What changed in this filing

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Item 1. Financial Statements

2021-05-06 compared with 2020-11-05 · 132 added, 259 removed, 274 unchanged (59% of the section changed)

2 unchanged sentences

CONDENSED BALANCE SHEETS

September 30,

(in thousands, except par value)

2021 December 31,

1 unchanged sentence

Cash and cash equivalents $ 14,662 $ 130,981

Short-term investments 110,922 —

Accounts receivable and unbilled receivable 242 320

9 unchanged sentences

Accrued expenses 2,999 3,851

Note payable 305,000 —

Operating lease liabilities 635 860

Other current liabilities 42 42

Total current liabilities 4,479 6,119

7 unchanged sentences

Common stock, $ 0.0001 par value, 150,000 shares authorized;

26,285,743 and 8,593,633 shares issued and outstanding at September 30, 2020 and December 31, 2019, respectively

37,552 and 36,781 shares issued and outstanding at March 31, 2021 and December 31, 2020, respectively

Additional paid-in capital 363,350 361,819

Service receivables ( 1,791 ) ( 2,171 )

Accumulated other comprehensive loss ( 67 ) —

Accumulated deficit ( 236,680 ) ( 231,495 )

4 unchanged sentences

CONDENSED STATEMENTS OF OPERATIONS

Three Months Ended September 30, Nine Months Ended September 30,

2020 2019 2020 2019

(in thousands, except per share amounts)

Three Months Ended March 31,

Royalties $ 72 $ 68

Services — — — 1,495

Total revenues 72 68

4 unchanged sentences

Loss from operations ( 5,442 ) ( 4,124 )

Interest income 15,864 53,700 67,358 188,204

Gain (loss) from change in fair value of derivative financial instruments—warrants ( 144,035 ) 13,330 ( 186,072 ) 27,359

Interest income, net 57 36

Gain from change in fair value of derivative financial instruments—warrants 207 2

Other income (expense), net ( 1 ) ( 3 )

1 unchanged sentence

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

Deemed dividend recognized on beneficial conversion features of Series C Convertible Preferred Stock issuance — — — ( 268,269 )

Deemed dividend recognized on beneficial conversion features of Series D Convertible Preferred Stock issuance — — ( 601,767 ) —

Deemed dividend recognized on beneficial conversion features of Series E Convertible Preferred Stock issuance — — ( 2,664,717 ) —

Net loss attributable to common stockholders $ ( 5,185 ) $ ( 4,095 )

3 unchanged sentences

CARDIFF ONCOLOGY, INC.

CONDENSED STATEMENTS OF COMPREHENSIVE LOSS

(in thousands)

Three Months Ended March 31,

Net loss $ ( 5,179 ) $ ( 4,089 )

Other comprehensive loss:

Unrealized loss on securities available-for-sale ( 67 ) —

Total comprehensive loss ( 5,246 ) ( 4,089 )

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

Comprehensive loss attributable to common stockholders $ ( 5,252 ) $ ( 4,095 )

See accompanying notes to the unaudited condensed financial statements.

CARDIFF ONCOLOGY, INC.

CONDENSED STATEMENTS OF STOCKHOLDERS’ EQUITY

(in thousands)

Preferred Stock

3 unchanged sentences

Amount Additional

Paid-In Capital Service Receivable Accumulated Deficit Total

Paid-In Capital Service Receivable Accumulated Other Comprehensive Loss Accumulated Deficit Total

Stockholders’ Equity

1 unchanged sentence

Stock-based compensation — — — — 268 — — — 268

Sale of common stock and warrants — — 800,000 80 999,921 — — 1,000,001

Issuance of common stock upon exercise of warrants — — 771 — 1,263 — — — 1,263

Issuance of common stock upon vesting of restricted stock units — — 6,810 1 ( 1 ) — — —

Other comprehensive loss — — — — — — ( 67 ) — ( 67 )

Preferred stock dividend — — — — — — — ( 6 ) ( 6 )

2 unchanged sentences

Balance, March 31, 2021 716 $ 1 37,552 $ 4 $ 363,350 $ ( 1,791 ) $ ( 67 ) $ ( 236,680 ) $ 124,817

Stock-based compensation — — — — 281,776 — — 281,776

Issuance of common stock, preferred stock and warrants for clinical trial funding commitment 154,670 15 602,833 60 2,292,425 ( 2,300,000 ) — ( 7,500 )

Deemed dividend recognized on beneficial conversion features of Series D Convertible Preferred Stock issuance — — — — 601,767 — ( 601,767 ) —

Deemed dividend recognized on beneficial conversion features of Series E Convertible Preferred Stock issuance — — — — 2,664,717 — ( 2,664,717 ) —

Sale of common stock, preferred stock and warrants (1)

865,824 866 4,689,313 469 17,277,093 — — 17,278,428

Issuance of common stock upon exercise of warrants — — 3,473,393 347 4,604,670 — — 4,605,017

Issuance of common stock upon vesting of restricted stock units — — 2,250 — — — — —

Issuance of common stock upon conversion of Series D Convertible Preferred Stock ( 154,670 ) ( 15 ) 1,546,700 155 ( 140 ) — — —

Preferred stock dividend payable on Series A Convertible Preferred Stock — — — — — — ( 6,060 ) ( 6,060 )

Release of clinical trial funding commitment — — — — — 213,492 — 213,492

Net loss — — — — — — ( 4,124,532 ) ( 4,124,532 )

