Q1 2025 Champions Oncology Inc Earnings Call

Speaker Change: Music

Speaker Change: Greetings.

Speaker Change: Welcome to the Champions on College 1st quarter fiscal year 2025 earnings call. At this time, all participants are an illicitly mode.

Speaker Change: A question and answer session will follow the formal presentation. Any one should require operator assistance during the conference, please press star 0 on your telephone keypad. Please note, this conference is being recorded. I will now turn the conference over to your host, Ronnie Morris, Chief Executive Officer. You may begin.

Speaker Change: The National Assembly of the National Assembly.

Speaker Change: Good afternoon. I am Ronnie Morris, U of Champions on College. Join me today to David Miller, our chief financial officer. Thank you for joining us for our quarterly earnings call. Before I begin, I'll remind you of the making for the statements you're in today's call that actual results could different materialism would have described in those statements.

Speaker Change: Additional information on factors that could cause result to differ as a valid armforms tank Q and Form 10K.

Speaker Change: A reconciliation of non-gap financial measures that make this gutster in the call to cap financial measures is available in the earnings release.

David Miller: I will start by pointing out that our prepared comments because they will be relatively brief as we just recently provided our fiscal year and result in company update six weeks ago.

Speaker Change: on our year-end call I provided on the difficulties being counted last year, which led to disappointing financial result compared to our historical performance. I indicated that these challenges stem from a combination of external and internal factors.

Speaker Change: Externally, the weakness of interaction in the biotech sector, including tightness in the capital markets, negatively affected our customers, R&D budgets, resulting in fewer biotech signing studies, as well as decrease in our average study size.

Speaker Change: This led to a decrease in our booking's growth and revenue

Speaker Change: Internally, we were hampered by operational issues that led to caught inefficiencies and delays in revenue recognition.

Speaker Change: Putting pressure on our bottom line. On a more positive note, I highlighted that we ended the year strongly with significant trend reversals beginning to emerge. Improvements and operations began to take hold and some of the external pressures appear to be easing.

Speaker Change: The reversal was supported by our Q4 revenue in excess of $14 million and an adjusted quarterly profit.

Speaker Change: Most importantly, I indicated that we were cautiously optimistic that the turnaround was not limited to the quarter and that the changes we were making were leading to a stronger and leaner company, well positioned for a return to sustainable revenue and profitability.

Speaker Change: As we begin this fiscal year, I'm encouraged to report that the positive momentum which began last quarter has continued.

Speaker Change: We have begun here with another good revenue quarter in excess of $14 million improved operational efficiency and scalability, all leading to expanded profitability.

Speaker Change: The next several quarters will not be without a challenge in some volatility in our financial results, but we are confident that we have right sides of the company to accentuate the positive and minimize any negative impact when obstacles are encountered. Our business continues.

Speaker Change: to be driven by your unique and first-and-class PDFs bank are precise and reproducible well-characterized data and are expanded in vivo and X vivo platforms which combined to provide.

Speaker Change: and Biotech companies that necessary insights to further their drug development and translational needs.

Speaker Change: with regards to Corelli, our fully-owned drug development subsidiary. There's not much to add from our year-end call. I would reiterate that we continue to be excited about the targets and compounds that we have developed.

Speaker Change: We are actively engaging discussions to out-licen several of our programs.

Speaker Change: As with all our core centers, we are cognizant of the impact on our bottom line results. As such, we are working to minimize our core by reducing our spend while being careful not to harm the target's development simultaneously searching for a potential latency.

Speaker Change: The funding environment remains tight, but we continue to be actively engaged with investors in efforts race capital support and accelerate our growth.

Speaker Change: In summary, the quarters performance represented a second sequential quarter of overall improvements in our results and operations. We anticipate that we will continue to solidify these achievements over the coming quarters and put us back on track to provide consistently positive results for our investors.

Speaker Change: Our comprehensive platform, our unique data, our stellar reputation and strong team are the key ingredients for our positive outlook. We are confident that we will continue to become stronger with revenue and profitability over the longer term. Now let me turn the call over to...

Speaker Change: for a more detailed review of the financial results.

Speaker Change: Thanks Ronnie, our full results on form 10Q will be solved with the SEC by Monday, September 16th.

Ronnie Morris: Our first quarter revenue was $14.1 million, an increase of 12% from the first quarter of 2024.

Speaker Change: I highlighted on our year end call and we iterated by Ronnie. The financial turnaround began last quarter and continues with our second consecutive quarter of revenue of an excess of 14 million.

Speaker Change: On the Gapbases, our income from operations for the first quarter of 2025 was 1.2 million compared to a loss of 2.6 million in the prior year.

Speaker Change: Included in the income of 1.3 million were non-cash expenses of stock pump and depreciation totaling approximately 700,000.

Speaker Change: Excluding these non-cash items, our adjusted unit was 2 million for the quarter, compared to an adjusted loss of 1.7 million in the year ago period.

Speaker Change: During the focus to our cash base result, total cost of sales was $70 million, compared to $7.5 million in our first quarter last year, at the client of 6%.

Speaker Change: The decline was primarily due to operational efficiency implemented, which had a dual effect of reducing the amount of repeat work and the associated cost while increasing our revenue conversion.

