CSBR - Earnings call transcript Q4 2020 | Champions Oncology, Inc.

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Operator

Greetings and welcome to Champions Oncology fourth quarter fiscal year 2020 earnings call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions]. Please note this conference is being recorded. the Officer to of turn Morris, host, now Executive Chief Champions would conference our over Ronnie I Oncology. Thank you.

You may now begin.

Ronnie Morris

am today our I I fiscal year-end joining afternoon. Ronnie call. of our CEO Good earnings Champions us am for joined Thank by CFO. Miller, XXXX David you for Morris, Oncology.

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

cause non-GAAP results GAAP Forms discussed evolution major achieving could year differ that Additional is XX-K. the our continuing information that and call financial milestones on be in to XX-Q in another available of A earnings available factors significant Champions to may is the of the Oncology. on reconciliation financial release. progress, Form measures had and Overall, of the measures we

the We new bookings simultaneously revenue while expansion core levels product record and our to our of continued business, and develop offerings resources of investing reaching further services. launch

We revenue expanded demand business. our in guidance. to with growing order of resulting our and meet Financially, space also line capacity our $XX XX% revenue the million, mid-year in growth, recently exceeded in lab

than revenue year expenses. our higher foundation fiscal continued that were expenses to laying economic continued associated increase, into the due outsource revenue heading XXXX. to the environment, for and Our uncertain mostly that partners was Despite and expected growth one-time with was other our bookings

the adjust pandemic. it's times, living current the challenging during months we of a COVID to Speaking several as and working been all

COVID planned the We this Champions, the the we fairly weathered early anticipating and well. expected of originally for up challenges. worked to in some point Fortunately have stages of storm

hard quarter, the to precisely for work risk on We purchase. laboratory our immediately We active a to our remain on we entering of and reduce the of increased we lab to to services term, during such PPE stocking that measures level basis. The additional the strong of testament took for given daily a long scarce level development at time our service continued employees would increased pharma providing to. as able continue example, lab spending supply we we of suspected and are budget that that mitigate well-positioned COVID added remain technicians timely For to pharma the the up still a indications for for customer. become completed and services high items were our our shifts any demand disinfection ensuring We number accustomed workspace. fourth the was drug work are while It's for our our can't oncology dedicated continued customers' predict for growth. initial partners our we demand over while

healthy and a contributor vivo growing show revenue. platform interest, is to ex rapidly becoming Our to continues

PhenoVista partnered of As seen discussed have this a develop we half to year. and solid second unique opportunity, previously, have tremendous in in we the imaging platform especially base with this tumor growth

invest offer will in We summary, continue The for ahead as revenue to reduce this equipment will to our margin this contributing end unique and the launch this improve Additionally, vivo expand and cost a to will in fast-growing has additional vivo ex we our comprehensive, and In investment this and bring own been of more and set anticipate product ex of fiscal are plan differentiated our opportunity. year work vivo internal successful us we growth in-house of services. platform that ex year. enable look we to this capabilities. by is expanding

commence area pipeline several to quarters of the later led most our date. had COVID a taken the encouraging ago. the last pushed in off originally the although Now which companies by This scheduled been have growth delay trials to signs to longer let been flow by me months business update anticipated clinical of these by has the than reported that is we pharma due you on pandemic. cytometry in regulatory traction, our is launched gain business over our have human to opportunities. several It impacted This we but

the despite have regulatory the regulatory in prior succeeded signing These studies. However, several we study. are process to steps in signing flow the initial challenges, full validation the flow

not time tangible work, While clinical a it with does and commitment a study a come the a which trial positive our business base. customer development will belief affirms our we is more traction that first full validation over certainly to step guarantee the and get

it predict this optimistic Champions. on develop fiscal year of the and growth future the too we While impact early t business line will cautiously this revenue, is to are contribute

the on front, service invest we also to and On new existing focus our platforms creating enhancing while R&D continue offerings.

our data the to revenue early lead growth. at generators. year the capability a is and continuing good this internal we with sequencing foundation too functionality Along to build effect company specifics, customers contributor our revenue had fiscal the summary, with can as still sequence cost effectively in-house for multipronged near to our expertise, term but partners example in-house can expectation continue work an as to of tumor greater add to In will example, It to have relevant an pace are for our As tumors future pharmaceutical faster throughout genomic database, offer more bringing come services experience we as we potential us for increase to tumors models more a This that our sequencing will overall we well. effort discuss that reducing XXXX, into tumor cost and revenue expand gain which will our developing a anticipate we envision This how potential with. but gain our capabilities a on we tumor and allow to capabilities that we year. focus, valuable detail in genomic we opportunities not We discuss the sequencing data. and strategy will

We have differentiated a on strong a core business platform. built

and to in adding new services and offerings. traction our of enhancing we both suite service gained our are We

While forward the over the to look years, we over substantially year. course updates time. of we have grown We growth continued revenue providing and results over envision improving the

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

David Miller

Ronnie. Thanks

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

fourth revenue quarter, year-over-year. revenue an $XX.X XX% the achieved our the of $X.X million During had million quarter period, $X.X in million to half second and a we ago to up we increased bringing increase record Fourth revenue and to annual the growth XX% compared year predicted.

