# Champions Oncology, Inc.: Form 10-Q for the period ended Jan 31, 2024

- Company: [Champions Oncology, Inc.](/companies/csbr.md) (CIK 771856)
- Form: 10-Q
- Filed: 2024-03-15
- Accepted by EDGAR: Mar 14, 2024, 21:37 ET
- Period: 2024-01-31
- Accession: 0001628280-24-011279
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/771856/000162828024011279/csbr-20240131.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/771856/000162828024011279/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2024-01-31.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2023-11-01 to 2024-01-31 | $12.0m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Revenue | 9 months, 2023-05-01 to 2024-01-31 | $36.2m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Cost of revenue | 3 months, 2023-11-01 to 2024-01-31 | $7.8m | us-gaap:CostOfGoodsAndServicesSold |
| Cost of revenue | 9 months, 2023-05-01 to 2024-01-31 | $22.2m | us-gaap:CostOfGoodsAndServicesSold |
| Research and development | 3 months, 2023-11-01 to 2024-01-31 | $2.2m | us-gaap:ResearchAndDevelopmentExpense |
| Research and development | 9 months, 2023-05-01 to 2024-01-31 | $7.5m | us-gaap:ResearchAndDevelopmentExpense |
| Operating income | 3 months, 2023-11-01 to 2024-01-31 | −$2.6m | us-gaap:OperatingIncomeLoss |
| Operating income | 9 months, 2023-05-01 to 2024-01-31 | −$7.1m | us-gaap:OperatingIncomeLoss |
| Income tax | 3 months, 2023-11-01 to 2024-01-31 | $11.0k | us-gaap:IncomeTaxExpenseBenefit |
| Income tax | 9 months, 2023-05-01 to 2024-01-31 | $49.0k | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2023-11-01 to 2024-01-31 | −$2.5m | us-gaap:NetIncomeLoss |
| Net income | 9 months, 2023-05-01 to 2024-01-31 | −$7.2m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2023-11-01 to 2024-01-31 | −$0.19 | us-gaap:EarningsPerShareDiluted |
| Diluted EPS | 9 months, 2023-05-01 to 2024-01-31 | −$0.53 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2023-11-01 to 2024-01-31 | −$0.19 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 9 months, 2023-05-01 to 2024-01-31 | −$0.53 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2023-11-01 to 2024-01-31 | 13,593,758 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 9 months, 2023-05-01 to 2024-01-31 | 13,538,480 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 9 months, 2023-05-01 to 2024-01-31 | −$4.3m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 9 months, 2023-05-01 to 2024-01-31 | $947.0k | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Share repurchases | 9 months, 2023-05-01 to 2024-01-31 | $634.0k | us-gaap:PaymentsForRepurchaseOfCommonStock |
| Cash and equivalents | at 2024-01-31 | $4.5m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2024-01-31 | $13.2m | us-gaap:AssetsCurrent |
| Total assets | at 2024-01-31 | $26.8m | us-gaap:Assets |
| Current liabilities | at 2024-01-31 | $22.0m | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2024-01-31 | $28.8m | us-gaap:Liabilities |
| Shareholders' equity | at 2024-01-31 | −$2.1m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 15,890 characters.

*The following discussion of our historical results of operations and our liquidity and capital resources should be read in conjunction with the condensed consolidated financial statements and related notes that appear elsewhere in this Report and our 2023 Annual Report.*

### Forward-Looking Statements

This Report contains certain “forward-looking statements,” which include information relating to future events, future financial performance, strategies, expectations, competitive environment, regulation, and availability of resources. These forward-looking statements include, without limitation, statements regarding: proposed new programs; expectations that regulatory developments or other matters will not have a material adverse effect on our financial position, results of operations, or liquidity; statements concerning projections, predictions, expectations, estimates, or forecasts as to our business, financial and operational results, and future economic performance; and statements of management’s goals and objectives and other similar expressions concerning matters that are not historical facts. Words such as “may,” “should,” “could,” “would,” “predicts,” “potential,” “continue,” “expects,” “anticipates,” “future,” “intends,” “plans,” “believes,” “estimates” and similar expressions, as well as statements in future tense, identify forward-looking statements.

Forward-looking statements should not be read as a guarantee of future performance or results and will not necessarily be accurate indications of the times at, or by, which such performance or results will be achieved. Forward-looking statements are based on information available at the time those statements are made or management’s good faith belief as of that time with respect to future events, and are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking statements.

Forward-looking statements speak only as of the date the statements are made. Factors that could cause actual results to differ from those discussed in the forward-looking statements include, but are not limited to, those described in “Risk Factors” in Part I, Item 1A of our 2023 Annual Report, as updated in our subsequent reports filed with the SEC, including any updates found in Part II, Item 1A of this or other reports on Form 10-Q, if any. You should not put undue reliance on any forward-looking statements. We assume no obligation to update forward-looking statements to reflect actual results, changes in assumptions, or changes in other factors affecting forward-looking information, except to the extent required by applicable securities laws. If we do update one or more forward-looking statements, no inference should be drawn that we will make additional updates with respect to those or other forward-looking statements.

### Overview and Recent Developments

We are a technology-enabled research organization engaged in creating transformative technology solutions to be utilized in drug discovery and development. Our research center consists of a comprehensive set of computational and experimental research platforms. Our pharmacology, biomarker, and data platforms are designed to facilitate drug discovery and development at lower costs and increased speeds. We perform studies which we believe may predict the efficacy of experimental oncology drugs or approved drugs as stand-alone therapies or in combination with other drugs and can simulate the results of human clinical trials. These studies include in vivo studies that rely on implanting multiple tumors from our TumorBank in mice and testing the therapy of interest on these tumors. Studies may also include bioinformatics analysis that reveal the differences in the genetic signatures of the tumors that responded to a therapy as compared to the tumors that did not respond. Additionally, we provide computational or experimental support to identify novel therapeutic targets, select appropriate patient populations for clinical evaluation, identify potential therapeutic combination strategies, and develop biomarker hypothesis of sensitivity or resistance. These studies include the use of our in vivo, ex vivo, analytical and computational platforms.

We are engaged in the development and sale of advanced technology solutions and products to personalize the development and use of oncology drugs through our Translational Oncology Solutions ("TOS"). This technology ranges from computational-based discovery platforms, unique oncology software solutions, and innovative and proprietary experimental tools such as in vivo, ex vivo and biomarker platforms. Utilizing our TumorGraft Technology Platform (the "Platform"), a comprehensive bank of unique, well characterized models, we provide select services to pharmaceutical and biotechnology companies seeking personalized approaches to drug development. By performing studies to predict the efficacy of oncology drugs, our Platform facilitates drug discovery with lower costs and increased speed of drug development as well as increased adoption of existing drugs.

We offer Lumin Bioinformatics ("Lumin"), an oncology data-driven Software as a Service (SaaS) program. Our Lumin software contains comprehensive information derived from our research services and clinical studies. Lumin leverages our large Datacenter coupled with analytics and artificial intelligence to provide a robust tool for computational cancer research. Insights developed using Lumin can provide the basis for biomarker hypotheses, reveal potential mechanisms of therapeutic resistance, and guide the direction of additional preclinical evaluations.

Our drug discovery and development business leverages the computational and experimental capabilities within our platforms. Our discovery strategy utilizes our Datacenter, coupled with artificial intelligence and other advanced computational analytics, to identify novel therapeutic targets. We then employ the use of our proprietary experimental platforms to validate these targets for further drug development efforts.

We have a pipeline of targets at various stages of discovery and validation, with a select group that has progressed to therapeutic development. Our commercial strategy for the validated targets and therapeutics established from this business is wide-ranging and still being developed. It will depend on many factors, and will be specific for each target or therapeutic area identified. All expenses associated with this part of our business are research and development and are expensed as incurred.

We regularly evaluate strategic options to create additional value from our drug discovery business, which may include, but are not limited to, potential spin-out transactions or capital raises.

### Liquidity and Capital Resources

Our liquidity needs have typically arisen from the funding of our research and development programs and the launch of new products, working capital requirements, and other strategic initiatives. Recently, we have met these cash requirements through cash, working capital management, and sales of products and services. In the past, we have also received proceeds from certain private placements and public offerings of our securities. For the nine months ended January 31, 2024, the Company had a net loss of approximately $7.2 million and cash used in operations of approximately $4.3 million. As of January 31, 2024, the Company had an accumulated deficit of approximately $84.5 million and cash on hand of approximately $4.5 million. We believe that our cash on hand, together with expected cash flows from operations to be provided for during fiscal 2025, are adequate to fund operations through at least 12 months from the filing of this Report. However, should our revenue expectations not materialize, we believe we have cost reduction strategies that could be implemented without disrupting the business or restructuring the Company. Should the Company be required to raise additional capital, there can be no assurance that management would be successful in raising such capital on terms acceptable to us, if at all.

