PROPOSAL NO. 1
THE REVERSE STOCK SPLIT PROPOSAL
General
Our Board has unanimously approved,
and recommended that our stockholders approve, an amendment to our Charter (the “Certificate of Amendment”),
to effect a reverse stock split at a ratio of not less than
and not greater than (the “Reverse
Stock Split”), with the final decision of whether to proceed with the Reverse Stock Split, the effective time of the
Reverse Stock Split, and the exact ratio of the Reverse Stock Split to be determined by the Board, in its sole discretion and without
further action by the stockholders.
If the stockholders approve the Reverse Stock Split, and the
Board decides to implement it, the Reverse Stock Split will become effective as of 12:01 a.m. Eastern Time on a date to be determined
by the Board that will be specified in the Certificate of Amendment (the “Effective Time”). If the Board does
not decide to implement the Reverse Stock Split within twelve months from the date of the Special Meeting, the authority granted
in this proposal to implement the Reverse Stock Split will terminate.
The Reverse Stock Split will be realized simultaneously for
all outstanding Common Stock. The Reverse Stock Split will affect all holders of Common Stock uniformly and each stockholder will
hold the same percentage of Common Stock outstanding immediately following the Reverse Stock Split as that stockholder held immediately
prior to the Reverse Stock Split, except for immaterial adjustments that may result from the treatment of fractional shares as
described below. The Reverse Stock Split will not change the par value of our Common Stock and will not reduce the number of authorized
shares of Common Stock. The Reverse Stock Split will also affect outstanding options and warrants, as described in “Principal
Effects of Reverse Stock Split on Outstanding Equity Awards, Warrants, and Equity Plans” below.
Reasons for the Reverse Stock Split
The principal reason for the Reverse Stock Split is to increase
the per share trading price of the Company’s Common Stock in order to help ensure a share price high enough to satisfy the
$1.00 per share minimum bid price requirement for continued listing on The Nasdaq Capital Market, although there can be no assurance
that the trading price of our Common Stock would be maintained at such level or that we will be able to maintain the listing of
our Common Stock on The Nasdaq Capital Market.
As previously reported, on November 2, 2018, the Company received
written notice (the “Notification Letter”) from the Nasdaq Stock Market (“Nasdaq”) notifying
the Company that it was 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, because the bid price of the Company’s Common Stock had closed below the
minimum $1.00 per share for the 30 consecutive trading days prior to the date of the Notification Letter. The Notification Letter
indicated that we were provided an initial period of 180 calendar days, or until May 13, 2019, in which to regain compliance.
This period was extended for a second 180-day period on May
14, 2019. As a result of the extension, we have until November 11, 2019 to regain compliance by maintaining a closing bid price
of at least $1.00 per share for a minimum of 10 consecutive trading days. In the event that we do not regain compliance by that
date, Nasdaq may commence delisting proceedings and our Common Stock will trade, if at all, on the over-the counter market, such
as the OTC Bulletin Board or OTCQX or OTCQB markets, which 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.
If we do not regain compliance by November 11, 2019, we expect
that the Nasdaq staff will provide written notice that our Common Stock is subject to delisting. The Board has considered the
potential harm to the Company and our stockholders should Nasdaq delist our Common Stock. Delisting from Nasdaq would likely adversely
affect our ability to raise additional financing through the public or private sale of equity securities and would significantly
affect the ability of investors to trade our securities. Delisting would also likely negatively affect the value and liquidity
of our Common Stock because alternatives, such as the OTC Bulletin Board and the pink sheets, are generally considered to be less
efficient markets.
Given the volatility and fluctuations in the capital markets,
if our share price does not appreciate prior to these deadlines, we believe that the Company’s best option to meet Nasdaq’s
$1.00 minimum bid price requirement would be to effect the Reverse Stock Split to increase the per-share trading price of our
Common Stock.