Excluding quarter the gain $X.X to a period. million stock-based goodwill of compared fourth ago we a recognized comp, $XXX,XXX loss in depreciation and year write-off, of

a year, breakeven Including loss to year $X.X write-off, compared of stock-based for gain approximately the $X.X were to ago. a and million in of For we compared depreciation a at we goodwill the a comp, the a full ago year quarter million loss period. of recognized $XXX,XXX

gain we a the the am to million that $X.X the identify led specific losses $XXX,XXX focus a of year, recognize ago full of year expense quarter. period. increases I and to costs compared for loss the For in going to and

and we First, $XXX,XXX sheet segments. while dollars worth our as such goodwill highlighting thousand we call it goodwill. generally exclude balance of quarterly non-cash the our of on between POS several TOS Historically, hundred add narrative, stock-comp allocated evenly our write-off expenses is in

the stated to quarter. with goodwill to POS our non-cash we decided with with asset a reevaluate determination continue take combined business, associated exiting growth expense TOS, strategy of and the we write-off the As this POS in continued this

an Focusing was cost the was fourth increase last million the which of sales period year, of versus back $X.X $X.X expenses, for cash or related fiscal on our same for $XXX,XXX XX%. of XXXX quarter million

increase breadth immediately As we incur Ronnie to The partnered successfully organizations revenue. short of is these the cost outsourcing the our approximately minimal of offsetting partnerships offerings. to we with mentioned, with term work half downside other that

regularly, our of expenses in well we discussed we recognize As incurred as recognition. revenue advance

there is limited these combined in incur We upon partnerships, with fact cost signing business However, leverage. immediate the the that impact a larger magnified. is the

As the jump spikes in volume the expenses. been in quarter result fourth the a bookings has of

total against revenue. in the of expenses $X million related of partnership For a had we million X.X recognized quarter,

compared which dipped on XX% ago to XX% for the As in a was gross margin our period. pressure result, the added there to quarter year

Going pricing are combined that these forward, we partners. margins with improving fact costs associated better our the we we expect with recognize revenue the terms negotiating as with

part to bringing start this year. of in-house term leverage lower will This as overall longer upfront we data expanding in and impact intend of which when occur rapidly. will strategy, the our our of accumulate charges provide quickly this expect bookings are cost, we work Additionally, half the which mitigate later

the in increase of cost to related of sales We our have lab. expansion will an however

will rent approximately Our $XXX,XXX increase per expense quarter.

investment year to necessary have a ensure growing expense $XXX,XXX period. is was meet to Sales the marketing it demand. to capacity enough ago we $X compared million and in However,

million $X sales year, was salaries million to was mainly and ago marketing in The year factors, expense to and increase period. due the the compared two $X commissions. For

existing deeper opening our the expansion continued We into geographies. territories penetrate business as team of well up development new to

ahead and this Looking development efforts. continued year, marketing business team the anticipate to expansion we of a

G&A was following. to the was ago attributable primarily increase due compensation Our The compared period. $X.X in the $X.X expense to million million to year executive

of Morris cash. preserve compensation the in to year fiscal During not company's order XXXX, XXXX and Ronnie most did any receive

it company the position in and compensation. $XXX,XXX time. award for Ronnie accrued expense In over as will considerably paid Board our compensate quarterly Board of an this additional grown, period improved approved fourth the decided be As that and time. quarter equity, has to has lieu the of the cash one-time recently out We

million the Now turning the year to with cash cash. balance on in sheet. We ended $X.X

of in $X to deferred cash quarter, mainly bookings. in the million, timing strong the and the revenue receivable For with the from along operations to payable due due increase normal our was variability accounts

during appropriate increasing in anticipated recognize XX%. we the XXXX the an cash were conclusion, million as In costs another our We growth, the exercised higher outsource some of expenses cash sheet. infusing we ended utilize and record $X for year final In be our position balance we profitability. a fiscal strategically balance our of cash one-time With were over topline at growth of to back annual impacted and strong summation, tranche our in opportunities reduction that our grew cash addition, specific fiscal in expected time. revenue than our expenses, quarter expect result, looking reached warrants we to In which we elimination additional XXXX. revenue our the by

the over more expenses causes current and We have fiscal identified specifically even focus will year. on the

