Champions Oncology Inc.

07/23/2025 | Press release | Distributed by Public on 07/23/2025 15:02

Annual Report for Fiscal Year Ending April 30, 2025 (Form 10-K)

Management's Discussion and Analysis of Financial Condition and Results of Operations
You should read the following discussion and analysis together with our consolidated financial statements and the related notes included elsewhere in this Annual Report. This discussion contains forward-looking statements that are based on our current expectations, estimates, and projections about our business and operations. Our actual results may differ materially from those currently anticipated and expressed in such forward-looking statements as a result of a number of factors, including those we discuss under Item 1A - "Risk Factors" and elsewhere in this Annual Report.
Overview and Recent Developments
We are a technology-enabled research organization engaged in creating transformative technology solutions to be utilized in drug discovery and development. Our research center consists of a comprehensive set of computational and experimental research platforms. Our pharmacology, biomarker, and data platforms are designed to facilitate drug discovery and development at lower costs and increased speeds. We perform studies which we believe may predict the efficacy of experimental oncology drugs or approved drugs as stand-alone therapies or in combination with other drugs and can stimulate the results of human clinical trials. These studies include in vivo studies that rely on implanting multiple tumors from our TumorBank in mice and testing the therapy of interest on these tumors. Studies may also include bioinformatics analysis that reveal the differences in the genetic signatures of the tumors that responded to a therapy as compared to the tumors that did not respond. Additionally, we provide computational or experimental support to identify novel therapeutic targets, select appropriate patient populations for clinical evaluation, identify potential therapeutic combination strategies, and develop biomarker hypothesis of sensitivity or resistance. These studies include the use of our in vivo, ex vivo, analytical and computational platforms.
We are engaged in the development and sale of advanced technology solutions and products to personalize the development and use of oncology drugs through our Translational Oncology Solutions ("TOS"). This technology ranges from computational-based discovery platforms, unique oncology software solutions, and innovative and proprietary experimental tools such as in vivo, ex vivo and biomarker platforms. Utilizing our TumorGraft Technology Platform (the "Platform"), a comprehensive bank of unique, well characterized Patient Derived Xenograft ("PDX") models, we provide select services to pharmaceutical and biotechnology companies seeking personalized approaches to drug development. By performing studies to predict the efficacy of oncology drugs, our Platform facilitates drug discovery with lower costs and increased speed of drug development as well as increased adoption of existing drugs.
We offer access to certain PDX model data via licensing agreements. As our Platform has been expanded over time with the collection of models and the enhancement of their characterization, we have developed a robust multi-omic dataset with substantial potential for both drug discovery and development. This dataset serves as a vital resource for both our pharmaceutical and biotechnology customer who gain access to model-specific data and further their research via licensed access.
We also offer Lumin Bioinformatics ("Lumin"), an oncology data-driven software program which 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. It is the combination of the Datacenter and the analytics that create a foundation for Lumin. 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.
Our drug discovery and development business leverages the computational and experimental capabilities within our platforms. Our discovery strategy utilizes our rich and unique Datacenter, coupled with artificial intelligence and other advanced computational analytics, to identify novel therapeutic targets. We then employ the use of our proprietary experimental platforms to rapidly validate these targets for further drug development efforts.
We have a pipeline of targets at various stages of discovery and validation, with a select group that has progressed to early stage therapeutic development. Our commercial strategy for the validated targets and therapeutics established from this business is wide-ranging and still being developed. It will depend on many factors, and will be specific for each target or therapeutic area identified. Any expenses associated with this part of our business are research and development and are expensed as incurred.
We regularly evaluate strategic options to create additional value from our drug discovery business, which may include, but are not limited to, potential spin-out transactions or capital raises.
Results of Operations
The following table summarizes our operating results for the periods presented below (dollars in thousands):
For the Years Ended April 30,
2025 % of
Revenue 		2024 % of
Revenue
%
Change
Oncology revenue $ 56,944 100.0 % $ 50,155 100.0 % 13.5 %
Costs and operating expenses:
Cost of oncology revenue 28,389 49.9 29,401 58.6 (3.4)
Research and development 6,825 12.0 9,544 19.0 (28.5)
Sales and marketing 7,545 13.2 7,064 14.1 6.8
General and administrative 9,339 16.4 11,067 22.1 (15.6)
Loss on disposal of equipment 293 0.5 435 0.9 (32.6)
Total costs and operating expenses 52,391 92.0 57,511 114.7 (8.9)
Income (loss) from operations 4,553 8.0 (7,356) (14.7) (161.9)
Oncology Revenue
Oncology revenue, which is primarily derived from research services, was $56.9 million and $50.2 million, for the years ended April 30, 2025 and 2024, respectively, an increase of $6.8 million, or 13.5%.
