What changed in this filing

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Item 2. Management’s Discussion and Analysis

2021-05-06 compared with 2020-11-05 · 85 added, 157 removed, 92 unchanged (72% of the section changed)

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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.

We licensed onvansertib from Nerviano Medical Sciences ("NMS") 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 [IC 50 ] = 2nM), whereas low or no activity was observed on a panel of 63 kinases (IC 50 >500 nM), including the PLK members PLK2 and PLK3 (IC 50 >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.

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, 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 .

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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.

Onvansertib has been evaluated preclinically and has demonstrated to have synergy with chemotherapies, including irinotecan, 5-FU, cisplatin, cytarabine, doxorubicin, gemcitabine and paclitaxel, and with targeted therapeutics including abiraterone, PARP inhibitor, venetoclax, histone deacetylase ("HDAC") inhibitors, fms-like tyrosine kinase 3 ("FLT3") inhibitors, sorafenib, and bortezomib.

These therapies are used clinically for the treatment of many hematologic and solid cancers, including acute myeloid leukemia ("AML"), non-Hodgkin’s lymphoma ("NHL"), metastatic CRC, metastatic castration resistant prostate cancer ("mCRPC"), adrenocortical carcinoma ("ACC"), triple negative breast cancer ("TNBC"), small cell lung cancer ("SCLC"), and ovarian cancer.

These preclinical studies are the foundation of the scientific rationale for the use of specific combinations in indicated cancer types within our ongoing and planned clinical trials for the drug development of onvansertib.

We believe the high-selectivity of onvansertib to PLK1, its 24-hour half-life and oral bioavailability, as well as evidence of safety and clinical benefit, 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.

Significant clinical updates:

• TROV-054 is a Phase 1b/2 open-label multi- center 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 (Arizona, Minnesota and Florida), Kansas University Medical Center ("KUMC") and CARTI Cancer Center;

• TROV-053 is a Phase 2 open-label multi-center 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");

• CRDF-001 is a Phase 2 open-label mutli-center clinical trial of onvansertib in combination with nanoliposomal irinotecan (“Onivyde ® ”), leucovorin, and fluorouracil for second line treatment of patients with metastatic pancreatic ductal adenocarcinoma ("PDAC"), which is being conducted at 6 clinical trial sites across the U.S.

– The Mayo Clinic Cancer Centers (Arizona, Minnesota and Florida), Kansas University Medical Center (“KUMC”), University of Nebraska Medical Center (“UNMC”) and Inova Schar Cancer Institute.

KRAS-mutated mCRC

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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;

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.

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.

Data presented on April 12, 2021, at a key opinion leader webinar, provided an update of the ongoing phase 1b/2 clinical study in KRAS-mutated metastatic colorectal cancer.

Of the 18 patients evaluable for efficacy, 7 (39%) achieved an objective response (partial response;

4 patients have had a confirmed PR;

1 patient with a non-confirmed PR went off study due to an unrelated event prior to their 16-week confirmatory scan and 2 patients await their respective confirmatory scans.

This objective response rate (ORR) compares favorably with current standard of care benchmarks that range from 5 to 13%.

To-date, the time to achieving a PR ranges from 2 to 6 months in patients on treatment.

Objective responses were observed across different KRAS variants, including the 3 most common in CRC.

Median progression free survival (mPFS) is currently 9.4 months which compares favorably with the current standard of care benchmarks that range from 4.5 to 5.7 months.

16 of 18 patients had a KRAS variant detected by ddPCR at baseline (all had a KRAS mutation detected by NGS).

The greatest decreases in KRAS mutant allelic frequency (MAF) after 1 cycle of treatment were observed in patients achieving a PR (ranging from a decrease ranging from 78% to 100%), while the 2 patients who progressed showed a more modest reduction in KRAS MAF (decrease of 55% and 26%, respectively).

Patients with PR and stable disease (SD) tended to have lower on-treatment KRAS MAF than patients with early progressive disease (PD).

Of all adverse events (AEs) associated with onvansertib in combination with FOLFIRI/bevacizumab, only 11% have been grade 3 or 4.

Grade 4 adverse events were attributed to the 5-FU bolus component of the combination regimen, which was eliminated in subsequent cycles of treatment per protocol and institutional guidelines.

