UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_________________________
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): July 24, 2014
CHAMPIONS ONCOLOGY, INC.
(Exact name of registrant as specified in its charter)
Delaware | 0-17263 | 52-1401755 | ||
(State or Other Jurisdiction | (Commission File Number) | (IRS Employer | ||
of Incorporation) | Identification No.) |
1 University Plaza, Suite 307, Hackensack, New Jersey 07601
(Address of Principal Executive Offices)
Registrant’s telephone number, including area code: (410) 369-0365
Applicable
(Former Name or Former Address if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
INFORMATION TO BE INCLUDED IN THE REPORT
Item 2.02. Results of Operations and Financial Condition.
On July 24, 2014, Champion’s Oncology, Inc. (the “Company”) issued a press release regarding the Company’s unaudited financial results for its fiscal quarter ended April 30, 2014. A copy of the Company’s press release is attached hereto as Exhibit 99.1.
The information contained in this Current Report shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
The following exhibit filed herewith:
Exhibit No.
99.1 Press Release dated July 24, 2014
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
CHAMPIONS ONCOLOGY, INC. | ||
(Registrant) | ||
Date: July 24, 2014 | By: | /s/ Joel Ackerman |
Joel Ackerman | ||
Chief Executive Officer |
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NEWS |
One University Plaza, Suite 307 Hackensack, NJ 07601 Tel: 201-808-8400
Champions Oncology Reports Results for Quarter and Full Year Ended April 30, 2014
Hackensack, NJ – July 24, 2014 – 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 year ended April 30, 2014.
Fourth Quarter and Recent Business Highlights:
• | Procured a quarterly record high of more than 100 implants |
• | Quarterly revenue increased 38% over the same prior year period result |
• | Total annual revenues grew to a record high of $11.6 million, a 39% year over year increase |
• | Initiated clinical research collaboration with Mount Sinai Medical Center in New York |
• | Strategically expanded our TOS sales team |
Joel Ackerman, Champions Oncology CEO, stated, “The end of fiscal 2014 is an opportune time to reflect on the achievements of the past year. It’s rewarding to observe the incremental business progression from the proof of concept phase to a targeted focus on commercial growth and operational efficiencies. We have set the stage to execute our strategy and expect continued growth in the future.”
Financial Results
For the fourth quarter of 2014, revenue was $2.5 million, as compared to $1.8 million for the three months ended April 30, 2013, an increase of 38%. For the twelve-month period ended April 30, 2014, revenue was $11.6 million, as compared to $8.3 million for the same period of the prior year, an increase of 39%. Total operating expenses for the fourth quarter 2014 were $4.8 million, as compared to $3.9 million for the three months ended April 30, 2013. For the twelve month period ended April 30, 2014, total operating expenses were $17.8 million, as compared to $14.5 million for the same period of 2013.
For the fourth quarter of 2014, Champions reported a loss from operations of $2.4 million as compared to a loss from operations of $2.1 million for the three months ended April 30, 2013. Excluding stock-based compensation of $0.84 million and $0.48 million for the three months ended April 30, 2014 and 2013, Champions recognized a loss from operations of $1.5 million and $1.6 million respectively. For the twelve months ended April 30, 2014, Champions reported a loss from operations of $6.3 million as compared to a loss from operations of $6.2 million for the twelve-month period of the prior year. Excluding stock-based compensation of $2.8 million and $2.4 million for the twelve months ended April 30, 2014 and 2013, Champions recognized a loss from operations of $3.5 million and $3.8 million respectively.
Operating Results
The number of implants during the quarter was 101 consisting of 66 commercial implants and 35 implants from research partnerships and trials. Total implants increased 141% over the same period last year with a 57% increase in implants from commercial POS efforts. The increase in commercial implants was partially the result of growing demand from patients in Singapore resulting from our partnership with Parkway Cancer Center.
