Champions Oncology Reports Record Quarterly Revenue of $10.1 Million

Launches Lumin Bioinformatics SaaS platform

HACKENSACK, NJ / ACCESSWIRE / December 14, 2020 / Champions Oncology, Inc. (NASDAQ:CSBR), a leading global oncology technology solutions provider engaged in transforming drug discovery through innovative pharmacology, biomarker and data platforms, today announced its financial results for the second fiscal quarter ended October 31, 2020.

Second Quarter and Recent Highlights:

• Launched our Lumin Bioinformatics proprietary SaaS platform
• Delivered record quarterly revenue of $10.1 million, an increase of 33% year-over-year
• Reported income from operations, excluding stock-based compensation, depreciation and amortization, of $400,000
• Raising our full-year revenue guidance to 20%-25%

Ronnie Morris, CEO of Champions, commented, “This quarter was highlighted by a significant milestone for Champions as we unveiled Lumin Bioinformatics, our proprietary SaaS program that provides customers with tools to interrogate our vast database and perform computational research in an effort to identify new targets in their drug discovery and development programs. Through both internal and public datasets, we have built tools and visualizations that provide a powerful mechanism for cancer biologists to leverage computational analytics in discovery and development programs.”

David Miller, CFO of Champions added, “We reached another quarterly revenue record, exceeding $10 million for the first time equating to a 33% year over year revenue increase. The success of our recent product launches has led to continued bookings growth, positioning Champions to deliver further revenue milestones in the coming quarters. Accordingly, we are raising our full-year revenue guidance to 20%-25%. In addition, the launch of our Lumin platform represents another product rollout that Champions expects to become a meaningful contributor to the continued expansion of the Company over the coming years.”

Second Fiscal Quarter Financial Results

For the second quarter of fiscal 2021, revenue increased 32.7% to $10.1 million compared to $7.6 million for the second quarter of fiscal 2020. The increase in revenue was due to a continued increase in sales, both in number and size of studies, and the expansion of both our platform and product lines. Our contract amounts have increased as we perform more complex studies and end point analysis testing. Total costs and operating expenses for the second quarter of fiscal 2021 were $10.1 million compared to $7.3 million for the second quarter of fiscal 2020, an increase of $2.8 million or 37.9%.

For the second quarter of fiscal 2021, Champions reported income from operations of $7,000, including $85,000 in stock-based compensation and $307,000 in depreciation and amortization expenses, a decrease of $284,000 compared to the income from operations of $291,000, inclusive of $77,000 in stock-based compensation and $178,000 in depreciation and amortization expenses, in the second quarter of fiscal 2020. Excluding stock-based compensation, depreciation and amortization expenses, Champions reported non-GAAP income from operations of $401,000 for the second quarter of fiscal 2021 compared to non-GAAP income from operations of $546,000 in the second quarter of fiscal 2020, a decrease of $144,000.

Cost of oncology solutions was $5.6 million for the three-months ended October 31, 2020, an increase of $1.8 million, or 45.4% compared to $3.9 million for the three-months ended October 31, 2019. For the three- months ended October 31, 2020, gross margin was 44.2% compared to 49.1% for the three-months ended October 31, 2019. The increase in cost of oncology services for the three-month period was mainly due to an increase in compensation, lab supply, and outsourced lab service expenses. Outsourced lab services accounted for $1.4 million of the total increase. Excluding outsourced lab services, the overall expense increase in cost of sales is generally in line with the expected contribution based on the growth in revenue, study volume, and expansion into new services. Gross margin varies based on timing differences between expense and revenue recognition and was driven lower by the increase in costs on growing study volume in advance of revenue recognition. The cost of outsourced lab services amplified this impact.

Research and development expense for the three-months ended October 31, 2020 was $1.7 million, an increase of $308,000 or 23.0%, compared to $1.3 million for the three-months ended October 31, 2019, respectively. The increase was due to increased compensation and lab supply expense as we continued to develop new service capabilities and endpoint analysis testing. Additionally, we incurred sequencing costs as our investment in characterizing our TumorBank continued, adding valuable data to our platform. Sales and marketing expense for the three-months ended October 31, 2020 was $1.3 million, an increase of $371,000, or 38.0%, compared to $977,000 for the three-months ended October 31, 2019. The increase was primarily due to compensation expense driven by the continued investment in expanding our business development team. General and administrative expense for the three-months ended October 31, 2020 was $1.5 million, an increase of $333,000, or 29.3%, compared to $1.1 million for the three-months ended October 31, 2019, respectively. General and administrative expenses are primarily comprised of compensation, insurance, accounting fees, and depreciation expenses and have increased to support the overall infrastructure growth of the company.

Net cash generated from operating activities was $880,000 for the three-months ended October 31, 2020 compared to $360,000 for the same period last year. The increase in cash flow from operations is primarily due to the improvement in financial operating results.

