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| And two, we are excited and hopefully getting outside funding in short order to take the pressure off of Champions to continue to grow the exciting platform |
| Our margins should begin to improve over the coming quarters as our revenue expands, leveraging against the fixed cost component of cost of sales and lower mouse costs resulting from both price reductions on recently negotiated terms along with improvement in operations |
| Despite the slowdown, we continue to have robust bookings, a comprehensive platform, a stellar reputation and a strong team that is poised for the next stage |
| Our business development strategy is taking hold, which will contribute to our already strong bookings, which are the fundamental foundation for building long-term success |
| We are confident that despite recent obstacles from both internal and external factors, our long-term prospects are positive and we're poised for a slow but steady improvement in our operational results, including revenue growth and ultimately profitability within the next few quarters |
| As I think we've mentioned, it was somewhat of a disappointing quarter from financial perspective, but we do feel very confident going forward both looking at our bookings and our efficiencies and our operational excellence and the customer feedback that we are going to start to have quarters where we have good revenue, higher base of revenue, decreased costs and profitability |
| However, I will reiterate that we see positive developments emerging that will translate to improving results over the coming quarters |
| We are confident that we will emerge with stronger revenue and profitability over the long-term |
| We continue to get extremely positive feedback from our customers on this platform and we anticipate strong growth from our ex vivo offering over the coming quarters |
| As these higher bookings convert to revenue over the coming quarters, we will see a return to quarterly revenue growth and profitability |
| We anticipate a small decline in our cash balance in Q4 with a gradual quarterly acceleration beginning in fiscal 2025, stemming from improvement in our operational results |
| This is an exciting development within our target discovery program and a model we hope to replicate |
| We envision a return to sustained revenue growth, which we began this quarter, while at the same time, we begin to realize operational efficiencies that have been a company focus over the last few quarters |
| We have made significant progress towards reversing these trends and the metrics we use to measure operational efficiencies and success have made significant headway over the last several months |
| We believe last quarter, our Q2 was the revenue low point and the expectation remains that we'll see gradual improvement over the coming quarters beginning with this quarter, Q3, which was approximately 4% higher sequentially |
| We are becoming leaner in order to reach our goal of quarterly profitability and the continued -- and then continue to expand our operating margin over time |
| This does not mean we are abandoning the smaller biotech space, but we see a more robust pipeline of opportunities emanating from these larger customers |
| We believe our cash position remains sound |
| With regards to Corellia, our wholly owned drug development subsidiary, our lead discovery programs are progressing well through the therapeutic discovery stages with our two lead programs exhibiting promising results |
| This should lead to lower mouse costs as a percentage of revenue in the coming quarters |
| When the need arises, we are confident we will be able to step up to meet the increased need |
| With regard to specific offerings, our clinical biomarkers pipeline has grown with a modest uptick in our clinical bookings |
| We continue to expand our ex vivo offering, making it more robust by adding additional model to our platform |
| So we are excited to continue to update you for Q4 and for next year's guidance as well over the summertime |
| So certainly looking better than it was, let's say, a year ago, but how far it's going to come to where it was a couple of years ago, I just don't know yet |
| We will keep tight control on our expenses, including making strategic reductions in several areas that won't adversely impact operations or long-term growth, but should start having an impact on our bottom line results in the near-term |
| Despite the fact that the biotech sector is showing a lot more activity since the start of the year, we have decided to right-size the operational teams and reduce our costs at this time to better reflect the current market conditions and our current revenue |
| So thank you, everybody for joining our quarterly earnings call |
| So we look forward to that update and have a good evening |
| This has been an area that has lagged behind our internal expectations and we are monitoring closely to determine if it can finally become a more meaningful contributor to our long-term revenue growth |
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| In summary, the quarter's performance was challenging but not entirely unexpected |
| In summation, our third quarter financial results were weaker than usual, but mostly as expected |
| Along with the external factors, we identified some operational issues that led to slower revenue conversion, putting additional downward pressure on our top line and operating results |
| As we've been guiding on our calls throughout the year, the challenges encountered last year, specifically the customer cancellations led to a reduction in convertible bookings and would ultimately lead to lower revenue in 2024 |
| Our third quarter revenue was $12 million, a decline of 6% from the third quarter of fiscal 2023 |
| As we have discussed on previous calls, the challenges began in October of 2022, when the economic environment, specifically in the biotech sector turned markedly negative |
| As a result of our lower top line revenue and higher cost of sales, our gross margin dipped to 35% for the quarter compared to 41% for the same period last year |
| Overall, we experienced a challenging third quarter with less than stellar results as we continue to navigate through the challenges we've been highlighting over the course of the year |
| All of these factors resulted in lower net bookings and ultimately lower quarterly revenue |
| Our customers reduced their R&D budgets in real time, which led to fewer studies ordered and increasing cancellations and longer sales cycles |
| As is often the case, anticipated turnaround has taken longer than initially expected but it is coming |
| Cancellations have receded back to historical levels |
| These costs rose due to some operational inefficiencies, which are being corrected |
| Ronnie Morris And in terms of the Corellia investment, we definitely are lowering our investment substantially for both Q4 and Q1 going forward |
| Excluding these non-cash items, our adjusted EBITDA loss was approximately $1.7 million for the quarter compared to an adjusted EBITDA loss of $1.6 million in the year ago period |
| Additionally, we anticipate a decline in salary expense as we make some strategic reductions in our operational team |
| On a GAAP basis, our loss for the third quarter of 2024 was approximately $2.6 million compared to $2.5 million in the prior year |
| So the answer to your question is number one, we are taking that into account and we are reducing our spend significantly |
| For the quarter, cash used in operating activities was approximately $900,000, resulting primarily from our net loss and partially offset by an increase in deferred revenue |
| Ronnie Morris And in terms of the -- in terms of what we're seeing out there, there's certainly been a loosening up of the R&D budgets in the pipelines |
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