Champions Oncology(CSBR) - 2024 Q3 - Quarterly Results

Management Commentary and Business Outlook Management acknowledges a challenging economic environment, particularly in the biotech sector, which has impacted revenue growth. In response, the company is strategically reducing costs to improve short-term results. Despite the downturn, leadership remains confident in a future rebound and is actively seeking capital for its AI subsidiary, Corellia, AI, while progressing its lead targets towards potential licensing deals - The company is navigating a challenging economic environment that began approximately one year ago, particularly affecting the biotech sector[3] - Strategic initiatives include 'right-sizing' the business to reduce costs and improve short-term financial results without impacting long-term potential[3] - The company is actively engaged in raising capital for its wholly owned AI subsidiary, Corellia, AI[3] - Two lead drug targets are progressing, with a potential licensing deal anticipated in the coming quarters[3] Third Quarter Fiscal 2024 Financial Performance For the third quarter of fiscal 2024, Champions Oncology reported a 5.9% decrease in revenue to $12.0 million, primarily due to prior-period customer cancellations. Gross margin contracted to 34.7% from 39.7% year-over-year due to lower revenue against fixed costs and operational inefficiencies. The company recorded an operating loss of $2.6 million and an adjusted EBITDA loss of $1.7 million, both slightly wider than the prior year's quarter Q3 Revenue and Profitability Q3 FY2024 vs Q3 FY2023 Key Financial Metrics | Metric | Q3 FY2024 | Q3 FY2023 | Change | | :--- | :--- | :--- | :--- | | Total Revenue | $12.0M | $12.8M | -5.9% | | Gross Margin | 34.7% | 39.7% | -5.0 p.p. | | Loss from Operations | ($2.6M) | ($2.5M) | +4.1% | | Adjusted EBITDA Loss | ($1.7M) | ($1.6M) | +6.3% | - The decline in revenue was primarily attributed to customer cancellations in prior periods, which led to lower study revenue in the current quarter[4][5] - Lower gross margin was a result of decreased revenue against relatively fixed costs, combined with higher variable costs from operational inefficiencies[7] Q3 Operating Expenses Q3 FY2024 Operating Expenses (in thousands) | Expense Category | Q3 FY2024 | Q3 FY2023 | YoY Change | | :--- | :--- | :--- | :--- | | Cost of Oncology Solutions | $7,849 | $7,699 | +1.9% | | Research & Development | $2,186 | $3,202 | -31.7% | | Sales & Marketing | $1,797 | $1,761 | +2.0% | | General & Administrative | $2,764 | $2,569 | +7.6% | - The significant decrease in R&D expense was primarily due to reduced investment in the company's target discovery program[8] - The increase in G&A expense was mainly driven by higher compensation, recruiting expenses, and an increase in bad debt reserves[8] Q3 Cash Flow - Net cash used in operating activities was approximately $920,000 for the quarter, primarily due to the operational loss[9] - Net cash used in investing activities was approximately $125,000 for investments in lab and computer equipment[9] - There were no financing activities during the third quarter of fiscal year 2024[9] Year-To-Date Fiscal 2024 Financial Performance For the first nine months of fiscal 2024, revenue decreased by 11.4% to $36.2 million compared to the same period last year. The gross margin fell to 38.7% from 45.6%. This resulted in a significantly wider loss from operations of $7.1 million and an adjusted EBITDA loss of $4.8 million, compared to losses of $2.7 million and $0.4 million, respectively, in the prior year period. The company ended the quarter with $4.5 million in cash and no debt YTD Revenue and Profitability YTD FY2024 vs YTD FY2023 Key Financial Metrics | Metric | YTD FY2024 | YTD FY2023 | Change | | :--- | :--- | :--- | :--- | | Total Revenue | $36.2M | $40.8M | -11.4% | | Gross Margin | 38.7% | 45.6% | -6.9 