csbr-20220131

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)


☑			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
			For the quarterly period ended January 31, 2022


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
			For the transition period from to

Commission file number 001-11504

CHAMPIONS ONCOLOGY, INC.

(Exact name of registrant as defined in its charter)


Delaware			52-1401755
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)

One University Plaza, Suite 307			07601
Hackensack, New Jersey			(Zip Code)
(Address of principal executive offices)

(201) 808-8400

(Registrant’s telephone number, including area code)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class

Trading Symbol(s)

Name of Each Exchange on Which Registered

Common Stock, par value $0.001 per share

CSBR

The Nasdaq Stock Market LLC

Securities registered pursuant to Section 12(g) of the Act:

None.

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes þ No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company”, and "emerging growth company" in Rule 12b-2 of the Exchange Act.


Large accelerated filer ¨	Accelerated filer ¨	Non-accelerated filer þ	Smaller reporting company ☑
			Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No þ

The number of Common Shares of the Registrant outstanding as of March 11, 2022 was 13,522,441.

DOCUMENTS INCORPORATED BY REFERENCE - None

INDEX TO FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED JANUARY 31, 2022


	PART I - FINANCIAL INFORMATION
Item 1.	Financial Statements.
	Condensed Consolidated Balance Sheets as of January 31, 202 2 (unaudited) and April 30, 2021	4
	Unaudited Condensed Consolidated Statements of Operations for the Three and Nine Months Ended January 31, 202 2 and 202 1	5
	Unaudited Condensed Consolidated Statements of Changes in Stockholders' Equity for the Three and Nine Months Ended January 31, 202 2 and 202 1	6
	Unaudited Condensed Consolidated Statements of Cash Flows for the Nine Months Ended January 31, 202 2 and 2021	7
	Notes to Unaudited Condensed Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	18
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	22
Item 4.	Controls and Procedures	22

	PART II - OTHER INFORMATION
Item 1.	Legal Proceedings	24
Item 1A.	Risk Factors	24
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	24
Item 3.	Defaults Upon Senior Securities	24
Item 4.	Mine Safety Disclosures	24
Item 5.	Other Information	24
Item 6.	Exhibits	25

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

CHAMPIONS ONCOLOGY, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in Thousands)


	January 31, 2022		April 30, 2021
	(unaudited)
ASSETS
Current assets:
Cash	$	8,701	$	4,687
Accounts receivable, net	8,563		6,986
Prepaid expenses and other current assets	561		957

Total current assets	17,825		12,630


Operating lease right-of-use assets, net	8,418		8,521
Property and equipment, net	6,991		6,090
Other long-term assets	15		15
Goodwill	335		335

Total assets	$	33,584	$	27,591

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:
Accounts payable	$	3,743	$	1,894
Accrued liabilities	2,026		2,231

Current portion of operating lease liabilities	1,014		818
Other current liability	15		—
Deferred revenue	8,701		6,256

Total current liabilities	15,499		11,199

Non-current operating lease liabilities	8,618		8,783

Other non-current liabilities	231		181

Total liabilities	$	24,348	$	20,163

Stockholders’ equity:
Common stock, $.001 par value; 200,000,000 shares authorized; 13,517,941 and 13,414,066 shares issued and outstanding as of January 31, 2022 and April 30, 2021, respectively	14		13

Additional paid-in capital	80,860		79,945
Accumulated deficit	(71,638)		(72,530)

Total stockholders’ equity	9,236		7,428

Total liabilities and stockholders’ equity	$	33,584	$	27,591

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

CHAMPIONS ONCOLOGY, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Dollars in Thousands, Except Per Share Amounts)


	Three Months Ended January 31,				Nine Months Ended January 31,
	2022		2021		2022		2021

Oncology services revenue	$	13,193	$	10,812	$	36,232	$	30,476

Costs and operating expenses:
Cost of oncology services	6,406		4,623		17,411		15,603
Research and development	2,181		1,879		6,783		5,125
Sales and marketing	1,549		1,492		4,764		4,048
General and administrative	2,227		1,836		6,356		4,686

Total costs and operating expenses	12,363		9,830		35,314		29,462

Income from operations	830		982		918		1,014


Other income (expense), net	(32)		(8)		11		64

Income before provision for income taxes	798		974		929		1,078
Provision for income taxes	11		15		37		43

Net income	$	787	$	959	$	892	$	1,035

Net income per common share outstanding
basic	$	0.06	$	0.07	$	0.07	$	0.08
and diluted	$	0.05	$	0.07	$	0.06	$	0.07

Weighted average common shares outstanding
basic	13,500,444		13,371,613		13,170,880		12,974,470
and diluted	14,387,009		14,507,155		14,178,082		14,510,280

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

CHAMPIONS ONCOLOGY, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(Dollars in Thousands)


