CSBR - Earnings call transcript Q4 2018 | Champions Oncology, Inc.

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Operator

Greetings and welcome to Champions Oncology Fourth Quarter Fiscal Year 2018 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to turn the conference over to your host, Ronnie Morris, CEO of Champions Oncology. you. Thank

begin. may You

Ronnie Morris

Ronnie David of you Miller, our us I’m joined for Oncology. today for call. earnings by our quarterly Morris, afternoon. Champions CEO I’m joining Good CFO. Thank

the you start, I will statements results is from I differ remind described statements. call Before that in actual and those will make I forward-looking materially what could during

guidance be A earnings Additional discussed available measures Forms XX-Q our is available information on in to financial call factors the in continued we non-GAAP that Form on could another reconciliation XX-K. GAAP cause that is the year of Oncology. [Technical million more may growth. We results release. to differ of substantial measures had Champions We of and financial Overall, the capacity progress own $XX another fully transitioned revenue for into year for Difficulty lab be and of cannot ] efficiencies, our facility year and operational additional exceeding our XX% record the new pleased revenue recorded surpassing the with easily

Operator

is Ronnie, the this operator.

Ronnie Morris

grown have see digits. expense services growth. maintain to and we while have Third, is future and PDX again, large achieved review and tumor core continue academic collaboration leverage to institutions our tool as many successfully characterized catalyst in bank double have us and with and growth, our allow more Fourth, well our we to and the relationship and to leadership. able bank important drug with development And single-digit cost, advantage we biopharma us preclinical in key revenues our scientific pharma scientific expertise expand in distinctive our advantage. a medical our once and way be by Operationally, lastly, to control a consultative investigators a for continues this very giving both building powerful

our find we our and the of infrastructure in fixed people confident and over growing increase ways continue improvement margin will With discussed that leverage regards as our have productivity disclose continuing our feel numbers, for XXXX, bookings the XXXX. we through labs as the the this revenue the new for top base. past, trend nicely is projections first we to second-half we quarter had As the our cost This to record on bookings to come we revenue through stage don’t fiscal while line, of of XXXX. set we the

as over to We pharmaceutical customers trends and within dollar existing continue and see customers exceeds annual The grow of have customer XX that in biotech added our a customer We volume base. well. positive now base XXXX, XXX. to continues new

new on customers at So time. and summarize, the we over revenue, nice customers adding pharma a biotech pace new are to average growing contribute these

growing and gearing of the our We’re breadth depth for base. customer both

hematologic our we oncology solid on expanding immuno bank and discussed prior the offerings. expanding over calls, PDX been offering we tumor several including our years, several As introducing and last have

studies early XXXX, platform, we and screening ahead is will introduce sold tumor customers of ex large assist leverage Looking believe provide vivo This to pharmaceutical us preclinical the large to bank expect enable we much and our some services which to platform our work. in companies. to after ex our and their vivo by needed

the further to we’re providing of years. When our compensation depreciation, excluding in While basis introduction laid information GAAP these on the coming new services these in revenue achieving future million from loss months. to ground $X XXXX, the look forward counting contribute We meaningfully not to stock-based achieved break-even $X.X from million on for services in expansion a new monumental additional fiscal operations revenue in in progress profitability, results. XXXX. and We’ve XXXX nearly to narrowing we made fiscal towards

flow We’ll exceed revenue combined on with positive and and and modest consistent single-digit operating on our that very expenses. cash a We’re basis will cost during in XXXX. increase both XXXX optimistic XX% again growth fiscal quarterly profitable be

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

David Miller

Ronnie. Thanks,

Form XX-K with on results filed full Our will the July be on SEC XX. or before

in driven As business we to along we as quarter of signing, our was XX.X%, year driving million, a primarily quarter-to-quarter. level million extract segment. been XX% new Revenue you compared from $X.X the prior of our that fiscal from XX.X% for results, with million, an overall fiscal XXXX more in TOS efficiencies an and our our consistent increase of have XX% grow increase the guidance well $X.X year by revenue record in can revenue This increase revenue consistent ahead of the operations Total higher year. was revenue to we was levels $XX.X for are prior continue the of of see fourth growth. increase

