HACKENSACK, N.J., Nov. 29, 2016 /PRNewswire/ -- Champions
Oncology, Inc. (Nasdaq: CSBR), engaged in the development of
advanced technology solutions and services to personalize the
development and use of oncology drugs, today announced its
financial results for the second quarter ended October 31,
2016.
Second Quarter and Recent Business Highlights:
- Record quarterly revenue of $4.5
million;
- Second quarter revenue growth of 50%; 59% growth in TOS
segment;
- Reaffirms annual revenue guidance for current fiscal year of
$16 - 18 million;
- Quarterly cash burn reduced to less than $150,000 with $4.3
million of cash at the end of the quarter;
- Signed $2 million pre-clinical
pharmacology contract with large pharmaceutical customer; and
- Initiates leadership transition process for calendar year 2017
to drive innovation and accelerated growth.
Joel Ackerman, CEO of Champions,
commented, "This was truly a milestone quarter for Champions.
We have been focused over the last 2 years on achieving
profitability while continuing to invest in expanding our
technology and products. We reached this important step in
the Company's evolution by growing our customer base, delivering
high quality studies and managing our costs. With 50% revenue
growth and a lower cost base than last year, we have delivered on
this ambitious objective ahead of schedule. Looking forward,
we remain confident we will achieve our projected revenue of
$16 - 18 million for our fiscal year
ending April 2017. This quarter's profitability was achieved
without any one-time revenue items or non-recurring events while
continuing to invest approximately $4
million per year in innovative research and
development. We are now poised to shift our attention to the
next phase of strategic growth."
New Strategic Emphasis
Dr. Ronnie Morris, the company's
President added, "We have spent considerable time with the Board of
Directors developing the next phase of our strategic plan. We
have concluded that now is the right time to shift the emphasis of
the company's strategic efforts towards innovation. We are
committed to increasing our profitability and improving cash flow
while simultaneously pursuing an accelerated growth path driven by
new uses of PDX and related product offerings. We have built
a customer base of almost 150 pharmaceutical and biotech companies
that work with Champions because of our powerful platform and
operational excellence. Many customers have talked to us
about expanding our technology and platform to provide them with
enhanced products and services based on our current offering.
We are now ramping up our efforts to develop these innovations and
meet our customers' demands."
Senior Leadership Changes
To align the Company's senior management resources with this
increased focus on innovation, the Company is announcing a
re-alignment of certain roles at Champions. Dr. Philip Breitfeld, a recent addition to the
company's board of directors, will assume the position of Chief
Strategic and Innovation Officer of the Company. Dr.
Breitfeld, a medical oncologist, has over 30 years of experience in
oncology research and drug development. He has held positions
as Senior Medical Director and Head of the Global Clinical Oncology
Development Unit in the U.S. for Merck KGaA and as Associate Chief
Medical Officer at Biocryst. Most recently he was
Global Vice President at Quintiles' responsible for the Therapeutic
Centers of Excellence, where his focus was business development and
innovation. This change is anticipated to occur during December 2016.
In addition, Joel Ackerman,
current CEO, will shift his role to Chairman of the Board of
Directors. Dr. Ronnie Morris,
current President of Champions, will assume the role of CEO.
Dr. David Sidransky, the founder of
Champions and current Chairman of the Board of Directors, will
assume the role of lead director. These changes will
take effect in January 2017. Dr. David Sidransky commented, "Now that we have
proven the business model, we wanted to align the senior team with
the new strategic emphasis of the company. As President of
Champions for the last six years, Ronnie is intimately familiar
with every aspect of the company's business. We have developed a
plan that ensures a smooth and gradual transition to the new
strategic phase. We look forward to Joel's continued
involvement in the oversight of the company's financial and
operational performance. I look forward to working closely
with Ronnie, Phil and the rest of the team on the next phase of
growth."
Financial Results
For the second quarter of fiscal 2017, revenue was $4.5 million, as compared to $2.9 million for the second quarter 2016, an
increase of 50%. Total operating expense for the second quarter
fiscal 2017 was $5 million as
compared to $5.5 million for the
second quarter 2016, a decrease of 9.4%. Revenue was $8.1 million and $5.8
million for the six months ended October 31, 2016 and 2015, respectively, an
increase of $2.3 million or
40.3%.
