Q1 2024 Champions Oncology Inc Earnings Call

Speaker 1: Greetings. Welcome to the Champions Oncology First Quarter Fiscal Year 2024 earnings call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation.

Greetings and welcome to the champions oncology first quarter fiscal year 'twenty 'twenty four earnings calls at this time all participants are in a listen only mode.

A question and answer session will follow the formal presentation.

Speaker 1: If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. I will now turn the conference over to your host, Dr. Ronny Morris, CEO at Champions Oncology. You may begin.

If anyone should require operator assistance during the conference. Please press star zero on your telephone keypad. Please note. This conference is being recorded I will now turn the conference over to your host Dr. Ronnie Morris CEO of champions oncology you may begin.

Speaker 2: Good afternoon. I am Ronnie Morris, CEO of Champions Oncology. Joining me today is David Miller, our Chief Financial Officer. Thank you for joining us.

Good afternoon, everybody more CEO of champions oncology joining me today is David Miller, our Chief Financial Officer.

Thank you for joining us for our quarterly earnings call.

Speaker 2: Before I begin, I would remind you that we will be making forward-looking statements during today's call and that actual results could differ materially from what is described in those statements.

Before I begin I will remind you that we will make forward looking statements during today's call and that actual results could differ materially from what is described in those statements.

Speaker 2: Additional information on factors that could cause results to differ is available in our forms 10Q and 10K. A reconciliation of non-GAAP financial measures that may be discussed during the call to GAAP financial measures is available in the earnings release.

Information on factors that could cause results to differ.

Available in our Form 10-Q and Form 10-K.

Reconciliation of non-GAAP financial measures that may be discussed during the call to GAAP financial measures is available in the earnings release.

Speaker 2: I'll start by pointing out that our prepared comments for today will be relatively brief as we just recently provided our fiscal year end results and company updates six weeks ago. On that call, I provided an update on the accomplishments from fiscal year 2023 along with the longer term strategic vision for the company. I also highlighted the challenges we encountered such as the overall economic environment which led to cancellations well in excess of our historical norms.

I'll start by pointing out that our prepared comments for today will be relatively brief as we just recently provided our fiscal year end results and company update six weeks ago.

On that call I provided an update on the accomplishments from fiscal year 2023, along with the longer term strategic vision for the company.

Also highlighted the challenges we encountered such as the overall economic environment, which led to cancellations well in excess of our historical norms.

Speaker 2: Additionally, we identified some operational issues that led to slower revenue conversion and put pressure on our operating results that would extend into fiscal year 2023.

Additionally, we identified some operational issues that led to slower revenue conversion and put pressure on our operating results that would extend into fiscal year 2024.

Speaker 2: As indicated, those challenges are impacting our current year's results, however, I am cautiously optimistic that we have made significant progress towards reversing those trends.

As indicated those challenges are impacting our current year's results. However, I am cautiously optimistic that we have made significant progress towards reversing those trends.

Speaker 2: We have made the necessary operational changes with some key hires and internal restructuring that we're confident will lead to greater efficiencies and an improvement in our operation.

We have made the necessary operational changes at some key hires and internal restructuring that we're confident will lead to greater efficiencies and an improvement in our operations externally.

Speaker 2: Externally, some of the economic pressures that were impacting customer behavior, resulting in longer sales cycle and a higher and quicker propensity to cancel a study, seems to be easing.

Externally some of the economic pressures that were impacting customer behavior, resulting in longer sales cycle, and a higher and quicker propensity to cancel or a <unk>.

Study seems to be easing.

Speaker 2: On a positive note, our quarterly bookings have continued to grow, and we're seeing a softening of the cancellations over the last couple of months retreating towards historical levels.

On a positive note our quarterly bookings have continued to grow and we're seeing a softening of the cancellations over the last couple of months retreating towards historical levels.

Speaker 2: We continue to be excited about our expanding ex vivo platform, which we anticipate will lead to increased sales and revenue growth over the coming quarters. In our clinical biomarkers services, we've made some key business development hires during this quarter. We have seen an increase in lead generation in addition to an uptick in clinical booking.

We continue to be excited about our expanding ex vivo platform, which we anticipate will lead to increased sales and revenue growth over the coming quarters and our buyer in our clinical Biomarkers services. We've made some key business development highest during this quarter. We have seen an increase in lead generation. In addition to an uptick in clinical bookings.

As discussed over the years the revenue from clinical work has a longer cycle than our traditional services, but the increase in the pipeline and bookings are positive developments that should contribute to revenue growth over time.

Speaker 2: As discussed over the years, the revenue from clinical work has a longer cycle than our traditional services, but the increase in the pipeline and in bookings are positive developments that should contribute to revenue growth over time.

Operator: Greetings. Welcome to the Champions Oncology, first quarter fiscal year 2024 earnings call. At this time, all participants are in a listen-only mode.

Operator: A question and answer session will follow the form of presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded.

Speaker 2: With regards to Corellia, our wholly owned drug development subsidiary, our lead discovery programs are progressing well through the therapeutic discovery stages with our two lead programs exhibiting promising results.

With regards to corella, our wholly owned drug development subsidiary, our lead discovery programs are progressing well through the therapeutic discovery stages with our two lead programs exhibiting promising results we.

Ronnie Morris: I will now turn the conference over to your host, Dr. Roni Morris, CEO at Champions Oncology. You could afternoon. I am Ronnie Morris, CEO of Champions Oncology. Joining me today is David Miller, our chief financial officer. Thank you for joining us for our quarterly earnings call.

Speaker 2: We have begun building therapeutic programs around these targets.

We have begun building therapeutic programs around these targets are.

Speaker 2: Our platform has identified many other exciting targets and we are actively engaged with investors in an effort to raise capital to support and accelerate our growth.

Our platform has identified many other exciting targets and we are actively engaged with investors in an effort to raise capital to support and accelerate our growth.

In summary, the quarter's performance was generally as expected we anticipate that improvements will slowly take hold and put us back on our targeted path. Despite this being a challenging period. We continue to have robust bookings a comprehensive platform a stellar reputation and a strong team that is poised for the next growth spurt.

Speaker 2: In summary, the quarter's performance was generally as expected. We anticipate that improvements will slowly take hold and put us back on our targeted path.

Ronnie Morris: Before I begin, I'll remind you that we're making forward-looking statements during today's call and that actual results could differ materially from what it describes in those statements. Additional information on factors that could cause results to differ is available in our forms, 10Q and form, 10K, or reconciliation of non-gap financial measures that may be discussed during the call to gap financial measures is available in the earnings release.

Speaker 2: Despite this being a challenging period, we continue to have robust bookings, a comprehensive platform, a stellar reputation, and a strong team that is poised for the next growth spurt. We are confident that we will emerge with strong revenue and profitability over the longer term.

We are confident that we will emerge with strong revenue and profitability over the longer term now.

Speaker 2: Now let me turn the call over to David Miller for a more detailed review of the financial results.

Ronnie Morris: I'll start by pointing out that our prepared comments for today will be relatively brief as we just recently provided our fiscal year-in results and company updates six weeks ago. On that call, I provided an update on the accomplishments from fiscal year 2023, along with the longer-term strategic vision for the company. I also highlighted the challenges we encountered such as the overall economic environment which led to cancellations well in excess of our historical norms.

Now, let me turn the call over to David Miller for a more detailed review of the financial results.

Thanks, Ronny our full results on Form 10-Q will be filed with the SEC later today.

Speaker 3: Thanks, Ronnie. Our full results on Form 10Q will be followed with the SEC later today.

Speaker 3: Our first quarter revenue was $12.6 million, a decline of 9% from the first quarter of 2023. As highlighted on our year-end call and reiterated by Ronnie, the challenges encountered last year would impact our financial performance in the first half of 2024, with a gradual improvement occurring over the course of the year.

Our first quarter revenue was $12 6 million a decline of 9% from the first quarter of 2023.

Ronnie Morris: Additionally, we identified some operational issues that led to slower revenue conversion and pressure on our operating results that would extend into fiscal year 2024. As indicated, those challenges are impacting our current year's results. However, I am cautiously optimistic that we have made significant progress towards reversing those trends. We have made the necessary operational changes with some key hires and internal restructuring that were confident will lead to greater efficiencies and an improvement in our operations.

As highlighted on our year end call and reiterated by Ronnie challenges accounted last year would impact our financial performance in the first half of 2024 with a gradual improvement occurring over the course of the year.

Speaker 3: On a gap basis, our loss from operations for the first quarter of 2024 was $2.6 million compared to a loss of $284,000 in the prior year.

On a GAAP basis, our loss from operations for the first quarter of 2024, with two 6 million compared to a loss of 284000 in the prior year.

Included in the $2 6 billion loss were non cash expenses and stock comp and depreciation of stock comp and depreciation totaling approximately 900000.

Speaker 3: Included in the $2.6 million loss were non-cash expenses of stock comp and depreciation totaling approximately $900,000.

Excluding these noncash items, our adjusted loss was $1 7 million for the quarter compared to adjusted EBITDA of 450000 in the year ago period.

Speaker 3: Excluding these non-cash items, our adjusted loss was $1.7 million for the quarter, compared to adjusted EBITDA of $450,000 in the year-ago period.