The only G3/G4 AE reported in ≥2 patients was neutropenia (n=8), which was managed by dose delay, growth factor therapy and/or discontinuation of the 5-FU bolus;

no patients went off trial due to neutropenia.

To-date, no major or unexpected toxicities have been attributed to onvansertib.

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.

On April 12, 2021, we announced a KOL Event Webinar presentation of Phase 1b/2 data from our ongoing trial in KRAS-mutated mCRC demonstrating continued robust response to treatment and progression-free survival.

On April 10, 2021, we announced an electronic oral poster presentation of findings from our Expanded Access Program ("EAP") demonstrating the clinical benefit of onvansertib in KRAS-mutated mCRC at the American Association for Cancer Research ("AACR") Annual Meeting 2021.

On January 15, 2021, we announced an electronic poster presentation of clinical data further demonstrating the clinical benefit of onvansertib in KRAS-mutate mCRC and initial findings from our Expanded Access Program ("EAP") in mCRC.

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").

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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.

Data presented on February 11, 2021, at the American Society of Clinical Oncology Genitourinary Cancers Symposium (“ASCO-GU”) provided evidence of the safety and efficacy of onvansertib in combination with abiraterone.

Arms A (n=17) and B (n=12) showed similar response with 29% and 25% of patients achieving the primary endpoint and 53% and 42% of patients with SD at 12 weeks, respectively.

The more continuous dosing schedule of Arm C (n=8) has shown a higher response rate with 63% of patients, to-date, achieving the primary endpoint and 75% with SD at 12 weeks.

Evidence of efficacy was observed in patients harboring AR alterations across all 3 arms.

ctDNA analysis revealed differences in baseline genomic profiles of patients achieving SD at 12 weeks vs patients progressing before or at 12 weeks.

Mutations exclusively present in

patients with SD were associated with cell cycle and DNA repair pathways that may result in increased sensitivity to onvansertib and efficacy of the combination.

Onvansertib + abiraterone has demonstrated safety across all 3 dosing schedules.

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.

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

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

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.

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;

James Armitage, Dr.

Gary Pace and Ms.

Each new Director brings extensive and relevant experience to our company.

Our accumulated deficit through September 30, 2020 is $224.9 million.

On April 10, 2021, we announced, in collaboration with MIT, the presentation of an electronic oral poster presentation featuring gene signature analyses data identifying androgen-independent mechanism for onvansertib-abiraterone synergy in mCRPC.

On February 11, 2021, we announced an electronic poster presentation of clinical data further demonstrating the safety, efficacy and durability of response in patient with mCRPC at the American Society of Clinical Oncology Genitourinary Cancers Symposium (“ASCO-GU”).

CRDF-001 is a Phase 2 Study of onvansertib in combination with nanoliposomal irinotecan and 5-FU for the second line treatment of patients with metastatic pancreatic ductal adenocarcinoma ("PDAC").

The first patient enrolled is anticipated in the first half of 2021.

The objective of this trial is to assess the safety and preliminary efficacy of onvansertib in combination with nanoliposomal irinotecan (Onyvide ® ), 5-FU and leucovorin as a second-line treatment in patients with metastatic PDAC who have failed first-line gemcitabine-based therapy.

The trial is expected to enroll approximately 45 patients across six sites in the U.S.

including the three Mayo Clinic Cancer Centers (Arizona, Minnesota and Florida), Kansas University Medical Center, University of Nebraska Medical Center and Inova Schar Cancer Institute.

Key News Releases

On January 26, 2021, we announced that the FDA provided a "study may proceed" notification to the Company to initiate our study in metastatic PDAC.

Company Updates

Our accumulated deficit through March 31, 2021 is $236.7 million.

To date, we have generated minimal revenues and expect to incur additional losses to perform further research and development activities.

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Off-Balance Sheet Arrangements

We had no off-balance sheet arrangements as of September 30, 2020.

We had no off-balance sheet arrangements as of March 31, 2021.

Critical Accounting Policies

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There have been no changes to our critical accounting policies since December 31, 2020.

RESULTS OF OPERATIONS

Three Months Ended September 30, 2020 and 2019

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.

Three Months Ended March 31, 2021 and 2020

Total revenues was $0.1 million for three months ended March 31, 2021 as compared to $0.1 million for the prior period.

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.

