Business context and reporting period
This unaudited Form 10-Q covers the quarter and six months ended June 30, 2018. The filing registrant is Trovagene, Inc., a clinical-stage oncology therapeutics company developing PCM-075; this differs from the “Cardiff Oncology, Inc.” company name in the request metadata and should be verified. The company was advancing Phase 1b/2 PCM-075 trials in acute myeloid leukemia (AML) and a Phase 2 trial in metastatic castration-resistant prostate cancer (mCRPC). It closed its CLIA-certified laboratory in May 2018 and shifted focus toward oncology therapeutics.
Financial performance and position
| Metric | Q2 2018 | Q2 2017 | Six months 2018 | Six months 2017 |
|---|---|---|---|---|
| Revenue | $111,813 | $102,011 | $211,949 | $197,049 |
| Operating loss | $4,439,596 | $5,888,253 | $9,094,619 | $16,013,899 |
| Net loss | $3,746,955 | $8,045,811 | $8,533,132 | $18,045,348 |
| Net loss attributable to common stockholders | $6,522,548 | $8,051,871 | $11,314,785 | $18,057,468 |
| Loss per common share | $0.88 | $3.12 | $1.88 | $7.00 |
Revenue remained small relative to operating costs. Cost of revenue exceeded revenue by $92,623 in Q2 and $358,831 for the six-month period. Six-month R&D expense was $3.84 million, up from $5.26 million a year earlier overall, though Q2 R&D rose to $1.95 million from $0.98 million as clinical-trial services increased. Six-month SG&A fell to $4.66 million from $8.28 million, primarily reflecting lower legal costs and reduced headcount.
Cash and cash equivalents were $18.49 million at June 30, 2018, versus $8.23 million at December 31, 2017; working capital was $16.43 million versus $5.52 million. Operating cash use was $6.11 million for the first half, compared with $13.36 million in 2017. Financing provided $16.40 million, mainly from equity and warrant proceeds. The company reported no long-term debt at June 30 after paying off its equipment credit line in April; it also reported $67,847 in warrant derivative liabilities. No separate margin guidance was provided.
Material changes versus the prior comparable period
- Six-month operating loss and net loss narrowed substantially year over year, while Q2 R&D increased with PCM-075 trial activity.
- June equity financing generated approximately $18.0 million gross proceeds through common stock, warrants, and Series B convertible preferred stock. The offering and conversions materially increased shares outstanding.
- A $2.77 million non-cash deemed dividend from the Series B preferred stock’s beneficial conversion feature increased loss attributable to common stockholders. Excluding this item, management presented adjusted loss per share of $0.44 for Q2 and $1.29 for the first half; these are non-GAAP presentations.
- The company completed repayment of its equipment credit line and closed its CLIA laboratory, recording approximately $243,000 of restructuring charges in the first half.
- A 1-for-12 reverse stock split took effect June 1, 2018; share and per-share figures were retroactively adjusted in the filing.
Outlook, risks, and unusual items
Management expected existing resources to fund planned operations through June 2019, but stated that continued significant losses and additional capital would be needed to advance clinical programs. The filing says these circumstances raise substantial doubt about the company’s ability to continue as a going concern. Funding may not be available on acceptable terms; potential consequences include dilution, trial delays or curtailment, and licensing or disposition of assets on unfavorable terms.
For the second half of 2018, management planned to complete AML dose escalation and identify a recommended Phase 2 dose, report preliminary safety and efficacy data from both programs, and progress the mCRPC safety lead-in and enrollment. These were forward-looking targets, not assurances. In preliminary AML data reported by the company, six patients were evaluated; no dose-limiting toxicities precluding escalation were observed, and three showed reductions in leukemic cells. The small, early-stage dataset does not establish clinical benefit.
Additional risks include the September 4, 2018 deadline to regain Nasdaq’s $1.00 minimum-bid-price compliance, substantial potential dilution from outstanding warrants and convertible preferred stock, and clinical, regulatory, financing, and execution uncertainty. A $350,000 severance payment to former CEO William Welch was agreed after quarter-end and accrued at June 30. Management reported effective disclosure controls and no material change in internal control over financial reporting during the quarter.
Important facts for investors to verify
- Confirm the filing issuer and security: the supplied filing is for Trovagene, Inc., not Cardiff Oncology, Inc.
- Track cash burn, actual runway, and the company’s ability to obtain further financing; the June 2019 runway estimate is based on management assumptions.
- Review progress, enrollment, safety, and efficacy evidence from the AML and mCRPC trials, distinguishing preliminary findings from established outcomes.
- Assess dilution from the June offering, 22.19 million reported warrants outstanding, and Series B preferred stock convertible into common shares; verify post-quarter warrant exercises and shares outstanding.
- Verify whether Nasdaq minimum-bid compliance was regained by the stated September 4, 2018 deadline.