For the second quarter of fiscal 2017 and 2016, Champions
reported a loss from operations of $493,000 and $2.5
million, respectively. Excluding stock-based compensation of
$535,000 and $748,000 for the three months ended October
31, 2016 and 2015, respectively, Champions recognized a gain
from operations of $42,000 and loss
from operations of $1.75 million for
second quarter 2017 and 2016, respectively.
For the six months ended October 31,
2016 and 2015, Champions reported a loss from operations of
$3.0 million and $5.4 million, respectively, a decrease of
$2.4 million or (44%). Excluding
stock-based compensation of $1.7
million and $1.5 million for
the six months ended October 31, 2016
and 2015, Champions recognized loss from operations of $1.3 million and $3.9
million, respectively.
Net cash used in operations was $2.6 and $5.1
million for the six months ended October 31, 2016 and 2015, respectively, a
decrease of $2.5M or (49.4%). The
reduction in cash burn is the result of revenue growth, aggressive
expense management and payments received in advance of revenue
recognition.
Net cash used in operations for the second quarter of fiscal
2017 was $117,000. The company
ended the quarter with $4.3 million
of cash and cash equivalents on the balance sheet.
Translational Oncology Services (TOS) revenue was $4.0 million and $2.5
million for the three months ended October 31, 2016 and 2015, respectively, an
increase of $1.5 million or 59.4%.
The increase is due to increased bookings in prior quarters, both
in the number and size of the studies, and the addition of new
customers.
TOS cost of sales was $1.8 million
and $1.4 million for the three months
ended October 31, 2016 and 2015,
respectively, an increase of $400,000, or 26.7%. For the three months ended
October 31, 2016 and 2015, gross
margin for TOS was 53.8% and 41.9%, respectively. The increase in
TOS cost of sales was due to an increase in TOS studies. The
improvement in gross margin was due to higher TOS revenue leveraged
off the fixed cost component of the lab and effective management of
the variable lab costs.
Personalized Oncology Services (POS) revenue was $497,000 and $486,000 for the three months ended October 31, 2016 and 2015, respectively, an
increase of $11,000 or 2.3%.
POS cost of sales was $374,000 and
$568,000 for the three months ended
October 31, 2016 and 2015,
respectively, a decrease of $194,000,
or (34.2%). For the three months ended October 31, 2016 and 2015, gross margin for POS
was 24.7% and negative (16.9%), respectively. The improvement is
attributed to the increase in higher margin sequencing revenue and
aggressively managing our lab costs.
Research and development expense was $1
million and $919,000 for the
three months ended October 31, 2016
and 2015, respectively, an increase of $89,000, or 9.7%. Sales and marketing expense for
the three months ended October 31,
2016 and 2015 was $717,000 and
$834,000 respectively, a decrease of
$117,000, or (14.0%). The decrease is
due to the consolidation of sales and marketing personnel resources
of the POS and TOS division. General and administrative expense was
$1.0 million and $1.7 million for the three months ended
October 31, 2016 and 2015,
respectively, a decrease of $700,000
or 39.9%. The decrease is primarily due to a decrease of
$213,000 in stock compensation
expense, along with reductions in legal and audit fees $150,000 and personnel related expenses of
$100,000.
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 second quarter financial results.
To access the conference call, domestic participants should dial
800-875-3456, Canadian participants should dial 800-648-0973, and
international participants should dial 302-607-2001. The
participant passcode is "Champions".
Full details of the Company's financial results will be
available Wednesday December 14, 2016
in the Company's Form 10-Q at www.championsoncology.com.
* Non-GAAP Financial Information
See the attached Reconciliation of GAAP net loss to non-GAAP net
loss for an explanation of the amounts excluded to arrive at
non-GAAP net loss and related non-GAAP net loss per share amounts
for the three months ended October 31,
2016 and 2015. Non-GAAP financial measures provide investors
and management with supplemental measures of operating performance
and 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 and non-GAAP loss per share are not, and should
not be viewed as a substitute for similar GAAP items.
