrants, net of offering costs

 –

 –

 1,963,511

 –

 7,452

 –

 7,452

 Issuance of common stock upon exercise of warrants

 –

 –

 628,935

 –

 –

 –

 –

 Issuance of common stock upon vesting of restricted stock units

 –

 –

 23,414

 –

 –

 –

 –

 Shares withheld for payroll taxes

 –

 –

 ( 5,849
)

 –

 ( 26
)

 –

 ( 26
)

 Stock-based compensation expense

 –

 –

 –

 –

 –

 –

 –

 –

 –

 –

 ( 10,826
)

 ( 10,826
)

 Balance at December 31, 2023

 –

 $
 –

 3,747,329

 $
 –

 $
 146,936

 $
 ( 139,206
)

 $
 7,730

 See accompanying notes to consolidated financial
statements.

 F- 5

 CONSOLIDATED STATEMENTS OF CASH FLOWS

 (Amounts in thousands)

 Year Ended

 2023

 2022

 Cash flows from operating activities:

 $
 ( 10,826
)

 $
 ( 11,480
)

 Adjustments to reconcile net loss to net cash used in operating activities:

 Depreciation and amortization

 Amortization of right of use asset

 Impairment of property and equipment

 –

 Stock-based compensation

 Changes in operating assets and liabilities:

 Prepaid expenses and other assets

 ( 196
)

 Accounts payable

 ( 122
)

 Accrued expenses

 ( 83
)

 ( 1,635
)

 Lease liability

 ( 135
)

 ( 125
)

 Net cash used in operating activities

 ( 10,749
)

 ( 12,129
)

 Cash flows from investing activities:

 Cash paid for purchase of property and equipment

 ( 5
)

 ( 121
)

 Net cash used in investing activities

 ( 5
)

 ( 121
)

 Cash flows from financing activities:

 Net proceeds from the issuance of common stock and warrants

 7,452

 –

 Net proceeds from the issuance of preferred stock

 –

 Cash-in-lieu of fractional shares for reverse stock split

 ( 11
)

 –

 Redemption of Series D Preferred Stock

 ( 2
)

 –

 Payment of taxes on net share settlements of restricted stock units

 ( 26
)

 ( 28
)

 Net cash provided by (used in) financing activities

 7,413

 ( 26
)

 Net decrease in cash and restricted cash

 ( 3,341
)

 ( 12,276
)

 Cash and restricted cash at the beginning of period

 11,831

 24,107

 Cash and restricted cash at the end of period

 $
 8,490

 $
 11,831

 The following table provides a reconciliation of cash and restricted
cash reported within the consolidated balance sheets to the totals above:

 2023

 2022

 Cash

 $
 8,490

 $
 11,781

 Restricted cash

 –

 Total cash and restricted cash

 $
 8,490

 $
 11,831

 See accompanying notes to consolidated financial
statements.

 F- 6

 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 1. Organization and Significant Accounting Policies

 Nature of Operations

 Phio Pharmaceuticals Corp. (" Phio "
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. The Company is 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.

 Phio was incorporated in the state of Delaware
in 2011 as RXi Pharmaceuticals Corporation. On November 19, 2018, the Company changed its name to Phio Pharmaceuticals Corp., to reflect
its transition from a platform company to one that is fully committed to developing groundbreaking immuno-oncology therapeutics.

 Basis of Presentation

 The accompanying consolidated financial statements
have been prepared in accordance with accounting principles generally accepted in the United States of America (" GAAP ").

 Principles of Consolidation

 The consolidated financial statements include
the accounts of the Company and its wholly-owned subsidiary, MirImmune, LLC. All material intercompany accounts have been eliminated
in consolidation.

 Segments

 The Company operates as one operating
segment and all assets are located in the United States.

 Reverse Stock Split

 Effective January 26, 2023, the Company
completed a 1-for-12
reverse stock split of the Company's outstanding common stock (the " Reverse Stock Split "). All share
and per share amounts in the consolidated financial statements have been retroactively adjusted for all periods presented to give
effect to the Reverse Stock Split, including reclassifying an amount equal to the reduction in par value to additional paid-in
capital. Additionally, the Company made adjustments to the outstanding stock option and unvested restricted stock unit
(" RSU ") balances, and related per share amounts, at December 31, 2022 to reflect final revisions to those
outstanding equity awards as a result of the Reverse Stock Split. The Reverse Stock Split did not reduce the number of authorized
shares of the Company's common stock or preferred stock.

 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, and the valuation allowance
on our deferred tax assets. On an ongoing basis the Company evaluates its estimates and bases its estimates on historical experience and
other relevant assumptions that the Company believes are reasonable under the circumstances. Actual results could differ materially from
these estimates.

 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. There is no guarantee that debt, additional equity or other funding will be available to us on acceptable
terms, or at all. If the Company fails to obtain additional funding when needed, the Company would be forced to scale back or terminate
its operations or seek to merge with or to be acquired by another company.

 F- 7

 The Company has limited cash resources, has reported
recurring losses from operations since inception, negative operating cash flows and has not yet received product revenues. These factors
raise substantial doubt regarding the Company's ability to continue as a going concern, and the Company's current cash resources
may not provide sufficient capital to fund operations for at least the next 12 months from the date of the release of these consolidated
financial statements. The continuation of the Company as a going concern depends upon the Company's ability to raise additional
capital through an equity offering, debt offering and/or strategic opportunity to fund its operations. There can be no assurance that
the Company will be successful in accomplishing these plans in order to continue as a going concern. These consolidated financial statements
do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that
might be necessary should the Company be unable to continue as a going concern.

 Restricted Cash

 Restricted cash consists of certificates of deposit
held by financial institutions as collateral for the Company's corporate credit cards.

 Concentrations of Credit Risk

 Financial instruments that potentially
subject the Company to concentrations of credit risk consist principally of cash. The Company maintains cash balances in several
accounts with a reputable financial institution that management believes is creditworthy, and which at times are in excess of
federally insured limits. These accounts are insured by the Federal Deposit Insurance Corporation for up to $ 250,000
per institution.

 The Company
relies, and expects to continue to rely, on a small number of vendors to perform research activities and clinical trial activities that
continue to progress its product candidates for its development programs. These programs could be adversely affected by a significant
interruption in the related processes of these vendors.

 Property and Equipment

 Property and equipment are stated at cost and depreciated
using the straight-line method based on the estimated useful lives of the related assets. The Company provides for depreciation over the
assets' estimated useful lives as follows:

 Schedule of estimated useful lives

 Computer equipment

 3 years

 Machinery & equipment

 5 years

 Furniture & fixtures

 5 years

 Leasehold improvements

 Lesser of lease term or 5 years

 Impairment of Long-Lived Assets

 The Company reviews long-lived assets for impairment
annually or whenever an event or change in circumstance occurs in which the related carrying amounts may not be recoverable. An impairment
loss would be recognized based on the difference between the carrying value of the asset and its estimated fair value, which would be
determined based on either discounted future cash flows or other appropriate fair value methods.

 Leases

 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 right of
use assets are recorded based on the present value of lease payments to be made over the lease term. The discount rate used to calculate
the present value is the rate implicit in the lease, or if not readily determinable, the Company's incremental borrowing rate. 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. 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, including scheduled
increases, 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.

 F- 8

 Derivative Financial Instruments

 Financial instruments that meet the definition
of a derivative are classified as an asset or liability and measured at fair value on the issuance date and are revalued on each subsequent
balance sheet date. The changes in fair value are recognized as current period income or loss. 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.

 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 collaborations, 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.

 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. 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, the achievement of milestones and other information available to us and are assessed
on a quarterly basis. Actual 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.

 Collaborative Arrangements

 The Company follows 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. The Company also considers the guidance
in the FASB ASC Topic 606, " Revenue from Contracts with Customers," (" Topic 606 ") in determining
the appropriate treatment for activities between the Company and its collaborative partners that are more reflective of a vendor-customer
relationship and therefore, within the scope of Topic 606. Under Topic 808, the Company determines 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 arrangements is determined based on the nature and contractual terms of the arrangement along
with the nature of the operations of the participants. The Company recognizes its share of costs arising from research and development
activities performed by collaborators in the period its 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.

 Patents and Patent Application Costs

 Although the Company believes that its patents
and underlying technology have continuing value, the amount of future benefits to be derived from the patents is uncertain. Patent costs
are, therefore, expensed as general and administrative costs as incurred.

 Stock-based Compensation

 The Company follows the provisions of the FASB
ASC Topic 718, " Compensation — Stock Compensation " (" ASC 718 "), which requires the measurement
and recognition of compensation expense for all stock-based payment awards. The fair value of RSUs is based upon the Company's
closing stock price at the grant date. The Company uses the Black-Scholes option-pricing model to estimate the fair value of stock options
at the grant date. The Black-Scholes valuation model requires the input of valuation assumptions to calculate the value of stock options,
including expected volatility, expected term, risk-free interest rate and expected dividends. Stock-based compensation expense is recognized
on a straight-line basis over the requisite service period, which generally represents the vesting period, and commences at the date
of grant based on the fair value of the award.

 F- 9

 Stock-based compensation expense recognized in
the consolidated financial statements is based on awards that are ultimately expected to vest. Accordingly, we are also required to estimate
forfeitures at the time of grant and to revise those estimates in subsequent periods if actual forfeitures differ from estimates. We use
historical data to estimate pre-vesting award forfeitures and record stock-based compensation expense only for those awards that are expected
to vest. Our forfeiture rate estimates are based on an analysis of our actual forfeiture experience, employee turnover behavior, and other
factors. The impact of any adjustments to our forfeiture rates or to the extent that actual forfeitures differ from our estimates, is
recorded as a cumulative adjustment in the period the estimates are revised.

 Income Taxes

 The Company recognizes assets or liabilities for
the deferred tax consequences of temporary differences between the tax basis of assets or liabilities and their reported amounts in the
consolidated financial statements in accordance with the FASB ASC Topic 740, "Accounting for Income Taxes" (" ASC
740 "). These temporary differences will result in taxable or deductible amounts in future years when the reported amounts
of the assets or liabilities are recovered or settled. Those temporary differences referred to as deferred tax assets and liabilities
are determined at the end of each period using the tax rate expected to be in effect when taxes are actually paid or recovered. Valuation
allowances are established if, based on the weight of available evidence, it is more likely than not that all or a portion of a deferred
tax asset will not be realized. The provision for income taxes, if any, represents the tax payable for the period and the change in deferred
income tax assets and liabilities during the period.