Ronnie Morris: Externally, some of the economic pressures that were impacting customer behavior resulting in longer sale cycle and a higher and quicker propensity to cancel a study seems to be easing. On a positive note, our quarterly bookings have continued to grow, and we're seeing a softening of the cancellations over the last couple of months retreating towards historical levels.

Speaker 3: Turning the focus to our cash based results, the total cost of sales was $7.5 million compared to $6.9 million in our first quarter last year, an increase of 9%.

Turning the focus to our cash based results. The total cost of sales was $7 5 million compared to $6 $9 million in our first quarter of last year, an increase of 9%.

Speaker 3: The increase relative to the same period last year was primarily due to an increase in outsourced lab services and mouse class.

The increase relative to the same period last year was primarily due to an increase in outsourced lab services and now Scott.

Due to the increase in cost of sales on lower revenue, our gross margin for the quarter was 40% compared to 50% for the same period last year.

Speaker 3: Due to the increase in cost of sales on lower revenue, our gross margin for the quarter was 40% compared to 50% for the same period last year.

Ronnie Morris: We continue to be excited about our expanding X-Vivo platform, which we anticipate will lead to increased sales and revenue growth over the coming quarters. In our clinical biomarkers services, we've made some key business development hires during this quarter. We have seen an increase in lead generation in addition to an uptick in clinical bookings. As discussed over the years, the revenue from clinical work has a longer cycle than our traditional services, but the increase in the pipeline and in bookings are positive developments that should contribute to revenue growth over time. With regards to Corelia, our Holy-owned drug development subsidiary, our lead discovery programs are progressing well through the therapeutic discovery stages with our two lead programs exhibiting promising results.

Speaker 3: The margin pressure will continue for the next few quarters, but we anticipate gradual improvement as our revenue accelerates over the course of the year, while our cost of sales will increase at a much slower rate.

Margin pressure will continue for the next few quarters, but we anticipate gradual improvement as our revenue accelerates over the course of the year, while our cost of sales will increase at a much slower rate.

Speaker 3: For the quarter, R&D expense was approximately 2.8 million compared to 2.9 million in the year-ago period. Our R&D spend is split between our traditional R&D supporting our core business services and investing in our drug discovery platform.

For the quarter R&D expense was approximately $2 8 million compared to $2 9 million in the year ago period.

R&D spend is split between our traditional R&D supporting our core business services and investing in our drug discovery platform.

Speaker 3: Approximately 1.2 million was invested towards our drug discovery efforts during the COVID-19.

The $1 2 million was invested towards that with drug discovery efforts during the quarter.

Sales and marketing expense for the quarter was a flat $1 6 million.

Speaker 3: Sales and marketing expense for the quarter was a flat $1.6 million.

Ronnie Morris: We have begun building therapeutic programs around these[inaudible] and David Miller. Our platform has identified many other exciting targets and we are actively engaged with investors in an effort to raise capital to support and accelerate our growth. We are confident that we will emerge with strong revenue and profitability over the longer term.

Our G&A expense was $2 3 million compared to $1 9 million in a year ago period, an increase of 400000.

Speaker 3: Our GNA expense was $2.3 million compared to $1.9 million in a year-ago period, an increase of $400,000.

Speaker 3: The increase was primarily due to a small increase in compensation expense and the bad debt and credit loss allowances.

The increase was primarily due to a small increase in compensation expense and bad debt and credit loss allowances.

Now turning to cash.

Speaker 3: We ended the quarter with $5 million cash on the balance sheet and no debt.

We ended the year with cash we ended the quarter with 5 million of cash on the balance sheet and no debt.

Speaker 3: For the quarter, cash used in operating activities was $3.8 million with an additional $700,000 for investment and less equipment and $600,000 in financing activities as part of our stock lease purchase?

For the quarter cash used in operating activities was $3 $8 million with an additional 700000 toward investment in less equipment, and 600000 and financing activities as part of our stock repurchase plan.

Speaker 3: The accelerated cash burn for the quarter was due to multiple factors, including our net loss and a return of custom deposits on cancelled studies, which reduced our deferred revenue and cash balance.

The accelerated cash burn for the quarter was due to multiple factors.

David Miller: Now let me turn the call over to David Miller for a more detailed review of the financial results. Thanks Ronnie. Our full results on from 10Q we filed with the SEC later today. Our first quarter revenue was 12.6 million, a decline of 9% from the first quarter of 2023. As highlighted on our year end call and reiterated by Ronnie, the challenges encountered last year would impact our financial performance in the first half of 2024 with a gradual improvement occurring over the course of the year.

Net loss and a return off of customer deposits on canceled studies, which reduced our deferred revenue and cash balance.

