Cardiff Oncology, Inc. 10-Q

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Forward-Looking Statements This Quarterly Report on Form 10-Q includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements other than statements of historical facts contained in this Quarterly Report, including statements regarding the future financial position, business strategy and plans and objectives of management for future operations, are forward-looking statements. The words “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “intend,” “should,” “plan,” “expect,” and similar expressions, as they relate to us, are intended to identify forward-looking statements. We have based these forward-looking statements largely on current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy and financial needs. These forward-looking statements are subject to a number of risks, uncertainties and assumptions. In addition, our business and financial performance may be affected by the factors that are discussed under “Risk Factors” in the Annual Report on Form 10-K for the year ended December 31, 2019, filed on February 27, 2020. Moreover, we operate in a very competitive and rapidly changing environment. New risk factors emerge from time to time and it is not possible for us to predict all risk factors, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. You should not rely upon forward-looking statements as predictions of future events. We cannot assure you that the events and circumstances reflected in the forward-looking statements will be achieved or occur. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. The following discussion and analysis is qualified in its entirety by, and should be read in conjunction with, the more detailed information set forth in the financial statements and the notes thereto appearing elsewhere in this Quarterly Report on Form 10-Q. This discussion should not be construed to imply that the results discussed herein will necessarily continue into the future, or that any conclusion reached herein will necessarily be indicative of actual operating results in the future. Such discussion represents only the best present assessment of our management. Overview We are a clinical stage, biotechnology company, developing new treatment options for cancer patients in indications with the greatest medical need. Our goal is to overcome resistance, extend duration of response and increase overall survival. We are developing onvansertib, a first-in-class, third-generation Polo-like Kinase 1 ("PLK1") inhibitor, in combination with standard-of-care chemotherapy and targeted therapeutics. Our clinical development programs incorporate tumor genomics and biomarker technology to enable assessment of patient response to treatment. We licensed onvansertib from Nerviano Medical Sciences ("NMS") in March, 2017, pursuant to a license agreement with NMS dated March 13, 2017. This exclusive, world-wide license agreement includes 3 issued patents for onvansertib which cover composition of matter, salt forms of onvansertib and combination of onvansertib with other drugs. Onvansertib is highly potent against the PLK1 enzyme (concentration for 50% inhibition [IC50] = 2nM), whereas low or no activity was observed on a panel of 63 kinases (IC50>500 nM), including the PLK members PLK2 and PLK3 (IC50>10 μM). Onvansertib was developed to have ideal pharmacokinetics, including oral bioavailability and administration and a drug half-life of approximately 24 hours, allowing for flexible dosing and scheduling, and is well tolerated and safe with only mild to moderate side effects reported to-date. A Phase 1 safety study of onvansertib was successfully completed in patients with advanced metastatic solid tumors and published in 2017 in Investigational New Drugs. PLK1, a serine/threonine kinase, is a master regulator of mitotic progression with various roles and localizations during the different mitotic phases. Upon PLK1 depletion in cancer cells by RNA interference ("RNAi"), inhibition of proliferation and decreased viability, resulting from cell cycle arrest with 4N DNA content followed by apoptosis, are observed. PLK1 depletion also results in an increase in the number of cells containing abnormal spindle formation and misaligned chromosomes. Expression of PLK1 is seen in all proliferating normal tissues, and PLK1 is overexpressed in a number of tumors (including breast, prostate, ovary, lung, gastric and colon cancers), as well as in hematologic cancers. 