 The recognition and measurement of benefits related
to the Company's tax positions requires significant judgment, as uncertainties often exist with respect to new laws, new interpretations
of existing laws, and rulings by taxing authorities. The Company follows a more-likely-than not threshold for financial statement recognition
and measurement of a tax position taken, or expected to be taken in a tax return. The guidance relates to, amongst other things, classification,
accounting for interest and penalties associated with tax positions, and disclosure requirements. Any interest and penalties accrued related
to uncertain tax positions are recorded as tax expense. Differences between actual results and the Company's assumptions or changes
in the Company's assumptions in future periods are recorded in the period they become known.

 Comprehensive Loss

 The Company's comprehensive loss is equal
to its net loss for all periods presented.

 Net Loss per Share

 Basic net loss per share is computed by dividing
net loss by the weighted average number of common shares outstanding. Diluted net loss per share is computed by dividing the Company's
net loss by the weighted average number of common shares outstanding and the impact of all dilutive potential common shares outstanding,
except where such dilutive potential common shares would be anti-dilutive. Dilutive potential common shares primarily consist of warrants,
RSUs and stock options.

 Recent Accounting Pronouncements

 In November 2023, the FASB issued Accounting Standards
Update (" ASU ") 2023-07, " Segment Reporting (Topic 280) – Improvements to Reporting Segment Disclosures"
 (" ASU 2023-07 "), which requires disclosure of incremental segment information on an annual and interim basis.
In addition, ASU 2023-07 clarifies circumstances in which an entity can disclose multiple segment measures of profit or loss, provides
new segment disclosure requirements for entities with a single reportable segment, and contains other disclosure requirements. The amendments
in ASU 2023-07 are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after
December 15, 2024. Early adoption is permitted. The enhanced disclosures are required to be applied
retrospectively to all prior periods presented in the financial statements. The Company is currently evaluating the impact of
ASU 2023-07 on its consolidated financial statements and disclosures, but does not expect that it will have a material impact on its
consolidated financial statements.

 In December 2023, the FASB issued ASU 2023-09,
" Income Taxes (Topic 740) – Improvements to Income Tax Disclosures" (" ASU 2023-09 "), which
requires disclosure of specific categories in the rate reconciliation table along with additional information for reconciling items that
meet a quantitative threshold, disclosure of disaggregated income taxes paid and modifies other income tax-related disclosures. The amendments
in ASU 2023-09 are effective for annual periods beginning after December 15, 2024 and allows for adoption on a prospective basis, with
a retrospective option. Early adoption is permitted. The Company is currently evaluating the impact of ASU 2023-09, but does not expect
that it will have a material impact on its consolidated financial statements.

 F- 10

 2. Collaboration Agreement

 AgonOx, Inc. (" AgonOx ")

 In February 2021, the Company entered into a
clinical co-development collaboration agreement (the " Clinical Co-Development Agreement ") with AgonOx, a private
company developing a pipeline of novel immunotherapy drugs targeting key regulators of the immune response to cancer. Under the
Clinical Co-Development Agreement, Phio and AgonOx are working to develop a T cell-based therapy using the Company's lead
product candidate, PH-762, and AgonOx's "double positive" tumor infiltrating lymphocytes (" DP
TIL ") technology. Per the terms of the Clinical Co-Development Agreement, the Company agreed to reimburse AgonOx up to
$ 4,000,000 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.

 The Company will recognize its share of costs arising
from research and development activities performed by AgonOx in the Company's consolidated 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.

 The Company recognized approximately $ 1,115,000
and $ 130,000 of expense in connection with these efforts during the years ended December 31, 2023 and 2022, respectively.

 There is approximately $ 2,757,000 of remaining
costs not yet incurred under the Clinical Co-Development Agreement as of December 31, 2023.

 3. Fair
Value of Financial Instruments

 The Company
follows the provisions of the FASB 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
December 31, 2022, the Company categorized its restricted cash of $ 50,000 as Level 2 hierarchy. Restricted cash consisted of certificates
of deposit held by financial institutions as collateral for the Company's corporate credit cards. 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.

 The carrying amounts of cash,
accounts payable and accrued expenses of the Company approximate their fair values due to their short-term nature.

 F- 11

 4. Property and Equipment

 The following table summarizes the Company's
major classes of property and equipment, in thousands:

 Schedule of property and equipment

 2023

 2022

 Computer equipment

 $

 $

 Machinery & equipment

 1,077

 Furniture & fixtures

 Leasehold improvements

 Total gross fixed assets

 1,142

 1,358

 Less: accumulated depreciation and amortization

 ( 1,136
)

 ( 1,175
)

 Property and equipment, net

 $

 $

 Depreciation and amortization expense for the years
ended December 31, 2023 and 2022 was $ 56,000 and $ 71,000, respectively.

 In November 2023, the Company decided not to
renew the lease for its corporate headquarters and primary research facility in Marlborough, Massachusetts. Beginning in April of
2024, we expect to continue operations as a remote business with a small laboratory facility. Based on this evaluation, the Company
determined that long-lived assets with a carrying amount of $ 126,000
were no longer recoverable and an impairment charge of $ 126,000
was recorded to write those assets down to their fair value. The Company did no t
record any impairment charges at December 31, 2022.

 5. Accrued Expenses

 Accrued expenses consist of the following, in thousands:

 Schedule of accrued expenses

 2023

 2022

 Compensation and benefits

 $

 $

 Professional fees

 Research and development costs

 Other

 Total accrued expenses

 $

 $
 1,025

 6. 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.

 F- 12

 The lease for the Company's corporate headquarters
represents all of its significant lease obligations. The amounts reported in the consolidated balance sheets for the operating lease 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 amounts recorded in balance sheet

 2023

 2022

 Assets

 Right of use asset

 $

 $

 Liabilities

 Lease liability, current

 Lease liability, non-current

 –

 Total lease liability

 $

 $

 Lease Term and Discount Rate

 Weighted average remaining lease term

 0.25

 1.25

 Weighted average discount rate

 4.70 %

 4.70 %

 Operating lease costs included in operating expense
were $ 132,000 for the years ended December 31, 2023 and 2022, respectively.

 Cash paid for the amounts included in the measurement
of the operating lease liability on the Company's consolidated balance sheets and included within changes in the lease liability
in the operating activities of the Company's consolidated statements of cash flows was $ 139,000 and $ 135,000 for the years ended
December 31, 2023 and 2022, respectively.

 Future lease payments for our non-cancellable operating
lease and a reconciliation to the carrying amount of the operating lease liability presented in the consolidated balance sheet as of December
31, 2023 is as follows, in thousands:

 Schedule of future minimum lease payments

 2024

 $

 Total lease payments

 Less: Imputed interest

 –

 Total operating lease liability

 $

 7. Commitments and Contingencies

 Commitments

 In February 2021, the
Company entered into the Clinical Co-Development Agreement with AgonOx to develop a T cell-based therapy using the Company's
lead product candidate, PH-762, and AgonOx's DP TIL technology. Per the terms of the Clinical Co-Development Agreement, the
Company agreed to reimburse AgonOx up to $ 4,000,000
 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. Refer to Note 2 for further details on the Clinical Co-Development Agreement with AgonOx.

 Refer to Note 6 for more information about the
Company's obligations under its non-cancellable lease for its corporate headquarters.

 F- 13

 In September 2011, the Company entered into
an agreement with Advanced RNA Technologies, LLC (" Advirna "), pursuant to which Advirna assigned to the Company
its existing patent and technology rights related to the INTASYL technology in exchange for an annual maintenance fee of $ 100,000,
a one-time milestone payment upon the future issuance of the first patent with valid claims covering the assigned patent and
technology rights and the issuance of shares of common stock of the Company equal to 5 %
of the Company's fully-diluted shares outstanding at the time of issuance. The one-time milestone payment and the issuance of
shares of common stock of the Company were completed in 2014 and 2012, respectively. Additionally, the Company is required to pay
low single-digit royalties to Advirna on any licensing revenue received by the Company with respect to future licensing of the
assigned Advirna patent and technology rights. To date, any royalties owed to Advirna under the Advirna agreement have been
minimal.

 The Company's rights under the Advirna agreement
will expire upon the later of: (i) the expiration of the last-to-expire of the "patent rights" (as defined therein) included
in the Advirna agreement; or (ii) the abandonment of the last-to-be abandoned of such patents, unless earlier terminated in accordance
with the provisions of the Advirna agreement. Further, the Company also granted back to Advirna a license under the assigned patent and
technology rights for fields of use outside human therapeutics.

 As part of its business, the Company may enter
into licensing agreements with third parties that require milestone and royalty payments based on the progress of the asset through development
stages. Milestone payments may be required, for example, upon progress through clinical trials, upon approval of the product by a regulatory
agency and/or upon a percentage of sales of the product pursuant to such agreements. The expenditures required under these arrangements
may be material individually in relation to any product candidates covered by the intellectual property licensed under any such arrangement,
and material in the aggregate in the unlikely event that milestones for multiple products covered by these arrangements were reached in
the same period. Due to the contingent nature of these payments, they are not included in the table of contractual obligations shown below.

 During the years ended December 31, 2023 and 2022,
the Company did no t trigger any milestone payments.

 The Company's contractual license obligations
that will require future cash payments as of December 31, 2023, which result from payments expected in connection with annual license
fees, are as follows, in thousands:

 Schedule of future cash payments for contractual license obligations

 Year Ending December 31,

 2024

 $

 2025

 2026

 2027

 2028

 Thereafter

 Total

 $

 The Company applies the disclosure provisions of
the FASB ASC Topic 460, " Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees
of Indebtedness of Others " (" ASC 460 "), to its agreements that contain guarantee or indemnification
clauses. The Company provides: (i) indemnifications of varying scope and size to certain investors and other parties for certain
losses suffered or incurred by the indemnified party in connection with various types of third-party claims; and (ii) indemnifications
of varying scope and size to officers and directors against third-party claims arising from the services they provide to us. These indemnifications
give rise only to the disclosure provisions of ASC 460. To date, the Company has not incurred costs as a result of these obligations and
does not expect to incur material costs in the future. Accordingly, the Company has not accrued any liabilities in its consolidated financial
statements related to these indemnifications.

