Champions Oncology(CSBR) - 2024 Q2 - Quarterly Report

PART I – FINANCIAL INFORMATION Financial Statements This section presents the unaudited condensed consolidated financial statements, including balance sheets, statements of operations, changes in equity, and cash flows, along with explanatory notes Condensed Consolidated Balance Sheets This section presents the company's financial position, including assets, liabilities, and equity, as of October 31, 2023, and April 30, 2023 Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | Oct 31, 2023 (unaudited) | Apr 30, 2023 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $5,513 | $10,118 | | Total current assets | $14,017 | $19,457 | | Total assets | $28,294 | $34,311 | | Liabilities & Equity | | | | Total current liabilities | $20,950 | $21,733 | | Total liabilities | $28,201 | $29,675 | | Total stockholders' equity | $93 | $4,636 | | Accumulated deficit | ($81,954) | ($77,317) | Unaudited Condensed Consolidated Statements of Operations This section details the company's revenues, expenses, and net loss for the three and six months ended October 31, 2023 and 2022 Operating Results for the Three Months Ended October 31 (in thousands, except per share) | Metric | 2023 | 2022 | | :--- | :--- | :--- | | Oncology services revenue | $11,573 | $14,281 | | Total costs and operating expenses | $13,528 | $14,274 | | Income (loss) from operations | ($1,955) | $7 | | Net loss | ($2,071) | ($16) | | Net loss per common share | ($0.15) | $0.00 | Operating Results for the Six Months Ended October 31 (in thousands, except per share) | Metric | 2023 | 2022 | | :--- | :--- | :--- | | Oncology services revenue | $24,134 | $28,026 | | Total costs and operating expenses | $28,641 | $28,303 | | (Loss) Income from operations | ($4,507) | ($277) | | Net loss | ($4,637) | ($335) | | Net loss per common share | ($0.34) | ($0.02) | Unaudited Condensed Consolidated Statements of Changes in Stockholders' Equity This section outlines the changes in the company's stockholders' equity, including the impact of net loss and share repurchases - Total stockholders' equity decreased from $4.6 million at April 30, 2023, to $93,000 at October 31, 2023. The decrease was primarily driven by a net loss of $4.6 million and common stock repurchases totaling approximately $708,000, partially offset by stock-based compensation and proceeds from stock option exercises[76] Unaudited Condensed Consolidated Statements of Cash Flows This section summarizes the company's cash inflows and outflows from operating, investing, and financing activities Cash Flow Summary for the Six Months Ended October 31 (in thousands) | Cash Flow Activity | 2023 | 2022 | | :--- | :--- | :--- | | Net cash (used in) provided by operating activities | ($3,402) | $3,091 | | Net cash used in investing activities | ($821) | ($1,358) | | Net cash (used in) provided by financing activities | ($382) | $86 | | Net (decrease) increase in cash | ($4,605) | $1,819 | | Cash at end of period | $5,513 | $10,826 | Notes to Unaudited Condensed Consolidated Financial Statements This section provides detailed explanations and disclosures supporting the unaudited condensed consolidated financial statements - The company believes its cash on hand of $5.5 million, along with expected cash from operations, is adequate to fund operations for at least the next 12 months. However, it acknowledges that if revenue expectations are not met, cost reduction strategies may be implemented[94] Disaggregated Revenue for Six Months Ended October 31 (in thousands) | Service Line | 2023 | 2022 | | :--- | :--- | :--- | | Pharmacology services | $22,735 | $26,236 | | Other TOS revenue | $1,381 | $1,679 | | Personalized oncology services | $18 | $111 | | Total oncology services revenue | $24,134 | $28,026 | - The company initiated a share repurchase program on March 29, 2023, authorizing up to $5.0 million in purchases. As of October 31, 2023, approximately 120,300 shares were repurchased for about $708,000, leaving $4.3 million available[150] - Royalty expenses related to licensed tumor models were approximately $126,200 for the six months ended October 31, 2023, compared to $108,000 for the same period in 2022[32] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses a significant decline in oncology services revenue, attributing it to an increase in study cancellations, leading to an operating loss and lower margins, while expressing confidence in liquidity Overview and Recent Developments This section provides an overview of the company's business, core offerings, and strategic initiatives in drug discovery and development - The company is a technology-enabled research organization focused on drug discovery and development, utilizing pharmacology, biomarker, and data platforms[38] - Core offerings include Translational Oncology Solutions (TOS) using the TumorGraft Technology Platform, and Lumin Bioinformatics, a Software as a Service (SaaS) program for computational cancer research[39][40] - The company is actively developing its own pipeline of therapeutic targets and regularly evaluates strategic options for its drug discovery business, such as spin-outs or capital raises[42][43] Liquidity and Capital Resources This section discusses the company's cash position, accumulated deficit, and management's assessment of its ability to fund operations - As of October 31, 2023, the company had $5.5 million in cash and an accumulated deficit of approximately $82.0 million[45] - For the six months ended