Balance, June 30, 2020 926,424 $ 926 21,325,076 $ 9,585 $ 247,528,273 $ ( 2,765,164 ) $ ( 220,389,581 ) $ 24,384,039

Stock-based compensation — — — — 361,884 — — 361,884

Issuance of common stock upon exercise of warrants — — 4,956,084 496 12,910,306 — — 12,910,802

Issuance of common stock upon exercise of stock options — — 3,333 — 6,832 — — 6,832

Preferred Stock

Shares Preferred Stock

Amount Common Stock

Shares Common Stock

Amount Additional

Paid-In Capital Service Receivable Accumulated Deficit Total

Stockholders’ Equity

Issuance of common stock upon vesting of restricted stock units — — 1,250 — — — — —

Preferred stock dividend payable on Series A Convertible Preferred Stock — — — — — — ( 6,060 ) ( 6,060 )

Release of clinical trial funding commitment — — — — — 361,584 — 361,584

Net loss — — — — — — ( 4,496,531 ) ( 4,496,531 )

Balance, September 30, 2020 926,424 $ 926 26,285,743 $ 10,081 $ 260,807,295 $ ( 2,403,580 ) $ ( 224,892,172 ) $ 33,522,550

(1) Net of expenses of $ 616,143 , and fair value of warrants issued as a transaction advisory fee as of the date of issuance of $ 370,666 .

See accompanying notes to the unaudited condensed financial statements.

Preferred Stock

3 unchanged sentences

Amount Additional

Paid-In Capital Service Receivable Accumulated Deficit Total

Paid-In Capital Service Receivable Accumulated Other Comprehensive Loss Accumulated Deficit Total

Stockholders’ Equity

1 unchanged sentence

Stock-based compensation — — — 177 — — — 177

Issuance of common stock, preferred stock and warrants for clinical trial funding commitment, net of expenses and discount of $ 40,000 and $ 235,640 , respectively

200,000 200 183,334 110 1,634,690 ( 1,675,000 ) — ( 40,000 )

Deemed dividend recognized on beneficial conversion features of Series C Convertible Preferred Stock issuance — — — — 268,269 — ( 268,269 ) —

Sale of common stock and warrants — — 800 — 1,000 — — — 1,000

Issuance of common stock upon exercise of warrants — — 1,610 — 1,456 — — — 1,456

Issuance of common stock upon vesting of restricted stock units — — 7 — — — — — —

Preferred stock dividend payable on Series A Convertible Preferred Stock — — — — — — ( 6,060 ) ( 6,060 )

Issuance of common stock for share rounding as a result of reverse stock split — — 6,466 — — — — —

Preferred stock dividend — — — — — — — ( 6 ) ( 6 )

Release of clinical trial funding commitment — — — — — 293 — — 293

1 unchanged sentence

Balance, March 31, 2020 61 $ — 11,011 $ 8 $ 219,805 $ ( 679 ) $ — $ ( 212,993 ) $ 6,141

Stock-based compensation — — — — 148,834 — — 148,834

Sale of common stock and warrants, net of expenses — — 421,917 42 2,902,698 — — 2,902,740

Issuance of common stock upon exercise of warrants — — 156,353 16 1,548 — — 1,564

Issuance of common stock upon vesting of restricted stock units — — 4,433 — — — — —

Issuance of common stock upon conversion of Series C Convertible Preferred Stock ( 200,000 ) ( 200 ) 333,333 33 167 — — —

Preferred stock dividend payable on Series A Convertible Preferred Stock — — — — — — ( 6,060 ) ( 6,060 )

Release of clinical trial funding commitment — — — — — 240,279 — 240,279

Net loss — — — — — ( 4,125,303 ) ( 4,125,303 )

Balance, June 30, 2019 60,600 $ 60 5,441,390 $ 7,997 $ 210,706,090 $ ( 1,364,234 ) $ ( 200,501,678 ) $ 8,848,235

Stock-based compensation — — — — 266,325 — — 266,325

Sale of common stock and warrants, net of expenses — — 271,744 27 1,483,554 — — 1,483,581

Issuance of common stock upon exercise of warrants — — 717,969 72 7,108 — — 7,180

Issuance of common stock upon vesting of restricted stock units — — 5,402 — — — — —

Preferred stock dividend payable on Series A Convertible Preferred Stock — — — — — — ( 6,060 ) ( 6,060 )

Preferred Stock

Shares Preferred Stock

Amount Common Stock

Shares Common Stock

Amount Additional

Paid-In Capital Service Receivable Accumulated Deficit Total

Stockholders’ Equity

Release of clinical trial funding commitment — — — — — 198,268 — 198,268

Net loss — — — — — — ( 4,141,549 ) ( 4,141,549 )

Balance, September 30, 2019 60,600 $ 60 6,436,505 $ 8,096 $ 212,463,077 $ ( 1,165,966 ) $ ( 204,649,287 ) $ 6,655,980

See accompanying notes to the unaudited condensed financial statements.

