On July 28, 2016 Champions Oncology, Inc. (Nasdaq: CSBR), engaged in the development of advanced technology solutions and services to personalize the development and use of oncology drugs, reported its financial results for the year ended April 30, 2016 (Filing, Q2, Champions Oncology, 2016, JUL 28, 2016, View Source [SID:1234514146]).

Schedule your 30 min Free 1stOncology Demo!
Discover why more than 1,500 members use 1stOncology™ to excel in:

Early/Late Stage Pipeline Development - Target Scouting - Clinical Biomarkers - Indication Selection & Expansion - BD&L Contacts - Conference Reports - Combinatorial Drug Settings - Companion Diagnostics - Drug Repositioning - First-in-class Analysis - Competitive Analysis - Deals & Licensing

                  Schedule Your 30 min Free Demo!

Fourth Quarter and Recent Business Highlights:

•Year over year revenue growth of 26%
•Projected revenue for fiscal 2017 (ending April 2017) of $16 – 18 million of revenue
•Delivered second consecutive quarter of record TOS bookings
•Reduced cash burn to under $750K for the quarter
•Completed public offering netting $4.4M
•Projected cash flow positive by end of fiscal 2017
•Completed first study in acute myeloid leukemia
•Signed second co-clinical trial

Joel Ackerman, Champions Oncology CEO, stated, "this past year we’ve seen a significant shift from anticipated to actual results. We have delivered consecutive quarters of record TOS bookings, setting the stage for continued revenue growth heading into the coming year. This revenue growth, combined with strong expense control, has enabled us to continue lowering our quarterly cash burn rate and puts us on a path to cash flow breakeven. We are projecting an accelerating revenue growth for fiscal 2017 which we expect to result in revenue of $16 – 18 million for the year. By the end of the year, we expect to have a revenue run rate of close to $20 million and to be cash flow positive."

Financial Results

For the fourth quarter of 2016, revenue was $2.8 million, as compared to $3.2 million for the three months ended April 30, 2015, a decrease of 12.5%. For the twelve-month period ended April 30, 2016, revenue was $11.2 million, as compared to $8.9 million for the same period of the prior year, an increase of 26.2%. Total operating expense for the fourth quarter 2016 was $5.4 million as compared to $5.7 million for the fourth quarter 2015. For the twelve months ended April 30, 2016, total operating expense was $21.5 million, as compared to $22.1 million for the twelve months ended April 30, 2015.

For the fourth quarter of 2016 and 2015, Champions reported a loss from operations of $2.6 million and $2.4 million, respectively. Excluding stock-based compensation of $509,000 and $878,000 for the three months ended April 30, 2016 and 2015, Champions recognized a loss from operations of $2.1 million and $1.5 million, respectively. For the twelve months ended April 30, 2016, Champions reported a loss from operations of $10.4 million as compared to a loss from operations of $13.2 million for the twelve months ended April 30, 2015. Excluding stock-based compensation of $2.6 million and $3.2 million for the twelve months ended April 30, 2016 and 2015, Champions recognized a loss from operations of $7.8 million and $10 million, respectively.

Operating Results

Translational Oncology Solutions (TOS):

TOS revenue was $2.3 million and $2.8 million for the three months ended April 30, 2016 and 2015, respectively, a decrease of $500,000 or 20.3%. The decrease was due to a backlog of revenue recognized in the fourth quarter of 2015 resulting in a higher than normal revenue quarter. TOS revenue was $9.2 million and $7.2 million for the twelve months ended April 30, 2016 and 2015, respectively, an increase of $2 million, or 27.9%. The increase was due to increased bookings, both in the number and size of the studies, due to the expansion of the TOS sales team and growth of the platform.

TOS cost of sales was $1.9 million and $1.7 million for the three months ended April 30, 2016 and 2015, respectively, an increase of $200,000, or 13.5%. TOS cost of sales was $6.6 million and $4.9 million for the twelve months ended April 30, 2016 and 2015, respectively, an increase of $1.7 million, or 34.4%. For the three months ended April 30, 2016 and 2015, gross margin for TOS was 15.5% and 40.7%, respectively. For the twelve months ended April 30, 2016 and 2015, gross margin for TOS was 28.5% and 31.9%, respectively. The increase in TOS cost of sales was due to an increase in TOS studies. Gross margin varies based on timing differences between expense and revenue recognition. The decline in gross margin was due to expenses incurred in advance of future revenue.

Personalized Oncology Solutions (POS):

POS revenue was $585,000 and $418,000 for the three months ended April 30, 2016 and 2015, respectively, an increase of $167,000 or 39.9%. POS revenue was $2 million and $1.7 million for the twelve months ended April 30, 2016 and 2015, respectively, an increase of $300,000 or 18.6%. The increase is primarily the result of growth in sequencing and tumor board revenue offset by a decline in implant and drug panel revenue.

POS cost of sales was $441,000 and $543,000 for the three months ended April 30, 2016 and 2015, respectively, a decrease of $102,000, or 18.7%. POS cost of sales was $2.1 million and $2.7 million for the twelve months ended April 30, 2016 and 2015, respectively, a decrease of $600,000, or 23.1%. For the three months ended April 30, 2016 and 2015, gross margin for POS was 24.6% and negative (29.8%), respectively. For the twelve months ended April 30, 2016 and 2015, gross margin for POS was negative (6.6%) and negative (64.3%), respectively. The improvement is attributed to the increase in higher margin sequencing revenue and aggressively managing our lab costs.

Research and development expense was $1.2 million and $1.1 million for the three months ended April 30, 2016 and 2015, respectively. Research and development expense was $4.2 million and $4.8 million for the twelve months ended April 30, 2016 and 2015, respectively. The decrease is largely due to lower expenses in genomic characterization of our Champions TumorGraft Bank.

Sales and marketing expense for the three months ended April 30, 2016 and 2015 was $757,000 and $943,000, respectively. Sales and marketing expense for the twelve months ended April 30, 2016 and 2015 was $3.4 million and $4.3 million, respectively. The decrease is due to the consolidation of sales and marketing personnel resources of the POS and TOS division.
General and administrative expense was $1.1 million and $1.4 million for the three months ended April 30, 2016 and 2015, respectively. General and administrative expense for the twelve months ended April 30, 2016 and 2015 was $5.2 million and $5.3 million, respectively. The decrease is due to aggressive cost management to maintain cost controls even as the business grows.