Our as our operational results improved cancellations decrease and with our bookings, which are a leading indicator to higher revenue.

Speaker 3: As our operational results improve, cancellations decrease, and with our bookings, which are a leading indicator to higher revenue.

Speaker 3: Continuing to grow, our cash positions are solid and will gradually increase over the second half of the year.

Continuing to grow our cash position, our cash position remains solid and we will gradually increase over the second half of the year.

Speaker 3: In summation, our first quarter financial results were mostly as expected, which was that results would still be impacted by the challenges faced in our fiscal 2023. However, with our continued strengths in bookings, and with the operational corrections made beginning to take effect, and with an improving economic environment we're experiencing, we're confident that despite some short-term obstacles, our long-term prospects are positive.

Information, our first quarter financial results were mostly as expected, which was that results would still be impacted by the challenges facing our fiscal 2000 Twenty's debate. However, with our continued strength in bookings and with the operational corrections made beginning to take effect and with an improving economic environment, we're experiencing.

David Miller: On a gap basis, our loss from operations for the first quarter of 2024 was 2.6 million compared to a loss of 284,000 in the prior year. Included in the 2.6 million loss were non-cash expenses of stock company depreciation to a stock company depreciation, totally approximately 900,000. Excluding these non-cash items, our adjusted loss was 1.7 million for the quarter compared to adjusted EBITDA of 450,000 in the year ago period. During the focus to our cash-based results, the total cost of sales was 7.5 million compared to 6.9 million in our first quarter last year, an increase of 9%.

Confident that despite some short term obstacles out of long term prospects are all positive.

Speaker 3: We anticipate a slow but steady improvement in our operational results, including revenue growth and profitability as the year progresses. We look forward to our next update in mid-December when we report our second quarter results. We will now open the call for questions.

Anticipate a slow but steady improvement in our operational results, including revenue growth and profitability as the year progresses. We look forward to our next update in mid December when we report our second quarter results. We will now open the call to questions.

Speaker 1: Thank you. At this time, we will be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Once again, that's star 1 if you wish to ask a question at this time. And please hold while we poll for questions.

Thank you at this time, we will be conducting a question and answer session. If you'd like to ask a question. Please press star one on your telephone keypad.

Confirmation tone will indicate your line is in the question queue. You May Press Star two if you would like to remove your question from the queue.

David Miller: The increase relative to the same period last year was primarily due to an increase in outsourced lab services and mouse costs. Due to the increase in cost of sales on lower revenue, our gross margin for the quarter was 40%, compared to 50% for the same period last year. The margin pressure will continue for the next few quarters, but we anticipate gradual improvement as our revenue accelerates over the course of the year, while our cost of sales will increase at a much slower rate.

For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Once again Thats star one if you wish to ask a question at this time, please hold while we poll for questions.

And our first question today is coming from Matt Hewitt from Craig Hallum Capital Group match. Your line is live.

Speaker 1: The first question today is coming from Matt Hewitt from Craig Hallam Capital Group. Matt, your line is live.

Speaker 4: Good afternoon. Thank you for taking the questions. Maybe first one regarding the landscape. Obviously we've been hearing not just from you guys on your Q4 call, but today and we've heard from others that it's just a really difficult environment right now. Farm and biotech companies are facing funding pressures. There's all sorts of issues.

Good afternoon, and thank you for taking the questions maybe first one regarding the the landscape. Obviously, we've been hearing not just from you guys on your Q4 call, but today and we've heard from others that it's just a really difficult environment right now pharma and biotech companies are facing.

David Miller: For the quarter, R&D expense was approximately 2.8 million compared to 2.9 million in the year ago period. Our R&D spend is split between our traditional R&D supporting our court business services and investing in our drug discovery platform. Approximately 1.2 million was invested towards our drug discovery efforts during the quarter. Sales and marketing expense for the quarter was a flat 1.6 million dollars. Our R&D expense was 2.3 million compared to 1.9 million in the year ago period, an increase of 400,000.

Facing funding pressures, there's all sorts of issues. What are you hearing from your customers as far as these cancellations are concerned it sounds like it's coming down but is that a function of them re prioritizing pipelines is it a function of kind of shifting gears and maybe exiting one area too.

Speaker 4: What are you hearing from your customers as far as these cancellations are concerned? It sounds like it's coming down, but is that a function of them reprioritizing pipelines? Is it a function of...

Speaker 4: kind of shifting gears and maybe exiting one area to focus on something else and that's what this next leg is going to be or is there something else driving that I guess what's in an improving booking situation.

To focus on something else and that's what this next leg is going to be or is there something else driving that I guess, what's in improving bookings situation.

