Cardiff Oncology, Inc. — Q1 2023 Form 10-Q
Reporting period: Three months ended March 31, 2023. Cardiff Oncology is a clinical-stage biotechnology company developing onvansertib, a PLK1 inhibitor, in combination with standard-of-care treatments for several cancers. The unaudited financial statements are prepared under U.S. GAAP.
Financial results and position
| Metric | Q1 2023 | Q1 2022 / prior period |
|---|---|---|
| Royalty revenue | $83,000 | $74,000 |
| Research and development expense | $9.1 million | $7.2 million |
| Selling, general and administrative expense | $3.1 million | $3.9 million |
| Operating loss | $12.1 million | $11.1 million |
| Net loss | $11.2 million | $11.0 million |
| Net loss per common share | $0.25 | $0.25 |
| Net cash used in operating activities | $8.7 million | $10.2 million |
At March 31, 2023, cash and cash equivalents were $15.0 million and short-term investments were $82.0 million, totaling $97.0 million. Working capital was $93.6 million, down from $103.5 million at December 31, 2022. Total assets were $106.5 million and total liabilities were $10.0 million, including $2.6 million of operating lease liabilities; the filing reports no borrowings. The company had no financing cash flow in the quarter. It reported $7.3 million of investing cash inflow, primarily reflecting investment maturities and sales exceeding purchases.
Revenue consists of royalties on other intellectual-property licenses, not onvansertib sales. Profitability and operating margins are not meaningful measures for this clinical-stage business, which reported an operating loss.
Material changes and operating developments
- R&D expense increased $1.8 million year over year, mainly due to clinical-program and outside-service costs for onvansertib, as well as growth in the R&D team.
- SG&A expense decreased $0.9 million, primarily because prior-year strategic valuation consulting was completed and stock-based compensation and insurance costs were lower.
- Net loss increased $0.2 million; higher interest income partly offset the increase in operating expenses. Weighted-average shares rose to 44.7 million from 43.2 million, while loss per share remained $0.25.
- ONSEMBLE, a randomized Phase 2 trial in second-line KRAS/NRAS-mutated metastatic colorectal cancer, dosed its first patient in March 2023. The company anticipated topline data in the second half of 2024.
- The company reported five ongoing onvansertib trials, including programs in colorectal cancer, pancreatic cancer, triple-negative breast cancer and small cell lung cancer. It expected additional pancreatic cancer data in mid-2023, preliminary small cell lung cancer data in mid-2023, and preliminary triple-negative breast cancer data in Q4 2023 or Q1 2024.
Outlook, risks and contingencies
Management said the $97.0 million of cash, cash equivalents and short-term investments was expected to fund requirements for at least 12 months after issuance of the statements, and projected resources sufficient to fund operations into 2025. The company expects continued losses and operating cash outflows for the next several years and may need additional capital; availability and terms are uncertain, and equity financing could dilute shareholders.
Clinical development carries substantial uncertainty, including trial duration and outcomes, regulatory review, development costs, competition and financing needs. The company cited no material changes to the risk factors in its 2022 Form 10-K. It reported no legal proceedings and no material litigation liabilities. Potential milestone payments under the onvansertib license and other license obligations may arise; no milestone or royalty payments under the Nerviano agreement were made in Q1 2023.
Management concluded disclosure controls and procedures were effective as of March 31, 2023, and reported no material change in internal control over financial reporting during the quarter.
Important facts for investors to verify
- Whether clinical-trial enrollment, data timing and outcomes match the company’s stated expectations, particularly for ONSEMBLE and the pancreatic, breast and small cell lung cancer studies.
- Whether the projected funding runway into 2025 remains supportable as trial spending and operating cash outflows continue.
- How much additional capital may be needed and whether future financing could materially dilute shareholders.
- Whether royalty revenue, investment income and the value or liquidity of short-term investments change materially.
- Potential future license milestones, royalties, lease commitments and other clinical-development obligations.