Phio Pharmaceuticals Corp. Common Stock Small Cap Growth Hybrid Investor Conference

Good morning, everybody, and thank you for tuning in to the Phio story today. Phio is an immuno-oncology company that is specializing in the treatment of certain types of skin cancers. In fact, our goal is to change the treatment paradigm in terms of how certain skin cancer is treated. We do this through enhancing our body's immune cell function and enable it to basically improve and kill solid tumors in the body. We do this through our technology of delivering RNA platform. It is called INTASYL. INTASYL is a short interfering RNA that has the ability to make our immune cells more effective in killing cancer cells. With a quick look at our forward-looking statements, let me introduce you to the disease called cutaneous squamous cell carcinoma and the opportunity that presents itself with this.

The incidence of solid tumors in the human body is significant. There are over 7 million of them. In that, 25% of all solid tumors across all organs represent cutaneous squamous cell carcinoma. It represents about 1.8 million incidents overall annually, and it is a very complicated disease, but one that needs to be carefully addressed. One of the reasons is that it is increasing due to aging population. It is also known to be caused by excessive UV exposure and the weakened immunity of a body after patients get older, as this typically affects patients who are beyond 60 years of age and above. It is a recurring condition, and it is also progressive. If you get one, you are going to get another, and if left untreated, it can lead to death.

In fact, what many people don't understand is that the mortality rate for cutaneous squamous cell carcinoma is almost double that of melanoma. The current treatment paradigm is surgical intervention. That is standard of care. But surgical intervention does have its complications that are associated with location, with the size of the tumor, and with the patient's overall health. Patients that have certain comorbidities, like a particular disease state, such as diabetes, or patients who have interactions with certain types of drugs, immune status, patients who might be affected by drugs that are immunosuppressive, such as inhaled steroids or products that basically are blood thinners that can cause excessive bleeding. All of those can ultimately lead to an outcome which is less than desirable, to promote faster healing and recovery time, to minimize disfigurement, which can come in the form of hypopigmentation or even scarring.

Actually, to eliminate the functionality of certain digits on the body. Also, to decrease the need for reconstructive surgery and maybe even to reduce the surgical frequency as well. The opportunity in the neoadjuvant market for cutaneous squamous cell carcinoma rests with those lesions which are considered high risk. These are lesions that typically are in excess of 2 centimeters in dimension and also are in high-risk areas of the body, such as the head or the neck, the feet, the hand, and the pretibial, which is the lower leg. There is about 1.1 million of those incidences of the 1.8 million total. We believe that the opportunity, the addressable market, if you will, for this, in terms of a neoadjuvant treatment, could range somewhere between $2 billion-$3 billion.

Our enthusiasm for this is really based on the results of the conclusion of our first phase Ib clinical trial. This took place over the course of a couple of years and concluded earlier in 2006. What I would like to point out here is that in the administration of four injections of drug over three weeks, and this was done over five escalating cohorts of the drug concentration. In the final cohort, we had an 85% response rate, and by that I mean there were seven patients in that cohort. Six of them responded. Four of those six had 100% pathologic clearance of the cancer in the tissue. One had greater than 90%, and one other had greater than 50%. Across all cohorts, the overall response rate was 65%.

What this has done is it has actually led us to what will be our dose selection for the next Phase IIb study, which will be coming up shortly. The other factor that was important in this, across those five escalating doses, which increased the dose twentyfold over that duration, there were no immune or dose-limiting toxicities in any of the patients. There was also no recurrence seen at the end of day 13. What this means is that we do have a very favorable safety and tolerability profile, which makes this a very attractive drug for moving forward into the next study with the FDA. A couple of other factors that make this particular concentration, or this particular therapy and treatment interesting is that it can be administered directly in the physician's office.