We the and a strong cash on position opportunities we are to excited ahead. that are lie in capitalize

high to revenue quarterly growth are will in of in projecting confident year year. the We revenue XX% milestones fiscal result another another during XX% annual new current as hit we which revenue

almost weeks look first forward our report quarter to already six with update we result. another complete are accordingly when in quarter our We and about we first

question. the to We open call will now

Operator

Instructions]. [Operator

with question Matt Our Craig-Hallum. from questions. first your comes state Hewitt Please

Matt Hewitt

thank for and you questions. afternoon the Good taking

Ronnie Morris

Matt. Sure

Matt Hewitt

on you update procedures early some currently the an back. Maybe us to see far on as the We clinical in trials As where the were I are delayed. clinical provide coming the trials But elective are? Could could those more know update first one. where an on like processes you give sitting? started lockdowns, trial of

Ronnie Morris

for routine the definitely except as trials. their lot or these full institutions, caregivers. are for of a patients, So country COVID on don't are progressing. necessarily the know, are associated of the academic with are the people any you have they the not in clinical They slowly, who of in in the necessarily coming care world, progressing complement you trials are where related or Depending

earlier Phase from So conversations earlier just seeing X the what have going flow and been is trials primarily parts we the are parts to they a start, when the obviously clinical the because in of, some is delay are trials a the some coming and the see around X, to we just we in of pipeline. negotiating being of little our things trials, these are of down cytometry of Phase we what bit stalled, Phase clinical X think perspective, leading and we what in

Matt Hewitt

be flow a are are That's comfortable, clinical for with from to way of, following you may to you. revenue helpful. pipeline. these you doing, guess flow describe a validation full-blown guess that that as compared Thank there are is then those I with the on And I the contribution kind projects the cytometry? first, study

Ronnie Morris

Yes.

that's, that be out. it study. I if study. study far or then think, way and it's size enrolled It are do we probably lot see for, if It validation depends depends of that, on it to perform to been come somewhere that actually times But a in in perspective. of the were a an So from be the contract company going to it ones is guideline how on booked to in expects if anywhere only validation of able for multi, A the actually international will range the between can pharmaceutical that And have many a U.S.-based. the patients depends once XX five about it's $XXX,XXX so we general amount.

Matt Hewitt

great. I touched you then That's Okay. a did. helpful. on little And or maybe bit think That's this David

and to where and looking I for As marketing, that plans that add maybe on ago what update Maybe it your an headcount have know there. a year the are sales as far versus been today was you fiscal XXXX? sits where

Ronnie Morris

want to You that, David? take

David Miller

Sure.

current an the So existing But salespeople we salespeople. immediate this quarter of look course the that we And current of more course number, over the to exact gone plans course Certainly over to year. trickle the this number expect year, we as have to you resource. increasing. see add of from that that geography, forward in The not the XX effect as salespeople the I have we approximately opportunity we XX we will, over do certainly that XX, or see even a of decide hesitant and XXXX, couple to about will will fiscal, we add are year. see

Matt Hewitt

in one and Maybe I this this going great. investors will know helpful. find don't if the are one but queue and I think hop you would back information That's to I last have

expenses during quarter the incremental get Coronavirus. had obviously related You to the

was what there little You additional the shifts And what might distancing. cost to up prepared. quantify But Coronavirus about that of ongoing. talked to obviously any the be kind of splitting so that way quarter? buying was impact still your on create that you adding, to it a Is PPEs Champions? Obviously, bit

David Miller

up, range usual. can to to than even more period. So, quantify comparing of ramping $XXX,XXX the certainly some supplies, the actually of it in of it I just historical in has it And terms $XXX,XXX been

see of we et costs we the impact dollar easily attributing it were down time, say of was our some just we up, cost we I specific supplies. But that has cost think additional grow the I in of grow. just not that that cost, associated to as expect identifiable. over some double discussion levels would time, may include terms did as ramping we costs supply come remain those at hopefully I terms specific over some there cetera. was in on because of in were the been if the don't too exact amount. the the in with supply but shift can I very certainly specifying And that terms know There cost that ones

Matt Hewitt

right. Thank All Understood. you much. very

Ronnie Morris

Sure.

Operator

Instructions]. [Operator

Scott state Henry next Our from question. Please comes with ROTH your question Capital.

Scott Henry

Thank But think you good in about trajectory days the But have we into there the could be know guess at all. only sense talk just I I would and for your XXXX? that how left four plays guess of quarter. and revenue COVID-XX afternoon. should about appreciated. starters, any you we color I for if trajectory that don't first

Ronnie Morris

David. ahead, Go Yes.

