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Item 2. Management’s Discussion and Analysis

2024-08-08 compared with 2024-05-02 · 75 added, 52 removed, 152 unchanged (46% of the section changed)

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We are a clinical-stage biotechnology company leveraging PLK1 inhibition, a well-validated oncology drug target, to develop novel therapies across a range of cancers with the greatest unmet medical need.

Our goal is to target tumor vulnerabilities with treatment combinations of onvansertib, our oral and highly selective PLK1 inhibitor, and standard of care therapeutics.

We are focusing our clinical program in indications such as RAS-mutated metastatic colorectal cancer ("mCRC"), as well as in investigator-initiated trials in metastatic pancreatic ductal adenocarcinoma ("mPDAC"), small cell lung cancer ("SCLC"), and triple negative breast cancer ("TNBC").

Our goal is to target tumor vulnerabilities with treatment combinations of onvansertib, our oral and highly selective PLK1 inhibitor, and standard-of-care ("SoC") therapeutics.

We are focusing our clinical program in indications such as RAS-mutated metastatic colorectal cancer ("mCRC"), as well as in investigator-initiated ongoing or planned trials in metastatic pancreatic ductal adenocarcinoma ("mPDAC"), small cell lung cancer ("SCLC"), and triple negative breast cancer ("TNBC").

Our clinical development programs incorporate tumor genomics and biomarker assays to refine assessment of patient response to treatment.

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In addition, in vivo combination studies have confirmed the positive results obtained in vitro and additive or synergistic effects on efficacy have been observed in xenograft models of onvansertib in combination with irinotecan, 5-fluorouracil ("5-FU"), abiraterone, PARP inhibitors, venetoclax, paclitaxel, or bevacizumab.

Combining onvansertib with standard of care cancer agents provides opportunities for synergy with many cancer therapies.

There are five ongoing and planned clinical trials of onvansertib:

one trial (CRDF-004) in first-line treatment in patients with RAS-mutated mCRC, one trial (CRDF-001) in second-line treatment in patients with mPDAC, and three investigator-initiated trials in first-line mPDAC, relapsed SCLC and unresectable locally advanced or metastatic TNBC.

Previously we reported data from two additional trials:

one trial (TROV-054) in second-line treatment in patients with KRAS-mutated mCRC, and one trial (CRDF-003), which we refer to as the ONSEMBLE trial, in second-line treatment in patients with RAS-mutated mCRC.

Combining onvansertib with SoC cancer agents provides opportunities for synergy with many cancer therapies.

There are several ongoing and planned clinical trials of onvansertib in multiple indications:

one trial (CRDF-004) in first-line treatment in patients with RAS-mutated mCRC, and investigator-initiated trials in first-line mPDAC, relapsed SCLC and unresectable locally advanced or metastatic TNBC.

RAS-mutated mCRC Program:

CRDF-004 Randomized Clinical Trial in First-Line RAS-mutated mCRC

CRDF-004 is a Phase 2 open-label, randomized multi-center clinical trial of onvansertib in combination with standard of care FOLFIRI and bevacizumab or FOLFOX and bevacizumab for the first-line treatment of patients with RAS-mutated mCRC.

The primary objectives of the CRDF-004 trial are to evaluate onvansertib’s safety and efficacy in combination with the standard of care, as well as to evaluate two doses of onvansertib, 20mg and 30mg, given in combination with standard of care, against standard of care alone.

CRDF-004 is a Phase 2 open-label, randomized multi-center clinical trial of onvansertib in combination with SoC FOLFIRI and bevacizumab or FOLFOX and bevacizumab for the first-line treatment of patients with RAS-mutated mCRC.

The primary objectives of the CRDF-004 trial are to evaluate onvansertib’s safety and efficacy in combination with the SoC, as well as to evaluate two doses of onvansertib, 20mg and 30mg, given in combination with SoC, against SoC alone.

The primary endpoint of the trial is objective response rate ("ORR").

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Phase 1b/2 Clinical Trial in Second-Line KRAS-mutated mCRC

TROV-054, a Phase 1b/2 open-label multi-center clinical trial of onvansertib in combination with standard of care FOLFIRI and bevacizumab for the second-line treatment of patients with KRAS-mutated mCRC, completed enrollment in October 2022.

TROV-054, a Phase 1b/2 open-label multi-center clinical trial of onvansertib in combination with SoC FOLFIRI and bevacizumab for the second-line treatment of patients with KRAS-mutated mCRC, completed enrollment in October 2022.

The primary objectives of this trial were to evaluate the Dose-Limiting Toxicities ("DLTs"), maximum tolerated dose ("MTD") and 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 patients with KRAS-mutated mCRC (Phase 2).

