Champions Oncology Reports Fiscal 2012 Third Quarter Financial Results

HACKENSACK, N.J., March 14, 2012 /PRNewswire/ -- Champions Oncology, Inc. (OTC: CSBR) reported the following results:

Fiscal Year 2012 Third Quarter Financial Results:

Operating revenues were $2.4 million and $2.8 million for the three months ended January 31, 2012 and 2011, respectively, and $5.8 million and $5.3 million for the nine months ended January 31, 2012 and 2011, respectively.

Total operating expenses were $4.2 million and $3.6 million for the three months ended January 31, 2012 and 2011, respectively, and $12.2 million and $7.7 million for the nine months ended January 31, 2012 and 2011, respectively.

Champions reported a net loss of $1.7 million, or ($0.04) per share and $0.4 million, or ($0.01) per share for the three months ended January 31, 2012 and 2011, respectively, and $6.1 million, or ($0.13) per share and $1.1 million, or ($0.03) per share for the nine months ended January 31, 2012 and 2011, respectively.

Champions recognized a net loss of $1.0 million, excluding stock based compensation of $0.7 million, or ($0.02) per share and net income of $0.8 million, excluding stock based compensation of $1.2 million, or $0.02 per share for the three months ended January 31, 2012 and 2011, respectively, and net losses of $3.5 million, excluding stock based compensation of $2.6 million, or ($0.07) per share and net income of $0.5 million, excluding stock based compensation of $1.6 million, or $0.01 per share for the nine months ended January 31, 2012 and 2011, respectively.

In fiscal 2011, the Company modified its POS business strategy to focus on growing its core technology products, which includes Tumorgraft implants and drug studies. As a result, the Company significantly reduced the price of the core technology products to make the products affordable to a broader patient based. In addition, the Company has increased spending on sales and marketing efforts to support this strategy. The Company will continue to offer related personalized oncology services to our customers, including personalized tumor panels and gene sequencing, however, we expect future POS revenue growth to be driven by our core products.

During fiscal 2012, the Company started transitioning the laboratory activities that support the POS and TOS services to our facility in Baltimore, MD. To facilitate this strategy and support the increase in current and expected volume, we have invested in the infrastructure and increased our laboratory staff and are evaluating options to increase our lab capacity to meet the future demand. We believe that bringing these activities in house will significantly reduce the cost of providing our services and allow us to maintain a more aggressive pricing strategy. We expect the transition to be largely complete by the end of the first quarter of fiscal 2013.

Operating Results

Revenues from Translational Oncology Services (TOS) were $1.7 million and $1.4 million for the three months ended January 31, 2012 and 2011, respectively, an increase of $0.3 million or 26%. TOS revenues were $3.9 million and $2.5 million for the nine months ended January 31, 2012 and 2011, respectively, an increase of $1.4 million or 56%. These increases in TOS revenues were due primarily to increased sales efforts and investments in growing our Tumorbank.

Cost of TOS was $0.8 million and $0.7 million for the three months ended January 31, 2012 and 2011, respectively, an increase of $0.1 million, or 16%.  Cost of TOS was $1.9 million and $1.4 million for the nine months ended January 31, 2012 and 2011, respectively, an increase of $0.5 million, or 36%. The increase in cost of sales was due to increased sales volume of the TOS business.

Revenues from Personalized Oncology Services (POS) were $0.6 million and $1.4 million for the three months ended January 31, 2012 and 2011, respectively, a decrease of $0.8 million, or 54%. POS revenues were $1.8 million and $2.8 million for the nine months ended January 31, 2012 and 2011, respectively, a decrease of $1.0 million, or 35%.  Panel revenue, a component of POS revenue, decreased $0.9 million and $1.0 million for the three and nine months ended January 31, 2012, respectively.  This decrease is primarily attributable to a decrease in pricing per panel.  Excluding panel revenue, POS revenue was $0.59 million and $0.5 million for three months ended January 31, 2012 and 2011, an increase of $0.09 million and $1.35 million and $1.32 million for nine months ended January 31, 2012 and 2011, respectively, an increase of $0.03 million. The Company experienced significantly higher volumes of implants and drug studies compared to the prior year.  For the three months ended January 31, 2012, the Company performed 25 tumorgraft implants compared to one in the same quarter last year.  For the nine months ended January 31, 2012, the Company performed 70 tumorgraft implants compared to nine in the prior year.  For the three months ended January 31, 2012, the Company completed five drug studies compared to zero in the same quarter last year.  For the nine months ended January 31, 2012, the Company completed nine drug studies compared to three in the prior year.  However, the increase in volume was partially offset by a strategic decision to lower pricing for both the tumorgraft implants and drug studies.