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CONDENSED STATEMENTS OF CASH FLOWS

Nine Months Ended September 30,

(in thousands)

Three Months Ended March 31,

Operating activities

1 unchanged sentence

Adjustments to reconcile net loss to net cash used in operating activities:

Impairment loss 34,169 —

Loss on disposal of assets 1 —

Depreciation 119 119

Stock-based compensation expense 268 177

Amortization of premiums on short-term investments 204 —

Change in fair value of derivative financial instruments—warrants ( 207 ) ( 2 )

3 unchanged sentences

Accounts receivable and unbilled receivable 79 97

Prepaid expenses ( 623,902 ) 277,876

Prepaid expenses and other assets ( 183 ) 56

Operating lease right-of-use assets 82 80

4 unchanged sentences

Investing activities:

Capital expenditures ( 153,784 ) ( 67,622 )

Purchases of short-term investments ( 114,195 ) —

Sales of short-term investments 2,497 —

Net cash used in investing activities ( 111,698 ) —

1 unchanged sentence

Proceeds from sales of common stock, preferred stock and warrants, net of expenses of $ 0 and $ 634 , respectively

18,278,429 4,386,321

Costs related to the clinical trial funding commitment ( 7,500 ) ( 40,000 )

Proceeds from exercise of options 6,832 —

Proceeds from exercise of warrants 1,263 1,456

Borrowings under note payable 305,000 —

Net cash provided by financing activities 1,263 2,456

6 unchanged sentences

Preferred stock dividend payable on Series A Convertible Preferred Stock $ 6 $ 6

Deemed dividend recognized for beneficial conversion features of Series C Convertible Preferred Stock issuance $ — $ 268,269

Deemed dividend recognized for beneficial conversion features of Series D Convertible Preferred Stock issuance $ 601,767 $ —

Nine Months Ended September 30,

Deemed dividend recognized for beneficial conversion features of Series E Convertible Preferred Stock issuance $ 2,664,717 $ —

Common stock, Series C Convertible Preferred Stock and warrants issued in connection with clinical trial funding commitment, net of discount of $ 235,640

$ — $ 1,675,000

Common stock, Series D Convertible Preferred Stock and warrants issued in connection with clinical trial funding commitment, net of discount of $ 488,270

$ 2,300,000 $ —

Common stock issued upon conversion of Series C Convertible Preferred Stock $ — $ 33

Common stock issued upon conversion of Series D Convertible Preferred Stock $ 155 $ —

See accompanying notes to the unaudited condensed financial statements.

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Cardiff Oncology, Inc.

(“Cardiff Oncology” or the “Company”) headquartered in San Diego, California, is a clinical-stage biotechnology company with the singular mission of developing new treatment options for cancer patients in indications with the greatest medical need, including KRAS-mutated metastatic colorectal cancer, Zytiga®-resistant metastatic castration-resistant prostate cancer and relapsed or refractory acute myeloid leukemia.

(“Cardiff Oncology” or the “Company”) headquartered in San Diego, California, is a clinical-stage biotechnology company with the singular mission of developing new treatment options for cancer patients in indications with the greatest medical need, including KRAS-mutated metastatic colorectal cancer, metastatic pancreatic cancer and Zytiga®-resistant metastatic castration-resistant prostate cancer.

Our goal is to overcome resistance, improve response to treatment and increase overall survival.

Through the integration of tumor genomics and biomarker technology, we are able to assess patient response to treatment.

Through the integration of tumor genomics and biomarker technology, we are performing correlative studies in our clinical programs to enable assessment of patient response to treatment.

Basis of Presentation

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The Company has incurred net losses since its inception and has negative operating cash flows.

As of September 30, 2020, the Company had $ 36.4 million in cash and cash equivalents 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.

On October 2, 2020 the Company closed an underwritten public offering of its common stock for gross proceeds of approximately $ 100.9 million.

See Note 11 to the condensed financial statements for further information.

As of March 31, 2021, the Company had $ 125.6 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.

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See Note 10 to the condensed financial statements for further information.

As of October 31, 2020 the Company had $ 131.8 million in cash and cash equivalents.

Summary of Significant Accounting Policies

During the nine months ended September 30, 2020, 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, 2019.

During the three months ended March 31, 2021, 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, 2020, other than the addition of investment securities as described below.

Investment Securities

All investments have been classified as “available-for-sale” and are carried at fair value as determined based upon quoted market prices or pricing models for similar securities at period end.

Investments with contractual maturities less than 12 months at the balance sheet date are considered short-term investments.

Investments with contractual maturities beyond one year are also classified as short-term due to the Company’s ability to liquidate the investment for use in operations within the next 12 months.

Realized gains and losses on investment securities are included in earnings and are derived using the specific identification method for determining the cost of securities sold.

The Company has not realized any significant gains or losses on sales of available-for-sale investment securities during any of the periods presented.

As all the Company’s investment holdings are in the form of debt securities or certificates of deposit, unrealized gains and losses that are determined to be temporary in nature are reported as a component of accumulated other comprehensive income.

A decline in the fair value of any security below cost that is deemed other than temporary results in a charge to earnings and the establishment of a new cost basis for the security.

Interest income is recognized when earned and is included in investment income, as are the amortization of purchase premiums and accretion of purchase discounts on investment securities.

Net Loss Per Share

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Preferred dividends are included in net loss attributable to common stockholders in the computation of basic and diluted earnings per share.

Shares used in calculating diluted net loss per common share exclude as anti-dilutive the following share equivalents:

The following table sets forth the computation of basic and diluted earnings per share:

Ended September 30, Nine Months

Ended September 30,

2020 2019 2020 2019

Ended March 31,

(in thousands, except per share amounts) 2021 2020

Net loss used for basic and diluted loss per share $ ( 5,185 ) $ ( 4,095 )

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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,

Options to purchase Common Stock 1,849,737 975,233

4 unchanged sentences

9,025,380 11,496,978

Recently Adopted Accounting Pronouncement

Recent Accounting Pronouncement Not Yet Adopted

In August 2020, the FASB issued ASU No.

