Revenue Performance - Oncology services revenue for the three months ended October 31, 2024, was $13.5 million, an increase of 16.6% compared to $11.6 million for the same period in 2023[107] - For the six months ended October 31, 2024, oncology services revenue reached $27.6 million, reflecting a 14.2% increase from $24.1 million in 2023[108] Cost and Expenses - The cost of oncology services for the three months ended October 31, 2024, was $7.4 million, up 12.2% from $6.6 million in 2023[109] - Research and development expenses decreased by 32.8% to $1.7 million for the three months ended October 31, 2024, compared to $2.5 million in 2023[110] - General and administrative expenses for the three months ended October 31, 2024, were $1.9 million, a decrease of 27.3% from $2.6 million in 2023[112] Financial Position - The company reported a net income of approximately $2.0 million for the six months ended October 31, 2024, with cash provided by operations of approximately $28,000[104] - As of October 31, 2024, the company had an accumulated deficit of approximately $82.6 million and cash on hand of approximately $2.8 million[104] - Net cash provided by financing activities was $202,000 for the six months ended October 31, 2024, primarily from cash received from stock options exercises[115] - The company has no off-balance sheet debt or similar obligations, ensuring transparency in its financial position[119] Strategic Considerations - The company is exploring strategic options to create additional value from its drug discovery business, which may include potential spin-out transactions or capital raises[102] - The company faces risks that could adversely affect its results of operations, including economic uncertainty, inflation, and geopolitical instability[117] Accounting Estimates - Significant estimates affecting financial statements include accounts receivable realization, revenue recognition, and stock-based compensation assumptions[118] - The company is classified as a smaller reporting company and is not required to provide extensive market risk disclosures[120]

Financial Data and Key Metrics Changes - Revenue for Q2 was $13.5 million, representing a 17% increase compared to the same period last year [11] - GAAP income from operations for Q2 was $700,000, compared to a loss of $1.9 million in the prior year [12] - Adjusted EBITDA for Q2 was $1.1 million, compared to an adjusted loss of $1.4 million in the year-ago period [12] - Gross margin improved to 45% from 43% year-over-year [14] - Total revenue for the first half was $27.6 million, an increase of 14% compared to $24 million in the first half of 2024 [16] Business Line Data and Key Metrics Changes - The core services business experienced sustained growth driven by the PDX bank and multi-omic data [5] - R&D expenses decreased to approximately $1.7 million from $2.5 million year-over-year, a decline of $800,000 [14] - Sales and marketing expenses remained mostly unchanged at $1.7 million compared to $1.8 million last year [15] - G&A expenses decreased to $1.6 million from $2.1 million, primarily due to reduced compensation and recruitment expenses [15] Market Data and Key Metrics Changes - The funding environment is showing signs of improvement, particularly from big pharma and the biotech sector, although it has not fully returned to previous levels [23][24] - There is increased investment in the biotech sector, indicating a cautiously optimistic outlook for funding [23] Company Strategy and Development Direction - The company is focusing on monetizing its unique data assets and plans to introduce a new revenue stream through data licensing [7] - The strategy includes enhancing the characterization of tumor models to provide valuable insights for drug development [6] - The company aims to transform its data strategy into a data business that will significantly impact revenue and enterprise value [10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in returning to a path of strong financial results and anticipates revenue growth of 10% to 15% for fiscal 2025 [19][20] - The company expects a slight decline in research service revenues next quarter, with a reacceleration anticipated in the fourth quarter [19] Other Important Information - The company ended the quarter with $2.8 million in cash and no debt, indicating a solid cash position [18] - Cash used in operating activities was $300,000, primarily due to an increase in accounts receivable [18] Q&A Session Summary Question: What are the market dynamics regarding funding? - Management noted that while the funding environment is not back to previous levels, it has improved over the last year, with cautious optimism for future funding from big pharma and biotech [23][24] Question: Are there any new tests or services being rolled out? - Management highlighted the focus on the unique biological data created over the years, emphasizing the potential for growth in this area, particularly with the advent of AI [27][28]

Financial Performance - Total revenue for Q2 fiscal 2025 was $13.5 million, a 17% increase from $11.6 million in Q2 fiscal 2024[7] - Adjusted EBITDA for Q2 fiscal 2025 was $1.1 million, compared to an adjusted EBITDA loss of $1.4 million in Q2 fiscal 2024[8] - Gross profit for Q2 fiscal 2025 was $6.1 million, with a margin of 45%, up from a margin of 43% in Q2 fiscal 2024[9] - For the first half of fiscal 2025, total revenue increased 14.2% to $27.6 million compared to $24.1 million in the same period last year[15] - The company projects revenue growth for the year of at least 10% to 15%[6] - Oncology services revenue for the three months ended October 31, 2024, was $13.489 million, a 16.6% increase from $11.573 million for the same period in 2023[27] - Net income for the six months ended October 31, 2024, was $2.041 million, compared to a net loss of $4.637 million for the same period in 2023[27] - The company reported a basic net income per share of $0.05 for the three months ended October 31, 2024, compared to a loss of $0.15 per share for the same period in 2023[27] Expenses and Costs - Research and development expenses for Q2 fiscal 2025 decreased by 32.8% to $1.7 million compared to $2.5 million in Q2 fiscal 2024[10] - Total costs and operating expenses for Q2 fiscal 2025 were $12.8 million, a decrease of 5.7% from $13.5 million in Q2 fiscal 2024[7] - Cost of oncology services for Q2 fiscal 2025 was $7.4 million, an increase of 12.2% from $6.6 million in Q2 fiscal 2024[9] - Research and development expenses for the three months ended October 31, 2024, were $1.689 million, down from $2.515 million for the same period in 2023[27] Assets and Liabilities - Total current assets increased to $14.084 million as of October 31, 2024, from $13.639 million as of April 30, 2024[28] - Total liabilities decreased to $24.559 million as of October 31, 2024, from $28.035 million as of April 30, 2024[28] - Cash and cash equivalents increased to $2.754 million as of October 31, 2024, from $2.618 million as of April 30, 2024[28] - Deferred revenue decreased to $10.220 million as of October 31, 2024, from $12.094 million as of April 30, 2024[28] Cash Flow - The company ended the quarter with cash on hand of approximately $2.8 million and no debt[14] - Net cash provided by operating activities for the six months ended October 31, 2024, was $28, compared to a net cash used of $3.402 million for the same period in 2023[29] Share Information - The weighted average common shares outstanding for the three months ended October 31, 2024, was 13,593,766, compared to 13,497,061 for the same period in 2023[27]

Revenue and Income - Oncology services revenue for the three months ended July 31, 2024, was $14.1 million, an increase of 11.9% from $12.6 million in the same period of 2023[72]. - The company reported a net income of approximately $1.3 million for the three months ended July 31, 2024, with cash provided by operations of approximately $311,000[70]. Costs and Expenses - Cost of oncology services decreased to $7.1 million for the three months ended July 31, 2024, down 8.0% from $7.7 million in 2023[73]. - Research and development expenses were $1.5 million for the three months ended July 31, 2024, a decrease of 47.9% from $2.8 million in 2023[74]. - General and administrative expenses decreased to $2.5 million for the three months ended July 31, 2024, down 14.0% from $2.9 million in 2023[76]. - Total costs and operating expenses for the three months ended July 31, 2024, were $12.7 million, a decrease of 15.8% from $15.1 million in 2023[71]. Financial Position - As of July 31, 2024, the company had an accumulated deficit of approximately $83.3 million and cash on hand of approximately $2.9 million[70]. - The company may need to raise additional equity or debt capital in the near term to continue funding operations[70]. Research and Development - The company has a pipeline of targets at various stages of discovery and validation, with a select group progressing to therapeutic development[68]. - The company is engaged in developing advanced technology solutions for personalized oncology drug development through its Translational Oncology Solutions[66].

