ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Company Overview
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 ("SoC") 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"), metastatic triple negative breast cancer ("mTNBC") and Chronic Myelomonocytic Leukemia ("CMML"). Our clinical development programs incorporate tumor genomics and biomarker assays to refine patient selection and assessment of patient response to treatment. Our common stock is listed on the Nasdaq Capital Market under the ticker symbol "CRDF".
Our accumulated deficit through December 31, 2025 is $430.0 million. To date, we have generated minimal revenues, unrelated to onvansertib, and expect to incur additional losses to perform further research and development activities.
Our drug development efforts are in their early stages, and we cannot make estimates of the costs or the time that our development efforts will take to complete, or the timing and amount of revenues related to the sale of our drug. The risk of completion of any program is high because of the many uncertainties involved in developing new drug candidates to market, including the long duration of clinical testing, the specific performance of proposed products under stringent clinical trial protocols, extended regulatory approval and review cycles, our ability to raise additional capital, the nature and timing of research and development expenses, and competing technologies being developed by organizations with significantly greater resources.
Recent Developments
Appointment of Interim Chief Executive Officer and Chief Accounting Officer
On January 27, 2026, we announced that Mani Mohindru, PhD, a member of Cardiff Oncology’s Board of Directors since 2021 and a seasoned biotech executive, has been appointed interim Chief Executive Officer, effective immediately. Mark Erlander, PhD, Chief Executive Officer, and James Levine, Chief Financial Officer, have stepped down from their respective roles.
As part of this transition, Brigitte Lindsay was promoted to the role of Chief Accounting Officer, ensuring continuity within the finance function.
Critical Accounting Policies and Estimates
Our accounting policies are described in Part II, Item 8. Financial Statements—Note 2 Basis of Presentation and Summary of Significant Accounting Policies in this Annual Report on Form 10-K. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. Actual results could differ from those estimates. We believe that the following discussion represents our critical accounting policies and estimates.
Accrued Clinical Trial Expenses
We accrue and expense research and development expenditures as incurred, which include costs related to clinical trial activities. We accrue costs for clinical trial activities based upon estimates of the services received and related expenses incurred that have yet to be invoiced by the Clinical Research Organizations ("CROs"), professional service providers, and other vendors providing clinical trial services (collectively, the “service providers”). We consider several elements including the key terms of the clinical trial agreements, budgets, contract amendments, and the progress of clinical trials toward completion (which includes consideration of patient
47
enrollment) in estimating the clinical trial accrual. We accrue costs based on estimated work completed in accordance with agreements established with our service providers. We determine the estimated costs through discussions with internal personnel and external service providers as to the progress or stage of completion of the services and the agreed-upon fee to be paid for such services. We make estimates of our accrued expenses as of each balance sheet date in our financial statements based on facts and circumstances known to us at that time. Due to the nature of estimates, we cannot assure you that we will not make changes to our estimates in the future as we become aware of additional information about the status or conduct of our clinical trial activities.
Results of Operations
Years Ended December 31, 2025 and 2024
Revenues
Total revenues were $0.6 million for the year ended December 31, 2025, as compared to $0.7 million for the same period in 2024. 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:
Year Ended December 31,
(in thousands) 2025 2024 Increase(Decrease)
Clinical trials, outside services, and lab supplies 23,954 26,472 (2,518 )
Research and development expenses decreased by $1.5 million for the year ended December 31, 2025, compared to the same period in 2024. The overall decrease in expenses was primarily due to a reduction in clinical trial expenses and a decrease in preclinical activities. The increase in stock based compensation was due to new stock option grants during the current period.
Selling, General and Administrative Expenses
Selling, general and administrative expenses consisted of the following:
Year Ended December 31,
(in thousands) 2025 2024 Increase(Decrease)
Selling, general and administrative expenses increased by $1.7 million for the year ended December 31, 2025, compared to the same period in 2024. The overall increase in expenses was primarily within professional fees and was primarily from strategic advisory services utilized during the current period and an increase in patent fees. Salaries and staff costs increased due to employee severance agreements which were expensed during the current period.
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Interest Income
Interest income was $3.1 million for the year ended December 31, 2025 as compared to $3.3 million for the same period of 2024. Our interest income is primarily from our short-term investment portfolios and money market accounts. The amount of interest income earned varies each period based on the balance of our accounts and interest rates.
Liquidity and Capital Resources
As of December 31, 2025, and December 31, 2024, we had working capital of $43.7 million and $81.6 million, respectively.
We have incurred net losses since our inception and have negative operating cash flows. As of December 31, 2025, we had $58.3 million in cash, cash equivalents and short-term investments. Based on our current projections, we expect that our capital resources are sufficient to fund our operations into the first quarter of 2027, which is not sufficient to meet our funding requirements for at least the next 12 months following the issuance of our financial statements. Management has performed an analysis and concluded that there exists a substantial doubt about the Company's ability to continue as a going concern, see Note 1 Business Overview and Liquidity to the financial statements for additional details.
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. The risk of completion of any program is high because of the many uncertainties involved in developing new drug candidates to market, including the long duration of clinical testing, the specific performance of proposed products under stringent clinical trial protocols, extended regulatory approval and review cycles, our ability to raise additional capital, the nature and timing of research and development expenses, and competing technologies being developed by organizations with significantly greater resources.
For the foreseeable future, we expect to continue to incur losses and require additional capital to further advance our clinical trial programs and support our 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.
Cash Flow Summary
Year Ended December 31,
Net cash used in operating activities $ (37,923 ) $ (37,693 )
Net cash provided by investing activities 1,342 13,728
Net cash provided by financing activities 2,581 53,780
Net change in cash and cash equivalents $ (34,000 ) $ 29,815
Operating Activities
Net cash used in operating activities for the year ended December 31, 2025, was $37.9 million. Our primary use of cash was from our net loss of $45.9 million, adjusted for non-cash items of $5.7 million primarily related to stock-based compensation. The net change in our operating assets and liabilities decreased cash used in operations by $2.2 million.
Net cash used in operating activities for the year ended December 31, 2024, was $37.7 million. Our primary use of cash was from our net loss of $45.4 million, adjusted for non-cash items of $5.1 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.
49
Investing Activities
Net cash provided by investing activities for the year ended December 31, 2025, was $1.3 million, primarily related to maturities and sales in excess of purchases of marketable securities.