2018-13 ("ASU 2018-13"), Changes to the Disclosure Requirements for Fair Value Measurement .

This ASU eliminates, adds and modifies certain disclosure requirements for fair value measurements as part of its disclosure framework project.

The standard is effective for all entities for financial statements issued for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years.

The Company has prospectively adopted ASU 2018-13 as of January 1, 2020 for periods presented after adoption.

The adoption of ASU 2018-13 did not have a material impact on the Company's financial statements.

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.

adoption is permitted.

The Company is currently evaluating the impact of this standard on its financial statements and related disclosures.

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, 2020 and December 31, 2019:

Fair Value Measurements at

September 30, 2020

Quoted Prices in Active Markets for Identical Assets and Liabilities

March 31, 2021

(in thousands) Quoted Prices in Active Markets for Identical Assets and Liabilities

(Level 1) Significant Other Observable Inputs

2 unchanged sentences

Money market fund (1) $ 6,271 $ — $ — $ 6,271

Total Assets $ 35,536,630 $ — $ — $ 35,536,630

Corporate debt securities (1) — 5,345 — 5,345

Total included in cash and cash equivalents $ 6,271 $ 5,345 $ — $ 11,616

Available for sale investments (2):

Certificate of deposit — 2,599 — 2,599

Corporate debt securities — 81,450 — 81,450

Commercial paper — 5,745 — 5,745

government — 741 — 741

treasury securities — 20,387 — 20,387

Total available for sale investments $ — $ 110,922 $ — $ 110,922

Total assets measured at fair value on a recurring basis $ 6,271 $ 116,267 $ — $ 122,538

Derivative financial instruments — warrants (3)

$ — $ — $ 78 $ 78

Total Liabilities $ — $ — $ 190,199 $ 190,199

Total liabilities measured at fair value on a recurring basis $ — $ — $ 78 $ 78

Fair Value Measurements at

December 31, 2020

Quoted Prices in Active Markets for Identical Assets and Liabilities

(in thousands) Quoted Prices in Active Markets for Identical Assets and Liabilities

(Level 1) Significant Other Observable Inputs

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Money market fund (1) $ 129,988 $ — $ — $ 129,988

Total Assets $ 10,131,240 $ — $ — $ 10,131,240

Total assets measured at fair value on a recurring basis $ 129,988 $ — $ — $ 129,988

Derivative financial instruments — warrants (3)

$ — $ — $ 285 $ 285

Total Liabilities $ — $ — $ 4,127 $ 4,127

Total liabilities measured at fair value on a recurring basis $ — $ — $ 285 $ 285

(1) Included as a component of cash and cash equivalents on the accompanying condensed balance sheets.

(2) Included in short-term investments in the accompanying consolidated balance sheets depending on the respective maturity date.

(3) A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement.

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See Note 6 to the condensed financial statements for further information.

Property and Equipment

Supplementary Balance Sheet Information

Investments available for sale consist of the following:

As of March 31,

(in thousands) Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Market Value

Certificate of deposit 2,599 — — 2,599

Corporate debt securities 81,518 1 ( 69 ) 81,450

Commercial paper 5,745 1 ( 1 ) 5,745

government 742 — ( 1 ) 741

treasury securities 20,385 3 ( 1 ) 20,387

Total short term investments $ 110,989 $ 5 $ ( 72 ) $ 110,922

Property and equipment consist of the following:

As of September 30,

(in thousands) As of March 31,

2021 As of December 31,

2 unchanged sentences

Laboratory equipment 853 868

3,635,900 3,482,116

Less—accumulated depreciation and amortization ( 3,109 ) ( 3,004 )

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The lease currently requires fixed monthly rent payments of approximately $ 80,000 , with 3 % annual escalation.

The lease also contains one five-year renewal option with minimum monthly rent equal to the then-current fair market value, subject to a 3 % annual increase.

As the Company is not reasonably certain to exercise this option, it has not been included in the calculation of the lease liability or right-of-use asset related to this lease.

The Company is currently in negotiations to lease lab and office space after our current lease expires.

Facility Subleases

As a result of corporate restructurings in previous years, the Company vacated a portion of its facility and has subleased the space to third parties under three separate sublease agreements, which all expire December 31, 2021.

The Company recorded a cease-use loss liability and expense in 2018 pursuant to ASC 420, Exit or Disposal Cost Obligations , representing the total expected shortfall in sublease income for two of the subleases as compared to its required payments for those spaces under the remainder of the master lease term.

This liability was being amortized over the remaining lease term until the adoption of ASC 842, whereupon the remaining cease-use loss liability of approximately $ 487,000 was eliminated and treated as a reduction to the beginning ROU asset value for the master lease as of January 1, 2019.

Income will continue to be recognized on a straight-line basis over the term of the sublease.

Impairment of Right-of-Use Assets

The Company recorded an impairment loss of $ 0 and $ 34,169 for the three and nine months ended September 30, 2020, respectively.

The loss related to a vacated portion of the facility that was no longer being subleased.

The Company determined that the prolonged loss of sublease income and an adverse commercial real estate market caused by COVID-19 were indicators of impairment.

A fair value approach using quoted prices for similar assets was used to determine the impairment loss.

The loss was recorded within operating expenses in the condensed statement of operations.