22 Table of Contents Onvansertib has been tested for antiproliferative activity on a panel of 148 tumor cell lines and appeared highly active with an IC50 (a measure concentration for 50% target inhibition) below 100 nM in 75 cell lines and IC50 values below 1 uM in 133 out of 148 cell lines. Onvansertib also appears active in cells expressing multi-drug resistant (“MDR”) transporter proteins and we believe its apparent ability to overcome the MDR transporter resistance mechanism in cancer cells could prove useful in broader drug combination applications. Additionally, onvansertib has been tested in in-vivo xenograft and transgenic models of different cancer types with the demonstration of tumor growth inhibition or tumor regression. In in-vitro and in-vivo preclinical studies, synergy (interaction of discrete drugs such that the total effect is greater than the sum of the individual effects) has been demonstrated with onvansertib when used in combination with numerous different chemotherapies, including irinotecan, 5-FU, cisplatin, cytarabine, doxorubicin, gemcitabine and paclitaxel, as well as targeted therapeutics, such as abiraterone acetate ("Zytiga ® "), histone deacetylase (“HDAC”) inhibitors, such as belinostat ("Beleodaq ® "), quizartinib ("AC220"), a development stage FLT3 inhibitor, and bortezomib ("Velcade ® "). These therapies are used clinically for the treatment of solid tumor cancers, leukemias and lymphomas including metastatic colorectal cancer ("mCRC"), metastatic castration resistant prostate cancer ("mCRPC"), pancreatic cancer, triple negative breast cancer (“TNBC”), acute myeloid leukemia ("AML") and other hematological malignancies. We believe the high-selectivity of onvansertib to PLK1, its 24-hour half-life and oral bioavailability, as well as its demonstrated safety and tolerability, with expected on-target, easy to manage and reversible side effects, may prove beneficial in addressing clinical therapeutic needs across a variety of cancers. Clinical Program Updates We currently have three active clinical trials: • TROV-054 is a Phase 1b/2 open-label clinical trial of onvansertib in combination with FOLFIRI and bevacizumab ("Avastin ® ") for the second line treatment of patients with KRAS-mutated mCRC, which is being conducted at 6 clinical trial sites across the U.S. - USC Norris Comprehensive Cancer Center, The Mayo Clinic Cancer Centers, Kansas University Medical Center ("KUMC") and CARTI Cancer Center; • TROV-053 is a Phase 2 open-label clinical trial of onvansertib in combination with abiraterone acetate (Zytiga ® ) and prednisone in patients with mCRPC, which is being conducted at Beth Israel Deaconess Medical Center ("BIDMC"), Dana-Farber Cancer Institute ("DFCI"), and Massachusetts General Hospital ("MGH"); • TROV-052 is a Phase 2 open-label clinical trial of onvansertib in combination with standard-of-care chemotherapy, decitabine, in patients with relapsed or refractory AML, which is being conducted at nine sites across the U.S. The Phase 1b portion of the AML trial was completed in the fourth quarter of 2019. KRAS-mutated mCRC TROV-054 is a Phase 1b/2 study of onvansertib for the second-line treatment of patients with KRAS-mutated metastatic colorectal cancer ("mCRC") in combination with standard-of-care FOLFIRI and bevacizumab (Avastin ® ). The primary objective of this study is to evaluate the dose-limiting toxicities ("DLTs") and maximum tolerated dose ("MTD") or recommended Phase 2 dose ("RP2D") of onvansertib in combination with FOLFIRI and bevacizumab (Phase 1b) and to continue to assess the safety and preliminary efficacy of onvansertib in combination with FOLFIRI and bevacizumab (Phase 2). The rationale for this clinical trial is based on three key principles including synthetic lethality, synergy and proof-of-concept clinical benefit. Synthetic lethality arises when a combination of deficiencies in the expression of two genes leads to cell death, whereas a deficiency in only one of these genes does not. The deficiencies can arise through mutations, epigenetic alterations or inhibitors of the protein encoded by one of the genes. In reference to onvansertib, CRC tumor cells harboring KRAS mutations are more vulnerable to cell death with PLK1 inhibition versus KRAS wild-type isogenic cells. Synergy occurs when the combination of two drugs results in an unexpected greater activity than an expected additive effect of the two drugs. Onvansertib in combination with irinotecan and 5-FU (components of FOLFIRI) demonstrate synergy in colorectal cancer cell lines and the combination has demonstrated significantly greater tumor growth inhibition than either drug alone. Proof-of-concept clinical response has been demonstrated in a previously completed Phase 1 trial in solid tumors in which 3 of 5 patients showing stable disease had a KRAS mutation; 2 in colorectal cancer and 1 in pancreatic cancer. 23 Table of Contents Data presented on September 17, 2020, at the European Society for Medical Oncology ("ESMO") conference, demonstrated the safety and efficacy of onvansertib. Of the 11 patients evaluable for efficacy, 10 of 11 (91%) patients achieved disease control (SD – stable disease plus PR – partial response) with only 1 patient progressing in <6 months while on treatment. Five (45%) patients achieved a partial response (PR); 4 patients had a confirmed PR (≥ 30% tumor shrinkage) with 1 patient going on to curative surgery; 1 patient with an initial PR went off study prior to confirmatory scan due to a non-treatment related event. All 5 PRs were associated with different KRAS mutation variants, including the most common that comprise nearly 80% of mutations in CRC. Eight of 11 (73%) patients demonstrated durable response ranging from 6 to >12 months, and 