We with growth we pleased fiscal in the XXXX. made and are progress

a $X.X in fiscal increase, million year compared XX, once to margin ahead was XX.X% XXXX. April compared XX% TOS Looking gross April we TOS XX.X% year quarter the XX%. the for of to was was XXXX $XX.X XX.X% to for XX.X% was XXXX, fiscal million XX.X% gross compared to ended and revenue million, revenue for fiscal for for revenue TOS our are quarter, least the comfortable predicting at the fourth in XXXX. year XXXX, growth period. margin or XXXX. year-ago XXXX, million three fiscal again, to $X.X months increase, the ended fiscal million of fiscal compared TOS for fourth XX, $XX.X $X.X

but volatility business our numerous margins may discussed As fluctuate the as decrease grows. we’ve likely the times, to quarter-to-quarter, is gross

structure to expect addition, to increases. fixed productivity continue we gross as In expand our we continue margin drive cost to our leverage and

XX.X% to forward, expenses on next of is and the which the XXXX due not in sales diminishable ended expenses year. to April all expenses, months marketing XXXX. marketing ended compared modest POS calls. strategic for generally a expect decrease to development for its The fiscal XXXX. $X XXXX, for the were for in that XXX, the months million expected should of primarily us million sales million the the million period the XXX, three of Research fiscal compared in XX, rationale as expenses increase General XX, expenses and compensation sales the we XXXX, in total reduction of expanding $X.X period result three of we’ll In quarter expense. were million April on conference in from same a expect compared result XX% Combined, mainly discussing of were remain of took months we segment in X.X%. XXXX, prior opportunities. stock-based $X.X The $X.X April $XXX,XXX growth compared salaries, mainly contribution our $XXX,XXX. year and a breaking over Sales million will TOS be but XX, of to it’s decrease decrease fiscal The million is $X.X marketing and along cost Going force, the we that, time. over to our business with the administrative administration diminish $X.X million to in year, for were $XXX,XXXX now approach expenses to full-year the year to $XXX,XXX and conference decrease our our last This for year. fiscal declined be expenses, our year, therefore, same million fiscal capture of for enable percentage be were and Development become total which XXXX, XX and has ended the and further was year to result were is results and $X.X same in for operating travel decision $X.X a quarterly our were April April marketing will million flat of out and a sales a will more in for XXXX, the $X.X the or last compared fourth ended the do General our both additional ended in year. last months financial XXXX, and further XX.X%, financials, POS period Sales and compared we Research a XXXX, to the a to not last part POS, $X attendance. expenses increase three G&A reduction expenses an for year. and

operating the aforementioned by expenses compared $XX.X a to were million in stock-based XXXX, million primarily year in fiscal is total XXXX, in fiscal year, driven year which decrease $XX.X the decrease For compensation. of X.X%,

times, reduction cost in focus the excluding As in Accordingly, discussed by comp. financial items, to many a was compensation we with and expenses. and reduction the of total stock-based results evaluation our highlights annual as stock-based such due depreciation non-cash

or X.X%, expenses last $XX,XXX. the cash-based fourth quarter to $X.X operating total year, the million were sales for in expenses and of compared fiscal period same XXXX, decline of a $X.X of million cost Our for approximately

$XX.X On of for a excluding $XX.X revenue increase XX%. the million an in modest costs growth represents $XXX,XXX, against increase XXXX, This comp stock-based total versus above year, were million or total depreciation, and X.X%. XXXX

the sales increase attributable of POS from a POS, to higher majority of volume. cost in Additionally, is this the increased resulting

X%, business expenses expand a anticipate our continue to our we XXXX, will we at rate higher ahead grow as Looking slightly at opportunity. to

a However, reported stage and we the income from solidly the for significant fiscal cash of of XXXX, reported increase a company million. of in of of to the On represents equivalent loss fiscal compared from set year from basis, million million the non-GAAP cash for in expected achievement profitable in in an $X non-GAAP to fourth well the XXXX. fourth year loss basis, quarters we for $X.X growth rate. $X.X operations the operations operations full positive the compared of or revenue a the below $XXX,XXX, loss quarter expenses a approximately XXXX, a On a will or be quarter which we $XX,XXX for one XXXX, fiscal

our million XX timing relatively to year. our turn along ended differences of our and flat activities and million cash let compared XXXX, working approximately was business. The of million. in operations XXXX, XX, an QX, the occurred first $X.X the improvement cost to XX $X.X April in of cash over the used new the Now course me to used in quarter with transitioning Net operating related in we for has as lab, for April $X.X ordinary Since majority of to incurred the remained position months capital cash XX, cash. expenses months the

approximately the end sheet. on the of XXXX, $XXX,XXX cash had of balance fiscal of we As year

an strengthening cash overall expect we year, sheet. improving next to position head balance all in a Looking

