Earnings call transcript Q4 2023

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Operator

Greetings, and welcome to Champions Oncology's Fourth Quarter and Fiscal Year-End 2023 Earnings Conference Call. At this time, all participants are in listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] Please note, this conference is being recorded.

I will now turn the conference over to your host, Ronnie Morris, CEO of Champions Oncology.

begin. may You

Ronnie Morris

am I CEO Champions of Good Ronnie Oncology. afternoon. Morris,

is Joining for Chief call. David Financial today our Officer. earnings us our joining Miller, me for Thank quarterly you

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

XX-K. differ our Forms in information factors on available that Additional and could Form is cause results to XX-Q

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

Overall, our we deliver platforms to successfully had another year and of while business, progress, expanding on evolve strategy. and core longer-term our capabilities continuing

also adversely several two external on the as our internal. one presented impacted year primarily business was fronts, However, one challenges and

of sector quarter. the the in a half pressure on sequential our impacted course of to increases negative in second the funding the in the over the biotech year, decline quarterly booking discussed quarterly numbers first leading we year, As our

bookings the Additionally, customer with an challenging cancellations. in in in resulted the uptick along environment economic decline QX,

the than steadied, are rate to historical studies still above and, past. the are our as budgetary quicker of has customers While is norms therefore, still cancel cancellation experiencing cancellation in rate pressures

in These issues course during increase Internally, which we encountered operational led of operational the to in revenue cancellations. the contributor conversion, the another to year. lower-than-expected issues resulted delays, study and was

operational issues, fiscal first continue confident we the year. fixed will that of have we feel we the have and While this impact a addressed to of half for financial many

a of first looking year. profitability this issues this We that turn robust these revenue and of lower-than-expected and external to we in revenue back which The getting will half led challenges in effects anticipate both profitability. are of on second the of still the cumulative led track bookings the half feel and forward top-line internal weaker and to to year both impact conversion, the to for

bookings year. this negative continued half last reaccelerated in of positive of trend events, the despite more our year, fiscal note, and a On beginning these has the the second into

driver As including development of part platform we we ex services this feel made we our strategic the support longer-term of are in to lead With of phase expanded over business ex team our opportunity this which have should growth. development revenue We vivo sales continued team, clinical in Similarly, fiscal services. we year. already that vivo to core platform. have some have to a hires services, we an our and next increased course our of in development increase plan, have generation, expecting the of our be these reached seen the our

Champions pipeline living our robust It target development as discovery PDX PDX program. and its its discovery of of proprietary we've its of into regard platform announced Molecular tools out unique in development our Corellia a therapeutic bank central the AI. and a and Oncology platform. advancing superior models therapeutic leverage and team of to the will Atlas a Champions' programs Corellia therapeutic With with recently effort, world-class scientists and continue launched discovery wholly-owned to development named of subsidiary a launch drug

Our greater is with efficiency. and antibody develop rapid more drug pace objective conjugates at innovative, a to first-in-class

to stage, of stage with progressing Corellia. the lead promising we discovery support therapeutic this lead Our accelerate through programs well the results. actively growth exhibiting and are are discovery At programs our capital two raising

that strong have the challenging a a despite more In reputation, next and this growth is platform, we a we year team strong summary, a spurt. for poised bookings, stellar expected, being than robust

longer stronger to of we revenue poised on in confident emerge impact the year, of the to that over term. Some experienced are will year half results these first over are but last spill challenges fiscal with continue this we we and our profitability and

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

David Miller

Ronnie. Thanks,

today. on later results will the with XX-K full filed SEC be Our Form

of We record revised provided. impacted approximately a XX% guidance top-line with our the rate The year. norm of issues had financial our the range another the contributed loss leading of Ronnie revenue within revenue to representing growth net year to and of the historic year-over-year $XX growth and which presented for below million, performance, growth

million impairment operations basis, On non-cash off depreciation totaling charge million, comp, of expenses capitalized of prior a Included XXXX in product. Lumin GAAP the the loss the remaining due $XXX,XXX compared from $XXX,XXX was $X.X our was year includes to of $X.X in writing which to our charge. loss for stock and The income impairment fiscal $X.X year. million are an cost

adjusted non-cash year-ago these to items, million for compared the million $X.X EBITDA XXXX $X.X in our Excluding adjusted period. of was loss

to the revenue fourth period, results. million an cash-based Turning focus increase to to and million the of Fourth quarter or $XX.X quarter in increased $XX.X year-ago the X%. compared $XXX,XXX

period. year-ago Our adjusted $XXX,XXX to loss EBITDA $XXX,XXX adjusted was in the compared

in of million fourth quarter year, million to XX%. compared of $X.X our increase Total was cost $X sales an last