David Miller: The increase was primarily due to a small increase in compensation expense and the bad debt and credit loss allowances. Now, outturning to cash, we ended the year with 5 million of cash on the end of the quarter with 5 million of cash on the balance sheet and no debt. For the quarter, cash used in operating activities was 3.8 million with an additional 700,000 for investment and less equipment and 600,000 in financing activities as part of our stock we purchased.

Yeah.

Yes, I think it's like I said I think Matt. It's a combination of all of the above I think that the cancellations that we had over the last couple of quarters were primarily from things that booked you know a little earlier and those I think were driven more by I would say the budgetary concerns.

Speaker 2: Yeah, I think it's like, I think that it's a combination of all of the above. I think that, you know, the cancellations.

Speaker 2: that we had over the last couple quarters were primarily from things that booked, you know, a little earlier, and those, I think, were driven more by, I would say, the budgetary concerns of just, you know, are they going to be funded? I think that the newer ones are more of a prioritization where they're, you know, they might book something, and then they might decide that, you know,

David Miller: Plan. The excellent cash burn for the quarter was due to multiple factors, including our net loss and a return up of customer deposits on canceled studies, which reduced our deferred revenue and cash balance. Our as our operational results improve, cancellations decreased and with our bookings, which are leading indicators to higher revenue, continue to grow our cash positions, a cash position in the insolid and will gradually increase over the second half of the year.

Of just you know are they are they going to be funded I think that the newer ones are more of a prioritization.

We're there.

They might book something and then they may decide that you know.

Speaker 2: with the landscape that they want to prioritize one thing over the other. I think as

With the landscape do they want to prioritize.

One thing over the other I think as I.

Speaker 2: I would say two comments, and these are all very general because there's so many anecdotes, but I would say two comments. One, that we have seen a palpable kind of a decrease in cancellations over the last couple of months. So, it wasn't just one month or two months, now it's the third month, so we're kind of confident that, from that perspective, those are moving in the right direction.

I would say two comments in and these are all very general because theres. So many anecdotes, but I would say two comments one that we have palpable, we have seen a palpable kind of a decrease in Calvin cancellations over the last couple of months. So it wasn't just one month or two months now with a third month, so so where we're at.

David Miller: Information, our first quarter financial results were mostly as expected, which was that results would still be impacted by the challenges faced in our fiscal 2020 debate. However, our continued strengths in bookings and with the operational corrections made beginning to take effect and with the improving economic environment we're experiencing, we're confident that despite some short-term obstacles, our long-term prospects are positive. We anticipate a slow but steady improvement in our operational results, including revenue growth and profitability as the year progresses.

Kind of confident that that from that perspective, those are moving in the right.

Erection and I would say the second thing is that we feel like things are opening up more now in terms of.

Speaker 2: direction. And I would say the second thing is that we feel like things are opening up more now in terms of

The the mood or or the.

Speaker 2: the mood or the,

David Miller: We look forward to our next update in mid-December when we report our second quarter results.

Speaker 2: the feeling the biotech feeling like like things are opening up for them to raise money and and and and continue to to fund their program so you know certainly not the way it was a couple years ago uh... i'm in terms of just you know a tremendous amount of influx and and the feeling like there's always gonna be money available but we feel much better than we did let's say a year ago

The feeling in the biotech feeling like things are opening up for them to raise money in and continue to fund their program. So.

Operator: We will now open a call for questions. Thank you. At this time, we will be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone key path. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Once again, that's star one. If you wish to ask a question at this time, please hold while we pull for questions.

Certainly not the way it was a couple of years ago in terms of just you know a tremendous amount of influx and the feeling like theres always going to be money available, but we feel much better than we did let's say a year ago.

Got it so maybe more back to a more normalized.

Speaker 4: Got it. So maybe back to a more normalized flow of capital. OK, got it. OK, that's super helpful. And then question regarding the gross margin. Some of the decline year on year was due to increased outsourcing that you guys are doing. Are any of those services something that, in theory, you guys could bring in-house at some point to reduce your dependence on others to complete some of these studies?

I think all of capital Okay got it.

Yeah.

Okay. That's super helpful. And then a question regarding the gross margin some of the decline year on year was due to increased outsourcing that you guys are doing.

Matthew Hewitt: The first question today is coming from Matt Hewitt, from Craig Hallam Capital Group. Matt, your line is live. Good afternoon. Thank you for taking the questions. Maybe first one regarding the landscape. Obviously, we've been hearing not just from you guys on your queue for call but today, and we've heard from others, it's just a really difficult environment right now. Farmer and biotech companies are facing funding pressures, there's all sorts of issues.

Or are there are any of those services something that in theory, you guys could bring in house at some point.

To reduce your dependence on others to complete some of these studies.

