crdf-20230930

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 September 30, 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 October 26, 2023, the issuer had 44,677,169 shares of Common Stock issued and outstanding.

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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	8

	Notes to Condensed Financial Statements	9

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	16

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

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PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

CARDIFF ONCOLOGY, INC.

CONDENSED BALANCE SHEETS

(in thousands, except par value)

(Unaudited)


	September 30, 2023		December 31, 2022
Assets
Current assets:
Cash and cash equivalents	$	15,233	$	16,347
Short-term investments	66,130		88,920
Accounts receivable and unbilled receivable	198		771
Prepaid expenses and other current assets	2,344		5,246
Total current assets	83,905		111,284
Property and equipment, net	1,317		1,269

Operating lease right-of-use assets	1,843		2,251
Other assets	1,387		1,387
Total Assets	$	88,452	$	116,191

Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	2,179	$	1,956
Accrued liabilities	6,151		5,177

Operating lease liabilities	688		675


Total current liabilities	9,018		7,808


Operating lease liabilities, net of current portion	1,607		2,040


Total Liabilities	10,625		9,848

Commitments and contingencies (Note 6)

Stockholders’ equity
Preferred stock, 20,000 shares authorized; 277,100 designated as Series A Convertible Preferred Stock; 60,600 shares outstanding at September 30, 2023 and December 31, 2022 with liquidation preference of $1,062 and $1,044 at September 30, 2023 and December 31, 2022, respectively (Note 5)	—		—
Common stock, $0.0001 par value, 150,000 shares authorized; 44,677 shares issued and outstanding at September 30, 2023 and December 31, 2022	4		4
Additional paid-in capital	408,434		404,834

Accumulated other comprehensive loss	(407)		(395)
Accumulated deficit	(330,204)		(298,100)
Total stockholders’ equity	77,827		106,343
Total liabilities and stockholders’ equity	$	88,452	$	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 September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022



Royalty revenues	$	141	$	93	$	332	$	258
Costs and expenses:

Research and development	8,022		6,009		25,094		20,665
Selling, general and administrative	2,939		3,077		10,318		10,103


Total operating expenses	10,961		9,086		35,412		30,768

Loss from operations	(10,820)		(8,993)		(35,080)		(30,510)

Other income (expense), net:
Interest income, net	1,068		458		3,061		841



Other income (expense), net	21		(36)		(85)		(338)
Total other income (expense), net	1,089		422		2,976		503

Net loss	(9,731)		(8,571)		(32,104)		(30,007)

Preferred stock dividend payable on Series A Convertible Preferred Stock	(6)		(6)		(18)		(18)





Net loss attributable to common stockholders	$	(9,737)	$	(8,577)	$	(32,122)	$	(30,025)

Net loss per common share — basic and diluted	$	(0.22)	$	(0.20)	$	(0.72)	$	(0.69)


Weighted-average shares outstanding — basic and diluted	44,677		43,333		44,677		43,291

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 September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Net loss	$	(9,731)	$	(8,571)	$	(32,104)	$	(30,007)
Other comprehensive loss:
Unrealized gain (loss) on securities available-for-sale	24		203		(12)		(637)
Total comprehensive loss	(9,707)		(8,368)		(32,116)		(30,644)

Preferred stock dividend payable on Series A Convertible Preferred Stock	(6)		(6)		(18)		(18)





Comprehensive loss attributable to common stockholders	$	(9,713)	$	(8,374)	$	(32,134)	$	(30,662)

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
Stock-based compensation	—	—		—	—		1,581		—		—		1,581
Other comprehensive loss	—	—		—	—		—		(355)		—		(355)
Net loss	—	—		—	—		—		—		(11,150)		(11,150)
Balance, June 30, 2023	61	$	—	44,677	$	4	$	407,479	$	(431)	$	(320,473)	$	86,579
Stock-based compensation	—	—		—	—		955		—		—		955
Other comprehensive gain	—	—		—	—		—		24		—		24
Net loss	—	—		—	—		—		—		(9,731)		(9,731)
Balance, September 30, 2023	61	$	—	44,677	$	4	$	408,434	$	(407)	$	(330,204)	$	77,827

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	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
Stock-based compensation	—	—		—	—		1,055		—		—		—		1,055

Other comprehensive loss	—	—		—	—		—		—		(234)		—		(234)
Preferred stock dividend	—	—		—	—		—		—		—		(6)		(6)

Net loss	—	—		—	—		—		—		—		(10,443)		(10,443)
Balance, June 30, 2022	388	$	—	43,306	$	4	$	402,710	$	—	$	(982)	$	(281,258)	$	120,474
Stock-based compensation	—	—		—	—		1,037		—		—		—		1,037
Issuance of common stock upon exercise of stock options	—	—		29	—		75		—		—		—		75
Other comprehensive gain	—	—		—	—		—		—		203		—		203
Preferred stock dividend	—	—		—	—		—		—		—		(6)		(6)

Net loss	—	—		—	—		—		—		—		(8,571)		(8,571)
Balance, September 30, 2022	388	$	—	43,335	$	4	$	403,822	$	—	$	(779)	$	(289,835)	$	113,212

See accompanying notes to the unaudited condensed financial statements.