Net cash provided by investing activities for the year ended December 31, 2024, was $13.7 million, primarily related to maturities and sales in excess of purchases of marketable securities.
Financing Activities
Net cash provided by financing activities for the year ended December 31, 2025, was $2.6 million, from the exercise of warrants and employee stock options exercises.
Net cash provided by financing activities for the year ended December 31, 2024, was $53.8 million from the net proceeds from the sale of common stock.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
All financial information required by this Item is attached hereto at the end of this report beginning on page F-1 and is hereby incorporated by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
ITEM 9A. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
Our principal executive officer and principal financial officer evaluated the effectiveness of our disclosure controls and procedures as of December 31, 2025. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, or the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure. Based on that evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this Annual Report on Form 10-K.
Management’s Report on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting as such term is defined in Exchange Act Rule 13a-15(f). Internal control over financial reporting is a process designed under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, to provide reasonable assurance regarding the reliability of financial
50
reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.
As of December 31, 2025, under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this assessment, our management concluded that, as of December 31, 2025, our internal control over financial reporting was effective based on those criteria.
Changes in Internal Control Over Financial Reporting
There has been no change in our internal control over financial reporting during the quarter ended December 31, 2025, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
ITEM 9B. OTHER INFORMATION
None.
ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
None.
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PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
The information required by this item is incorporated by reference from the information contained in our Definitive Proxy Statement to be filed with the Securities and Exchange Commission in connection with the Annual Meeting of Stockholders to be held in 2026 (the “2026 Proxy Statement”), under the heading “Election of Directors.”
ITEM 11. EXECUTIVE COMPENSATION
The information required by this item is incorporated by reference from the information contained in the 2026 Proxy Statement under the heading “Executive Compensation.”
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The information required by this item is incorporated by reference from the information contained in the 2026 Proxy Statement under the headings “Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.”
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
The information required by this item is incorporated by reference from the information contained in the 2026 Proxy Statement under the headings “Family Relationships and other Arrangements.”
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
The information required by this item is incorporated by reference from the information contained in the 2026 Proxy Statement under the heading “Proposal 2: Ratification of the Appointment of Our Independent Registered Public Accounting Firm for Fiscal Year Ending December 31, 2026.”
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PART IV
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
ExhibitNumber Description of Exhibit
(a)(1) Financial Statements
(b) Exhibits
ExhibitNumber Description
53
54
23.1 Consent of Independent Registered Public Accounting Firm
24 Power of Attorney (included on signature page hereto).
101.SCH Inline XBRL Taxonomy Extension Schema With Embedded Linkbase Document.
101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.LAB Inline XBRL Taxonomy Extension Labels Linkbase Document.
101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document.
101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document.
104 Cover Page Interactive Data File (embedded within the Inline XBRL document)
+ Indicates a management contract or compensatory plan or arrangement.
* The SEC has granted confidential treatment with respect to certain portions of this exhibit. Omitted portions have been filed separately with the SEC.
@ Portions of this exhibit (indicated by asterisks) have been redacted in compliance with Regulation S-K Item 601(b)(10)(iv).
ITEM 16. FORM 10-K SUMMARY
None.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
CARDIFF ONCOLOGY, INC.
/s/ Mani Mohindru
February 24, 2026 Interim Chief Executive Officer (Principal Executive Officer)
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POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below hereby constitutes and appoints Mani Mohindru as her attorney-in-fact, with full power of substitution and resubstitution, for her in any and all capacities, to sign any and all amendments to this Annual Report on Form 10-K, and to file the same, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorney-in-fact, or her substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
SIGNATURE TITLE DATE
/s/ Mani Mohindru Interim Chief Executive Officer February 24, 2026
Mani Mohindru (Principal Executive Officer)
/s/ Brigitte Lindsay Chief Accounting Officer February 24, 2026
Brigitte Lindsay (Principal Financial and Accounting Officer)
/s/ Rodney S. Markin Chairman of the Board and Director February 24, 2026
Rodney S. Markin
/s/ James O. Armitage Director February 24, 2026
James O. Armitage
/s/ Mark Erlander Director February 24, 2026
Mark Erlander
/s/ Gary W. Pace Director February 24, 2026
Gary W. Pace
/s/ Renee Tannenbaum Director February 24, 2026
Renee Tannenbaum
/s/ Lâle White Director February 24, 2026
Lâle White
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CARDIFF ONCOLOGY, INC.
Index to Financial Statements
Balance Sheets F-4
Statements of Operations F-5
Statements of Comprehensive Loss F-6
Statements of Stockholders’ Equity F-7
Statements of Cash Flows F-8
Notes to Financial Statements F-9
F-1
Report of Independent Registered Public Accounting Firm
Shareholders and Board of Directors
Cardiff Oncology, Inc.
San Diego, California
Opinion on the Financial Statements
We have audited the accompanying balance sheets of Cardiff Oncology, Inc. (the “Company”) as of December 31, 2025 and 2024, the related statements of operations, comprehensive loss, stockholders’ equity, and cash flows for each of the years then ended, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2025 and 2024, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.
Going Concern Uncertainty
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has suffered recurring losses from operations and has negative operating cash flows that raise substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of a critical audit matter does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Accrued Clinical Trial Expenses
As disclosed in Note 2 to the financial statements, the Company expenses research and development expenditures as incurred, which include costs relating to clinical trial activities. The Company accrues costs for clinical trial
F-2
activities based upon estimates of the services received and related expenses incurred that have yet to be invoiced by the service providers. As of December 31, 2025, the Company recorded $3.8 million in clinical trial accruals.
We identified the estimation of accrued clinical trial expenses as a critical audit matter. The Company considered several elements when estimating the accrued costs for clinical trial activities, including the key terms of the clinical trial agreements, budgets, contract amendments, and the progress of clinical trials towards completion (which included consideration of patient enrollment). Auditing these elements involved especially challenging auditor judgment due to the nature of the audit evidence available to address these matters.
The primary procedures we performed to address the critical audit matter included:
•
Testing management’s estimation of accrued clinical trial expenses by inspecting certain clinical trial agreements, budgets, and contract amendments;evaluating the Company’s assessment of progress of clinical trials (including consideration of patient enrollment);confirming certain amounts invoiced and amounts paid directly with a service provider; and testing a sample of clinical trial expenses incurred.