The components of lease expense were as follows:

Three Months Ended September 30, Nine Months Ended September 30,

2020 2019 2020 2019

Three Months Ended March 31,

(in thousands) 2021 2020

Operating lease cost $ 95 $ 107

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Supplemental balance sheet information related to leases was as follows:

As of September 30,

(in thousands) As of March 31,

2021 As of December 31,

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Total operating lease liabilities $ 643 $ 869

Weighted-average remaining lease term–operating leases 1.3 years 2.0 years

Weighted-average remaining lease term–operating leases 0.8 years 1.0 year

Weighted-average discount rate–operating leases 6.5 % 6.5 %

Supplemental cash flow and other information related to leases was as follows:

Three Months Ended September 30, Nine Months Ended September 30,

2020 2019 2020 2019

Three Months Ended March 31,

(in thousands) 2021 2020

Cash paid for amounts included in the measurement of lease liabilities:

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Total remaining annual commitments under non-cancelable lease agreements for each of the years ended December 31 are as follows:

(in thousands)

Year Ending December 31, Operating Leases Sublease Income Net Operating Leases

2020 (excluding the nine months ended September 30, 2020) $ 159,167 $ ( 72,793 ) $ 86,374

2021 968,165 ( 403,345 ) 564,820

2022 5,868 — 5,868

2023 3,423 — 3,423

2021 (excluding the three months ended March 31, 2021) $ 650 $ ( 303 ) $ 347

Total future minimum lease payments 659 $ ( 303 ) $ 356

Less imputed interest ( 16 )

Total $ 1,090,712

Derivative Financial Instruments — Warrants

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The Company estimates the fair value of these warrants using the Black-Scholes option pricing model.

The range of assumptions and weighted averages used to determine the fair value of the warrants valued using the Black-Scholes option pricing model during the periods indicated were:

Nine Months Ended September 30,

Estimated fair value of Cardiff Oncology common stock $ 1.01 - $ 14.19

$ 1.51 - $ 3.75

Expected warrant term 2.3 - 3.1 years

3.3 - 4.1 years

Risk-free interest rate 0.14 - 1.62 %

1.56 - 2.49 %

Expected volatility of Cardiff Oncology common stock 110 - 118 %

Dividend yield 0 % 0 %

As of September 30,

Weighted Average (1)(2) :

The assumptions used to determine the fair value of the warrants using the Black-Scholes option pricing model were:

As of March 31,

2021 As of December 31,

Fair value of Cardiff Oncology common stock $ 9.26 $ 17.99

Expected warrant term 2.3 years

Expected warrant term 1.8 years 2.2 years

Risk-free interest rate 0.14 % 0.13 %

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Dividend yield 0 % 0 %

(1) Weighted average is only disclosed for periods after January 1, 2020 under the adoption of ASU 2018-13.

(2) The weighted average was calculated using the relative fair value method.

Expected volatility is based on historical volatility of Cardiff Oncology’s common stock.

The warrants have a transferability provision and based on guidance provided in Staff Accounting Bulletin (“SAB”) No.

107, Share-Based Payment (“SAB No.

107”) , for instruments issued with such a provision, Cardiff Oncology used the remaining contractual term as the expected term of the warrants.

The warrants have a transferability provision, accordingly, Cardiff Oncology used the remaining contractual term as the expected term of the warrants.

The risk-free rate is based on the U.S.

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The following table sets forth the components of changes in the Company’s derivative financial instruments — warrants liability balance, valued using the Black-Scholes option pricing method, for the periods indicated.

(in thousands, except for number of warrants)

Date Description Number of Warrants Derivative

December 31, 2020 Balance of derivative financial instruments — warrants liability

64,496 $ 4,127

Change in fair value of derivative financial instruments — warrants during the period recognized as a loss in the condensed statements of operations

September 30, 2020 Balance of derivative financial instruments — warrants liability

64,496 $ 190,199

Change in fair value of derivative financial instruments — warrants during the period recognized as a gain in the condensed statements of operations

March 31, 2021 Balance of derivative financial instruments — warrants liability

Stockholders’ Equity

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Stock-based compensation expense related to Cardiff Oncology equity awards have been recognized in operating results as follows:

Three Months Ended September 30, Nine Months Ended September 30,

2020 2019 2020 2019

Three Months Ended March 31,

(in thousands) 2021 2020

Included in research and development expense $ 40 $ 77

1 unchanged sentence

Total stock-based compensation expense $ 268 $ 177

The unrecognized compensation cost related to non-vested stock options outstanding at September 30, 2020 and 2019, net of estimated forfeitures, was $ 2,388,077 and $ 1,476,725 , respectively, which is expected to be recognized over a weighted-average remaining vesting period of 2.2 and 2.4 years, respectively.

The weighted-average remaining contractual term of outstanding options as of September 30, 2020 was approximately 9.1 years.

The total fair value of stock options vested during the nine months ended September 30, 2020 and 2019 were $ 770,582 and $ 321,870 , respectively.

The unrecognized compensation cost related to non-vested stock options outstanding at March 31, 2021, net of estimated forfeitures, was $ 1.2 million, which is expected to be recognized over a weighted-average remaining vesting period of 1.8 .

The weighted-average remaining contractual term of outstanding options as of March 31, 2021 was approximately 8.6 years.

The total fair value of stock options vested during the three months ended March 31, 2021 and 2020 were $ 24,333 and $ 34,929 , respectively.

