Cardiff Oncology, Inc. 10-K

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market information Our common stock has traded on The Nasdaq Capital Market under the symbol “CRDF” since May 8, 2020, and was previously traded as “TROV” from May 30, 2012 to May 7, 2020. Number of Stockholders As of February 20, 2025, we had approximately 58 stockholders of record of our common stock. Dividend Policy Historically, we have not paid any dividends to the holders of shares of our common stock and we do not expect to pay any such dividends in the foreseeable future as we expect to retain our future earnings for use in the operation and expansion of our business. Pursuant to the terms of our outstanding shares of Series A Convertible Preferred Stock, dividends cannot be paid to the holders of shares of our common stock so long as any dividends due on the Series A Convertible Preferred Stock remain unpaid. Securities Authorized for Issuance under Equity Compensation Plans See Item 12 of Part III of this Annual Report on Form 10-K for information about our equity compensation plans which is incorporated by reference herein. ITEM 6. [ Reserved] 45 ITEM 7. MANAGEMENT ’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Company Overview We are a clinical-stage biotechnology company, headquartered in San Diego, CA, leveraging PLK1 inhibition, a well-validated oncology drug target, to develop novel therapies across a range of cancers with the greatest unmet medical need. Our goal is to target tumor vulnerabilities with treatment combinations of onvansertib, our oral and highly selective PLK1 inhibitor, and standard-of-care ("SoC") therapeutics. We are focusing our clinical program in indications such as RAS-mutated metastatic colorectal cancer ("mCRC"), as well as in investigator-initiated ongoing or planned trials in metastatic pancreatic ductal adenocarcinoma ("mPDAC"), small cell lung cancer ("SCLC"), and triple negative breast cancer ("TNBC"). Our clinical development programs incorporate tumor genomics and biomarker assays to refine assessment of patient response to treatment. Our common stock is listed on the Nasdaq Capital Market under the ticker symbol "CRDF". Recent Developments On December 10, 2024 we announced the sale of an aggregate of 15,384,619 shares of common stock in an oversubscribed underwritten registered direct offering, which resulted in gross proceeds of $40 million before underwriting discounts, commissions and expenses. The USPTO issued U.S. Patent No. 12,144,813 to us on November 19, 2024. The patent has an expected expiration date of no earlier than 2043. The patent claims cover the method of using onvansertib in combination with bevacizumab (“bev”) for the treatment of KRAS mutated mCRC patients who have not previously been treated with bev (“bev naïve”). This patent is supported by the unexpected benefits of the treatment in such bev naïve patients. Our accumulated deficit through December 31, 2024 is $384.2 million. To date, we have generated minimal revenues, unrelated to onvansertib, and expect to incur additional losses to perform further research and development activities. Our drug development efforts are in their early stages, and we cannot make estimates of the costs or the time that our development efforts will take to complete, or the timing and amount of revenues related to the sale of our drug. The risk of completion of any program is high because of the many uncertainties involved in developing new drug candidates to market, including the long duration of clinical testing, the specific performance of proposed products under stringent clinical trial protocols, extended regulatory approval and review cycles, our ability to raise additional capital, the nature and timing of research and development expenses, and competing technologies being developed by organizations with significantly greater resources. Critical Accounting Policies and Estimates Our accounting policies are described in Part II, Item 8. Financial Statements—Note 2 Basis of Presentation and Summary of Significant Accounting Policies in this Annual Report on Form 10-K . The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. Actual results could differ from those estimates. We believe that the following discussion represents our critical accounting policies and estimates. Accrued Clinical Trial Expenses We accrue and expense research and development expenditures as incurred, which include costs related to clinical trial activities. We accrue costs for clinical trial activities based upon estimates of the services received and related expenses incurred that have yet to be invoiced by the Clinical Research Organizations ("CROs"), professional service providers, and other vendors providing clinical trial services (collectively, the “service providers”). We accrue costs based on estimated work completed in accordance with agreements established with our service providers. We determine the estimated costs through discussions with internal personnel and external 46 service providers as to the progress or stage of completion of the services and the agreed-upon fee to be paid for such services. We make estimates of our accrued expenses as of each balance sheet date in our financial statements based on facts and circumstances known to us at that time. Due to the nature of estimates, we cannot assure you that we will not make changes to our estimates in the future as we become aware of additional information about the status or conduct of our clinical trial activities. Results of Operations Years Ended December 31, 2024 and 2023 Revenues Total revenues were $0.7 million for the twelve months ended December 31, 2024, as compared to $0.5 million for the same period in 2023. Revenues are from our sales-based or usage-based royalties on other intellectual property licenses, unrelated to onvansertib. Revenue recognition of the royalty depends on the timing and overall sales activities of the licensees. Research and Development Expenses Research and development expenses consisted of the following: Year Ended December 31, (in thousands) 2024 2023 Increase (Decrease) Salaries and staff costs $ 6,903 $ 5,930 $ 973 Stock-based compensation 1,660 1,279 381 Clinical trials, outside