The 35 research and trial implants were generated as a result of Champions continued partnerships with academic medical centers. These implants will enable Champions to accelerate the growth of its TumorBank which will further the Company’s efforts to build our platform to scale.
POS revenues were $430,000 and $482,000 for the three months ended April 30, 2014 and 2013, respectively, a decrease of $52,000 or 11%. Core POS revenues from our Tumorgraft technology platform decreased $22,000 or 5%. This decrease is due to a 9% decline in the average number of tests per panel. Non-core POS revenue decreased $32,000 due to a strategic shift to focus on core revenues. POS revenue was $2.3 million and $2.4 million for the twelve months ended April 30, 2014 and 2013, respectively, a decrease of $0.1 million or 5%. The decrease is due to the strategic decision to lower the price per test and a small decrease in the average tests per panel.
POS cost of sales was $628,000 and $637,000 for the three months ended April 30, 2014 and 2013, respectively, a decrease of $9,000, or 1%. POS cost of sales was $2.73 million and $2.67 million for the twelve months ended April 30, 2014 and 2013, respectively, an increase of $.06 million, or 2%. For the three months ended April 30, 2014 and 2013, gross margins for POS were negative 46% and negative 33%, respectively. For the twelve months ended April 30, 2014 and 2013, gross margins for POS were negative 21% and negative 12%, respectively. The gross margin in this business segment fluctuates based on a number of factors including business mix, volumes and timing of revenue recognition.
Translational Oncology Solutions (TOS):
TOS revenues were $2.0 million and $1.3 million for the three months ended April 30, 2014 and 2013, respectively, an increase of $0.7 million or 56%. TOS revenues were $9.3 million and $5.9 million for the twelve months ended April 30, 2014 and 2013, respectively, an increase of $3.4 million, or 57%. The growth is the result of increased customer adoption of TumorGraft technology across a growing customer base and expansion of the Company’s TumorBank.
TOS cost of sales was $1.0 million and $0.9 million for the three months ended April 30, 2014 and 2013, respectively, an increase of $0.1 million, or 6%. TOS cost of sales was $3.5 million and $2.7 million for the twelve months ended April 30, 2014 and 2013, respectively, an increase of $0.8 million, or 33%. For the three months ended April 30, 2014 and 2013, gross margins for TOS were 52% and 30%, respectively. Gross margins fluctuate from quarter to quarter generally due to the timing of revenue recognition. For the twelve months ended April 30, 2014 and 2013, gross margins for TOS were 62% and 55%, respectively.
Research and development expense was $663,000 and $502,000 for the three months ended April 30, 2014 and 2013, respectively. Research and development expense was $2.3 million and $1.9 million for the twelve months ended April 30, 2014 and 2013, respectively. Sales and marketing expense for the three months ended April 30, 2014 and 2013 was $1.0 million and $0.6 million respectively. Sales and marketing expense for the twelve months ended April 30, 2014 and 2013 was $3.2 million and $2.7 million, respectively. General and administrative expense for the three months ended April 30, 2014 and 2013 was $1.5 million and $1.2 million, respectively. General and administrative expense for the twelve months ended April 30, 2014 and 2013 was $6.1 million and $4.6 million, respectively. The increase was due primarily to an increase in compensation expense as we added senior executives to the company management along with an increase in costs associated with overall business growth.
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 fourth quarter 2014 financial results. To access the conference call, domestic participants should dial 800-875-3456, Canadian participants should dial 800-648-0973, and international participants should dial 302-607-2001. The participant passcode is “Champions Oncology.”
Full details of the Company’s financial results will be available Monday, July 28, 2014 in the Company’s Form 10-K at www.championsoncology.com.