The estimated fair value of stock option awards was determined on the date of grant using the Black-Scholes option valuation model with the following weighted-average assumptions during the following periods indicated:

Nine Months Ended September 30,

Three Months Ended March 31,

Risk-free interest rate (1)

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Expected volatility of Cardiff Oncology common stock (1)

Expected term 5.9 years 5.9 years

Expected term (1)

(1) No stock options were granted during the period.

A summary of stock option activity and changes in stock options outstanding is presented below:

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Balance outstanding, December 31, 2020 1,860,507 $ 7.43 $ 27,963,363

Granted 969,965 $ 2.53

Exercised ( 3,333 ) $ 2.05

Canceled / Forfeited ( 10,770 ) $ 2.55

Expired ( 15,275 ) $ 8.98

Balance outstanding, September 30, 2020 1,920,706 $ 7.65 $ 21,766,326

Exercisable at September 30, 2020 441,434 $ 24.82 $ 4,507,516

On June 6, 2019, the number of authorized shares in the Cardiff Oncology 2014 Equity Incentive Plan (“2014 EIP”) was increased from 243,056 to 1,243,056 .

On April 16, 2020 the 2014 EIP was amended to increase the number of shares of common stock reserved for issuance thereunder to 2,243,056 from 1,243,056 .

As of September 30, 2020, there were 258,497 shares available for issuance under the 2014 EIP.

Balance outstanding, March 31, 2021 1,849,737 $ 7.46 $ 12,125,293

Exercisable at March 31, 2021 756,300 $ 14.61 $ 4,739,794

Vested and expected to vest at March 31, 2021 1,768,104 $ 7.68 $ 11,572,933

The number of authorized shares in the Cardiff Oncology 2014 Equity Incentive Plan (“2014 EIP”) is 2,243,056 .

As of March 31, 2021, there were 271,216 shares available for issuance under the 2014 EIP.

Restricted Stock Units

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Vested ( 491 ) $ 147.60

Non-vested RSUs outstanding, September 30, 2020 991 $ 73.84 $ 14,062

The total fair value of vested RSUs during the nine months ended September 30, 2020 and 2019 were $ 100,585 and $ 169,563 , respectively.

Non-vested RSUs outstanding, March 31, 2021 — $ — $ —

The total fair value of vested RSUs during the three months ended March 31, 2021 and 2020 were $ 72,472 and $ 95,170 , respectively.

A summary of warrant activity and changes in warrants outstanding, including both liability and equity classifications is presented below:

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Balance outstanding, December 31, 2020 5,260,992 $ 5.19 4.1 years

Granted 5,831,451 $ 1.70

Exercised ( 770,833 ) $ 1.64

Balance outstanding, September 30, 2020 7,373,351 $ 4.54 4.3 years

Excluded from the table above are 992,039 pre-funded warrants that were exercised during the nine months ended September 30, 2020.

Balance outstanding, March 31, 2021 4,490,159 $ 5.80 3.7 years

Preferred Stock

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Shares outstanding

Class Par value Shares designated Liquidation preference As of September 30,

Class Par value Shares designated Liquidation preference As of March 31,

2021 As of December 31,

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Series E Convertible Preferred Stock $ 0.001 865,824 None 655,044 655,044

Series C Convertible Preferred Stock and Service Receivable

On January 25, 2019, the Company entered into a Master Services Agreement and a Stock and Warrant Subscription Agreement with PoC Capital, LLC (“PoC”), whereby PoC agreed to finance $ 1.675 million for the development costs associated with Phase 1b/2 study of onvansertib in combination with FOLFIRI and Avastin ® in patients with metastatic Colorectal Cancer (“mCRC”) harboring KRAS mutation in exchange for (i) 183,334 shares of common stock, (ii) warrants to purchase an aggregate of 150,000 shares of common stock, with an exercise price of $ 3.762 per share, expiring on January 25, 2024, and (iii) 200,000 shares of Series C Convertible Preferred Stock, each share of which was convertible into 1.67 shares of common stock.

In April of 2019, all 200,000 shares of Series C Convertible Preferred Stock were converted into 333,333 shares of the Company's common stock.

The Company evaluated the awards issued under this transaction and determined they should be classified as equity.

These equity awards were fully vested and non-forfeitable.

Since the equity awards were for clinical trial services yet to be provided, the Company recognized $ 1.675 million service receivables as contra equity.

The Company releases the service receivables as clinical trial services are performed.

The conversion feature of the Series C Convertible Preferred Stock at the time of issuance was determined to be beneficial on the commitment date.

Because the Series C Convertible Preferred Stock was perpetual with no stated maturity date, and the conversions could occur any time from inception, the Company immediately recorded a non-cash deemed dividend of $ 0.3 million related to the beneficial conversion feature arising from the issuance of Series C Convertible Preferred Stock.

This non-cash deemed dividend increased the Company’s net loss attributable to common stockholders and net loss per share.

Series D Convertible Preferred Stock and Service Receivable

On May 8, 2020, the Company entered into a Stock and Warrant Subscription Agreement with PoC, whereby PoC agreed to finance an additional $ 2.3 million for a clinical trial in exchange for (i) 602,833 shares of its common stock (the “Common Stock”), (ii) 154,670 shares of its Series D Preferred Stock (as defined below) and (iii) a warrant exercisable for 859,813 shares of its Common Stock.

In exchange, PoC is funding our clinical development of onvansertib in metastatic colorectal cancer pursuant to a Master Services Agreement dated as of January 25, 2019 by and among the Company, Integrium, LLC and PoC, as amended.

The warrant will be exercisable six months following the date of issuance at an exercise price of $ 1.50 per share and will expire on November 7, 2025.

