Cardiff Oncology, Inc. — Form 10-Q Summary
Reporting period: Quarter and nine months ended September 30, 2020. Cardiff Oncology is a clinical-stage biotechnology company developing onvansertib, a PLK1 inhibitor, for cancer indications. The company reported minimal royalty revenue, not product sales.
Financial performance and liquidity
| Metric | Q3 2020 | Nine months 2020 |
|---|---|---|
| Revenue | $136,401 | $246,738 |
| Operating expenses | $4.50 million | $12.84 million |
| Net loss | $4.50 million | $12.71 million |
| Net loss attributable to common stockholders | $4.50 million ($0.19 per share) | $15.99 million ($1.00 per share) |
| Operating cash used | — | $11.19 million |
Revenue consisted primarily of royalties on other intellectual-property licenses, unrelated to onvansertib. No meaningful product revenue or profit margin was reported. September 30 cash and cash equivalents were $36.41 million; working capital was $32.75 million. Financing activities provided $37.55 million during the nine months, including $18.28 million from securities sales and $18.97 million from warrant exercises. Capital expenditures were $153,784.
At September 30, liabilities included a $305,000 Paycheck Protection Program loan and $1.09 million of operating lease liabilities. The PPP loan, bearing 0.98% interest, was repaid in full on October 19. Management stated that September 30 cash was sufficient for at least 12 months following issuance of the financial statements, while noting the company would continue to need capital. After quarter-end, the October 2 public offering generated approximately $100.9 million gross and $94.0 million net; additional warrant exercises generated approximately $3.4 million through October 31. Cash and cash equivalents were $131.8 million as of October 31.
Changes versus prior comparable periods
- Q3 revenue rose to $136,401 from $51,687. Nine-month revenue increased to $246,738 from $152,055.
- Q3 operating expenses rose 5.6% to $4.50 million; the common-stockholder loss increased to $4.50 million from $4.15 million. Loss per share improved to $0.19 from $0.69, primarily because the weighted-average share count increased substantially.
- Nine-month operating expenses increased to $12.84 million from $12.54 million. Research and development expense declined $261,538, while selling, general and administrative expense increased $555,967.
- Nine-month net loss attributable to common stockholders increased to $15.99 million from $12.46 million. The increase principally reflected $3.27 million of noncash deemed dividends on Series D and E preferred-stock conversion features, alongside higher operating expense, lower interest income, and warrant fair-value losses. These deemed dividends increased the common-stockholder loss but were not operating cash outflows.
- Cash increased from $10.20 million at December 31, 2019 to $36.41 million at September 30, 2020, mainly due to equity financings and warrant exercises. Common shares outstanding increased from 8.59 million at year-end 2019 to 26.29 million at September 30; the filing reported 35,324,607 shares issued and outstanding as of October 30.
Programs, outlook, risks, and unusual items
- Clinical programs: Three active trials evaluated onvansertib with standard-of-care treatment in KRAS-mutated metastatic colorectal cancer (mCRC), metastatic castration-resistant prostate cancer (mCRPC), and relapsed or refractory acute myeloid leukemia (AML). The AML Phase 2 trial was enrolling; the Phase 1b portion was complete.
- mCRC data: At a September 2020 conference, the company reported disease control in 10 of 11 evaluable patients, including five partial responses; four partial responses were confirmed. These are early clinical results from a small patient group, not established efficacy.
- mCRPC data: October 2020 conference data reported a 31% disease-control rate in evaluable patients in cohorts A and B; the company said the trial was on track to meet prespecified success criteria. This update occurred after the quarter-end.
- AML data: The company reported a 24% complete response rate across dose levels in Phase 1b and 31% at the four higher dose levels. Phase 2 was ongoing.
- Capital and outlook: Management expects continuing losses and operating cash outflows for the foreseeable future and anticipates needing additional capital. No numerical revenue, earnings, or trial-completion guidance was provided. Future equity fundraising could dilute shareholders.
- COVID-19: No material financial-statement impact was reported for the quarter or nine-month period, but the company warned that the pandemic could delay enrollment, site operations, trial procedures, regulatory review, and drug supply, and could impair access to capital. It also cited adverse commercial real-estate conditions in recording a $34,169 nine-month impairment of a vacated facility portion.
- Other items: Warrant-liability remeasurement resulted in a $144,035 Q3 loss and a $186,072 nine-month loss. Related-party research and development expenses for services from Leucadia Life Sciences and Tommy Adams were approximately $281,000 for Q3 and $810,000 for the nine months. Management reported no material litigation, no off-balance-sheet arrangements, and effective disclosure controls as of September 30.
Important facts for investors to verify
- Whether the reported early clinical responses are confirmed in larger trials, with durable benefit and acceptable safety, and whether enrollment and trial timelines are affected by COVID-19.
- Post-offering cash, actual quarterly operating cash burn, and the resulting duration of the company’s funding runway.
- Potential dilution from the enlarged share base and outstanding options, warrants, and convertible preferred stock; the filing excluded 12.84 million potentially dilutive share equivalents from diluted loss per share as anti-dilutive.
- The terms and continuing accounting impact of warrant liabilities and preferred-stock conversion features, as well as the related-party clinical-services arrangements.