services, and lab supplies 26,472 23,686 2,786 Facilities and other 1,817 1,962 (145 ) Total research and development $ 36,852 $ 32,857 $ 3,995 Research and development expenses increased by $4.0 million for the twelve months ended December 31, 2024, compared to the same period in 2023. The overall increase in expenses was primarily due to costs associated with clinical programs and outside service costs related to the development of our lead drug candidate, onvansertib. Salaries and staff costs increased generally from key hires in research and development and clinical operations (research and development average headcount grew by 15% over the comparative period). Selling, General and Administrative Expenses Selling, general and administrative expenses consisted of the following: Year Ended December 31, (in thousands) 2024 2023 Increase (Decrease) Salaries and staff costs $ 3,286 $ 3,531 $ (245 ) Stock-based compensation 3,100 3,230 (130 ) Outside services and professional fees 4,369 4,133 236 Facilities and other 1,727 2,149 (422 ) Total selling, general and administrative $ 12,482 $ 13,043 $ (561 ) Selling, general and administrative expenses decreased by $0.6 million for the twelve months ended December 31, 2024, compared to the same period in 2023. The overall decrease in expenses was primarily within facilities and other costs due to reduced insurance costs compared to the prior period. Salaries and staff costs decreased due to an employee severance agreement which was expensed during the prior period. Stock-based compensation expense decreased due to a modification of stock options that occurred during the prior period. The increase in outside services and professional fees, was due to the settlement of litigation during the current period, offset by a decrease in corporate legal expenses compared to the prior period. 47 Interest Income, Net Interest income, net was $3.3 million for the twelve months ended December 31, 2024 as compared to $4.1 million for the same period of 2023. Our interest income is primarily from our short-term investment portfolios and money market accounts. The amount of interest income earned varies each period based on the balance of our accounts and interest rates. Liquidity and Capital Resources As of December 31, 2024, and December 31, 2023, we had working capital of $81.6 million and $67.0 million, respectively. We have incurred net losses since our inception and have negative operating cash flows. As of December 31, 2024, we had $91.7 million in cash, cash equivalents and short-term investments and we believe we have sufficient cash to meet our funding requirements for at least the next 12 months following the filing of this Form 10-K. Based on our current projections we expect that our capital resources are sufficient to fund our operations into the first quarter of 2027. Our drug development efforts are in their early stages, and we cannot make estimates of the costs or the time that our development efforts will take to complete, or the timing and amount of revenues related to the sale of our drug candidates. The risk of completion of any program is high because of the many uncertainties involved in developing new drug candidates to market, including the long duration of clinical testing, the specific performance of proposed products under stringent clinical trial protocols, extended regulatory approval and review cycles, our ability to raise additional capital, the nature and timing of research and development expenses, and competing technologies being developed by organizations with significantly greater resources. For the foreseeable future, we expect to continue to incur losses and require additional capital to further advance our clinical trial programs and support our other operations. We cannot be certain that additional funding will be available on acceptable terms, or at all. To the extent that we can raise additional funds by issuing equity securities, our stockholders may experience additional dilution. Cash Flow Summary Year Ended December 31, (in thousands) 2024 2023 Net cash used in operating activities $ (37,693 ) $ (30,887 ) Net cash provided by investing activities 13,728 36,195 Net cash provided by financing activities 53,780 — Net change in cash and equivalents $ 29,815 $ 5,308 Operating Activities Net cash used in operating activities for the twelve months ended December 31, 2024, was $37.7 million. Our primary use of cash was from our net loss of $45.4 million, adjusted for non-cash items of $4.6 million primarily related to stock-based compensation. The net change in our operating assets and liabilities decreased cash used in operations by $3.2 million. Net cash used in operating activities for the twelve months ended December 31, 2023, was $30.9 million. Our primary use of cash was from our net loss of $41.4 million, adjusted for non-cash items of $4.0 million primarily related to stock-based compensation. The net change in our operating assets and liabilities decreased cash used in operations by $6.6 million. At our current and anticipated level of operating loss, we expect to continue to incur an operating cash outflow for the next several years. 48 Investing Activities Net cash provided by investing activities for the twelve months ended December 31, 2024 was $13.7 million, primarily related to maturities and sales in excess of purchases of marketable securities. Net cash provided by investing activities for the twelve months ended December 31, 2023 was $36.2 million, primarily related to maturities and sales in excess of purchases of marketable securities. Financing Activities Net cash provided by financing activities for the twelve months ended December 31, 2024 was $53.8 million, from the sale of common stock and employee stock options exercises. Net cash provided by financing activities for the twelve months ended December 31, 2023 was $0. ITEM 7A. QUANTI TATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Not applicable. ITEM 8. FINANCIA L STATEMENTS AND SUPPLEMENTARY DATA All financial information required by this Item is attached hereto at the end of this report beginning on page F-1 and is hereby incorporated by reference. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None.