•
Testing the completeness of the Company’s accrued clinical trial expenses by inspecting board of directors’ minutes to identify clinical trials; evaluating publicly available information (such as press releases, investor presentations and public databases that track clinical trials); and inquiring of clinical staff to gain an understanding of the progress of a certain on-going clinical trial.
•
Selecting subsequent payments for testing to evaluate the completeness of clinical trial accruals at the end of the year.
/s/ BDO USA, P.C.
We have served as the Company’s auditor since 2007.
San Diego, California
February 24, 2026
F-3
Cardiff Oncology, Inc.
Balance Sheets
(in thousands, except par value)
Assets
Current assets:
Accounts receivable and unbilled receivable 182 773
Prepaid expenses and other current assets 1,642 2,535
Property and equipment, net 578 898
Operating lease right-of-use assets 629 1,169
Liabilities and Stockholders’ Equity
Current liabilities:
Operating lease liabilities 730 710
Operating lease liabilities, net of current portion 102 813
Commitments and contingencies (Note 9)
Stockholders’ equity:
Accumulated other comprehensive gain 50 34
Total liabilities and stockholders’ equity $ 61,884 $ 97,190
The accompanying notes are an integral part of these financial statements.
F-4
Cardiff Oncology, Inc.
Statements of Operations
(in thousands, except per share amounts)
Year Ended December 31,
Costs and expenses:
Other income (expense), net:
Other income (expense), net 5 (39 )
Total other income (expense), net 3,109 3,220
Net loss attributable to common stockholders $ (45,876 ) $ (45,455 )
Net loss per common share — basic and diluted $ (0.69 ) $ (0.95 )
Weighted-average shares outstanding — basic and diluted 66,841 47,650
The accompanying notes are an integral part of these financial statements.
F-5
Cardiff Oncology, Inc.
Statements of Comprehensive Loss
(in thousands)
Year Ended December 31,
Other comprehensive loss:
Unrealized gain on securities available- for-sale 16 101
Comprehensive loss attributable to common stockholders $ (45,860 ) $ (45,354 )
The accompanying notes are an integral part of these financial statements.
F-6
Cardiff Oncology, Inc.
Statements of Stockholders’ Equity
(in thousands)
Modified-retrospective adoption of ASU 2020-06(1) — — — — (793 ) — 793 —
Stock-based compensation — — — — 4,760 — — 4,760
Issuance of common stock upon exercise of stock options — — 139 — 373 — — 373
Other comprehensive gain — — — — — 101 — 101
Stock-based compensation — — — — 5,693 — — 5,693
Issuance of common stock upon exercise of warrants(3) — — 945 — 2,088 — — 2,088
Issuance of common stock upon cashless exercise of warrants — — 553 — — — — —
Issuance of common stock upon exercise of stock options — — 283 — 493 — — 493
Other comprehensive gain — — — — — 16 — 16
(1)
See Note 2.
(2)
Net of expenses of $3.3 million.
(3)
Net of expenses of $0.2 million.
The accompanying notes are an integral part of these financial statements.
F-7
Cardiff Oncology, Inc.
Statements of Cash Flows
(in thousands)
Year Ended December 31,
Operating activities
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation expense 5,693 4,760
Amortization of right-of-use assets 540 539
Accretion of discounts on short-term investments, net (848 ) (598 )
Changes in operating assets and liabilities:
Accounts receivable and unbilled receivable 591 (484 )
Prepaid expenses and other current assets 557 (452 )
Accounts payable and accrued liabilities 2,202 2,985
Operating lease liabilities (691 ) (626 )
Net cash used in operating activities (37,923 ) (37,693 )
Investing activities
Capital expenditures (44 ) (80 )
Purchases of short-term investments (71,860 ) (23,563 )
Net cash provided by investing activities 1,342 13,728
Financing activities
Proceeds from exercise of options 493 373
Net cash provided by financing activities 2,581 53,780
Net change in cash and cash equivalents (34,000 ) 29,815
Cash and cash equivalents—Beginning of year 51,470 21,655
Cash and cash equivalents—End of year $ 17,470 $ 51,470
Supplementary disclosure of cash flow activity:
Supplemental disclosure of non-cash investing activities:
Cash paid for taxes $ 1 $ 1
The accompanying notes are an integral part of these financial statements.
F-8
Cardiff Oncology, Inc.
Notes to Financial Statements
1. Business Overview and Liquidity
Business Organization and Overview
Cardiff Oncology, Inc. (the “Company”) headquartered in San Diego, California, is a clinical-stage biotechnology company leveraging Polo-like Kinase 1 (“PLK1”) inhibition, to develop novel therapies across a range of cancers. The Company’s lead asset is onvansertib, a PLK1 inhibitor that is being evaluated in combination with standard-of-care ("SoC") therapeutics in clinical programs targeting indications such as RAS-mutated metastatic colorectal cancer (“mCRC”), as well as investigator-initiated trials in metastatic pancreatic ductal adenocarcinoma (“mPDAC”), small cell lung cancer (“SCLC”), metastatic triple negative breast cancer (“mTNBC”), and Chronic Myelomonocytic Leukemia ("CMML"). These programs and the Company’s broader development strategy are designed to target tumor vulnerabilities in order to overcome treatment resistance and deliver superior clinical benefit compared to SoC alone. The Company's common stock is listed on the Nasdaq Capital Market under the ticker symbol "CRDF".
Going Concern Uncertainty
The Company has incurred net losses since its inception and has negative operating cash flows. As of December 31, 2025, the Company had $58.3 million in cash, cash equivalents and short-term investments, which is not sufficient to meet its funding requirements for at least the next 12 months following the issuance date of these financial statements. Management has performed an analysis and concluded that there exists a substantial doubt about the Company's ability to continue as a going concern. The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. The financial statements do not include any adjustments related to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might result from the outcome of this uncertainty.
The Company's ability to continue as a going concern is dependent upon its ability to obtain additional equity or debt financing, obtain government grants or reduce expenditures. 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.
2. Basis of Presentation and Summary of Significant Accounting Policies
The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”).