Our revenues are comprised of the following:
For the Years Ended April 30,
(in 000s) 2025 2024
Pharmacology services $ 48,585 $ 47,035
TOS data license revenue 4,676 -
Other TOS revenue 3,683 3,102
Personalized oncology services - 18
Total oncology revenue $ 56,944 $ 50,155
Pharmacology Services
•The increase for the year ending April 30, 2025 was the result of a stronger bookings to revenue conversion rate. Bookings, which represent the total value of signed statements of work, convert to revenue over time as the Company fulfills its contractual performance obligations. Operational improvements implemented throughout the year have enhanced execution efficiency, contributing to the improvement in the conversion percentage.
TOS Data License Revenue
•Revenue for the year ending April 30, 2025 resulted from the sale of data licenses. No such revenues occurred for the year ending April 30, 2024.
Other TOS Revenue
•Other TOS Revenue includes additional clinical services provided to the Company's pharmaceutical and biotechnology customers, specifically flow cytometry and SaaS provided via Lumin.
•Our flow cytometry services revenue increased approximately $787,000 for the year ending April 30, 2025 due to stronger bookings to revenue conversion rates.
•This increase in Other TOS Revenue was offset by a decrease in our SaaS revenues for the year ending April 30, 2025 as compared with 2024 of $205,000. This decrease resulted from both a decline in new and renewal subscriptions.
Cost of Oncology Revenue
Cost of oncology revenue was $28.4 million and $29.4 million for the years ended April 30, 2025 and 2024, respectively, a decrease of $1.0 million or 3.4%. Cost of oncology revenue is comprised primarily of expenses for mice, laboratory supplies, compensation, and outsourced lab services. The reduction from prior year was primarily driven by lower compensation, such as overtime, and lab supply costs due to operational improvements, along with a decrease in outsourced lab services.
Research and Development
Research and development expense was $6.8 million and $9.5 million for the years ended April 30, 2025 and 2024, respectively, a decrease of $2.7 million or 28.5%.
The significant components of research and development expense were comprised of the following:
Years Ended April 30,
(in 000s) 2025 2024
Compensation $ 2,800 $ 3,900
Laboratory Supplies 2,000 2,000
Mice Costs 550 510
Outside Services 590 1,320
The overall decreases in research and development expense from the prior year period were primarily the result of a reduction in investment in our developmental programs including Corellia, our wholly owned subsidiary focused on target discovery.
Sales and Marketing
Sales and marketing expense was $7.5 million and $7.1 million for the years ended April 30, 2025 and 2024, respectively, an increase of $481,000 or 6.8%. The increase was mainly due to an increase in compensation costs including the expansion of the Data License deals team.
General and Administrative
General and administrative expense was $9.3 million and $11.1 million for the years ended April 30, 2025 and 2024, respectively, a decrease of $1.7 million, or 15.6%. General and administrative expense was primarily comprised of compensation, insurance, professional fees, IT, and depreciation and amortization expenses. The general and administrative expense decrease was primarily due to a reduction in compensation expenses and professional fees. Additional non-cash
declines resulted from stock compensation and allowances for estimated credit losses and bad debt reserves. The overall reduction was partially offset by an increase in IT expenses.
Loss on Disposal of Equipment
Loss on disposal of equipment was $293,000 and $435,000 for the years ended April 30, 2025 and 2024, respectively, a decrease of $142,000 or 33%. For both years ended April 30, 2025 and 2024, the losses resulted from the disposal of equipment which could no longer be utilized and had a net book value, or carrying value on the balance sheet, as of the disposal date.
Other Income, net
Other income, net, was $73,000 and $48,000 for the years ended April 30, 2025 and April 30, 2024, respectively. For the year ended April 30, 2025, other income resulted primarily from interest income of $87,000 and foreign currency transaction net gains of approximately $11,000 partially offset by interest expense of $27,000. For the year ended April 30, 2024, other income resulted primarily from interest income of $92,000 partially offset by foreign currency transaction net losses of approximately $16,000 and interest expense of $28,000.
Liquidity and Capital Resources
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 our 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 years ended April 30, 2025 and 2024, the Company had net income of approximately $4.7 million and a net loss of approximately $7.3 million, respectively. As of April 30, 2025, the Company had an accumulated deficit of approximately $79.9 million, negative working capital of $1.5 million and cash of $9.8 million. For the twelve months ended April 30, 2025, the Company realized cash flow from operations of approximately $7.4 million. Despite our negative working capital at this date, we believe that our cash on hand, together with expected cash flows from operations, are adequate to fund operations through at least August 2026. Should the Company be required to raise additional capital, there can be no assurance that management would be successful in raising such capital on terms acceptable to us, if at all.
Cash Flows
The following discussion relates to the major components of our cash flows:
Cash Flows from Operating Activities
Net cash provided by operating activities was $7.4 million for the year ended April 30, 2025. Net cash used in operating activities was $6.1 million for the year ended April 30, 2024. The increase in cash from operations was primarily due to the net income realized in fiscal 2025 and an increase in deferred revenue partially offset by changes in our working capital accounts in the ordinary course of business.
Cash Flows from Investing Activities
Net cash used in investing activities was $389,000 and $836,000 for the years ended April 30, 2025 and 2024, respectively. The cash used was for the investment in lab and computer equipment.