David Miller

expect, think, we certainly growth. growth sequential I over just see some No. the that a I stated It's fine. QX. we revenue mean I XX%

look am the is as confident increase here overall, with and should XXX I to at sorry, sit lumpiness think always quarter-over-quarter that obviously, revenue, will projected quarterly it sequential the are sequentially way we seeing XX% variability. the as we course it's the year, increases. the start I over of so we Ronnie. revenue today, we we But growth around and the with say we And our

color. you I think additional wanted to add

Ronnie Morris

we continued ramped are of long operational sides, or that and I to COVID the because how one continuing And We going us to be of through to have to some their ourselves things. have another, add work there both lab had say obviously be internal a for work. us Yes. I down who, been had happen One, think COVID to have down. And there term. just have to shut we never long reason is capacity what's some to operational. that really term. things. delay on the is I been, with we companies can couple because that there to slowed companies elephant see they other big want of that, going in have don't And affect room up

the a we see continue think from I to out lot So net there. that, of I think positivity effect,

same lot their us to lot the and they budgets from be before continuing activity the We a with even see people with still remote as COVID. and home a continue a to of working companies of working scientists and were it's in of biotech but to work lot if seem pharma us

we from that trajectory just from grow mentioned. feel a the to that continue we perspective, short So that able comfortable at term, be at will to pretty we least

Scott Henry

Okay. Great. out events just a another on to fiscal steady how lot think quarter. of fourth staying income again statement, gate XXXX? the right positive gross of obviously question kind just And turn of we expect when the get a flow in margins you we about then add guess this cash in into state? should And to one-time Would question, I to

David Miller

Okay.

So two will I take those questions.

flow of that. terms cash just will in So defined positive, I

of first that specifically, differences flow cash between be Whether can improve payable profitable operationally the QX? always Yes, will anticipate receivable. I in there accounts be or and all, accounts So timing I not statement on do to do.

grow you in state, say timing way time, you it's we P&L I think and to as times to difficult the et A look it's see we to low lot gross the cetera. we very and an the receipts, revenue times, I terms, steady recognize our to perspective, think of flow continue operational be at the QX. XX% several profitable Ks in the a in our on. over gradually increasing terms Qs fair But just to from of stated then at we state, loss mid-XXs. in will steady see we statement increasing the to I that exact think cash later have And increase expenses grow, a as clear, But incrementally margin terms cash especially then grow. So be it initially that if low on or the in XXs because on in be we would of range, the

Scott Henry

on any going higher Question that helpful. typical if think that number roughly I than line. I that were I recall mean should don't Okay. there in is very how $XXX,XXX. was And That's extenuating is, forward? circumstances then by about R&D,

Ronnie Morris

Yes.

effort about less a doing. we of us to work so opportunity a saw ahead conscious to So as year We that are of lot of we and of ahead a us, on an made profitability. expand a focused be that ago we lot the opportunity some internal of took excitement

that's R&D were opportunities. being mentioned at think why of platform, some we really expanding I our vivo line, about looking the some opportunities. them, some opportunistic other We ex

So coming this I will do we think same. in year, that the

if But will We lower this than and where or opportunistic were a really be aim year. opportunities we come things the think have we to about we where idea a little we work of expense us profitability. but I can not on profitable to afford is opportunity. the think I want important And an think at be somewhat to do it it, we good

Scott Henry

timeframe? coming Okay. when flow we impacted division? guess, we fiscal late about think Thank a been which Or fiscal of you. XXXX? revenues out by I kind Should should COVID-XX, to you regards mentioned And cytometry final that XXXX is question. the of think that material with has

Ronnie Morris

will about, certainly it during think been had that I the contribute a business some it's the could for for fiscal I driver this be be the for of these validation fiscal mean are that real growth about we the talking studies I not But talking end contribution we I year. anticipated, think have year. we there think XXXX, fiscal XXXX. towards certainly that fiscal to

Scott Henry

Thank for Okay. the questions. taking you

Ronnie Morris

you. Thank

Operator

back are management I this it Thank gentlemen, for there and to further Ladies questions will at time. closing remarks. you. no turn

Ronnie Morris

end Thank call. weeks our you approximately much look for updating very QX. in joining of on everybody forward We us for year to six

be direction good a headed. wish about And that, with excited I Champions everybody continues Oncology are to evening. We you. Thank the

Operator

parties All disconnect. today's you. day. Thank may This a conference. Have concludes good

Champions Oncology (CSBR) 27 Jul 202020 Q4 Earnings call transcript