In June of 2020, all 154,670 Series D Preferred Stock were converted to 1,546,700 shares of Common Stock.

The Company evaluated the awards issued under this transaction and determined they should be classified as equity.

These equity awards were fully vested and non-forfeitable.

Since the equity awards were for clinical trial services yet to be provided, the Company recognized $ 2.3 million service receivables as contra equity.

The Company releases the service receivables as clinical trial services are performed.

The conversion feature of the Series D Convertible Preferred Stock at the time of issuance was determined to be beneficial on the commitment date.

Because the Series D Convertible Preferred Stock was perpetual with no stated maturity date, and the conversions could occur any time from inception, the Company immediately recorded a non-cash deemed dividend of $ 0.6 million related to the beneficial conversion feature arising from the issuance of Series D Convertible Preferred Stock.

This non-cash deemed dividend increased the Company’s net loss attributable to common stockholders and net loss per share.

Series E Convertible Preferred Stock

On June 15, 2020 the Company entered into a Securities Purchase Agreement with Acorn Bioventures LP ("Acorn"), CDK Associates, L.L.C.

(“CDK”) and Third Street Holdings LLC (“Third Street”), pursuant to which the Company agreed to offer, issue and sell to Acorn, CDK and Third Street, (i) in a registered direct offering, an aggregate of 1,984,328 shares of common stock and (ii) in a concurrent private placement, (a) an aggregate of 865,824 shares of Series E Preferred Stock (“Series E Preferred Stock”) and (b) Series N warrants to purchase up to 2,213,115 shares of Common Stock.

The Series E Preferred Stock is convertible at any time determined by dividing the $ 10 stated value per share of the Series E Preferred Stock by a conversion price of $ 2.44 per share, subject to adjustment in accordance with the Certificate of Designation.

The Series N Warrants will be exercisable six months following the date of issuance at an exercise price of $ 2.39 per share and will expire on December 16, 2025.

As of September 30, 2020, there were 865,824 shares of Series E Convertible Preferred Stock outstanding.

The conversion feature of the Series E Convertible Preferred Stock at the time of issuance was determined to be beneficial on the commitment date.

Because the Series E Convertible Preferred Stock was perpetual with no stated maturity date, and the conversions could occur any time from inception, the Company immediately recorded a non-cash deemed dividend of $ 2.7 million related to the beneficial conversion feature arising from the issuance of Series E Convertible Preferred Stock.

This non-cash deemed dividend increased the Company’s net loss attributable to common stockholders and net loss per share.

In conjunction with the June 15, 2020 offering, we issued 184,426 warrants as an advisory fee.

These warrants are exercisable six months following the date of issuance at an exercise price of $ 3.05 per share and will expire 5.5 years following the date of issuance.

These warrants are classified as equity and its estimated fair value of $ 370,666 was recognized as additional paid in capital on the issuance date.

The estimated fair value is determined using the Black-Scholes Option Pricing Model which is based on the value of the underlying common stock at the valuation measurement date, the remaining contractual term of the warrant, risk-free interest rates, expected dividends and expected volatility of the price of the underlying common stock.

Securities Purchase Agreements with Lincoln Park Capital Fund, LLC

On March 30, 2020, the Company entered into a Securities Purchase Agreement with Lincoln Park Capital Fund, LLC (“LPC”), pursuant to which the Company agreed to offer, issue and sell to LPC, (i) in a registered direct offering, an aggregate of (a) 800,000 shares of common stock and (b) Series I warrants to purchase up to 131,967 shares (the “Series I Warrant Shares”) of common stock.

In a concurrent private placement, the Company also sold to LPC Series J warrants (the “Series J Warrants”) to purchase one share of common stock for each Share and for each Series I Warrant purchased for cash in the registered direct offering.

The Series J Warrants are exercisable six months following the date of issuance at an exercise price of $ 0.948 per share and will expire 5.5 years following the date of issuance.

The gross proceeds from this purchase were $ 1.0 million.

On April 9, 2020, the Company entered into a Securities Purchase Agreement with LPC, pursuant to which the Company agreed to offer, issue and sell to LPC, (i) in a registered direct offering, an aggregate of (a) 904,970 shares of common stock and (b) Series K warrants to purchase up to 255,000 shares (the “Series K Warrant Shares”) of common stock.

In a concurrent private placement, the Company also sold to LPC Series L warrants (the “Series L Warrants”) to purchase one share of Common Stock for each Share and for each Series K Warrant purchased for cash in the registered direct offering.

The Series L Warrants are exercisable six months following the date of issuance at an exercise price of $ 0.81 per share and will expire 5.5 years following the date of issuance.

The gross proceeds from this purchase were $ 1.1 million.

Securities Purchase Agreement With Certain Directors and Executives

On May 11, 2020 and May 14, 2020, the Company entered into Securities Purchase Agreements with certain directors and executives of the Company pursuant to which the Company sold 447,761 shares of common stock at a purchase price of $ 1.34 per share and 146,854 shares of common stock at a purchase price of $ 1.43 per share.

The gross proceeds from these purchases were $ 810,000 .

Securities Purchase Agreement with Acorn Bioventures LP

On May 26, 2020, the Company entered into a Securities Purchase Agreement with Acorn, pursuant to which the Company agreed to offer, issue and sell to Acorn, (i) in a registered direct offering, an aggregate of 1,205,400 shares of common stock and (ii) in a concurrent private placement, Series M warrants to purchase up to 482,160 shares of common stock.

