Champions Oncology Reports Quarterly Revenue of $12.0 Million
- Revenue declined by 6% to $12.0 million for the third quarter of fiscal 2024.
- Champions Oncology is facing economic challenges in the biotech sector but remains confident about future prospects.
- The company is actively seeking capital for its subsidiary, Corellia, AI, and progressing towards potential licensing deals.
- Strategic cost reductions are being implemented to improve short-term results.
- Loss from operations for the third quarter of fiscal 2024 was $2.6 million with an adjusted EBITDA loss of $1.7 million.
- Total revenue for the first nine months of fiscal 2024 decreased by 11.4% to $36.2 million compared to the same period last year.
- Champions ended the quarter with approximately $4.5 million in cash and cash equivalents and no debt.
- Revenue decline of 6% may impact investor confidence.
- Loss from operations and adjusted EBITDA loss indicate financial challenges.
- Reductions in costs may affect certain operational aspects of the business.
- Year-to-date revenue decline of 11.4% raises concerns about long-term growth.
- Ending the quarter with $4.5 million in cash may limit flexibility for future investments.
Insights
Champions Oncology's reported decline in third-quarter revenue and gross margin contraction reflects the company's struggle in a challenging biotech environment. The decrease in revenue by 5.9% year-over-year, coupled with a gross margin reduction from 39.7% to 34.7%, indicates pressure on profitability. This could be attributed to fixed costs remaining relatively unchanged while revenue decreased, highlighting a lack of scalability in the cost structure. Operational inefficiencies, as mentioned, also contributed to the margin squeeze.
Adjusted EBITDA loss widening slightly from $1.6 million to $1.7 million suggests that operational improvements are not keeping pace with the revenue decline. The decrease in R&D expenses by 31.7% could be seen as a red flag for future growth prospects, as it may indicate a scaling back of investment in innovation. However, the management's statement about potential licensing deals in the pipeline could counterbalance this concern if those deals materialize.
The company's net cash used in operating activities and the lack of financing activities in the third quarter highlight the need for capital efficiency and possibly signal a cautious approach to cash management, which is prudent given the current financial performance. Champions Oncology's cash position of $4.5 million with no debt provides some buffer, but the burn rate will be a key metric to watch in subsequent quarters.
The biotechnology sector has faced economic headwinds and Champions Oncology's performance appears to be in line with broader industry trends of reduced study revenue and customer cancellations. The company's proactive engagement with investors for raising capital for its subsidiary, Corellia AI, indicates a strategic pivot towards leveraging artificial intelligence in oncology. This move could be pivotal in differentiating the company in a crowded marketplace and could potentially lead to new revenue streams.
Strategic cost reductions mentioned by the CFO suggest that Champions Oncology is attempting to optimize its operations without sacrificing long-term growth potential. The market will likely monitor how these cost reductions impact the company's agility in responding to future opportunities. The accreditation of the laboratory by the College of American Pathologists (CAP) is a positive development, potentially enhancing the company's reputation and quality assurance in its services.
The mention of operational inefficiencies leading to increased mouse costs and compensation expenses requires further scrutiny. It raises questions about the company's ability to manage variable costs, which could be a critical lever for improving margins in the future.
The reduction in R&D spending by Champions Oncology may reflect a strategic reallocation of resources or a response to the current economic climate. However, sustained R&D is crucial for long-term innovation and maintaining a competitive edge in the oncology research services market. The company's focus on its two lead targets and the potential for a licensing deal could be indicative of a more targeted and potentially lucrative R&D strategy, but it also represents a concentration of risk if those targets do not succeed.
The CAP accreditation is a testament to the company's commitment to maintaining high laboratory standards, which is essential for ensuring the integrity of preclinical and clinical research data. This could enhance trust among existing and potential clients, potentially leading to more business opportunities.
Overall, Champions Oncology's financial health and strategic decisions will need to be closely monitored, particularly their investment in R&D and the execution of their strategic initiatives, such as the development of Corellia AI and the pursuit of licensing deals.
HACKENSACK, NJ / ACCESSWIRE / March 12, 2024 / Champions Oncology, Inc. (NASDAQ:CSBR), a global preclinical and clinical research services provider that offers end-to-end oncology solutions, today announced its financial results for its third quarter of fiscal 2024, ended January 31, 2024.