	Common Stock			Additional Paid-in Capital	Accumulated Deficit				Total Stockholders' Equity
	Shares	Amount
Balance April 30, 2021	13,414,066	$	13		$	79,945	$	(72,530)		$	7,428
Stock-based compensation	—	—			280		—			280



Issuance of common stock on exercise of stock options	1,000	—			2		—			2


Net loss	—	—			—		(172)			(172)
Balance July 31, 2021	13,415,066	$	13		$	80,227	$	(72,702)		$	7,538
Stock-based compensation	—	—			134		—			134



Issuance of common stock on exercise of stock options	81,078	1			121		—			122


Net income	—	—			—		277			277
Balance October 31, 2021	13,496,144	$	14		$	80,482	$	(72,425)		$	8,071
Stock-based compensation	—	—			310		—			310
Issuance of common stock on exercise of stock options	21,797	—			68		—			68
Net income	—	—			—		787			787
Balance January 31, 2022	13,517,941	$	14		$	80,860	$	(71,638)		$	9,236

	Common Stock			Additional Paid-in Capital	Accumulated Deficit				Total Stockholders' Equity
	Shares	Amount
Balance April 30, 2020	12,726,728	$	13		$	77,978	$	(72,673)		$	5,318
Stock-based compensation	—	—			120		—			120

Issuance of common stock on exercise of stock options	1,160	—			—		—			—
Net income	—	—			—		75			75
Balance July 31, 2020	12,727,888	$	13		$	78,098	$	(72,598)		$	5,513
Stock-based compensation	—	—			85		—			85
Issuance of common stock on exercise of stock options	640,657	—			1,294		—			1,294
Net income	—	—			—		1			1
Balance October 31, 2020	13,368,545	$	13		$	79,477	$	(72,597)		$	6,893

Stock-based compensation	—	—			232		—			232
Issuance of common stock on exercise of stock options	21,627	—			2		—			2
Net income	—	—			—		959			959
Balance January 31, 2021	13,390,172	$	13		$	79,711	$	(71,638)		$	8,086

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

CHAMPIONS ONCOLOGY, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in Thousands)


	Nine Months Ended January 31,
	2022		2021
Operating activities:
Net income	$	892	$	1,035

Adjustments to reconcile net income to net cash provided by operating activities:
Stock-based compensation	724		437

Depreciation and amortization expense	1,059		881

Net gain on disposal of equipment	(4)		—
Gain on termination of operating lease	—		(75)
Operating lease right-of use assets	535		226
Provision for doubtful accounts	117		49

Changes in operating assets and liabilities:
Accounts receivable	(1,693)		(1,401)
Prepaid expenses and other current assets	397		(34)

Accounts payable	1,772		(1,395)
Accrued liabilities	(205)		(122)

Other current liabilities	15		—
Other non-current liabilities	50		3
Operating lease liabilities	(403)		(106)
Deferred revenue	2,445		801

Net cash provided by operating activities	5,701		299

Investing activities:
Purchase of property and equipment	(1,878)		(2,427)


Refund of security deposit	—		92

Net cash used in investing activities	(1,878)		(2,335)

Financing activities:

Proceeds from exercise of options	191		1,296


Finance lease payments	—		(173)


Net cash provided by financing activities	191		1,123

Increase (decrease) in cash	4,014		(913)
Cash at beginning of period	4,687		8,342

Cash at end of period	$	8,701	$	7,429

Non-cash investing activities:
Right-of-use assets obtained in exchange for operating lease liabilities	$	205	$	3,872
Equipment acquired in accounts payable	79		—

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

CHAMPIONS ONCOLOGY, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 1. Organization, Use of Estimates and Basis of Presentation

Champions Oncology, Inc. (the “Company”) is engaged in creating transformative technology solutions to be utilized in oncology drug discovery and development. This technology includes proprietary in-vivo, ex-vivo and biomarker platforms, unique oncology software solutions and computational-based discovery platforms. Utilizing its TumorGraft Technology Platform ("The Platform"), a comprehensive bank of unique, well characterized models, the Company provides select services to pharmaceutical and biotechnology companies seeking personalized approaches to drug development. By performing pharmacology studies to predict the efficacy of oncology drugs, the Company’s Platform facilitates drug discovery with lower costs and increased speed of drug development as well as increased adoption of existing drugs.

The Company’s Software as a Service business is centered around a proprietary software platform and data tool, Lumin Bioinformatics ("Lumin”), which contains comprehensive information derived from our research services and clinical studies. Lumin leverages Champions’ large datacenter coupled with analytics and artificial intelligence to provide a robust tool for computational cancer research. Insights developed using Lumin can provide the basis for biomarker hypotheses, reveal potential mechanisms of therapeutic resistance, and guide the direction of additional preclinical evaluations.