4 patients remain on treatment. Onvansertib in combination with FOLFIRI and bevacizumab is safe and well tolerated with only 9% of adverse events being grade 3 or 4 and all being resolved within 2.5 weeks. Of the 11 patients, 8 had previously received bevacizumab as first line treatment, including the 4 patients who remain on treatment. Key News Releases On September 17, 2020, we announced an electronic poster presentation of clinical data further demonstrating the safety, efficacy and durability of response of onvansertib in KRAS-mutated mCRC patients at the European Society of Medical Oncology ("ESMO") Virtual Congress 2020. On June 9, 2020, we announced the initiation of our Expanded Access Program ("EAP") for onvansertib, in combination with standard-of-care FOLFIRI and bevacizumab, for second-line treatment of patients with KRAS-mutated metastatic colorectal cancer ("mCRC"). This announcement followed the FDA granting Fast Track Designation for onvansertib in KRAS-mutated mCRC. mCRPC TROV-053 is a Phase 2 study of onvansertib in combination with Zytiga ® (abiraterone) and prednisone for the treatment of patients with metastatic castration resistant prostate cancer ("mCRPC"). The primary objective of this study is to observe the effects of onvansertib in combination with abiraterone and prednisone on disease control as assessed by prostate specific antigen ("PSA") decline or stabilization after 12 weeks of study treatment in patients with mCRPC showing early signs of resistance to abiraterone. The rationale for this trial is based on the mechanism of action ("MOA") of onvansertib and Zytiga ® and the synergy of these two drugs when used in combination. Onvansertib inhibits tumor cell division (mitosis) by inducing G2/M arrest of tumor cells and the combination of onvansertib and Zytiga ® significantly increases mitotic arrest and is synergistic when used in combination. Additionally, PLK1 inhibition appears to enhance the efficacy of androgen signaling blockade in castration-resistant prostate cancer. Data presented on October 20, 2020, at the 27th Annual Prostate Cancer Foundation ("PCF") Scientific Retreat, demonstrated the efficacy of onvansertib across all three cohorts of patients. The trial is on track to meet prespecified criteria for success on its primary endpoint, with 31% (8/26) disease control rate in evaluable patients in cohorts A and B. Two of three patients treated as of the data cutoff date in cohort C achieved the primary efficacy endpoint at 12 weeks. Recent collaborative studies with Massachusetts Institute of Technology ("MIT") and Decipher Biosciences suggest that prostate cancer patients with the clinically defined basal molecular tumor subtype may be more likely to respond to onvansertib being added to ongoing abiraterone therapy. Key News Releases On October 20, 2020, we announced an electronic poster presentation of clinical data further demonstrating the safety, efficacy and durability of response of onvansertib in patients with mCRPC at the 27 th annual Prostate Cancer Foundation ("PCF") Scientific Retreat. AML TROV-052 is a Phase 2 Study of onvansertib in combination with standard-of-care chemotherapy, decitabine, for the treatment of patients with relapsed or refractory acute myeloid leukemia ("AML"). The Phase 1b portion of this trial was completed in the fourth quarter of 2019. The objective of this trial is to evaluate the DLTs and MTD or RP2D of onvansertib (Phase 1b – completed in October 2019). In Phase 2, the objective is to assess the safety, tolerability and preliminary efficacy of the combination of onvansertib at 24 Table of Contents the RP2D and decitabine in patients with relapsed or refractory AML. Additionally, as a correlative objective, this trial is evaluating potential pharmacodynamic ("PD") and diagnostic biomarkers of onvansertib in patients with AML. We were granted Orphan Drug Designation ("ODD") for onvansertib for the treatment of AML from the FDA and the European Commission. The rationale for this trial is based on the need for new and better therapeutic options for patients in the relapsed or refractory AML setting. Current treatment options are often limited by the patient’s age and health status. Combination treatment with onvansertib and standard-of-care chemotherapy may provide a new safe and effective therapeutic option. Data presented on June 12, 2020 at the European Hematology Association ("EHA") conference, demonstrated the safety and efficacy of onvansertib in patients. In the completed Phase 1b portion of this trial, the RP2D was established at onvansertib 60 mg/m 2 . Onvansertib adverse events were primarily on-target hematological events, in accordance with the mechanism of action, and were reversible and manageable. Anti-leukemic activity was observed at a wide range of onvansertib dose levels (27 to 90 mg/m 2 ) and the complete response rate achieved in patients was 24% through all dose levels, and 31% at the 4 higher dose levels (27 to 90 mg/m 2 ). Decreases in mutant ctDNA after 1 cycle of treatment were highly predictive of clinical response and target engagement (biomarker positivity) in circulating blast cells was associated with a greater decrease in bone marrow blast cells. Phase 2 is enrolling patients and is ongoing. Financial and Company Updates Financial On September 29, 2020 we announced pricing of an underwritten public offering of 6,500,000 shares of our common stock at a price of $13.50 per share. The underwriters had an option to purchase an additional 975,000 shares, which was exercised in the full. The offering was completed on October 2, 2020 and the gross proceeds were $100.9 million. Company On May 8, 2020 we changed our company name from Trovagene, Inc. to Cardiff Oncology, Inc., and our Nasdaq ticker symbol to ‘CRDF.’ The web address for the Cardiff Oncology website is www.cardiffoncology.com. On May 8, 2020 Mark Erlander, PhD, assumed the role of Chief Executive Officer and Thomas Adams, PhD, transitioned from Chief Executive Officer and Chairman to Executive Chairman. On April 22, 2020, we announced the election of three new independent Directors to our Board of Directors; Dr. James Armitage, Dr. Gary Pace and Ms. Lâle White. Each new Director brings extensive and relevant experience to our company. Our accumulated deficit through September 30, 2020 is $224.9 million. To date, we have generated minimal revenues 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 drugs. 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. Off-Balance Sheet Arrangements We had no off-balance sheet arrangements as of September 30, 2020. Critical Accounting Policies Our accounting policies are described in ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS of our Annual Report on Form 10-K as of and for the year ended December 31, 2019, filed with the SEC on February 27, 2020. There have been no changes to our critical accounting policies since December 31, 2019. 25 Table of Contents RESULTS OF OPERATIONS Three Months Ended September 30, 2020 and 2019 Revenues Our total revenues consisted of the following: Three Months Ended September 30, 2020 2019 Increase (Decrease) Royalties $ 136,401 $ 51,687 $ 84,714 Services and other — — — Total revenues $ 136,401 $ 51,687 $ 84,714 The increase in royalty income for the three months ended September 30, 2020 as compared to the prior period is primarily from fluctuations of 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: Three Months Ended September 30, 2020 2019 Increase (Decrease) Salaries and staff costs $ 412,154 $ 399,962 $ 12,192 Stock-based compensation 104,259 104,153 106 Clinical trials, outside services, and lab supplies 2,151,028 2,052,224 98,804 Facilities and other 187,371 262,485 (75,114) Total research and development $ 2,854,812 $ 2,818,824 $ 35,988 Research and development expenses increased by $35,988 for the three months ended September 30, 2020 compared to the same period in 2019. The overall increase in research and development expenses was primarily due to costs associated with clinical programs and outside service costs for three ongoing clinical trials related to the development of our lead drug candidate, onvansertib. Facilities and other decreased primarily due to decreased travel and conference expenses to present data related to our lead drug candidate, onvansertib. Due to COVID-19 presentation of data has transitioned to virtual conferences. Selling, General and Administrative Expenses Selling, general and administrative expenses consisted of the following: Three Months Ended September 30, 2020 2019 Increase (Decrease) Salaries and staff costs $ 519,883 $ 468,821 $ 51,062 Stock-based compensation 257,625 162,172 95,453 Outside services and professional fees 488,633 507,074 (18,441) Facilities and other 378,070 302,272 75,798 Total selling, general and administrative $ 1,644,211 $ 1,440,339 $ 203,872 Selling, general and administrative expenses increased by $203,872 for the three months ended September 30, 2020 compared to the same period in 2019. The significant components of the increase were primarily due to the increase in stock-based compensation, salaries and staff costs, facilities and other costs, partially offset by a reduction in outside services. The increase in stock-based compensation is primarily due to stock options granted in June 2020. The increase in salaries and staff 26 Table of Contents costs is primarily due to annual increases in salary and promotions. The increase in facilities and other cost was due to an increase in insurance costs for the three months ended September 30, 2020 as compared to the same period of 2019. Interest Income Interest income was $15,864 for the three months ended September 30, 2020 as compared to $53,700 for the same period of 2019. The decrease of interest income is primarily due to lower interest rates for three months ended September 30, 2020 as compared to the same period of 2019. Change in Fair Value of Derivative Financial Instruments — Warrants We have issued warrants that are accounted for as derivative liabilities. As of September 30, 2020, the derivative financial instruments — warrants liabilities were revalued to $190,199, resulting in an increase in value of $144,035 from June 30, 2020, based