Financial Data and Key Metrics Changes - The first quarter revenue was $14.1 million, an increase of 12% from the first quarter of 2024 [8] - GAAP income from operations for Q1 2025 was $1.3 million, compared to a loss of $2.6 million in the prior year [8] - Adjusted EBITDA for the quarter was $2 million, compared to an adjusted loss of $1.7 million in the year-ago period [8] Business Line Data and Key Metrics Changes - Total cost of sales was $7 million, a decline of 6% from $7.5 million in the first quarter last year, due to operational efficiencies [9] - R&D expense was approximately $1.5 million, down from $2.8 million in the year-ago period, reflecting a strategic reduction [10] - Sales and marketing expense remained flat at $1.6 million, while G&A expense decreased to $1.9 million from $2.3 million in the prior year [10] Market Data and Key Metrics Changes - The funding environment for biotech has improved compared to the previous year, although it remains tight for small biotech firms [13] - Larger pharmaceutical companies are cutting back but still have budgets to continue work, indicating a mixed market response [13] Company Strategy and Development Direction - The company is focused on operational improvements and has rightsized to minimize negative impacts from challenges [5] - There is an emphasis on maintaining a strong cash position while reducing costs, particularly in non-core developmental programs [10] - The company is actively engaged in discussions to out-license several programs from its drug development subsidiary, Corellia [6] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism about the turnaround, indicating that improvements in operations and external pressures are beginning to ease [4] - The company anticipates continued volatility in financial results but is confident in its path toward sustainable revenue and profitability [5][12] Other Important Information - The company ended the quarter with $2.9 million in cash and no debt, with cash generated from operating activities amounting to $300,000 [11] - The company expects to report its second quarter results in mid-December [12] Q&A Session Summary Question: Insights from customers regarding funding environment - Management noted that while the environment is still tight for small biotech firms, it is improving, especially for mid-sized to larger pharmaceutical companies [13] Question: Trends in conversion rates and cancellations - Management confirmed that both revenue conversion rates and cancellation rates have improved, indicating positive trends [14] Question: Impact of the BIOSECURE Act on competition - Management indicated that the passage of the BIOSECURE Act could potentially help the company by limiting competition from certain entities [15]

Financial Performance - Total revenue for the first quarter of fiscal 2025 was $14.1 million, an increase of 12% compared to $12.6 million in the same period last year[3] - Adjusted EBITDA for the first quarter was $2.0 million, a significant improvement from an adjusted EBITDA loss of $1.7 million in the first quarter of fiscal 2024[4] - Net income for the first quarter was $1.3 million, compared to a net loss of $2.6 million in the same period last year[4] - Total costs and operating expenses for the first quarter were $12.7 million, a decrease of $2.4 million or 15.8% from $15.1 million in the first quarter of fiscal 2024[3] - Total margin improved to 49.7% for the first quarter, up from 38.8% in the same period last year[5] Cost Management - Cost of oncology services decreased by $612,000, or 8.0%, to $7.1 million compared to $7.7 million for the same period last year[5] - Research and development expenses decreased by $1.3 million, or 47.9%, to $1.5 million compared to $2.8 million for the same period last year[6] - The company plans to continue focusing on cost reductions to maintain profitability despite potential revenue and margin volatility in upcoming quarters[2] - Stock-based compensation expense decreased to $258 from $423 year-over-year[16] Cash Flow and Liquidity - The company ended the quarter with cash on hand of approximately $2.9 million and has no debt[7] - Net cash provided by operating activities was $311, a significant improvement from a cash used of $3,991 in the prior year[16] - Cash at the end of the period was $2,892, down from $4,869 at the end of the same period last year[16] - Net cash used in investing activities was $668, with no purchases of property and equipment reported for the current period[16] - Net cash used in financing activities was $37, compared to $590 in the previous year[16] - The company reported a net increase in cash of $274, contrasting with a decrease of $5,249 in the same period last year[16] - Changes in operating assets and liabilities resulted in a cash outflow of $1,927, an improvement from $2,725 in the previous year[16] Future Outlook - The company is cautiously optimistic about future growth, citing operational improvements and a strong team as key factors[2] Depreciation and Allowance - Depreciation and amortization expense remained relatively stable at $449, compared to $445 in the prior year[16] - Allowance for doubtful accounts and estimated credit losses showed a reversal of $71, compared to an expense of $162 in the previous year[16]