Segment Reporting
The company operates in one business segment in the United States, which includes all activities related to the development of novel therapies across a range of cancers. The Company's chief operating decision-maker is its chief executive officer. The chief operating decision-maker allocates resources based on available cash, cash equivalents and short-term investments. The primary measure of performance reviewed by the chief operating decision-maker is net loss which is compared to the annual budget and quarterly forecasts.
All financial information required for segment reporting that is provided to the chief operating decision-maker is contained within the financial statements and notes to financial statements, with the exception of the disaggregated amounts contained in the table below:
F-9
Year Ended December 31,
Research and development:
Clinical trials, outside services, and lab supplies 23,954 26,472
Selling, general and administrative:
Outside services and professional fees 5,262 4,369
Total selling, general and administrative $ 14,224 $ 12,482
Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make significant estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The most significant estimate involves accrued clinical trial expenses.
Accrued Clinical Trial Expenses
The Company expenses research and development expenditures as incurred, which include costs related to clinical trial activities. The Company accrues costs for clinical trial activities based upon estimates of the services received and related expenses incurred that have yet to be invoiced by the Clinical Research Organizations ("CROs"), investigators, professional service providers, and other vendors providing clinical trial services (collectively, the “service providers”). The Company considers several elements including the key terms of the clinical trial agreements, budgets, contract amendments, and the progress of clinical trials toward completion (which includes consideration of patient enrollment) in estimating the clinical trial accrual. As of December 31, 2025 and 2024, the Company’s clinical trial accrual balance of $3.8 million and $4.4 million, respectively, is included in accrued liabilities. The Company’s related clinical trial expenses are included in research and development expense.
Cash and Cash Equivalents
The Company considers all highly liquid investments with original maturities of three months or less from the date of purchase to be cash equivalents. Cash and cash equivalents consist of cash in readily available checking and money market accounts.
Investment Securities
Investment transactions are recorded on the trade date, and purchases of investments that are settled after the balance sheet date are included in accrued liabilities. 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
F-10
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 loss. 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.
Concentration of Credit Risk
Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash, cash equivalents and short-term investments as follows:
Cash and Cash Equivalents
The Company maintains deposit accounts at financial institutions that are in excess of federally insured limits. The Company has not experienced any losses in such accounts and believes it is not exposed to significant risk on its cash due to the financial position of the depository institution in which those deposits are held. The Company limits its exposure to credit loss by generally placing its cash in high credit quality financial institutions and investment in non FDIC insured money market funds denominated and payable in U.S. dollars.
Short-term Investments
The Company follows an investment policy which requires short-term investments to be diversified across different types of instruments and issuers. The investment policy also requires investments to be in high quality instruments. The diversification and credit quality requirements of the Company's investment policy limits its exposure to credit loss.
Revenues
The Company recognizes revenue when control of its products and services are transferred to its customers in an amount that reflects the consideration it expects to receive from its customers in exchange for those products and services. This process involves identifying the contract with a customer, determining the performance obligations in the contract, determining the contract price, allocating the contract price to the distinct performance obligations in the contract, and recognizing revenue when the performance obligations have been satisfied. A performance obligation is considered distinct from other obligations in a contract when it provides a benefit to the customer either on its own or together with other resources that are readily available to the customer and is separately identified in the contract. The Company considers a performance obligation satisfied once it has transferred control of goods or service to the customer, meaning the customer has the ability to use and obtain the benefit of goods or service. The Company recognizes revenue for satisfied performance obligations only when it determines there are no uncertainties regarding payment terms or transfer of control. For sales-based royalties, the Company recognizes revenue at the later of (i) when the related sales occur, or (ii) when the performance obligation to which some or all of the royalty has been allocated has been satisfied (or partially satisfied).
Royalty and License Revenues
The Company licenses and sublicenses its patent rights to healthcare companies, medical laboratories and biotechnology partners. These patents are from the Company's legacy portfolio and unrelated to onvansertib. Agreements may involve multiple elements such as license fees, minimum royalties, usage-based royalties and milestone payments. Revenue is recognized when the criteria described above have been met as well as the following:
•
Up-front nonrefundable license fees pursuant to agreements under which the Company has no continuing performance obligations are recognized as revenues on the effective date of the agreement and when collection is probable.
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•
Minimum royalties are recognized as earned, and royalties are earned based on the licensee’s use. The Company estimates and records licensee’s sales based on historical usage rate and collectability.
•
For sales-based royalties, the Company recognizes revenue at the later of (i) when the related sales occur, or (ii) when the performance obligation to which some or all of the royalty has been allocated has been satisfied (or partially satisfied).
Payment terms and conditions vary by contracts, although terms generally include a requirement of payment within 30 to 45 days after invoice. Royalties are generally due quarterly or annually.
Stock-Based Compensation
Stock-based compensation expense is measured at the grant date based on the estimated fair value of the award and is recognized straight-line over the requisite service period of the individual grants, which typically equals the vesting period. The Company estimates forfeitures based on its historical experience.
Fair Value of Financial Instruments
Financial instruments consist of cash equivalents, investments, accounts receivable, and accounts payable. The Company applies ASC 820 for financial assets and liabilities that are required to be measured at fair value and non-financial assets and liabilities that are not required to be measured at fair value on a recurring basis. These financial instruments are stated at their respective historical carrying amounts, which approximate fair value due to their short-term nature as they reflect current market interest rates.
The authoritative guidance establishes a fair value hierarchy that is based on the extent and level of judgment used to estimate the fair value of assets and liabilities. In general, the authoritative guidance requires us to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. An asset or liability’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the measurement of its fair value. The three levels of input defined by the authoritative guidance are as follows:
•
Level 1 — Quoted prices for identical instruments in active markets.
•
Level 2 — Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations where inputs are observable or where significant value drivers are observable.
•
Level 3 — Instruments where significant value drivers are unobservable to third parties.
Long-Lived Assets
Long-lived assets consist of property, equipment and lease right-of-use assets. The Company records property and equipment at cost. Depreciation on property and equipment is calculated using the straight-line method over the estimated useful life of the asset. Depreciation of leasehold improvements is computed based on the shorter of the life of the asset or the term of the lease. The estimated useful lives of the major classes of property and equipment are as follows:
Estimated Useful Lives
Furniture and office equipment 3 to 5 years
Leasehold improvements 4 to 6 years
Laboratory equipment 5 years
Impairment losses on long-lived assets used in operations are recorded when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets carrying amount. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the estimated fair value of the assets.