For year at of last anticipated $XX.X staffed increases convert expected. which not occur, ago, the year sales compared did growth, increase in fiscal compared revenue the but pace same was to to increase as due XX%. our the team compensation bookings a the operational to $XX.X which million of and to an the primarily for year we million period full year, The both did meet cost was to fourth quarter

coming our margin year-end the in fourth sales lower-than-expected and XX% the growth, for gross approximately quarter cost pressure, to the for under the quarter increase and Due at XX% of were revenue in on year. for

pressure half approximately XXXX percentage is first revenue our below conversion gross XX%. the as year, of be still last expected to our historical will rates. was period same The margin the For for continue margin

we second expansion anticipate this an our gross revenue conversion improves, year. the in As of margin of half

approximately in For million period. the fourth year-ago R&D $X.X million to was compared expense the quarter, $X.X

stated strategy expense platform. spend, in XXXX. to our drug R&D to year, The ramp to R&D compared investing $X.X our year-over-year for up was the million increase our million million discovery $XX.X attributed For $X.X was specifically fiscal

sales million, quarter, $XXX,XXX expense last to was $X.X of approximately fourth compared the year. and the increase marketing quarter fourth an For

to million million expense as such year-ago primarily team to business marketing compared conference as our For development initiatives, The restrictions was attendance eased. and the related compensation the year, of were $X.X sales to marketing additional the increases attributed COVID expansion and $X.X in expense period.

Our G&A expense was fourth XXXX. the quarter million $X.X and for XXXX of both

subsidiary. professional For due support $X.X was the invested IT fees IT year, to formation to $X.X We company increase upgrading period. the our year-ago new fees. in of G&A to infrastructure million related professional compared the in This expense was to million and and primarily in growth the an our

we a percentage of level and increases, expected anticipate lower revenue to is Looking G&A a G&A as ahead XXXX, to fiscal of year decline.

and to $XX.X year no Now ended cash. the We debt. with on of cash turning balance the sheet million

plan. For of activities quarter, an repurchase activities our operating $XXX,XXX stock in as cash investment and the $XX,XXX with $XXX,XXX additional in and part was lab financing used for equipment

For the year, generated $X activities approximately million, for cash million. used was by and cash was operating $X CapEx

XXXX, Looking improve cash a to of cash with our first fiscal we ahead in our our will the strength and revenue half balance anticipate decline rebound. as the year bookings, in our over we conversion, but the position continued year,

and lab further we and spend and efficiencies, the capacity CapEx our us other margin. functions improve to million planned our to expand as is range vivo allowing ex our increase automate in Our $X.X revenue platform increase

by impacted performance XXXX Information: the was this for outlined challenges financial in our call.

record, annual reached million by $XX we growing challenges, the revenue another XX%. despite approximately and However, revenue recording in

Our in small second second bookings reaching decline the quarter, a highs year. rebounded half from the the in new of

to The We're fiscal bookings strength back expecting in revenue the latter to our pinpoint anticipate be XXXX. for rationale range to the conversion, half historical difficult year the of to revert and the wide timing of over We XX%. is of the projecting revenue it's X% norms in course our the growth we for exact of conversion continued revenue that year. although are between the improvement the

that want short-term obstacles, reiterate some the message our long-term I positive. are prospects to despite

strong report sales the about ahead. opportunities exciting look lie we forward we to to weeks Our on that are when update our are long-term first another six We in quarter results. and positioned capitalize

questions. call for the open now will We

Operator

will your this is [Operator And Matt a time, from Thank question-and-answer conducting you. first the be is line At coming Hewitt live. we Matt, Craig-Hallum. question today Instructions] session. from

Matt Hewitt

you little talk desire to some those you if bit on for you're the landscape, customers Maybe regarding albeit moving little a sounds of Maybe could forward seeing from bit one, hearing it like some regarding programs? remaining regarding you're pipelines, update. for what the just keep the question ball about improvement, Thank elevated. invest first the their afternoon. Good and their and a some taking cancellations are

Ronnie Morris

Matt. Thanks, Yes.

