Joel Ackerman - CEO.

Good morning. I'm Joel Ackerman, the CEO of Champions Oncology. Thank you for joining us for our quarterly earnings call. I'll start the call today with highlights and updates since our last call, discuss the financial results, and then open up the call for questions.

Before I start, I will remind you that I'll make forward-looking statements during the call and actual results could differ materially from what is described in those statements. Additional information on factors that could cause results to differ is available in our Forms 10-Q and 10-K.

Reconciliation of non-GAAP financial measures that may be discussed on the call to GAAP financial measures is available in the earnings release. To start, I'm going to focus on recent highlights, which accentuate our continuing strategy to develop new areas of growth that facilitates the development of proprietary uses of our TumorGraft platform.

The first highlight that I'd like to talk about is a new product we're developing that we call ImmunoGrafts. This product involves implanting our TumorGraft models in severely immune compromised mice that have had a human immune system implanted in them.

This combination of a human immune system and the TumorGraft both implanted in a mouse allows for the testing of a new class of immune modulating drugs. As background, Immune Oncology is clearly the hottest new area in oncology drug development.

The successive of new compounds in achieving durable responses in patients has created a buzz around immune oncology that is hard to avoid because TumorGrafts are typically implanted in mice that are immune compromised the mechanism of immune therapies namely recruiting the immune system to attack the cancer cannot work. So to overcome this problem.

We've started to use humanized mice namely mice with human immune systems implanted within them. A combination of human immune system panic [ph] human tumor in a mouse is what we called an ImmunoGraft. During the last quarter, we executed our first ImmunoGraft study. The work was done for a large pharma company that is a leader in immune oncology.

The goals of the study were to understand how different components of the human immune system are established in our mice, observe whether or not the human immune system actually infiltrates the tumor, and is therefore in the right place at the right time.

And finally test to see if the drug is able to strength the tumor by activating an immune response in the mouse. The study has been a real success in demonstrating the viability of these models to test an important new class of drugs.

We demonstrated to the customer, the ability of the human immune system to become established, to infiltrate the tumor and to actively attack the cancer. We're now working to ramp up this program to fulfill the demand we see for this new product.

ImmunoGrafts present a number of scientific operational and cost challenges over and above the existing challenges at TumorGrafts.

We are dedicated R&D efforts to better understand and overcome these challenges and are working with customers to design studies that recognize these challenges and give us an opportunity to work on them as we generate revenue.

We think, we're well position to build on our recent success and see this as a potential area for creating intellectual proper [ph], that will further our efforts towards building a proprietary technology platform.

The second highlight for the quarter is the progress we've made with an new set of study designs we're offering to the pharmaceutical industry.

These new study designs, which we refer to as our clinical TOS products combine the skills Champions has developed in POS and TOS to expand the frontiers of TumorGrafts for use during traditional human clinical trials. Human clinical trials are notoriously expensive, slow and have high failure rates.

Embedding TumorGraft studies into the flow of human clinical trials offers a path to dramatically increasing the knowledge accumulated about patients on study for a relatively small increasing cost.

It can also significantly increase the odds of success of subsequent trials through the analysis of the combined data sets for better understanding of patient sub-population and combination strategies because these products involve working directly with patients to collect their tumors at multiple geographically dispersed sites around the country and around the world, they leverage the unique capabilities developed in our POS [technical difficulty] working with patients.

While the details of the new products are too complex for this call, they all involved building TumorGrafts on specific patients that are enrolled in traditional human clinical trials.

The results of the TumorGrafts can then be used to guide the patients care as part of the trial or to supplement the information the trial sponsor is getting about the patient from the clinical trial.

These studies are a natural evolution of the use of TumorGrafts from the pre-clinical stage to the translational stage to the clinical stage of drug development. What we find particularly exciting about these efforts is, first the scale of these studies because the drugs we're testing are in the clinic.

They general have much larger budgets available for testing. The pipeline that we have developed over the last couple of quarters has studies of all different sizes. But we expect the typical study size to be in order of magnitude larger than the typical study in our current POS business.

Second, we're excited about the blending of the POS and TOS businesses. We have been interested since Ronnie and I joined the company almost five years ago in bringing these businesses together. It allows us to leverage two distinct skill sets that Champions has and nobody else can deliver on.

We've started merging two organizations that serve the POS and the TOS customers and we see real organizational cultural and cost benefits to more integrated and streamline structure.

Overtime, we expect to see a continued blending of what has before in two very distinct business units, into a team that is addressing a spectrum of uses of TumorGrafts across the continuum of drug development from pre-clinical testing all the way to patient care.