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CARDIFF ONCOLOGY, INC.

CONDENSED STATEMENTS OF CASH FLOWS

(in thousands)

(Unaudited)


	Nine Months Ended September 30,
	2023		2022
Operating activities
Net loss	$	(32,104)	$	(30,007)
Adjustments to reconcile net loss to net cash used in operating activities:


Depreciation	295		150

Stock-based compensation expense	3,600		3,244




Amortization of premiums (discounts) on short-term investments	(716)		672



Release of clinical trial funding commitment	—		139
Changes in operating assets and liabilities:
Other assets	—		55
Accounts receivable and unbilled receivable	573		(115)
Prepaid expenses and other current assets	3,188		4
Operating lease right-of-use assets	408		408
Accounts payable and accrued expenses	1,428		1,325
Operating lease liabilities	(420)		(271)
Other liabilities	—		(34)
Net cash used in operating activities	(23,748)		(24,430)

Investing activities:

Capital expenditures	(574)		(931)
Insurance proceeds from casualty loss	—		114
Maturities of short-term investments	80,534		61,229
Purchases of short-term investments	(67,491)		(80,428)
Sales of short-term investments	10,165		51,145
Net cash provided by investing activities	22,634		31,129

Financing activities:



Proceeds from exercise of options	—		75






Net cash provided by financing activities	—		75

Net change in cash and cash equivalents	(1,114)		6,774
Cash and cash equivalents—Beginning of period	16,347		11,943
Cash and cash equivalents—End of period	$	15,233	$	18,717

Supplementary disclosure of cash flow activity:


Supplemental disclosure of non-cash investing and financing activities:
Acquisition of property and equipment included in accounts payable and accrued expenses	$	—	$	255

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 RAS-mutated metastatic colorectal cancer, metastatic pancreatic cancer, as well as investigator-initiated trials in small cell lung cancer and triple negative breast 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 September 30, 2023, the Company had $81.4 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 nine months ended September 30, 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.

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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:


	September 30,
	2023	2022
Options to purchase Common Stock	6,652,427	5,101,572
Warrants to purchase Common Stock	2,807,948	4,490,159

Series A Convertible Preferred Stock	877	877

Series E Convertible Preferred Stock	—	1,342,250
	9,461,252	10,934,858

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 September 30, 2023, and December 31, 2022:


	Fair Value Measurements at September 30, 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	$	14,928	$	—	$	—	$	14,928

Total included in cash and cash equivalents	14,928		—		—		14,928

Available for sale investments:
Certificate of deposit	—		9,181		—		9,181
Corporate debt securities	—		22,368		—		22,368
Commercial paper	—		7,613		—		7,613

U.S. government agencies	—		6,821		—		6,821
U.S. treasury securities	20,147		—		—		20,147
Total available for sale investments	20,147		45,983		—		66,130

Total assets measured at fair value on a recurring basis	$	35,075	$	45,983	$	—	$	81,058

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	Fair Value Measurements at December 31, 2022
(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	$	15,722	$	—	$	—	$	15,722

Total included in cash and cash equivalents	15,722		—		—		15,722

Available for sale investments:
Certificate of deposit	—		16,023		—		16,023
Corporate debt securities	—		49,535		—		49,535
Commercial paper	—		13,187		—		13,187
U.S. government agencies	—		2,288		—		2,288
U.S. treasury securities	7,887		—		—		7,887
Total available for sale investments	7,887		81,033		—		88,920

Total assets measured at fair value on a recurring basis	$	23,609	$	81,033	$	—	$	104,642

The Company’s policy is to recognize transfers between levels of the fair value hierarchy on the date of the event or change in circumstances that caused the transfer. There were no transfers into or out of Level 3 during the nine months ended September 30, 2023.

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4. Supplementary Balance Sheet Information

Investments available for sale

Investments available for sale consist of the following:


	As of September 30, 2023
(in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Market Value
Maturity less than 1 year:
Certificate of deposit	$	9,181	$	3	$	(3)	$	9,181
Corporate debt securities	12,194		3		(28)		12,169
Commercial paper	7,616		—		(3)		7,613

U.S. government agencies	6,852		—		(31)		6,821
U.S. treasury securities	1,935		—		(13)		1,922
Total maturity less than 1 year	37,778		6		(78)		37,706
Maturity 1 to 2 years:
Corporate debt securities	10,281		3		(85)		10,199

U.S. treasury securities	18,478

SEC Form 10-Q filed by Cardiff Oncology Inc.