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• Median progression free survival ("mPFS") across all evaluable patients was 9.3 months (95% CI:

Historical control trials of different drug combinations, including the standard-of-care of FOLFIRI with bevacizumab, in similar patient populations have shown ORR and mPFS of 5 – 13% and ~4.5 – 6.7 months, respectively.

Historical control trials of different drug combinations, including the SoC of FOLFIRI with bevacizumab, in similar patient populations have shown ORR and mPFS of 5 – 13% and ~4.5 – 6.7 months, respectively.

• A subgroup analysis of patients who were bevacizumab naïve when they entered second-line therapy vs.

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Phase 2 Clinical Trial in Second-Line RAS-mutated mCRC

The ONSEMBLE trial (CRDF-003) is a Phase 2 randomized, open-label multi-center clinical trial of onvansertib in combination with standard of care FOLFIRI and bevacizumab for the second-line treatment of patients with RAS-mutated mCRC.

The ONSEMBLE trial (CRDF-003) is a Phase 2 randomized, open-label multi-center clinical trial of onvansertib in combination with SoC FOLFIRI and bevacizumab for the second-line treatment of patients with RAS-mutated mCRC.

The primary objectives of the ONSEMBLE trial are to evaluate onvansertib’s safety and efficacy in combination with FOLFIRI and bevacizumab, as well as to evaluate two doses of onvansertib, 20mg and 30mg, given in combination with FOLFIRI and bevacizumab, against FOLFIRI and bevacizumab alone.

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Two Grade 4 TEAEs of neutropenia were seen in patients receiving 20mg onvansertib given in combination with FOLFIRI and bevacizumab.

Both patients recovered within 7

and 10 days after withholding the study treatment and no dose reductions in subsequent treatment cycles were needed.

Both patients recovered within 7 and 10 days after withholding the study treatment and no dose reductions in subsequent treatment cycles were needed.

There were no major or unexpected toxicities seen in the trial.

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In addition, these objective responses were present only in bevacizumab naïve patients randomized to the experimental arms of onvansertib in combination with FOLFIRI and bevacizumab versus bevacizumab naïve patients randomized to the FOLFIRI and bevacizumab alone control arm.

mDPAC Program:

mPDAC Program:

Phase 2 Investigator-Initiated Clinical Trial in First-Line mPDAC

A two-cohort, non-randomized Phase 2 trial of onvansertib in combination with first-line standard of care Gemzar ® and Abraxane ® will be conducted at the OHSU Knight Cancer Institute.

The enrollment criteria includes patients who are treatment-naïve with an ECOG performance status of 0 to 1, and with unresectable, locally advanced, or metastatic pancreatic cancer with measurable disease per RECIST 1.1.

The first cohort of patients will receive ten days of monotherapy as a lead-in.

After the lead-in period, patients will then move to receive a combination regimen of standard of care chemotherapy and onvansertib.

The second cohort of patients will not receive the onvansertib monotherapy lead-in, but will move straight to the combination regimen.

This combination regimen consists of Gem-Abraxane on days 1, 8 and 15 of a four-week cycle.

Patients will receive daily onvansertib with chemotherapy on days 1 through 5, days 8 through 12, and days 15 through 19.

Patients will be monitored with bloodwork on a weekly basis.

The primary endpoint of this trial will be ORR, disease control rate ("DCR") at 16 weeks.

Secondary endpoint will be DoR and PFS.

In February 2024, the FDA approved NALIRIFOX as a first-line treatment option for mPDAC.

As a result, we are currently planning to support a new investigator-initiated mPDAC Phase 2 trial of onvansertib in combination with first-line SoC NALIRIFOX, details of which we will announced when available.

The trial would replace a previously planned two-cohort, non-randomized Phase 2 trial of onvansertib in combination with first-line SoC Gemzar ® and Abraxane ® which was to be conducted at the OHSU Knight Cancer Institute.

Phase 2 Clinical Trial in mPDAC

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Preliminary data presented on September 26, 2023 provided an update of the ongoing CRDF-001 Phase 2 open label clinical trial in mPDAC:

• Preliminary data from 21 patients evaluable for radiographic response showed 1 patient achieving a confirmed partial response (“PR”) and 3 patients achieving unconfirmed partial response that were awaiting confirmatory scans;

• Preliminary data from 21 patients evaluable for radiographic response showed 1 patient achieving a confirmed partial response (“PR”) and 3 patients achieving unconfirmed PR that were awaiting confirmatory scans;

• 19% objective response rate ORR achieved compared to historical control of 7.7% in second-line setting;

• 5.0 months median progression-free survival (“mPFS”) achieved compared to historical control of 3.1 months with standard of care (“SoC”);

• 5.0 months mPFS achieved compared to historical control of 3.1 months with SoC;

An update provided on February 29, 2024 indicated 3 of the 4 PRs are confirmed PRs and 1 of the 4 PRs did not confirm on their subsequent scan.

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Phase 2 Investigator-Initiated Clinical Trial in SCLC

A single-arm, two-stage, Phase 2 trial of onvansertib monotherapy in patients with relapsed SCLC is open for enrollment at the University of Pittsburgh Medical Center ("UPMC").

The trial is designed to enroll 15 patients in Stage 1, with the study proceeding to Stage 2 if 2 or more Stage 1 patients achieve an objective response.

Stage 2 is designed to enroll an additional 20 patients.

A single-arm, two-stage, Phase 2 trial of onvansertib monotherapy in patients with relapsed SCLC at the University of Pittsburgh Medical Center ("UPMC"), completed enrollment in July 2023.

The primary endpoint of the trial is ORR, while key secondary endpoints include PFS and overall survival.

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An examination of the safety data from the first six patients by the institutional review board confirmed the trial can continue to enroll as planned.

Preliminary efficacy data for seven patients presented on September 26, 2023, showed one confirmed partial response (“PR”), three stable disease (“SD”) and three progressive disease (“PD”).

Preliminary efficacy data for seven patients presented on September 26, 2023, showed one confirmed PR, three stable disease (“SD”) and three progressive disease (“PD”).

The disease control rate (“DCR”), including PR and SD, is 57% (4 of 7 patients).

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There have been no changes to our critical accounting policies since December 31, 2023.

Three Months Ended March 31, 2024 and 2023

Total revenues were $205,000 for the three months ended March 31, 2024, as compared to $83,000 for the same period in 2023.

RESULTS OF OPERATIONS

Three Months Ended June 30, 2024 and 2023

Total revenues were $163,000 for the three months ended June 30, 2024, as compared to $108,000 for the prior period.

Revenues are from our sales-based or usage-based royalties on other intellectual property licenses, unrelated to onvansertib.

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Research and development expenses consisted of the following:

Three Months Ended March 31,

Three Months Ended June 30,

(in thousands) 2024 2023 Increase (Decrease)

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Total research and development $ 9,493 $ 8,020 $ 1,473

Research and development expenses decreased by $1.0 million for the three months ended March 31, 2024, compared to the same period in 2023.

The overall decrease in clinical trials and outside services expenses was primarily due to a reduction in chemistry, manufacturing and control costs compared to the prior period.

Salaries and staff costs increased primarily from additional hires (research and development average headcount grew by 36% over the comparative period).

Research and development expenses increased by $1.5 million for the three months ended June 30, 2024, compared to the same period in 2023.

The overall increase in expenses was primarily due to costs associated with clinical programs and outside service costs related to the development of our lead drug candidate, onvansertib.

The increase in salaries and staff costs was primarily from key hires in research and development and clinical operations (research and development average headcount grew by 19% over the comparative period).

Selling, General and Administrative Expenses

Selling, general and administrative expenses consisted of the following:

Three Months Ended March 31,

Three Months Ended June 30,

(in thousands) 2024 2023 Increase (Decrease)

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Total selling, general and administrative $ 3,215 $ 4,296 $ (1,081)

Selling, general and administrative expenses increased by $47,000 for the three months ended March 31, 2024, compared to the same period in 2023.

Salaries and staff costs increased due to adjustments to our bonus accrual compared to the prior period.

Selling, general and administrative expenses decreased by $1.1 million for the three months ended June 30, 2024, compared to the same period in 2023.

The overall decrease in expenses was primarily due to salaries and staff costs due to an employee severance agreement which was expensed during the prior period.

Stock-based compensation expense decreased due to a modification of stock options that occurred during the prior period.

The decrease in facilities and other costs was primarily due to reduced insurance costs compared to the prior period.

Interest Income, Net

Interest income, net was $0.9 million for the three months ended March 31, 2024 as compared to $0.9 million for the same period of 2023.

Interest income, net is primarily earned from our short-term investment portfolio and money market accounts.

Interest income, net was $0.8 million for the three months ended June 30, 2024 as compared to $1.1 million for the same period of 2023.

The decrease in interest income was primarily due to a lower balance of our short-term investments portfolio and money market accounts for the three months ended June 30, 2024 as compared to the same period of 2023.

Six Months Ended June 30, 2024 and 2023

Total revenues were $368,000 for the six months ended June 30, 2024, as compared to $191,000 for the same period in 2023.

Revenues are from our sales-based or usage-based royalties on other intellectual property licenses, unrelated to onvansertib.

Revenue recognition of the royalty depends on the timing and overall sales activities of the licensees.

