Cardiff Oncology, Inc. — Q3 2021 Form 10-Q
Reporting period: Three and nine months ended September 30, 2021. Cardiff is a clinical-stage oncology company developing onvansertib; it reported minimal royalty revenue from licenses unrelated to onvansertib and no product sales.
Financial performance and position
| Metric | Q3 2021 | Q3 2020 | Nine months 2021 | Nine months 2020 |
|---|---|---|---|---|
| Revenue | $0.086 million | $0.136 million | $0.226 million | $0.247 million |
| Research and development | $4.154 million | $2.855 million | $11.552 million | $8.036 million |
| Selling, general and administrative | $2.930 million | $1.644 million | $8.003 million | $4.800 million |
| Net loss | $6.913 million | $4.497 million | $18.849 million | $12.710 million |
| Net loss per common share | $0.17 | $0.19 | $0.49 | $1.00 |
| Cash used in operating activities | Not provided for quarter | Not provided for quarter | $15.650 million | $11.191 million |
Operating expenses substantially exceeded royalty revenue, so operating margins were not meaningful. R&D growth reflected costs for three onvansertib trials and outside services. SG&A growth was driven mainly by stock-based compensation and outside and professional services.
At September 30, cash and cash equivalents were $13.165 million and short-term investments were $120.882 million, totaling approximately $134.0 million. Working capital was $132.7 million. Cash and cash equivalents had been $131.0 million at year-end 2020; the decrease largely reflected purchases of short-term investments, with $122.7 million of net cash used in investing activities. Financing provided $20.5 million, including $19.2 million from common-stock sales and $1.3 million from warrant exercises.
The filing reports no borrowings at September 30; liabilities included $3.285 million of operating lease obligations. Total liabilities were $7.768 million. Cardiff reported negative operating cash flow and an accumulated deficit of $250.4 million.
Changes versus prior periods and notable items
- Q3 net loss increased by $2.4 million year over year as operating expenses rose. Q3 loss per share was lower than the prior-year loss per share, reflecting a substantially larger weighted-average share count.
- For the first nine months, net loss increased by $6.1 million, while net loss attributable to common stockholders increased by $2.9 million. The comparison was affected by $3.267 million less in preferred-stock dividends and deemed dividends than in 2020.
- Common shares outstanding increased to 39.552 million from 36.781 million at December 31, 2020. The company sold 2.0 million shares in Q2 for net proceeds of $19.2 million and issued 0.771 million shares upon warrant exercises during the nine-month period.
- Stock-based compensation was $2.244 million for the nine months, including $0.6 million of incremental expense related to modifications of departing directors’ options. A $0.280 million nine-month gain from revaluing warrant liabilities reduced reported losses.
Clinical outlook, management commentary and risks
- Management said the approximately $134.0 million in cash, cash equivalents and short-term investments was sufficient to meet funding requirements for at least 12 months following issuance of the financial statements. The company expects continued losses, operating cash outflows for several years, and a need for additional capital; future funding may not be available on acceptable terms and equity financing could dilute shareholders. No formal revenue or earnings guidance was provided.
- Onvansertib was being studied in three combination programs: a Phase 1b/2 trial in KRAS-mutated metastatic colorectal cancer (mCRC), a Phase 2 trial in metastatic pancreatic ductal adenocarcinoma (mPDAC), and a Phase 2 trial in metastatic castration-resistant prostate cancer (mCRPC).
- Company-reported mCRC data presented in September showed partial responses in 8 of 19 response-evaluable patients treated at the recommended Phase 2 dose and in 12 of 32 evaluable patients across dose levels. Median progression-free survival across evaluable patients was 9.4 months; it had not yet been reached at the recommended dose. These were interim trial results, not definitive evidence of benefit.
- For mCRPC, the company reported 12-week disease-control rates of 29%, 40% and 54% in trial Arms A, B and C, respectively, based on data as of July 2, 2021. The first mPDAC patient was dosed in June 2021; the trial was expected to enroll approximately 45 patients.
- Management said COVID-19 had not materially disrupted operations to date, but a prolonged outbreak could affect trial timing, operations and access to capital. Drug-development, clinical-trial, regulatory, competition and financing uncertainties remain substantial. The company reported no material change to previously disclosed risk factors, no material legal proceedings, and no off-balance-sheet arrangements.
Important facts for investors to verify
- Cash burn, investment liquidity and the basis for management’s stated 12-month funding runway.
- Updated enrollment, follow-up, safety and efficacy results for all three onvansertib trials, particularly the interim mCRC and mCRPC findings.
- Future financing needs and potential dilution from equity issuance, outstanding warrants, options and convertible preferred stock.
- Clinical, regulatory, COVID-19 and other risks that could delay trials or prevent successful development of onvansertib.