Good morning. I am Joel Ackerman, the CEO of Champions Oncology. Thank you for joining us for our Quarterly Earnings Call. I will start the call today with highlights and updates since our last call; then discuss the financial results for the quarter, and then open up the call for questions.

Before I start, I will remind you that I will 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 the non-GAAP financial measures that may be discussed on the call to GAAP financial measures is available in the earnings release. As a quick overview we had another quarter of great progress. Our bookings were strong and growing and give us increased confidence in our full fiscal year 2017 projections.

The cost control efforts we have established over the last year continue to deliver. Our expense base has not grown materially despite a dramatic increase in revenue. Our burn rate increased this quarter as a result of the natural fluctuations in certain balance sheet items.

However our operating loss continues to come down and we are confident we have the cash needed to get to cash flow breakeven. Strategically we made good progress this quarter on our new offerings and continue to see these progress towards proven commercial products.

We performed ahead of our projections and are confident about the continued progress for the rest of the year. As you know, our most recent call was only six weeks ago, because that was the end of our last fiscal year and those results are always announced later in the quarter to give us time to complete the 10-K.

Therefore the September call tends to be shorter than most, nevertheless we have some strong progress to report today. Let me start with bookings, because as I have said in the past, there is no single indicator of our future success that is more important than bookings. Q1 was another record bookings quarter for us.

It was a particularly well diversified quarter. We signed more than 30 new studies, with more than 20 different customers. Of particular note were four new studies signed in AML. We've been talking for the last few quarters about our excitement and progress in developing AML models.

We announced a few weeks ago the successful completion of our first study. As a result we saw our first meaningful contribution of AML to our revenue growth in the first quarter as we projected. We are now seeing the next step of progress, as the commercial opportunity for AML is being realized in our pipeline.

We expect this result will -- we expect this will result in continued revenue acceleration, as the AML results contribute to the growth of our core TOS revenue. Looking forward, the bookings potential for the rest of the year is very strong. The business development team we have in place is now complete, seasoned and experienced.

Our sales pipeline is strong, with potential opportunities at historically high levels, as we continue to see increased interest from existing and new customers. As such we remain confident in our bookings growth for the remainder of the year.

Given the progress we have made on bookings and the strong revenue results this quarter -- more on this in a minute -- we remain confident in the revenue guidance for fiscal 2017, that we gave last quarter of $16 million to $18 million. Our ImmunoGraft product, focused on new models for testing immune-oncology drugs, continues to make progress.

We signed three new studies, plus three amendments to increase the size of existing studies during the quarter. These studies tend to be smaller than typical TOS studies, despite the higher cost for mice.

We see this as an indication that our customers are still piloting this new product and we expect the average study sizes to increase, as the product advances and our customers have more experience with these models. Finally let me update you on our co-clinical TumorGraft offering.

As a reminder these are studies done in parallel with human clinical trials in which we typically build TumorGrafts from clinical trial patients, to supplement and expand the information gained by pharma companies, as part of their early stage human trials. We signed our first co-clinical deal towards the end of calendar 2015.

This study has been slow to start, because of slower enrollment in the human trials. However we enrolled our first patient during Q1 and are seeing a steady increase in the number of patients' tumors we have implanted.

We anticipate starting to see growth in these implants during the quarter and expect that will lead to the first meaningful revenue contribution from this study in the coming quarters. As we announced during our last call, we signed an additional co-clinical deal with a mid-tier pharmaceutical company.

This is a pilot study with a relatively small number of patients and only a few hundred thousand dollars of revenue. This study is an important opportunity for us to demonstrate our ability to build models from patients on clinical trials and operationalize the concept of co-clinical trials.

From a revenue per study perspective co-clinical trials have more potential than any of our other products, and we believe that having a completed study will allow us to tap into the potential of this product overtime. Now let me review the results we announced for our first fiscal quarter. The full 10-Q will be filed next week.

Overall revenue for the quarter was $3.7 million, significantly above the high end of the range of $3.25 million to $3.5 million, we projected last quarter. The over performance relative to expectations was largely in the TOS business. TOS revenue was $3.2 million for the quarter, an increase of 30% over the prior year quarter.

The increase was due to the flow-through of the strong bookings we saw two quarters ago. The over performance relative to our recent guidance was the result of faster conversion of our bookings to revenue, relative to historical trends.

The effective result was that studies we expected to complete in August finished sooner than anticipated and we were able to recognize the revenue a quarter earlier than expected.

We are watching this carefully, the result – is – to see if this is the result of typical volatility we have seen in the past from one quarter to next or if this is the beginning of a favorable trend from the continued high quality performance we are seeing from our lab operations. We will have more to report on this next quarter.

TOS gross margin was 35% for the first quarter, a four percentage point improvement over last year. This continues to be one of the hardest lines to interpret on our income statement. The continued revenue growth we are delivering has a temporary negative impact on our gross margins, because of the timing mismatch of our costs and our revenue.

In particular this quarter the purchase of higher cost mice for an ImmunoGraft study, in advance of revenue recognition resulted in a significant negative impact on TOS gross margins. Despite this we are seeing our TOS margins improve and expect to see continued progress on this during the rest of the year.

Now on POS, our Personalized Oncology Solutions; POS revenue was up again for the first quarter to $511,000, a 5% increase over last year. The increase is primarily the result of growth in sequencing and tumor board, offset by a decline in implant and drug panel revenue. As we have said before we are not expecting POS to drive revenue growth.

