Good day, ladies and gentlemen, and welcome to the Champions Oncology First Quarter Fiscal Year 2022 Earnings Call. [Operator Instructions] At this time, it is my pleasure to turn the floor over to your host, Ronnie Morris, CEO of Champions Oncology. Sir, the floor is yours.

Good afternoon. I am Ronnie Morris, CEO of Champions Oncology. Joining me today is David Miller, our CFO. Thank you for joining us for our quarterly earnings call. Before I begin, I'll remind you that we're making forward-looking statements during today's call and that actual results could differ materially from what is described in those statements. Additional information on factors that could cause results to differ is available on our Forms 10-Q and Form 10-K. A reconciliation of non-GAAP financial measures that may be discussed during the call to GAAP financial measures is available in the earnings release. I will start by pointing out that our prepared comments for today will be relatively brief as we just recently provided our fiscal year-end results and company update 6 weeks ago. On that call, I outlined our transformative, strategic vision for the next few years. While we continue to progress on its execution during the first quarter, the fundamental message and status remain unchanged. Our oncology research services business, which includes in vivo and ex vivo studies, along with an extensive array of biomarker assays, continues to grow and deliver successful results, supporting our investment in other opportunities that will accelerate our long-term revenue growth. Our differentiating factor continues to be our data and scientific platform that come from our unique PDX tumor bank, combined with our expertise to provide high-quality scientific studies in our laboratories. It is this data, our platform and our scientific operational excellence that have enabled us to expand our platform and initiate software services and engage in therapeutic discovery efforts. To that end, approximately 1 year ago, we rolled out our new software platform, Lumin, a revolutionary data interpretation software tool capable of analyzing proteomic, genomic and transcriptomic data sets in real time. We have been licensing…

Thanks, Ronnie. Our full results on Form 10-Q will be filed with the SEC later today. Our first quarter revenue was a record $11.3 million compared to $9.5 million in the year ago period, an increase of $1.7 million or 18%. Excluding stock-based compensation and depreciation, we recognized a gain of $422,000 compared to a similar gain of $421,000 in the year ago period. Focusing as we do on results, excluding noncash expenses such as stock comp and depreciation, our first quarter gross margin was 53% compared to 44% for the same period last year. Total cost of sales was $5.3 million compared to the same $5.3 million in our first quarter of last year. As we discussed on several prior calls, our quarterly gross margins were pressured because we outsourced some lab work, enabling us to accelerate our revenue growth. We have brought most but not all of that work internally. The reduction in outsourced costs more than offset increases in compensation, lab supply and rent expenses, resulting from the increase in study volume and our lab extension in Q4 of last year. The net result is a flat year-over-year cost of sales and with the growth in revenue and improvement in gross margin. R&D expense was approximately $2.3 million compared to $1.6 million in the year ago period, an increase of $700,000 or 44%. The $2.3 million is generally in line with our guidance provided on our year-end call, will be indicated we will be ramping up our R&D investment, adding data to our tumor bank and investing in our therapeutic target discovery platform. It is worth noting that by increasing our investment in R&D, we're intentionally sacrificing short-term profitability for greater long-term revenue growth, profit and revenue potential. Sales and marketing expense was $1.5 million compared to…

[Operator Instructions] Our first question comes from Matt Hewitt with the Craig-Hallum Capital.

Maybe first up, I realize it's still early days on the renewals, but what is the feedback that you've been getting from those customers that have been up for renewal? Any incremental discussions that they've been having with you? And have any of those resulted in expansions?

Ronnie, you got that? Ronnie may take it. Sorry, Matt.

That's okay.

Hey, David, somehow I got this picture from the call. So I'm back.

No problem.

I'm not sure if you heard the question. But I realize it's early days, if you could provide us any feedback on those customers that have been up for renewal, what they're saying about the platform. Have any of them signed not just a renewal but maybe expansions as they've come back after that first year?