The Series M Warrants are exercisable six months following the date of issuance at an exercise price of $ 2.024 per share and will expire 5.5 years following the date of issuance.

The gross proceeds from this purchase were $ 2.5 million.

Commitments and Contingencies

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In March 2017, the Company entered into a license agreement with Nerviano which granted the Company development and commercialization rights to NMS-1286937, which Cardiff Oncology refers to as onvansertib.

Onvansertib is an oral, investigative drug and a highly-selective adenosine triphosphate competitive inhibitor of the serine/threonine PLK1.

The Company plans to develop onvansertib in patients with leukemias/lymphomas and solid tumor cancers.

Upon execution of the agreement, the Company paid $ 2.0 million in license fees which were expensed to research and development costs.

Onvansertib, an investigational drug, is an oral, and a highly-selective adenosine triphosphate competitive inhibitor of the serine/threonine PLK1.

The Company is developing onvansertib in cancer indications with the greatest medical need for new treatment options.

The Company was committed to order $ 1.0 million of future services provided by Nerviano, such as the cost to manufacture drug product, no later than June 30, 2019, and these services have been purchased.

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License fees are generally calculated as a percentage of product revenues, with rates that vary by agreement.

For the nine months ended September 30, 2020 and 2019, payments have not been material.

For the three months ended March 31, 2021 and 2020, payments have not been material.

Cardiff Oncology does not believe that it has legal liabilities that are probable or reasonably possible that require either accrual or disclosure.

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Related Party Transactions

In November 2018, the Company entered into a Material Transfer Agreement (“MTA”) with Leucadia Life Sciences (“Leucadia”) pursuant to which Leucadia will develop a PCR-based assay for onvansertib for Acute Myeloid Leukemia (“AML”).

The Company’s Executive Chairman, Dr.

Thomas Adams, is a principal stockholder of Leucadia.

In November 2018, the Company entered into a Material Transfer Agreement (“MTA”) with Leucadia Life Sciences (“Leucadia”) pursuant to which Leucadia developed a PCR-based assay for onvansertib for Acute Myeloid Leukemia (“AML”).

This assay was completed in December 2020.

For the duration of the agreement, one of the Company's directors, Dr.

Thomas Adams, was a principal stockholder of Leucadia.

In connection with the MTA, the Company entered into a consulting agreement with Tommy Adams, Co-Founder & Chief Operating Officer of Leucadia, who is the son of Dr.

During the three months ended September 30, 2020 and 2019 the Company incurred and recorded research and development expenses of approximately $ 281,000 and $ 242,000 , respectively, during the nine months ended September 30, 2020 and 2019 the Company incurred and recorded approximately $ 810,000 and $ 745,000 , respectively, for services performed by Leucadia and Tommy Adams.

During the three months ended March 31, 2021 and 2020 the Company incurred and recorded research and development expenses of approximately $ 0 and $ 0.3 million, respectively, for services performed by Leucadia and Tommy Adams.

The COVID-19 outbreak in the United States has caused significant business disruption.

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At this point, the extent to which COVID-19 may impact the Company's future financial condition or results of operations is uncertain.

While there has not been a material impact on the Company's condensed financial statements for the three or nine months ended September 30, 2020, a prolonged outbreak could have a material adverse impact on financial results and business operations of the Company, including the timing and ability of the Company to complete certain clinical trials and other efforts required to advance the development of its drugs and raise additional capital.

While there has not been a material impact on the Company's condensed financial statements for the three months ended March 31, 2021, a prolonged outbreak could have a material adverse impact on financial results and business operations of the Company, including the timing and ability of the Company to complete certain clinical trials and other efforts required to advance the development of its drugs and raise additional capital.

In response to the pandemic, the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”) was signed into law on March 27, 2020.

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The Company is utilizing the deferment of employer social security payments.

The CARES Act did not have a material impact on our income tax provision for the three or nine months ended September 30, 2020.

The CARES Act did not have a material impact on our income tax provision for the three months ended March 31, 2021.

We continue to monitor changes and revisions of the CARES Act and its impact on our financial position, results of operations and cash flows.

Small Business Administration Payroll Protection Program Loan

On April 15, 2020, the Company was granted a loan (the “Loan”) from JPMorgan Chase Bank, N.A.

in the aggregate amount of $ 305,000 , pursuant to the Paycheck Protection Program (the “PPP”) under Division A, Title I of the CARES Act with an interest rate of 0.98 % per annum.

On October 19, 2020 the Company repaid in full the outstanding principal and interest of the PPP Loan.

Subsequent Events

Underwritten Public Offering

On October 2, 2020 the Company completed an underwritten public offering of 6,500,000 shares of its 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 the Company, with gross proceeds of approximately $ 100.9 million, and net proceeds of approximately $ 94.0 million, after deducting underwriting discounts, commissions and estimated offering expenses.

Exercise of Warrants

From October 1 through October 31, 2020 the Company received proceeds of approximately $ 3.4 million from the exercise of 1.6 million warrants.

The warrants exercised during the relevant period were from various prior equity offerings.

Repayment of Small Business Administration Payroll Protection Program Loan

On October 19, 2020 the Company repaid in full the PPP Loan principal of $ 305,000 and interest for the period the loan was outstanding.

On May 5, 2021 the Company agreed to sell 2.0 million shares of its Common Stock for gross proceeds of $ 20.0 million under the Sales Agreement with Jefferies LLC.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements