What changed in this filing

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Item 2. Management’s Discussion and Analysis

2021-12-13 compared with 2021-09-13 · 39 added, 24 removed, 75 unchanged (46% of the section changed)

12 unchanged sentences

Forward-looking statements speak only as of the date the statements are made.

Factors that could cause actual results to differ from those discussed in the forward-looking statements include, but are not limited to, those described in “Risk Factors”

in Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended April 30, 2021, as updated in our subsequent reports filed with the SEC, including any updates found in Part II, Item 1A of this or other reports on Form 10-Q, if any.

Factors that could cause actual results to differ from those discussed in the forward-looking statements include, but are not limited to, those described in “Risk Factors” in Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended April 30, 2021, as updated in our subsequent reports filed with the SEC, including any updates found in Part II, Item 1A of this or other reports on Form 10-Q, if any.

You should not put undue reliance on any forward-looking statements.

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Our Lumin software contains comprehensive information derived from our research services and clinical studies.

Lumin leverages Champions’ large Datacenter coupled with analytics and artificial intelligence to provide a robust tool for computational cancer research.

Lumin leverages Champions’ large Datacenter coupled with analytics and artificial intelligence to provide a

robust tool for computational cancer research.

Insights developed using Lumin can provide the basis for biomarker hypotheses, reveal potential mechanisms of therapeutic resistance, and guide the direction of additional preclinical evaluations.

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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 cash, working capital management, proceeds from certain private placements and public offerings of our securities, and sales of products and services.

For the three months ended July 31, 2021, the Company had a net loss of approximately $172,000 and cash provided by operations of $216,000.

As of July 31, 2021, the Company had an accumulated deficit of approximately $72.7 million, working capital of $919,000, and cash of $4.0 million.

In the past, we have met these cash requirements through 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 six months ended October 31, 2021, the Company had net income of approximately $105,000 and cash provided by operations of $1.4 million.

As of October 31, 2021, the Company had an accumulated deficit of approximately $72.4 million, working capital of $1.2 million, and cash on hand of $4.8 million.

We believe that our cash on hand, together with expected positive cash flows from operations for fiscal year 2022, are adequate to fund operations through at least 12 months from the filing of this 10-Q.

3 unchanged sentences

The following table summarizes our operating results for the periods presented below (dollars in thousands):

For the Three Months Ended July 31,

For the Three Months Ended October 31,

Revenue 2020 % of

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Total costs and operating expenses 11,523 97.8 10,110 99.9 14.0

Income (loss) from operations $ (175) (1.6) % $ 24 0.3 % (829.2) %

Income from operations $ 263 2.2 % $ 7 0.1 % 3,657.1 %

For the Six months ended October 31,

Revenue 2020 % of

Oncology services revenue $ 23,039 100.0 % $ 19,664 100.0 % 17.2 %

Oncology services revenue, which is primarily derived from pharmacology studies, was $11.3 million and $9.5 million for the three months ended July 31, 2021 and 2020, respectively, an increase of $1.7 million or 17.9%.

The increase in revenue is due to increased sales, both in number and size of studies, and the expansion of both our platform and product lines.

Additionally, customers are seeking more complex study designs and end point analysis testing, leading to larger contracts, contributing to revenue growth.

Costs and operating expenses:

Cost of oncology services 11,005 47.8 10,980 55.8 0.2

Cost of oncology services for the three months ended July 31, 2021 and 2020 were $5.4 million and $5.3 million, respectively, an increase of $60,000 or 1.1%.

For the three months ended July 31, 2021 and 2020, gross margins were 52.0% and 44.1%, respectively.

Research and development 4,603 20.0 3,247 16.5 41.8

Sales and marketing 3,214 14.0 2,556 13.0 25.7

General and administrative 4,129 17.9 2,850 14.5 44.9

Total costs and operating expenses 22,951 99.6 19,633 99.7 16.9

Income from operations $ 88 0.4 $ 31 0.2 % 183.9 %

Oncology Services Revenue

Oncology services revenue, which is primarily derived from pharmacology studies, was $11.8 million and $10.1 million for the three months ended October 31, 2021 and 2020, respectively, an increase of $1.7 million or 16.5%.

Oncology services revenue was $23.0 million and $19.7 million for the six months ended October 31, 2021 and 2020, respectively, an increase of $3.4 million or 17.2%.

The increase in revenue is due to continued demand for our core services and the expansion of both our platform and product lines driving increased sales, both in number and size of studies.