As activities that cash fund will To time. year. is increase such, our we hand to fiscal results, for financial our had up that revenue full over on growth sufficient sum continue our to the we remain confident and operating strong

were XXXX, remain bookings have of tight continued and during strong while a the first quarter on our expenses control. to Our grow

look We As questions. a operational first like excess basis. of for profitable to and revenue growth call, in forward to now next will on quarter our open anticipation result, be we’re in six to solidly the year ahead which earnings would XX% weeks. excited to call a your results in look approximately of quarterly We

Operator

time, this Please [Operator be a Matt question-and-answer Our session. Instructions] proceed will first we Craig-Hallum. question question. with your with conducting is Hewitt At from

Matthew Hewitt

afternoon, our strong for you finish and thank Congratulations Good a to gentleman. the year on taking questions.

Ronnie Morris

Sure.

Matthew Hewitt

A me. of couple

some that the roster, like competitors? First one from these as XX you look quarter like – new year would characterize off, my customers those generating are converting congratulations. first to sounds from a customers. added had pharma say and at really studies, business more your at or over and you’re time would you looking are as strong curious, you of you new that biotech greenfield that It maybe on I’m you

Ronnie Morris

So say, I both. a would of it’s combination

that we up competitors. a Tier the get think, we and time, a At would starting that preclinical work. we’re call, converting type C the are just definitely healthy to number starting of our of, or into are from are I with same of discovery lot have some companies gotten what we working companies, customers have funding

bringing we back both. just where seems on more I and quarter-after-quarter, quarter. on think, the right excited at be pretty we’re that a about now, progressing see it year quarterly lot we to number If doing every of more of continue we the customers we’re So a to we’re that And look and add look customers basis. from

Matthew Hewitt

is maybe about a then of you’ve four thinking further of be margins they there going trend as look the and in out bit little down to at how XXXX called you’ve But the and bit going bit little gross we over even lab we Okay, made, that variability. and prepared this some the a as some great. little And the be down, some and given should enhancements gross a margins next quarters new longer-term? remarks,

David Miller

Sure. that want Ronnie, to do you take one? me

Ronnie Morris

ahead, Yes, go sure. ahead. Go

David Miller

mean, I to always that cost fixed we’ve a they we as have margin. will So see certainly, continue improving our gross certainly revenues as will an infrastructure. and we stressed grow grow,

savings recognized have new lab. we from our Additionally,

to between would that the grow but were XX% over be and XX%. we’ll way and the all early the the XX%, get we’ll full-year, and of time. range. year, should don’t always over things the I certainly, And other of certainly I as we course that So, increasing know revenues at for XX% ranging expenses up we be later. we we anticipate recognize one highlighted I

– So is sometimes some sometimes business is gross actually of pressure, that result opportunities. of reduction margin so a a that and growing

Matthew Hewitt

Got it.

Okay. And more. then maybe two

should new more thinking the the year, to offerings Are cadence? thinking about will new How fairly some this offerings? we first-half some that be is the or loaded, we out just of I should of roll plan think about those be year. how be balanced, front-end meaning,

Ronnie Morris

Yes.

beginning actually offerings about to on new some I that, it QX. probably next the of now. beginning impact the year you middle will end of of of towards should revenue probably the right offerings But year. say, them strong we’re And the we’re the rolling big contribute to realized we’re there’ll probably fiscal is the QX not out, that the revenue would the strong be out bookings towards of the So think next rolling bringing way be of We’ll until year. that and some and

Matthew Hewitt

Understood.

for then was the and pharma. sure for draft to one not today maybe provided think I’m Okay. new one And last by this. me, But FDA guidance about there some how

how clinical seeing appears encouraging be Specifically, you cases. through utilize to can that But sure biotech I companies them or animal I’m pointing start just know to often in you. companies, are encouraging animal pharma mean to or that more the FDA studies it’s for first. FDA business? and curious, some what them your And models How not other actually I’m process? even I’ve the fairly is before seen that go frequent they to how their that it that is that mice Thank is common common. less and

Ronnie Morris

Yes.

and because the testing, It So FDA common but for testing. the certainly I more – recommend doesn’t IND we’ve getting PDX the grants go testing into common unless and it process, seen preclinical is more the NIH. a to lot terms from beforehand. done last of of they the for couple NCI We FDA. think grant academics the it for especially over PDX they a Oftentimes, getting years more come it’s in or to us, have more can’t qualify

So to grants, it’s becoming behind. important, you’re getting preclinical PDX especially much more some whether you’re have doing really testing, testing whether work animal

ask uses becoming how company definitely People oncology standard, use is, how it. pharmaceutical use much gold place. it’s pharmas PDX? every much is more more And of question much much, answer in the So always me, PDX. a they just The do common really many

becoming gold really it’s So development. preclinical of the standard drug

Matthew Hewitt

Great. you very Thank much. All right.