Cost of POS was $0.5 million and $0.7 million for the three months ended January 31, 2012 and 2011, respectively, a decrease of $0.2 million, or 27%.  Cost of POS was $1.5 million and $1.2 million for the nine months ended January 31, 2012 and 2011, respectively, an increase of $0.3 million, or 21%. The year to date increase in cost of sales corresponds to increased lab costs associated with increased volumes.

Research and development expense was $0.9 million and $0.4 million for the three months ended January 31, 2012 and 2011, respectively, an increase of $0.5 million.  Research and development expense was $2.6 million and $2.1 million for the nine months ended January 31, 2012 and 2011, respectively, an increase of $0.5 million, or 21%.  The increases from prior year periods are primarily related to increased costs resulting from our continued investment in our Tumorbank and technology platform.

Sales and marketing expense was $0.6 million and $0.2 million for the three months ended January 31, 2012 and 2011, respectively, an increase of $0.4 million.  Sales and marketing expense was $1.9 million and $0.4 million for the nine months ended January 31, 2012 and 2011, respectively, an increase of $1.5 million.  The increases from prior year periods are primarily related to our continued investment in the infrastructure in POS, increases in our sales force, and increases in marketing costs.

General and administrative expense was $1.3 million and $1.5 million for the three months ended January 31, 2012 and 2011, respectively, a decrease of $0.2 million, or 15%.  Stock-based compensation was $0.7 million and $1.2 million for the three months ended January 31, 2012 and 2011, respectively. Excluding stock-based compensation, general and administrative expenses were $0.5 million and $0.3 million for the three months ended January 31, 2012 and 2011, an increase of $0.2 million. General and administrative expense was $4.4 million and $2.6 million for the nine months ended January 31, 2012 and 2011, respectively, an increase of $1.8 million, or 67%. Stock-based compensation was $2.6 million and $1.6 million for the nine months ended January 31, 2012 and 2011, respectively.  Excluding stock-based compensation, general and administrative expenses were $1.8 million and $1.0 million for the nine months ended January 31, 2012 and 2011, respectively, an increase of $0.8 million.  The increases from the prior periods are related to the expansion of our infrastructure, the addition of our corporate offices in New Jersey, and other costs associated with the Company's growth strategy.

For the third quarter of fiscal 2012, the Company reported a net loss of $1.7 million, or ($0.04) per share, compared to a net loss of $0.4 million, or ($0.01) per share, in the corresponding quarter of fiscal 2011.  In addition to the factors described above, the Company's net losses reflect non-cash expenses, i.e., share-based compensation and depreciation, of $0.8 million or ($0.02) per share, in the third quarter of 2012 compared to $1.2 million, or ($0.03) per share, in the third quarter of 2011.

The Company's cash position on January 31, 2012 was $6.5 million.

* 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 loss per share amounts for the fiscal second quarter ended, 2012 and 2011, respectively.  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.  We define non-GAAP diluted loss per share amounts as non-GAAP net loss divided by the weighted average number of diluted shares outstanding.  Our definition of non-GAAP net loss and non-GAAP diluted loss per share may differ from similarly named measures used by others.

Full details of the Company's financial results will be available in the Company's Form 10-Q at www.championsoncology.com.

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.  The Company uses this technology in conjunction with related services to offer solutions for two customer groups:  Personalized Oncology Solutions ("POS") in which physicians and patients looking for information help guide the development of personalized treatment plans, and Translational Oncology Solutions ("TOS") in which pharmaceutical and biotech companies seeking personalized approaches to drug development can lower the cost and increase the speed of developing new drugs and increasing the adoption of existing drugs. The Company's Tumorgraft™ Technology Platform consists of processes, physical tumors and information that we use to personalize the development and use of oncology drugs.  The Company is building its Tumorgraft™ Technology Platform through the procurement, development and characterization of numerous Tumorgrafts™ within each of several cancer types.  Tumorgrafts™ are procured through agreements with a number of institutions in the U.S. and overseas as well as through its POS business.  The Tumorgrafts™ are developed and tested through agreement with a United States-based preclinical facility.

The Company provides POS to oncologists by establishing and administering expert tumor panels for their patients to analyze medical records and test results, to assist in understanding conventional and experimental options and to identify and arrange for testing, analysis and study of the patients' cancer tissues, as appropriate.  Additionally, the Company offers Personalized Tumorgraft™ development, drug studies and genome sequencing as part of its POS whereby physicians can evaluate the effects of cancer drugs on their patients' tumorgrafts and understand the genetic make-up of their patient's tumor enabling them to better select treatment regimens that may be efficacious to the patient.

This press release contains "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, 2011 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.

Contact:
Susan Foreman
410-369-0365 X140

SOURCE Champions Oncology, Inc.