On behalf of OTC Markets and our co-host, Zacks Small Cap Research, we are very pleased you've joined us. The next presentation of the day is from Phio Pharmaceuticals. Please note you may submit questions for the presenter in the box to the left of the slides. You can also view a company's availability for one-on-one meetings by clicking Book a Meeting. At this point, I am very pleased to welcome Robert Bitterman, President and Chief Executive Officer of Phio Pharmaceuticals, which trades on Nasdaq under the symbol PHIO. Welcome, Robert.
Thank you very much. Good morning to everyone, and thank you for sharing some of your time so that I can tell you the Phio story. We are a clinical-stage immuno-oncology company that's concentrating on treating skin cancers. We do so with a very unique technology called INTASYL, which works in a way that actually helps our own body's immune cells, our T-cells, if you will, become more effective in killing tumor cells. Before I go to the crux of the presentation, I'll just go through the formality of presenting our forward-looking statements, and we can start with talking about the Phio value proposition. We are targeting a very large market. It is for cutaneous squamous cell carcinoma. It is the second largest incidence of solid tumors in the human body.
Human cutaneous squamous cell carcinoma, affectionately referred to as cSCC, actually has an annual death toll that is approximately twice that of melanoma. There's 1.8 million incidents that are diagnosed every year. It is believed to have an addressable market value of approximately $20 billion, and the incidence is rising primarily due to the fact that it's an aging population. With that, we, as I mentioned, we're treating this with our proprietary technology called INTASYL. It is a short interfering gene silencing technology, which basically works in a manner which targets a signal from a gene and silences it to produce the absence of a protein and allow our T-cells to basically reinvigorate and attack the tumor.
This technology is broadly patented into the year 2044, and it has been demonstrated to be safe and effective, as demonstrated in a recently completed Phase 1b clinical trial, demonstrating efficacy and safety, which I will show you or speak more to in a few moments. The last element of our value proposition is that we have an ultra-lean virtual infrastructure. We have only eight employees and four subject matter experts. These are individuals that have extensive management experience in dermatology and related drug development and a history of having NDA approvals and commercial launches. In fact, my two senior colleagues and I came out of retirement to actually take on this program because we found it to be so intriguing.
The rest of our development people are also employees who have worked with us over the course of a number of years through at least two and up to four different companies that I've been associated with and have run. The history of Phio is interesting. There's innovation that comes from the founder, who was awarded the Nobel Prize for the discovery of RNA interference. From that, evolved the development of INTASYL, which is a synthetic version of that. It is short interfering RNA drug technology that can precisely and selectively silence a specific gene in the human genome, and in so doing, making our bodies more effective in killing cancer cells.
How it works, the mechanism of action, by seeking out a PD-1-specific gene and its signal, it suppresses the production of protein that gene otherwise would instruct to be made. When that production of protein is there in the presence of tumors, ultimately, our immune cells become totally ineffective, and they get shut down. By silencing this gene and preventing the production of the protein, it reactivates the body's immune cells, it invigorates them, and in so doing, it makes them more effective in going after and killing the foreign invader in the form of a tumor. The chemistry of this is pretty simple. It's two strands of RNA, which are selectively sequenced with a bunch of synthetic nucleotides, better known as synthetic fragments of RNA. There are three characteristics to this chemistry.
I'm not gonna get into this in depth because I'm neither a chemist nor a scientist, but the precise sequencing design of these little, egg-shaped features, these nucleotides, allows for exceptional gene specificity. It only goes after the gene that we're targeting, and it doesn't affect the genes that we're not. What also is important about the technology is the cholesterol element in the passenger strand allows the drug to be transported directly across the cell membrane of the tumor cell, and it can do so intact and delivered exactly to the desired tissue where it's supposed to go through endocytosis. Finally, there's an element there that protects its stability until that signaling process is taken care of, and we turn off that particular signal to allow the therapy to do its job.
Now that's the chemistry, and that's also why it works, and also why it is patented. There are 54 patents which are issued. They encompass a variety of different elements in the patent world. The basic chemistry, we also patent gene targets. We patent compounds that are created from the chemistry, and we also have patented the therapeutic indications that we're going after as well. Now, originally this company was a research science company, and the scientists were very prolific in silencing a number of various compounds. We're not gonna go through all of these, but I just wanted to give this as an example.
When I was asked to come on board and take this operating role about three years ago, we had to determine what were we gonna focus on, because obviously, with a company of limited bandwidth and limited cash, there's only so many things that you can do effectively. Our goal was to select one, maybe two at the most, that we could actually target. With that, we could ultimately concentrate our effort and our resources. With that type of focus for all the rest of the compounds that were non-strategic, we would look to out-license them through other companies that might have an interest. Our focus centered on two programs, the first of which is what we call PH-762. It silences the PD-1 gene.