Speaker 2: Yeah, we could for some of them. I would say the biggest pressure on the gross margins was just some of the delayed studies and the repeating of studies, which we think we have a pretty good handle on now. And that goes to the mouse cost increase because we're just using more mice to get the same amount of work done. So I think that that that

Yeah, we could for some of them I would say the biggest.

Pressure on gross margins was just some of the delayed studies in the repeating of studies, which which we think we have a pretty good handle on now and that goes to the mouth cost increase because they're just using more mice to get the same amount of work done so I think that that that those press.

Matthew Hewitt: What are you hearing from your customers as far as these cancellations are concerned? It sounds like it's coming down. Is that a function of them reprioritizing pipelines? Is it a function of kind of shifting gears and maybe exiting one area to focus on something else? That's what this next leg is going to be, or is there something else driving that, I guess, what's in an improving booking situation?

Speaker 2: Those pressures on the gross margin are probably the largest pressures that I think.

<unk> on the gross margin are probably the largest pressures that I think you know over the next couple of months certainly next couple of quarters, I think we're going to turn back around.

Speaker 2: um... you know the next couple of months certainly next couple quarters i think we're gonna turn back around

Ronnie Morris: Yeah, I think Matt is a combination of all of the above. I think that the cancellations that we had over the last couple quarters were primarily from things that booked a little earlier, and those, I think, were driven more by, I would say, the budgetary concerns of just, are they going to be funded? I think that the newer ones are more of a prioritization, where they might book something and then they might decide with the landscape that they want to prioritize one thing over the other.

Speaker 4: Got it. And then maybe one last one for me and I'll hop back into queue. I think you were commenting about on

Got it and then maybe one last one for me then I'll hop back into queue. I think you were commenting about on.

Speaker 4: the biomarkers and some of the key hires that you were able to get there. You've seen an increase in the lead gen and your clinical bookings are improving. How should we be thinking about size of some of those types of studies? Are they bigger than your...

The the Biomarkers and some of the the key hires that you were able to get there you've seen an increase in lead Gen and your clinical bookings there are improving.

How should we be thinking about size of some of those types of studies or or are they bigger than your your historical studies or just to I know they've got a longer lead lead time, so I'm just thinking theoretically those should be larger right.

Speaker 4: your historical studies or just I know they've got a longer lead time so I'm just thinking theoretically those should be larger, right?

Speaker 2: Yet they come in all different sizes, primarily because, you know, for certain types of these clinical biomarkers, you first sign a study just to see the validation of an assay. And then if you successfully validate the assay and...

They come in all different sizes, primarily because you know for certain types of these clinical Biomarkers you first sign Ah study just to see the validation of an assay and then if you successfully validate the assay in the biotech or pharma likes the.

Ronnie Morris: I think as, I would say two comments, and these are all very general because there are so many anecdotes, but I would say two comments. One, that we have seen a palpable kind of a decrease in cancellations over the last couple of months. So it wasn't just one month or two months now, it's the third month. So we're kind of confident that from that perspective, those are moving the right. Direction. And I would say the second thing is that we feel like things are opening up more now in terms of the mood or the feeling of the biotech, feeling like things are opening up for them to raise money and continue to fund their programs.

Speaker 2: biotech or pharma likes the assay and the way it's working, then they'll sign a larger study. So it comes in, or it's a validated assay already, and then it's a larger study to begin with. So I think that they're all different sizes. And from our perspective, I think it took us a couple of years to get our operations correct. I remember we had talked for many years about how it just took us longer to get

And the way. It's working then then they'll sign a larger study.

So it comes in or or it's a validated out there already and then its a larger study to begin with so I think that they're all different sizes.

And and from our perspective, I think it took us a couple of years to get our operations correct and you remember we had talked for many years about how it just took us longer to get.

Ronnie Morris: So certainly not the way it was a couple years ago in terms of just a tremendous amount of influx and the feeling like there's always going to be money available. But we feel much better than we did let's say a year ago. Got it. So maybe back to a more normalized flow of capital. Okay. Got it. Okay. That's super helpful.

To get the labs running efficiently with with the right type of regulatory.

Speaker 2: to get the labs running efficiently with the right type of regulatory and operational efficiencies. We have accomplished that. The second part was to get the business development team that could actually go out and spread the word that we are in these services because this is a new service line for us.

And in operational efficiencies, we we've accomplished that the second part was to get the business development team that can actually go out and spread the word that we are in these services. Because this is a new service line for us.

It's a relatively new service line for us get the word out that the high quality would be doing preclinical work. We can also doing.

Speaker 2: It's a relatively new service line for us. Get the word out that the high quality we do in preclinical work, we can also do in clinical services as well. And that's why we're excited about this new key hires in the business development team, because we think now we're gonna be able to go out and spread the word and let people know the high quality work that we do, which will lead to increased business, which we're already starting to see.