Third Quarter and Recent Highlights:
- Third quarter revenue of
$12.0 million , a decline of6% - Gross margin declined to
35% - College of American Pathologists (CAP) has awarded accreditation to US-based laboratory
Ronnie Morris, CEO of Champions, commented, "As discussed over the course of the year, we're navigating through a challenging economic environment, specifically in the biotech sector, that began approximately one year ago. However, we still remain confident that the tide is turning and we will emerge stronger over the coming quarters." Morris added, "We remain actively engaged with investors in an effort to raise capital for our wholly owned subsidiary, Corellia, AI. Conjunctively, our two lead targets continue to progress with the potential of a licensing deal in the coming quarters."
David Miller, CFO of Champions, added, "In response to our lower revenue growth, we're strategically right-sizing the business to reduce costs and improve short term results as we rebound to previous revenue levels. These reductions will not have a long-term impact on the business and we believe our quarterly results will gradually improve going forward."
Third Fiscal Quarter Financial Results
Total revenue for the third quarter of fiscal 2024 was
For the third quarter of fiscal 2024, Champions reported a loss from operations of
Cost of oncology solutions was
Research and development expense for the three-months ended January 31, 2024 was
Net cash used in operating activities was approximately
Year-To-Date Financial Results
For the first nine months of fiscal 2024, revenue decreased
For the first nine months of fiscal 2024, Champions reported a loss from operations of
Cost of oncology solutions was
Research and development expense for the nine-months ended January 31, 2024 was
Net cash used in operating activities was
The Company ended the quarter with cash and cash equivalents on hand of approximately
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 third quarter financial results. To participate in the call, please call 877-545-0523 (Domestic) or 973-528-0016 (International) and enter the access code 860900, or provide the verbal reference "Champions Oncology".
Full details of the Company's financial results will be available by or before March 18, 2024 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 loss per share amounts for the three months ended January 31, 2024 and 2023. 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 other companies and may not be applicable for the current reporting period.
About Champions Oncology, Inc.
Champions Oncology is a global preclinical and clinical research services provider that offers end-to-end oncology R&D solutions to biopharma organizations. With the largest and most annotated bank of clinically relevant patient-derived xenograft (PDX) and primary hematological malignancy models, Champions delivers innovative highest-quality data through proprietary in vivo and ex vivo platforms. Through its large portfolio of cutting-edge bioanalytical platforms, groundbreaking data platform and analytics, and scientific excellence, Champions enables the advancement of preclinical and clinical oncology drug discovery and development programs worldwide. 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, 2023 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 Loss (Unaudited)
Three Months Ended January 31, | Nine Months Ended January 31, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
Net loss - GAAP | $ | (2,530 | ) | $ | (2,439 | ) | $ | (7,167 | ) | $ | (2,774 | ) | ||||
Less: | ||||||||||||||||
Stock-based compensation | 379 | 331 | 855 | 656 | ||||||||||||
Net Loss - Non-GAAP | $ | (2,151 | ) | $ | (2,108 | ) | $ | (6,312 | ) | $ | (2,118 | ) | ||||
Reconciliation of GAAP EPS to Non-GAAP EPS (Unaudited)
Three Months Ended January 31, | Nine Months Ended January 31, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
EPS - GAAP, basic and diluted | $ | (0.19 | ) | $ | (0.18 | ) | $ | (0.53 | ) | $ | (0.20 | ) | ||||
Less: | ||||||||||||||||
