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Champions Oncology Reports Financial Results for the Quarter Ended October 31, 2012
Submitted by admin on 12/13/2012 @ 3:00 PM
Companies mentioned in this article:
Champions Oncology, Inc.
HACKENSACK, N.J., Dec. 13, 2012 /PRNewswire/ -- Champions Oncology, Inc. (OTC: CSBR), engaged in the development of advanced technology solutions and services to personalize the development and use of oncology drugs, announced today its financial results for the fiscal quarter ended October 31, 2012.
Joel Ackerman, Champions Oncology CEO, stated, "We continue to make progress in increasing the number of TumorGrafts initiated and the size of our Tumorbank. We expect these to drive increased value of our technology platform over the long term."
Operating revenues were $1.5 million, as compared to $1.8 million for the three months ended October 31, 2011. For the six months ended October 31, 2012 and 2011, operating revenues were $3.6 million and $3.4 million, respectively.
Total operating expenses were $3.4 million, as compared to $4.3 million for the three months ended October 31, 2011. Operating expenses were $7.1 million, as compared to $8.0 million for the six months ended October 31, 2011.
Champions reported a net loss of $2.0 million, or ($0.04) per share, as compared to a net loss of $2.3 million, or ($0.05) per share, for the three months ended October 31, 2011. For the six months ended October 31, 2012, Champions reported a net loss of $3.3 million, or ($0.07) per share, as compared to a net loss of $4.4 million, or ($0.09) per share, for the 2011 period.
Excluding stock-based compensation of $0.6 million and $0.9 million for the three months ended October 31, 2012 and 2011, Champions recognized a net loss of $1.4 million, or ($0.03) per share and a net loss of $1.5 million, or ($0.03) per share for three months ended October 31, 2012 and 2011, respectively. For the six months ended October 31, 2012 and 2011, excluding stock-based compensation of $1.4 million and $1.9 million, Champions recognized a net loss of $1.9 million, or ($0.04) per share and a net loss of $2.5 million, or ($0.05) per share, respectively.
Operating Results
Personalized Oncology Solutions (POS) revenues were $0.5 million and $0.6 million for the three months ended October 31, 2012 and 2011, respectively, a decrease of $0.1 million, or 17%. For the six months ended October 31, 2012 and 2011, POS revenues were $1.4 million and $1.2 million, respectively, an increase of $0.2 million, or 17%. The increase in POS revenues was driven by an increased number of drug studies completed during the six months ended October 31, 2012 compared to the same period in the previous year. During the six months ended October 31, 2012 and 2011, the Company completed 22 and 5 drug studies, respectively. These increases are the result of the steady increase in the number of TumorGrafts performed which have moved onto drug studies.
POS cost of sales was $0.6 million and $0.5 million for the three months ended October 31, 2012 and 2011, respectively, an increase of $0.1 million, or 20%. For the six months ended October 31, 2012 and 2011, POS cost of sales was $1.4 million and $0.9 million, respectively, an increase of $0.5 million, or 56%. For the three months ended October 31, 2012 and 2011, gross margins for POS were -20% and 17%, respectively. For the six months ended October 31, 2012 and 2011, gross margins for POS were 0% and 25%, respectively. The increases in cost of sales and the declines in gross margins can be attributed to increased volumes of implants and drug studies performed, in line with management's strategy to obtain more tumors to increase our tumor model offerings to our TOS sponsors and increase the number of models in our Tumorbank
Translational Oncology Solutions (TOS) revenues were $1.0 million and $1.2 million for the three months ended October 31, 2012 and 2011, respectively, a decrease of $0.2 million, or 17%. The decrease in TOS revenues was due primarily to decreased contract bookings in the previous quarters. TOS revenues were $2.2 million for each of the six month periods ended October 31, 2012 and 2011.