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Leases
The Company determines if an arrangement is a lease at inception. Operating leases are included in operating lease Right-of-Use (“ROU”) assets, current operating lease liabilities and non-current operating lease liabilities in the Company’s balance sheets.
ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent its obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. None of the Company’s operating leases provide an implicit rate, therefore the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The incremental borrowing rate is the rate of interest that the Company would expect to pay to borrow on a collateralized and fully amortizing basis over a similar term an amount equal to the lease payments in a similar economic environment. The operating lease ROU asset also includes any lease payments made less lease incentives received. The Company’s lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Lease expense is recognized on a straight-line basis over the lease term. Our facilities lease agreement contains lease and non-lease components, such as common area maintenance. The Company elected to account for these lease and non-lease components of this agreement as a single lease component.
Leases with an initial term of 12 months or less are not recorded on the Company's balance sheets. These short-term leases are expensed on a straight-line basis over the lease term.
Income Taxes
Income taxes are determined using the asset and liability approach of accounting for income taxes. Under this approach, deferred taxes represent the future tax consequences expected to occur when the reported amounts of assets and liabilities are recovered or paid. Deferred taxes result from differences between the financial statement and tax bases of assets and liabilities and are adjusted for changes in tax rates and tax laws when changes are enacted. Valuation allowances are recorded to reduce deferred tax assets when it is more likely than not that a tax benefit will not be realized. The Company’s policy is to recognize the interest expense and/or penalties related to income tax matters as a component of income tax expense.
Contingencies
In the normal course of business, the Company is subject to loss contingencies, such as legal proceedings and claims arising out of its business, that cover a wide range of matters, including, among others, government investigations, stockholder lawsuits, product and environmental liability, and tax matters. In accordance with FASB ASC Topic 450, Contingencies, the Company records such loss contingencies when it is probable that a liability has been incurred and the amount of loss can be reasonably estimated. The Company, in accordance with this guidance, does not recognize gain contingencies until realized.
Research and Development
Research and development expenses include expenditures in connection with an in-house research and development laboratory, salaries and staff costs, clinical trials, purchased in-process research and development and regulatory and scientific consulting fees, as well as contract research and insurance. Also, patent filing and patent maintenance expenses are considered legal in nature and therefore classified as general and administrative expense, if any.
Non-refundable advance payments for goods or services that will be used or rendered for future research and development activities are deferred and capitalized. As the related goods are delivered or the services are performed, or when the goods or services are no longer expected to be provided, the deferred amounts are recognized as an expense.
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Upfront and milestone payments to acquire contractual rights to licensed technology are expensed when incurred if there is uncertainty in the Company receiving future economic benefit from the acquired contractual rights. Certain contractual rights may require the Company to make additional milestone payments based on development and commercial milestones, and royalties based on sales volume. See Note 9 - Commitments and Contingencies, for further details.
These potential development milestones include: (a) dosing of the first subject in the first Phase III Clinical Trial for the first Product, a registration enabling Phase II Clinical Trial, or after completion of a Phase II Clinical Trial that is used as the basis for an NDA submission; and (b) upon filing of the first NDA or equivalent for the first product candidate.
Net Loss Per Share
Basic and diluted net loss per common share is determined by dividing net loss attributable to common stockholders by the weighted-average common shares outstanding during the period. The accretion of Series A Convertible Preferred Stock dividends and deemed dividends recognized in connection with certain preferred share issuances are included in net loss attributable to common stockholders in the computation of basic and diluted earnings per share. For all periods presented, there is no difference in the number of shares used to calculate basic and diluted shares outstanding as inclusion of the potentially dilutive securities would be antidilutive. Shares used in calculating diluted net loss per common share exclude as anti-dilutive the following share equivalents:
December 31,
Series A Convertible Preferred Stock 877 877
Recently Adopted Accounting Pronouncement
In August 2020, the Financial Accounting Standards Board ("the FASB") issued ASU No. 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. This update was effective for the Company on January 1, 2024. The amendment is to be adopted through either a fully retrospective or modified retrospective method of transition. The Company adopted this standard as of January 1, 2024 using the modified-retrospective method. As a result of the adoption, the Company reversed the accretion of preferred stock dividends originally recorded in 2005 related to the Series A Convertible Preferred Stock of $793,000.
In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures. ASU 2023-09 requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as information on income taxes paid. ASU 2023-09 is effective for public entities with annual periods beginning after December 15, 2024 and for private businesses for annual periods beginning after December 15, 2025, with early adoption permitted. The Company has adopted this standard as of January 1, 2025 using the retrospective method for the comparative period with additional disclosure contained in Note 8 Income Taxes.
Recent Accounting Pronouncement Not Yet Adopted
In November 2024, the FASB issued ASU 2024-03 Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures, to enhance the transparency of certain expense disclosures. The update requires disclosure of specific expense categories in the notes to the financial statements at interim and annual reporting periods. The update requires disaggregated information about certain prescribed expense categories
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underlying any relevant income statement expense caption. The amendments in this update are effective for public entities for annual periods beginning after December 15, 2026, and interim periods beginning after December 15, 2027. The amendments may be adopted either prospectively or retrospectively. Early adoption is permitted. The Company is currently evaluating the impact of this guidance on its financial statement disclosures.
3. Supplementary Balance Sheet Information
Short-term investments available-for-sale securities consist of the following:
Maturity less than 1 year:
Certificate of deposit $ 143 $ — $ — $ 143
Maturity 1 to 2 years:
Maturity less than 1 year:
Maturity 1 to 2 years:
For the years ended December 31, 2025 and 2024, the net realized loss recorded within the Company's statements of operations from the sale of short-term investments were $0 and $34,000, respectively. The amount of gains and losses reclassified out of other comprehensive loss for the period related to the sales of short-term investments was not material for the years ended December 31, 2025 and 2024.
The Company periodically reviews its portfolio of debt securities to determine if any investment is impaired due to credit loss or other potential valuation concerns. For debt securities where the fair value of the investment is less than the amortized cost basis, the Company assessed at the individual security level various quantitative factors including, but not limited to, the nature of the investments, changes in credit ratings, interest rate fluctuations, industry analyst reports, and the severity of impairment. Unrealized losses in available for sale debt securities at December 31, 2025, were substantially due to changes in interest rates, not due to increased credit risks associated with specific securities. Accordingly, the Company has not recorded an allowance for credit losses. It is not more
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likely than not that the Company will be required to sell the investments before recovery of their amortized cost bases, which may be at maturity.