That program has now completed the clinical phase of a phase 1b trial, which I'm going to talk about in depth in a few moments. The other program is a program called PH-894, which silences another particular gene which is implicated in a number of various cancers. That second program is currently in a stage that is about ready to be filed for a new drug application or an Investigational New Drug application. At this stage, we are concentrating our efforts, our time, and our dollars on furthering the development of seven six two to go into the next stage. Why did we choose seven six two?
Well, I mentioned that there's a very large market, and this gives you a sense that if we exclude basal cell carcinomas, which are the largest incidence of solid tumors, and take that out of the mix, looking at all other solid tumors in the body in every organ, cutaneous squamous cell, cSCC, represents more than half of them at a $1.8 million incidence. The size of the market was an alluring factor. We also wanted to make sure that we were involved in looking at risk mitigation. If we're gonna start a program, we wanted to have a pretty good chance that we would have success in moving it through the various stages.
We chose PD-1 as a target because we knew it was implicated in skin cancer, and the large pharma companies had already validated it as such in their large monoclonal antibody programs, skin trials that were done, but their program was different. They systemically infused their drug into the body to attack this PD-1 on the surface of the tumor. In contrast, we knew that we could basically not infuse the entire body systemically, but we could inject the tumor directly, and in so doing, turn off the PD-1 at its source, just like turning water off with a faucet. This looked like it gave us a very interesting advantage, and certainly from our preclinical studies, it looked to be very safe. In contrast, the monoclonals have an incidence of about 38% in terms of serious adverse events in the patients that they treat.
The third factor that was important in the decision was the limited landscape, or the competitive landscape, where there were a limited number of novel programs that were actually being looked at to treat cutaneous squamous cell carcinoma. With those three factors in hand, having assessed that, we basically went to FDA and received clearance for PH762 to study cutaneous squamous cell, where our primary target is 1.4 million incidences of stages 1 and 2 of that disease, and these represent lesions of a size that is less than or equal to 3cm . What's interesting about this particular segment of the market is that there are currently no FDA-approved drug therapies for stages 1 and 2, and the invasive surgery is really the current standard of care. That's the alternative.
Stages 1 and 2 of cutaneous squamous cell will evolve to stages 3 and 4, and ultimately, as I mentioned in the earlier part of the presentation, they can lead to mortality, and at a rate that is twice that of melanoma. Surgery is clearly an option, but it's not always the best option. You know, we have issues of recovery, reconstruction through plastic surgery. Much depends on the tumor size, the location on the body, as well as the patient's general health, which oftentimes is gonna require a non-surgical option. As I like to say more viscerally, the question for the patient is: how large of a hole do you want to have cut in your skin and to have to go through the process of recovery, repair, potentially plastic surgery?
That becomes a really important question, especially for patients who are going to have this sort of having the lesions recur on occasion, and eventually the issue of surgical fatigue is something that derm surgeons actually have to deal with with many of their patients. With that, we felt that PH-762 was the answer to solving a number of these problems. In terms of our phase 1b clinical study, I wanna just tell you that the nature of the study originally was to treat up to 24 patients in five dose-escalating cohorts. The patients would receive four intratumoral injections over a three-week period, and at five weeks, if there was anything left of the lesion, it would be resected. The endpoints, primarily number one was safety, but also looking at pathology tumor results.
In other words, a microbiology analysis of how much cancer was left in the skin. 22 patients completed the entire study. 20 of them were cutaneous squamous cell, with one Merkel cell patient and one melanoma. Here are the results of that study. Over the course of 5 cohorts, we had an 85% pathological response in terms of efficacy in the fifth cohort, which shows up in the green. The interesting thing about this is that when you look at what we define as response comes in three categories. One, is there 100% clearance? That's the first response, if it's 100% clear. The second is if it's greater than 90%. The third is if it's greater than 50%. Throughout the entire study, across all 5 cohorts in various dose escalating cohorts, we had an 65% response.
In the final cohort, we had 85%, which was quite the remarkable response. Of those, 6 responders, 4 of them were totally complete responders. They were totally clear. The other factor that becomes important in a study is your safety profile, and we can say that during the course of the study, over 5 escalating cohorts, there were no immune-related or treatment-related toxicities in any of the patients across the study. This was despite the fact that we had increased the dose concentration from cohort 1 to cohort 5 20-fold over that process. Now, the question is, why did we end up with such a favorable safety profile?
Well, I think the first thing is that we're directly injecting the drug into the tumor, and by doing so, it essentially eliminates off-target side effects that are oftentimes associated with the systemic infusion of monoclonals. In the formulation of this drug, there are no formulation enhancements. Many drugs have to have lipid nanoparticles or viral vectors to aid the drug to get across the cell membrane to the desired target. We have nothing. All we do is deliver the drug through buffered saline solution, and this mitigates the risk of any adverse events that can be associated with formulation additives. Another feature about the drug is it's convenient. It can be administered by injection in the doctor's office. It avoids the logistics of systemic infusion centers, which are required for monoclonals. It also minimizes the aftercare associated with a surgical intervention.