* Non-GAAP Financial Information
See the attached Reconciliation of GAAP net loss to non-GAAP net loss for an explanation of the amounts excluded to arrive at non-GAAP net loss and related non-GAAP net loss per share amounts for the three and twelve months ended April 30, 2014 and 2013. 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 loss and non-GAAP loss per share are not, and should not be viewed as a substitute for similar GAAP items. Champions’ defines non-GAAP dilutive loss per share amounts as non-GAAP net loss divided by the weighted average number of diluted shares outstanding. Champions’ definition of non-GAAP net loss and non-GAAP diluted loss per share may differ from similarly named measures used by others.
About Champions Oncology, Inc.
Champions Oncology, Inc. is engaged in the development of advanced technology solutions and services to personalize the development and use of oncology drugs. The Company’s TumorGraft technology platform is a novel approach to personalizing cancer care based upon the implantation of primary human tumors in immune deficient mice followed by propagation of the resulting engraftments, or TumorGrafts, in a manner that preserves the biological characteristics of the original human tumor in order to determine the efficacy of a treatment regimen. The Company uses this technology in conjunction with related services to offer solutions for two customer groups: Personalized Oncology Solutions, in which results help guide the development of personalized treatment plans, and Translational Oncology Solutions, in which pharmaceutical and biotechnology companies seeking personalized approaches to drug development can lower the cost and increase the speed of developing new drugs. TumorGrafts are procured through agreements with a number of institutions in the U.S. and overseas as well as through Champions’ Personalized Oncology Solutions business. For more information, please visit www.championsoncology.com.
This press release may contain "forward-looking statements" (within the meaning of the Private Securities Litigation Act of 1995) that inherently involve risk and uncertainties. Champions Oncology generally uses words such as "believe," "may," "could," "will," "intend," "expect," "anticipate," "plan," and similar expressions to identify forward-looking statements. One should not place undue reliance on these forward-looking statements. The Company's actual results could differ materially from those anticipated in the forward-looking statements for many unforeseen factors. See Champions Oncology's Form 10-K for the fiscal year ended April 30, 2014 for a discussion of such risks, uncertainties and other factors. Although the Company believes the expectations reflected in the forward-looking statements are reasonable, they relate only to events as of the date on which the statements are made, and Champions Oncology's future results, levels of activity, performance or achievements may not meet these expectations. The Company does not intend to update any of the forward-looking statements after the date of this press release to conform these statements to actual results or to changes in Champions Oncology's expectations, except as required by law.
Champions Oncology, Inc.
(Dollars in thousands except per share amounts)
Reconciliation of GAAP to Non-GAAP Net Loss (Unaudited)
Three Months Ended April 30, | Twelve Months Ended April 30, | |||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
Net loss - GAAP | $ | (2,272 | ) | $ | (2,177 | ) | $ | (7,406 | ) | $ | (6,330 | ) | ||||
Less: | ||||||||||||||||
Stock-based compensation | 839 | 485 | 2,807 | 2,419 | ||||||||||||
Net loss - non-GAAP | $ | (1,433 | ) | $ | (1,692 | ) | $ | (4,599 | ) | $ | (3,911 | ) |