TOS cost of sales was $0.5 million and $0.6 million for the three months ended October 31, 2012 and 2011, respectively, a decrease of $0.1 million, or 17%. For the six months ended October 31, 2012 and 2011, TOS cost of sales was $1.2 million and $1.1 million, respectively, increase of $0.1 million, or 9%. For the three months ended October 31, 2012 and 2011, gross margins for TOS were 50%. For the six months ended October 31, 2012 and 2011, gross margins for TOS were 46% and 50%, respectively. The decline in gross margin for the six month period can be attributed to additional costs associated with transitioning laboratory activities in-house from a third-party contract research organization. Specifically, we made additional investments in our infrastructure and our laboratory staff to increase productivity and to support current and expected volumes, which is expected to significantly reduce the future cost of providing our services and allow us to maintain a more competitive pricing strategy.
Research and development expense was $0.4 million and $1.0 million for three months ended October 31, 2012 and 2011, respectively, a decrease of $0.6 million, or 60%. For the six months ended October 31, 2012 and 2011, research and development expense was $0.8 million and $1.6 million, respectively, a decrease of $0.8 million, or 50%. This decrease is primarily related to decreased laboratory maintenance costs associated with research and development efforts, in line with our strategy to focus on our POS and TOS lines of business. Additionally, the decrease can be attributed to decreased tumor procurement costs, resulting from our strategy to source models from our POS business.
Sales and marketing expense was $0.7 million for each of the three month periods ended October 31, 2012 and 2011. For the six months ended October 31, 2012 and 2011, sales and marketing expense was $1.4 million and $1.3 million, respectively, an increase of $0.1 million, or 8%.
General and administrative expense was $1.2 million and $1.5 million for the three months ended October 31, 2012 and 2011, respectively, a decrease of $0.3 million, or 20%. For the six months ended October 31, 2012 and 2011, general and administrative expense was $2.3 million and $3.1 million, respectively, a decrease of $0.8 million, or 26%. This decrease can be attributed to reductions in stock-based compensation expenses and consultant costs. The decrease in stock-based compensation expense is primarily due to large prior period stock option grants that contain performance conditions and were, and continue to be, accounted for using the accelerated attribution method.
* 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 and six months ended October 31, 2012 and 2011. 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. We define non-GAAP diluted loss per share amounts as non-GAAP net loss divided by the weighted average number of diluted shares outstanding. Our definition of non-GAAP net loss and non-GAAP diluted loss per share may differ from similarly named measures used by others.
Full details of the Company's financial results will be available in the Company's Form 10-K at www.championsoncology.com.
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 its Personalized Oncology Solutions business.
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, 2012 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.
Contact:
Susan Foreman
410-369-0365
sforeman@championsoncology.com
Champions Oncology, Inc.
(Dollars in thousands except per share amounts)
----------------------------------------------
Reconciliation of GAAP to Non-GAAP Net Loss
-------------------------------------------
Three Months Six Months
Ended October 31, Ended October 31,
----------------- -----------------
2012 2011 2012 2011
---- ---- ---- ----
Net loss - GAAP ($1,974) ($2,349) ($3,297) ($4,387)
--------------- ------- ------- ------- -------
Less: 624 855 1,364 1,868
Stock-based compensation
------------------------
Net loss - non-GAAP ($1,350) ($1,494) ($1,933) ($2,519)
------------------- ======= ======= ======= =======
Reconciliation of GAAP to Non-GAAP Earnings Per Share (EPS)
----------------------------------------------------------
Three Months Six Months
Ended October 31, Ended October 31,
----------------- -----------------
2012 2011 2012 2011
---- ---- ---- ----
EPS - GAAP ($0.04) ($0.05) ($0.07) ($0.09)
---------- ------ ------ ------ ------
Less: 0.01 0.02 0.03 0.04
Effect of stock-based compensation
on EPS
----------------------------------
EPS - non-GAAP ($0.03) ($0.03) ($0.04) ($0.05)
-------------- ====== ====== ====== ======