 F- 14

 Litigation

 From time to time, the Company may become a party
to various legal proceedings and complaints arising in the ordinary course of business. To the Company's knowledge, it is not currently
a party to any actual or threatened material legal proceedings. Accordingly, there were no contingent liabilities recorded as of the year
ended December 31, 2023.

 8. Preferred Stock

 The Company has authorized up to 10,000,000 shares
of preferred stock, $ 0.0001 par value per share, for issuance. The Company's Board of Directors (the " Board ")
is authorized under the Company's Amended and Restated Certificate of Incorporation (as may be amended and/or restated from time to
time, the " Amended Certificate "), to designate the authorized preferred stock into one or more series and to fix and
determine such rights, preferences, privileges and restrictions of any series of preferred stock, including voting rights, dividend rights,
conversion rights, redemption privileges and liquidation preferences, as shall be determined by the Board upon its issuance.

 In November 2022, the Company sold one
share of Series D Preferred Stock, par value $ 0.0001
per share (the " Series D Preferred Stock ") to Robert Bitterman, then its interim Executive Chairman and current
Chief Executive Officer, for $ 1,750.
The Series D Preferred Stock was not convertible into, or exchangeable for, shares of any other class or series of stock or other
securities of the Company; had no rights with respect to any distribution of assets of the Company, including upon a liquidation,
bankruptcy, reorganization, merger, acquisition, sale, dissolution or winding up of the Company, whether voluntarily or
involuntarily; and was not entitled to receive dividends of any kind.

 The Series D Preferred Stock was entitled to 17,500,000
votes per share exclusively with respect to any proposal to amend the Company's Amended Certificate to effect a reverse stock split
of the Company's common stock. The terms provided that it would be voted, without action by the holder, on any such proposal in
the same proportion as shares of the Company's common stock were voted. The Series D Preferred Stock otherwise had no voting rights
except as otherwise required by the General Corporation Law of the State of Delaware.

 Under its terms, the outstanding share of Series
D Preferred Stock was to be redeemed in whole, but not in part, at any time: (i) if such redemption was approved by the Board in its sole
discretion or (ii) automatically and effective upon the approval by the Company's stockholders of an amendment to the Amended Certificate
to effect a reverse stock split of the Company's common stock. The Series D Preferred Stock was redeemed in whole on January 4,
2023, upon the approval by the Company's stockholders of the Reverse Stock Split. Upon such redemption, the holder of the Series
D Preferred Stock received consideration of $ 1,750 in cash.

 At December 31, 2023, there were no shares of preferred
stock issued or outstanding.

 9. Stockholders' Equity

 April
2023 Financing — In April 2023, the Company completed a registered direct offering and a concurrent private placement of
a total of: 353,983 registered shares of the Company's common stock at a purchase price per share of $ 5.65, unregistered
five and one-half year term Series A warrants to purchase up to 353,983 shares of common stock at an exercise price of $ 5.40 per
share and unregistered eighteen month term Series B warrants to purchase up to 353,983 shares of common stock at an exercise
price of $ 5.40 per share (collectively, the " April 2023 Financing "). In addition, the Company issued unregistered
warrants to the placement agent, H.C. Wainwright & Co., LLC (" HCW "), in the April 2023 Financing to purchase a
total of 26,549 shares of common stock at an exercise price of $ 7.0625 per share. Net proceeds to the Company from the
April 2023 Financing were $ 1,538,000 after deducting placement agent fees and offering expenses.

 F- 15

 In
connection with the April 2023 Financing, the Company entered into warrant amendment agreements (the " Warrant Amendment
Agreements ") with the participating investors to amend the exercise price of certain existing warrants to purchase up to
an aggregate of 191,619 shares
of common stock that were previously issued in April 2018 through January 2021, such that each of the amended warrants have an
exercise price of $ 5.40 per
share. The Company received $ 24,000
as consideration in connection with the Warrant Amendment Agreements. The Company assessed the amendments to the exercise price of
the warrants under the FASB ASC Topic 815, " Derivatives and Hedging " (" ASC 815 ") and
determined that the amendment to the exercise price was completed in connection with and contingent on the close of the April 2023
Financing. The increase in fair value of $ 293,000
related to the Warrant Amendment Agreements was recognized as an equity issuance cost and recorded in additional paid in capital per
ASC 815.

 June
2023 Financing — In June 2023, the Company completed a registered direct offering and a concurrent private placement
of a total of: 233,646 registered
shares and 72,000 unregistered
shares of the Company's common stock each at a purchase price per share of $ 4.28,
unregistered pre-funded warrants to purchase up to an aggregate of 628,935 shares
of common stock at a purchase price per share of $ 4.279
and with an exercise price of $ 0.001
per share, unregistered five and one-half year term Series A warrants to purchase up to an aggregate of 934,581
shares of common stock at an exercise price of $ 4.03 per
share and unregistered eighteen month term Series B warrants to purchase up to an aggregate of 934,581
shares of common stock at an exercise price of $ 4.03 per
share (collectively, the " June 2023 Financing "). In addition, the Company issued unregistered warrants to the
placement agent, HCW, in the June 2023 Financing to purchase a total of 70,094
shares of common stock at an exercise price of $ 5.35 per
share. Net proceeds to the Company from the June 2023 Financing were $ 3,510,000 after
deducting placement agent fees and offering expenses.

 December
2023 Financing – In December 2023, the Company entered into an inducement letter agreement (the " Inducement Letter
Agreement ") with certain holders of the Company's existing warrants to purchase up to an aggregate of 2,130,252 shares
of the Company's common stock. The existing warrants were originally issued on dates between October 2018 and June 2023 with an
exercise price of $ 5.40 or $ 4.03 per share. Pursuant to the Inducement Letter Agreement, these warrants were exercised for cash at a reduced
exercise price of $ 1.33 per share in consideration of the Company's agreement to issue new five and one-half year term Series A
warrants to purchase up to 2,270,320 shares of common stock at an exercise price of $ 1.08 per share and new eighteen month term Series
B warrants to purchase up to 1,990,184 shares of common stock at an exercise price of $ 1.08 per share (collectively, the " December
2023 Financing "). In addition, the Company issued warrants to the placement agent, HCW, in the December 2023 Financing to purchase
a total of 159,769 shares of common stock at an exercise price of $ 1.66 per share.

 Pursuant to the terms of the Inducement Letter
Agreement, in the event that the exercise of the existing warrants in the December 2023 Financing would have otherwise caused a holder
to exceed the beneficial ownership limitations set forth in the existing warrant, the Company issued the number of shares that would
not cause a holder to exceed such beneficial ownership limitation and agreed to hold such balance of shares of common stock in abeyance.
Accordingly, at December 31, 2023, an aggregate of 826,370
 shares of common stock were held in abeyance (the " Abeyance Shares ") with such Abeyance Shares evidenced through
the holder's existing warrants and which are deemed to be prepaid. The Abeyance Shares will be held until notice is received by
the holder that the balance of the shares of common stock may be issued in compliance with such beneficial ownership limitations and
may be exercised pursuant to a notice of exercise from the holder. Until such time, the Abeyance Shares are evidenced through the holder's
existing warrants and have been included in the Company's table of outstanding warrants below.

 Net
proceeds to the Company from the December 2023 financing were $ 2,404,000 after deducting placement agent fees and offering expenses. The
Company assessed the amendments to the exercise price of the warrants under the ASC 815 and determined that the amendment to the exercise
price was completed in connection with and contingent on the close of the December 2023 Financing. The increase in fair value of $ 412,000
related to the modification of the terms of the warrants to induce exercise was recognized as an equity issuance cost and recorded in
additional paid in capital per ASC 815.

 Warrants

 The Company first assessed the warrants in the
April 2023 Financing, June 2023 Financing and December 2023 Financing under the FASB ASC Topic 480, " Distinguishing Liabilities
from Equity " (" ASC 480 ") to determine whether they were within the scope of ASC 480. As there were no instances
outside of the Company's control that could require cash settlement, the Company's warrants issued in the April 2023 Financing,
June 2023 Financing and December 2023 Financing were determined to be outside the scope of ASC 480.

 F- 16

 The Company then applied and followed the applicable
accounting guidance in ASC 815. Financial instruments are accounted for as either derivative liabilities or equity instruments depending
on the specific terms of the agreement. The warrants issued in the April 2023 Financing, June 2023 Financing and December 2023 Financing
did 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 warrants issued in the April 2023 Financing, June 2023 Financing and December 2023 Financing
were classified within stockholders' equity.

 In addition to the December 2023 Financing, the
Company issued 628,935 shares of common stock related to exercises from the pre-funded warrants issued in the June 2023 Financing for
proceeds of $ 630. There were no warrants exercised during the year ended December 31, 2022.

 The following table summarizes the Company's
outstanding warrants, all of which are classified as equity instruments, at December 31, 2023:

 Schedule of outstanding warrants

 Number
 of Shares

 Weighted-
 Average
 Exercise Price
 Per Share

 Outstanding at December 31, 2022

 545,401

 $
 54.53

 Issued

 7,722,979

 2.17

 Exercised

 ( 1,932,817
)

 0.90

 Expired

 ( 4,275
)

 624.62

 Outstanding at December 31, 2023

 6,331,288

 $
 3.68

 10. Stock-based Compensation

 Stock Plans

 The Company's approved equity plans include
the Phio Pharmaceuticals Corp. 2020 Long Term Incentive Plan (the " 2020 Plan ") and the Phio Pharmaceuticals Corp. 2012
Long Term Incentive Plan (the " 2012 Plan "). These plans are administered by our Board and provide for the grant of
incentive stock options, non-statutory stock options, stock appreciation rights, restricted stock awards, RSU awards, performance stock
awards, and performance cash awards. Upon adoption of the 2020 Plan, shares that remained available for grant under the 2012 Plan and
shares that were subject to outstanding awards under the 2012 Plan were included in the authorized shares available for grant under the
2020 Plan. Further, upon adoption of the 2020 Plan, the Company no longer grants new equity awards under the 2012 Plan. In July 2023,
the Company's stockholders approved an amendment to the 2020 Plan to increase the number of shares authorized for issuance thereunder
to 231,140 shares of common stock.

 As of December 31, 2023, there were 10,084
shares subject to outstanding stock options, 49,683 shares subject to unvested RSUs and 133,574 shares available for future grants.

