Champions Oncology(CSBR) - 2024 Q3 - Quarterly Report

PART I – FINANCIAL INFORMATION Financial Statements Champions Oncology, Inc. reported a $7.2 million net loss on $36.2 million revenue for the nine months ended January 31, 2024, with total assets decreasing and operating cash flow turning negative Condensed Consolidated Balance Sheets Total assets decreased to $26.8 million by January 31, 2024, primarily from reduced cash, leading to a $2.1 million stockholders' deficiency Condensed Consolidated Balance Sheet Highlights | Account | Jan 31, 2024 (unaudited) ($ thousands) | Apr 30, 2023 ($ thousands) | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $4,468 | $10,118 | | Accounts receivable, net | $7,895 | $8,011 | | Total current assets | $13,198 | $19,457 | | Total assets | $26,787 | $34,311 | | Liabilities & Equity | | | | Deferred revenue | $13,329 | $12,776 | | Total current liabilities | $21,969 | $21,733 | | Total liabilities | $28,845 | $29,675 | | Total stockholders' equity (deficiency) | $(2,058) | $4,636 | Unaudited Condensed Consolidated Statements of Operations For the nine months ended January 31, 2024, revenue decreased to $36.2 million, widening the net loss to $7.2 million from $2.8 million Consolidated Statements of Operations (in thousands, except per share data) | Metric | Three Months Ended Jan 31, 2024 ($ thousands) | Three Months Ended Jan 31, 2023 ($ thousands) | Nine Months Ended Jan 31, 2024 ($ thousands) | Nine Months Ended Jan 31, 2023 ($ thousands) | | :--- | :--- | :--- | :--- | :--- | | Oncology services revenue | $12,019 | $12,773 | $36,153 | $40,799 | | Total costs and operating expenses | $14,596 | $15,231 | $43,238 | $43,534 | | Loss from operations | $(2,577) | $(2,458) | $(7,085) | $(2,735) | | Net loss | $(2,530) | $(2,439) | $(7,167) | $(2,774) | | Net loss per share (basic and diluted) | $(0.19) | $(0.18) | $(0.53) | $(0.20) | Unaudited Condensed Consolidated Statements of Changes in Stockholders' Equity (Deficiency) Stockholders' equity shifted from $4.6 million to a $2.1 million deficiency by January 31, 2024, driven by a $7.2 million net loss - The company's equity position shifted from a positive $4,636 thousand to a deficiency of $(2,058) thousand over the nine months ended January 31, 2024[39] - Key activities impacting equity included a net loss of $7,167 thousand, stock-based compensation of $855 thousand, and common stock repurchases totaling $634 thousand[39][41] Unaudited Condensed Consolidated Statements of Cash Flows Net cash used in operating activities was $4.3 million for the nine months ended January 31, 2024, leading to a $5.7 million overall cash decrease Consolidated Statements of Cash Flows Highlights | Cash Flow Activity | Nine Months Ended Jan 31, 2024 ($ thousands) | Nine Months Ended Jan 31, 2023 ($ thousands) | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $(4,321) | $4,664 | | Net cash used in investing activities | $(947) | $(2,112) | | Net cash provided by (used in) financing activities | $(382) | $86 | | Increase (decrease) in cash | $(5,650) | $2,638 | | Cash at beginning of period | $10,118 | $9,007 | | Cash at end of period | $4,468 | $11,645 | Notes to Unaudited Condensed Consolidated Financial Statements The notes detail accounting policies, revenue recognition, and liquidity, with management asserting sufficient cash for the next 12 months - The company is a technology-enabled research organization focused on drug discovery and development, operating through several subsidiaries, though none of the foreign subsidiaries generated revenue in the reported periods[17][42] - Management believes that cash on hand ($4.5 million) and expected cash from operations are adequate to fund operations for at least 12 months, but has cost reduction strategies if revenue expectations are not met[21] - Revenue is recognized over time using a progress-based input method for its highly-integrated oncology services, which are typically completed within a year[53][55][79] - The company has a share repurchase program authorized for up to $5.0 million As of January 31, 2024, approximately $708,000 had been used to repurchase shares, with $4.3 million remaining[127] Management's Discussion and Analysis of Financial Condition and Results of Operations Management attributes the 11.4% revenue decrease and widened $7.1 million net loss to prior year study cancellations and fixed costs Overview and Recent Developments The company provides drug discovery solutions via its TumorGraft Platform and Lumin SaaS, while evaluating strategic options for its pipeline - The company's core business involves providing Translational Oncology Solutions (TOS) using its proprietary platforms to facilitate drug discovery for pharmaceutical and biotech companies[114][138] - The company offers a SaaS program, Lumin Bioinformatics, which leverages its large dataset with analytics and AI for computational cancer research[161] - Strategic options for its drug discovery business, such as spin-outs or capital raises, are under regular evaluation to create additional value[162] Operating Results Nine-month oncology services revenue decreased 11.4% to $36.2 million, leading to a gross margin drop and a 159% increase in operating loss Operating Results Summary (Nine Months Ended Jan 31, in thousands) | Line Item | 2024 ($ thousands) | 2023 ($ thousands) | % Change | | :--- | :--- | :--- | :--- | | Oncology services revenue | $36,153 | $40,799 | (11.4)% | | Cost of oncology services | $22,151 | $22,194 | (0.2)% | | Research and development | $7,494 | $8,693 | (13.8)% | | Sales and marketing | $5,288 | $5,153 | 2.6% | | General and administrative | $8,305 | $7,494 | 10.8% | | Loss from operations | $(7,085) | $(2,735) | 159.0% | - The decrease in revenue was attributed to an increase in study cancellations during fiscal year 2023, which reduced the available convertible revenue for the current year[142] - The decline in gross margin for both the three and nine-month periods was primarily due to the drop in revenue against a generally unchanged cost base[119] Liquidity and Capital Resources As of January 31, 2024, the company had $4.5 million in cash, asserting sufficient liquidity for 12 months despite a $7.2 million net loss - The company had cash on hand of approximately $4.5 million and an accumulated deficit of $84.5 million as of January 31, 2024[163] - Management asserts that cash on hand plus expected cash flows are adequate for at least 12 months, but has contingency plans for cost reduction if revenue targets are not met[163] Cash Flows For the nine months ended January 31, 2024, the company used $4.3 million in operating cash, $0.9 million in investing, and $0.4 million in financing - Net cash used in operating activities was $4.3 million, driven by the period's net loss[171] - Investing activities consisted of $947,000 used for purchasing lab and computer equipment[172] - Financing activities used $382,000, mainly for the stock repurchase program[173] Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, Champions Oncology, Inc. is exempt from providing market risk disclosures - The company is a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and is not required to provide the information otherwise required under this Item[148] Controls and Procedures Management concluded disclosure controls were effective as of January 31, 2024, with no material changes to internal controls during the quarter - Management concluded that the company's disclosure controls and procedures were effective as of January 31, 2024, at a reasonable assurance level[150] - There were no changes in internal control over financial reporting during the quarter that have materially affected, or are reasonably likely to materially affect, these controls[178] PART II – OTHER INFORMATION Legal Proceedings To management's knowledge, no litigation is currently pending or contemplated against the company, its officers, or directors - The company is not currently party to any legal proceedings[180] Risk Factors No material changes to previously disclosed risk factors from the company's 2023 Annual Report on Form 10-K have occurred - As a smaller reporting company, risk factors are not required in this report There have been no material changes from the risk factors disclosed in the 2023 Annual Report[181] Unregistered Sales of Equity Securities and Use of Proceeds The company reported no unregistered sales of equity securities or information on the use of proceeds during the period - There were no unregistered sales of equity securities during the period[154] Defaults Upon Senior Securities This item is not applicable as the company reported no defaults upon senior securities - Not applicable[155] Mine Safety Disclosures This item is not applicable to the company's operations, therefore no mine safety disclosures are reported - None[183] Other Information No other information was reported for the period - None[187] Exhibits The report lists filed exhibits, including CEO and CFO certifications and iXBRL documents - Exhibits filed include CEO and CFO certifications (31.1, 31.2, 32.1) and iXBRL Instance Documents[3][184]