Finally, for the physician's point of view, there's a flexible dosing arrangement to accommodate the different lesion sizes to allow for a different extraction of material from the vial to be put into the patient's lesion. There is also some economic factors that are worth noting here because when this process or procedure is done with the doctor's office, it drives practice economics for the doctor because they're paid for the process of injecting the patient. Also, for this particular type of treatment, there's no capital outlays required by the physician. As a final point, with regard to the active pharmaceutical ingredient and the drug product, these are sourced from a U.S. source, which takes out the risk of any changes in tariffs that might change the cost of goods in the process.
What we have at this point then is we look at this drug. What is the positioning of this as we go forward? Based on what we know now, we can say that we have a tissue-sparing agent that combines safety as well as convenience. If we cannot eliminate that tumor, we can at least debulk it or in the more layman's term, shrink it. This minimizes surgical excision and reconstructive surgery, and it preserves the skin integrity, promotes faster healing, and reduces pain. We've also talked about already the favorable safety profile of the drug. There were no dose-limiting toxicities through the highest cohort. It provides the patient and the doctor with an economics generator and convenience in the doctor's office for administration. What are our next steps at this point?
We're now in the process of designing the next clinical study to present to FDA. We'll be seeking their guidance for next steps in the clinical process sometime in the Q2 , the latter part of the Q2 of this year. At the same time, we're still in the comprehensive development phase of developing drug substance in a current good manufacturing practices U.S. facility that will be required to make the registration material for the next clinical study.
Finally, we're in the process of taking on a toxicology study, which is also required by the FDA, and that will be completed by the end of the year, all of which allowing for us hopefully to start the next clinical trial, that we hope will be commencing sometime in the Q1 of 2027. That's the seven six two story in terms of where we are today. The other compound, since we're somewhat limited on time, is the eight nine four profile. Eight nine four is an interesting compound because it silences the BRD4 gene. BRD4 is implicated in a variety of different cancers, melanoma, prostate cancer, breast, cervical, lung, and the list goes on.
Eight nine four is unique in that it has a dual mode of action because it can directly kill the tumor. At the same time, it also activates the immune cells, which also go after and kill the tumor. It has like a dual mode of action. What else is unique about eight nine four is it is precisely selective for the BRD4 gene only. Oftentimes or in the past, there have been small molecule studies that attempted to treat BRD4 but were not selective enough, and they shut down other genes which actually created various serious side effects. Having said that, eight nine four has a very clean toxicology profile in a non-human primate, and so far we believe that this will be completely and totally selective just and only to the BRD4 gene.
Right now, eight nine four has completed the required IND enabling studies, and we expect that, as soon as we get a focus on what the FDA is asking for us to do sometime around the middle of the year, with seven six two, we will then start to embark in bringing eight nine four into an IND stage. With that, a few comments on metrics. We have cash runway at the moment to take us well into this H1 of 2027. There are 11.6 million common shares outstanding. There are also common warrants that have 20 months of expiry left on them. There are 13 million of them plus that have an exercisable cash value of $26. They're exercisable at $2.05.
We carry no debt as a company, and as I mentioned before, our head count is eight, and we are also complemented by four subject matter experts in particular areas that are contracted and are on a part-time basis. All of the people involved in development, as I've mentioned before, have worked together collectively in other environments that I've led in different companies. With that, I'm going to bring to the closure on the slides and say that we're a company that has a unique technology using short interfering RNA, which gives precision silencing to what we want to do. We've established now safety and efficacy for the PH-762 program in this phase 1b trial.
We have extensive intellectual property, and our leadership has historically been validated by a track record that has taken drugs through approval in their past life. Finally, the cutaneous carcinoma market is highly attractive in that it is estimated to be an addressable market in excess of $20 billion. Phio Pharmaceuticals with INTASYL, making our immune cells more effective in killing cancer cells, making the human body do the work. With that, I will conclude, and I will be more than happy to answer any of the questions that you may wish to throw at me for another six or seven minutes or so. I see we have quite a number of them here. The first question said, let's move quick.
You reported that there are no dose limiting toxicities across the 20-fold dose escalation increase. How much flexibility does that give you to design an aggressive registration-enabling study? We believe that that gives us quite a bit of flexibility. We have dosed this drug at the highest physicochemical feasible limit at this point, and we think with this sort of a safety profile, the question will be, in the end, how many additional patients in the next trial will the FDA require for purposes of safety? We don't know that answer to that question yet, but it could be that there could be as many as a patient population of maybe up to 160. We're figuring that that's probably going to be the upper limit on the trial. Another question.
