On December 17, 2018 Champions Oncology, Inc. (Nasdaq: CSBR), engaged in an end-to-end range of research and development technology solutions and services to improve the development and use of oncology drugs, reported its financial results for the second fiscal quarter ended October 31, 2018 (Press release, Champions Oncology, DEC 17, 2018, View Source [SID1234532113]).

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Second Quarter and Recent Business Highlights:

Record quarterly revenue of $6.7 million, an increase of 28.6% year-over-year

Reported income from operations of $514,000, excluding stock-based compensation and depreciation

Signed lease for new lab space for flow cytometry and ex-vivo product launches•
Reiterated forecast of at least 20% revenue growth in fiscal 2019 and sustained, quarterly operational profitability

Ronnie Morris, CEO of Champions, commented, "As we expected, our revenue growth continued in the second quarter with year-over-year growth above 28% and putting us on pace to achieve our previously stated guidance of at least 20% revenue growth for our fiscal year 2019."

Morris continued, "We are moving forward with plans to expand beyond our core PDX offering to include our ex-vivo platform and clinical flow cytometry services. We look to leverage our existing Pharma relationships, adding to our product line and offering a more robust suite of services."

David Miller, CFO of Champions added, "We are excited to hit another milestone of record quarterly revenue and reporting consecutive, profitable quarters. The anticipated launch of our new products will help continue our revenue growth as we look beyond fiscal year 2019."

Second Fiscal Quarter Financial Results

For the second quarter of fiscal 2019, revenue increased 28.6% to $6.7 million compared to $5.2 million for the second quarter of fiscal 2018. Total operating expenses for the second quarter of fiscal 2019 were $6.4 million compared to $5.3 million for the second quarter of fiscal 2018, an increase of $1.1 million or 21.7%.

Exhibit 99.1

For the second quarter of fiscal 2019, Champions reported income from operations of $275,000, including $88,000 in stock-based compensation and $151,000 in depreciation expenses, an improvement of $345,000 or 492.9% compared to the loss from operations of $70,000, inclusive of $148,000 in stock-based compensation and $90,000 depreciation expenses, in the second quarter of fiscal 2018. Excluding stock-based compensation and depreciation, Champions reported income from operations of $514,000 for the second quarter of fiscal 2019 compared to an income from operations, excluding stock-based compensation and depreciation, of $168,000 in the second quarter of fiscal 2018 an improvement of $346,000 or 206.0%.

Cost of oncology solutions was $3.5 million for the three months ended October 31, 2018, an increase of $798,000, or 30.1% compared to $2.7 million for the three months ended October 31, 2017. The increase in cost of sales was due to an increase in TOS studies and salary expense. For the three months ended October 31, 2018, gross margin was 48.4% compared to 49.0% for the three months ended October 31, 2017.

Research and development expense was $1.2 million for the three months ended October 31, 2018, an increase of $78,000, or 7.0%, compared to $1.1 million for the three months ended October 31, 2017. Sales and marketing expense for the three months ended October 31, 2018 was $740,000, an increase of $189,000, or 34.3%, compared to $551,000 for the three months ended October 31, 2017. The increase is mainly due to an increase in salary expenses as we expand our salesforce. General and administrative expense was $1.0 million for the three months ended October 31, 2018 compared to $954,000 for the three months ended October 31, 2017, an increase of $80,000 or 8.4%. The increase is mainly due to recruiting costs.

Net cash generated was $940,000 for the three months ended October 31, 2018 compared to $229,000 for the same period last year. The improvement in cash flow is primarily due to operational results.

The Company ended the quarter with $2.0 million of cash and reiterated its position that it does not need to raise capital to fund operations.

Year-to-Date Financial Results

For the first six months of fiscal 2019, revenue increased 26.2% to $12.9 million, as compared to $10.2 million for the first six months of fiscal 2018. For the first six months of fiscal 2019, total operating expenses increased 11.3% to $12.1 million, as compared to $10.9 million for the first six months of fiscal 2018.

For the first six months of fiscal 2019, Champions reported an income from operations of $757,000, which includes $171,000 in stock-based compensation and $269,000 in depreciation, an improvement of $1.4 million or 209.9%, compared to the loss from operations of $689,000, inclusive of $741,000 in stock-based compensation and $132,000 depreciation, for the first six months of fiscal 2018. Excluding stock-based compensation and depreciation, Champions reported operating income of $1.2 million for the first six months of fiscal 2019.

Net cash provided by operations was $400,000 for the first six months of fiscal 2019 compared to net cash used in operations of $1.7 million in 2018, an increase of $2.1 million or 123.8%. The increase in cash is primary the result of our revenue growth.

Exhibit 99.1

Cost of oncology solutions was $6.5 million for the first six months of fiscal 2019 compared to $5.3 million for the first six months of fiscal 2018, an increase of $1.2 million or 23.4%. The increase in cost of sales was due to an increase in TOS studies. Gross margin was 49.4% for the first six months of fiscal 2019 compared to 48.3% for the first six months of fiscal 2018. The increase in cost of sales was due to an increase in TOS studies. Gross margin varies based on timing differences between expense and revenue recognition.

Research and development expense was $2.3 million for the first six months of fiscal 2019 an increase of $49,000, or 2.2% compared to $2.2 million for the first six months of fiscal 2018. Sales and marketing expense for the first six months of fiscal 2019 was $1.3 million, an increase of $24,000, or 1.9% compared to $1.2 million for the first six months of fiscal 2018. The increase is mainly due to increase in salary expense. General and administrative expense was $2.1 million for the first six months of fiscal 2019, a decrease of $76,000 or (3.5%) compared to $2.2 million for the first six months of fiscal 2018. The decrease is primarily due to a reduction in stock-based compensation expense.

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 second quarter financial results. To participate in the call, please call 877-407-8035 (domestic) or 201-689-8035 (international) 10 minutes ahead of the call and give the verbal reference "Champions Oncology."

Full details of the Company’s financial results will be available Monday, December 17, 2018 in the Company’s Form 10-Q at www.championsoncology.com.

* Non-GAAP Financial Information

See the attached Reconciliation of GAAP net loss to Non-GAAP net income (loss) for an explanation of the amounts excluded to arrive at Non-GAAP net income (loss) and related Non-GAAP earnings (loss) per share amounts for the six months ended October 31, 2018 and 2017. Non-GAAP financial measures provide investors and management with supplemental measures of operating performance and trends that facilitate comparisons between periods before and after certain items that would not otherwise be apparent on a GAAP basis. Certain unusual or non-recurring items that management does not believe affect the Company’s basic operations do not meet the GAAP definition of unusual or non-recurring items. Non-GAAP net income (loss) and Non-GAAP earnings (loss) per share are not, and should not be viewed as a substitute for similar GAAP items. Champions’ defines Non-GAAP dilutive earnings (loss) per share amounts as Non-GAAP net earnings (loss) divided by the weighted average number of diluted shares outstanding. Champions’ definition of Non-GAAP net earnings (loss) and Non-GAAP diluted earnings (loss) per share may differ from similarly named measures used by others companies