crdf-20230331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)


☒			QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2023


☐			TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

COMMISSION FILE NUMBER 001-35558

CARDIFF ONCOLOGY, INC.

(Exact Name of registrant as specified in its charter)


Delaware						27-2004382
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

11055 Flintkote Avenue, San Diego, California						92121
(Address of principal executive offices)						(Zip Code)

(858) 952-7570
(Registrant’s telephone number, including area code)

Title of each class:

Trading Symbol(s)

Name of each exchange on which registered:

Common Stock

CRDF

Nasdaq Capital Market

Indicate by check mark whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐

Accelerated filer ☐

Non-accelerated filer ☒

Smaller reporting company ☒

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of April 27, 2023, the issuer had 44,677,169 shares of Common Stock issued and outstanding.

Table of Contents

CARDIFF ONCOLOGY, INC.

Table of Contents


		Page
PART I	FINANCIAL INFORMATION

Item 1.	Financial Statements (unaudited)

	Condensed Balance Sheets	3

	Condensed Statements of Operations	4

	Condensed Statements of Comprehensive Loss	5

	Condensed Statements of Stockholders’ Equity	6

	Condensed Statements of Cash Flows	7

	Notes to Condensed Financial Statements	8

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	17

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	22

Item 4.	Controls and Procedures	22

PART II	OTHER INFORMATION

Item 1.	Legal Proceedings	23

Item 1A.	Risk Factors	23

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	23

Item 3.	Defaults Upon Senior Securities	23

Item 4.	Mine Safety Disclosures	23

Item 5.	Other Information	23

Item 6.	Exhibits	23

SIGNATURES

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

CARDIFF ONCOLOGY, INC.

CONDENSED BALANCE SHEETS

(in thousands, except par value)

(Unaudited)


	March 31, 2023		December 31, 2022
Assets
Current assets:
Cash and cash equivalents	$	15,017	$	16,347
Short-term investments	81,951		88,920
Accounts receivable and unbilled receivable	676		771
Prepaid expenses and other current assets	4,109		5,246
Total current assets	101,753		111,284
Property and equipment, net	1,320		1,269

Operating lease right-of-use assets	2,115		2,251
Other assets	1,361		1,387
Total Assets	$	106,549	$	116,191

Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	2,914	$	1,956
Accrued liabilities	4,555		5,177

Operating lease liabilities	679		675


Total current liabilities	8,148		7,808


Operating lease liabilities, net of current portion	1,898		2,040


Total Liabilities	10,046		9,848

Commitments and contingencies (Note 7)

Stockholders’ equity
Preferred stock, 20,000 shares authorized; Series A Convertible Preferred Stock liquidation preference $1,050 and $1,044 at March 31, 2023 and December 31, 2022, respectively (Note 6)	—		—
Common stock, $0.0001 par value, 150,000 shares authorized; 44,677 and 44,677 shares issued and outstanding at March 31, 2023 and December 31, 2022, respectively	4		4
Additional paid-in capital	405,898		404,834

Accumulated other comprehensive loss	(76)		(395)
Accumulated deficit	(309,323)		(298,100)
Total stockholders’ equity	96,503		106,343
Total liabilities and stockholders’ equity	$	106,549	$	116,191

See accompanying notes to the unaudited condensed financial statements.

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CARDIFF ONCOLOGY, INC.

CONDENSED STATEMENTS OF OPERATIONS

(in thousands, except per share amounts)

(Unaudited)


	Three Months Ended March 31,
		2023		2022



Royalty revenues		$	83	$	74
Costs and expenses:

Research and development		9,052		7,208
Selling, general and administrative		3,083		3,940


Total operating expenses		12,135		11,148

Loss from operations		(12,052)		(11,074)

Other income (expense), net:
Interest income, net		940		130



Other income (expense), net		(111)		(49)
Total other income (expense), net		829		81

Net loss		(11,223)		(10,993)

Preferred stock dividend payable on Series A Convertible Preferred Stock		(6)		(6)





Net loss attributable to common stockholders		$	(11,229)	$	(10,999)

Net loss per common share — basic and diluted		$	(0.25)	$	(0.25)


Weighted-average shares outstanding — basic and diluted		44,677		43,231

See accompanying notes to the unaudited condensed financial statements.

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CARDIFF ONCOLOGY, INC.

CONDENSED STATEMENTS OF COMPREHENSIVE LOSS

(in thousands)

(Unaudited)


	Three Months Ended March 31,
		2023		2022
Net loss		$	(11,223)	$	(10,993)
Other comprehensive loss:
Unrealized gain (loss) on securities available-for-sale		319		(606)
Total comprehensive loss		(10,904)		(11,599)

Preferred stock dividend payable on Series A Convertible Preferred Stock		(6)		(6)





Comprehensive loss attributable to common stockholders		$	(10,910)	$	(11,605)

See accompanying notes to the unaudited condensed financial statements.