Cost of Oncology Services

Cost of oncology services for the three months ended October 31, 2021 and 2020 were $5.6 million.

For the three months ended October 31, 2021 and 2020, gross margins were 52.4% and 44.2%, respectively.

Cost of oncology services for the six months ended October 31, 2021 and 2020 were $11.0 million and $11.0 million, respectively, an increase of $25,000.

For the six months ended October 31, 2021 and 2020, gross margins were 52.2% and 44.2%, respectively.

The improvement in gross margin was primarily due to the reduction in outsourced lab work.

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Research and Development

Research and development expenses for the three months ended July 31, 2021 and 2020 were $2.3 million and $1.6 million, respectively, an increase of approximately $707,000 or 44.3%.

The increase for the three month period was mainly due to increased compensation and lab supply expense related to our increased investment in our therapeutic discovery platform.

Research and development expenses for the three months ended October 31, 2021 and 2020 were $2.3 million and $1.7 million, respectively, an increase of approximately $649,000 or 39.3%.

Research and development expenses for the six months ended October 31, 2021 and 2020 were $4.6 million and $3.2 million, respectively, an increase of approximately $1.4 million or 41.8%.

The increase for the three and six month periods was mainly due to increased compensation and sequencing costs related to our increased investment in our therapeutic target discovery platform.

Sales and Marketing

Sales and marketing expenses for the three months ended July 31, 2021 and 2020 were $1.6 million and $1.2 million, respectively, an increase of $366,000, or 30.3%.

The increase for the three month period is mainly due to compensation expense driven by the continued expansion of our research services business development team and the addition of a Software as a Service ("SaaS") business development team.

Sales and marketing expenses for the three months ended October 31, 2021 and 2020 were $1.6 million and $1.3 million, respectively, an increase of $292,000, or 21.7%.

Sales and marketing expenses for the six months ended October 31, 2021 and 2020 were $3.2 million and $2.6 million, respectively, an increase of $658,000, or 25.7%.

The increase for the three and six month periods is mainly due to compensation expense driven by the expansion of our research services business development team and the addition of a Software as a Service ("SaaS") business development team.

General and Administrative

General and administrative expenses for the three months ended July 31, 2021 and 2020 were $2.2 million and $1.4 million, an increase of $772,000, or 55.9%.

General and administrative expenses are primarily comprised of compensation, insurance, professional fees, IT, and depreciation and amortization expenses and have increased to support the overall infrastructure growth of the company.

General and administrative expenses for the three months ended October 31, 2021 and 2020 were $2.0 million and $1.5 million, an increase of $507,000, or 34.5%.

General and administrative expenses for the six months ended October 31, 2021 and 2020 were $4.1 million and $2.9 million, an increase of $1.3 million, or 44.9%.

The increase was primarily due to an increase in compensation as well as an increase in IT related expenses to support the overall infrastructure growth of the organization.

Inflation does not have a meaningful impact on the results of our operations.

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Cash Flows from Operating Activities

Net cash provided by operating activities was $216,000 compared to net cash used in operations of $715,000 for the three months ended July 31, 2021 and 2020, respectively.

The cash generated from operating activities during the current period was primarily due to operating income excluding stock compensation, depreciation and amortization expenses.

Net cash provided by operating activities was $1.4 million compared to net cash provided by operations of $164,000 for the six months ended October 31, 2021 and 2020, respectively.

The cash generated from operating activities during the current period was primarily due to operating income excluding stock compensation, depreciation and amortization expenses, and changes in current balance sheet accounts in the ordinary course of business.

Cash Flows from Investing Activities

Net cash used in investing activities was $907,000 and $626,000 for the three months ended July 31, 2021 and 2020, respectively.

Net cash used in investing activities was $1.5 million and $1.1 million for the six months ended October 31, 2021 and 2020, respectively.

The cash used in investing activities was primarily for the investment in additional lab equipment and software development.

Cash Flows from Financing Activities

Net cash provided by financing activities was $2,000 for the three months ended July 31, 2021 compared to cash used by financing activities $58,000 for the three months ended July 31, 2020, respectively.

Cash used for the three months ending July 31, 2020 was to apply payment for a financing lease.

Net cash provided by financing activities was $123,000 for the six months ended October 31, 2021 compared to cash provided by financing activities $1.2 million for the six months ended October 31, 2020, respectively.

Cash provided by financing activities decreased as a direct result of a decrease in options exercised versus the prior year period offset by the application of a financing lease payment for the six months ending October 31, 2020.

Critical Accounting Estimates and Policies

12 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis