Cardiff Oncology, Inc. (NASDAQ:CRDF) Q3 2023 Earnings Call Transcript

Cardiff Oncology, Inc. (NASDAQ:CRDF) Q3 2023 Earnings Call Transcript November 2, 2023

Cardiff Oncology, Inc. beats earnings expectations. Reported EPS is $-0.22, expectations were $-0.29.

Operator: Welcome to the Cardiff Oncology third-quarter 2023 financial results and corporate update conference call. [Operator Instructions]. As a reminder, this call is being recorded today, November 2, 2023. I would now like to turn the conference call over to Kiki Patel of Gilmartin Group. Please go ahead.

Kiki Patel: Thank you, operator. Joining us on the call today from Cardiff Oncology are Chief Executive Officer, Mark Erlander, and Chief Financial Officer, Jamie Levine. During this conference call, management will make forward-looking statements, including without limitations, statements related to guidance, results, and the timing of the area for our advantage and clinical trials. These forward-looking statements are based on the company’s current expectations and inherently involve significant risks and uncertainties. Our actual results and the timing of events could differ materially from those anticipated in such forward-looking statements as a result of these risks and uncertainties. Factors that could cause results to be different from these statements include factors the company describes in the section entitled Risk Factors in our annual report on Form 10-K for the year ended December 31, 2022, filed with the SEC on March 2, 2023.

Cardiff Oncology undertakes no duty or obligation to update any forward-looking statements as a result of new information, future events, or changes in its expectations. Slides for today’s investor call can be found on the homepage and Events and Presentations tab on the Cardiff Oncology website at www.cardiffoncology.com. With that, I’ll turn the call over to Chief Executive Officer, Mark Erlander. Mark?

Mark Erlander: Thank you, Kiki, and good afternoon, everyone. And thank you for joining our third-quarter 2023 financial results and the corporate update conference call. As you can see on slide 3, this past quarter was transformational for Cardiff Oncology. In August, we announced strong data from our lead program in KRAS-mutated metastatic colorectal cancer, the conclusions from a highly supportive meeting with the FDA, and expansion of our relationship with Pfizer. Then in September, we released data with two earlier stage programs in pancreatic cancer and small cell lung cancer, which included a clear efficacy signal from onvansertib monotherapy in both indications. Today, we would like to put all of this in context and explain our strategy to you all and demonstrate how we can create shareholder value going forward.

As we all know, these are challenging times for publicly listed biotech companies, but Cardiff Oncology has a collection of strengths from which to build value. As we list on slide 4, these include, first and foremost, our drug onvansertib, has shown clear signals of efficacy and tolerability in combination with chemotherapies and as a single agent in our clinical trials across multiple indications. Second, onvansertib is the only PLK1 specific inhibitor in clinical development, meaning onvansertib is the first-in-class molecule for this well-understood target for cancer therapy. Third, onvansertib can combine synergistically with and is well tolerated in many first-line and second-line standard of care regimens. This enables us to address some of the most common and deadliest cancer indications in early lines of therapy where there are the large patient populations that could be positively impacted.

The fact that we are targeting first-line patients in both metastatic colorectal cancer and pancreatic cancer are good examples of that. Fourth, we have clear third-party support for our plan, and this includes the FDA and Pfizer. And finally, we have the financial resources to pursue our strategy in a thoughtful and methodical manner with the cash runway into 2025. As we go to slide 5, we show the three objectives for Cardiff Oncology that we believe will create value for all of our stakeholders. And let me be very clear. Our primary focus is our lead program in RAS-mutated metastatic colorectal cancer. We are currently working closely with Pfizer Ignite to execute the clinical development plan that the FDA has agreed to, and to generate data from our first-line CRDF-004 clinical trials in mid-2024.

Our second objective is to continue to generate additional clinical data from our trials in pancreatic cancer, small cell lung cancer, and triple-negative breast cancer, which we plan to do in a capital-efficient manner through investigator initiated trials. Finally, our third objective is rooted in our conviction that PLK1 inhibition has an even larger role to play in cancer therapy. As we have for other clinical programs, we will make data-driven decisions with strong commercial logic to explore new promising combinations and cancer indications. Our current efforts focused on cost effective preclinical study. By executing towards these objectives, we can create significant value for all of our stakeholders, and we believe that data and the plans we announced in the third quarter from a shareholder perspective, reduce the risk of our clinical development plan while increasing the reward potential given the larger commercial opportunity that we are now pursuing.

Let’s move to slide 6. Here, we’re summarizing the key accomplishments during the third quarter of our lead program in metastatic colorectal cancer. As you as you know, in August, we shared a series of findings from our second-line Phase 1b/2 clinical trial in KRAS-mutated metastatic colorectal cancer. About a quarter of the patients who came into our second-line trial were not treated with bevacizumab or bev in their prior first-line treatment. For this bev naive patient, we saw strong responses to the combination of our drug onvansertib with the second-line standard of care, which includes bev, specifically 73% of bev naive patients had a confirmed objective response to treatment versus historical controls that had demonstrated a rate of around 25%.

And these patients also remained on our trial for a median time of 15 months before their disease progressed versus historical controls of seven to eight months. We were highly encouraged by these data, which suggested that there was a new mechanism of action of onvansertib at blood that was previously unknown. Observing a threefold increase in response rate, a doubling in the median PFS in bev naive patients was a signal too strong for us to ignore. So as a next step, we investigated the underlying science through a 12-month, multi-phase preclinical program. The preclinical work led us to conclude that both onvansertib and bev have independent mechanisms of action that work together to restrict a tumor’s blood supply, thereby significantly decrease the tumor growth.

We next asked, why is this clinical finding only observed in bev naive patients and not in patients who were treated with bev — in bev in the first line setting? To answer this question, we engaged an independent research firm called Tempus to conduct a clinical study that analyzed tumor biopsy data from 135 KRAS-mutated metastatic colorectal patients — cancer patients. This analysis showed that once patients were exposed to bev in the first line setting, the tumor genomics were changed. And this change is consistent with generating tumor resistance to onvansertib and death in the second line setting. We believe this explains why we observed strong positive clinical results in our Phase 1b/2 trial in the bev naive, but not the bev-exposed patient populations.

Now armed with these findings, we shared our clinical and preclinical data with the FDA in a Type C meeting in June of this year. The FDA suggested we move our clinical development program of onvansertib up to the first line where all patients are bev naive and where we have the opportunity to positively impact the largest patient population of RAS-mutated metastatic colorectal cancer. We responded to the FDA’s suggestion by proposing a development plan with two clinical trials. The first trial, CRDF-004, will provide randomized data for both efficacy and dose confirmation. Then, we can conduct a subsequent registrational CRDF-005, where the FDA provided clear guidance for a path to both accelerated approval and full approval from one trial.

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Finally, we shared the full data package and FDA conclusions with members of our Scientific Advisory Board, which includes the representative from Pfizer. As you know, Pfizer initially invested in Cardiff Oncology two years ago, having seen full development of the clinical, preclinical, and FDA response I just described, they proposed to us that Pfizer Ignite conduct the CRDF-004 first-line clinical trial. Now, every partnership that Pfizer Ignite considers undergoes close internal scrutiny by the Chief Scientific Officer, along with other key scientific team members at Pfizer. They gauge the potential of each project, ensuring collaborations are mutually beneficial and aligned with Pfizer’s broader goals. As we announced in August, our new relationship with Pfizer Ignite allows us to leverage their clinical development horsepower to execute our CRDF-004 clinical trial, while importantly, Cardiff Oncology maintains full economic ownership and control of onvansertib.

This month, November, the first group of our planned 30 clinical trial sites across the United States for CRDF-004 will be open to enrollment. We anticipate enrolling patients shortly thereafter and plan to report preliminary results in the middle of next year. With this, I’d like to turn now to our earlier-stage programs, which are highlighted on slide 7. In September, we announced signals of efficacy in metastatic pancreatic cancer from two clinical trials, which support our planned path forward in the first line setting. The first trial CRDF-001, as you know, evaluate onvansertib’s efficacy and tolerability in the second line setting of pancreatic ductal adenocarcinoma or metastatic PDAC. From CRDF-001, we reported four of our 21 patients were 19% achieved an objective partial response or PR.

As of the data cutoff of September 13, 2023, three of the four patients with PRs were still awaiting their confirmatory scan. As of today, November 2, one of these three patients, patient 42, has now shown the further deepening of response at their four-month scan, therefore, representing a second confirmed PR on this trial. We are still awaiting confirmatory scans for the remaining two patients with an unconfirmed PR who remained on treatment, one for about eight months and another for over nine months. This is much longer than historical median progression survival — free survival of 3.1 months for second line. Overall, for all evaluable patients, we reported a median progression-free survival of five months, which is encouraging since this approaches the benchmark of the first-line median PFS, which is 5.5 months, indicating yet another strong signal of efficacy in this indication.

The second trial in pancreatic cancer is an investigator-initiated biomarker discovery trial in metastatic PDAC, where onvansertib effect on tumors is being evaluated as a single agent. As you recall from our last call, the data we presented in September showed effects on tumor biomarkers with onvansertib monotherapy after only 10 days of treatment. Because of these encouraging results that we observed today with onvansertib from both trials, we plan to move to the first line setting through a new investigator-initiated trial to be conducted at the Oregon Health and Science University Knight Cancer Institute. This first-line design enables us to potentially have the greatest opportunity to impact these challenging diseases at an earliest possible stage, when the chances of patients responding to treatment are the highest.

Finally, and important, this approach allows us to generate data in a capital-efficient manner. In September, we also presented the first look at data from an investigator-initiated trial in refractory extensive-stage small cell lung cancer. The trial treats patients with onvansertib monotherapy and is being conducted at the University of Pittsburgh Medical Center. Of the first seven patients that have been treated as of September 26, 2023, one had a confirmed partial response, three stable disease, and three progressive disease. Seeing a confirmed partial response, which the investigator assessed as a 50% shrinkage of the tumor from treatment with onvansertib monotherapy, provides a clear signal of onvansertib’s efficacy in this challenging disease.

Our current plans are to continue enrollment in this trial, but as we reported in September, our expectation is that a future clinical path forward in small cell lung cancer is most likely to include a combination regimen of onvansertib with second-line standard of care paclitaxel. Finally, the investigator-initiated trial in triple negative breast cancer continues to enroll, and we’ll provide data from that trial when it becomes available. Okay, so, so far, I’ve discussed our ongoing programs and plans, but our third objective to create value for our stakeholders is to investigate new therapeutic indications for onvansertib. For example, the recent discovery of the power of the onvansertib-bev combination indicates that we should aggressively explore, through preclinical models, indications where bev is FDA approved.

This includes RAS, wild-type colorectal cancer, lung, liver, kidney, cervical, and ovarian cancer. We also know that onvansertib is anti-mitotic, given that PLK1 plays a critical role in cellular mitosis, which is the process through which a cancer cell divides from one cell to two. There is extensive literature suggesting the combination of two anti-mitotic agents could be synergistic, and we have been exploring this combination in preclinical models with dramatic results. To give one example, I will share some new preclinical data for hormone-receptor positive, or HR-positive, breast cancer. These results are shown on slide 8. Breast cancer is the most common form of cancer diagnosed today in the United States, and hormone-receptor, or HR-positive breast cancer represents about 80% of breast cancer cases.

In metastatic HR-positive breast cancer, tumor cells can develop resistance to first-line treatment, in part by overexpressing PLK1. Paclitaxel, an anti-mitotic agent, is a common second-agent therapy, making it an ideal drug to explore in combination with onvansertib in this setting. The data on slide 6 shows how treatment with onvansertib, paclitaxel, and the two agents combined impacts patient-derived xenograft models resistant to first-line treatment with palbociclib in HR-positive breast cancer. We observed highly significant tumor regression with the combination, with over 50% of the tumors within each model having a complete response to the combination treatment. As we look at this here at Cardiff Oncology, we believe this data supports our broader vision for onvansertib, and we remain committed to a cost-effective approach using preclinical models to validate additional indications and combinations.

Now, I will turn it over to our CFO, Jamie Levine, to go over the financial results for the third quarter, 2023. Jamie?

Jamie Levine: Thank you, Mark. Earlier today, we issued a press release summarizing our financial results for the third quarter, and on slide 9, we share the financial highlights. You can also find additional information in our Form 10-Q for the third quarter filed with the SEC earlier today. Turning to our balance sheet, cash and short-term investments as of September 30, 2023 totaled $81.4 million and net cash used in operating activities for the third quarter of 2023 was approximately $8 million. Based on our current expectations and projections, we believe our cash resources are sufficient to fund operations into 2025. With that, I’ll turn the call back over to Mark.

Mark Erlander: Thank you, Jamie. And we close today, you can see from the data we have generated today, we here at Cardiff Oncology truly believe we have a pipeline in a product, and we have found highly capital efficient ways to explore the efficacy signals. And with data expected mid-next year from our first-line RAS-mutated metastatic colorectal cancer trial, we have an important near-term catalyst from our lead program. So while we recognize the challenges facing the broader biotech industry, we believe that the strength of our data, the clarity and support we received from our recent FDA meeting, our expansion of our relationship with Pfizer, and our strong financial position clearly show that Cardiff Oncology has the potential to create enormous value for our stakeholders, including our shareholders, and most importantly, the patients we intend to serve. With that, I will now open the call up for questions. Operator?

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Q&A Session

Operator: [Operator Instructions]. Our first question comes from the line of Mark Frahm with TD Cowen.