However it provides us with strategic value in our work with the pharma industry and academic collaborators. We are continuing to focus on lowering our costs in this business, and as you can see we have made great progress.

Gross margins were positive again for the quarter, as a result of the sustained effort to manage our product and processes and costs. We committed to achieving this and our results exceeded our expectations.

We expect the gross margins on this business to bounce around a bit from one quarter to the next, but we do not anticipate consuming significant capital going forward. Our reported operating expenses, including R&D, sales and marketing and G&A was $3.7 million, an increase of 6% or $200,000.

This increase was the result of a non-cash increase in stock-based compensation of $370,000. Excluding this non-cash expense our cash expenses were down almost 5%, despite our continuing revenue increase.

As you see from this we continue to keep a very tight control on our expense line, as we leverage the revenue increase to drive towards cash flow positive by the end of this fiscal year. As a result of our revenue growth and strong expense control, our net loss before stock-based compensation for the quarter was $1.4 million.

This is a great improvement over the average loss of more than $2 million per quarter we've seen over the past two years. We expect another significant improvement in this metric next quarter, continuing our path to cash flow positive. From a cash standpoint, the burn rate for the quarter was significantly higher than the past couple of quarters.

On a quarterly basis our cash burn rate consists of our operating loss before stock-based compensation, which is then adjusted for the changes in key balance sheet accounts, typically accounts revenue, accounts payable and deferred revenue. Capital expenditure is generally small and does not have a significant impact on our cash flow.

As I mentioned above this quarter our operating loss before stock-based compensation showed significant improvement over prior quarters. And this is the trend that we watch most carefully, is the metric that we expect to continue to improve the course of the year and is driving our trend towards cash flow positive.

Despite this improvement, all three of the key balance sheet accounts moved against us this quarter. Our accounts revenue increased and our accounts payable and deferred revenue declined, all of which lead to an increase in cash burn for the quarter.

The biggest move by far was the increase in AR, which was the result of natural fluctuations from quarter-to-quarter as well as the growth in the revenue over the last couple of quarters. We do not see any trend on the balance sheet that concerns us or will impact our path to cash flow positive.

We remain confident in our goal of achieving cash flow positive this year and believe we have sufficient cash on the balance sheet to get there without raising additional equity. As you can see, this was another strong quarter for Champions.

We exceeded our projections and remain confident both strategically and financially about the results for the rest of the year. Now let me open things up for questions..

[Operator Instructions] We have a question from the line of Anthony Marchese. You may ask your question..

Yes, hi, good morning Joel, great quarter. It's nice to see….

Nice to see positive results and I noticed that stock has picked up and volume dramatically, which is also nice to see.

Question for you, and really it's an investor related question, are there any comps that investors can look to in terms of trying to evaluate this company? In other words, it's hard, I believe for me and for other investors to figure out, is this something that should be trading at one times revenue, two times revenue, or are there any other metrics that we should be looking at in valuing the company? Because personally I think the stock's undervalued but it's my opinion.

But is there anything that we should be looking to use as a comp..

So it's a great question. Obviously multiple of earnings is not possible for valuing the company. So I think you are left with the multiple of revenue, which leads the obvious question well, what's an appropriate multiple of revenue? And I don't have a great set of comps to point you to.

The CROs tend not to be a particularly good set of comps, because they are businesses that are typically pure service businesses without any technology component. They don't grow anywhere nearly as quickly as we do, and their gross margins tend to be a lot lower. There are some life science tools companies that might be the best proxies for us.

They tend to be in very different businesses. So they also don't leave you with the cleanest set of comps. So I would say we do not have a list that we think of as here is the right group against which we should be compared naturally. So I guess the answer is we struggle with the same question you do. And I don't have a great answer for it.

Probably, the best single comp you could look at would be the acquisition by Charles River of one of our competitors, a company called Oncotest, a little less than a year ago. They didn't disclose revenue or multiple. So I'm reluctant to put words in their mouth.

But if you could kind a look at the press release back and do a little bit of math and come up with an answer there, that said that deal had a control premium in it because it was an acquisition, it wasn't a publicly traded comp..

What was it acquired for, I'm not familiar with the company?.

It's one of the small -- a company that's a little bit smaller than us, kind of does similar things to us. It was off the top of my head, it was acquired for something like EUR33 million..

Okay. So at the time about we were about 40, I guess $40 million to $45 million..

I think somewhere around that, yes..

Right okay. Well again, I'm just looking….

No, look, it's an important question. It's one we've always struggled with. Wall Street likes to have companies fall into neat buckets and be able to compare to other companies. And we don't naturally fall into any neat bucket..

My final question is, is Champions the kind of company that could potentially look to acquisitions for growth or is this basically something that you believe you'll grow just organically?.

We think about it a lot. It is not my expectation that we will invest large amounts of capital to acquire big companies. We look at what we've accomplished in AML, where we have effectively in-licensed technology from an academic group.

We're working with two academic or semi-academic like groups, where the capital we invested was less to buy a business and more to develop a product.

We are looking for other opportunities like that where folks have built the product, where they don't have the commercial capabilities to sell it, nor do they have the operational capabilities to deliver it. And it's something that we think we could put through our system that our existing customers would love to buy.

So that's probably the more likely way we would approach non-organic growth in the near future..

Great, okay. Thank you very much..

[Operator Instructions] We have no questions in queue at this time..

Great, well thank you all for your calling in. And we look forward to updating you next quarter..

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