Research and Development Expenses

Research and development expenses consisted of the following:

Six Months Ended June 30,

(in thousands) 2024 2023 Increase (Decrease)

Salaries and staff costs $ 3,582 $ 2,860 $ 722

Stock-based compensation 786 691 95

Clinical trials, outside services, and lab supplies 12,202 12,515 (313)

Facilities and other 931 1,006 (75)

Total research and development $ 17,501 $ 17,072 $ 429

Research and development expenses increased by $0.4 million for the six months ended June 30, 2024, compared to the same period in 2023.

The overall increase in expenses was primarily due to salaries and staff costs generally from key hires in research and development and clinical operations (research and development average headcount grew by 27% over the comparative period).

Outside services costs decreased due to recruitment fees for key hires that occurred during the prior period.

Selling, General and Administrative Expenses

Selling, general and administrative expenses consisted of the following:

Six Months Ended June 30,

(in thousands) 2024 2023 Increase (Decrease)

Salaries and staff costs $ 1,714 $ 2,157 $ (443)

Stock-based compensation 1,517 1,954 (437)

Outside services and professional fees 2,150 2,091 59

Facilities and other 964 1,177 (213)

Total selling, general and administrative $ 6,345 $ 7,379 $ (1,034)

Selling, general and administrative expenses decreased by $1.0 million for the six months ended June 30, 2024, compared to the same period in 2023.

The overall decrease in expenses was primarily due to salaries and staff costs due to an employee severance agreement which was expensed during the prior period.

Stock-based compensation expense decreased due to a modification of stock options that occurred during the prior period.

The decrease in facilities and other costs was primarily due to reduced insurance costs compared to the prior period.

Interest Income, Net

Interest income, net was $1.7 million for the six months ended June 30, 2024 as compared to $2.0 million for the same period of 2023.

The decrease in interest income was primarily due to a lower balance of our short-term investments portfolio and money market accounts for the six months ended June 30, 2024 as compared to the same period of 2023.

LIQUIDITY AND CAPITAL RESOURCES

As of March 31, 2024, and December 31, 2023, we had working capital of $58.1 million and $67.0 million, respectively.

As of June 30, 2024, and December 31, 2023, we had working capital of $49.7 million and $67.0 million, respectively.

We have incurred net losses since our inception and have negative operating cash flows.

As of March 31, 2024, we had $67.2 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 this Quarterly Report on Form 10-Q.

Based on our current projections we expect that our capital resources are sufficient to fund our operations into the third quarter of 2025.

As of June 30, 2024, we had $60.3 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 this Quarterly Report on Form 10-Q.

Based on our current projections we expect that our capital resources are sufficient to fund our operations through the end of the third quarter of 2025.

From July 1, 2024 through August 6, 2024, we raised gross proceeds of $2.3 million from the sale of 0.9 million shares of our Common Stock.

Our drug development efforts are in their early stages, and we cannot make estimates of the costs or the time that our development efforts will take to complete, or the timing and amount of revenues related to the sale of our drug candidates.

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Cash Flow Summary

Three Months Ended March 31,

Six Months Ended June 30,

(in thousands) 2024 2023

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Operating Activities

Net cash used in operating activities for the three months ended March 31, 2024, was $7.7 million.

Net cash used in operating activities for the six months ended June 30, 2024, was $17.0 million.

Our primary use of cash was from our net loss of $21.8 million, adjusted for non-cash items of $2.2 million primarily related to stock-based compensation.

The net change in our operating assets and liabilities decreased cash used in operations by $2.6 million.

Net cash used in operating activities for the three months ended March 31, 2023, was $8.7 million.

Net cash used in operating activities for the six months ended June 30, 2023, was $15.8 million.

Our primary use of cash was from our net loss of $22.4 million, adjusted for non-cash items of $2.4 million primarily related to stock-based compensation.

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Investing Activities

Net cash provided by investing activities for the three months ended March 31, 2024 was $4.6 million, primarily related to maturities in excess of purchases of marketable securities.

Net cash provided by investing activities for the three months ended March 31, 2023 was $7.3 million, primarily related to sales and maturities in excess of purchases of marketable securities.

Net cash provided by investing activities for the six months ended June 30, 2024 was $18.7 million, primarily related to maturities in excess of purchases of marketable securities.

Net cash provided by investing activities for the six months ended June 30, 2023 was $18.8 million, primarily related to sales and maturities in excess of purchases of marketable securities.

Financing Activities

Net cash provided by financing activities for the three months ended March 31, 2024 was $0.1 million, from employee stock options exercises.

Net cash provided by financing activities for the three months ended March 31, 2023 was $0.

Net cash provided by financing activities for the six months ended June 30, 2024 was $2.2 million, from the sale of common stock and employee stock options exercises.

Net cash provided by financing activities for the six months ended June 30, 2023 was $0.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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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 2. Management’s Discussion and Analysis