Cash Flows from Financing Activities
Net cash provided by financing activities was $170,000 for the year ended April 30, 2025. Net cash used in financing activities was $527,000 for the year ended April 30, 2024. Cash flows provided by financing activities in 2025 was primarily from proceeds from stock option exercises offset by financing lease payments. Net cash used in financing activities for 2024 was for the repurchase of common stock per our stock buyback program and financing lease payments and was partially offset by stock option exercise proceeds.
Critical Accounting Policies
We prepare our Consolidated Financial Statements in accordance with U.S. Generally Accepted Accounting Principles ("GAAP"). Our significant accounting policies are described in Note 2 - Summary of Significant Accounting Policies to our
Consolidated Financial Statements attached hereto. We believe the following critical accounting policies involve the most significant judgments and estimates used in the preparation of our Consolidated Financial Statements.
Revenue Recognition
The Company accounts for revenue under the Financial Accounting Standards Board's ("FASB") Accounting Standards Codification ("ASC") 606, Revenue from Contracts with Customers. In accordance with ("ASC 606"), revenue is now recognized when, or as, a customer obtains control of promised services. The amount of revenue recognized reflects the consideration to which the Company expects to be entitled to receive in exchange for these services.
A performance obligation is a promise (or a combination of promises) in a contract to transfer distinct goods or services to a customer and is the unit of accounting under ASC 606 for the purposes of revenue recognition. A contract's transaction price is allocated to each separate performance obligation based upon the standalone selling price and is recognized as revenue, when, or as, the performance obligation is satisfied. The majority of the Company's contracts have a single performance obligation because the promise to transfer individual services is not separately identifiable from other promises in the contracts, and therefore, is not distinct.
The majority of the Company's revenue arrangements are service contracts that are completed within a year or less. There are a few contracts that range in duration between 1 and 3 years. Substantially all of the Company's performance obligations, and associated revenue, are transferred to the customer over time. Most of the Company's contracts can be terminated by the customer without cause. In the event of termination, the Company's contracts provide that the customer pay the Company for services rendered through the termination date. The Company generally receives compensation based on a predetermined invoicing schedule relating to specific milestones for that contract.
Amendments to contracts are common. The Company evaluates each amendment which meets the criteria of a contract modification under ASC 606. Each modification is further evaluated to determine whether the contract modification should be accounted for as a separate contract or as a continuation of the original agreement.
The Company accounts for amendments as a separate contract when they meet the criteria under ASC 606-10-25-12.
Stock-Based Payments
We typically recognize expense for stock-based payments based on the fair value of awards on the date of grant. We use the Black-Scholes option pricing model to estimate fair value. The option pricing model requires us to estimate certain key assumptions such as expected life, volatility, risk free interest rates, and dividend yield to determine the fair value of stock-based awards. These assumptions are based on historical information and management judgment. We expense stock-based payments over the period that the awards are expected to vest. In the event of forfeitures, compensation expense is adjusted. We report cash flows resulting from tax deductions in excess of the compensation cost recognized from those options (excess tax benefits) as financing cash flows when the cash tax benefit is received.
Recent Accounting Pronouncements
In November 2023, the FASB issued Accounting Standards Update ("ASU") 2023-07, "Segment Reporting" (Topic 280): Improvements to Reportable Segment Disclosures, which is intended to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant expenses. The amendments require entities to disclose significant segment expenses that are regularly provided to the chief operating decision maker ("CODM") and included within segment profit and loss, as well as the title and position of the CODM. The Company has adopted this standard effective May 1, 2024, noting that it did not have a material impact on its consolidated financial statements or related disclosures.
In December 2023, the FASB issued ASU 2023-09, "Improvements to Tax Disclosures" (Topic 740). The new guidance is intended to enhance the transparency and decision usefulness of income tax disclosures through changes to the rate reconciliation and the income taxes paid information disclosed. The ASU is effective retrospectively for fiscal years beginning after December 15, 2025, with early adoption permitted. The Company is in the process of completing the assessment of the impact that the adoption of this ASU will have on its financial statements, which is not expected to be material.
In November 2024 and January 2025, the FASB issued ASU 2024-03, "Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures" (Subtopic 220-40) "Disaggregation of Income Statement Expenses" and ASU 2025-01 "Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures" (Subtopic 220-40): Clarifying the Effective Date". The new guidance is intended to enhance transparency and disclosures by requiring public
business entities to disclose additional information about specific expense categories in the notes to financial statements at interim and annual reporting periods. The ASU is effective for the first annual reporting periods after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027, with early adoption permitted. The Company is in the process of evaluating the impact that the adoption of this ASU will have on its financial statements and related disclosures, which is not expected to be material.
Off-Balance Sheet Financing
We have no off-balance sheet debt or similar obligations. We have no transactions or obligations with related parties that are not disclosed, consolidated into or reflected in our reported results of operations or financial position. We do not guarantee any third-party debt.
Champions Oncology Inc. published this content on July 23, 2025, and is solely responsible for the information contained herein. Distributed via SEC EDGAR on July 23, 2025 at 21:02 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]