 Restricted Stock Units

 RSUs are issued under the Company's
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. RSUs granted by the Company to employees generally vest annually over 3
years after the grant date and over 1
year after the grant date for directors of the Board of Directors. Upon vesting, each outstanding RSU will be settled 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 Company does not expect to
repurchase shares to satisfy RSU vests. 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.

 F- 17

 The following table summarizes the activity of
the Company's RSUs for the year ended December 31, 2023:

 Summary of RSU activity

 Number
 of Shares

 Weighted-
 Average
 Grant Date Fair Value
 Per Share

 Unvested units at December 31, 2022

 47,335

 $
 15.03

 Granted

 43,500

 5.24

 ( 23,414
)

 14.99

 Forfeited

 ( 17,738
)

 9.88

 Unvested units at December 31, 2023

 49,683

 $
 8.32

 The weighted-average fair value of RSUs granted
during the years ended December 31, 2023 and 2022 was $ 5.24 and $ 10.08, respectively.

 Stock-based compensation expense related to RSUs
was $ 298,000 and $ 401,000 for the years ended December 31, 2023 and 2022, respectively.

 The aggregate fair value of awards that vested
during the years ended December 31, 2023 and 2022 was $ 105,000 and $ 138,000, which represents the market value of the Company's
common stock on the date that the RSUs vested.

 As of December 31, 2023, the compensation
expense for all unvested RSUs in the amount of approximately $ 212,000 will be recognized in the Company's results of operations
over a weighted average period of 1.30 years.

 Stock Options

 Stock options are available for issuance 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 service requirements. Stock options granted by the Company to employees generally vest annually over 4
years after the grant date and generally vest over 1 year after the grant date for members of
the Board of Directors and expire within ten years of grant. 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 year ended December 31, 2022. For valuing options granted during the year ended December 31, 2023, the following assumptions were
used:

 Schedule of assumptions

 2023

 Risk-free interest rate

 4.72 %

 Expected volatility

 113.74 %

 Expected lives (in years)

 5.25

 Expected dividend yield

 0 %

 The weighted average grant date fair value of options
granted during the year ended December 31, 2023 was $ 1.14 per share.

 F- 18

 The following table summarizes the Company's
stock option activity for the year ended December 31, 2023:

 Summary of stock option activity

 Total Number
 of Shares

 Weighted-
 Average
 Exercise
 Price
 Per Share

 Weighted-
 Average
 Remaining
 Contractual
 Term

 Aggregate
 Intrinsic
 Value

 Balance at December 31, 2022

 $
 35,231.40

 Granted

 10,000

 1.37

 Exercised

 –

 –

 Forfeited

 –

 –

 Expired

 ( 93
)

 52,577.53

 Balance at December 31, 2023

 10,084

 $
 134.86

 9.74 years

 $
 –

 Exercisable at December 31, 2023

 $
 16,026.76

 2.78 years

 $
 –

 Stock-based compensation expense related to stock
options for the years ended December 31, 2023 and 2022 was $ 5,000 and $ 13,000, respectively.

 As of December 31, 2023, the compensation expense
for all unvested stock options in the amount of $ 6,000 will be recognized in the Company's results of operations over a weighted
average period of 0.25 years.

 There is no income tax benefit as the Company is
currently operating at a loss and an actual income tax benefit may not be realized.

 Employee Stock Purchase Plan

 The Company has 684 shares authorized for issuance under the 2013 Employee Stock Purchase
Plan (" ESPP "). The ESPP allows employees to contribute a percentage of their cash earnings, subject to certain maximum
amounts, to be used to purchase shares of the Company's common stock on each of two semi-annual purchase dates at a purchase price
equal to 90% of the market value per share on either (a) the date of grant of a purchase right under the ESPP or (b) the date on which
such purchase right is deemed exercised, whichever is lower. As of December 31, 2023, 661 shares were reserved for future issuance under
the ESPP. There was no activity under the ESPP for the years ended December 31, 2023 and 2022.

 Compensation Expense Related to Equity Awards

 The following table sets forth total stock-based
compensation expense for the years ended December 31, 2023 and 2022, in thousands:

 Schedule of stock-based compensation expense

 2023

 2022

 Research and development

 $

 $

 General and administrative

 Total stock-based compensation

 $

 $

 11. Income Taxes

 The provision for income taxes for the years ended
December 31, 2023 and 2022 are as follows, in thousands:

 Schedule of provision for income taxes

 Years Ended December 31,

 2023

 2022

 Current

 Federal

 $
 –

 $
 –

 State

 –

 –

 Total current

 –

 –

 Deferred

 Federal

 ( 1,831
)

 ( 1,733
)

 State

 ( 718
)

 ( 553
)

 Total deferred

 ( 2,549
)

 ( 2,286
)

 Valuation allowance

 2,549

 2,286

 Total provision for income taxes

 $
 –

 $
 –

 F- 19

 The following table presents a reconciliation of
the U.S. statutory tax rate to the Company's actual effective income tax rate:

 Schedule of effective income tax reconciliation

 Years Ended December 31,

 2023

 2022

 Federal statutory rate

 21.0 %

 21.0 %

 State income taxes, net of federal benefit

 5.9

 7.4

 Non-deductible expenses

 ( 0.5)

 ( 0.8)

 Income tax credits

 2.1

 3.2

 Valuation allowance

 ( 28.5)

 ( 30.8)

 Effective tax rate

 0.0 %

 0.0 %

 The Company recognizes deferred tax assets and
liabilities to reflect the tax effects of temporary differences between the tax basis of assets or liabilities and their reported amounts
in the consolidated financial statements in accordance with ASC 740. These temporary differences will result in taxable or deductible
amounts in future years when the reported amounts of the assets or liabilities are recovered or settled.

 ASC 740 requires that a valuation allowance be
established when management determines that it is more likely than not that all or a portion of a deferred asset will not be realized.
The Company evaluates the realizability of its net deferred income tax assets and valuation allowances as necessary, at least on an annual
basis. During this evaluation, the Company reviews its forecasts of income in conjunction with other positive and negative evidence surrounding
the realizability of its deferred income tax assets to determine if a valuation allowance is required. As a result of this evaluation,
the Company has recorded a full valuation allowance against its deferred tax assets as the Company believes it is more likely than not
that the benefit of all of its deferred tax assets will not be realized.

 The significant components of the Company's
deferred tax assets and liabilities are as follows, in thousands:

 Schedule of deferred tax assets and liabilities

 Years Ending December 31,

 2023

 2022

 Deferred tax assets:

 Net operating loss carryforwards

 $

 $
 11,808

 Tax credit carryforwards

 1,227

 Stock-based compensation

 Capitalized research and development expenses

 1,384

 1,662

 License fees

 1,680

 Lease liability

 Other timing differences

 Deferred tax assets

 2,558

 16,978

 Deferred tax liabilities:

 Right of use asset

 ( 9
)

 ( 43
)

 Deferred tax liability

 ( 9
)

 ( 43
)

 Valuation allowance

 ( 2,549
)

 ( 16,935
)

 Net deferred tax asset

 $
 –

 $
 –

 Ownership changes may limit the amount of net operating
loss (" NOL ") carryforwards or tax credit carryforwards that can be utilized to offset future taxable income or tax
liability. Pursuant to Sections 382 and 383 of the Internal Revenue Code of 1986, as amended (the " Code "), NOL
and tax credit carryforwards may be subject to annual limitations in the event a cumulative change in ownership of more than 50% occurs
within a three-year period. Any limitation may result in expiration of a portion of the NOL carryforwards or tax credit carryforwards
before utilization.

 F- 20

 During 2023, the Company completed an assessment
of the available NOL and tax credit carryforwards under Sections 382 and 383 of the Code since the last assessment completed in 2021 and
concluded that the Company underwent an ownership change in 2023. As a result, NOL and tax credit carryforwards attributable to the pre-ownership
change are subject to substantial annual limitations under Sections 382 and 383 of the Code. The Company adjusted its NOL and tax credit
carryforwards to address the impact of the ownership change. For the year ended December 31, 2023, federal and state NOLs were reduced
by $ 52,400,000 and $ 25,900,000, respectively, and federal and state research and development tax credit carryforwards were reduced by
$ 918,000 and $ 517,000, respectively, as a result of the ownership change in 2023. The Company may experience ownership changes in the
future as a result of subsequent shifts in stock ownership, some of which may be outside of the Company's control.

 At December 31, 2023, the Company had federal
and state NOL carryforwards of approximately $ 2,900,000 and
$ 2,475,000,
respectively, to reduce future taxable income. The utilization of the federal carryforwards as an available offset to future taxable
income is subject to limitations under federal income tax laws. Under current federal income tax law, federal NOLs generated in tax years
beginning after 2017 may be carried forward indefinitely, but are limited to offset up to 80% of future taxable income. As of December
31, 2023, all of our federal NOL carryforwards will carryforward indefinitely. The Company's available state NOL carryforwards
will begin to expire in 2044,
unless previously utilized.

 At December 31, 2023, the Company also had federal
and state research and development credits of approximately $ 227,000
 and $ 87,000,
respectively. The federal tax credit carryforwards will begin to expire in 2044
and the state tax credit carryforwards will begin to expire in 2039.

 The Company has not recorded any uncertain tax
positions as of December 31, 2023 or 2022. The Company does no t believe there will be any material changes in its unrecognized tax
positions over the next 12 months.

 The Company has no t incurred any interest or penalties.
In the event that the Company is assessed interest or penalties at some point in the future, they will be classified in the consolidated
financial statements as general and administrative expenses.

 The Company files income tax returns in the United
States and in multiple state jurisdictions. The Company is subject to tax examinations for federal and state purposes for tax years 2015
through 2023.

 12. Net Loss per Share

 Basic net loss per share is computed by dividing
net loss by the weighted average number of common shares outstanding. Diluted net loss per share is computed by dividing the Company's
net loss by the weighted average number of common shares outstanding and the impact of the dilutive effect of potential common stock equivalents,
except when the inclusion of such potential common stock equivalents would be anti-dilutive. Dilutive potential common stock equivalents
primarily consist of stock options, RSUs and warrants. Therefore, basic and diluted net loss per share applicable to common stockholders
were the same for all periods presented because the impact of these items is generally anti-dilutive during periods of net loss.

