csbr-20210131

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, 2021


☐			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 5, 2021 was 13,390,172.

DOCUMENTS INCORPORATED BY REFERENCE - None

INDEX TO FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED JANUARY 31, 2021


	PART I - FINANCIAL INFORMATION
Item 1.	Financial Statements.
	Condensed Consolidated Balance Sheets as of January 31, 202 1 (unaudited) and April 30, 2020	4
	Unaudited Condensed Consolidated Statements of Operations for the Three and Nine Months Ended January 31, 202 1 and 20 20	5
	Unaudited Condensed Consolidated Statements of Changes in Stockholders' Equity for the Three and Nine Months Ended January 31, 202 1 and 20 20	6
	Unaudited Condensed Consolidated Statements of Cash Flows for the Nine Months Ended January 31, 202 1 and 20 2 0	7
	Notes to Unaudited Condensed Consolidated Financial Statements	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	20
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	24
Item 4.	Controls and Procedures	24

	PART II - OTHER INFORMATION
Item 1.	Legal Proceedings	26
Item 1A.	Risk Factors	26
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	26
Item 3.	Defaults Upon Senior Securities	26
Item 4.	Mine Safety Disclosures	26
Item 5.	Other Information	26
Item 6.	Exhibits	27

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

CHAMPIONS ONCOLOGY, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in Thousands)


	January 31, 2021		April 30, 2020
	(unaudited)
ASSETS
Current assets:
Cash	$	7,429	$	8,342
Accounts receivable, net	6,121		4,770
Prepaid expenses and other current assets	419		385

Total current assets	13,969		13,497


Operating lease right-of-use assets, net	5,380		2,798
Property and equipment, net	5,540		3,993
Other long-term assets	36		128
Goodwill	335		335

Total assets	$	25,260	$	20,751

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:
Accounts payable	$	1,745	$	3,140
Accrued liabilities	2,426		2,502
Current portion of finance lease	—		125
Current portion of operating lease liabilities	628		503
Deferred revenue	6,615		5,815

Total current liabilities	11,414		12,085

Non-current operating lease liabilities	5,798		3,170

Other non-current liabilities	181		178

Total liabilities	$	17,393	$	15,433

Stockholders’ equity:
Common stock, $.001 par value; 200,000,000 shares authorized; 13,390,172 and 12,726,728 shares issued and outstanding as of January 31, 2021 and April 30, 2020, respectively	13		13

Additional paid-in capital	79,711		77,978
Accumulated deficit	(71,857)		(72,673)

Total stockholders’ equity	7,867		5,318

Total liabilities and stockholders’ equity	$	25,260	$	20,751

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,
	2021		2020		2021		2020

Oncology services revenue	$	10,812	$	9,012	$	30,476	$	23,375

Costs and operating expenses:
Cost of oncology services	4,842		4,325		15,822		11,958
Research and development	1,879		1,391		5,125		4,035
Sales and marketing	1,492		1,307		4,048		3,155
General and administrative	1,836		1,556		4,686		4,118

Total costs and operating expenses	10,049		8,579		29,681		23,266

Income from operations	763		433		795		109


Other income (expense)	(8)		(14)		64		1

Income before provision for income taxes	755		419		859		110
Provision for income taxes	15		12		43		38

Net income	$	740	$	407	$	816	$	72

Net income per common share outstanding
basic	$	0.06	$	0.03	$	0.06	$	0.01
and diluted	$	0.05	$	0.03	$	0.06	$	0.01

Weighted average common shares outstanding
basic	13,371,613		11,752,619		12,974,470		11,653,115
and diluted	14,507,155		13,673,672		14,510,280		13,440,861

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, 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	—	—			—		740			740
Balance January 31, 2021	13,390,172	$	13		$	79,711	$	(71,857)		$	7,867

	Common Stock			Additional Paid-in Capital	Accumulated Deficit				Total Stockholders' Equity
	Shares	Amount
Balance April 30, 2019	11,619,538	$	12		$	72,924	$	(70,698)		$	2,238
Stock-based compensation	—	—			131		—			131


Net loss	—	—			—		(641)			(641)
Balance July 31, 2019	11,619,538	$	12		$	73,055	$	(71,339)		$	1,728
Stock-based compensation	—	—			77		—			77
Issuance of common stock on exercise of stock options and warrants	625	—			2		—			2
Net income	—	—			—		307			307
Balance October 31, 2019	11,620,163	$	12		$	73,134	$	(71,032)		$	2,114