of feelings feel That's we their able We they're quickly over at a an to So year, their to or feelings certainly in changing be things felt And had increase more been now happening, studies -- these in new stabilized, And study fairly quick held seen willingness line. capital. delays. customers that some think contributing on of have think so, to going now. like based recently, It's cancellations. the it terms operational we have their factor raise definitely, least and maybe issues that last we've budgetary just priorities I still couple back some but into that yes, of be the when is think of ago. is most I experienced that I some quarters coming back and we feel have more of that,

a of was mix, I more So, They're certainly quarters, mix. They're still it's think, a right? couple of, customers. still a first combination it

in say, the seen wanted, might of that are half signal being out they're study, I of the a not the first isn't we'll cutting phenomenon couple they're just getting study." more they we've in think think latter that quarters. In pare certainly the results "Hey, maybe the of have study. part some back conscious want rolled of the better maybe results now I of the we're the study of in we with for going the past study of not whole terms So quicker last half study, customers whereas hoping that's early if to been the over seeing well they

are gestalt, up seem to to now let's they -- where to feel things behaved, Just a seem anecdotally little be just pressurized and we're the more ago. and starting way a more consistent be bit of open a with years people couple less say,

Matt Hewitt

how of maybe of you what have kind those were then, up, internal provide the Got and issues on that it. touching those addressed? bit on popped And a been little color could

Ronnie Morris

which, led led from a to the of ago, a think of two to, on, having key saying, vivo to we people of customers time, vivo turnover, to led studies, I of one an deviation which some bunch in -- works train an that to a for Maybe take studies, it leads repeat able leave, and to led in them had. side, a in accustomed restart to now," high Yes, deviations course, some of takes couple than six delays, some management months not way leads also couple or higher issues, of of to been studies, it "We're started had with -- extra couple the we've couple months bring a we sometimes it changes lot that going especially people about vivo management, year a of in study. to because with to

delay, use So, study the is and going either I'll a other if long be delayed you say, have the not revenue where customer's of time, cancel going "Maybe to just of the dollars to some start period study. or best cases purpose," the for over, by it's oftentimes my to in

had we that. So, of bunch a

fixed a now out experienced a vivo we some because while to think, wash I management couple period. strong a takes in, We've of of lot But of months a brought those that had studies, the in team. it's it have over issues issues. We

short for labors. have and of we to doing time, the in now long right in we on is this cycle, right way that revenue the the of that were, a blip. in right and We've it have control. little those people So, fruits because place, time just just go for to confident a we're these see going place, be long a the long under it processes be metrics we bit and to is us this time, a a studies takes going place, the able to But back

Matt Hewitt

that's But All Any us I it. queue. Maybe Therapeutics partnership. if the How last wondering one, there? give right. one then the you. you could Alloy hop Thank Got I'll update was on an progressing? details back in

Ronnie Morris

Yes.

as is a partnership Alloy really has that about the So, we're money conjugates. for. out been which That's antibody We're it. Corellia, the subsidiary excited drug raising there carved in building wholly-owned out

this good prospective We data to have and really bunch talking we're a investors of time. at

quality real direction. We in So, done building our work targets, about has all the Alloy that we're the currently feel position in. right things like we're and the leading some against ADCs excited

Matt Hewitt

Thank Great. you.

Operator

your question ROTH next live. The Capital. Instructions] from from Scott Henry is [Operator Scott, is coming you. Thank line

Scott Henry

you, Thank afternoon. and good

Just a questions. of couple

year-over-year mentioned you kind that context? baseline of give What fourth in second we can Can that? were up third quarters, you the First, quarter. was XX% the put a in and bookings so into that number first, us for

Ronnie Morris

So, I don't correct we don't me think David, up were think was, the we mentioned year-over-year, I mentioned... wrong, think -- we I what mentioned bookings if I'm XX%.

David Miller

are No, it's same both. Both percentages.

So, comparing quarter, up XX%. fourth XX%, comparing up fourth quarter and were they're to they year-over-year,

Ronnie Morris

Okay.