 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 anti dilutive stock

 2023

 2022

 Stock options

 10,084

 Unvested restricted stock units

 49,683

 47,335

 Warrants 1

 5,504,918

 545,401

 Total

 5,564,685

 592,913

 The weighted average number of common shares outstanding as of December 31, 2023 includes the Abeyance Shares from the December 2023
Financing, the exercise of which was prepaid and requires no further consideration for the delivery of the shares of common stock. Therefore,
these Abeyance Shares are not included in the table above.

 F- 21

 13. Subsequent Events

 In connection with the Inducement Letter Agreement,
shares were held in abeyance in the event that the exercise of the existing warrants in the December 2023 Financing would have otherwise
caused a holder to exceed the beneficial ownership limitations set forth in the existing warrant. These Abeyance Shares will be held until
notice is received by the holder that the balance, or portion thereof, may be issued in compliance with the beneficial ownership limitations.
Subsequent to the balance sheet date, 826,370 Abeyance Shares were released and issued.

 F- 22

 ITEM 9.

 CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

 None.

 ITEM 9A.

 CONTROLS AND PROCEDURES

 Evaluation of Disclosure Controls and Procedures

 Our management, with the participation of our Principal
Executive Officer (who is also acting as our Principal Financial Officer), evaluated the effectiveness of disclosure controls and procedures
(as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the " Exchange Act "))
as of the end of the period covered by this report to ensure that information that we are required to disclose in reports that we file
or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and
Exchange Commission's rules and forms.

 Our disclosure controls and procedures are designed
to provide reasonable assurance of achieving their objectives. We believe that a control system, no matter how well designed and operated,
cannot provide absolute assurance that the objectives of the control system are met, and no evaluation of controls can provide absolute
assurance that all control issues and instances of fraud, if any, within a company have been detected. Based on the evaluation of our
disclosure controls and procedures as of the end of the period covered by this report, management, with the participation of our Principal
Executive Officer (who is also acting as our Principal Financial Officer), concluded that our disclosure controls and procedures were
effective at the reasonable assurance level as of such date.

 Management's Annual Report on Internal Control Over Financial
Reporting

 Our management is responsible for establishing
and maintaining adequate internal control over financial reporting. A company's internal control over financial reporting is a process
designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements
for external purposes in accordance with generally accepted accounting principles.

 There are inherent limitations in the effectiveness
of any system of internal control, including the possibility of human error and the circumvention or overriding of controls. Accordingly,
even effective internal controls can provide only reasonable assurances with respect to financial statement preparation. Further, because
of changes in conditions, the effectiveness of internal control may vary over time.

 Our management assessed the effectiveness of our
internal control over financial reporting as of December 31, 2023. In making this assessment, management used the criteria set forth
in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013
framework). Based on this assessment, management, with the participation of our Principal Executive Officer (who is also acting as our
Principal Financial Officer), concluded that, as of December 31, 2023, our internal control over financial reporting was effective.

 Attestation Report of the Registered Public Accounting Firm

 This Annual Report on Form 10-K provides only management's
report. As a smaller reporting company, we are not required to provide an attestation report by our independent registered public accounting
firm regarding our internal control over financial reporting.

 Changes in Internal Control Over Financial Reporting

 There have been no changes in our internal control
over financial reporting that occurred during the quarter ended December 31, 2023 that have materially affected, or are reasonably
likely to materially affect, our internal control over financial reporting.

 ITEM 9B.

 OTHER INFORMATION

 During the three months ended December 31,
2023, no director or officer of the Company adopted
or terminated
a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement, as each term is defined in Item 408(a) of Regulation
S-K.

 ITEM 9C.

 DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

 Not applicable.

 ITEM 10.

 DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

 Board of Directors

 The size of the Board of Directors (the " Board ")
is currently set at five directors. Biographical and other information regarding our directors, whose terms expire at the 2024 Annual
Meeting of Stockholders, is set forth below.

 Director Name

 and Year First Became a Director

 Age

 Position(s) with

the Company

 Robert J. Bitterman (2012)

 President, Chief Executive Officer and Chairman of the Board of Directors

 Patricia A. Bradford (2022)

 Robert L. Ferrara (2019)

 Jonathan E. Freeman, Ph. D. (2017)

 Curtis A. Lockshin, Ph. D. (2013)

 Robert J. Bitterman has served as a member
and the Chair of the Board since 2012 and as our President and Chief Executive Officer since February 2023. Mr. Bitterman served as the
Interim Executive Chair of the Company from September 2022 to February 2023 until his appointment as President and Chief Executive Officer.
Mr. Bitterman served as the President and Chief Executive Officer of Cutanea Life Sciences, Inc., a private company he founded in 2005
that focused on developing innovative technologies to treat diseases and disorders of the skin and subcutaneous tissue, until its acquisition
by Biofrontera, Inc., USA in March 2019. Since leaving Cutanea, Mr. Bitterman was retired until commencing the Interim Executive Chair
role with the Company in September 2022. Prior to his role at Cutanea Life Sciences, Inc., Mr. Bitterman also held the position of President
and Chief Executive Officer of Isolagen, Inc., President and General Manager of Dermik Laboratories and various positions of increasing
responsibility in financial and commercial capacities within Aventis S.A. Mr. Bitterman holds an A.B. degree in Economics from The College
of the Holy Cross and a Master of Business Administration degree from Boston University. He also holds a Doctor of Humane Letters (Honoris
Causa) from the New York College of Podiatric Medicine.

 Patricia A. Bradford has served as a member
of the Board since 2022. Ms. Bradford served as Senior Vice President Global Human Resources at Unisys Corporation, a global information
technology solutions company, where her total service at Unisys spanned from 1982 until her retirement in 2013. In her role at Unisys,
Ms. Bradford strategically led all global human resource programs and initiatives, including talent management, at multiple levels of
the organization. Ms. Bradford's roles at Unisys progressively included all areas of human resources, including an overseas assignment
at the Unisys European headquarters where she provided human resources leadership to the region. Prior to Unisys, Ms. Bradford was employed
by Deloitte, an audit, consulting, tax, and advisory services firm, from 1978 to 1982. Since 2014, Ms. Bradford has maintained a consulting
practice focused on individual coaching for senior executives and high potential employees recommended by management. Ms. Bradford received
a B.S. degree with an emphasis on accounting and statistics from Walsh College and is a Certified Public Accountant.

 Robert L. Ferrara has served as a member
of the Board since 2019 and currently serves as our Lead Independent Director. He most recently served as the Chief Financial Officer
of Cutanea Life Sciences, Inc., a private company focused on developing innovative technologies to treat diseases and disorders of the
skin and subcutaneous tissue, from January 2012 to his retirement in June 2019. Prior to Cutanea, Mr. Ferrara served as the Chief Financial
Officer of Storeroom Solutions Inc., a venture capital financed, technology enhanced, integrated supply chain solutions company, from
2004 to 2011, and NER Data Products, Inc., an IT service management company, from 2000 to 2003, as well as holding other senior level
financial positions in national and international public companies in the greater Philadelphia area. Mr. Ferrara received a B.S. in Accounting
from Lehigh University and is a Certified Public Accountant.

 Jonathan E. Freeman, Ph. D. has served as
a member of the Board since 2017. Dr. Freeman currently serves as the Chief Operating Officer of Anthos Therapeutics Inc., a clinical-stage
biopharmaceutical company developing therapies for cardiovascular patients, a position he has held since July 2021. Anthos Therapeutics
Inc. was launched by Novartis and Blackstone Life Sciences, a private investment firm, where Dr. Freeman has also served as a Senior Advisor
since July 2018. From 2017 to June 2018, Dr. Freeman held the position of Chief Business Officer of Vedanta Biosciences, a clinical-stage
company developing therapies for immune-mediated diseases. Prior to his role with Vedanta Biosciences, Dr. Freeman was the Senior Vice
President of Strategy and Portfolio Management and Head of Business Development and Licensing at Merck KGaA, a leading science and technology
company, from 2008 to 2016. Dr. Freeman received a Ph. D. in Molecular Pharmacology and Drug Metabolism from the Imperial Cancer Research
Fund (now CRUK), an M.A. and First Class Honours in Biochemistry from Cambridge University and a MBA with a finance major from Webster
University, St. Louis.

 Curtis A. Lockshin, Ph. D. has served as
a member of the Board since 2013. Dr. Lockshin currently serves as the Chief Scientific Officer of Xenetic Biosciences, Inc., a biopharmaceutical
company focused on the development of novel oncology therapeutics, a position he has held since January 2017. Prior to this appointment,
Dr. Lockshin served as Xenetic Biosciences, Inc.'s Vice President of Research and Operations from March 2014 to January 2017. From
July 2016 to December 2016, Dr. Lockshin served as Chief Technical Officer of VBI Vaccines, Inc., a company developing vaccines in infectious
disease and immuno-oncology. VBI Vaccines, Inc. merged with SciVac Therapeutics, Inc. and its subsidiary SciVac, Ltd., a commercial-stage
biologics and vaccine company, in July 2016 where Dr. Lockshin had served as its Chief Executive Officer and director since September
2014. Since 2004, Dr. Lockshin has served as a Director of the Ruth K. Broad Biomedical Research Foundation, a Duke University Support
Corporation. Since May 2013, Dr. Lockshin has also served as President and Chief Executive Officer of Guardum Pharmaceuticals, LLC, a
private pharmaceutical company. Dr. Lockshin holds a S.B. degree in Life Sciences and a Ph. D. in Biological Chemistry from the Massachusetts
Institute of Technology.

 Executive Officers

 As of the date of this Annual Report on Form 10-K,
we have only one executive officer, Robert Bitterman, who serves as our President and Chief Executive Officer. Certain biographical information
regarding Mr. Bitterman is set forth above. There are no family relationships among any of our directors or executive officers.

 Audit Committee

 We have a separately-designated standing audit
committee established in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934, as amended (the " Exchange
Act "). The Audit Committee of the Board (the " Audit Committee ") is comprised of Mr. Ferrara (Chairman),
Ms. Bradford and Dr. Freeman. The Board has determined that all members of the Audit Committee satisfy the current independence and experience
requirements of Rule 10A-3 of the Exchange Act and the current Nasdaq independence standards, and Mr. Ferrara is an "audit committee
financial expert," as the Securities and Exchange Commission (the " SEC ") has defined that term in Item 407 of
Regulation S-K.