In addition, we believe that the low per share market price
of our Common Stock impairs its marketability to and acceptance by institutional investors and other members of the investing public
and creates a negative impression of the Company. Theoretically, decreasing the number of shares of Common Stock outstanding should
not, by itself, affect the marketability of the shares, the type of investor who would be interested in acquiring them, or our
reputation in the financial community. In practice, however, many investors, brokerage firms and market makers consider low-priced
stocks as unduly speculative in nature and, as a matter of policy, avoid investment and trading in such stocks. Moreover, the analysts
at many brokerage firms do not monitor the trading activity or otherwise provide coverage of lower priced stocks. The presence
of these factors may be adversely affecting, and may continue to adversely affect, not only the pricing of our Common Stock but
also its trading liquidity. In addition, these factors may affect our ability to raise additional capital through the sale of stock.
Further, we believe that a higher stock price could help us
attract and retain employees and other service providers. We believe that some potential employees and service providers are less
likely to work for a company with a low stock price, regardless of the size of the company’s market capitalization. If the
Reverse Stock Split successfully increases the per share price of our common stock, we believe this increase will enhance our ability
to attract and retain employees and service providers.
We hope that the decrease in the number of shares of our outstanding
Common Stock as a consequence of the Reverse Stock Split, and the anticipated increase in the price per share, will encourage greater
interest in our Common Stock by the financial community, business development partners and the investing public, help us attract
and retain employees and other service providers, help us raise additional capital through the sale of stock in the future if needed,
and possibly promote greater liquidity for our stockholders with respect to those shares presently held by them. However, the possibility
also exists that liquidity may be adversely affected by the reduced number of shares which would be outstanding if the Reverse
Stock Split is effected, particularly if the price per share of our Common Stock begins a declining trend after the Reverse Stock
Split is effected.
The Board believes that stockholder adoption of a range of reverse
stock split ratios (as opposed to adoption of a single reverse stock split ratio or a set of fixed ratios) provides maximum flexibility
to achieve the purposes of a reverse stock split and, therefore, is in the best interests of the Company. In determining a ratio
following the receipt of stockholder adoption, the Board (or any authorized committee of the Board) may consider, among other things,
factors such as:
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the historical trading price and trading volume of our Common Stock;
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the number of shares of our Common Stock outstanding;
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the then-prevailing trading price and trading volume of our Common Stock and the anticipated impact of the Reverse Stock Split on the trading market for our common stock;
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the anticipated impact of a particular ratio on our ability to reduce administrative and transactional costs;
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the continued listing requirements of Nasdaq; and
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prevailing general market and economic conditions.
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The Board reserves the right to elect to abandon the Reverse
Stock Split, notwithstanding stockholder adoption thereof, if it determines, in its sole discretion, that the Reverse Stock Split
is no longer needed to regain compliance with Nasdaq’s listing requirements or is no longer in the best interests of the
Company.
Reverse Stock Split Amendment to the Charter
If the Reverse Stock Split is approved, subsection(a) of ARTICLE
IV of the Charter shall be amended and restated in its entirety as follows:
(a) Authorized Shares. The total number of shares of stock which
the Corporation shall have authority to issue is 110,000,000 shares, consisting of 100,000,000 shares of Common Stock, par value
$0.0001 per share (“Common Stock”) and 10,000,000 shares of Preferred Stock, par value $0.0001 per share (“Preferred
Stock”). Upon the effectiveness of this Certificate of Amendment to the Amended and Restated Certificate of Incorporation
of the Corporation, each [whole number of shares, as determined by the Board], of Common Stock issued and outstanding at such time
shall, automatically and without any further action on the part of the Corporation or the holder thereof, be combined into one
(1) validly issued, fully paid and non-assessable share of Common Stock (the “Reverse Stock Split”). The par value
of the Common Stock following the Reverse Stock Split shall remain $0.0001 per share. No fractional shares shall be issued, and,
in lieu thereof, the Corporation shall pay cash equal to such fraction multiplied by the fair market value of a share of Common
Stock, as determined by the Board of Directors. Each certificate that immediately prior to the Effective Time represented shares
of Common Stock (an “Old Certificate”) shall thereafter represent that number of shares of Common Stock into which
the shares of Common Stock represented by the Old Certificate shall have been combined, subject to the elimination of fractional
share interests as described above.