October 31, 2023, the company experienced a net loss of $4.6 million and used $3.4 million in cash from operations[45] - Management believes current cash and expected cash flows are sufficient to fund operations for at least the next 12 months, with cost reduction strategies available if needed[45] Operating Results This section analyzes the company's revenue, costs, and operating loss, highlighting key drivers of financial performance Comparison of Operating Results for the Six Months Ended October 31 (in thousands) | Metric | 2023 | 2022 | % Change | | :--- | :--- | :--- | :--- | | Oncology services revenue | $24,134 | $28,026 | (13.9)% | | Cost of oncology services | $14,302 | $14,495 | (1.3)% | | Research and development | $5,308 | $5,491 | (3.3)% | | Sales and marketing | $3,491 | $3,392 | 2.9% | | General and administrative | $5,540 | $4,925 | 12.5% | | (Loss) Income from operations | ($4,507) | ($277) | 1,527.1% | - The 13.9% decrease in six-month revenue was attributed to an increase in study cancellations during fiscal year 2023, which reduced net bookings and available convertible revenue[47] - Gross margin for the six months ended October 31, 2023, decreased to 40.7% from 48.3% in the prior year, primarily due to the decline in revenue against a relatively unchanged cost base[49] Cash Flows This section provides a detailed breakdown of cash flows from operating, investing, and financing activities for the period - Net cash used in operating activities was $3.4 million for the six months ended October 31, 2023, primarily due to the net loss for the period[22] - Net cash used in investing activities was $821,000 for the six months ended October 31, 2023, for investments in lab and computer equipment[23] - Net cash used in financing activities was $382,000 for the six months ended October 31, 2023, reflecting the stock repurchase program, offset by cash from stock option exercises[24] Quantitative and Qualitative Disclosures About Market Risk The company, as a smaller reporting company, is not required to provide the information for this item - As a smaller reporting company, the company is exempt from providing disclosures about market risk[59] Controls and Procedures Management, including the CEO and CFO, evaluated the company's disclosure controls and procedures and concluded they were effective as of October 31, 2023. No material changes to the internal control over financial reporting were identified during the quarter Evaluation of Disclosure Controls and Procedures This section details management's assessment of the effectiveness of the company's disclosure controls and procedures - Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective at a reasonable assurance level as of October 31, 2023[3] - The evaluation confirmed that required information is recorded, processed, summarized, and reported within the timeframes specified by the SEC[3] Changes in Internal Control Over Financial Reporting This section reports on any material changes to the company's internal control over financial reporting during the quarter - There were no changes in the company's internal control over financial reporting during the quarter that have materially affected, or are reasonably likely to materially affect, these controls[4] PART II – OTHER INFORMATION Legal Proceedings The company reports that it is not currently party to any legal proceedings - None[7] Risk Factors As a smaller reporting company, this section is not required. The company refers readers to the Risk Factors section in its Annual Report on Form 10-K filed on July 24, 2023 - As a smaller reporting company, this item is not required. The company directs readers to its Form 10-K filed on July 24, 2023, for a discussion of risk factors[8] Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities The company reported no unregistered sales of equity securities or use of proceeds from such sales. It provided an update on its ongoing share repurchase program, noting that approximately $708,000 worth of common stock has been purchased under the $5.0 million authorization, leaving a balance of $4.3 million Unregistered Sales of Equity Securities This section reports on any unregistered sales of equity securities by the company - None[9] Use of Proceeds This section reports on the use of proceeds from any equity security sales - None[10] Issuer Purchases of Equity Securities This section provides details on the company's common stock repurchase program and recent purchases - On March 29, 2023, the Board approved a share repurchase program authorizing up to $5.0 million of the company's common stock[11] - As of October 31, 2023, the company had purchased approximately 120,300 shares at an average price of $5.73 per share, for a total of about $708,000[11] - Approximately $4.3 million remains available for repurchases under the authorized program[11] Defaults Upon Senior Securities The company reports no defaults upon senior securities - None[12] Mine Safety Disclosures This item is not applicable to the company - Not applicable[13] Other Information The company reports no other information for this item - None[14] Exhibits This section lists the exhibits filed with the report, including CEO and CFO certifications (Sections 302 and 906) and iXBRL data files - The report includes certifications from the Principal Executive Officer and Principal Financial Officer as required by Sections 302 and 906 of the Sarbanes-Oxley Act[16] - Interactive Data Files (iXBRL documents) are also filed as exhibits[16]