p.p. | | Loss from Operations | ($7.1M) | ($2.7M) | +163% | | Adjusted EBITDA Loss | ($4.8M) | ($0.4M) | +1100% | - The year-to-date revenue decline was also attributed to customer cancellations in fiscal year 2023, leading to lower study revenue in fiscal 2024[10] YTD Operating Expenses YTD FY2024 Operating Expenses (in thousands) | Expense Category | YTD FY2024 | YTD FY2023 | YoY Change | | :--- | :--- | :--- | :--- | | Cost of Oncology Solutions | $22,151 | $22,194 | -0.2% | | Research & Development | $7,494 | $8,693 | -13.8% | | Sales & Marketing | $5,288 | $5,153 | +2.6% | | General & Administrative | $8,305 | $7,494 | +10.8% | - The decrease in R&D expense was primarily from reduced investment in the target discovery program[13] - The increase in G&A expense was mainly due to higher compensation, recruiting expenses, and allowances for bad debt, partially offset by lower IT costs[13] YTD Cash Flow and Financial Position - Net cash used in operating activities for the nine-month period was $4.3 million[14] - Net cash used in investing activities was $950,000, primarily for lab and computer equipment[14] - Net cash used in financing activities was $382,000, resulting from stock repurchases offset by proceeds from option exercises[14] - The company ended the quarter with approximately $4.5 million in cash and cash equivalents and no debt[15] Financial Statements and Reconciliations The provided financial statements detail the company's performance. The Statement of Operations shows increased net losses for both the third quarter and year-to-date periods. The Balance Sheet indicates a decrease in total assets and a shift to a stockholders' deficit. The Statement of Cash Flows reflects negative cash flow from operations for the nine-month period, a significant reversal from the positive cash flow in the prior year. GAAP to Non-GAAP reconciliations are provided to adjust for stock-based compensation Consolidated Statements of Operations Q3 FY2024 Statement of Operations Highlights (in thousands) | Line Item | Q3 FY2024 | Q3 FY2023 | | :--- | :--- | :--- | | Oncology Services Revenue | $12,019 | $12,773 | | Loss from Operations | ($2,577) | ($2,458) | | Net Loss | ($2,530) | ($2,439) | | Net Loss per Share (basic & diluted) | ($0.19) | ($0.18) | YTD FY2024 Statement of Operations Highlights (in thousands) | Line Item | YTD FY2024 | YTD FY2023 | | :--- | :--- | :--- | | Oncology Services Revenue | $36,153 | $40,799 | | Loss from Operations | ($7,085) | ($2,735) | | Net Loss | ($7,167) | ($2,774) | | Net Loss per Share (basic & diluted) | ($0.53) | ($0.20) | Consolidated Balance Sheets Balance Sheet Highlights (in thousands) | Account | Jan 31, 2024 | Apr 30, 2023 | | :--- | :--- | :--- | | Cash and cash equivalents | $4,468 | $10,118 | | Total current assets | $13,198 | $19,457 | | Total assets | $26,787 | $34,311 | | Total liabilities | $28,845 | $29,675 | | Stockholders' equity (deficit) | ($2,058) | $4,636 | Consolidated Statements of Cash Flows Nine Months Ended Jan 31 Cash Flow Summary (in thousands) | Cash Flow Activity | 2024 | 2023 | | :--- | :--- | :--- | | Net cash (used in) provided by operating activities | ($4,321) | $4,664 | | Net cash used in investing activities | ($947) | ($2,112) | | Net cash (used in) provided by financing activities | ($382) | $86 | | Net decrease in cash | ($5,650) | $2,638 | | Cash at end of period | $4,468 | $11,645 | GAAP to Non-GAAP Reconciliation Q3 Net Loss Reconciliation (in thousands) | Metric | Q3 FY2024 | Q3 FY2023 | | :--- | :--- | :--- | | Net Loss - GAAP | ($2,530) | ($2,439) | | Stock-based compensation | $379 | $331 | | Net Loss - Non-GAAP | ($2,151) | ($2,108) | Q3 EPS Reconciliation | Metric | Q3 FY2024 | Q3 FY2023 | | :--- | :--- | :--- | | EPS - GAAP | ($0.19) | ($0.18) | | Effect of stock-based compensation | $0.03 | $0.02 | | EPS - Non-GAAP | ($0.16) | ($0.16) |