 Code of Business Conduct and Ethics

 We have adopted
a Code of Business Conduct and Ethics that applies to all employees, officers and directors. Our Code of Business Conduct and Ethics,
as well as other corporate governance materials, is located on our website at www.phiopharma.com.
Waivers of our Code of Business Conduct and Ethics may only be granted by the Board. We intend to disclose on our website any amendments
to, or waivers from, the Code of Business Conduct and Ethics that are required to be disclosed pursuant to the disclosure requirements
of Item 5.05 of Form 8-K within four business days following the date of such amendment or waiver.

 ITEM 11.

 EXECUTIVE COMPENSATION

 The following describes the compensation earned
by each of the executive officers identified below in the Summary Compensation Table, who are referred to collectively as our "named
executive officers" or NEO. Our NEO with respect to the fiscal year that ended on December 31, 2023 is Robert J. Bitterman.

 Summary Compensation Table

 Name and principal position

 Year

 Salary

($)

 Stock

awards

($) (1)

 Non-equity

incentive plan

compensation

($) (2)

 All other

compensation

($) (3)

 Total

($)

 Robert J. Bitterman (4)

 2023

 380,000

 57,640

 –

 437,892

 President and Chief Executive Officer

 2022

 77,885

 31,464

 –

 109,380

 (1)

 The amounts shown reflect the grant date fair value of restricted stock units (" RSUs ") computed in accordance with the Financial Accounting Standards Board (the " FASB ") Accounting Standards Codification (" ASC ") Topic 718, " Compensation — Stock Compensation " for the indicated year. See Note 10 to our consolidated financial statements included elsewhere in this Annual Report for further information.

 (2)

 Reflects the annual cash bonus earned for performance for each respective year under the Company's Incentive Bonus Program. Mr. Bitterman did not receive an annual cash bonus in 2023 or 2022.

 (3)

 Represents amounts for the dollar value of life insurance premiums paid.

 (4)

 Mr. Bitterman has served as a member of the Company's Board of Directors since 2012 and served as the Company's Interim Executive Chairman from September 2022 to February 2023 and was appointed as our President and Chief Executive Officer in February 2023. Upon his appointment to Interim Executive Chairman, Mr. Bitterman ceased receiving compensation in connection with his position as a director of the Company, including as Chairman of the Board. The amounts listed in fiscal year 2022 reflect the compensation paid to Mr. Bitterman as a member of our Board, totaling $46,112, and as our Interim Executive Chairman, totaling $63,268. Effective as of October 16, 2023, Mr. Bitterman voluntarily reduced his base salary by $100,000.

 Outstanding Equity Awards at Fiscal Year-End

 The following table shows information regarding outstanding equity
awards as of December 31, 2023 for our NEO:

 Option Awards

 Stock Awards

 Name

 Grant

 Date

 Number of

 Securities

 Underlying

 Unexercised

 Options

 (#)

 Exercisable

 Number of

 Securities

 Underlying

 Unexercised

 Options

 (#)

 Unexercisable

 Option

 Exercise

 Price

 ($)

 Option

Expiration

Date

 Number of

 Shares or

 Units of

 Stock That

 Have Not

 (#)

 Market Value of Shares or

 Units of

 Stock That

 Have Not

 ($)

 Equity

 Incentive

 Plan

 Awards:

 Number of

 Unearned

 Shares or

 Units of

 Stock That

 Have Not

 (#)

 Equity

Incentive

Plan

Awards:

Market Value of

Unearned

Shares or

Units of

Stock That

Have Not

($) (1)

 Robert J.

 Bitterman (2)

 6/2/2014

 –

 188,100.00

 6/2/2024

 –

 –

 –

 –

 6/1/2015

 –

 25,080.00

 6/1/2025

 –

 –

 –

 –

 2/10/2016

 –

 18,876.00

 2/10/2026

 –

 –

 –

 –

 2/1/2017

 –

 4,151.40

 2/1/2027

 –

 –

 –

 –

 2/20/2023

 –

 –

 –

 –

 11,000

 8,360

 –

 –

 (1)

 Value is based on the closing price of $0.76 of the Company's common stock on December 29, 2023.

 (2)

 The equity awards granted to Mr. Bitterman on June 2, 2014, June 1, 2015, February 10, 2016, and February 1, 2017 vested in one installment on the first anniversary of the grant date. The equity award granted to Mr. Bitterman on February 20, 2023 will vest over two years commencing on the first anniversary of the grant date.

 Base Salary

 When reviewing and approving our executive compensation
arrangements, including the base salaries paid to our executive officers, the Compensation Committee of the Board (the " Compensation
Committee ") considers a number of factors, including, but not limited to: the performance of the executive officer to the Company's
overall performance, the performance of the executive officer against the Company's corporate objectives, the executive officer's
skills, experience and qualifications in such executive officer's role, review of compensation surveys of base salaries paid by
comparable organizations and market compensation data. These factors provide the framework for decisions regarding the base salary compensation
for each executive officer. No single factor is determinative in setting base salary levels, nor was the impact of any factor on the determination
of pay levels quantifiable.

 Incentive Compensation

 Annual Incentive Bonus

 Annual bonuses are based on the achievement of
corporate goals typically comprised of a mix of clinical development, discovery, financial, business development, and investor relations
related performance objectives. The corporate goals are approved by the Board on an annual basis at the start of each year. Annual bonuses
for all employees, including executive officers, take into account the achievement of specified business objectives and individual performance
objectives, with the exception of the Company's President and Chief Executive Officer, whose annual bonus is determined solely by the
achievement of business objectives. The Compensation Committee reviews our achievements against these corporate goals and their assessment
of the goals and recommendations regarding funding is presented to our full Board for approval. The Compensation Committee maintains full
discretion in determining overall performance under the annual bonus and may adjust bonus payouts based on factors it deems relevant.
Our NEO received no annual incentive bonus payments in 2023 or 2022.

 Equity Incentive

 We maintain our Phio Pharmaceuticals Corp. 2020
Long Term Incentive Plan (the " 2020 Plan ") pursuant to which we currently grant RSU awards to eligible participants.
Grants of restricted stock units under this plan to our NEO is disclosed in the Summary Compensation Table and Outstanding Equity Awards
at Fiscal Year-End table above.

 Employment and Change of Control Agreements

 The following provides description of the employment
agreement that is currently in effect for our NEO:

 Robert J. Bitterman

 Mr. Bitterman was appointed President and Chief
Executive Officer and entered into an employment agreement, dated February 20, 2023, pursuant to which he will be entitled to an initial
annual base salary of $440,000 and will be eligible to receive an annual bonus of up to 40% of his annual base salary, based on the achievement
of certain performance goals established annually by the Board. In connection with his appointment, the Company granted Mr. Bitterman
RSUs settleable for 11,000 shares of the Company's common stock under the Company's 2020 Plan. The RSUs will vest in two equal annual
installments, commencing on the first anniversary of the date of grant, subject to Mr. Bitterman's continuous service with the Company
through each such vesting date. Effective as of October 16, 2023, Mr. Bitterman voluntarily reduced his base salary by $100,000.

 If Mr. Bitterman's
employment is terminated by the Company due to death or disability, the Company shall pay to Mr. Bitterman or to his estate, as applicable,
any earned, but unpaid, base salary and any amounts owed to Mr. Bitterman for reimbursement of expenses properly incurred which are reimbursable,
in each case as earned or incurred, as applicable through the date of termination (the " Accrued Benefits "), as well
as pay any accrued but unpaid bonus then due to Mr. Bitterman and all equity awards that have been granted will immediately vest on a
pro-rata basis. If Mr. Bitterman's employment is terminated by the Board for cause or by Mr. Bitterman without good reason, the
Company shall pay to Mr. Bitterman the Accrued Benefits through the date of termination. If Mr. Bitterman's employment is terminated
by Mr. Bitterman for good reason or by the Company other than as a result of death or disability and other than for cause, then the Company
shall pay to Mr. Bitterman the Accrued Benefits through the date of termination, continue to pay Mr. Bitterman his base salary for three
months from the date of separation, pay any accrued but unpaid bonus and if, and only if, such termination occurs within one year of a
change in control all equity awards that have been granted but are not exercisable at the time of such termination shall immediately become
exercisable in full.

 Mr. Bitterman is eligible
to participate in the Company's 2020 Plan and other benefits available to the Company's executive officers.

 Pay versus Performance

 As required by Section 953(a) of the Dodd-Frank
Wall Street Reform and Consumer Protection Act and Item 402(v) of Regulation S-K, we are providing the following information about the
relationship between the SEC-defined Compensation Actually Paid (" CAP ") to our NEO and certain of our financial performance
metrics during the fiscal years listed below. The SEC-defined CAP data set forth in the table below does not necessarily reflect amounts
actually paid, earned or received by our NEO, and the metrics are not those that the Compensation Committee uses when setting executive
compensation.

 The following table sets forth additional compensation
information of our principal executive officer (" PEO ") along with total shareholder return and net income for our 2023
and 2022 fiscal years. The Company did not have any non-PEO NEO for fiscal years 2023 and 2022.

 Year

 Summary Compensation Table Total for PEO

 (1)

 CAP to PEO

 (2)

 Value of Initial Fixed $100 Investment Based On
 Total Shareholder Return

 (3)

 Net Income (Loss)

 (Thousands)

 2023

 $ 437,892

 $ 379,393

 $6.33

 $(10,826)

 2022

 $109,380

 $ 94,715

 $13.83

 $(11,480)

 (1)

 Mr. Bitterman has served as a member of the Company's Board since 2012, served as the Company's Interim Executive Chair from September 2022 to February 2023 and was appointed as our President and Chief Executive Officer in February 2023.

 (2)

 CAP reflects the following exclusions and inclusions for the PEO in the table above:

 Year

 Summary Compensation Table Total

 Minus: Grant Date Fair Value of Stock Awards and Option Awards from Summary Compensation Table

 Plus: Year-end Fair Value of Unvested Equity Awards Granted During Year

 Plus: Year-Over-Year Difference of Year-End Fair
 Value of

 Unvested

 Awards

 Granted in

 Prior Years

 Plus: Fair Value at Vest Date for Awards Granted and Vested During Year

 Plus: Year-Over-Year Difference of Year-End Fair Value of Prior Years' Awards Vested During Year

 Minus: Fair Value at Prior Year-end for Prior Years' Awards that Fail to Meet Vesting Conditions During Year

 Compensation Actually Paid

 2023

 $437,892

 $(57,640)

 $8,360

 –

 –

 $(9,219)

 –

 $ 379,393

 2022

 $109,380

 $(31,464)

 $18,590

 –

 –

 $(1,791)

 –

 $ 94,715

 (3)

 Total shareholder return as calculated based on a fixed investment of $100 measured from the market close on December 31, 2021 through and including the end of the fiscal year for each year reported in the table.

