On December 14, 2015 Champions Oncology, Inc. (CSBR), engaged in the development of advanced technology solutions and services to personalize the development and use of oncology drugs, reported its financial results for the second quarter ended October 31, 2015 (Filing, 8-K, Champions Oncology, DEC 14, 2015, View Source [SID:1234508578]).

Second Quarter and Recent Business Highlights:

• Signed first large scale co-clinical trial with top 20 pharmaceutical company
• TOS revenue growth of 74%
• Continued progress in commercializing new ImmunoGraft product
• Signed sponsored research agreement with top 20 pharmaceutical company to expand platform into hematology
• Uplisted to NASDAQ Capital Market

Joel Ackerman, Champions Oncology CEO, stated, "During this past quarter, we delivered on a number key milestones. We have been investing significant resources over the last few years to grow the platform, accelerate the revenue growth and demonstrate the potential for PDX to deliver multi-million dollar opportunities. This quarter was a major turning point for the Company along all these dimensions. The co-clinical study we signed is the clearest proof to date of the $1 billion plus market potential of PDX and validates the continued investment we are making in our platform. We expect these large co-clinical studies to combine with the new revenue potential from our ImmunoGraft offering and our expansion into hematology modeling of acute myelogenous leukemia (AML) to drive continued growth acceleration over the coming quarters and next year. This revenue growth, combined with strong expense control, has enabled us to continue lowering our quarterly cash burn rate and we believe puts us on a path to cash flow breakeven."

Financial Results

Revenue was $3 million and $1.9 million for the three months ended October 31, 2015 and 2014, respectively, an increase of $1.1 million or 57.9%. Revenue was $5.8 million and $3.8 million for the six months ended October 31, 2015 and 2014, respectively, an increase of $2 million or 52.7%. Total operating expense was $5.5 million for both the three months ended October 31, 2015 and 2014. Total operating expense was $11.1 million for both the six months ended October 31, 2015 and 2014.

Champions reported a loss before income tax expense of $2.5 million and $3.1 million for the three months ended October 31, 2015 and 2014, respectively, a decrease of $600,000 or 18.4%. Excluding stock-based compensation of $748,000 and $820,000 for the three months ended October 31, 2015 and 2014, Champions recognized a net loss of $1.8 million and $2.3 million, respectively.

Champions reported a loss before income tax expense of $5.4 million and $6.7 million for the six months ended October 31, 2015 and 2014, respectively, a decrease of $1.3 million or 18.8%. Excluding stock-based compensation of $1.5 million and $1.6 million for the six months ended October 31, 2015 and 2014, Champions recognized a net loss of $3.9 million and $5 million, respectively.

Operating Results

Translational Oncology Solutions (TOS):

TOS revenue was $2.5 million and $1.4 million for the three months ended October 31, 2015 and 2014, respectively, an increase of $1.1 million, or 73.8%. The increase is due to increased bookings, both in the number and size of the studies, in prior quarters due to the expansion of the TOS sales team and growth of the platform.

TOS cost of sales was $1.4 million and $960,000 for the three months ended October 31, 2015 and 2014, respectively, an increase of $440,000, or 50.4%. Gross margin was 41.9% and 32.9% for the three months ended October 31, 2015 and 2014, respectively. The improvement in gross margin was due to higher TOS revenue, effective management of the variable lab costs and continuing leverage of the fixed cost component of our lab.

Personalized Oncology Solutions (POS):

POS revenue was $486,000 and $452,000 for the three months ended October 31, 2015 and 2014, respectively, an increase of $34,000 or 7.5% as the result of increases in our sequencing revenue offset by a decline in implant and panel revenue.

Gross margin was (16.9%) and (67.9%) for the three months ended October 31, 2015 and 2014, respectively as a result of aggressively managing our lab costs and a shift to higher margin revenue.

Research and development expense was $919,000 and $1.2 million for three months ended October 31, 2015 and 2014, respectively, a decrease of $281,000, or (26.4%). The decrease is due to lower expenses in genomic characterization of our Champions TumorGraft Bank for the current quarter.

Sales and marketing expense for the three months ended October 31, 2015 and 2014 was $834,000 and $1.2 million, respectively, a decrease of $366,000 or (30.7%). The decrease is due to lower public relations spend for POS and cost savings achieved by merging the sales and marketing resources of the POS and TOS division, including combining both under one commercial business leader.

General and administrative expense for the three months October 31, 2015 and 2014 was $1.7 million and $1.4 million, respectively, an increase of $300,000, or 23.5%. The increase is due to an increase in stock based compensation for the President and CEO in lieu of cash and due to the one-time costs associated with the uplisting to the Nasdaq exchange and related legal and filing fees.

Schedule your 30 min Free 1stOncology Demo!
Discover why more than 1,500 members use 1stOncology™ to excel in:

Early/Late Stage Pipeline Development - Target Scouting - Clinical Biomarkers - Indication Selection & Expansion - BD&L Contacts - Conference Reports - Combinatorial Drug Settings - Companion Diagnostics - Drug Repositioning - First-in-class Analysis - Competitive Analysis - Deals & Licensing

                  Schedule Your 30 min Free Demo!