Champions Oncology, Inc. (OTC: CSBR), engaged in the development of advanced technology solutions and services to personalize the development and use of oncology drugs, today announced its financial results for the second quarter ended October 31, 2014.
Second Quarter and Recent Business Highlights:
- Procured 95 new patient implants
- Strong bookings of new TOS studies from existing and new customers
- Released new version of TumorGraft Database
- Signed first study utilizing new ImmunoGrafts with a major pharmaceutical company
- Presented at the Connective Tissue Oncology Society Annual Meeting and 2014 Chicago Multidisciplinary Symposium in Thoracic Oncology
Joel Ackerman, Champions Oncology CEO, stated, "The second quarter of 2015 was an inflection point for the Company as we expanded our customer base and showed continued scaling of the business. The investments we made over the last few quarters in the Champions TumorBank and our commercial infrastructure and people is paying off. These results are not yet demonstrated in our financial statements but the leading indicators are very strong."
Financial Results
For the second quarter of 2015, revenue was $1.9 million, as compared to $2.4 million for the three months ended October 31, 2013, a decrease of $.5 million or (21.0)%. For the six months ended October 31, 2014, revenue was $3.8 million as compared to $5.4 million for the six months ended October 31, 2013, a decrease of (29.8)%. Total operating expenses for the second quarter 2015 were $5.5 million, as compared to $4.1 million for the three months ended October 31, 2013, an increase of 35.8%. For the six months ended October 31, 2014, total operating expenses were $11.2 million as compared to $7.9 million for the six months ended October 31, 2013, an increase of 41.9%.
For the second quarter of 2015, Champions reported a loss from operations of $3.7 million as compared to a loss from operations of $1.7 million for the three months ended October 31, 2013. Excluding stock-based compensation of $0.8 million and $0.5 million for the three months ended October 31, 2014 and 2013, Champions recognized a net loss of $2.9 million and $1.2 million respectively.
Operating Results
Personalized Oncology Solutions (POS):
The number of implants during the quarter was 95 consisting of 61 commercial implants and 34 implants from research partnerships and trials. Total implants increased 36% over the same period last year with a 127% increase in implants from research partnerships. The increase in research implants was the result of increased number of partnerships with academic medical centers. These implants will continue to enable Champions to accelerate the growth of its TumorBank which will further the Company's efforts to build its platform to scale.
POS revenue was $452,000 and $623,000 for the three months ended October 31, 2014 and 2013, respectively, a decrease of $171,000 or 27.5%. Core revenue from its TumorGraft technology platform decreased $148,000. This decrease is due to a 17% decline in implant revenue resulting from discounts given to acquire strategic tumors for our TumorBank and a reduction in the number of tests per panel.
POS cost of sales was $759,000 and $732,000 for the three months ended October 31, 2014 and 2013, respectively, an increase of $27,000 or 3.7%. For the three months ended October 31, 2014 and 2013, gross margins for POS were -67.9% and -17.5%, respectively. The decline in gross margin is attributed to the decline in POS revenue and a large fixed cost component to the cost of sales.
Translational Oncology Solutions (TOS):
TOS revenues were $1.4 million and $1.8 million for the three months ended October 31, 2014 and 2013, respectively, a decrease of $0.4 million, or 18.8%. The decline is due to a longer conversion time to recognize revenue from ongoing studies.
TOS cost of sales was $0.96 million and $0.70 million for the three months ended October 31, 2014 and 2013, respectively, an increase of $0.26 million, or 37.5%. For the three months ended October 31, 2014 and 2013, gross margins for TOS were 32.9% and 60.3%, respectively. Gross margin for the quarter ended October 31, 2014 was below usual levels because of the slower revenue recognition against the incurred TOS cost of sales.
Research and development expense was $1.2 million and $0.7 million for three months ended October 31, 2014 and 2013, respectively, an increase of $0.6 million, or 84.4%. This increase reflects the additional investment in characterizing the TumorBank. Sales and marketing expense for the three months ended October 31, 2014 and 2013 was $1.2 million and $0.7 million respectively. The increase was the result of the expansion of the TOS sales force. General and administrative expense for the three months ended October 31, 2014 and 2013 was $1.4 million and $1.3 million, respectively.
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