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CARDIFF ONCOLOGY, INC.

CONDENSED STATEMENTS OF STOCKHOLDERS’ EQUITY

(in thousands)

(Unaudited)


	Preferred Stock Shares	Preferred Stock Amount		Common Stock Shares	Common Stock Amount		Additional Paid-In Capital		Accumulated Other Comprehensive Loss		Accumulated Deficit		Total Stockholders’ Equity
Balance, January 1, 2023	61	$	—	44,677	$	4	$	404,834	$	(395)	$	(298,100)	$	106,343
Stock-based compensation	—	—		—	—		1,064		—		—		1,064
Other comprehensive gain	—	—		—	—		—		319		—		319
Net loss	—	—		—	—		—		—		(11,223)		(11,223)
Balance, March 31, 2023	61	$	—	44,677	$	4	$	405,898	$	(76)	$	(309,323)	$	96,503


	Preferred Stock Shares	Preferred Stock Amount		Common Stock Shares	Common Stock Amount		Additional Paid-In Capital		Service Receivable		Accumulated Other Comprehensive Loss		Accumulated Deficit		Total Stockholders’ Equity
Balance, January 1, 2022	716	$	1	41,964	$	4	$	400,503	$	(139)	$	(142)	$	(259,810)	$	140,417
Stock-based compensation	—	—		—	—		1,152		—		—		—		1,152



Other comprehensive loss	—	—		—	—		—		—		(606)		—		(606)
Issuance of common stock upon conversion of Series E Convertible Preferred Stock	(328)	(1)		1,342	—		—		—		—		—		(1)
Preferred stock dividend	—	—		—	—		—		—		—		(6)		(6)
Release of clinical trial funding commitment	—	—		—	—		—		139		—		—		139
Net loss	—	—		—	—		—		—		—		(10,993)		(10,993)
Balance, March 31, 2022	388	$	—	43,306	$	4	$	401,655	$	—	$	(748)	$	(270,809)	$	130,102

See accompanying notes to the unaudited condensed financial statements.

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CARDIFF ONCOLOGY, INC.

CONDENSED STATEMENTS OF CASH FLOWS

(in thousands)

(Unaudited)


	Three Months Ended March 31,
	2023		2022
Operating activities
Net loss	$	(11,223)	$	(10,993)
Adjustments to reconcile net loss to net cash used in operating activities:


Depreciation	90		31

Stock-based compensation expense	1,064		1,152




Amortization of premiums (discounts) on short-term investments	(163)		346



Release of clinical trial funding commitment	—		139
Changes in operating assets and liabilities:
Other assets	26		51
Accounts receivable and unbilled receivable	95		88
Prepaid expenses and other assets	1,251		(1,141)
Operating lease right-of-use assets	136		136
Accounts payable and accrued expenses	203		—
Operating lease liabilities	(138)		(16)
Other liabilities	—		(42)
Net cash used in operating activities	(8,659)		(10,249)

Investing activities:

Capital expenditures	(8)		(171)

Maturities of short-term investments	42,983		38,217
Purchases of short-term investments	(37,327)		(36,773)
Sales of short-term investments	1,681		17,085
Net cash provided by investing activities	7,329		18,358

Financing activities:










Net cash provided by financing activities	—		—

Net change in cash and cash equivalents	(1,330)		8,109
Cash and cash equivalents—Beginning of period	16,347		11,943
Cash and cash equivalents—End of period	$	15,017	$	20,052

Supplementary disclosure of cash flow activity:
Cash paid for taxes	$	—	$	1

Supplemental disclosure of non-cash investing and financing activities:
Acquisition of property and equipment included in accounts payable and accrued expenses	$	133	$	27

See accompanying notes to the unaudited condensed financial statements.

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CARDIFF ONCOLOGY, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

(Unaudited)

1. Organization and Basis of Presentation

Business Organization and Overview

Cardiff Oncology, Inc. (“Cardiff Oncology” or the “Company”) headquartered in San Diego, California, is a clinical-stage biotechnology company leveraging Polo-like Kinase 1 (“PLK1”) inhibition to develop novel therapies across a range of cancers. The Company’s lead asset is onvansertib, a PLK1 inhibitor that is being evaluated in combination with standard-of-care therapies in clinical programs targeting indications such as KRAS/NRAS-mutated metastatic colorectal cancer, metastatic pancreatic cancer, as well as investigator-initiated trials in triple negative breast cancer and small cell lung cancer. These programs and the Company’s broader development strategy are designed to target tumor vulnerabilities in order to overcome treatment resistance and deliver superior clinical benefit compared to the standard-of-care alone. The Company's common stock is listed on the Nasdaq Capital Market under the ticker symbol "CRDF".