Stock-based compensation	—	—			229		—			229
Issuance of common stock on exercise of stock options and warrants	203,111	—			427		—			427
Net income	—	—			—		407			407
Balance January 31, 2020	11,823,274	$	12		$	73,790	$	(70,625)		$	3,177

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,
	2021		2020
Operating activities:
Net income	$	816	$	72

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

Depreciation and amortization expense	881		579
Gain on disposal of equipment	—		(52)
Gain on termination of operating lease	(75)		—
Operating lease right-of use assets	226		299
Provision for doubtful accounts	49		218

Changes in operating assets and liabilities:
Accounts receivable	(1,401)		(334)
Prepaid expenses and other current assets	(34)		(47)

Accounts payable	(1,395)		(913)
Accrued liabilities	97		(202)


Other non-current liabilities	3		—
Operating lease liabilities	(106)		(261)
Deferred revenue	801		564

Net cash provided by operating activities	299		360

Investing activities:
Purchase of property and equipment	(2,427)		(693)


Refund of security deposit	92		—

Net cash used in investing activities	(2,335)		(693)

Financing activities:

Proceeds from exercise of options and warrants	1,296		429


Finance lease payments	(173)		(51)


Net cash provided by financing activities	1,123		378

Increase (decrease) in cash	(913)		45
Cash at beginning of period	8,342		3,237

Cash at end of period	$	7,429	$	3,282

Non-cash investing activities:
Right-of-use assets obtained in exchange for operating lease liabilities	$	3,872	$	3,205
Unpaid portion of property and equipment purchase	—		321

Credit received on purchase of equipment	—		160

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 transforming drug discovery and development through data-driven research strategies and innovative pharmacology, biomarker and data platforms. The Company’s TumorGraft Technology Platform is a novel approach to personalizing cancer care based upon the implantation of human tumors in immune-deficient mice. The Company provides a technology platform to pharmaceutical and biotechnology companies using proprietary TumorGraft studies, which the Company believes may be predictive of how drugs may perform in clinical settings. Utilizing the TumorGraft Technology Platform (the "Platform"), a comprehensive Bank of unique, well characterized "Patient Derived XenoGrafts" (PDX) models, the Company offers multiple services to pharmaceutical and biotechnology companies seeking personalized approaches to drug development. By performing studies to predict the efficacy of oncology drugs, our Platform facilitates drug discovery with lower costs and increased speed of drug development as well as increased adoption of existing drugs.

The Company has two operating subsidiaries: Champions Oncology (Israel), Limited and Champions Biotechnology U.K., Limited. For the three and nine months ended January 31, 2021 and 2020, 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, 2020, 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, 2020. 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, 2021 and April 30, 2020 the Company had no cash equivalents.

Liquidity

Our 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, we have met these cash requirements through our cash on hand, working capital management, proceeds from certain private placements and public offerings of our securities, and sales of products and services. For the nine months ended January 31, 2021, the Company had net income of approximately $816,000 and cash provided by operations of $299,000. As of January 31, 2021, the Company had an accumulated deficit of approximately $71.9 million, working capital of $2.6 million and cash of $7.4 million. We believe that our cash on hand, together with expected net positive cash provided by operations for fiscal year 2021, are adequate to fund operations through at least 12 months from the filing of this 10-Q. However, should our revenue expectations not materialize, we believe we have 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

Effective May 1, 2019, 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 asset is amortized over the lease term. For operating leases, interest on the lease liability and the amortization of the right-of-use 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,
	2021		2020		2021		2020
Basic and diluted net income per share computation (dollars in thousands):
Net income attributable to common stockholders	$	740	$	407	$	816	$	72
Weighted Average common shares – basic	13,371,613		11,752,619		12,974,470		11,653,115
Basic net income per share	$	0.06	$	0.03	$	0.06	$	0.01

Diluted income per share computation:
Net income attributable to common stockholders	$	740	$	407	$	816	$	72

Net income available to common stockholders	$	740	$	407	$	816	$	72

Weighted Average common shares	13,371,613		11,752,619		12,974,470		11,653,115
Incremental shares from assumed exercise of stock options	1,135,542		1,921,053		1,535,810		1,787,746
Adjusted weighted average share – diluted	14,507,155		13,673,672		14,510,280		13,440,861

Diluted net income per share	$	0.05	$	0.03	$	0.06	$	0.01

The following table reflects the total potential share-based instruments outstanding at January 31, 2021 and 2020 that could have an effect on the future computation of dilution per common share, had their effect not been anti-dilutive:


	January 31,
	2021	2020
Stock options	1,693,312	2,366,598
Warrants	—

SEC Form 10-Q filed by Champions Oncology, Inc.