The Certificate of Amendment attached hereto as Appendix A reflects
the changes that will be implemented to our Charter if the Reverse Stock Split is approved.
Principal Effects of the Reverse Stock Split
If the stockholders approve the proposal to authorize the Board
to implement the Reverse Stock Split and the Board implements the Reverse Stock Split, we will amend the existing provision of
Article IV of our Charter in the manner set forth above.
By approving this amendment, stockholders will approve the combination
of any whole number of shares of Common Stock between and including
and , with the exact number to be determined
by the Board, into one (1) share. The Certificate of Amendment to be filed with the Secretary of State of the State of Delaware
will include only that number determined by the Board to be in the best interests of the Company and its stockholders. In accordance
with these resolutions, the Board will not implement any amendment providing for a different split ratio.
As explained above, the Reverse Stock Split will be effected
simultaneously for all issued and outstanding shares of Common Stock and the exchange ratio will be the same for all issued and
outstanding shares of Common Stock. The Reverse Stock Split will affect all of our stockholders uniformly and will not affect any
stockholder’s percentage ownership interests in the Company, except to the extent that the Reverse Stock Split results in
any of our stockholders receiving a cash payment in lieu of owning a fractional share, as described in the section titled “Fractional
Shares” below. Common Stock issued pursuant to the Reverse Stock Split will remain fully paid and non-assessable. The Reverse
Stock Split will not affect the Company’s continuing obligations under the periodic reporting requirements of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”). Following the Reverse Stock Split, our Common Stock will
continue to be listed on The Nasdaq Capital Market, under the symbol “PHIO,” although it would receive a new CUSIP
number.
Upon effectiveness of the Reverse Stock Split, the number of
authorized shares of Common Stock that are not issued or outstanding will increase substantially, because the proposed amendment
will not reduce the number of authorized shares, while it will reduce the number of outstanding shares by a factor of between and
including and
, depending on the exchange ratio selected by the Board.
The shares that are authorized but unissued after the Reverse
Stock Split will be available for issuance, and, if we issue these shares, the ownership interest of holders of our Common Stock
may be diluted. We may issue such shares to raise capital and/or as consideration in acquiring other businesses or establishing
strategic relationships with other companies. Such acquisitions or strategic relationships may be effected using shares of common
stock or other securities convertible into common stock and/or by using capital that may need to be raised by selling such securities.
We do not have any agreement, arrangement or understanding at this time with respect to any specific transaction or acquisition
for which the newly unissued authorized shares would be issued.
Procedure for Effecting Reverse Stock Split and Exchange
of Stock Certificates
If the Reverse Stock Split is approved by the Company’s
stockholders, and if at such time the Board still believes that a reverse stock split is in the best interests of the Company and
its stockholders, the Board will determine the ratio of the reverse stock split to be implemented. The Reverse Stock Split will
become effective as of the Effective Time. The Board will determine the exact timing of the filing of the Certificate of Amendment
based on its evaluation as to when the filing would be the most advantageous to the Company and its stockholders. If the Board
does not decide to implement the Reverse Stock Split within twelve months from the date of the Special Meeting, the authority granted
in this proposal to implement the Reverse Stock Split will terminate.
Except as described below under the section titled “Fractional
Shares,” at the Effective Time, each whole number of issued and outstanding pre-Reverse Stock Split shares that the Board
has determined will be combined into one post-Reverse Stock Split share, will, automatically and without any further action on
the part of our stockholders, be combined into and become one share of Common Stock, and each certificate which, immediately prior
to the effective time represented pre-Reverse Stock Split shares, will be deemed for all corporate purposes to evidence ownership
of post-Reverse Stock Split shares.