The Company’s drug discovery and development business leverages the computational and experimental capabilities within its platforms. Their discovery strategy utilizes our rich and unique datacenter, coupled with artificial intelligence and other advanced computational analytics, to identify novel therapeutic targets. The use of its proprietary experimental platforms is then deployed to rapidly validate these targets for further drug development efforts.

The Company has three operating subsidiaries: Champions Oncology (Israel), Limited, Champions Biotechnology U.K., Limited, and Champions Oncology, S.R.L. (Italy). For the three and nine months ended January 31, 2022 and 2021, there were no revenues earned by these subsidiaries.

The Company’s foreign subsidiaries functional currency is the U.S. dollar. Transaction gains and losses are recognized in earnings. The Company is subject to foreign exchange rate fluctuations in connection with the Company’s international operations.

These unaudited condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission, or the SEC. All significant intercompany transactions and accounts have been eliminated. Certain information related to the Company’s organization, significant accounting policies and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States, or GAAP, has been condensed or omitted. The accounting policies followed in the preparation of these unaudited condensed consolidated financial statements are consistent with those followed in the Company’s annual consolidated financial statements for the year ended April 30, 2021, as filed on Form 10-K. In the opinion of management, these unaudited condensed consolidated financial statements contain all material adjustments necessary to fairly state our financial position, results of operations and cash flows for the periods presented and the presentations and disclosures herein are adequate when read in conjunction with the Company’s Annual Report on Form 10-K for the year ended April 30, 2021. The results of operations for the interim periods are not necessarily indicative of the results of operations for a full fiscal year.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

Note 2. Significant Accounting Policies

Cash and Cash Equivalents

The Company considers only those investments which are highly liquid, readily convertible to cash, and with original maturities of three months or less to be cash equivalents. As of January 31, 2022 and April 30, 2021 the Company had no cash equivalents.

Liquidity

The Company's liquidity needs have typically arisen from the funding of our research and development programs and the launch of new products, working capital requirements, and other strategic initiatives. In the past, these cash requirements have been met through cash on hand, working capital management, proceeds from certain private placements and public offerings of securities, and sales of products and services. For the nine months ended January 31, 2022, the Company had net income of approximately $892,000 and cash provided by operations of $5.7 million. As of January 31, 2022, the Company had an accumulated deficit of approximately $71.6 million, working capital of $2.3 million and cash of $8.7 million. The Company believes that cash on hand, together with expected net positive cash provided by operations for fiscal year 2022, are adequate to fund operations through at least 12 months from the filing of this 10-Q. However, should revenue expectations not materialize, the Company has cost reduction strategies that could be implemented without disrupting the business or restructuring the Company. Should the Company be required to raise additional capital, there can be no assurance that management would be successful in raising such capital on terms acceptable to us, if at all.

Leases

The Company accounts for its leases under Accounting Standards Codification ("ASC") Topic 842, Leases. Under this guidance, arrangements meeting the definition of a lease are classified as operating or financing leases and are recorded on the consolidated balance sheet as both a right-of-use asset and lease liability, calculated by discounting fixed lease payments over the lease term at the rate implicit in the lease, if applicable, or the Company’s incremental borrowing rate. As the Company's leases do not provide an implicit rate, the Company uses an incremental borrowing rate based on the information available at the lease commencement date in determining the present value of lease payments. Lease liabilities are increased by interest and reduced by payments each period, and the right-of-use ("ROU") asset is amortized over the lease term. For operating leases, interest on the lease liability and the amortization of the ROU asset result in straight-line rent expense over the lease term.

Earnings Per Share

Basic net income or loss per share is computed by dividing the net income or loss for the period by the weighted-average number of shares of common stock outstanding during the period. Diluted net income per share is computed by dividing the net income or loss for the period by the weighted-average number of shares of common stock plus dilutive potential common stock considered outstanding during the period. Such dilutive shares consist of incremental shares that would be issued upon exercise of the Company’s common stock purchase warrants and stock options.


	Three Months Ended January 31,				Nine Months Ended January 31,
	2022		2021		2022		2021
Basic and diluted net income per share computation (dollars in thousands):
Net income attributable to common stockholders	$	787	$	959	$	892	$	1,035
Weighted Average common shares – basic	13,500,444		13,371,613		13,170,880		12,974,470
Basic net income per share	$	0.06	$	0.07	$	0.07	$	0.08

Diluted income per share computation:
Net income attributable to common stockholders	$	787	$	959	$	892	$	1,035

Net income available to common stockholders	$	787	$	959	$	892	$	1,035

Weighted Average common shares	13,500,444		13,371,613		13,170,880		12,974,

SEC Form 10-Q filed by Champions Oncology Inc.