Champions Oncology Reports Results for the Quarter Ended October 31, 2013

Hackensack, NJ – December 12, 2013 – 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 the fiscal quarter ended October 31, 2013.

Recent Highlights

  • Signing of a $1.9 million technology licensing deal with a large pharmaceutical company in December
  • Acceleration of the scaling of the TumorBank through a research collaboration with an NCI designated comprehensive cancer center
  • Initiation of a 30 patient research trial in breast cancer
  • 63% revenue growth over prior year’s second quarter
  • Strong cash collection resulting in $7.6 million of cash on the balance sheet

Joel Ackerman, Champions Oncology CEO, stated, “The second quarter of fiscal 2014 was another very successful quarter for the company.  We are expanding our reach through a variety of partnerships that increases the value of our platform.  The quarterly results also demonstrate the success of our business model in commercializing the platform.”

Revenue was $2.4 million, as compared to $1.5 million for the three months ended October 31, 2012, an increase of 63.4%. Revenue was $5.4 million, as compared to $3.6 million for the six months ended October 31, 2012, an increase of 51.6%. Total operating expenses were $4.1 million, as compared to $3.4 million for the three months ended October 31, 2012. Total operating expenses were $7.9 million, as compared to $7.1 million for the six months ended October 31, 2012.

Champions reported a loss from operations of $1.7 million as compared to a loss from operations of $1.9 million for the three months ended October 31, 2012. Excluding stock-based compensation of $0.48 million and $0.62 million for the three months ended October 31, 2013 and 2012, Champions recognized a loss from operations of $1.2 million and $1.3 million for three months ended October 31, 2013 and 2012, respectively. Champions reported a loss from operations of $2.5 million as compared to a loss from operations of $3.5 million for the six months ended October 31, 2012. Excluding stock-based compensation of $1 million and $1.4 million for the six months ended October 31, 2013 and 2012, Champions recognized a loss from operations of $1.5 million and $2.1 million for six months ended October 31, 2013 and 2012, respectively.

Operating Results

Personalized Oncology Solutions (POS)

The number of implants during the quarter was 69, an increase of 53% over the same period last year.  55 of the implants were from the commercial POS efforts, an increase of 22% over the prior year.  This increase was the result of growing visibility with patients and physicians, the reduction in patient costs per implant and expanding our international operations. 14 of the implants were the result of a research partnership Champions has initiated with an academic medical center.  This partnership is expected to enable Champions to accelerate the growth of its TumorBank in particular tumor types and further Champions’ efforts to validate the TumorGraft platform for biomarker development.

The number of patients for whom studies were completed was 28 for the quarter, an increase of 211% over the same period last year.  The increase in patient studies is the result of higher implant volumes in the recent quarters which lead to studies in subsequent quarters. POS revenues were $0.6 million and $0.5 million for the three months ended October 31, 2013 and 2012, respectively, an increase of $0.1 million or 35.7%. The increase is due to the increase in our core products and services of $0.3 million which was offset by a decrease in our non-core products and services of $0.2 million. This is due to the strategic decision to focus on our core products and services. POS revenues were $1.2 million and $1.4 million for the six months ended October 31, 2013 and 2012, respectively, a decrease of $0.2 million or 9.6%.

POS cost of sales was $0.7 million and $0.6 million for the three months ended October 31, 2013 and 2012, respectively, an increase of $0.01 million, or 25.8%. POS cost of sales was $1.5 million and $1.4 million for the six months ended October 31, 2013 and 2012, respectively, an increase of $0.1 million, or 12.6%. For the three months ended October 31, 2013 and 2012, gross margins for POS were -17.5% and -26.8%, respectively. For the six months ended October 31, 2013 and 2012, gross margins for POS were -22.5% and 1.7%, respectively. The gross margin in this business segment fluctuates based on a number of factors including business mix, pricing and volumes.

Translational Oncology Solutions (TOS)

TOS revenues were $1.8 million and $1.0 million for the three months ended October 31, 2013 and 2012, respectively, an increase of $0.8 million, or 76.2%. TOS revenues were $4.2 million and $2.2 million for the six months ended October 31, 2013 and 2012, respectively, an increase of $2 million.

TOS cost of sales was $0.7 million and $0.5 million for the three months ended October 31, 2013 and 2012, respectively, an increase of $0.2 million, or 46.9%. TOS cost of sales was $1.6 million and $1.2 million for the six months ended October 31, 2013 and 2012, respectively, an increase of $0.4 million, or 34.2%.  For the three months ended October 31, 2013 and 2012, gross margins for TOS were 60% and 53%, respectively. For the six months ended October 31, 2013 and 2012, gross margins for TOS were 62% and 46%, respectively.  The increase in gross margin is due to the leveraging of the fixed component of cost of sales over a higher revenue amount and the absorption of certain costs associated with this quarter’s revenue in previous quarters.

Research and development expense was $0.7 million and $0.4 for three months ended October 31, 2013 and 2012, respectively. Research and development expense was $1.1 million and $0.8 for six months ended October 31, 2013 and 2012, respectively. Sales and marketing expense for both the three months ended October 31, 2013 and 2012 were $0.7 million. Sales and marketing expense for the six months ended October 31, 2013 and 2012 were $1.3 million and $1.4 million, respectively. General and administrative expense was $1.3 million and $1.2 million for the three months ended October 31, 2013 and 2012, respectively. General and administrative expense for both the six months ended October 31, 2013 and 2012 was $2.3 million.

Conference Call Information

The Company will host a conference call on Thursday, December 12, 2013, at 4:30 p.m. ET to discuss its fourth quarter 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 Friday, December 13, 2013 in the Company’s Form 10-Q at www.championsoncology.com.

* Non-GAAP Financial Information

See the attached Reconciliation of GAAP loss from operations to non-GAAP loss from operations for an explanation of the amounts excluded to arrive at non-GAAP loss from operations and related non-GAAP loss from operations per share amounts for the three and six months ended October 31, 2013 and 2012. 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 loss from operations and non-GAAP loss per share are not, and should not be viewed as a substitute for similar GAAP items.  We define non-GAAP dilutive loss per share amounts as non-GAAP loss from operations divided by the weighted average number of diluted shares outstanding.  Our definition of non-GAAP loss from operations and non-GAAP diluted loss per share may differ from similarly named measures used by others.

Champions Oncology, Inc.

(Dollars in thousands except per share amounts)

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