Reconciliation of GAAP EPS to Non-GAAP EPS (Unaudited)
Three Months Ended April 30, | Twelve Months Ended April 30, | |||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
EPS – GAAP | $ | (0.03 | ) | $ | (0.03 | ) | $ | (0.11 | ) | $ | (0.12 | ) | ||||
Less: | ||||||||||||||||
Effect of stock-based compensation on EPS | 0.01 | 0.01 | 0.04 | 0.05 | ||||||||||||
EPS - non-GAAP | $ | (0.02 | ) | $ | (0.02 | ) | $ | (0.07 | ) | $ | (0.07 | ) |
Condensed Consolidated Statements of Operations (Unaudited)
Three Months Ended April 30, | Twelve Months Ended April 30, | |||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
POS operating revenue | $ | 430 | $ | 482 | $ | 2,264 | $ | 2,390 | ||||||||
TOS operating revenue | 2,029 | 1,302 | 9,286 | 5,933 | ||||||||||||
Total operating revenue | $ | 2,459 | $ | 1,784 | $ | 11,550 | $ | 8,323 | ||||||||
Cost of POS | 628 | 637 | 2,731 | 2,672 | ||||||||||||
Cost of TOS | 965 | 912 | 3,532 | 2,656 | ||||||||||||
Research and development | 663 | 502 | 2,265 | 1,920 | ||||||||||||
Sales and marketing | 1,027 | 621 | 3,155 | 2,665 | ||||||||||||
General and administrative | 1,544 | 1,224 | 6,127 | 4,631 | ||||||||||||
Loss from Operations | $ | (2,368 | ) | $ | (2,112 | ) | $ | (6,260 | ) | $ | (6,221 | ) | ||||
Other Income (Expense) | 110 | (55 | ) | (1,129 | ) | (99 | ) | |||||||||
Net Loss before income tax expense | $ | (2,258 | ) | $ | (2,167 | ) | $ | (7,389 | ) | $ | (6,320 | ) | ||||
Income taxes | 14 | 10 | 17 | 10 | ||||||||||||
Net Loss | $ | (2,272 | ) | $ | (2,177 | ) | $ | (7,406 | ) | $ | (6,330 | ) |
Condensed Consolidated Balance Sheets as of (Unaudited)
April 30, | April 30, | |||||||
2014 | 2013 | |||||||
Cash and cash equivalents | $ | 5,891 | $ | 9,561 | ||||
Accounts receivable | 1,325 | 500 | ||||||
Other current assets | 383 | 315 | ||||||
Total current assets | 7,599 | 10,376 | ||||||
Restricted cash | 165 | 192 | ||||||
Property and equipment, net | 434 | 414 | ||||||
Goodwill | 669 | 669 | ||||||
Total assets | $ | 8,867 | $ | 11,651 | ||||
Accounts payable and accrued liabilities | $ | 1,568 | $ | 1,815 | ||||
Deferred revenue | 2,091 | 1,114 | ||||||
Total current liabilities | 3,659 | 2,929 | ||||||
Warrant liability | 2,011 | 1,046 | ||||||
Redeemable common stock | - | 16,882 | ||||||
Stockholders’ equity (deficit) | 3,197 | (9,206 | ) | |||||
Total liabilities, redeemable common stock and stockholders’ equity (deficit) | $ | 8,867 | $ | 11,651 |
Condensed Consolidated Statements of Cash Flows (Unaudited)
Twelve Months Ended | ||||||||
April 30, | ||||||||
2014 | 2013 | |||||||
Cash flows from operating activities: | ||||||||
Net Loss | $ | (7,406 | ) | $ | (6,330 | ) | ||
Adjustments to reconcile net cash used in operations: | ||||||||
Stock-based compensation expense | 2,807 | 2,376 | ||||||
Net foreign currency remeasurement loss | 124 | - | ||||||
Depreciation expense | 213 | 203 | ||||||
Change in fair value of warrant liability | 965 | 74 | ||||||
Changes in operating assets and liabilities | (136 | ) | (625 | ) | ||||
Net cash used in operating activities | (3,433 | ) | (4,302 | ) | ||||
Cash flows from investing activities: | ||||||||
Purchases of property and equipment | (234 | ) | (57 | ) | ||||
Net cash used in investing activities: | (234 | ) | (57 | ) | ||||
Cash flows from financing activities: | ||||||||
Private placement of common shares and warrants | 21 | 9,141 | ||||||
Net cash provided by financing activities: | 21 | 9,141 | ||||||
Exchange rate effect on cash and cash equivalents | (24 | ) | 25 | |||||
Increase (decrease) in cash and cash equivalents | (3,670 | ) | 4,807 | |||||
Cash and cash equivalents, beginning of period | 9,561 | 4,754 | ||||||
Cash and cash equivalents, end of period | $ | 5,891 | $ | 9,561 |