Fractional Shares
No fractional shares will be issued in connection with the Reverse
Stock Split. Stockholders of record at the Effective Time of the Reverse Stock Split who otherwise would be entitled to receive
fractional shares because they hold a number of pre-Reverse Stock Split shares not evenly divisible by the number of pre-Reverse
Stock Split shares for which each post-Reverse Stock Split share is to be exchanged, will, in lieu of a fractional share, be entitled,
upon surrender to the exchange agent of certificate(s) representing such pre-Reverse Stock Split shares, to a cash payment in lieu
thereof. The cash payment will equal the fraction to which the stockholder would otherwise be entitled multiplied by the average
of the closing prices (as adjusted to reflect the Reverse Stock Split) of our Common Stock, as reported by Bloomberg L.P., during
the ten consecutive trading days ending on the trading day that is the second day immediately prior to the date on which the Reverse
Stock Split becomes effective.
Stockholders should be aware that, under the escheat laws of
the various jurisdictions where stockholders reside, sums due for fractional interests that are not timely claimed after the effective
time may be required to be paid to the designated agent for each such jurisdiction. Thereafter, stockholders otherwise entitled
to receive such funds may have to seek to obtain them directly from the state to which they were paid.
Risks Associated with the Reverse Stock Split
We cannot predict whether the Reverse Stock Split will increase
the market price for our Common Stock. Additionally, the market price of our Common Stock will also be based on our performance
and other factors, some of which are unrelated to the number of shares outstanding. Further, there are a number of risks associated
with the Reverse Stock Split, including:
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The market price per share of our shares of Common Stock post-Reverse Stock Split may not remain in excess of the $1.00 minimum bid price per share as required by Nasdaq, or the Company may fail to meet the other requirements for continued listing on Nasdaq, including the minimum value of listed securities, as described above, resulting in the delisting of our Common Stock.
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Although the Board believes that a higher stock price may help generate the interest of new investors, the Reverse Stock Split may not result in a per-share price that will successfully attract certain types of investors and such resulting share price may not satisfy the investing guidelines of institutional investors or investment funds. Further, other factors, such as our financial results, market conditions and the market perception of our business, may adversely affect the interest of new investors in the shares of our Common Stock. As a result, the trading liquidity of the shares of our Common Stock may not improve as a result of the Reverse Stock Split and there can be no assurance that the Reverse Stock Split, if completed, will result in the intended benefits described above.
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The Reverse Stock Split could be viewed negatively by the market and other factors, such as those described above, may adversely affect the market price of the shares of our Common Stock. Consequently, the market price per post-Reverse Stock Split shares may not increase in proportion to the reduction of the number of shares of our Common Stock outstanding before the implementation of the Reverse Stock Split. Accordingly, the total market capitalization of our shares of Common Stock after the Reverse Stock Split may be lower than the total market capitalization before the Reverse Stock Split. Any reduction in total market capitalization as the result of the Reverse Stock Split may make it more difficult for us to meet the Nasdaq Listing Rule regarding minimum value of listed securities, which could result in our shares of Common Stock being delisted from The Nasdaq Capital Market.
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The Reverse Stock Split may result in some stockholders owning “odd lots” of less than 100 shares of common stock. Odd lot shares may be more difficult to sell, and brokerage commissions and other costs of transactions in odd lots are generally somewhat higher than the costs of transactions in “round lots” of even multiples of 100 shares.
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Book-Entry Shares
If the Reverse Stock Split is effected, stockholders who hold
uncertificated shares (i.e., shares held in book-entry form and not represented by a physical stock certificate), either as direct
or beneficial owners, will have their holdings electronically adjusted automatically by our transfer agent (and, for beneficial
owners, by their brokers or banks that hold in “street name” for their benefit, as the case may be) to give effect
to the Reverse Stock Split. Stockholders who hold uncertificated shares as direct owners will be sent a statement of holding from
our transfer agent that indicates the number of post-Reverse Stock Split shares of our Common Stock owned in book-entry form.