Basis of Presentation

The accompanying unaudited interim condensed financial statements of Cardiff Oncology have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and the rules and regulations of the Securities and Exchange Commission (“SEC”) related to a quarterly report on Form 10-Q. Certain information and note disclosures normally included in annual financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to those rules and regulations. The unaudited interim condensed financial statements reflect all adjustments consisting of normal recurring adjustments which, in the opinion of management, are necessary for a fair statement of the Company’s financial position and the results of its operations and cash flows for the periods presented. The unaudited condensed balance sheet at December 31, 2022, has been derived from the audited financial statements at that date but does not include all of the information and disclosures required by GAAP for annual financial statements. The operating results presented in these unaudited interim condensed financial statements are not necessarily indicative of the results that may be expected for any future periods. These unaudited interim condensed financial statements should be read in conjunction with the audited financial statements and the notes thereto for the year ended December 31, 2022, included in the Company’s annual report on Form 10-K filed with the SEC on March 2, 2023.

Liquidity

The Company has incurred net losses since its inception and has negative operating cash flows. As of March 31, 2023, the Company had $97.0 million in cash, cash equivalents and short-term investments and believes it has sufficient cash to meet its funding requirements for at least the next 12 months following the issuance date of these financial statements.

For the foreseeable future, the Company expects to continue to incur losses and require additional capital to further advance its clinical trial programs and support its other operations. The Company cannot be certain that additional funding will be available on acceptable terms, or at all. To the extent that the Company can raise additional funds by issuing equity securities, the Company’s stockholders may experience additional dilution.

2. Summary of Significant Accounting Policies

During the three months ended March 31, 2023, there have been no changes to the Company’s significant accounting policies as described in its Annual Report on Form 10-K for the fiscal year ended December 31, 2022.

Net Loss Per Share

Basic and diluted net loss per common share is determined by dividing net loss applicable to common stockholders by the weighted-average common shares outstanding during the period. Preferred dividends are included in net loss attributable to common stockholders in the computation of basic and diluted earnings per share.

Table of Contents

The following table sets forth the outstanding potentially dilutive securities that have been excluded in the calculation of diluted net loss per share because their effect was anti-dilutive:


	March 31,
	2023	2022
Options to purchase Common Stock	6,396,895	5,467,611
Warrants to purchase Common Stock	4,296,472	4,490,159

Series A Convertible Preferred Stock	877	877

Series E Convertible Preferred Stock	—	1,342,250
	10,694,244	11,300,897

Recent Accounting Pronouncement Not Yet Adopted

In August 2020, the FASB issued ASU No. 2020-06 ("ASU 2020-06"), Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40) (“ASU 2020-06”). ASU 2020-06 eliminates the beneficial conversion and cash conversion accounting models for convertible instruments. It also amends the accounting for certain contracts in an entity’s own equity that are currently accounted for as derivatives because of specific settlement provisions. In addition, ASU 2020-06 modifies how particular convertible instruments and certain contracts that may be settled in cash or shares impact the diluted EPS computation. The amendments in this update are effective for public business entities for fiscal years beginning after December 15, 2021 (or December 15, 2023, for companies who meet the SEC definition of Smaller Reporting Companies), and interim periods within those fiscal years. The amendment is to be adopted through either a fully retrospective or modified retrospective method of transition. Early adoption is permitted. The Company is currently evaluating the impact of this standard on its financial statements and related disclosures, and will adopt this standard on January 1, 2024.

3. Fair Value Measurements

The following table presents the Company’s assets and liabilities that are measured and recognized at fair value on a recurring basis classified under the appropriate level of the fair value hierarchy as of March 31, 2023, and December 31, 2022:


	Fair Value Measurements at March 31, 2023
(in thousands)	Quoted Prices in Active Markets for Identical Assets and Liabilities (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Assets:
Money market fund	$	14,158	$	—	$	—	$	14,158

Total included in cash and cash equivalents	14,158		—		—		14,158

Available for sale investments:
Certificate of deposit	—		13,925		—		13,925
Corporate debt securities	—		32,828		—		32,828
Commercial paper	—		10,398		—		10,398

U.S. government agencies	—		7,842				7,842
U.S. treasury securities	16,958		—		—		16,958
Total available for sale investments (1)	16,958

SEC Form 10-Q filed by Cardiff Oncology Inc.