Cardiff Oncology, Inc. — Q3 2022 Form 10-Q
Reporting period: Quarter and nine months ended September 30, 2022. Cardiff Oncology is a clinical-stage biotechnology company developing onvansertib, a PLK1 inhibitor, in combination with other therapies. Revenue is limited to royalties from licenses unrelated to onvansertib.
Financial results
| Metric | Q3 2022 | Q3 2021 | Nine months 2022 | Nine months 2021 |
|---|---|---|---|---|
| Royalty revenue | $93,000 | $86,000 | $258,000 | $226,000 |
| Research and development expense | $6.0 million | $4.2 million | $20.7 million | $11.6 million |
| Selling, general and administrative expense | $3.1 million | $2.9 million | $10.1 million | $8.0 million |
| Net loss | $8.6 million | $6.9 million | $30.0 million | $18.8 million |
| Net loss per share | $0.20 | $0.17 | $0.69 | $0.49 |
| Operating cash used | Not stated for quarter | Not stated for quarter | $24.4 million | $15.7 million |
As a development-stage company with minimal royalty revenue, Cardiff reported operating losses; a meaningful operating margin is not provided. Interest income for the nine-month period was $841,000, compared with $185,000 in 2021.
- Liquidity: Cash and cash equivalents were $18.7 million and short-term investments were $95.6 million at September 30, totaling $114.3 million. Working capital was $111.5 million.
- Cash flows: Investing activities provided $31.1 million, mainly from investment sales and maturities exceeding purchases. Financing activities provided $75,000 from option exercises; the comparable 2021 period included $20.5 million of equity and warrant proceeds.
- Debt and obligations: The balance sheet reports no borrowings. Total liabilities were $10.4 million, including $2.8 million of operating lease liabilities. The facility lease runs through February 2027.
- Equity: Stockholders’ equity was $113.2 million, down from $140.4 million at year-end 2021. Accumulated deficit was $289.8 million. Common shares outstanding were 43.335 million at September 30.
Changes versus prior comparable periods
- Q3 net loss increased $1.7 million year over year; nine-month net loss increased $11.2 million. The filing attributes the increases primarily to higher operating expenses.
- Nine-month R&D expense rose $9.1 million, primarily due to CMC and clinical pharmacology work, clinical trials and related services, and increased staffing. Nine-month SG&A expense rose $2.1 million, reflecting higher staffing, stock compensation, professional fees, and facilities costs.
- Nine-month operating cash use increased $8.8 million from 2021. Cash and investments declined from $140.8 million at December 31, 2021, to $114.3 million at September 30, 2022.
- Accumulated other comprehensive loss included $637,000 of unrealized investment losses for the nine months, which the company said were primarily related to rising interest rates rather than increased credit risk.
Outlook, clinical programs, and risks
- Management said resources were sufficient for at least 12 months after issuance and, based on current projections, expected to fund operations into 2025. The company also expects continued losses and operating cash outflows for several years and may need additional capital; financing may not be available on acceptable terms and equity issuance could dilute shareholders.
- In TROV-054, the company reported an objective response rate of 35% (17 of 48 evaluable patients), median duration of response of 11.7 months, and median progression-free survival of 9.3 months. These are results from an ongoing, single-arm trial and are not controlled comparisons.
- In the ongoing pancreatic cancer trial, preliminary data from five evaluable patients showed one initial partial response and three cases of stable disease; additional data were anticipated in mid-2023.
- The randomized ONSEMBLE trial was expected to activate in Q4 2022, enroll about 150 patients, and provide topline data in the second half of 2024. The filing also anticipated preliminary data in 2023 or early 2024 from the TNBC and SCLC investigator-led trials.
- Development and commercialization remain subject to clinical, regulatory, financing, competition, and execution risks. The filing reported no material changes to the risk factors in the 2021 Form 10-K, no legal proceedings, and no material control deficiencies; disclosure controls were assessed as effective.
Important facts for investors to verify
- Whether projected funding into 2025 remains adequate as trial enrollment, development spending, and operating cash use evolve.
- Updates and study design details for onvansertib trials, including whether TROV-054 results are confirmed in randomized studies.
- Actual timing and results of ONSEMBLE and the pancreatic, TNBC, and SCLC programs versus the filing’s expectations.
- Potential dilution from equity financing and outstanding options and warrants; the filing lists approximately 5.1 million options and 4.5 million warrants.
- Post-quarter Series E preferred stock conversion: 327,509 shares converted into 1,342,250 common shares on October 11, 2022; the company reported 44,677,169 common shares outstanding as of October 27, 2022.