Mark Frahm: Thanks for taking my questions. Maybe first on the clinical side, at the last update, there were three unconfirmed PDAC responses. Just — I’m not sure if maybe some of those patients have had a chance to have a confirmatory scan in the last month or two, and if so, were any of them able to confirm? And then on the finance side, maybe, Jamie, can you just talk through the expense trajectory here as the first-line trial and colorectal starts to ramp up and some of these other ISTs? I know it’s not a big lift on your part, but just as some of those start up as well.

Mark Erlander: Okay. Well, thanks, Mark, for your question. So regarding the CRDF-001 PDAC trial, as you as you stated, we had four PRs that we announced with one being confirmed on our September call. What we’re announcing today is the continuing and following these patients. And now we have a second patient who had a deepening response and confirm — and now has a confirmed PR. We have two remaining patients who have not had their next scan, one’s been on treatment for eight months and the other’s still on treatment for over nine months. And so we planned at some date in the future, we will update that trial, but that’s where we stand today. And I will now turn it to Jamie to — unless, Mark, there’s any more clarity you need on that.

Mark Frahm: No, no. That’s very helpful. Thanks.

Jamie Levine: So Mark, from an expense trajectory, what we’d say is we have a few trials that are actually going to be winding down. As we’ve talked about, our plans in mCRC of the Phase 1b/2 trial, it’s going to be winding down. We’re also shifting away from our second line PDAC trial into the first line IIT that Mark talked about earlier on the call. So that’s happening at the same time as we are ramping up our CRDF-004 trial. So when we look at our overall expenses, our net expenses going forward, we do expense — we do expect that they’re going to increase but not significantly. And I think when you put that together with the $81 million we have at the end of the third quarter, you can see, once again, we burned $8 million this quarter. That’s in line with where we’ve been in the past. And so that is the basis on which we make the statement that our current cash extends into 2025.

Mark Frahm: Great. Thanks, very helpful.

Mark Erlander: Sure.

Operator: Our next question comes from the line of Joe Catanzaro with Piper Sandler.

Joe Catanzaro: Hey, everybody. Appreciate you taking my questions. Maybe just a couple from me on the 004 study. I would love to just get your sense around your level of competence around being able to generate these interim data by mid-’24, given dosing hasn’t started yet. I’m wondering if you have any internal projections on how quickly you can enroll these planned 90 patients. And then have you said whether this data readout is triggered by a specific number of patients reaching a specific amount of follow-up? Any details there would be helpful. Thanks.

Mark Erlander: Well, hi, Joe. Yes, we remain very bullish in being able to put out the first interim data or preliminary data from the trial. As you know, we are working very closely with Pfizer Ignite. And Pfizer Ignite, we’re very pleased because Pfizer Ignite is actually conducting and implementing and executing the CRDF-004 randomized trial. And so we are going off of where those projections are. And we do believe that we will be able to have data to talk about. Now, keep in mind, we’ll be watching the trial. The trial itself is an open-label trial. So we’ll be able to watch the progress of that as we start to enroll patients. But we do remain confident to be able to give information sometime mid next year.

Joe Catanzaro: Okay, that’s helpful. And then in terms of the actual data readout, my follow-up there was whether that’s triggered by something formerly in the protocol as it relates to the number of patients and the amount of follow-up.

Mark Erlander: No, it’s not. It’s really we’re watching as it’s open label. So it’s going to depend on the magnitude of the effect that we do see. So but there is no trigger in the protocol.

Joe Catanzaro: Okay, got it. That’s very helpful. Thanks for taking my question.

Mark Erlander: Sure, Joe.

Operator: Our next question comes from the line of Andy Hsieh with William Blair.

Andy Hsieh: Great, thanks for taking my questions and congratulations on all the progress. Two questions, if you don’t mind. One has to do with, Mark, I believe when you were conducting the Phase 1b/2 study before, there was a strategy employed to minimize the adverse event from switching between bolus 5-FU and infusional 5-FU. I’m just curious if that strategy is also being employed in 004 and 005. And then I’d love to hear, obviously with this expanded pipeline development plan, I’d love to hear your thoughts on the IP strategy in terms of market exclusivity. Thank you.

Mark Erlander: Okay. With the first question, Andy, regarding the bolus, we’re continuing to have that be an optional for the treatment arms. And — but in the control arm, the FDA has asked that they consider it to be standard care to have the 5-FU bolus. But we will continue to do what we’ve done in the Phase 1b/2 trial. Your second question, maybe, Andy, maybe you could repeat that again just so I make sure I answer that correctly.

Operator: Thank you. At this time, I would now like to turn the conference back over to Mark Erlander for closing remarks.

Mark Erlander: Well, thank you all for your time, and this concludes our conference call and thank you once again for joining us this afternoon.

Operator: This concludes today’s conference call. Thank you for participating. You may now disconnect.