Cardiff Oncology, Inc. — FY2020 Form 10-K
Reporting period: Fiscal year ended December 31, 2020; filed February 25, 2021. This is an annual report, not a standalone fourth-quarter report. Cardiff Oncology is a clinical-stage biotechnology company developing onvansertib, an oral PLK1 inhibitor. It had no approved products and generated only minimal royalty revenue.
Financial results and liquidity
| Metric | 2020 | 2019 |
|---|---|---|
| Revenue | $366,000 | $245,000 |
| Research and development expense | $11.24 million | $11.16 million |
| Selling, general and administrative expense | $8.22 million | $5.76 million |
| Operating loss | $19.09 million | $16.68 million |
| Net loss | $19.31 million | $16.41 million |
| Net loss attributable to common stockholders | $22.60 million | $16.71 million |
| Net loss per common share, basic and diluted | $1.08 | $2.80 |
| Cash used in operating activities | $16.31 million | $13.27 million |
- Revenue was almost entirely royalties from licenses unrelated to onvansertib; the company reported no product-sales revenue.
- Year-end cash and cash equivalents were $130.98 million, versus $10.20 million in 2019. Working capital was $127.24 million, versus $6.57 million.
- Financing provided $137.31 million of net cash in 2020, including approximately $94.0 million of net proceeds from an October public offering. Common shares outstanding rose to 36.78 million from 8.59 million at year-end 2019.
- Total liabilities were $6.57 million. The $305,000 Paycheck Protection Program loan was repaid in October 2020; no year-end borrowings are reported.
- Margins are not meaningful for this pre-commercial company. The filing reports no material impact of COVID-19 on the 2020 financial statements.
Material changes versus 2019
- Net loss increased by $2.89 million, driven mainly by higher SG&A and operating costs. SG&A rose $2.46 million, including accelerated option vesting of about $583,000 and a one-time $300,000 severance payment related to former executive chairman Thomas Adams.
- Research and development expense was broadly flat. The company reported increased assay-development and recruiting costs, offset in part by lower travel and conference costs.
- Net loss attributable to common stockholders also includes $3.27 million of non-cash deemed dividends on Series D and E preferred stock. This helps explain why it exceeded reported net loss.
- Operating cash use increased by $3.05 million. The substantial improvement in year-end liquidity primarily reflects equity and warrant financing, not operating cash generation.
Business progress, outlook and risks
- Onvansertib was being studied in three active programs: AML, KRAS-mutated metastatic colorectal cancer (mCRC), and metastatic castration-resistant prostate cancer (mCRPC). The company planned to start a Phase 2 pancreatic cancer study in the first half of 2021.
- For AML, Phase 2 enrollment was completed in October 2020. Data presented in December reported complete remission with or without count recovery in 9 of 45 patients (20%); these are clinical-trial findings, not proof of approval or commercial success.
- For mCRC, data presented in January 2021 reported partial responses in 5 of 12 efficacy-evaluable patients and durable responses exceeding six months in 8 of 12. The filing described the combination as generally tolerated; further enrollment, follow-up and confirmation remain important.
- These clinical updates include presentations after the December 31, 2020 reporting date. Results are preliminary and early-stage; the filing cautions that earlier trial results may not predict later-stage outcomes.
- Management believed year-end cash was sufficient for at least 12 months following issuance of the financial statements, while expecting continued losses and operating cash outflows for several years. No specific earnings or revenue guidance was provided; additional capital may be needed.
- Principal risks include clinical-trial failure or delay, regulatory uncertainty, dependence on external manufacturers and service providers, potential COVID-19 disruption, competition, intellectual-property and license risks, and dilution or difficulty raising capital. Onvansertib is licensed from Nerviano, and a breach of that agreement could jeopardize key rights.
- The company reported no material legal claims, no off-balance-sheet arrangements, and effective disclosure controls and internal control over financial reporting as of year-end. The auditor issued an unqualified opinion and identified accrued clinical-trial expenses as a critical audit matter.
Important facts for investors to verify
- Whether later clinical-trial data confirm the reported response rates, durability, safety and biomarker findings, particularly in mCRC and AML.
- Cash burn and trial spending relative to the stated liquidity runway, and whether additional financing is required.
- The impact of equity issuance, outstanding options and warrants, and preferred-stock terms on potential dilution and common-stockholder claims.
- Clinical-trial timing and enrollment, planned pancreatic-study initiation, and any COVID-19 or supply-chain effects.
- The accrued clinical-trial expense estimate of $1.68 million and the company’s dependence on Nerviano and other third parties.