 Relationship Between Pay and Performance

 The following charts shown below illustrate the
relationship of compensation actually paid to our PEO, as set forth in the table above, as compared to: our (1) total shareholder return
and (2) net income (loss).

 Director Compensation

 Non-Employee Director Compensation Policy

 We compensate our non-employee directors for their
service as a member of our Board. Each non-employee director is entitled to receive an annual cash retainer of $35,000. The chairs of
our Board and Audit Committee are entitled to receive an additional annual cash retainer of $15,000 and the chairs of the Compensation,
Governance and Nominating Committees are entitled to receive an additional cash retainer of $7,500. In addition, the Lead Independent
Director, if any, is entitled to receive an additional annual cash retainer of $12,500. Each non-employee director is also entitled to
receive 1,500 RSUs, which vest in full on the one-year anniversary of the respective date of grant.

 The Compensation Committee and the Board reassess
the appropriate levels of cash and equity compensation for non-employee directors on an annual basis.

 Non-employee directors are also reimbursed for
their travel and reasonable out-of-pocket expenses incurred in connection with attending Board and committee meetings and in attending
continuing education seminars, to the extent that attendance is required by the Board or the committee(s) on which that director serves.

 Non-Employee Director Compensation Table

 The following table shows the compensation to
the Company's non-employee directors in fiscal year 2023. We compensate our non-employee directors for their service as a
member of our Board. Compensation paid to Robert J. Bitterman, the Company's President, Chief Executive Officer and Chairman of the Board,
is set forth above in the Summary Compensation Table due to Mr. Bitterman's status as a NEO of the Company.

 Name

 Fees Earned or
 Paid in Cash ($)

 Stock Awards
 ($) (1)

 Total
 ($)

 Patricia A. Bradford

 50,000

 7,860

 57,860

 Robert L. Ferrara

 62,500

 7,860

 70,360

 Jonathan E. Freeman, Ph. D.

 35,000

 7,860

 42,860

 Curtis A. Lockshin, Ph. D.

 42,500

 7,860

 50,360

 (1)

 The amounts shown reflect the grant date fair value of RSUs computed in accordance with the FASB ASC Topic 718, "Compensation — Stock Compensation".

 As of December 31, 2023, the aggregate number
of shares underlying stock options and RSUs by our non-employee directors is as follows: Patricia A. Bradford — 1,500 RSUs, Robert
L. Ferrara — 1,500 RSUs, Jonathan E. Freeman, Ph. D. — 1 option award and 1,500 RSUs, and Curtis A. Lockshin, Ph. D. —
4 option awards and 1,500 RSUs. Mr. Bitterman's outstanding equity awards are also included in the Outstanding Equity Awards at
Fiscal Year-End table above due to his status a NEO during the fiscal year ended December 31, 2023.

 ITEM 12.

 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

 Security Ownership of Certain Beneficial Owners and Management

 Based on information available to us and filings
with the SEC, the following table sets forth certain information regarding the beneficial ownership (as defined by Rule 13d-3 under the
Exchange Act) of our outstanding common stock for (i) each of our directors, (ii) each of our executive officers, (iii) all of our directors
and executive officers as a group and (iv) persons known to us to beneficially own more than 5% of our outstanding common stock. The following
information is presented as of March 15, 2024 or such other date as may be reflected below.

 Beneficial ownership and percentage ownership are
determined in accordance with the rules of the SEC and include voting or investment power with respect to shares of stock. This information
does not necessarily indicate beneficial ownership for any other purpose. Under these rules, shares of common stock not outstanding but
deemed beneficially owned by virtue of the right of a person to acquire them as of March 15, 2024, or within 60 days of March 15, 2024,
are deemed outstanding for the purpose of computing the percentage ownership of each person, but are not deemed outstanding for the purpose
of computing the percentage ownership of any other person.

 Unless otherwise indicated and subject to applicable
community property laws, to our knowledge, each stockholder named in the following table possesses sole voting and investment power over
their shares of common stock, except for those jointly owned with that person's spouse. Unless otherwise indicated below, the address
of each person listed on the table is c/o Phio Pharmaceuticals Corp., 257 Simarano Drive, Suite 101, Marlborough, MA 01752.

 Shares Beneficially Owned

 Name and Address of Beneficial Owner

 Number (1)

 Percent of

Class (2)

 Greater than 5% Holders

 Intracoastal Capital LLC (3)

 509,622

 9.99%

 Directors and Named Executive Officers:

 Robert J. Bitterman (4)

 13,498

 *

 Patricia A. Bradford

 3,167

 *

 Robert Ferrara

 4,001

 *

 Jonathan E. Freeman, Ph. D. (5)

 3,201

 *

 Curtis A. Lockshin, Ph. D. (6)

 3,204

 *

 All current directors and executive officers as a group (five persons)

 27,071

 *

 __________________

 *

 Indicates less than 1%.

 (1)

 Represents shares of common stock held as of March 15, 2024 plus shares of common stock that may be acquired upon the exercise of options and warrants within 60 days of March 15, 2024.

 (2)

 Based on 4,591,700 shares of common stock that were issued and outstanding
as of March 15, 2024. Shares not outstanding but deemed beneficially owned by virtue of the right of a person to acquire them as of March
15, 2024, or within 60 days of March 15, 2024, are treated as outstanding only when determining the ownership and voting power for each
person (or all directors and executive officers as a group).

 (3)

 Based solely on shares of common stock issuable upon the exercise of warrants
held by Intracoastal Capital LLC (" Intracoastal "), Mitchell P. Kopin (" Mr. Kopin ") and Daniel B.
Asher (" Mr. Asher "). Each of Intracoastal, Mr. Kopin and Mr. Asher may be deemed to have beneficial ownership of 509,622
shares of common stock issuable upon the exercise of certain warrants held by Intracoastal. Certain of the warrants held by Intracoastal
contain a blocker provision under which the holder thereof does not have the right to exercise its warrants to the extent (but only to
the extent) that such exercise would result in beneficial ownership by the holder thereof, together with the holder's affiliates,
and any other persons acting as a group together with the holder or any of the holder's affiliates, of more than 4.99% or 9.99%
of the Company's common stock. Based upon a Schedule 13G/A filed on February 6, 2024, Intracoastal and Messrs. Kopin and Asher would
be deemed to have beneficial ownership of 1,177,723 shares of common stock in the absence of such blocker provisions. The principal business
office of Mr. Kopin and Intracoastal is 245 Palm Trail, Delray Beach, Florida 33483. The principal business office of Mr. Asher is 111
W. Jackson Boulevard, Suite 2000, Chicago, Illinois 60604.

 (4)

 Includes 4 stock options exercisable within 60 days of March 15, 2024.

 (5)

 Includes 1 stock option exercisable within 60 days of March 15, 2024.

 (6)

 Includes 4 stock options exercisable within 60 days of March 15, 2024.

 Equity Compensation Plan Information

 The following table sets forth certain information
as of December 31, 2023 about the securities authorized for issuance under our equity compensation plans, which consist of our 2020 Plan
and our 2013 Employee Stock Purchase Plan. Upon adoption of the 2020 Plan, shares that remained available for grant under our prior Phio
Pharmaceuticals Corp. 2012 Long-Term Incentive Plan (the " 2012 Plan ") and shares that were subject to outstanding awards
under the 2012 Plan were included in the authorized shares available for grant under the 2020 Plan. Further, upon adoption of the 2020
Plan, the Company no longer grants new equity awards under the 2012 Plan.

 Plan Category

 Number of Securities
 to be Issued Upon
 Exercise of
 Outstanding Options,
 Warrants and
 Rights

 Weighted-Average
 Exercise Price of
 Outstanding Options,
 Warrants and Rights

 Number of Securities
 Remaining Available for
 Future Issuance
 Under Equity Compensation
 Plans (Excluding
 Securities Reflected in
 First Column)

 Equity compensation plans approved by security holders (1)

 59,767

 $
 134.86

 133,574

 Equity compensation plans not approved by security holders

 –

 –

 –

 Total

 59,767

 $
 134.86

 133,574

 ___________________

 (1)

 Includes 10,084 outstanding options and 49,683 unvested RSUs under the 2020 Plan.

 ITEM 13.

 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

 The Board, with the assistance of the Audit Committee, reviews and
approves all transactions with directors, officers and holders of more than 5% of our voting securities and their affiliates. Prior to
the Board's consideration of a transaction with such a related party, the material facts as to the related party's relationship
or interest in the transaction must be disclosed to the Board, and the transaction will not be considered approved by the Board unless
a majority of the directors who are not interested in the transaction (if applicable) approve the transaction. Furthermore, when stockholders
are entitled to vote on a transaction with a related party, the material facts of the related party's relationship or interest in
the transaction must be disclosed to the stockholders, who must approve the transaction in good faith.

 During the past two years, there has not been, nor is there currently
proposed, any transaction or series of related transactions to which we were or will be a party in which the amount involved exceeded
or will exceed the lesser of (i) $120,000 and (ii) one percent of the average of Company's total assets at yearend for the last two completed
fiscal years and in which the other parties included or will include any of our directors, executive officers, holders of 5% or more of
our voting securities, or any member of the immediate family of any of the foregoing persons, other than compensation arrangements with
directors and executive officers, which are described where required in Item 11. Executive Compensation of this Annual Report on Form
10-K.

 Indemnification Agreements

 We have entered into indemnification agreements with each of our executive
officers and directors. These agreements provide that, subject to limited exceptions and among other things, we will indemnify each of
our executive officers and directors to the fullest extent permitted by law and advance expenses to each indemnitee in connection with
any proceeding in which a right to indemnification is available.

 Director Independence

 We believe that the Company benefits from having a strong and independent
Board. For a director to be considered independent, the Board must determine that the director does not have any direct or indirect material
relationship with the Company that would affect his or her exercise of independent judgment. On an annual basis, the Board reviews the
independence of all directors under the applicable SEC rules and Nasdaq listing standards. The Board also considers each director's
affiliations with the Company and members of management, as well as significant holdings of Company securities. This review considers
all known relevant facts and circumstances in making an independence determination. Based on this review, the Board has made an affirmative
determination that all directors are independent, other than our President and Chief Executive Officer and Chairman of the Board, Mr.
Bitterman.

