On JuChampions Oncology, Inc. (Nasdaq: CSBR), a leader in the development of advanced preclinical oncology solutions, reported its financial results for the fiscal year and fourth quarter ended April 30, 2024 (Press release, Champions Oncology, JUL 18, 2024, View Source [SID1234644950]).

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Fourth Quarter Financial Highlights:
•Fourth quarter revenue increased 7% to $14 million
•Adjusted EBITDA fourth quarter income of $884,000
•Fourth quarter gross margin on pharmacology services of 49%

Fiscal Year 2024 Financial Highlights:
•Annual revenue of $50.2 million, a decrease of 7% year-over-year
•Fiscal Year 2024 adjusted EBITDA loss of $3.9 million
•Fiscal Year 2024 gross margin on pharmacology services of 42%

Ronnie Morris, CEO of Champions, commented, "As we discussed over the year, we’d be facing hurdles during fiscal 2024 due to the challenging funding environment in the biotech sector and a range of spending patterns from our larger pharmaceutical companies, leading to a slowdown in sales growth and an increase in cancellations. As we head into our fiscal 2025, the overall market sector is showing some signs of recovery and we feel we’ve turned a corner as we close out the year." Morris added, "With regards to our wholly owned subsidiary, Corellia, AI, we remain actively engaged with investors in an effort to raise capital while also carefully managing its expenses and the impact to our bottom-line results."

David Miller, CFO of Champions added, "In response to the challenges encountered over the course of the year, we’ve strategically implemented cost cutting measures and operational efficiencies to improve our bottom line. We began to see results from these efforts in the fourth quarter with adjusted EBITDA income of $884,000 and we believe we’re back on track to delivering profitable results on a consistent basis into fiscal 2025 and beyond."

Fourth Quarter Financial Results

Total revenue for the fourth quarter of fiscal 2024 was $14.0 million, an increase of 7%, compared to $13.1 million for the same period last year. The increase in revenue was primarily due to the operational improvements implemented over the year positively effecting our revenue conversion. Total costs and operating expenses for the fourth quarter of fiscal 2024 were $14.2 million compared to $15.6 million for the fourth quarter of fiscal 2023, a decrease of $1.4 million or 9%.

For the fourth quarter of fiscal 2024, Champions reported a loss from operations of $190,000, which includes $263,000 in stock-based compensation, $457,000 in depreciation and amortization, and a $354,000 loss on the disposal of lab equipment, compared to a loss from operations of $2.5 million, inclusive of $209,000 in stock-based compensation, $583,000 in depreciation and amortization, and an $807,000 asset impairment charge in the fourth quarter of fiscal 2023. Excluding stock-based compensation, depreciation and amortization expenses, and the disposal of equipment loss, Champions reported adjusted EBITDA income for the quarter of $884,000, compared to an adjusted EBITDA loss of $922,000 in the prior year period.

Cost of oncology solutions was $7.3 million for the three months ended April 30, 2024, a slight decrease of $87,000, or 1% compared to $7.3 million for the three months ended April 30, 2023. For the three months ended April 30, 2024, gross margin was 48% compared to 44% for the three months ended April 30, 2023. The margin expansion resulted from the improved revenue conversion while maintaining a generally stable cost structure.
Research and development expense was $2.0 million for the three months ended April 30, 2024, a decrease of $804,000, or 28%, compared to $2.9 million in the prior year. The decrease was primarily due to a decrease in compensation and lab supply expenses as we carefully monitored our R&D spend in both our core business and target discovery program. Sales and marketing expense for the three months ended April 30, 2024 was $1.8 million, a slight decrease of $73,000, or 4%, compared to $1.8 million for the three months ended April 30, 2023. The decrease was the result of a decrease in compensation expense offset by an increase in marketing opportunities. General and administrative expense was $2.8 million for the three months ended April 30, 2024 compared to $2.7 million for the three months ended April 30, 2023, an increase of $16,000, or 1%.

Net cash used in operating activities for the quarter was approximately $1.8 resulting primarily from an operating loss and changes in our working capital accounts in the ordinary course of business including, but not limited to, an increase in accounts receivable and a decline in deferred revenue. There were no investing activities for the quarter. Net cash used in financing activities for the quarter was $37,000 for the payment of financing leases. The Company ended the quarter with a cash position of $2.6 million and no debt.

Year-to-Date Financial Results

Total revenue for fiscal year 2024 was $50.2 million, a decrease of 7%, compared to $53.9 million for fiscal year 2023. The decline in revenue was primarily from customer cancellations in fiscal year 2023 resulting in lower study revenue during fiscal year 2024. Total operating expenses decreased 3% to $57.5 million for fiscal year 2024, as compared to $59.1 million for the prior year.

For the twelve months ended April 30, 2024, Champions reported a net loss from operations of $7.4 million, inclusive of $1.1 million in stock-based compensation expense, $1.9 million in depreciation and amortization expenses, and a $435,000 loss on the disposal of lab equipment, compared to a net loss from operations of 5.3 million, inclusive of $864,000 in stock-based compensation expense, $2.2 million in depreciation and amortization expenses, and an asset impairment charge of $807,000 for the prior year. Excluding stock-based compensation, depreciation and amortization, and an equipment disposal loss, Champions reported an adjusted EBITDA loss of $3.9 million for fiscal year 2024 compared to an adjusted EBITDA loss of $1.3 million in the prior year.

Cost of oncology solutions was $29.4 million for the twelve months ended April 30, 2024, a decrease of $131,000 or 0.4%, compared to $29.5 million, for the twelve months ended April 30, 2023. Gross margin was 41% for the twelve months ended April 30, 2024 compared to 45% for the twelve months ended April 30, 2023. The lower margin resulted from a decline in revenue against a generally unchanged cost base. Due to some operational inefficiencies, the variable cost component of cost of sales did not decline meaningfully despite the lower study volume.

Research and development expense was $9.5 million for fiscal year 2024, a decrease of $2.0 million, or 17%, compared to $11.5 million for the prior year. The decrease was primarily due to the implementation of cost savings strategies. Sales and marketing expense for fiscal year 2024 was $7.1 million, an increase of $62,000, or 1%, compared to $7.0 million for fiscal year 2023. The increase was primarily due to marketing initiatives, including increased conference attendance. General and administrative expense was $11.1 million for fiscal year 2024, an increase of $827,000, or 8%, compared to $10.2 million for fiscal year 2023. General and administrative expense was primarily comprised of compensation, insurance, professional fees, IT, and depreciation and amortization expenses. The increase in general and administrative expense was primarily due to an increase in compensation related expenses and non-cash depreciation and amortization offset by a decrease in IT expenses.

Net cash used in operations was $6.1 million for fiscal year 2024. Cash used in operations was primarily the result of our net loss. Net cash used in investing activities was $836,000 primarily from investment in additional lab equipment. Net cash used in financing activities was $527,000 resulting from repurchases of our common stock and financing lease payments offset by proceeds from option exercises. The Company has paused its stock repurchase program.

Conference Call Information:

The Company will host a conference call today at 4:30 p.m. EST (1:30 p.m. PST) to discuss its fourth quarter financial results. To participate in the call, please call 888-506-0062 (domestic) or 973-528-0011 (international) ten minutes ahead of the call and enter the access code 135832. A replay of the call will be available by dialing 877-481-4010 (Domestic) or 919-882-2331 (International) and entering passcode: 50895, or by accessing the investors section of the company’s website within 72 hours.

Full details of the Company’s financial results will be available on, or before, Monday July 22, 2024 and no later than Monday July 29, 2024 in the Company’s Form 10-K at View Source