Condensed Consolidated Statements of Operations (Unaudited)
----------------------------------------------------------
Three Months Six Months
Ended October 31, Ended October 31,
----------------- -----------------
2012 2011 2012 2011
---- ---- ---- ----
POS operating revenue $459 $590 $1,377 $1,188
--------------------- ---- ---- ------ ------
TOS operating revenue 999 1,151 2,187 2,184
--------------------- --- ----- ----- -----
Total operating revenue $1,458 $1,741 $3,564 $3,372
----------------------- ------ ------ ------ ------
Cost of POS 582 461 1,354 945
----------- --- --- ----- ---
Cost of TOS 475 620 1,174 1,104
----------- --- --- ----- -----
Research and development 436 1,008 823 1,616
------------------------ --- ----- --- -----
Sales and marketing 680 651 1,389 1,262
------------------- --- --- ----- -----
General and administrative 1,201 1,470 2,340 3,130
-------------------------- ----- ----- ----- -----
Loss from Operations ($1,916) ($2,469) ($3,516) ($4,685)
-------------------- ------- ------- ------- -------
Other (Loss) Income (57) 120 223 298
------------------- --- --- --- ---
Net Loss before income tax expense ($1,973) ($2,349) ($3,293) ($4,387)
---------------------------------- ------- ------- ------- -------
Income taxes 1 - 4 -
------------ --- --- --- ---
Net Loss ($1,974) ($2,349) ($3,297) ($4,387)
-------- ------- ------- ------- -------
Earnings per share- basic and diluted ($0.04) ($0.05) ($0.07) ($0.09)
------------------------------------- ------ ------ ------ ------
Weighted average shares outstanding- basic and diluted 47,079,000 46,790,000 47,073,000 46,606,000
------------------------------------------------------ ---------- ---------- ---------- ----------
Condensed Consolidated Balance Sheets
-------------------------------------
Balance as of
-------------
October 31, 2012 April 30, 2012
(unaudited)
---------- ----------
Cash and cash equivalents $2,161 $4,716
------------------------- ------ ------
Accounts receivable 627 584
------------------- --- ---
Other current assets 95 205
-------------------- --- ---
Total current assets 2,883 5,505
-------------------- ----- -----
Restricted cash 188 188
--------------- --- ---
Property and equipment, net 485 560
--------------------------- --- ---
Goodwill 669 669
-------- --- ---
Total assets $4,225 $6,922
------------ ====== ======
Accounts payable and accrued liabilities $1,723 $2,301
---------------------------------------- ------ ------
Deferred revenue 1,205 1,185
---------------- ----- -----
Total current liabilities 2,928 3,486
------------------------- ----- -----
Warrant liability 322 555
----------------- --- ---
Redeemable common stock 8,159 8,159
----------------------- ----- -----
Stockholders' deficit (7,184) (5,278)
--------------------- ------ ------
Total liabilities, redeemable common stock and $4,225 $6,922
stockholders' deficit
---------------------
Condensed Consolidated Statements of Cash Flows (Unaudited)
----------------------------------------------------------
Six Months Ended
October 31,
-----------------
2012 2011
---- ----
Cash flows from operating
activities:
-------------------------
Net Loss ($3,297) ($4,387)
-------- ------- -------
Adjustments to reconcile net cash
used in operations:
---------------------------------
Stock-based compensation expense 1,364 1,868
-------------------------------- ----- -----
Depreciation expense 103 49
-------------------- --- ---
Change in fair value of warrant
liability (233) (288)
------------------------------- ---- ----
Changes in operating assets and
liabilities (491) (533)
------------------------------- ---- ----
Net cash used in operating
activities (2,554) (3,291)
-------------------------- ------ ------
Cash flows from investing
activities:
-------------------------
Purchases of property and equipment (28) (160)
----------------------------------- --- ----
Net cash used in investing
activities: (28) (160)
-------------------------- === ====
Cash flows from financing
activities:
-------------------------
Proceeds from exercise of options
and warrants - 98
--------------------------------- --- ---
Net cash provided by financing
activities: - 98
------------------------------ === ===
Exchange rate effect on cash and
cash equivalents 27 15
-------------------------------- --- ---
Decrease in cash and cash
equivalents (2,555) (3,338)
------------------------- ------ ------
Cash and cash equivalents, beginning
of period 4,716 10,457
------------------------------------ ----- ------
Cash and cash equivalents, end of
period $2,161 $7,119
--------------------------------- ====== ======
SOURCE Champions Oncology, Inc.