 In addition, Nasdaq listing standards require that, subject to specified
exceptions, each member of our Audit, Compensation, Governance and Nominating Committees of the Board be independent and that members
of our Audit Committee also satisfy independence criteria set forth in Rule 10A-3 under the Exchange Act. The Board has determined that
all members of the Audit Committee, Compensation Committee, Governance Committee, and Nominating Committee are independent under the applicable
Nasdaq listing standards and the Exchange Act.

 ITEM 14.

 PRINCIPAL ACCOUNTANT FEES AND SERVICES

 Pre-Approval Policies and Procedures

 Under the Sarbanes-Oxley Act of 2002, all audit and permissible non-audit
services provided by our independent registered public accounting firm must be approved in advance by our Audit Committee to ensure that
such services do not impair the independent registered public accounting firm's independence from us. Accordingly, the Audit Committee
reviews and pre-approves all audit and non-audit services performed by our independent registered public accounting firm, as well as the
fees charged for such services. In its review of non-audit service fees, the Audit Committee considers, among other things, the possible
impact of the performance of such services on the independent registered public accounting firm's independence.

 The following is a summary of the fees billed and expected to be billed
to the Company by BDO USA, P.C. (" BDO "), our independent registered public accounting firm, for professional services
rendered for the fiscal years ended December 31, 2023 and 2022. All fees incurred in fiscal years 2023 and 2022 for services rendered
by BDO were approved in accordance with the pre-approval policies and procedures described above.

 2023

 2022

 Audit Fees

 $
 443,162

 $
 215,974

 Audit-Related Fees

 –

 –

 Tax Fees

 –

 –

 All Other Fees

 –

 –

 Total All Fees:

 $
 443,162

 $
 215,974

 Audit Fees consist of fees for the audit of the Company's
consolidated financial statements included in our annual reports on Form 10-K, the review of the Company's consolidated financial
statements included in our quarterly reports on Form 10-Q and other statutory and regulatory filings, including auditor consents.

 Audit-Related Fees consist of fees billed for assurance and
related services that are also performed by our independent registered public accounting firm.

 Tax Fees consist of services rendered for tax compliance, tax
advice and tax planning.

 All Other Fees consist of the aggregate fees billed for products
and services provided by BDO and not otherwise included in Audit Fees, Audit-Related Fees or Tax Fees.

 ITEM 15.

 EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

 Financial Statements

 Our consolidated financial statements are set forth
in Item 8 to this Annual Report on Form 10-K.

 Financial Statement Schedules

 Certain schedules are omitted because they are
not applicable, or are not required by smaller reporting companies.

 Exhibits

 Exhibit

 Incorporated by Reference Herein

 Number

 Description

 Form

 Date

 3.1

 Amended and Restated Certificate of Incorporation of Phio Pharmaceuticals Corp.

 November 19, 2018

 3.2

 Certificate of Amendment to the Amendment and Restated Certificate of Incorporation of Phio Pharmaceuticals Corp.

 January 14, 2020

 3.3

 Certificate of Amendment to the Amendment and Restated Certificate of Incorporation of Phio Pharmaceuticals Corp.

 January 25, 2023

 3.4

 Certificate of Designation of Series D Preferred Stock, dated November 16, 2022.

 November 16, 2022

 3.5

 Amended and Restated Bylaws of Phio Pharmaceutical Corp.

 May 2, 2022

 4.1

 Form of Warrant.

 Amendment No. 1 to the Registration Statement on Form S-1 (File No. 333-221173)

 September 28, 2018

 4.2

 Form of Placement Agent Warrant.

 November 19, 2019

 4.3

 Form of Warrant.

 February 6, 2020

 4.4

 Form of Warrant.

 February 13, 2020

 4.5

 Form of Underwriter Warrant.

 February 13, 2020

 4.6

 Form of Warrant.

 April 2, 2020

 4.7

 Form of Common Stock Warrant.

 January 25, 2021

 4.8

 Form of Placement Agent Warrant.

 February 17, 2021

 4.9

 Form of Series A Common Stock Warrant.

 April 20, 2023

 4.10

 Form of Series B Common Stock Warrant.

 April 20, 2023

 4.11

 Form of Existing Warrant Amendment.

 April 20, 2023

 4.12

 Form of Series A Common Stock Warrant.

 4.13

 Form of Series B Common Stock Warrant.

 4.14

 Form of Series A/B Warrant.

 December 8, 2023

 4.15

 Form of Placement Agent Warrant.

 December 8, 2023

 4.16

 Description of Securities Registered Pursuant to Section 12(b) of the Securities Exchange Act of 1934. *

 10.1

 Patent and Technology Assignment Agreement between RXi Pharmaceuticals Corporation (formerly RNCS, Inc.) and Advirna, LLC, effective as of September 24, 2011.

 Registration Statement on Form S-1 (File No. 333-177498)

 October 25, 2011

 10.2

 Clinical Co-development Agreement, dated February 26, 2021, by and between Phio Pharmaceuticals Corp. and AgonOx, Inc.+

 Annual Report on Form 10-K (File No. 00136304)

 March 22, 2023

 10.3

 Phio Pharmaceuticals Corp. 2020 Long Term Incentive Plan, as amended and restated. #

 Quarterly Report on Form 10-Q (File No. 001-36304)

 November 9, 2023

 10.4

 Form of Restricted Stock Unit Award under the Company's 2020 Long Term Incentive Plan. #

 Annual Report on Form 10-K (File. 001-36304)

 March 25, 2021

 10.5

 Form of Nonqualified Stock Option Award under the Company's 2020 Long Term Incentive Plan. #

 Annual Report on Form 10-Q (File. 001-36304)

 November 9, 2023

 10.6

 Phio Pharmaceuticals Corp. 2012 Long Term Incentive Plan. #

 Quarterly Report on Form 10-Q (File No. 001-36304)

 November 12, 2019

 10.7

 Form of Restricted Stock Unit Award under the Company's 2012 Long Term Incentive Plan, as amended. #

 Amendment No. 2 to the Registration Statement on Form S-1 (File No. 333-177498)

 December 29, 2011

 10.8

 Form of Incentive Stock Option Award under the Company's 2012 Long Term Incentive Plan, as amended. #

 Registration Statement on Form S-1 (File No. 333-191236)

 September 18, 2013

 10.9

 Form of Non-Qualified Stock Option Award under the Company's 2012 Long Term Incentive Plan, as amended. #

 Registration Statement on Form S-1 (File No. 333-191236)

 September 18, 2013

 10.10

 RXi Pharmaceuticals Corporation Employee Stock Purchase Plan. #

 Registration Statement on Form S-8 (File No. 333-277013)

 August 24, 2018

 10.11

 Form of Indemnification Agreement. #

 Amendment No. 3 to the Registration Statement on Form S-1 (File No. 333-177498)

 January 23, 2012

 10.12

 Employment Agreement, dated February 20, 2023, by and between Phio Pharmaceuticals Corp. and Robert Bitterman. #

 February 22, 2023

 10.13

 Lease Agreement dated December 17, 2013 between RXi Pharmaceuticals Corporation and 257 Simarano Drive, LLC, Brighton Properties, LLC, Robert Stubblebine 1, LLC and Robert Stubblebine 2, LLC.

 Current Report on Form 8-K (File No. 000-54910)

 December 20, 2013

 10.14

 First Amendment to Lease dated January 22, 2019.

 January 28, 2019

 10.15

 Registration Rights Agreement, dated January 21, 2021, by and between the Company and the Purchasers signatory therein.

 January 25, 2021

 10.16

 Form of Securities Purchase Agreement, dated April 18, 2023, by and between the Company and each of the Purchasers signatory thereto.

 April 20, 2023

 10.17

 Form of Securities Purchase Agreement, dated May 31, 2023, by and between the Company and each of the Purchasers signatory thereto (Registered Direct Offering).

 10.18

 Form of Securities Purchase Agreement, dated May 31, 2023, by and between the Company and each of the Purchasers signatory thereto (PIPE Private Placement).

 10.19

 Form of Registration Rights Agreement, dated May 31, 2023, by and between the Company and each of the Purchasers signatory thereto.

 10.20

 Form of Inducement Letter Agreement, dated December 6, 2023, by and between Phio Pharmaceuticals Corp. and the Holders.

 December 8, 2023

 23.1

 Consent of BDO USA, P.C., an Independent Registered Public Accounting Firm. *

 31.1

 Sarbanes-Oxley Act Section 302 Certification of Principal Executive Officer and Principal Financial Officer. *

 32.1

 Sarbanes-Oxley Action Section 906 Certification of Principal Executive Officer and Principal Financial Officer. **

 97.1

 Phio Pharmaceuticals Corp. Incentive Compensation Recovery Policy. *

 101.INS

 101.SCH

 101.CAL

 101.DEF

 101.LAB

 101.PRE

 _________

 *

 Filed herewith.

 **

 Furnished herewith.

 #

 Indicates a management contract or compensatory plan or arrangement.

 +

 Certain portions of this Exhibit have been redacted pursuant to Item 601(b)(10) of Regulation S-K. The Company agrees to furnish supplementally an unredacted copy of this Exhibit to the SEC upon request.

 ITEM 16.

 FORM 10-K SUMMARY

 None.

 SIGNATURES

 Pursuant to the requirements of Section 13
or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.

 By:

 /s/ Robert J. Bitterman

 Robert J. Bitterman

 President and Chief Executive Officer

 (as Principal Executive and Financial Officer)

 Date: April 1, 2024

 Pursuant to the requirements of the Securities
Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and
on the dates indicated.

 Signatures

 Title

 Date

 /s/ Robert
 J. Bitterman

 Robert J. Bitterman

 President, Chief Executive Officer and Director

 (Principal Executive Officer and Principal Financial
 Officer)

 /s/ Caitlin
 Kontulis

 Caitlin Kontulis

 Vice President of Finance and Administration and Secretary

 (Principal Accounting Officer)

 /s/ Patricia
 Bradford

 Patricia Bradford

 /s/ Robert
 L. Ferrara

 Robert L. Ferrara

 /s/ Jonathan
 E. Freeman

 Jonathan E. Freeman, Ph. D.

 /s/ Curtis A.
 Lockshin

 Curtis A. Lockshin, Ph. D.