Cardiff Oncology, Inc. — Q2 2021 Form 10-Q
Reporting period: Quarter and six months ended June 30, 2021. Cardiff is a clinical-stage oncology company developing onvansertib; reported royalty revenue comes from other intellectual-property licenses, not onvansertib.
Financial performance and liquidity
| Metric | Q2 2021 | Q2 2020 | Six months 2021 | Six months 2020 |
|---|---|---|---|---|
| Revenue | $68,000 | $43,000 | $140,000 | $110,000 |
| Research and development | $4.1 million | $2.5 million | $7.4 million | $5.2 million |
| Selling, general and administrative | $2.8 million | $1.7 million | $5.1 million | $3.2 million |
| Net loss | $6.8 million | $4.1 million | $11.9 million | $8.2 million |
| Net loss per common share | $0.17 | $0.51 | $0.31 | $0.94 |
Revenue is immaterial relative to operating costs; conventional operating margins are not meaningful for this development-stage business. At June 30, cash and cash equivalents were $10.6 million and short-term investments were $129.5 million, totaling $140.1 million. Working capital was $138.3 million. Management said available funds should support operations for at least 12 months after the report’s issuance.
Operating cash use was $10.2 million in the first half, versus $7.7 million a year earlier. Investing cash use of $130.7 million primarily reflected purchases of short-term investments, rather than operating burn. Financing provided $20.5 million, including $19.2 million from common-stock sales and $1.3 million from warrant exercises. The company had no material funded debt reported; lease liabilities totaled $408,000.
Changes and notable items
- First-half R&D expense rose $2.2 million, mainly from clinical-trial and outside-service costs for three onvansertib programs. SG&A rose $1.9 million, including higher stock compensation and professional fees.
- In May, Cardiff sold 2.0 million common shares for net proceeds of $19.2 million. Common shares outstanding increased to 39.6 million from 36.8 million at year-end 2020.
- Q2 included $1.0 million of stock-based compensation; $0.6 million related to modifications of former directors’ options. The six-month results also included a $268,000 gain from revaluing warrant liabilities.
- Cash and cash equivalents fell from $131.0 million at year-end, while the company established a $129.5 million short-term investment portfolio. Total cash and investments increased to $140.1 million from $131.0 million.
Outlook, programs and risks
Management expects continuing losses and operating cash outflows for the foreseeable future, and anticipates needing additional capital to advance clinical programs. Future financing may not be available on acceptable terms; equity financing could dilute shareholders. COVID-19 could disrupt trials and operations and impair access to capital. The filing reports no material changes to the risk factors in the 2020 Form 10-K.
Onvansertib was being studied in combination regimens for KRAS-mutated metastatic colorectal cancer (mCRC), metastatic castration-resistant prostate cancer (mCRPC), and metastatic pancreatic cancer (mPDAC). The pancreatic Phase 2 trial dosed its first patient in June 2021. Management described mCRC data presented in April: among 18 efficacy-evaluable patients, 7 had a partial response, and reported median progression-free survival was 9.4 months. These were interim clinical findings, not financial guidance or results from a completed pivotal trial. Management announced updated mCRC data were expected in September 2021.
In July 2021, Cardiff amended its facility lease for approximately 12,300 square feet, beginning January 2022 and ending February 2027, at initial monthly rent of $55,000 with 3% annual escalations. Management reported effective disclosure controls and no material change in internal control over financial reporting.
Investor facts to verify
- Whether subsequent clinical-trial updates confirm or change the interim response and progression-free-survival results, including sample size, follow-up, and safety.
- How quickly cash and investments are consumed as trial activity expands, and whether management’s stated 12-month runway remains current.
- Potential financing needs and dilution, given continuing operating losses and limited royalty revenue.
- Trial enrollment, timelines, and COVID-19 or other factors that could delay development or raise costs.
- Future lease costs and stock-based compensation, including the effects of equity awards and any further share issuance.