The Company ended the quarter in a strong cash position with a $8.6 million cash balance compared to $2.8 million at the end of the same period last year. The Company has no debt.

Year-to-Date Financial Results

For the first six months of fiscal 2021, revenue increased 36.9% to $19.7 million, as compared to $14.4 million for the first six months of fiscal 2020. For the first six months of fiscal 2021, total operating expenses increased 33.7% to $19.6 million, as compared to $14.7 million for the first six months of fiscal 2020. The increase in revenue was due to increased sales, both in number and size of studies, an increase in demand for our services, the growth of the platform, and the expansion of our product line. Our customers are seeking more complex study designs and end point analysis testing, contributing to the larger contract sizes.

For the first six months of fiscal 2021, Champions reported income from operations of $31,000, which includes $205,000 in stock-based compensation and $584,000 in depreciation and amortization expenses, an increase of $357,000 or 109.6%, compared to a loss from operations of $323,000, inclusive of $208,000 in stock-based compensation and $360,000 depreciation, for the first six months of fiscal 2020. Excluding stock-based compensation and depreciation, Champions reported operating income of $822,000 for the first six months of fiscal 2021 compared to income of $244,000 in the same period last year.

Cost of oncology solutions was $11.0 million for the first six months of fiscal 2021 compared to $7.6 million for the first six months of fiscal 2020, an increase of $3.3 million or 43.8%. Gross margin was 44.2% for the first six months of fiscal 2021 compared to 46.9% for the first six months of fiscal 2020. The increase in cost of oncology services for the six-month period was mainly due to an increase in compensation, lab supply and outsourced lab service expenses. Excluding outsourced lab services, the overall expense increase is generally in line with the expected contribution based on the growth in revenue, study volume, and expansion into new services. Gross margin varies based on timing differences between expense and revenue recognition and was driven lower by the increase in costs on growing study volume in advance of revenue recognition. The cost of outsourced lab services amplified this impact.

Research and development expense was $3.2 million for the first six months of fiscal 2021 an increase of $603,000, or 22.8% compared to $2.6 million for the first six months of fiscal 2020. The increase was due to increased compensation and lab supply expense as we continued to develop new service capabilities and endpoint testing analysis, and incurred sequencing costs as we continued to characterize our TumorBank. Sales and marketing expense for the first six months of fiscal 2021 was $2.6 million, an increase of $709,000, or 38.4% compared to $1.8 million for the first six months of fiscal 2020. The increase was primarily due to compensation expense driven by the continued investment in expanding our sales force. General and administrative expense was $2.9 million for the first six months of fiscal 2021 , an increase of $289,000, or 11.3% compared to $2.6 million for the first six months of fiscal 2020. General and administrative expenses are primarily comprised of compensation, insurance, accounting fees, and depreciation expenses and have increased to support the overall infrastructure growth of the company.

Net cash provided by operations was $164,000 for the first six months of fiscal 2021 compared to net provided by operations of $81,000 in fiscal 2020, an increase of $45,000 or 55.6%.

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 third quarter financial results. To participate in the call, please call 877-407-8035 (domestic) or 201-689-8035 (international) ten minutes ahead of the call and give the verbal reference “Champions Oncology.”

Full details of the Company’s financial results will be available Tuesday, December 15, 2020 in the Company’s Form 10-Q at www.championsoncology.com.

* Non-GAAP Financial Information

See the attached Reconciliation of GAAP net income (loss) to Non-GAAP net income (loss) for an explanation of the amounts excluded to arrive at Non-GAAP net income (loss) and related Non-GAAP earnings (loss) per share amounts for the three months ended October 31, 2020 and 2019. 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 income (loss) and Non-GAAP earnings (loss) per share are not, and should not, be viewed as a substitute for similar GAAP items. Champions defines Non-GAAP dilutive earnings (loss) per share amounts as Non-GAAP net earnings (loss) divided by the weighted average number of diluted shares outstanding. Champions’ definition of Non-GAAP net earnings (loss) and Non-GAAP diluted earnings (loss) per share may differ from similarly named measures used by other companies.

About Champions Oncology, Inc.

Champions Oncology is a technology-driven research organization that provides transformative end-to-end research and development solutions, ranging from in vitro cell line assessments, modeling treatment in the clinic using highly predictive patient-derived xenograft (PDX) models, as well as assessing clinical patient samples with sophisticated biomarker platforms. Champions Oncology is actively engaged in the development of advanced technology solutions and services to accelerate the development of oncology therapeutics. 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, 2020 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)

Reconciliation of GAAP to Non-GAAP Net Income (Loss) (Unaudited)

Reconciliation of GAAP EPS to Non-GAAP EPS (Unaudited)

Unaudited Condensed Consolidated Statements of Operations

Condensed Consolidated Balance Sheets

Unaudited Condensed Consolidated Statements of Cash Flows

SOURCE: Champions Oncology, Inc.

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