Champions' defines non-GAAP dilutive loss per share amounts as
non-GAAP net loss divided by the weighted average number of diluted
shares outstanding. Champions' definition of non-GAAP net
loss and non-GAAP diluted loss per share may differ from similarly
named measures used by others.
About Champions Oncology, Inc.
Champions Oncology, Inc. is engaged in the development of
advanced technology solutions and services to personalize the
development and use of oncology drugs. The Company's
TumorGraft technology platform is a novel approach to personalizing
cancer care based upon the implantation of primary human tumors in
immune deficient mice followed by propagation of the resulting
engraftments, or TumorGrafts, in a manner that preserves the
biological characteristics of the original human tumor in order to
determine the efficacy of a treatment regimen. The Company
uses this technology in conjunction with related services to offer
solutions for two customer groups: Personalized Oncology
Solutions, in which results help guide the development of
personalized treatment plans, and Translational Oncology Solutions,
in which pharmaceutical and biotechnology companies seeking
personalized approaches to drug development can lower the cost and
increase the speed of developing new drugs. TumorGrafts are
procured through agreements with a number of institutions in the
U.S. and overseas as well as through Champions' Personalized
Oncology Solutions business. For more information, please visit
www.championsoncology.com.
This press release may contain "forward-looking statements"
(within the meaning of the Private Securities Litigation Act of
1995) that inherently involve risk and uncertainties.
Champions Oncology generally uses words such as "believe," "may,"
"could," "will," "intend," "expect," "anticipate," "plan," and
similar expressions to identify forward-looking statements.
One should not place undue reliance on these forward-looking
statements. The Company's actual results could differ
materially from those anticipated in the forward-looking statements
for many unforeseen factors. See Champions Oncology's Form
10-K for the fiscal year ended April 30,
2016 for a discussion of such risks, uncertainties and other
factors. Although the Company believes the expectations
reflected in the forward-looking statements are reasonable, they
relate only to events as of the date on which the statements are
made, and Champions Oncology's future results, levels of activity,
performance or achievements may not meet these expectations.
The Company does not intend to update any of the forward-looking
statements after the date of this press release to conform these
statements to actual results or to changes in Champions Oncology's
expectations, except as required by law.
Champions
Oncology, Inc.
(Dollars in
thousands except per share amounts)
|
|
Reconciliation of
GAAP to Non-GAAP Net Gain (Loss) (Unaudited)
|
|
|
Three Months
Ended
October
31,
|
|
Six Months
Ended
October
31,
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
Net loss -
GAAP
|
$
|
(504)
|
|
$
|
(2,548)
|
|
$
|
(3,051)
|
|
$
|
(5,461)
|
Less:
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based
compensation
|
535
|
|
748
|
|
1,664
|
|
1,523
|
Net gain (loss) -
non-GAAP
|
$
|
31
|
|
$
|
(1,800)
|
|
$
|
(1,387)
|
|
$
|
(3,938)
|
|
|
Reconciliation of
GAAP EPS to Non-GAAP EPS (Unaudited)
|
|
|
|
|
|
Three Months
Ended
October 31,
|
|
Six Months
Ended
October 31,
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
EPS – GAAP
|
$
|
(0.05)
|
|
$
|
(0.29)