Given that 4 of the 6 patients at the highest dose level achieved 100% tumor clearance with no adverse events, do you view this data set as already competitive with existing checkpoint inhibitors in skin cancer? Let me answer that question this way. First of all, this is basically treating stages 1 and 2 of cutaneous squamous cell. The other programs which are treating skin cancers are the monoclonal antibodies, products such as Keytruda, Libtayo, a couple of others. Those drugs are treating advanced and late stage cancers, whether it's melanoma or squamous cell. The target audience is a little bit different. Now, I can say that it appears that the clearance rate, total clearance rate on Keytruda and Libtayo, from what I've been able to research, is somewhere in the rate of about 17% and 11% respectively.
At least that's what we can find in the database. For purposes of total clarity, I would say that given the target audience that we're in, I think this is very relevant. To actually compare it to later stage programs, I'm not sure if that's a fair comparison at this point, to be totally transparent. Question three. You reported no. We got that one. Okay. You're targeting an FDA submission in Q2 to guide next stage development. What is the most optimistic scenario for when a pivotal trial could begin? I did mention actually in the discussion that we're targeting realistically the Q1 of 2027, in addition to designing the clinical trial, which we're actually in the process and would hope that the FDA would be open to our proposal.
We do have to complete the production of registration material at a cGMP facility, the one that's in the United States. We are planning to go and propose a phase 2b adaptive trial into a phase 3 pivotal. For that, we have to basically have a much stricter set of criteria in terms of CMC, that being the chemistry, manufacturing, and controls section of the package for an NDA submission. That will take a certain amount of time to complete that. It will take us into the Q4 to make the drug product. We also have the toxicology study. We are in the process of studying a 3-month toxicology in a non-human primate, and we expect to have the final report on the safety of that study sometime later in the Q4 .
Those are criteria that have to be met before we can actually start dosing what we would like to have as a toxicology trial. As a pivotal trial. I'm sorry. Let's see. Just trying to track through these questions as they're coming through. Next question. If PH-762 becomes a first-in-class office-based treatment for skin cancers, how do you envision building a broader INTASYL franchise around it in other tumor types or settings? Well, PH-762, actually, which can attack and silence the PD-1 protein or gene, is implicated in a number of other diseases, including head and neck, melanoma, basal cell carcinoma. There's a number of different directions that we could go with PH-762.
Realistically at this point, given the size of our company, our people bandwidth, as well as our cash flow, our goal is to start discussions, which we already have, with potential partners, companies that might have an interest in some of these other therapeutic applications to see whether or not they might be interested in licensing parts or maybe geographically the PH-762 program. Of course, in addition to that, the technology itself, the structure that I showed you, we can basically manipulate those RNA sequences so that we can shut down other genes as well that affect other diseases. There's an unlimited number of possibilities.
Realistically, most of our focus will be on other applications of PH-762 for other diseases, as well as looking at the PH-894 silencing the BRD4 gene and looking to see the interest both in the U.S. as well as internationally. Let's see, what's next? Given that you already have CMC and U.S. manufacturing arrangements in place, how could you realistically move from FDA feedback to initiating the next trial? Well, the CMC package has to be very well documented, and that's really what's taking place in terms of this process, which started six months ago and will continue probably for about another three months to complete that.
Realistically, with the FDA will not know the final analysis of the CMC when we meet with them to discuss the clinical trial approach, but they will have a pretty good idea as to what we're doing. Finally, we'll have to have that report ready before we submit to conducting a clinical trial. Let's see, we're getting down to a few minutes left here. Question, the trial has hit safety, efficacy, and completion milestones on time. What does this say about your team's ability to execute as you scale into larger multi-site studies? We conduct the studies through a contracted research organization that has the ability to basically control the operations of this. We manage this as a project, and we manage that vendor to ultimately make sure that the sites are being filled with patients.
We now have a pretty good list of physician sites that we've used in this first site. As we've now gotten more familiarity with the drug, as ultimately the medical community has gotten more familiarity with the drug, it will be easier actually to recruit in the next trial, because a number of the safety complications in the protocol will have been removed going forward. We do not see a problem in scaling to the next trial given the scope of our operation. We may add a person or two selectively, but we are not prone to wanting to commit to overhead in any significant degree. At this point, I think we're at the end of our time allotment, so I'm gonna leave you with the thought that we have a very fascinating program.
We're excited about it, and we're excited that all of you who have attended this presentation were willing to take the time to hear about it as well. I would leave you with a thought, and that is that skin cancer is serious business, and it's really in everyone's best interest to check this out. I would suggest you see your dermatologist once a year for a skin check and make sure if you have something, you get it caught early, because the consequences of letting it go are not good. Thank you very much, and I appreciate your attention, and enjoy the rest of your day.