Certificated Shares
As soon as practicable after the effective time of the Reverse
Stock Split, stockholders will be notified that the Reverse Stock Split has been effected. We expect that our transfer agent will
act as exchange agent for purposes of implementing the exchange of stock certificates. Holders of pre-Reverse Stock Split shares
will be asked to surrender to the exchange agent certificates representing pre-Reverse Stock Split shares in exchange for certificates
representing post-Reverse Stock Split shares in accordance with the procedures to be set forth in a letter of transmittal to be
sent by us or our exchange agent. No new certificates will be issued to a stockholder until such stockholder has surrendered such
stockholder’s outstanding certificate(s) together with the properly completed and executed letter of transmittal to the exchange
agent. Any pre-Reverse Stock Split shares submitted for transfer, whether pursuant to a sale or other disposition, or otherwise,
will automatically be exchanged for post-Reverse Stock Split shares. STOCKHOLDERS SHOULD NOT DESTROY ANY STOCK CERTIFICATE(S) AND
SHOULD NOT SUBMIT ANY CERTIFICATE(S) UNTIL REQUESTED TO DO SO.
Principal Effects of Reverse Stock Split on Outstanding Equity
Awards, Warrants, and Equity Plans
As of September 30, 2019, there were:
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outstanding stock options to purchase an aggregate of 145,777 shares of our common stock with a weighted average exercise price of $59.93 per share;
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outstanding restricted stock units to receive an aggregate of 517,241 shares of our Common Stock;
and
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warrants to purchase an aggregate of 26,816,284 shares of common stock with a weighted average exercise price of $1.44 per share.
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When the Reverse Stock Split becomes effective, the number of
shares of Common Stock covered by such rights will be reduced to between and including and the number currently
covered, and the exercise or conversion price per share will be increased to between and including
and times the current exercise or conversion
price, resulting in the same aggregate price being required to be paid therefor upon exercise or conversion thereof as was required
immediately preceding the Reverse Stock Split.
In addition, the number of shares of Common Stock and number
of shares of Common Stock subject to stock options or similar rights authorized under the Company’s equity incentive plan
and employee stock purchase plan will automatically be proportionately adjusted for the reverse stock split ratio, such that fewer
shares will be subject to such plans. Further, the per share exercise price under such plans will automatically be proportionately
adjusted for the Reverse Stock Split.
Accounting Matters
The Reverse Stock Split will not affect the common stock capital
account on our balance sheet. However, because the par value of our Common Stock will remain unchanged at the effective time of
the split, the components that make up the common stock capital account will change by offsetting amounts. Depending on the size
of the Reverse Stock Split the Board decides to implement, the stated capital component will be reduced proportionately based upon
the Reverse Stock Split and the additional paid-in capital component will be increased with the amount by which the stated capital
is reduced. Immediately after the Reverse Stock Split, the per share net income or loss and net book value of our Common Stock
will be increased because there will be fewer shares of common stock outstanding. All historic share and per share amounts in our
financial statements and related footnotes will be adjusted accordingly for the Reverse Stock Split.
Effect on Par Value
The proposed amendment to our Charter will not affect the par
value of our Common Stock, which will remain at $0.0001 per share.
No Going Private Transaction
Notwithstanding the decrease in the number of outstanding shares
following the proposed Reverse Stock Split, our Board does not intend for this transaction to be the first step in a “going
private transaction” within the meaning of Rule 13e-3 of the Exchange Act.
Potential Anti-Takeover Effect
Although the increased proportion of unissued authorized shares
to issued shares could, under certain circumstances, have an anti-takeover effect (for example, by permitting issuances that would
dilute the stock ownership of a person seeking to effect a change in the composition of the Board or contemplating a tender offer
or other transaction for the combination of the Company with another company), the Reverse Stock Split proposal is not being proposed
in response to any effort of which we are aware to accumulate shares of our Common Stock or obtain control of the Company, nor
is it part of a plan by management to recommend a series of similar amendments to the Board and stockholders. Other than the Reverse
Stock Split proposal, the Board does not currently contemplate recommending the adoption of any other actions that could be construed
to affect the ability of third parties to take over or change control of the Company.