|
|
$
|
(0.32)
|
|
$
|
(0.63)
|
Less:
|
|
|
|
|
|
|
|
|
|
|
|
Effect of stock-based
compensation on EPS
|
0.05
|
|
0.09
|
|
0.17
|
|
0.18
|
EPS -
non-GAAP
|
$
|
—
|
|
$
|
(0.20)
|
|
$
|
(0.15)
|
|
$
|
(0.45)
|
|
|
|
|
|
Condensed
Consolidated Statements of Operations (Unaudited)
|
|
|
Three Months
Ended
October 31,
|
|
Six Months
Ended
October 31,
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
TOS operating
revenue
|
3,960
|
|
2,485
|
|
7,119
|
|
4,822
|
POS operating
revenue
|
$
|
497
|
|
$
|
486
|
|
$
|
1,007
|
|
$
|
971
|
Total operating
revenue
|
$
|
4,457
|
|
$
|
2,971
|
|
$
|
8,126
|
|
$
|
5,793
|
Cost of
TOS
|
1,829
|
|
1,443
|
|
3,879
|
|
3,056
|
Cost of
POS
|
374
|
|
568
|
|
847
|
|
1,228
|
Research and
development
|
1,008
|
|
919
|
|
2,219
|
|
2,019
|
Sales and
marketing
|
717
|
|
834
|
|
1,643
|
|
1,863
|
General and
administrative
|
1,022
|
|
1,700
|
|
2,555
|
|
3,017
|
Loss from
Operations
|
$
|
(493)
|
|
$
|
(2,493)
|
|
$
|
(3,017)
|
|
$
|
(5,390)
|
Other
(Expense)
|
(16)
|
|
(14)
|
|
(25)
|
|
(24)
|
Net Loss before
provision for income taxes
|
$
|
(509)
|
|
$
|
(2,507)
|
|
$
|
(3,042)
|
|
$
|
(5,414)
|
Income
taxes
|
(5)
|
|
41
|
|
9
|
|
47
|
Net
Loss
|
$
|
(504)
|
|
$
|
(2,548)
|
|
$
|
(3,051)
|
|
$
|
(5,461)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Condensed
Consolidated Balance Sheets as of (Unaudited)
|
|
|
October
31,
2016
|
|
April
30,
2016
|
Cash and cash
equivalents
|
$
|
4,328
|
|
$
|
2,585
|
Accounts
receivable
|
1,891
|
|
1,312
|
Other current
assets
|
445
|
|
443
|
Total current
assets
|
6,664
|
|
4,340
|
|
|
|
|
|
|
|
|
Restricted
cash
|
150
|
|
150
|
Property and
equipment, net
|
561
|
|
618
|
Goodwill
|
669
|
|
669
|
Total
assets
|
$
|
8,044
|
|
$
|
5,777
|
Accounts payable and
accrued liabilities
|
$
|
1,454
|
|
$
|
2,167
|
Deferred
revenue
|
3,144
|
|
3,139
|
Total current
liabilities
|
4,598
|
|
5,306
|
Other Non-current
Liability
|
241
|
|
233
|
Stockholders'
equity
|
3,205
|
|
238
|
Total liabilities
and stockholders' equity
|
$
|
8,044
|
|
$
|
5,777
|
Condensed
Consolidated Statements of Cash Flows (Unaudited)
|
|
|
|
Six Months
Ended
October
31,
|
|
2016
|
|
2015
|
Cash flows from
operating activities:
|
|
|
|
Net Loss
|
$
|
(3,051)
|
|
$
|
(5,461)
|
Adjustments to
reconcile net cash used in operations:
|
|
|
|
|
|
Stock-based
compensation expense
|
1,664
|
|
1,523
|
Depreciation and
amortization expense
|
84
|
|
76
|
Allowance for
doubtful accounts
|
(2)
|
|
34
|
Changes in operating
assets and liabilities
|
(1,287)
|
|
(1,299)
|
Net cash used in
operating activities
|
(2,592)
|
|
(5,127)
|
|
|
|
|
Cash flows from
investing activities:
|
|
|
|
Purchases of property
and equipment
|
(28)
|
|
(44)
|
Net cash used in
investing activities:
|
(28)
|
|
(44)
|
|
|
|
|
Cash flows from
financing activities:
|
|
|
|
Public Offering June
2016, net of financing costs of $742,000
|
4,340
|
|
—
|
Payment of issuance
costs related to 2015 Private Placement
|
—
|
|
(18)
|
Capital lease
payments
|
8
|
|
(11)
|
Issuance of common
stock
|
15
|
|
—
|
Net cash provided
by (used in) financing activities:
|
4,363
|
|
(29)
|
|
|
|
|
Increase (decrease)
in cash and cash equivalents
|
1,743
|
|
(5,200)
|
Cash and cash
equivalents, beginning of period
|
2,585
|
|
9,357
|
Cash and cash
equivalents, end of period
|
$
|
4,328
|
|
$
|
4,157
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/champions-oncology-reports-50-revenue-growth-accelerated-progress-on-path-to-profitability-and-future-role-changes-of-the-senior-leadership-300369960.html
SOURCE Champions Oncology, Inc.