Cardiff Oncology: Risky Investment

Summary

• Despite producing decent data, the stock has kept falling.
• Today it is in the penny stock zone, and we do not recommend penny stocks as investments.
• However, Pfizer's small stake is a silver lining.
• Looking for a portfolio of ideas like this one? Members of The Total Pharma Tracker get exclusive access to our model portfolio. Learn More »

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Cardiff Oncology (NASDAQ:CRDF) is in the penny stock zone today; a highly risky stock that I covered twice before. Their lead and only asset is onvansertib, an oral and highly-selective inhibitor of Polo-like Kinase 1 (PLK1). And therein lies the problem. PLK1 inhibitors have unresolved safety issues.

A 2019 paper I read says the following:

First, most of the PLK1 inhibitors achieved therapeutic effects only when doses exceeded toxic limits.

And to address that issue, they recommend:

First of all, research should address how to foster the potency of PLK1-targeting drugs to avoid drug toxicity. This could be attained through developing probes with higher affinity and enhanced accessibility to PLK1 molecules. Concordantly, improving specificity of PLK1 inhibitors is equally important as it can reduce the therapeutic doses required via confining the drug to the pursued target. Furthermore, higher specificity can minimize the off-target toxicities.

Now, besides onvansertib, there are at least two other major PLK1 inhibitors - rigosertib and volasertib. Volasertib is an old molecule; in phase 1 trials, its toxicity profile was as follows:

Reversible hematotoxicity was the main side effect with thrombocytopenia, neutropenia and febrile neutropenia constituting the dose limiting toxicities. Anemia in 22% (grade 3: 8%), neutropenia in 15% (grade 3/4: 14%), thrombocytopenia in 14% (grade 3/4: 14%) and fatigue in 15% (all grade 1/2) of patients were the most frequent drug-related side effects.

For Cardiff to get ahead of the pack, it needed to demonstrate superlative efficacy data for its Phase Ib/II trial in KRAS-mutated mCRC trial with a manageable safety profile.

According to Fierce:

However, Cardiff thinks it can carve out a lane in the KRAS cancer market. In early phase 1b/2 data revealed in September, onvansertib spurred an initial partial response in eight of 19 patients, or 42%, who got the middle dose and could be evaluated as of the cut-off date. Those phase 1b/2 data compare to an objective response rate of 5% to 13% across historical controls of patients receiving standard of care, the biotech said at the time.

Compare this to data from Amgen’s Lumakras and mirati’s adagrasib:

The group yesterday boldly pointed to Mirati and Amgen’s Kras inhibitors, adagrasib and Lumakras, which in colorectal cancer have respectively yielded ORRs of just 17% and 7%.

However, what has spooked investors is that in the uncontrolled trial here, onvansertib’s efficacy seems to have waned over the months. Here’s a chart from Evaluate that shows how:

Announced	Data cutoff	Responses (ORR)	Confirmed responses (ORR)
28 Apr 2020 (AACR)	24 Jan 2020	3/8 PR (38%)	Unclear
17 Sep 2020 (Esmo)	4 May 2020	5/11 PR (45%)	4/11 PR (36%)
15 Jan 2021 (Asco-GI)	1 Nov 2020	5/12 PR (42%)	4/12 PR (33%)
12 Apr 2021	Unclear	7/18 PR (39%)	4/18 PR (22%)
8 Sep 2021	2 Jul 2021	12/32 PR (38%)	10/32 PR (31%)
	2 Jul 2021 at RP2D	8/19 PR (42%)	7/19 PR (37%)
18 Jan 2022 (Asco-GI)	3 Dec 2021*	17/48; 1 CR, others PR (35%)*	13/48; 1 CR, others PR (27%)
	3 Dec 2021 at RP2D*	12/35; 1 CR, others PR (34%)*	10/35; 1 CR, others PR (29%)

Data still looks better than competing KRAS molecules, however the distinct tapering down of efficacy over the months is quite noticeable.

Pfizer must have seen something here the market isn’t seeing; in November last year, it paid $15mn to Cardiff as part of a deal to get a first look at the data:

In connection with the equity investment, Adam Schayowitz, Ph.D., MBA, Vice President & Medicine Team Group Lead for Breast Cancer, Colorectal Cancer and Melanoma at Pfizer, will join Cardiff Oncology's Scientific Advisory Board, once formed. Dr. Schayowitz commented, "Pfizer strives to make a meaningful difference for people living with cancer through the advancement of innovative therapies, and we believe that collaboration and strategic investments are key to achieving this goal. We are pleased to be supporting Cardiff Oncology and look forward to potential new approaches to addressing cancers with pressing unmet needs."

Financials And Risk Discussion

CRDF has a market cap of just $57mn and a cash balance of $129mn, so the market is severely bearish this company. The company spent $11mn in the previous quarter, which gives us a long runway at that rate.

The trouble with trial data with this company is that available data are only from small, open label trials. Until the market sees much more rigorous data from a pivotal trial, I believe it will remain suspicious.

Bottomline

Some bullish investors will see Pfizer’s $15mn as a clarion call for buying CRDF. Let’s look at it another way. $15mn is to Pfizer what $500 is to us ordinary mortals, give or take a few hundred dollars. So yes, Pfizer’s interest is a vote of confidence, but it is an extremely cautious, small vote. We should really bear that in mind.

Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.