primarily upon the fluctuation in our stock price as well as the changes in the expected term, volatility, and risk-free interest rates for the expected term. The increase in value upon remeasurement at September 30, 2020 was recorded as a loss from the change in fair value of derivative financial instruments — warrants in the condensed statement of operations. Net Loss Net loss and per share amounts were as follows: Three Months Ended September 30, 2020 2019 Increase (Decrease) Net loss attributable to common shareholders $ (4,502,591) $ (4,147,609) $ 354,982 Net loss per common share — basic and diluted $ (0.19) $ (0.69) $ (0.50) Weighted average shares outstanding — basic and diluted 23,341,218 6,024,679 17,316,539 The $354,982 increase in net loss attributable to common shareholders was primarily the result of an increase of operating expenses and an increase in the loss recorded from the change in fair value of derivative financial instruments during the three months ended September 30, 2020, compared to the same period in the prior year. The $0.50 decrease in basic net loss per share was impacted by the increase in basic weighted average shares outstanding resulting primarily from the issuance of approximately 19.8 million shares of common stock and common stock equivalents from October 1, 2019 through September 30, 2020. Nine Months Ended September 30, 2020 and 2019 Revenues Our total revenues consisted of the following: Nine Months Ended September 30, 2020 2019 Increase (Decrease) Royalties $ 246,738 $ 150,560 $ 96,178 Services and other — 1,495 (1,495) Total revenues $ 246,738 $ 152,055 $ 94,683 The increase in revenues for the nine months ended September 30, 2020 as compared to the prior period is primarily from fluctuations of 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. 27 Table of Contents Research and Development Expenses Research and development expenses consisted of the following: Nine Months Ended September 30, 2020 2019 Increase (Decrease) Salaries and staff costs $ 1,261,280 $ 1,183,901 $ 77,379 Stock-based compensation 251,212 300,291 (49,079) Clinical trials, outside services, and lab supplies 5,933,212 6,115,127 (181,915) Facilities and other 590,521 698,444 (107,923) Total research and development $ 8,036,225 $ 8,297,763 $ (261,538) Research and development expenses decreased by $261,538 for the nine months ended September 30, 2020 compared to the same period in 2019. The overall decrease in research and development expenses was primarily due to costs associated with clinical programs and outside service costs for three ongoing clinical trials related to the development of our lead drug candidate, onvansertib. Facilities and other decreased primarily due to decreased travel and conference expenses to present data related to our lead drug candidate, onvansertib. Due to COVID-19 presentation of data has transitioned to virtual conferences. Selling, General and Administrative Expenses Selling, general and administrative expenses consisted of the following: Nine Months Ended September 30, 2020 2019 Increase (Decrease) Salaries and staff costs $ 1,565,021 $ 1,449,979 $ 115,042 Stock-based compensation 569,757 314,935 254,822 Outside services and professional fees 1,468,236 1,541,120 (72,884) Facilities and other 1,196,443 937,456 258,987 Total selling, general and administrative $ 4,799,457 $ 4,243,490 $ 555,967 Selling, general and administrative expenses increased by $555,967 for the nine months ended September 30, 2020 compared to the same period in 2019. The significant components of the increase were primarily due to the increase in stock-based compensation, salaries and staff costs, facilities and other costs, partially offset by a reduction in outside services. The increase in stock-based compensation is primarily due to stock options granted in June 2019 and June 2020. The increase in salaries and staff costs is primarily due to annual salary increases and promotions. The increase in facilities and other cost was due to an increase in insurance costs for the nine months ended September 30, 2020 as compared to the same period of 2019. Interest Income and Expense Interest income was $67,358 for the nine months ended September 30, 2020 as compared to $188,204 for the same period of 2019. The decrease of interest income is primarily due to lower interest rates for nine months ended September 30, 2020 as compared to the same period of 2019. Change in Fair Value of Derivative Financial Instruments — Warrants We have issued warrants that are accounted for as derivative liabilities. As of September 30, 2020, the derivative financial instruments — warrants liabilities were revalued to $190,199, resulting in an increase in value of $186,072 from December 31, 2019, based primarily upon the fluctuation in our stock price as well as the changes in the expected term, volatility, and risk-free interest rates for the expected term. The increase in value upon remeasurement at September 30, 2020 was recorded as a loss from the change in fair value of derivative financial instruments — warrants in the condensed statement of operations. 