William Blair downgrades Cardiff Oncology stock rating on rights uncertainty

William Blair recently reduced its stock rating for Cardiff Oncology (NASDAQ: CRDF) to Market Perform from Outperform. This follows the company's second-quarter financial report and business update, released after the market close on August 11. William Blair claims that the company's fundamentals have significantly worsened. A major concern cited by the firm is the uncertainty surrounding onvansertib rights.

This uncertainty is evident in the stock's performance, with shares plummeting 63% year-to-date to $1.05 per share. InvestingPro data also highlights that Cardiff is rapidly depleting its cash reserves, with a levered free cash flow of -$37.46 million over the past year. The firm warns that Cardiff must secure additional funding before commencing a Phase III trial.

This financial strain contributes to an unfavorable risk/reward ratio, leading to the downgrade. Despite these challenges, InvestingPro analysis suggests that the stock is currently undervalued, with a fair value estimate of $1.29 per share. Cardiff Oncology has recently announced a $10 million registered direct offering, selling 8,571,429 shares and associated warrants at $1.05 each.

Company insiders and directors have also bought shares at $1.435 per share. Cardiff also reported positive Phase 2 trial results for onvansertib combined with standard treatments in metastatic colorectal cancer. However, the company faces additional hurdles due to H.C. Wainwright downgrading its stock to Neutral after Nerviano Medical Sciences terminated a crucial license agreement, citing alleged patent inventorship breaches.

Likewise, TD Cowen reduced its rating to Hold due to the ongoing license dispute. Cardiff Oncology intends to host an investor webcast to share updated trial data, to be presented at the American Society of Clinical Oncology Annual Meeting.