The third thing that had us so excited about clinical TOS today is the growth of the pipeline. We do not get signed deal in this area, but we're very encouraged by the breadth and depth of the conversations we're having. We have a shortlist of strong interest, where we've had multiple meetings and agreed upon study design and pricing.

It's clear to us that the scientific and clinical staff at these companies are ready to move forward with our projects. That said, we all understand the challenge of predicting timing particularly with innovative offerings in big companies.

Nevertheless, we're starting to gear up for what we think will be a new avenue for growth for Champions in the future. A final update, I'd like to talk about is our up listing to the National Exchange. As we have disclosed in the past, up listing to either the New York Stock Exchange or NASDAQ is an important goal of ours for some time.

As we thought about the size of the financing we wanted to pursue, ensuring sufficient capital to uplift was an important consideration. I'm happy to report that we believe, we're on track to completing our uplifting in the near future.

We believe we have a clear path to satisfying all the requirements needed to uplist in NASDAQ and are working diligently to get this done. I will remind you that this is not done until it is done, but we feel good about accomplishing this shortly.

In conjunction with the up listing, I will be dedicating more time to investor relations and telling the Champions story to a new set of potential investors. Trading on a National Exchange should open up a new set of prospects who either could not or would not invest in a company that traded over the counter. Now let me turn to the financial results.

During the quarter, we implanted 143 new patients' tumors an increase of 39% over the last year. 51 of these implants came from our commercial POS offering and 92 implants came from research, partnerships and trial. We've invested a lot of time and effort in establishing collaborations with a wide range of the country's top oncology centers.

And as you can see, our hard work and diligent effort is paying off. POS remains an important and differentiated source of tumors for us. However, it is hard to target specific tumor types or sub-types in POS.

These new collaborations allow us to focus on the tumors we're implanting in cohorts of greatest value to us and establish the skills and relationships that will serve us well with our clinical TOS offer in the future. POS revenue was $418,000 for the quarter. A decrease of 3% over the prior year. As I've mentioned in prior quarters.

We're working hard to lower the losses coming from the POS business. As a result, we have shifted sales and marketing resources away from POS and made other product in operational changes that have impacted the revenue of the business. As a result, we do not expect significant revenue growth in POS in the near term.

In the future, as the business evolves and regulatory issues become clearer. We will decide if we want to increase our investment in this business to grow revenue in the future. POS cost of sales were $543,000 for the quarter and the gross margin loss was $135,000 compared with a loss of almost $200,000 in the same quarter last year.

We're showing good progress in lowering the cost structure and the loss. We anticipate continued progress on this in the coming quarters. Now let me talk about TOS. The business that serves the pharma industry. TOS revenue was $2.8 million for the three months ended April 30, 2015 an increase of 39% over the same quarter last year.

Over the last few quarters, I talked a lot about the pick-up in bookings also the signings of new business with our TOS customers. I've explained that there was always a delay between bookings and actual [ph] revenue recognition because we do not recognize revenue until the work is completed.

Even though we typically collect a significant portion of cash at the beginning of the work and additional cash as we achieve different milestones in the process. We're very pleased to be able to show this revenue growth in the quarter as we had anticipated. Based on the booking results, we've seen over the last couple of quarter.

We remain confident that next quarter will continue to show strong revenue growth over the same quarter last year. That said, we do still expect volatility in the revenue line in the future. TOS gross margins were 41% for the quarter compared to 52% in the same quarter last year.

The lower margins are the result of timing mismatches between revenue, cost that we discussed in the past as well as increased investment in the lab infrastructure to ensure we have the capacity to grow and deliver quality service to our customers. Regarding our operating expenses.

Year-over-year sales and marketing expenses declined as we lower the sales spend in the POS. Going forward, we are looking to integrate the sales efforts as the line begins to blur between POS and TOS. This should result in some economies of scale as we eliminate duplicitous [ph] efforts and streamline the organization.

R&D continues to be the place where we're increasing costs. This is require to pursue ImmunoGrafts and to continue to build the platform.

G&A was down slightly compared with last year as a result of the number of cost management initiatives that we implemented that ensure G&A cost are controlled and we're spending on money on things that help grow the revenue with the company. As a hope, you see from my presentation.

We've delivered on the growth that we anticipated at the last couple of quarters, while continuing to manage our expenses. We've got a lot of exciting new avenues for growth that we expect will supplement the traditional revenue streams to the past and build the proprietary nature of our platform. These are the ends in my prepared remarks.

I'll now open up the call to question..

Operator:.

Great. Well thank you all for joining us today. We look forward to keeping you updated in the future. Have a good day..

That concludes this morning's teleconference. You may now disconnect your line..