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Research and development expenses consisted of the following:

Three Months Ended September 30,

2020 2019 Increase (Decrease)

Three Months Ended March 31,

(in thousands) 2021 2020 Increase (Decrease)

Salaries and staff costs $ 282 $ 424 $ (142)

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Total research and development $ 3,279 $ 2,706 $ 573

Research and development expenses increased by $35,988 for the three months ended September 30, 2020 compared to the same period in 2019.

Research and development expenses increased by $0.6 million for the three months ended March 31, 2021 compared to the same period in 2020.

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.

Salaries and staff costs decreased primarily due to departmental changes of certain executives in the current period.

Selling, General and Administrative Expenses

Selling, general and administrative expenses consisted of the following:

Three Months Ended September 30,

2020 2019 Increase (Decrease)

Three Months Ended March 31,

(in thousands) 2021 2020 Increase (Decrease)

Salaries and staff costs $ 568 $ 494 $ 74

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Total selling, general and administrative $ 2,235 $ 1,486 $ 749

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.

Selling, general and administrative expenses increased by $0.7 million for the three months ended March 31, 2021 compared to the same period in 2020.

The significant components of the increase were outside services and stock-based compensation.

The increase in outside services and professional fees is primarily due to increased legal fees mainly related to the expansion of our patent portfolio and recruiting fees.

The increase in stock-based compensation is primarily due to stock options granted in June 2020.

The increase in salaries and staff

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 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

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.

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 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.

As of March 31, 2021, the derivative financial instruments — warrants liabilities were revalued to $0.1 million, resulting in an decrease in value of $0.2 million from December 31, 2020, based primarily upon the fluctuation in our stock price as well as the decrease in the remaining life of the warrants, volatility, and risk-free interest rates for the expected term.

The change in value upon remeasurement at March 31, 2021 was recorded as a gain from the change in fair value of derivative financial instruments — warrants in the condensed statement of operations.

Net loss and per share amounts were as follows:

Nine Months Ended September 30,

2020 2019 Increase (Decrease)

Three Months Ended March 31,

(in thousands, except per share amounts) 2021 2020 Increase (Decrease)

Net loss $ (5,179) $ (4,089) $ 1,090

Preferred stock dividend (6) (6) —

Net loss attributable to common shareholders $ (5,185) $ (4,095) $ 1,090

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Weighted average shares outstanding — basic and diluted 37,164 9,910 27,254

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.

The $1.1 million increase in net loss attributable to common shareholders was primarily the result of an increase in operating expenses for the three months ended March 31, 2021 compared to the same period in the prior year.

The $0.27 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 26.5 million shares of common stock from April 1, 2020 through March 31, 2021.

LIQUIDITY AND CAPITAL RESOURCES

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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.

Net cash used in operating activities for the three months ended March 31, 2021 was $5.9 million, compared to $3.4 million for the three months ended March 31, 2020.

Our use of cash was primarily a result of the net loss of $5.2 million for the three months ended March 31, 2021, adjusted for non-cash items related to release of clinical trial funding commitment of $0.4 million, stock-based compensation of $0.3 million, and depreciation of $0.1 million.

The net change in our operating assets and liabilities was $1.5 million 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.

Net cash used in investing activities was $111.7 million during the three months ended March 31, 2021, compared to no investment activities for the same period in 2020, investment activities during the current period were primarily related to net purchases of marketable securities.

Net cash provided in financing activities was $1.3 million during the three months ended March 31, 2021, compared to $2.5 million for the same period in 2020.

Net cash provided in financing activities during the three months ended March 31, 2021 was from $1.3 million of proceeds from the exercise of warrants.

Net cash provided in financing activities during the three months ended March 31, 2020 was from $1.5 million of proceeds from the exercise of warrants and $1.0 million from the sale of common stock and warrants.

As of March 31, 2021, and December 31, 2020, we had working capital of $124.1 million and $127.2 million, 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.

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.

As of March 31, 2021, we had $125.6 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 issuance date of these financial statements.

For the foreseeable future, we expect to continue to incur losses and require additional capital to further advance its clinical trial programs and support its 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.

The economic effects of COVID-19 could also have an adverse effect on our ability to raise additional capital.

CONTRACTUAL OBLIGATIONS

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What changed 10-Q

Item 2. Management’s Discussion and Analysis