Speaker Change: Due to the decrease in cost of sales, while increasing revenue by 1.5 million, our gross margin for the quarter improved to 50%, compared to 40% for the same period last year.

Speaker Change: Our margins will fluctuate over the next few quarters with some expected volatility in revenue and cost of sell, but on a long term, with a stabilization in our costs, we anticipate delivering margins in excess of 50% as our revenue grows.

Speaker Change: For the quarter, R&D expense was approximately 1.5 million compared to 2.8 million in the year ago period of decline of 1.3 million. We have a renewed emphasis on our bottom line with the hopes and we've strategically reduced our R&D expense.

Speaker Change: We continue to invest in our core business to facilitate future growth, but within much of this in our investment in developmental programs that are not part of our core vision.

Speaker Change: approximately 600,000 was invested towards a drug discovery as efforts during the quarter compared to 1.2 million last year. For the quarter sales and marketing expense with a flat 1.6 million.

Speaker Change: Our G&X, G&A extends was 1.9 million compared to 2.3 million in the year ago period, a decrease of 400,000. The decrease was primarily due to our reduction in compensation and recruitment expenses.

Speaker Change: Now starting to cash, we enter the quarter with 2.9 million of cash on the balance sheet and no debt. For the quarter, cash generated by operating activities with 300,000.

Speaker Change: The cash generation was led by an improvement in our operating results along with changes in our working past capital accounts in the ordinary quest of business.

Speaker Change: As our operational results continue to stabilize and improve, we anticipate a gradual increase in our cash balance. Accordingly, we are confident that our cash positioning means solid.

Speaker Change: In summation, our first quarter financial results was strong, with revenue in excess of 14 million and adjusted it at that of 2 million.

Speaker Change: There will be some volatility in revenue and it will end up over the year, where with the expected threat in our bookings and with the operational corrections taking effect, or confident that we return to the path of delivering stronger financial results that should create value for our shell hole shareholders.

Speaker Change: We look forward to our next update in mid December when we report our second quarter result. We will now open the call to questions.

Speaker Change: Thank you.

Speaker Change: 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 keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you'd like to remove your line from the question queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.

Speaker Change: One moment please, while we pull for questions, once again please press star one if you have a question or a comment.

Speaker Change: The first question comes from Matt Hewitt with Craig Halm, please proceed.

Speaker Change: Good afternoon and thank you for taking the questions and congratulations on the strong quarter

Matt Hewitt: Maybe first up, I'd love it if you could provide a little bit of color and what's you're hearing from customers. I think you noted that the funding environment has gotten a little bit better.

Speaker Change: but what are you hearing from customers and even if you could dilineate that between the smaller mid-sized customers versus larger customers there's been some, I don't want to say concern, but some comments here recently regarding the larger customers, reprioritization of pipelines, those types of things, I'm just curious what you're hearing.

August Dalton: Hey, Matt, thanks. Yeah, so I don't know that we have a science of cancer for that, but I'll give you kind of August Dalton and some anecdotes. We feel that...

Speaker Change: to the degree it's improving, it's hard to really tell you. I would say that from our experience, it's still tight in the small biotech world whereas in the mid-sized to the larger farm, they are definitely cutting back, but...

Speaker Change: They have budget and they are continuing to do work so, you know, for our services, the pre-clinical services using our unique and first and class.

Speaker Change: and Pediax Bank, I think that that's a place where they need to continue to spend. So from our perspective, it's definitely getting better, but it's not where it was, let's say, a couple of years ago, and we think it will get there.

Speaker Change: taking out of the year or so.

Speaker Change: Okay, I'm going to let that's go much appreciated. Last quarter you noted that the conversion rates were improving, cancelation rates were down, did that trend continue here into the first quarter?

Speaker Change: Yes, yeah, we've seen that that...

Speaker Change: Both of those things are happening, our revenues converting better, and as a result of our cancellations being down as well. So those are two really...

Speaker Change: Positive aspects to the first quarter, as well as the fourth quarter that we had talked about, so things are definitely moving in the right trend.

Speaker Change: Wright direction.

Speaker Change: That's great and maybe one last one little hop-back in the queue but on Monday afternoon the biosecure act was passed in the house Now we'll move on to the Senate

Speaker Change: I'm just curious, do you guys compete against one or more of the entities listed in that bill and if so would their being blocked in the here in the U.S. market would that create an opportunity for you to pick up some share? Thank you.

Speaker Change: Yeah, so I think, you know, I think for a long time, you know, certain certain companies have have...

Speaker Change: State away from working with some of those groups, I think it probably will help us. I don't know to what extent, but I think it probably will help us, because certainly some of those companies to a certain extent, we compete with.

Speaker Change: Got it. Well, that's great news. Thank you.

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Speaker Change: Okay, I'd like to turn the floor back to management for any closing remarks.

Speaker Change: Great, well, thank you everybody for joining us for a Corlerons call. We certainly are excited to continue the positive trend, getting back to profitability and the growth we are excited about.

Speaker Change: How we deliver our results, the quality.

Speaker Change: our teams, the work we do, the important work we do with our...

Speaker Change: Pharmaceutical and the biotech partners and customers and we look forward to updating everybody in a couple of months to our continued progress. So everyone have a good evening and thank you for joining us.

Speaker Change: Thank you, this concludes today's conference and you may disconnect your lines at this time. Thank you for your participation.