There were no unrealized loss positions greater than one year as of December 31, 2025 and 2024.
Accrued Interest from Short-term Investments
Accrued interest from short-term investments contained within prepaid expenses and other current assets as of December 31, 2025 and 2024, was $0.3 million and $0.4 million, respectively.
Property and Equipment
Fixed assets consist of furniture and office equipment, leasehold improvements and laboratory equipment. Depreciation expense for property and equipment for the years ended December 31, 2025 and 2024 was $0.4 million and $0.4 million, respectively. Property and equipment consisted of the following:
Furniture and office equipment $ 1,051 $ 1,053
Property and equipment, gross 5,045 5,035
Less—accumulated depreciation (4,467 ) (4,137 )
Property and equipment, net $ 578 $ 898
Accrued Liabilities
Accrued liabilities consisted of the following:
Unsettled investments payable 744 —
Research agreements and services 311 478
Other accrued liabilities 287 230
Total accrued liabilities $ 7,577 $ 7,897
4. Leases
As a lessee, the Company’s current lease includes its master facility lease which is considered an operating lease.
Master Facility Lease
The Company currently leases office and lab space in San Diego that expires on February 28, 2027. The lease currently requires monthly payments of approximately $67,000 per month with 3% annual escalation.
The components of lease expense were as follows:
(in thousands) Year Ended December 31,
Operating lease cost $ 620 $ 667
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Supplemental balance sheet information related to leases was as follows:
Operating lease ROU assets $ 629 $ 1,169
Current operating lease liabilities $ 730 $ 710
Non-current operating lease liabilities 102 813
Total operating lease liabilities $ 832 $ 1,523
Weighted-average remaining lease term–operating leases 1.2 years 2.2 years
Weighted-average discount rate–operating leases 7 % 7 %
Supplemental cash flow and other information related to leases was as follows:
(in thousands) For the YearEnded December 31,
Cash paid for amounts included in the measurement of lease liabilities:
Cash paid included in operating cash flows $ 777 $ 756
Total remaining annual commitments under non-cancelable operating lease agreements as of December 31, 2025, are summarized are as follows:
(in thousands)
Year Ending December 31, Operating Leases
Total future minimum lease payments 866
Less imputed interest (34 )
5. Stockholders’ Equity
Warrants
A summary of warrant activity and changes in warrants outstanding is presented below:
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During the year ended December 31, 2025, warrant holders cashless exercised 1,711,668 warrants, resulting in the issuance of 553,318 shares of common stock.
Series A Convertible Preferred Stock
The material terms of the Series A Convertible Preferred Stock consist of:
1) Dividends. Holders of the Company’s Series A Convertible Preferred Stock are entitled to receive cumulative dividends at the rate per share of 4% per annum, payable quarterly on March 31, June 30, September 30 and December 31, beginning with September 30, 2005. Dividends are payable, at the Company’s sole election, in cash or shares of common stock. As of December 31, 2025 and 2024, the Company had $511,000 and $486,000, respectively in cumulative unpaid preferred stock dividends, included in the liquidation preference of the Series A Convertible Preferred Stock, and $25,000 and $24,000 of cumulative dividends were added to the liquidation preference of the Series A Convertible Preferred Stock during the years ended December 31, 2025 and 2024, respectively.
2) Voting Rights. Shares of the Series A Convertible Preferred Stock have no voting rights. However, so long as any shares of Series A Convertible Preferred Stock are outstanding, the Company may not, without the affirmative vote of the holders of the shares of Series A Convertible Preferred Stock then outstanding, (a) adversely change the powers, preferences or rights given to the Series A Convertible Preferred Stock, (b) authorize or create any class of stock senior or equal to the Series A Convertible Preferred Stock, (c) amend its certificate of incorporation or other charter documents, so as to affect adversely any rights of the holders of Series A Convertible Preferred Stock or (d) increase the authorized number of shares of Series A Convertible Preferred Stock.
3) Liquidation. Upon any liquidation, dissolution or winding-up of the Company, the holders of the Series A Convertible Preferred Stock are entitled to receive an amount equal to the Stated Value per share, which is currently $10 per share plus any accrued and unpaid dividends.
4) Conversion Rights. Each share of Series A Convertible Preferred Stock is convertible at the option of the holder into that number of shares of common stock determined by dividing the Stated Value, currently $10 per share, by the conversion price, which at the time of issuance was $928.80 per share, and subsequently adjusted to $691.20 per share.
5) Subsequent Equity Sales. The conversion price is subject to adjustment for dilutive issuances for a period of 12 months beginning March 17, 2006 and the conversion price was adjusted to $691.20 per share.
6) Automatic Conversion. If the price of the Company’s common stock equals $1,857.60 per share for 20 consecutive trading days, and an average of 116 shares of common stock per day are traded during the 20 trading days, the Company will have the right to deliver a notice to the holders of the Series A Convertible Preferred Stock, requesting the holders to convert any portion of the shares of Series A Convertible Preferred Stock into shares of common stock at the applicable conversion price. As of the date of these financial statements, such conditions have not been met.
The components of the liquidation preference for the Series A Convertible Preferred Stock were as follows:
As of December 31,
Stated Value per share liquidation $ 606 $ 606
Cumulative unpaid preferred stock dividends 511 486
Liquidation preference - Series A Convertible Preferred Stock $ 1,117 $ 1,092
Sale of Common Stock
The shares of common stock sold by the Company during the year ended December 31, 2024, were pursuant to the Company’s effective shelf registration statement on Form S-3 (File No. 333‐264148), which was declared effective by the Securities and Exchange Commission on April 25, 2022.
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During the year ended December 31, 2024, the Company received net proceeds of $16.0million from the sale of 6.3 million shares of its common stock under the Sales Agreement with Jefferies LLC, and the Company received net proceeds of $37.4 million from the sale of 15.4 million shares of its common stock from an underwritten registered direct offering.