Ronnie Morris

You’re welcome.

Operator

Montgomery. question. proceed Knight question Please next from with Our with Janney Paul Instructions] [Operator is your

Unidentified Analyst

Knight. the completed is you an on on studies update the of total year-to-date provide this Mike Paul guys guys, behalf of that line on now? Can you’ve actually number Hey,

Ronnie Morris

studies. XXXX? of I in our For mean, well Yes, excess was it XXX

Unidentified Analyst

Okay.

start point before for on of seeing increase you you from trial? see Okay, booking – a recognized are thank And services, them And to maybe $XX of then the of do the signing mentioned some but the you be customer you. expect million you to backlog any or revenue a revenue in further, still in Do I Thanks. could for in how of backlog, past not Phase Phase you then that I increased in XXXX? demand contract assess interest the studies. about a

Ronnie Morris

some that, revenue to pharmaceutical that and easier the part of trial to is from we attaching Having the co-clinical us coming in. work trials So Oncology for the revenue we predict see to predict traditional the ourselves of do call, Phase come we we’re revenue XXXX we for said co-clinical what from, going to It’s trial, part because how trial. hard to It’s clinical be Services. that clinical the the I of much the do attached coming definitely the us with companies. some to Translational

second In interest. terms of there still is your question,

co-clinical interested a companies been that we’re get things the and of that of a pharmaceutical or other we’ve is avenue anything that are the active discussing One there’s been with to trial, that, think we the for offering. over whereas We trials for answers of speed in that They little have the more inherently this that little we’ve the weeks, that PDX. some that, a out will want really more combining need doing in vivo concept. next come platform discussion with of some quicker the a than couple a some co-clinical

introduced And of will the to powerful combination this vivo we’ve and PDX So we currently finance, the out. rolling ex them that a a of ex some vivo trials. new the think co-clinical work for we’re be it’s enticement

Unidentified Analyst

Thank great. for you the time. That’s

Ronnie Morris

You’re welcome.

Operator

question. next Dawson from Please Bob James proceed Securities. with question your Wasserman with Our comes

Robert Wasserman

Hey. for good on quarter question good and and Thanks, taking year. guys, the a congratulations fiscal a

question. one Just

You year fiscal sales idea what to the you on certain for [ph]? Micro sales stent accounts more expanding new – collaborations as little or that, this a year? force your with territories area this mentioned more is fail on or a products What looking bit this AZ geographical plan are larger about year. or your focusing color is to little give in Could you the

Ronnie Morris

Yes.

are pipeline. there’s business see coming So or activity, of it’s the lot development lot a a business we down really people and incredibly just a twofold. of lot One busy

the certainly of biotech a our So regions At and just West offering there’s where India our because we the emerging lot – of sales and those fit areas a are are our pharmaceutical and Northeast, emerging China, really companies in discovery to that increase lot Coast bank there lot a see PDX preclinical like We areas of areas. would opportunity. doing that biotech. the want throughout world lot that time, force, the feel some using other same a are tumor geographical certain we in well of work

we’re well. So think about trying as into to expanding also those areas

in sales have We a force Europe.

market because We’re well. really a is turning sales for into to force, as that good us expand looking Europe

sales So opportunity help that a expanding we that’s lot. we think to us see the going by and force,

Robert Wasserman

Okay, great.

on someone… coming are some it So new like already, the you areas in have have some is – must sounds cases which cases it up, you in supplementing,

Ronnie Morris

Correct.

Robert Wasserman

an you employer?] [ph] …[say, are

Ronnie Morris

correct. Correct,

Robert Wasserman

congrats Okay, you. thanks Thank again. and

David Miller

you. Thank Thanks.

Operator

Our Henry Capital. next with question from Scott is question. proceed ROTH with Please your

Scott Henry

good Thank you, afternoon. and

couple a Just of questions.