Effect of stock-based compensation on EPS | 0.03 | 0.02 | 0.06 | 0.05 | ||||||||||||
EPS - Non-GAAP, basic and diluted | $ | (0.16 | ) | $ | (0.16 | ) | $ | (0.47 | ) | $ | (0.15 | ) | ||||
Unaudited Condensed Consolidated Statements of Operations (unaudited)
Three Months Ended January 31, | Nine Months Ended January 31, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
Oncology services revenue | $ | 12,019 | $ | 12,773 | $ | 36,153 | $ | 40,799 | ||||||||
Cost of oncology services | 7,849 | 7,699 | 22,151 | 22,194 | ||||||||||||
Research and development | 2,186 | 3,202 | 7,494 | 8,693 | ||||||||||||
Sales and marketing | 1,797 | 1,761 | 5,288 | 5,153 | ||||||||||||
General and administrative | 2,764 | 2,569 | 8,305 | 7,494 | ||||||||||||
Loss from operations | (2,577 | ) | (2,458 | ) | (7,085 | ) | (2,735 | ) | ||||||||
Other income (loss) | 58 | 36 | (33 | ) | 9 | |||||||||||
Loss before provision for income taxes | (2,519 | ) | (2,422 | ) | (7,118 | ) | (2,726 | ) | ||||||||
Provision for income taxes | 11 | 17 | 49 | 48 | ||||||||||||
Net loss | $ | (2,530 | ) | $ | (2,439 | ) | $ | (7,167 | ) | $ | (2,774 | ) | ||||
Net loss per common share outstanding | ||||||||||||||||
basic | $ | (0.19 | ) | $ | (0.18 | ) | $ | (0.53 | ) | $ | (0.20 | ) | ||||
and diluted | $ | (0.19 | ) | $ | (0.18 | ) | $ | (0.53 | ) | $ | (0.20 | ) | ||||
Weighted average common shares outstanding | ||||||||||||||||
basic | 13,593,758 | 13,558,642 | 13,538,480 | 13,532,990 | ||||||||||||
and diluted | 13,593,758 | 13,558,642 | 13,538,480 | 13,532,990 | ||||||||||||
Condensed Consolidated Balance Sheets
| January 31, 2024 | April 30, 2023 | |||||||
| (unaudited) | ||||||||
Cash and cash equivalents | $ | 4,468 | $ | 10,118 | ||||
Accounts receivable, net | 7,895 | 8,011 | ||||||
Other current assets | 835 | 1,328 | ||||||
Total current assets | 13,198 | 19,457 | ||||||
Operating lease right-of-use assets, net | 6,536 | 7,318 | ||||||
Property and equipment, net | 6,533 | 7,186 | ||||||
Other long term assets | 185 | 15 | ||||||
Goodwill | 335 | 335 | ||||||
Total assets | $ | 26,787 | $ | 34,311 | ||||
Accounts payable and accrued liabilities | $ | 7,186 | $ | 7,604 | ||||
Current portion of operating lease liabilities | 1,305 | 1,208 | ||||||
Other current liabilities | 149 | 145 | ||||||
Deferred revenue | 13,329 | 12,776 | ||||||
Total current liabilities | 21,969 | 21,733 | ||||||
Non-current operating lease liabilities | 6,437 | 7,391 | ||||||
Other Non-current Liability | 439 | 551 | ||||||
Total liabilities | 28,845 | 29,675 | ||||||
Stockholders' equity | (2,058 | ) | 4,636 | |||||
Total liabilities and stockholders' equity | $ | 26,787 | $ | 34,311 | ||||
Unaudited Condensed Consolidated Statements of Cash Flows (unaudited)
Nine Months Ended January 31, | ||||||||
| 2024 | 2023 | |||||||
Cash flows from operating activities: | ||||||||
Net loss | $ | (7,167 | ) | $ | (2,774 | ) | ||
Adjustments to reconcile net loss to net cash provided by (used in) operations: | ||||||||
Stock-based compensation expense | 855 | 656 | ||||||
Operating lease right-of use assets | 781 | 817 | ||||||
Depreciation and amortization expense | 1,410 | 1,663 | ||||||
Loss on disposal of equipment | 81 | - | ||||||
Allowance for doubtful accounts | 314 | 83 | ||||||
Changes in operating assets and liabilities | (595 | ) | 4,219 | |||||
Net cash provided by (used in) operating activities | (4,321 | ) | 4,664 | |||||
Cash flows from investing activities: | ||||||||
Purchases of property and equipment | (947 | ) | (2,112 | ) | ||||
Net cash used in investing activities: | (947 | ) | (2,112 | ) | ||||
Cash flows from financing activities: | ||||||||
Repurchases of common stock | (634 | ) | - | |||||
Proceeds from the exercise of stock options | 252 | 86 | ||||||
Net cash provided by (used in) financing activities: | (382 | ) | 86 | |||||
Net increase (decrease) in cash | (5,650 | ) | 2,638 | |||||
Cash at beginning of period | 10,118 | 9,007 | ||||||
Cash at the end of period | $ | 4,468 | $ | 11,645 | ||||
SOURCE: Champions Oncology, Inc.
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