6. Stock-Based Compensation
2021 Equity Incentive Plan
In June 2021, the Company's stockholders approved the 2021 Omnibus Equity Incentive Plan ("2021 Plan"). As of December 31, 2025, the number of authorized shares in the 2021 Plan is equal to the sum of (i) 12,150,000shares, plus (ii) the number of shares of Common Stock reserved, but unissued under the 2014 Plan; and (iii) the number of shares of Common Stock underlying forfeited awards under the 2014 Plan. As of December 31, 2025, there were 4,928,228 shares available for issuance under the 2021 Plan.
2014 Equity Incentive Plan
Subsequent to the adoption of the 2021 Plan, no additional equity awards can be made under the terms of the 2014 Plan.
Inducement Grants
The Company issues equity awards to certain new employees as inducement grants outside of its 2021 Plan. As of December 31, 2025, an aggregate of 1,590,288 shares were issuable upon the exercise of inducement grant stock options approved by the Company.
Rescinding and Reissuance of March 2024 Stock Options
On May 30, 2024, the Board of Directors of the Company approved the rescinding of an aggregate of 1,697,712 shares of common stock issuable upon exercise of stock options granted on March 7, 2024 at an exercise price of $3.51 per share to employees and officers of the Company. On May 30, 2024, the Board of Directors of the Company approved the grant of an aggregate of 1,697,712 shares of common stock issuable upon exercise of stock options at an exercise price of $3.51 per share to employees and officers of the Company, subject to stockholder approval of an increase in the shares of common stock available for issuance pursuant to the Company’s 2021 Equity Incentive Plan at the Company’s annual meeting on June 20, 2024. The increase of shares available was approved by shareholders at the June 20, 2024 meeting, thus completing the requirements for the reissuance of the grant. The terms of the reissued grant were identical to the rescinded grant, therefore the transaction does not represent a stock option modification.
Stock-based compensation has been recognized in operating results as follows:
(in thousands) Years ended December 31,
Research and development expenses $ 2,376 $ 1,660
Selling, general and administrative expenses 3,317 3,100
Total stock-based compensation $ 5,693 $ 4,760
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Stock Options
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 assumptions during the years indicated below:
Years ended December 31,
Dividend yield 0% 0%
Expected term (in years) 6.2 5.8
Risk-free interest rate — Based on the daily yield curve rates for U.S. Treasury obligations with maturities that correspond to the expected term of the Company’s stock options.
Dividend yield — The Company has not paid any dividends on common stock since its inception and does not anticipate paying dividends on its common stock in the foreseeable future.
Expected volatility — Based on the historical volatility of the Company’s common stock.
Expected term — The expected term for options granted after January 1, 2023 is estimated based on the Company's historical employee data.
Forfeitures — The Company estimates forfeitures based on its historical experience.
The weighted-average fair value per share of all options granted during the years ended December 31, 2025 and 2024, estimated as of the grant date using the Black-Scholes option valuation model, was $2.99 and $2.79 per share, respectively.
The unrecognized compensation cost related to non-vested stock options outstanding at December 31, 2025 was $9.8 million. The weighted-average remaining amortization period at December 31, 2025 for non-vested stock options was 2.7 years.
The total fair value of shares vested during the years ended December 31, 2025 and 2024 was $5.1 million and $4.6 million, respectively.
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A summary of stock option activity and of changes in stock options outstanding is presented below:
7. 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 December 31, 2025 and 2024:
Fair Value Measurements atDecember 31, 2025
Assets:
Total included in cash and cash equivalents 17,169 — — 17,169
Available for sale investments:
Certificate of deposit — 143 — 143
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Fair Value Measurements atDecember 31, 2024
Assets:
U.S. treasury securities 393 — — 393
Total included in cash and cash equivalents 50,892 — — 50,892
Available for sale investments:
The Company’s policy is to recognize transfers between levels of the fair value hierarchy on the date of the event or change in circumstances that caused the transfer. There were no transfers into or out of Level 3 during the years ended December 31, 2025 and 2024.
8. Income Taxes
The Company's loss before income taxes is as follows:
(in thousands) Years ended December 31,
The provision for income tax (benefit) expense consists of the following:
Years ended December 31,
Current:
Federal $ — $ —
State — —
Total current income tax (benefit) expense — —
Deferred:
Total deferred income tax (benefit) expense (8,828 ) (9,263 )
Total income tax (benefit) expense $ — $ —
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Significant components of the Company’s taxes and the rates are shown below:
Years ended December 31,
(in thousands, except percentages) 2025 2024
State and local taxes net of federal income tax effect(1) (408 ) 0.9 % 1 — %
Tax Credits:
Research and development credits (591 ) 1.3 % (642 ) 1.4 %
Nontaxable or Nondeductible Items:
Other 5 — % 5 — %
Change in unrecognized tax benefits 827 (1.8 )% — — %
Effective income tax rate $ — — % $ — — %
(1) Income tax rate associated with the state of California.
Significant components of the Company’s deferred tax assets and liabilities from federal and state income taxes are shown below:
Years ended December 31,
Deferred tax assets:
Research and development credits and other tax credits 4,685 4,556
Operating lease liabilities 180 327
Deferred tax liabilities:
Operating lease right-of-use assets (136 ) (251 )
Total deferred tax liabilities (136 ) (251 )
Net deferred tax assets before valuation allowance 57,262 48,434
Net deferred tax asset $ — $ —
A summary of changes to the Company's valuation allowance is presented below:
Years ended December 31,
Deferred Tax Assets - Valuation Allowance
Federal increase/(decrease) charge to expenses 8,615 8,816
State increase/(decrease) charge to expenses 213 447
At December 31, 2025, the Company had federal net operating loss carryforwards (“NOLs”) of approximately $2.0 million which, if not used, will continue to expire through 2037, and federal net operating loss carryforwards of approximately $141.7 million, which do not expire. The Company also has California NOLs of approximately $26.0 million which, if not used, will begin to expire in 2029. The Company also has research and development tax credits available for federal and California purposes of approximately $2.8 million and $3.4 million, respectively. The
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federal research and development tax credits will begin to expire in 2026. The California research and development tax credits do not expire.
Since inception the Company has incurred continuing losses and expects to continue to incur losses for the foreseeable future. The Company has recorded a full valuation allowance against its net deferred tax assets as it is more likely than not they will not be realized.
