Champions Oncology Reports Financial Results for the Quarter Ended July 31, 2012

Hackensack, NJ – September 12, 2012 – Champions Oncology, Inc. (OTC: CSBR), engaged in the development of advanced technology solutions and services to personalize the development and use of oncology drugs, announced today its financial results for its first fiscal quarter ended July 31, 2012.

Joel Ackerman, Champions Oncology CEO, stated, “We are pleased with our continual progress and are focused on continuing to grow our Tumorbank as a source of value creation.”

Operating revenues were $2.1 million, as compared to $1.6 million for the three months ended July 31, 2011.

Total operating expenses were $3.7 million, as compared to $3.8 million for the three months ended July 31, 2011.

Champions reported a net loss of $1.3 million, or ($0.03) per share, as compared to $2.0 million, or ($0.04) per share, for the first quarter ended July 31, 2011.

Excluding stock based compensation of $0.7 million for the 2012 period and $1.0 million for the 2011 period, Champions recognized a net loss of $0.6* million, or ($0.01*) per share for the first quarter ended July 31, 2012, as compared to a net loss of $1.0* million, or ($0.02*) per share for the first quarter ended July 31, 2011.

Operating Results

Personalized Oncology Solutions

Personalized Oncology Solutions (POS) revenues were $0.9 million and $0.6 million for the 2012 and 2011 periods, respectively, an increase of $0.3 million, or 50%.  The increases in POS revenues were driven by an increased number of drug studies completed during the quarter.  During the three months ended July 31, 2012, the Company completed 13 drug studies, compared to only one completed in the prior year. These increases are the result of the steady increase in the number of TumorGrafts performed which have moved onto drug studies.

POS Cost of Sales was $0.8 million and $0.5 million for the 2012 and 2011 periods, respectively, an increase of $0.3 million, or 60%.  Gross margins for POS were 11% and 17% for the 2012 and 2011 periods, respectively.  The decline in gross margin can be attributed to increased costs related to transitioning our laboratory activities in-house from a third-party laboratory.  This transition, which is expected to yield future cost savings through higher utilization of capacity, began during the second half of fiscal 2012 and was substantially completed during the first quarter of fiscal 2013.

Translational Oncology Solutions

Translational Oncology Solutions (TOS) revenues were $1.2 million and $1.0 million for the three months ended July 31, 2012 and 2011, respectively, an increase of $0.2 million, or 20%.  The increase in TOS revenues was due primarily to higher numbers of models sold as a result of our increased investment in our Tumorbank.

TOS Cost of Sales were $0.7 million and $0.4 million for the 2012 and 2011 periods, respectively, an increase of $0.3 million, or 75%.  Gross margins for TOS were 42% and 60% for the 2012 and 2011 periods, respectively.  The decline in gross margin can be attributed to additional costs associated with transitioning laboratory activities in-house from a third-party laboratory.  Specifically, we have made additional investments in our infrastructure and our laboratory staff to increase productivity and to support current and expected volumes.

Research and Development

Research and development expenses were $0.4 million and $0.5 million for the three months ended July 31, 2012 and 2011, respectively.  This decrease was primarily related to decreased tumor procurement costs, resulting from our strategy to source models from our POS business.

Sales and Marketing

Sales and marketing expenses for each of the periods were $0.7 million.  Employee-related costs associated with our sales force and marketing personnel increased $0.2 million, but this was offset by a decrease in marketing activities.

General and Administrative Expenses

General and administrative expense was $1.1 million and $1.7 million for the respective 2012 and 2011 periods, a decrease of $0.6 million, or 35%.  This decrease can be attributed to reductions in stock-based compensation expenses and consultant costs.

* 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 three months ended July 31, 2012 and 2011.  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-K at www.championsoncology.com.

Reconciliation of GAAP to Non-GAAP Net Loss

 Quarter Ended July 31
20122011
Net loss – GAAP
($1,323)($2,037)
Less:Stock-based compensation 7391014
Net loss – non-GAAP($584)

($1,023)

Reconciliation of GAAP to Non-GAAP Earnings Per Share (EPS)

 Quarter Ended July 31
20122011
EPS – GAAP ($0.03)($0.04)
Less:Effect of stock-based compensation on EPS0.020.02
EPS – non-GAAP($0.01)($0.02)

Condensed Consolidated Statements of Operations (Unaudited

 Balance as of  
July 31, 2012

(unaudited)
April 30, 2012
Cash and cash equivalents
$2,916$4,716
Accounts receivable639584
Other current assets208205
Total current assets37635505
Restricted cash188188
Property and equipment, net525560
Goodwill669669
Total assets$5,145$6,922
Accounts payable and accrued liabilities$1,635$2,301
Deferred revenue9181185
Total current liabilities 25533486
Warrant liability
270555
Redeemable common stock
81598159
Stockholders’ deficit
(5,837)(5,278)
Total liabilities, redeemable common stock and stockholders’ deficit
$5,145$6,922

Condensed Consolidated Balance Sheets

 Balance as of
July 31, 2012

(unaudited)

April 30, 2012

Cash and cash equivalents
$2,916

$4,716

Accounts receivable
639584
Other current assets
208205
Total current assets
37635505
Restricted cash
188188
Property and equipment, net
525560
Goodwill669669
Total assets
$5145$6922
Accounts payable and accrued liabilities
$1,635

$2,301

Deferred revenue
9181185
Total current liabilities
25533486
Warrant liability
270555
Redeemable common stock
8,1598,159
Stockholders’ deficit
(5,837)

(5,278)

Total liabilities, redeemable common stock and stockholders’ deficit
$5,145

$6,922

Condensed Consolidated Statements of Cash Flows (Unaudited)

 Quarter Ended July 31

 
20122011
Cash flows from operating activities:
Net Loss
($1,323)

($2,037)

Adjustments to reconcile net cash used in operations:
Stock-based compensation expense
7391014
Depreciation expense
5429
Change in fair value of warrant liability
(285)

(177)

Changes in operating assets and liabilities
(991)

(364)

Net cash used in operating activities
(1,806)

(1535)

Cash flows from investing activities:
Purchases of property and equipment
(19)

(95)

Net cash used in investing activities:
(19)

(95)

Cash flows from financing activities: -4
Proceeds from exercise of options and warrants
-4
Exchange rate effect on cash and cash equivalents
258
Decrease in cash and cash equivalents
(1,800)

(1618)

Cash and cash equivalents, beginning of period
4,71610,457
Cash and cash equivalents, end of period
$2,916

$8,839