Yes. So as I think we said, it literally is early days. I think we have under 10 contracts that were up for renewal. I think our renewal rate was over 80%. But again, we're talking about such small numbers, so it's hard to draw any conclusions from that. I think, in general, we -- the challenge for us now is just to continue to get our active users very comfortable with the platform. I think the ones that are becoming more comfortable are really seeing the value. Like any new software, the challenge just is in getting people to use it and to understand all the capabilities. So we're expending effort to make sure that we are giving them the tutorials and making sure that they feel comfortable using it. So the ones that have been using it more and more are definitely seeing the value, and I think the challenge now is just to get more of our users to be using it on a more regular basis.

Got it. Okay. One of the things that was kind of added in addition to the software itself was the ability to contract with a Champions team, essentially a services component to the Lumin platform. Has that launched? Are you seeing any traction with that?

Yes. That has launched, and we are certainly seeing traction. We think that long term, that's going to be a big revenue driver and a value add for our customers. So as they're getting comfortable with the software, I think they're realizing that there's a lot of important analytics that they want to do. But it's a little hard for them to do it because it requires more of a deep dive into our data. And so we are seeing traction with the customers that are starting to utilize the platform more. We're seeing them come to us. And we call it the Acuity product, and we're seeing them signing up for it.

Okay. And then you mentioned there towards the end regarding the European lab. Is that up and running? Have you started to sign some contracts using that facility?

So we haven't signed any international contracts yet. The lab is open. We are currently in the process over the next month or 2 of certifying and making sure we are compliant with all the regulations. So probably by the end of this quarter, we will be fully established there. And we're talking to customers now. So we expect by the end of the year certainly to be in the -- to be having serious proposals.

That's great to hear. And then maybe last one for me and I'll hop back in the queue. Regarding the full cytometry business, maybe an update on how that's progressing, what that pipeline looks like. Any details there would be helpful.

Yes. The biomarker business, in general, I think, is doing well. I think as we've talked about, slower than we initially thought, but we still continue to see it grow and we still continue to see it to be -- over the next couple of years to be one of the major drivers of growth. Certainly, the opening of the European site, I think, is really going to help boost some of the larger studies that we've always wanted because it was very limiting only having a site in the United States. A lot of the larger studies wanted to have international abilities to see patients, both from trials from Europe and the United States. So we're really excited about opening up our first international site. We think it's really going to help with that clinical biomarker business, and slower than we thought but definitely making steady progress. We've built good quality labs and our -- the customers that are using us are happy. So we're excited about both where we're at from a quality perspective as well as where we think things are going.

[Operator Instructions] We have another question from Matt Hewitt.

All right. I'll keep going. One of the things that's come up -- depending upon the company that's reporting, but one of the things that's come up has been kind of -- it's almost like a disarray for pharma budgets and decision timing. It sounds like, for the most part, the budgets are actually doing very well, but there's been delays on some of the decision-making because of the pandemic. What are you seeing in your business? Are you seeing similar type patterns? Or given where you're at in the clinical stage processes for the most part, that hasn't been a factor for you?

Yes. So because most of our business is preclinical, we haven't really seen that much of a fluctuation. I would say that middle last year, the middle of the pandemic, there were a couple of months where we did see a slowdown. But as it stands right now, at least from a preclinical perspective, we feel pretty comfortable that things are back to normal, the budgets are robust, and our pipelines are strong, and there's just a lot of customers that are coming back for repeat business. In terms of the clinical biomarker space, we're a little bit newer into the scene. So it's harder for us to gauge how robust some of those pipelines were a couple of years ago as opposed to now. So it's hard for us to kind of gauge that level of activity. But we certainly have an active pipeline. We're talking to a lot of different companies about their trials, but it's hard for us to gauge that level of activity.

[Operator Instructions] Okay. And it doesn't look like we have any further incoming questions.

Okay. Great. Well, thank you very much for joining us for our quarterly earnings call. We are, as always, very excited about our opportunities. We're excited about our oncology services business. We're also very excited about our software services as well as our therapeutic discovery, really utilizing what we set out to do many years ago, which was build our data engine with a data strategy and data analytics. So we're excited to be using it, doing all these different things. We're excited that we're working with so many partners who trust us and the business continues to grow, which is certainly a sign that our platform has a lot of value. So with that, I thank you for joining us, and we look forward to sharing more news over the next couple of months and certainly at the next quarterly earnings call. Have a good evening, everybody.