On September 16, 2019 Champions Oncology, Inc. (Nasdaq: CSBR), engaged in an end-to-end range of research and development technology solutions and services to improve the development and use of oncology drugs, reported its financial results for the first fiscal quarter ended July 31, 2019 (Press release, Champions Oncology, SEP 16, 2019, View Source [SID1234539577]).
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First Quarter and Recent Business Highlights:
Quarterly revenue of $6.7 million, an increase of 8.2% year-over-year
Record quarterly bookings
Launched clinical flow services
Ronnie Morris, CEO of Champions, commented, "While our first quarter financial results were slightly weaker than expected, the cause was mainly due to the timing of study completions and revenue recognition."
Morris added, "We began aggressively selling our recently launched flow cytometry services during the quarter, expanding sales efforts beyond our core PDX offerings. We have multiple opportunities in the pipeline and look forward to finalizing deals in the coming months. With the combination of continued strength in our core bookings and new product launches, we remain confident in the long term prospects for the Company."
David Miller, CFO of Champions added, "As expected, our revenue declined from the fourth quarter but grew 8% year over year. We anticipate this growth rate will be the low point for the year. The overall health of our business remains strong with continued growth from our core products. With the launch of our clinical flow cytometry services, we expect meaningful contribution to our financial results over the long term."
First Fiscal Quarter Financial Results
For the first quarter of fiscal 2020, revenue increased 8.2% to $6.7 million compared to $6.2 million for the first quarter of fiscal 2019. The increase in revenue is due to increased sales, both in number and size of studies, and growth of the platform. Total costs and operating expenses for the first quarter of fiscal 2020 were $7.4 million compared to $5.7 million for the first quarter of fiscal 2018, an increase of $1.6 million or 28.0%.
Exhibit 99.1
For the first quarter of fiscal 2020, Champions reported a loss from operations of $614,000, including $131,000 in stock-based compensation and $182,000 in depreciation expenses, an increase in the loss of $1.1 million compared to the income from operations of $481,000, inclusive of $83,000 in stock-based compensation and $118,000 depreciation expenses, in the first quarter of fiscal 2018. Excluding stock-based compensation and depreciation, Champions reported loss from operations of $301,000 for the first quarter of fiscal 2020 compared to an income from operations, excluding stock-based compensation and depreciation, of $682,000 in the first quarter of fiscal 2018 a decrease of $983,000.
Cost of oncology solutions was $3.8 million for the three months ended July 31, 2019, an increase of $669,000, or 21.7% compared to $3.1 million for the three months ended July 31, 2018. For the three months ended July 31, 2019, gross margin was 44.3% compared to 50.5% for the three months ended July 31, 2018. The increase in cost of oncology services for the three month period was mainly due to an increase in salaries, mice costs, and lab supplies resulting from the increase in study volume. Gross margin varies based on timing differences between expense and revenue recognition and was impacted by the increase in cost ahead of the revenue related to the studies performed.
Research and development expense was $1.3 million for the three months ended July 31, 2019, an increase of $215,000, or 19.8%, compared to $1.1 million for the three months ended July 31, 2018. The increase is due to lab costs and salaries related to new product development costs. Sales and marketing expense for the three months ended July 31, 2019 was $870,000, an increase of $352,000, or 68.0%, compared to $518,000 for the three months ended July 31, 2018. The increase was mainly due to the expansion of the sales force and commission accrual. General and administrative expense was $1.4 million for the three months ended July 31, 2019 compared to $1.1 million for the three months ended July 31, 2018, an increase of $371,000 or 35.2%. The increase for the three month period is mainly due to the increase in salary expense and audit fees.
Net cash used was $1.0 million for the three months ended July 31, 2019 compared to cash generated of $160,000 for the same period last year. Included in the $1.0 million spend for the quarter was an investment of $750,000 in new lab equipment.
The Company ended the quarter with $2.2 million of cash and reiterated its position that it does not intend to raise capital to fund operations.
Conference Call Information:
The Company will host a conference call today at 4:30 p.m. EDT (1:30 p.m. PDT) to discuss its first quarter financial results. To participate in the call, please call 844-602-0380 (domestic) or 862-298-0970 (international) 10 minutes ahead of the call and give the verbal reference "Champions Oncology."
Full details of the Company’s financial results will be available Monday, September 16, 2019 in the Company’s Form 10-Q at www.championsoncology.com.
* Non-GAAP Financial Information
See the attached Reconciliation of GAAP net (loss) income to Non-GAAP net (loss) income for an explanation of the amounts excluded to arrive at Non-GAAP net (loss) income and related Non-GAAP (loss) earnings per share amounts for the nine months ended July 31, 2019 and 2018. Non-GAAP financial measures provide investors and management with supplemental measures of operating performance and
Exhibit 99.1
trends that facilitate comparisons between periods before and after certain items that would not otherwise be apparent on a GAAP basis. Certain unusual or non-recurring items that management does not believe affect the Company’s basic operations do not meet the GAAP definition of unusual or non-recurring items. Non-GAAP net (loss) income and Non-GAAP (loss) earnings per share are not, and should not be viewed as a substitute for similar GAAP items. Champions’ defines Non-GAAP dilutive (loss) earnings per share amounts as Non-GAAP net (loss) earnings divided by the weighted average number of diluted shares outstanding. Champions’ definition of Non-GAAP net (loss) earnings and Non-GAAP diluted (loss) earnings per share may differ from similarly named measures used by other companies.