Clinical services as well.

And that's why we're excited about this new business.

Ronnie Morris: And then question regarding the gross margins. Some of the decline year on year was due to increased outsourcing that you guys are doing. Are any of those services something that in theory you guys could bring in house at some point to reduce your dependence on others to complete some of these studies? Yeah, we could for some of them. I would say the biggest pressure on the gross margins was just some of the delayed studies and the repeating of studies which we think we have a pretty good handle on now.

Key hires in the business development team because we think now we're gonna be able to go out and spread the word and let people know the high quality of work that we do which will lead to increased business, which we're already starting to see.

All right that's great. Thank you.

Yeah.

Thank you and once again Thats star one if you wish to ask a question. The next question is coming from David Darrin from Darrin Capital David Your line is live.

Speaker 1: Thank you. And once again, it's star one if you wish to ask a question. The next question is coming from David Darin from Darin Capital. David, your line is live.

Thank you Morris.

I wanted to ask you a question about.

Youre hiring.

Ronnie Morris: And that goes to the math cost increase because we're just using more mice to get the same amount of work done. So I think that that those pressures on the gross margin are probably the largest pressures that I think, you know, the next couple of months, certainly next couple quarters. I think we're going to turn back around. Got it.

Speaker 3: I know that it's out there that the champions is looking to hire.

I know that.

It's out there.

Champions is looking to hire.

Ah you're results affecting your hiring goals.

Speaker 3: Are your hiring goals increasing or are they decreasing?

Are you hiring goals.

Increasing or decreasing.

And Archie positions, you're looking to fill.

Speaker 3: And are these positions you're looking to fill more for entry-level or higher-level management in which you're serving?

For entry level or higher level management.

Matthew Hewitt: And then maybe one last one for me and I'll hop back into queue. I think you were commenting about the biomarkers and some of the key hires that you were able to get there. You see an increase in the lead gen and your clinical booking there are improving how should we thinking about size as some of those types of studies are are they bigger than your your historical studies or just I know they've got a longer lead time.

You are seeking more seasons employees.

Speaker 2: Yes, so so we aren't, we certainly have a couple of positions we're looking to hire, but we do not have a lot of positions looking to hire we have a fairly

Yeah. So so we arent, we certainly have a couple of positions we're looking to hire but we do not have a lot of physicians looking to hire we have a fairly.

Speaker 2: Good team, I mean when I say good team, I mean we're a very good team in terms of quality of people, but we have a, we're I think fairly well positioned. I think we at this point, considering certainly our history, we have very.

Good team.

When I say, a good team and we're very good team in terms of quality of people, but we have a we're I think fairly well positioned.

We at this point.

Considering certainly our history, we have very few.

Speaker 2: few positions available, so I'm not sure the question in terms of hiring, but I don't think our hiring has changed. We have a certain expectation for the bookings. We have a certain expectation for the work we want to do, and we have...

Few positions available so I'm not sure. The question in terms of of hiring but I don't think our hiring.

Ronnie Morris: So I'm just thinking theoretically those should be larger right? Yeah, they come in all different sizes primarily because, you know, first certain types of these clinical biomarkers you first sign a study just to see the validation of an assay. And then if you successfully validate the assay and the biotech or pharma likes the assay in the way it's working, then, then they'll find a larger study. So it comes in or it's a validated assay already and then it's a larger study to begin with. So I think that they're all different sizes.

Has changed we have a certain expectation for the bookings we have a certain expectation for the work we want to do and we have outfitted.

Speaker 2: Outfitted the organization to meet those expectations and you know, certainly certainly for like the scientific operation like the ex vivo platform and the

Outfitted the organization to meet those expectations and you know certainly.

Certainly for like the scientific operation.

Like the ex vivo platform in the.

And the Biomarkers, we have we have built a team that has excess capacity because we need that team in place who needs to be operational efficient operationally efficient with good quality.

Speaker 2: and the biomarkers, we have built a team that has excess capacity because we need that team in place. We need it to be operationally efficient with good quality. And we expect that over the next year or two, we'll be able to fill it up and we'll be able to continue to work efficiently. So, I don't know that we have that many openings right now. We always have openings, there's always.

Ronnie Morris: And from our perspective, I think it took us a couple of years to get our operations correct. I remember we had talked for many years about how, you know, it just took us longer to get to get the labs running efficiently with the right type of regulatory and operational efficiencies. We've accomplished that. The second part was to get the business development team that can actually go out and spread the word that we are in these services because this is a new service line for us.

And we expect that over the next year or two we'll be able to.