### Operating Results

The following table summarizes our operating results for the periods presented below (dollars in thousands):

|  | For the Three Months Ended January 31, 2024 | % of Revenue | 2023 | % of Revenue | % Change |
| --- | ---: | ---: | ---: | ---: | ---: |
| Oncology services revenue | $12,019 | 100.0% | $12,773 | 100.0% | (5.9)% |
| **Costs and operating expenses:** |  |  |  |  |  |
| Cost of oncology services | 7,849 | 65.3 | 7,699 | 60.3 | 1.9 |
| Research and development | 2,186 | 18.2 | 3,202 | 25.1 | (31.7) |
| Sales and marketing | 1,797 | 15.0 | 1,761 | 13.8 | 2.0 |
| General and administrative | 2,764 | 23.0 | 2,569 | 20.1 | 7.6 |
| Total costs and operating expenses | 14,596 | 121.4 | 15,231 | 119.3 | (4.2) |
| Loss from operations | $(2,577) | (21.4)% | $(2,458) | (19.2)% | 4.8% |

|  | For the Nine months ended January 31, 2024 | % of Revenue | 2023 | % of Revenue | % Change |
| --- | ---: | ---: | ---: | ---: | ---: |
| Oncology services revenue | $36,153 | 100.0% | $40,799 | 100.0% | (11.4)% |
| **Costs and operating expenses:** |  |  |  |  |  |
| Cost of oncology services | 22,151 | 61.3 | 22,194 | 54.4 | (0.2) |
| Research and development | 7,494 | 20.7 | 8,693 | 21.3 | (13.8) |
| Sales and marketing | 5,288 | 14.6 | 5,153 | 12.6 | 2.6 |
| General and administrative | 8,305 | 23.0 | 7,494 | 18.4 | 10.8 |
| Total costs and operating expenses | 43,238 | 119.6 | 43,534 | 106.7 | (0.7) |
| Loss from operations | $(7,085) | (19.6) | $(2,735) | (6.7)% | 159.0% |

### Oncology Services Revenue

Oncology services revenue, which is primarily derived from pharmacology studies, was $12.0 million and $12.8 million for the three months ended January 31, 2024 and 2023, respectively, a decrease of $0.8 million or 5.9%. Oncology services revenue was $36.2 million and $40.8 million for the nine months ended January 31, 2024 and 2023, respectively, a decrease of

$4.6 million or 11.4%. The decrease in revenue resulted from an increase in study cancellations during fiscal year 2023, thereby reducing our net bookings and available convertible revenue in the current year.

### Cost of Oncology Services

Cost of oncology services for the three months ended January 31, 2024 and 2023 were $7.8 million and $7.7 million, respectively, an increase of $150,000 or 1.9%. Cost of oncology services for the nine months ended January 31, 2024 and 2023 were $22.2 million and $22.2 million, respectively, a slight decrease of $43,000 or 0.2%. The net increase in cost of oncology services for the three months ended January 31, 2024 was primarily from an increase in compensation expense and mouse costs. For the three months ended January 31, 2024 and 2023, margins were 34.7% and 39.7%, respectively. For the nine months ended January 2024 and 2023, margins were 38.7% and 45.6%, respectively. The lower margin for both the three months and nine months ended January 31, 2024 resulted primarily from a decline in top line revenue against a generally unchanged cost base.

### Research and Development

Research and development expenses for the three months ended January 31, 2024 and 2023 were $2.2 million and $3.2 million, respectively, a decrease of approximately $1.0 million or 31.7%. Research and development expenses for the nine months ended January 2024 and 2023 were $7.5 million and $8.7 million, respectively, a decrease of approximately $1.2 million or 13.8%. The decrease in both the three and nine month periods was primarily due to a reduction in investment related to our target discovery program.

### Sales and Marketing

Sales and marketing expenses for the three months ended January 31, 2024 and 2023 were $1.8 million and $1.8 million, respectively, a slight increase of $36,000 or 2.0%. Sales and marketing expenses for the nine months ended January 2024 and 2023 were $5.3 million and $5.2 million, respectively, an increase of $135,000 or 2.6%. Sales and marketing expenses are primarily comprised of compensation expenses to support business development.

### General and Administrative

General and administrative expenses for the three months ended January 31, 2024 and 2023 were $2.8 million and $2.6 million, respectively, an increase of $195,000, or 7.6%. General and administrative expenses for the nine months ended January 31, 2024 and 2023 were $8.3 million and $7.5 million, respectively, an increase of $811,000, or 10.8%. General and administrative expenses are primarily comprised of compensation, insurance, professional fees, IT and depreciation and amortization expenses. The increase for the nine months ended January 31, 2024 was primarily from compensation and recruiting expenses and an increase in allowances for credit losses and bad debt reserves.