Pursuant to the Internal Revenue Code of 1986, as amended (the “Code”) Sections 382 and 383, annual use of a company’s NOL and research and development credit carryforwards may be limited if there is a cumulative change in ownership of greater than 50% within a three-year period. The amount of the annual limitation is determined based on the value of the Company immediately prior to the ownership change. The Company completed an IRS Section 382 study through December 31, 2022, to assess the limitations on the use of its NOL carryforwards due to changes in ownership. There have been two ownership changes prior to December 31, 2022, and any changes in ownership subsequent to December 31, 2022, may result in additional limitations. If limited, the related tax asset would be removed from the deferred tax asset schedule with a corresponding reduction in the valuation allowance. The Company has established a valuation allowance as the realization of such deferred tax assets has not met the more likely than not threshold requirement. Due to the existence of the valuation allowance, further changes in the Company’s unrecognized tax benefits will not impact the Company’s effective tax rate.
The Company is subject to taxation in the U.S. and California. Due to net operating losses, all tax years since inception remain open to examination.
The Company's gross unrecognized tax benefits are as follows:
Years ended December 31,
Unrecognized tax benefits
Beginning balance $ — $ —
Increases related to prior year tax positions 777 —
Increases related to current year tax positions 158 —
Balance at end of year $ 935 $ —
As of December 31, 2025, the Company has gross unrecognized tax benefits of $0.9 million, none of which would affect the effective tax rate due to a full valuation allowance. The Company has no accrual for interest or penalties on its balance sheet at December 31, 2025 and has not recognized interest and/or penalties in its statement of operations for the year ended December 31, 2025.
The amounts of cash taxes paid are as follows:
(in thousands) Years ended December 31,
Current:
Federal $ — $ —
State:
California 1 1
Cash paid for income taxes $ 1 $ 1
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During the years ended December 31, 2025 and 2024, the only jurisdiction with cash taxes paid that equaled or exceeded 5% of total income taxes paid was California.
On July 4, 2025, the One Big Beautiful Bill Act ("OBBBA") was enacted into law. The new tax law contains several key provisions affecting corporations including but are not limited to expensing of domestic specified research or experimental expenditures and one hundred percent bonus depreciation on eligible property after January 19, 2025. In accordance with Accounting Standards Codification (ASC) 740, Income Taxes, the Company is required to recognize the effect of the tax law changes in the period of enactment, such as remeasuring the estimated U.S. deferred tax assets and liabilities. Because of a full valuation allowance, there is no effect to deferred tax assets and liabilities for year end December 31, 2025. The Company will continue to apply OBBBA tax law changes as required or elected in future years.
9. Commitments and Contingencies
Executive Agreements
Certain executive agreements provide for severance payments in case of terminations without cause or certain change of control scenarios.
Research and Development and Clinical Trial Agreements
In March 2017, the Company entered into a license agreement with Nerviano which granted the Company development and commercialization rights to NMS-1286937, which the Company refers to as onvansertib. Terms of the agreement also provide for the Company to pay development milestones up to an aggregate of $15 million, commercial milestones, and royalties based on sales volume ranging from mid-single digits to low double digits. These potential development milestones include: (a) dosing of the first subject in the first Phase III Clinical Trial for the first Product, a registration enabling Phase II Clinical Trial, or after completion of a Phase II Clinical Trial that is used as the basis for an NDA submission; and (b) upon filing of the first NDA or equivalent for the first product candidate. During the years ended December 31, 2025 and 2024, no milestone or royalty payments were made.
The Company is a party of various agreements under which it licenses technology on an exclusive basis in the field of oncology therapeutics. These agreements include License fees, Royalties and Milestone payments. The Company also has a legacy license agreement in the field of oncology diagnostics under which royalty payments are due. These royalty payments are calculated as a percent of revenue. During the years ended December 31, 2025 and 2024, payments have not been material.
Litigation
On May 13, 2024, a purported stockholder of the Company filed a putative class action in the Court of Chancery of the State of Delaware captioned Vrana v. James O. Armitage et al., C.A. No. 2024-0507-MTZ (Del. Ch.) (“Action”). The Action was mooted on June 20, 2024 when the Company’s stockholders voted: (i) to elect all 7 nominees for director to serve until the 2025 Annual Meeting of Stockholders; and (ii) to approve an amendment to the Company’s 2021 Equity Incentive Plan to increase the number of shares issuable thereunder to 8,150,000 shares. On June 26, 2024, the Court entered an order dismissing the Action but retained jurisdiction solely for the purpose of resolving the plaintiff’s counsel’s anticipated motion for an award of attorneys’ fees and expenses. Without admitting any fault or wrongdoing, the Company agreed to pay $400,000 in attorneys’ fees and expenses to the plaintiff’s counsel in connection with the mooted claims. In entering the order, the Court did not review, and did not pass judgment on, the payment of the attorneys’ fees and expenses. The Company paid the plaintiff’s counsel fees and expenses during September 2024, which was recorded within selling general and administrative expense.
From time to time, the Company may become involved in various lawsuits and legal proceedings that arise in the ordinary course of business. Litigation is subject to inherent uncertainties, and an adverse result in matters may arise from time to time that may harm the Company’s business.
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License Agreement
On February 18, 2026, Nerviano sent the Company a written notice alleging that it is in material breach of the license agreement with respect to (i) alleged joint ownership of certain of its U.S. patents nos. 12.144.813 and 12.263.173 (the “Cardiff Patents”) and (ii) the filing of a joint invention continuation patent application. The Company is currently reviewing the notice and believes it has meritorious defenses to the allegations contained therein. The Cardiff Patents were based on the results of the Company’s TROV-054 study with claims that cover the method of using onvansertib in combination with bevacizumab for the treatment of metastatic colorectal cancer patients who have not previously been treated with bevacizumab. The Company intends to vigorously defend its rights under the license agreement. If it is unable to cure or successfully dispute the alleged breach, Nerviano may have the right to terminate the license agreement. This would have a material adverse effect on the Company’s business, financial condition, and results of operations, which cannot be reasonably estimated at this time.
10. Employee Benefit Plan
The Company has a defined contribution retirement plan under Section 401(k) of the Internal Revenue Service ("IRS") Code covering its employees. The plan allows employees to defer, up to the maximum allowed, a percentage of their income through contributions to the plan as allowed by IRS Code. The Company does not currently make matching contributions.
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