David Miller

wanted history. we It over have add we you same in don't bookings not didn't disclose to the not question and, -- if to number. indicating -- our our -- our a just We're booking But happens number answer have exact remains the just to know we be know, provided that. the bookings specific I yes, specifically, don't to in general, number. strength I

Scott Henry

it sounded to -- of was the like that I'm it just that's good. range, end, outside trying okay, typical within the It sense higher but a isolation. of get So, sounds number perhaps

I range. like end the higher X% second we about think the Is revenue to to versus half would that range, David, lower fair? said XXXX. second the you it of When that the Second, first first half, growth be fiscal in half sounds end half think the of that XX%

David Miller

fair. Correct. That's

Scott Henry

do even how in AI a the Okay. business Is all what with makes Thank I about can then, that you. channel. you getting And drug if more do perhaps it business, also you AI to core into do or could discovery to your more you're business? the think at certainly mean, threat it AI the appealing?

Ronnie Morris

Yes.

that actually think I business. AI So, enhances the

biotech to was genomic the it I the use think I of explosion, using to AI we information, anytime ideas come and new proteomic happening with using hypotheses, now up whether now more explosion, ideas. come test hypothesis. think up new anytime all tools to investigate leads what that find tools the we that and explosion, ends with more there's investment, is, new more new hypothesis, all transcriptomic interesting to up And discovery, and pharma and need

with a actually up both helping other helped us So, and come think new is has helping up and new of targets. us I that people lot targets, with AI come it's

core services. and and just going because it's perspective, my also I to both, helpful that our I of from helpful So, in on the use think think more it's it's us enhance make business to

Scott Henry

Final question, of great. bit one, which think a is a tougher Okay, I a but relevant one.

It's You've got well done multiple a for great core business. years.

to as some have You've now starting But as invested honest, they initiatives, some worked pain new initiatives. core with which, execution. planned, in you're from haven't the in as new well business happens well be out to which

Thank the Could question help the initiatives? you. the this is, actually think new So, separate too spreading business you thin? Corellia you're to do yourself maintain between and shift the core

Ronnie Morris

I great so Yes, that's think question. a

many you we expanded have years, the over and a heard, you've And So, over when lot we that as have first talk data, tried or tried get that of And two we years, think about kind right? lines expanded we on and we into have into I business. concentrate do to that I over and pared focus to all, software. the back last to two need think of realized of certainly, year

our ex utilize our both data off our business. of ex about getting remains models. is is the excited excited getting. a in feedback bulk comes That vivo our that which platform. in we're all bank, tumor our vivo that of effort We're the proprietary bank proprietary tremendous of putting that our around One the we're bookings ex our business the vivo and and into platforms really of we're about and still vivo the amount the specialness business We're

also that tumor it's tedious starting tools, our have a within there's we for we has business. standalone and the for and grow And side and which clinical biomarker preclinical that of that's Then, flow more use using been harder the is business, sequencing, for more who those cytometry, and little tools of outside that that either people bank. us all utilize been histology, the or to services competition

the However, it's and on continue definitely I move to believe like harder that. haul, we're It's been feel we but for the right to than I do it's over long longer, definitely making expected taken Champions push traction.

for that certain might And time technology. good have wasn't we things then, felt the it right been idea it might a had even we have good though and

users there because plate was we on have our the still and like we and So too Lumin, we plate. some lot our that, deemphasized services Lumin software think platform, there on was still a for instance, it's and good a of much but in

that another a to stand Like own, that and discovery focus Champions. business separate into example the I team. of separate that type It's alone has of and stand does that was out from So, business a carving a to its think take focus, can't away separate has that. the have on

So, I we are very right focused now. think very,

always on have areas. these into and to to I we're we what continue continue expand that call, to challenges, preclinical I -- to but going end-to-end good adjacent services. -- confident think these, clinical areas, think services people working continue pretty There's able grow into be the I these expansion, in we to feel

Scott Henry

taking color Thank thank the for you you great. and the for Okay, question.

Ronnie Morris

My pleasure.

Operator

this back to closing were time. There the no Ronnie I you. other turn Thank in like remarks. for questions Morris to would at queue now call

Ronnie Morris

everybody joining quarterly for our call. you for Thank

out we robust excited over quarters of also that We're and money the we are update and an initiatives. good on we weeks in put were going then about joining. As potential the We're of see of for into challenging have we're QX call. everybody to able entity, Corellia And There platform. we've the the there excited where for getting to line some said, next we sight about profitability. we're our have but the couple excited Thank the have and back we're ahead, that the years. raising about still very capital to hope that we're growth discovery news be excited drug effort couple to in terms you to next

Operator

Thank you. today's concludes This conference.

at You participation. you may disconnect your time. your this Thank for lines

Champions Oncology (CSBR) 24 Jul 232023 Q4 Earnings call transcript