No Dissenters’ Appraisal Rights
Under the Delaware General Corporation Law, the Company’s
stockholders are not entitled to dissenters’ appraisal rights with respect to the Reverse Stock Split, and the Company will
not independently provide stockholders with any such right.
Material United States Federal Income Tax Consequences of
the Reverse Stock Split
The following is not intended as tax or legal advice. Each holder
should seek advice based on his, her or its particular circumstances from an independent tax advisor.
The following is a summary of certain United States federal
income tax consequences of the Reverse Stock Split generally applicable to beneficial holders of shares of our Common Stock. This
summary addresses only such stockholders who hold their pre-reverse stock split shares as capital assets and will hold the post-reverse
stock split shares as capital assets. This discussion does not address all United States federal income tax considerations that
may be relevant to particular stockholders in light of their individual circumstances or to stockholders that are subject to special
rules, such as financial institutions, tax-exempt organizations, insurance companies, dealers in securities, and foreign stockholders.
The following summary is based upon the provisions of the Internal Revenue Code of 1986, as amended, applicable Treasury Regulations
thereunder, judicial decisions and current administrative rulings, as of the date hereof, all of which are subject to change, possibly
on a retroactive basis. Tax consequences under state, local, foreign, and other laws are not addressed herein. Each stockholder
should consult its tax advisor as to the particular facts and circumstances which may be unique to such stockholder and also as
to any estate, gift, state, local or foreign tax considerations arising out of the Reverse Stock Split.
Exchange Pursuant to Reverse Stock Split
No gain or loss will be recognized by a stockholder
upon such stockholder’s exchange of pre-reverse stock split shares for post-reverse stock split shares pursuant to the Reverse
Stock Split, except to the extent of cash, if any, received in lieu of fractional shares, further described in “Cash in Lieu
of Fractional Shares” below. The aggregate tax basis of the post-reverse stock split shares received in the Reverse Stock
Split, including any fractional share deemed to have been received, will be equal to the aggregate tax basis of the pre-reverse
stock split shares exchanged therefor, and the holding period of the post-reverse stock split shares will include the holding period
of the pre-reverse stock split shares.
Cash in Lieu of Fractional Shares
A holder of pre-reverse stock split shares that receives
cash in lieu of a fractional share of post-reverse stock split shares should generally be treated as having received such fractional
share pursuant to the Reverse Stock Split and then as having exchanged such fractional share for cash in a redemption by the Company.
The amount of any gain or loss should be equal to the difference between the ratable portion of the tax basis of the pre-reverse
stock split shares exchanged in the Reverse Stock Split that is allocated to such fractional share and the cash received in lieu
thereof. In general, any such gain or loss will constitute a long-term capital gain or loss if the holder’s holding period
for such pre-reverse stock split shares exceeds one year at the time of the Reverse Stock Split. Deductibility of capital losses
by holders is subject to limitations.
Interests of Directors and Executive Officers
Our directors and executive officers have no substantial interests,
directly or indirectly, in the matters set forth in this proposal except to the extent of their ownership of shares of our Common
Stock.
Reservation of Right to Abandon Reverse Stock Split
We reserve the right to not file the Certificate of Amendment
and to abandon any Reverse Stock Split without further action by our stockholders at any time before the effectiveness of the filing
with the Secretary of the State of Delaware of the Certificate of Amendment, even if the authority to effect these amendments is
approved by our stockholders at the Special Meeting. By voting in favor of the Reverse Stock Split, you are expressly also authorizing
the Board to delay, not proceed with, and abandon, the Reverse Stock Split and the Certificate of Amendment if it should so decide,
in its sole discretion, that such actions are in the best interests of our stockholders.
Recommendation
The Board recommends a vote “FOR” the ratification
of the Certificate of Amendment so as to effect the Reverse Stock Split.
Vote Required
The affirmative vote of the holders of a majority of the outstanding
shares of our Common Stock entitled to vote on the matter either in person or by proxy is required to approve the Certificate of
Amendment to our Charter to effect the Reverse Stock Split of our Common Stock. Abstentions and broker non-votes, if any, will
thus count as votes AGAINST the Reverse Stock Split.