### Cash Flows

The following discussion relates to the major components of our cash flows:

#### Cash Flows from Operating Activities

For the nine months ended January 31, 2024, net cash used in operating activities was $4.3 million. The cash used in operating activities was primarily due to the loss for the period resulting from lower revenue.

#### Cash Flows from Investing Activities

Net cash used in investing activities was $947,000 and $2.1 million for the nine months ended January 31, 2024 and 2023, respectively. The cash used in investing activities was for the investment in additional lab and computer equipment.

#### Cash Flows from Financing Activities

Net cash used in financing activities was $382,000 for the nine months ended January 31, 2024. The cash used was for the Company's stock repurchase program, offset by cash received from stock option exercises.

### Factors That May Adversely Affect our Results of Operations

Our results of operations may be adversely affected by various factors that could cause economic uncertainty and volatility in the financial markets, many of which are beyond our control. Our business could be impacted by, among other things, downturns in the financial markets or in economic conditions, increases in oil prices, inflation, increases in interest rates, supply chain disruptions, declines in consumer confidence and spending, the ongoing effects of the COVID-19 pandemic, including resurgences and the emergence of new variants, and geopolitical instability, such as the military conflicts in Ukraine and the Middle East. We cannot at this time fully predict the likelihood of one or more of the above events, their duration, or magnitude or the extent to which they may negatively impact our business.

### Critical Accounting Estimates and Policies

The preparation of these condensed consolidated financial statements in conformity with GAAP in the United States requires management to apply methodologies and make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Significant estimates of the Company include, among other things, accounts receivable realization, revenue recognition (replacement of licensed tumors), valuation allowance for deferred tax assets, valuation of goodwill, and stock-based compensation and warrant assumptions. Actual results could differ from those estimates. The Company’s critical accounting policies are summarized in our 2023 Annual Report.

### Off-Balance Sheet Financing

We have no off-balance sheet debt or similar obligations. We have no transactions or obligations with related parties that are not disclosed, consolidated into or reflected in our reported results of operations or financial position. We do not guarantee any third-party debt.

## Market risk

As filed, 173 characters.

We are a smaller reporting companies company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information otherwise required under this Item.

## Controls and procedures

As filed, 2,768 characters.

### Evaluation of Disclosure Controls and Procedures

It is management’s responsibility to establish and maintain “disclosure controls and procedures” as such term is defined in Rule 13a-15(e) under the Exchange Act. Our management, with the participation of our Chief Executive Officer and our Chief Financial Officer have reviewed and evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this Report. In designing and evaluating our disclosure controls and procedures, our management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and our management necessarily is required to apply its judgment in evaluating the relationship between the benefit of desired controls and procedures and the cost of implementing new controls and procedures.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies and procedures may deteriorate.

Our management has assessed the effectiveness of our internal control over financial reporting as of January 31, 2024. Based on that assessment, our management, including our Chief Executive Officer and our Chief Financial Officer, have concluded that our disclosure controls and procedures were effective as of January 31, 2024 at the reasonable assurance level in ensuring that information required to be disclosed in the reports that we file or submit under the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and is accumulated and communicated to management, including our Chief Executive Officer and our Chief Financial Officer as appropriate, to allow timely decisions regarding required disclosure. Further, management concluded that our consolidated financial statements in this Report present fairly, in all material respects, the Company’s financial position, results of operations and cash flows as of the dates, and for the periods presented, in conformity with U.S. GAAP.

### Changes in Internal Control Over Financial Reporting

There have been no changes in our internal control over financial reporting in connection with the evaluation required by Rule 13a-15(d) of the Exchange Act that occurred during the period covered by this Quarterly Report on Form 10-Q that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

## Risk factors

As filed, 616 characters.

As a smaller reporting company under Rule 12-2 of the Exchange Act, we are not required to include risk factors in this Report. However, as of the date of this Report, there have been no material changes with respect to those risk factors previously disclosed in our 2023 Annual Report. Any of these factors could result in a significant or material adverse effect on our results of operations or financial condition. Additional risks could arise that may also affect our business. We may disclose changes to such risk factors or disclose additional risk factors from time to time in our future filings with the SEC.

Filed Mar 15, 2024.
Source: SEC EDGAR, the filing index for accession 0001628280-24-011279. Last ingested by Listed: Oct 24, 2026, 14:56 ET. No prices; not investment advice.