28 Table of Contents Net Loss Net loss and per share amounts were as follows: Nine Months Ended September 30, 2020 2019 Increase (Decrease) Net loss attributable to common shareholders $ (15,994,289) $ (12,458,072) $ 3,536,217 Net loss per common share — basic and diluted $ (1.00) $ (2.40) $ (1.40) Weighted average shares outstanding — basic and diluted 15,941,665 5,180,221 10,761,444 The $3,536,217 increase in net loss attributable to common shareholders was primarily the result of an increase of $3.0 million attributable to the d eemed dividends recognized on beneficial conversion features of convertible preferred stock issuances, an increase in the loss recorded from the change in fair value of derivative financial instruments, an increase in operating expense and a decrease in interest income, for the nine months ended September 30, 2020 compared to the same period in the prior year. The $1.40 decrease in basic net loss per share was impacted by the increase in basic weighted average shares outstanding resulting primarily from the issuance of approximately 19.8 million shares of common stock and common stock equivalents from October 1, 2019 through September 30, 2020. LIQUIDITY AND CAPITAL RESOURCES The COVID-19 outbreak in the United States has caused business disruptions. The extent of the impact of COVID-19 on our operational and financial performance will depend on certain developments, including the duration and spread of the outbreak, and impact on our clinical trials, employees and vendors, all of which are uncertain and cannot be predicted. The economic effects of the outbreak could also have an adverse effect on our ability to raise additional capital. At this point, the extent to which COVID-19 may impact our future financial condition or results of operations is uncertain. As of September 30, 2020, we had $36,405,432 in cash and cash equivalents. Net cash used in operating activities for the nine months ended September 30, 2020 was $11,191,025, compared to $9,990,636 for the nine months ended September 30, 2019. Our use of cash was primarily a result of the net loss of $12,709,625 for the nine months ended September 30, 2020, adjusted for non-cash items related to release of clinical trial funding commitment of $868,093, stock-based compensation of $820,969, and depreciation and amortization of $348,748. The net change in our operating assets and liabilities was $739,451 increasing cash used in operations. At our current and anticipated level of operating loss, we expect to continue to incur an operating cash outflow for the next several years. Net cash used in investing activities was $153,784 during the nine months ended September 30, 2020, compared to $67,622 for the same period in 2019, which were for capital expenditures. Net cash provided in financing activities was $37,554,949 during the nine months ended September 30, 2020, compared to $7,637,331 for the same period in 2019. Net cash provided in financing activities during the nine months ended September 30, 2020 was primarily from $18.3 million of proceeds from the sale of common stock, preferred stock and warrants and from $19.0 million of proceeds from the exercise of warrants. Net cash provided in financing activities during the nine months ended September 30, 2019 was primarily from $3.3 million of proceeds from the exercise of warrants and $4.4 million from the sale of common stock and warrants. As of September 30, 2020, and December 31, 2019, we had working capital of $32,746,587 and $6,571,985, respectively. We have incurred net losses since our inception and have negative operating cash flows. As of September 30, 2020, we had $36.4 million in cash and cash equivalents and we believe we have sufficient cash to meet our 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. The economic effects of COVID-19 could also have an adverse effect on the Company's ability to raise additional capital. 29 Table of Contents Public Offerings On October 2, 2020, we announced the completion of an underwritten public offering of 6,500,000 shares of our common stock at a price to the public of $13.50 per share. In addition, the underwriters exercised in full an option to purchase an additional 975,000 shares of common stock at the public offering price, less the underwriting discounts and commissions. All of the shares in the offering were sold by us, with gross proceeds of approximately $100.9 million and net proceeds of approximately $94.0 million, after deducting underwriting discounts and commissions and estimated offering expenses. CONTRACTUAL OBLIGATIONS For a discussion of our contractual obligations see (i) our Financial Statements and Notes to Financial Statements Note 10. Commitments and Contingencies , and (ii) Item 7 Management Discussion and Analysis of Financial Condition and Results of Operations — Contractual Obligations and Commitments , included in our Annual Report on Form 10-K as of December 31, 2019. There have been no material changes to our contractual obligations in our Form 10-K for the year ended December 31, 2019. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Not applicable.