On March 11, 2021 Champions Oncology, Inc. (Nasdaq: CSBR), a leading global oncology technology solutions provider engaged in transforming drug discovery and development through data-driven research strategies and innovative pharmacology, biomarker and data platforms, reported its financial results for the third fiscal quarter ended January 31, 2021 (Press release, Champions Oncology, MAR 11, 2021, View Source [SID1234576487]).

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Third Quarter and Recent Highlights:

•Delivered record quarterly revenue of $10.8 million, an increase of 20% year over year
•Reported non-GAAP income from operations, excluding stock-based compensation, depreciation and amortization, of $1.3 million
•Expanded Lumin Bioinformatics proprietary SaaS platform with proteomic module integration

Ronnie Morris, CEO of Champions, commented, "We are pleased with our third quarter results and we continue to execute our long term strategy of investing in the development of new products and services to increase our revenue streams."

David Miller, CFO of Champions, added, "We delivered another record quarter with revenue increasing to $10.8 million. In addition to the growth in our product and service offerings, we’re bringing the outsourced ex-vivo work in-house to our labs which we expect will impact margins positively in the future."

Third Fiscal Quarter Financial Results

For the third quarter of fiscal 2021, revenue increased 20.0% to $10.8 million compared to $9.0 million for the third quarter of fiscal 2020. The increase in revenue was due to a continued increase in sales,

Exhibit 99.1
both in number and size of studies, and the expansion of both our platform and product lines. Our contract amounts have increased as we perform more complex studies and end point analysis testing. Total costs and operating expenses for the third quarter of fiscal 2021 were $10.0 million compared to $8.6 million for the third quarter of fiscal 2020, an increase of $1.5 million or 17.1%.

For the third quarter of fiscal 2021, Champions reported income from operations of $763,000, including $232,000 in stock-based compensation and $297,000 in depreciation and amortization expenses, an increase of $330,000 compared to income from operations of $433,000, inclusive of $229,000 in stock-based compensation and $219,000 in depreciation and amortization expenses, in the third quarter of fiscal 2020. Excluding stock-based compensation, depreciation and amortization expenses, Champions reported non-GAAP income from operations of $1.3 million for the third quarter of fiscal 2021 compared to non-GAAP income from operations of $881,000 in the third quarter of fiscal 2020, an increase of $411,000.
Cost of oncology solutions was $4.8 million for the three-months ended January 31, 2021, an increase of $0.5 million, or 12.0% compared to $4.3 million for the three-months ended January 31, 2020. For the three- months ended January 31, 2021, gross margin was 55.2% compared to 52.0% for the three-months ended January 31, 2020. The increase in cost of oncology services for the three-month period was mainly due to an increase in compensation and lab supply expenses. The increase in cost of sales is generally in line with the expected contribution based on the growth in revenue, study volume, and expansion into new services. Gross margin varies based on timing differences between expense and revenue recognition and was boosted by the revenue recognized from outsourced work where costs were partially recognized in prior quarters.
Research and development expense for the three-months ended January 31, 2021 was $1.9 million, an increase of $488,000 or 35.1%, compared to $1.4 million for the three-months ended January 31, 2020, respectively. The increase was due to increased compensation and lab supply expense as we continued to develop new service capabilities and endpoint analysis testing. Additionally, we incurred proteomic sequencing costs as our investment in characterizing our TumorBank continued, adding valuable data to our platform. Sales and marketing expense for the three-months ended January 31, 2021 was $1.5 million, an increase of $185,000, or 14.2%, compared to $1.3 million for the three-months ended January 31, 2020. The increase was primarily due to compensation expense driven by the continued investment in expanding our business development team. General and administrative expense for the three-months ended January 31, 2021 was $1.8 million, an increase of $280,000, or 18.0%, compared to $1.6 million for the three-months ended January 31, 2020, respectively. The increase was primarily due to compensation and IT related expenses.
Net cash used in operating activities was $107,000 for the three-months ended January 31, 2021 compared to net cash provided by operating activities of $280,000 for the same period last year. The decrease in cash flow from operations was primarily due to a significant reduction in our accounts payable balance along with timing differences in other working capital accounts in the ordinary course of business.

The Company ended the quarter in a strong cash position with a $7.4 million cash balance compared to $3.3 million at the end of the same period last year. The Company has no debt.

Year-to-Date Financial Results

For the first nine months of fiscal 2021, revenue increased 30.4% to $30.5 million, as compared to $23.4 million for the first nine months of fiscal 2020. For the first nine months of fiscal 2021, total

Exhibit 99.1
operating expenses increased 27.6% to $29.7 million, as compared to $23.3 million for the first nine months of fiscal 2020. The increase in revenue was due to increased sales, both in number and size of studies, an increase in demand for our services, the growth of the platform, and the expansion of our product line. Our customers are seeking more complex study designs and end point analysis testing, contributing to the larger contract sizes.

For the first nine months of fiscal 2021, Champions reported income from operations of $795,000, which includes $437,000 in stock-based compensation and $881,000 in depreciation and amortization expenses, an increase of $686,000 or 629%, compared to income from operations of $109,000, inclusive of $437,000 in stock-based compensation and $579,000 depreciation, for the first nine months of fiscal 2020. Excluding stock-based compensation and depreciation, Champions reported non-GAAP operating income of $2.1 million for the first nine months of fiscal 2021 compared to non-GAAP operating income of $1.1 million in the same period last year.

Cost of oncology solutions was $15.8 million for the first nine months of fiscal 2021 compared to $12.0 million for the first nine months of fiscal 2020, an increase of $3.9 million or 32.3%. Gross margin was 48.1% for the first nine months of fiscal 2021 compared to 48.8% for the first nine months of fiscal 2020. The increase in cost of oncology services for the nine month period was mainly due to an increase in compensation, lab supply, and outsourced lab service expenses. Gross margin varies based on timing differences between expense and revenue recognition and was driven lower by the increase in costs on growing study volume in advance of revenue recognition. The cost of outsourced lab services amplified this impact.

Research and development expense was $5.1 million for the first nine months of fiscal 2021 an increase of $1.1 million, or 27.0% compared to $4.0 million for the first nine months of fiscal 2020. The increase was due to increased compensation and lab supply expense as we continued to develop new service capabilities and endpoint testing analysis, and incurred sequencing costs as we continued to characterize our TumorBank. Sales and marketing expense for the first nine months of fiscal 2021 was $4.0 million, an increase of $893,000, or 28.3% compared to $3.2 million for the first nine months of fiscal 2020. The increase was primarily due to compensation expense driven by the continued investment in expanding our sales force. General and administrative expense was $4.7 million for the first nine months of fiscal 2021, an increase of $568,000, or 13.8% compared to $4.1 million for the first nine months of fiscal 2020. General and administrative expenses are primarily comprised of compensation, insurance, accounting fees, and depreciation expenses and have increased to support the overall infrastructure growth of the company.

Net cash provided by operations was $299,000 for the first nine months of fiscal 2021 compared to net cash provided by operations of $360,000 in fiscal 2020, a decrease of $61,000 or 16.9%. The decrease in cash from operations was primarily due to timing differences in working capital accounts in the ordinary course of business.

Conference Call Information:
The Company will host a conference call today at 4:30 p.m. EST (1:30 p.m. PST) to discuss its third quarter financial results. To participate in the call, please call 877-407-8035 (domestic) or 201-689-8035 (international) ten minutes ahead of the call and give the verbal reference "Champions Oncology."
Full details of the Company’s financial results will be available by Wednesday, March 17, 2021 in the Company’s Form 10-Q at www.championsoncology.com.