With that, it avoids the logistics of systemic infusion centers, which are often used for monoclonal antibodies for the same purpose. It also minimizes the post-surgical recovery because we are successfully shrinking, if not eliminating the tumor before surgery. As a matter of convenience for the physician, the drug is refrigeration stable for two years, and it also has the ability to accommodate flexible dosing because not all lesions are the same size, and they require a different amount of drug. There are a number of patient factors and physician factors relative to convenience. There are also some interesting economic factors associated with the therapy as well, because visits to the physician by the patient drive physician practice economics. Doctors get paid for the number of patients that they see and the number of procedures that they perform.

Also, unlike certain other types of therapies, there is no capital outlay required by the physician for this. Radiation therapy, for example, is a significant investment in capital, and it is also a very space-consuming piece of equipment. This is very simple. The injection basically takes 1-2 minutes, and the physician is finished, and the patient can be done. The other factor, and I think that is important to note in this too, is that in the production of the product, our active pharmaceutical ingredient, which is referred to as drug substance, is manufactured in a facility in the U.S., as well as our finished drug product, that which is actually injected into the patient. That is also produced in the U.S. This eliminates any of the risks associated with variability in tariffs that periodically come up in our economy.

With that as a background on the disease and where we believe the opportunity rests, I would like to talk to you about the mechanism of action when it comes to this particular technology called INTASYL. Essentially, INTASYL is a technology designed to selectively block or turn off a signal from a designated gene. Our body's DNA is continuously giving instructions to RNA to do and perform certain things, basically upregulating proteins, downregulating proteins. In the process, when we are dealing with cutaneous squamous cell carcinoma, the presence of a certain protein created by a particular gene will cause our immune cells to become inert, to become ineffective. What we do is we have the ability to selectively identify that one gene that produces that particular protein, it is called PD-1, and turn off that signal so that the production of protein ceases, not permanently, just temporarily.

As that happens, the body's immune cells suddenly reawaken, reactivate, and go after and attacking the foreign invader, which is the tumor. This makes our immune cells much more effective in killing the cancer cells. I would like to show you just a really brief illustration here, and if you bear with me and follow this from the upper left-hand corner of the graph or the picture. There you see the injection of the drug into the beige tumor. The drug is specifically programmed precisely to go into the T cell where the PD-1 protein is being produced. It basically turns it off in a matter of hours, and after that happens, the T cell awakens. It goes after and attacks the tumor cell, which you see at the lower center of the page. Not the tumor, but the tumor cell.

Then once the T cell is reawakened, it also creates a dissemination of something called interferon gamma. This is a cytokine which does two things. This further attacks other tumor tissue, and at the same time, it attracts more and various kinds of T cells that become very effective in also killing the tumors. So that is really the picture and the mechanism of how this works. What does it look like? Well, we will not spend too much time on this, but technically, if you are a scientist, you can recognize this as an asymmetric duplex consisting of synthetic fragments of RNA. This configuration really has three very important characteristics. One which I basically already touched upon, which is exceptional gene targeting. The second is the ability to deliver the drug across that cell membrane. You saw the drug being injected in the prior slide.

It gets it through there intact through endocytosis, and it can go to any cellular tissue, but is programmed to basically shut down that particular PD-1 protein. The drug also has a stability factor that allows it to do its job without basically losing its stability in the process. This is basis for why it works, and it's also the basis for a very broad patent portfolio. 54 patents have been issued, extending out to 2044, and the patents cover not only the core technology, but we patented sequences in the genes to shut down. We've developed compounds from the material, and also we've established methods of use. We've also, in the future, patented combinations of our technology with monoclonal antibodies as well. It's a very broad and extensive patent portfolio.

I think the real question now becomes, what makes this so special in attacking the various tumors? The real answer to this is it attacks this problem at its source. It goes right into the tumor and shuts down the culprit, which is the PD-1 protein, before it migrates to the tumor cell surface. By doing this locally in the tumor, it reduces the risk of various toxicities and complications. Some of you are familiar with monoclonal antibodies. They're systemically infused throughout the entire body. When that happens, there is a number of different autoimmune side effects of a serious nature which can occur and create other complications for the patient. These are essentially mitigated with the use of INTASYL because it's only going directly to the tumor.