First, about could little model, you Puma? [Multiple Speakers]? we income with that you as should the the talk deal bit business did how how well a that as about impacts be think And statement within your

Ronnie Morris

Yes.

work with through So co-clinical we co-clinical patients trial, do grow, the tumors Puma company preclinical help implant those do trial. is patients’ from understand patients those a tumors were we deal where the clinical as we on trial. their was clinical those that pharmaceutical the to And trial a going

So Their tied we’re a from helpful interesting. our co-clinical we’ve revenue But the the perspective, really the trials. really important to described companies. They’re for always pharmaceutical way work trial.

the So for actually the wait we therefore, of to actual have because a the work the wait then on the the to from for have to for to tumor and study to have wait revenue, it’s we recognizing usually for IRB grow, the to cycle have approvals, we booking longer tumor. wait enrollment, we the

to a revenue recognize take – a year could of of recognize a – and a year-and-a-half it new trial. for clinical to to trial signing begin signing So co-clinical us

Scott Henry

Okay.

recognize can couple magnitude when But a a terms it get revenue what more the a revenue of to of years, that? long-term be do that sense road of is of project. of the So you down in sort

Ronnie Morris

Services. Translational what we TOS, So call, is the in regular, although our which general, Oncology

to work usually you So what are tumor the is for David, anywhere $X.X preclinical? the magnitude when much we bank million use larger co-clinical say average the our would between and pharmaceutical company, average trial, $X of do the whereas, trials co-clinical million

David Miller

larger and But increasing. is the closer range answer the to The to sign kind XXX,XXX. obviously, quick going customers, range. certainly, average generally that are There’s just studies average $XXX,XXX a obviously to be larger is $XXX,XXX is wide of

Scott Henry

then Okay, great. questions. And couple just of follow-up a

the kind or on variability jumped there’s relatively in QX? First, but margins up, of it what some caused the numbers. goods quarter-to-quarter, gross QX cost of small inversely the variability I understand But sold, – still

David Miller

in It’s really pick work. a up

will – that an in now to translate So the work of we’re quarters growing we couple a there’s volume next recognize right revenue. over But that now. increase doing and the

the recognized revenue, will For now. that in and be expenses QX QX and start

Scott Henry

Okay.

is That’s thanks. And in question unique helpful. final Okay, that. the somewhat

the Your XX%. sequential have which be from the would would And see at over start comps somewhat flat revenue XXXX, are we you when that, still throughout we a meaning is growing typical, increase QX the to expect is that would forward, over growth? you’re throughout a go XX%. into flat year, would such progression meaning trajectory revenues yet to Why Typically, lead that see next it year, you typical, you steady it’s more that with more would QX? high year-over-year through

David Miller

Yes.

of think, of per different we’ve we kind always a million stages. couple for reason, in – So where we quarter it’s I reasons. stages, up of we’ve always from kind leaped of to I and $X a think, in bookings kind went million grown $X for whatever One, fast

is due the our that QX. think, we summer new over partially reason, I into lab to the move fully second The until integrate didn’t

pretty – in much that there amount amount restrained doing of of from fixed And a so old revenue, revenue. our fair we lab a were had

that with in least a forward QX what have our we that’s will at So I projections. going see to from definitely seeing revenue QX, step-up we’re

pretty flat continue I So is will to which end, in has row. to quarters a we think do think for what couple a and done that, we increase and I trend that historically, won’t been we’ve going

Scott Henry

you Thank a and strong congratulations year. the on for taking questions great. Okay,

David Miller

Thank you.

Operator

question-and-answer Morris the At the of Ladies like back session. to this end I’d turn to Ronnie reached time, and gentlemen, the closing call for we’ve comments.

Ronnie Morris

taking Thank time. you. appreciate, I everybody, their

can things relatively while our as at stable. to you grow, we’re expenses company. going we’re where a lot on. as about see, excited of keeping very exciting certainly a continuing We’re And There’s

We forward weeks. with evening. everybody good I call. joining for to six everybody just in a will that, So speaking the to Have approximately thank look

Ronnie Morris	Chief Executive Officer
David Miller	Chief Financial Officer
Matthew Hewitt	Craig-Hallum Capital Group LLC
Robert Wasserman	Dawson James Securities
Scott Henry	ROTH Capital Partners

Champions Oncology (CSBR) 27 Jul 182018 Q4 Earnings call transcript