Holders of proxies solicited by this Proxy Statement will vote
the proxies received by them as directed on the proxy card or, if no direction is made, then FOR the Reverse Stock Split.
THE BOARD OF DIRECTORS
RECOMMENDS A VOTE “FOR” PROPOSAL NO. 1.
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 current directors, (ii) each of our “named executive officers,”
as defined in the Executive Officers section above, (iii) all of our current 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 for such persons
is presented as of September 30, 2019 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 issuable through
the exercise of any option, warrant or right within 60 days of September 30, 2019 are deemed outstanding for the purpose of computing
the percentage ownership of the person holding the option, warrant or right, 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.
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Shares Beneficially Owned
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Name and Address of Beneficial Owner
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Number (1)
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Percent of Class(2)
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Greater than 5% Holders
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CVI Investments, Inc.(3)
P.O. Box 309GT
Ugland House
South Church Street
George Town, Grand Cayman KY1-1104
Cayman Islands
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1,998,801
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7.79%
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Sabby Volatility Warrant Master Fund, Ltd.(4)
c/o Ogier Fiduciary Services (Cayman) Limited
89 Nexus Way, Camana Bay
Grand Cayman KY1-9007
Cayman Islands
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1,814,619
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7.07%
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Directors and Named Executive Officers:
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Gerrit Dispersyn, Dr. Med. Sc. (5)
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13,250
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*
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Robert J. Bitterman(6)
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11,830
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*
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Geert Cauwenbergh, Dr. Med. Sc.(7)
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491,049
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1.91%
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H. Paul Dorman(8)
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11,598
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Robert L. Ferrara
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Jonathan E. Freeman, Ph.D. (9)
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10,350
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*
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Curtis A. Lockshin, Ph.D.(10)
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11,225
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All current directors and executive officers as a group (seven persons)
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549,302
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2.14%
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Indicates less than 1%.
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(1)
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Represents shares of common stock held as of
September 30, 2019 plus shares of common stock that may be acquired upon exercise of options, warrants or rights within 60
days of September 30, 2019.
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(2)
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Based on 25,654,670 shares of common stock that
were issued and outstanding as of September 30, 2019. The percentage ownership and voting power for each person (or all directors
and executive officers as a group) is calculated by assuming the exercise of all options, warrants or rights within 60 days
of September 30, 2019 held by such person and the non-exercise of all outstanding options, warrants or rights held by all
other persons.
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(3)
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Based solely on information set forth in a Schedule
13G filed with the SEC on February 14, 2019.
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(4)
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Based solely on information set forth in a Schedule
13G filed with the SEC on January 4, 2019.
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(5)
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Includes 10,136 shares of common stock issuable
through the exercise of options outstanding within 60 days of September 30, 2019.
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(6)
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Includes 1,390 shares of common stock issuable
through the exercise of options and warrants outstanding within 60 days of September 30, 2019.
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(7)
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Includes 26,508 shares of common stock issuable
through the exercise of options and warrants outstanding within 60 days of September 30, 2019.
|
|
(8)
|
Includes 1,223 shares of common stock issuable
through the exercise of options and warrants outstanding within 60 days of September 30, 2019.
|
|
(9)
|
Includes 350 shares of common stock issuable
through the exercise of options outstanding within 60 days of September 30, 2019.
|
|
(10)
|
Includes 1,095 shares of common stock issuable
through the exercise of options and warrants outstanding within 60 days of September 30, 2019.
|
OTHER BUSINESS
We know of no other matters to be submitted to a vote of stockholders
at the Special Meeting. If any other matter is properly brought before the Special Meeting or any adjournment thereof, it is the
intention of the persons named in the enclosed proxy to vote the shares they represent in accordance with their judgment.
In order for any stockholder to nominate a candidate or to submit
a proposal for other business to be acted upon at a given annual meeting, he or she must provide timely written notice to our corporate
Secretary in the form prescribed by our Bylaws, as described below.