Filing summary
Issuer identification: The supplied filing is Trovagene, Inc.’s Form 10-K, not a filing under the name Cardiff Oncology, Inc. It covers the fiscal year ended December 31, 2019, and was signed February 27, 2020. The filing describes Trovagene as a clinical-stage oncology company developing onvansertib.
Business context and development
Onvansertib is an investigational oral PLK1 inhibitor. At year-end, the company had three active trials: a Phase 1b/2 study in AML, a Phase 2 study in metastatic castration-resistant prostate cancer (mCRPC), and a Phase 1b/2 study in KRAS-mutated metastatic colorectal cancer (mCRC). The company also uses biomarker analyses in its development programs. It had no approved product and reported only limited royalty and service revenue.
Key financial metrics
| Metric | 2019 | 2018 |
|---|---|---|
| Revenue | $244,632 | $378,325 |
| Research and development expense | $11.16 million | $8.16 million |
| Selling, general and administrative expense | $5.76 million | $8.01 million |
| Operating loss | $16.68 million | $17.05 million |
| Net loss | $16.41 million | $16.46 million |
| Net loss attributable to common stockholders | $16.71 million | $19.25 million |
| Net loss per common share, basic and diluted | $2.80 | $8.26 |
| Cash and cash equivalents at year-end | $10.20 million | $11.45 million |
| Net cash used in operating activities | $13.27 million | $13.20 million |
| Working capital at year-end | $6.57 million | $9.84 million |
Gross margin and conventional profitability margins are not meaningful for this development-stage business. The company reported no cost of revenue in 2019. It had no equipment-line debt outstanding after repaying the facility in 2018; year-end liabilities included $1.73 million of operating lease liabilities. Total future operating lease payments were $1.84 million before sublease income.
Material changes and financing
- Revenue fell 35%, primarily because service revenue declined following the 2018 disposition of the CLIA laboratory. Royalty revenue was $243,137, compared with $250,453.
- R&D expense rose about $3.00 million, mainly from higher clinical-trial and outside-service costs. SG&A fell about $2.24 million, in part because of lower headcount and lower stock-based compensation.
- The 2018 net loss included $664,686 in restructuring charges for the CLIA laboratory closure; no restructuring charge was recorded in 2019.
- Financing activities provided $12.08 million in 2019, primarily from equity and warrant-related proceeds. Common shares outstanding increased from 3.83 million at 2018 year-end to 8.59 million at 2019 year-end; 10.21 million were outstanding on February 20, 2020. The filing reports 10.59 million warrants outstanding at year-end, excluding pre-funded warrants, which had all been exercised by February 20, 2020.
- In January 2020, exercise of Series H warrants provided approximately $1.5 million in net proceeds.
Outlook, risks and unusual items
Management estimated that year-end cash would fund planned operations into the third quarter of 2020, while warning that assumptions could prove wrong and additional funding could be needed sooner. The auditor highlighted substantial doubt about the company’s ability to continue as a going concern. Management said further capital was necessary and could be raised through equity, partnerships, new revenue initiatives or cost reductions; failure to obtain financing could force delays, reductions or termination of development programs. Equity financing could materially dilute stockholders.
Reported clinical findings were preliminary and based on small, early-stage cohorts. In AML, the company reported 5 complete responses or complete responses with incomplete count recovery among 16 patients in one reported analysis; a separate account of the completed Phase 1b trial reported 5 among 21 patients. In mCRPC, the company reported PSA decreases in 72% of patients after one cycle and disease control in 60% of patients evaluable after three months. In mCRC, decreases in circulating KRAS mutation burden were reported in all four patients who completed their first cycle. These are company-reported early results, not evidence of regulatory approval or established clinical benefit.
Other notable matters include $1.01 million of 2019 R&D expense for services from Leucadia Life Sciences and a related consultant; the CEO was a principal stockholder of Leucadia and the consultant was his son. The filing also disclosed potential federal and state tax exposure relating to past executive compensation, for which no liability was accrued. A fourth-quarter correction of an immaterial error increased previously reported 2019 weighted-average share counts and revised interim loss-per-share figures. Management reported effective disclosure controls and internal control over financial reporting at December 31, 2019.
Important facts for investors to verify
- Confirm issuer identity: this source is Trovagene, Inc.’s 2019 Form 10-K, despite the request metadata naming Cardiff Oncology.
- Review the going-concern disclosure, cash runway assumptions, subsequent financing, and capital needs after the reported third-quarter 2020 runway estimate.
- Check trial status, enrollment, response definitions, follow-up, safety, and whether the preliminary AML, mCRPC and mCRC findings were confirmed in later studies.
- Assess dilution and potential share supply from warrants, pre-funded warrants, options, and future financing.
- Examine the related-party Leucadia arrangement and the disclosed unaccrued executive-compensation tax exposure.