Fill it up and we'll be able to continue to work efficiently. So I don't I don't I don't know that we have that many openings right now we always have openings as there's always some bit of turnover, but I think we're hiring the same way we've always hired.

Ronnie Morris: It's a relatively new service line for us. Get the word out that the high quality we do in pre-clinical work, we can also do in clinical services as well. And that's why we're excited about this new, you know, key hires in the business development team because we think now we're going to be able to go out and spread the word and let people know the high quality work that we do which will lead to increased business, which we're already starting to see. That's great. Thank you. And once again, it's star one, if you wish to ask a question.

Speaker 2: some bit of turnover, but I think we're hiring the same. We've always hired.

Thank you.

Yeah.

Yeah.

Thank you and there were no other questions from the lines at this time I would now like to hand, the call back to Dr. Morris for closing remarks.

Speaker 1: Thank you. And there were no other questions from the lines at this time. I would now like to hand the call back to Dr. Morris for closing remarks.

Speaker 2: Thank you for joining us for our quarterly earnings call. A lot of good things happening at Champions Oncology. We're very excited about.

Thank you for joining us for our quarterly earnings call a lot of good things happening at champions oncology, we're very excited about the drug discovery effort that.

Speaker 2: drug discovery effort that we have. We're very excited about some of the new assays that we've been rolling out, especially our ex vivo assay. We continue to be excited about our in vivo work that we do, and clearly the biome.

We have we're very excited about some of the new assays that we've been rolling out, especially our ex vivo assay. We continue to be excited about our in vivo work that we do.

And clearly the biomarker that we perform for Biopharma. So I know all areas I think we continue to.

Speaker 2: that we perform for biopharma. So on all areas, I think we continue to, we continue to have an excellent.

David Darren: The next question is coming from David DARREN, from DARREN Capital. David, your line is live. Dr. Morris, I want to ask you a question about your hiring. I know that it's out there that the champions is looking to hire them. Are your results affecting your hiring goals? Are your hiring goals increasing or are they decreasing? And are these positions you're looking to fill more for entry level or higher level management in which you're seeking more seasoned employees?

We continue to have an excellent.

Reputation.

Speaker 2: in the marketplace for doing good, high-quality work. We are scientifically inclined.

In the marketplace for doing good high quality work, we are scientifically inclined.

Speaker 2: collaborative, and I think those are all the recipes for continued success. So we look forward to.

Collaborative.

And I think those are all the recipes for continued success. So we look forward to.

Discussing those with you on our next quarterly call and I. Thank you everybody and have a good afternoon.

Speaker 2: discussing those with you on our next quarterly call. And thank you everybody and have a good afternoon. Bye bye.

Thank you. This does conclude today's conference you may disconnect. Your lines at this time. Thank you for your participation.

Speaker 1: Thank you. This does conclude today's conference. You may disconnect your lines at this time. Thank you for your participation.

David Darren: Yeah, so we certainly have a couple of positions we're looking to hire, but we do not have a lot of positions looking to hire. We have a fairly good team. I mean, when I say good team, and we have a very good team in terms of quality of people, but we have a where I think fairly well positioned that I think we at this point, considering certainly our history, we have very few positions available.

Yeah.

Yeah.

Yeah.

David Darren: So I'm not sure the question in terms of hiring, but I don't think our hiring has changed. We have a certain expectation for the bookings. We have a certain expectation for the work we want to do, and we have outfitted the organization to meet those expectations. And certainly for the scientific operation, like the X-Vivo platform, and the biomarkers, we have built a team that has excess capacity because we need that team in place.

David Darren: We need it to be operationally efficient with good quality, and we expect that over the next year or two, we'll be able to fill it up, and we'll be able to continue to work efficiently. So I don't know that we have that many openings right now. We always have openings. There's always some bit of turnover, but I think we're hiring the same way we've always hired.

Operator: Thank you, and there were no other questions from the lines at this time.

Ronnie Morris: I would now like to hand the call back to Dr. Morris for closing remarks.

Ronnie Morris: Thank you for joining us for our quarterly earnings call. A lot of good things happening at Champions psychology. We're very excited about the drug discovery effort that we have. We're very excited about some of the new assays that we've been rolling out, especially our X-Vivo assay. We continue to be excited about our X-Vivo work that we do, and clearly the biomarker that we perform for biopharmus. So on all areas, I think we continue to.., and we continue to have an excellent reputation in a marketplace for doing good, high quality work. We are scientifically inclined, collaborative, and I think those are all the recipes for continued success.

Ronnie Morris: So we look forward to discussing those with you on our next quarterly call and thank you everybody and have a good afternoon. Bye. Thank you.

Operator: This does conclude today's conference. You made this connector lines up this time.

Operator: Thank you for your participation.