Revenue and Financial Performance - Oncology services revenue decreased to $50.2 million in fiscal 2024 from $53.9 million in fiscal 2023, a decline of 6.9%[124] - The company reported a net loss of approximately $7.3 million for fiscal 2024, compared to a net loss of approximately $5.3 million in fiscal 2023[133] - Net cash used in operating activities was $6.1 million for fiscal 2024, a decrease from net cash provided of $4.0 million in fiscal 2023[134] Expenses - Gross margin for oncology services was 41% in fiscal 2024, down from 45% in fiscal 2023, attributed to unchanged variable costs amid revenue decline[125] - Research and development expenses decreased by 17.3% to $9.5 million in fiscal 2024 from $11.5 million in fiscal 2023 due to cost-cutting measures[126] - General and administrative expenses increased by 8.1% to $11.1 million in fiscal 2024, primarily due to compensation and recruiting expenses[128] Asset Impairment and Liabilities - The company recognized an asset impairment of $807,000 related to Lumin software development costs in fiscal 2023, with no impairment charges in fiscal 2024[129] - The company recorded an asset impairment charge related to software development costs of $807,000 during fiscal 2023, with no impairment charges recorded during fiscal 2024[147] - As of April 30, 2024 and 2023, the company recognized a liability for uncertain tax positions related to foreign operations amounting to $181,000[149] - The company has established a full valuation allowance for all deferred tax assets as of April 30, 2024 and 2023[148] Cash Flow and Investments - Cash used in investing activities was $836,000 in fiscal 2024, down from $2.9 million in fiscal 2023, primarily for lab and computer equipment[136] - Loss on disposal of equipment was $435,000 in fiscal 2024, compared to zero in fiscal 2023[130] Strategic Initiatives - The company is exploring strategic options to create additional value from its drug discovery business, including potential spin-out transactions or capital raises[121] Accounting Policies - The company adopted ASU No. 2016-13 on May 1, 2023, which requires immediate recognition of management's estimates of current expected credit losses, with no material effect on financial statements[152] - The company has no off-balance sheet debt or similar obligations, nor any transactions with related parties that are not disclosed[153] - Capitalized software development costs are amortized over an estimated useful economic life of three years[146] - The recoverability of capitalized software development costs is assessed by comparing forecasted future revenues to the carrying amount of the costs[147] - Stock-based payments are recognized based on fair value using the Black-Scholes option pricing model, with expenses adjusted for forfeitures[145] - The company does not anticipate any significant unrecognized tax benefits will be recorded during the next 12 months[149] - Amendments to contracts are evaluated to determine if they should be accounted for as separate contracts or as a continuation of the original agreement[144]

Financial Data and Key Metrics Changes - Fiscal 2024 saw a revenue decline of approximately $4 million or 7%, totaling $15 million, marking a contraction for the first time in many years [8][12] - In Q4, revenue increased to $14 million, up from $13.1 million in the prior year, representing a 7% increase [9] - Adjusted EBITDA for Q4 was approximately $900,000, compared to an adjusted loss of $900,000 in Q4 of 2023 [9][17] - The loss from operations for fiscal year 2024 was $7.4 million, compared to a loss of $5.3 million in 2023 [17] Business Line Data and Key Metrics Changes - The pharmacology services gross margin expanded to 49% in Q4, compared to 47% in the same quarter last year [39] - R&D expenses decreased to approximately $2 million in Q4 from $2.8 million in the prior year, and for the year, R&D expenses were $9.5 million compared to $11.5 million in fiscal 2023 [45] - Sales and marketing expenses remained relatively unchanged at $1.8 million for Q4 and $6.9 million for the year [46] Market Data and Key Metrics Changes - The biotech economic environment led to fewer new companies booking services and a slight decrease in average study size, impacting bookings growth [4][12] - Cancellations on recently signed bookings have slowed, indicating a potential stabilization in the market [5] Company Strategy and Development Direction - The company is focusing on expanding relationships with large pharma customers, which are less susceptible to downturns in the biotech sector [5] - Corellia, the drug development subsidiary, is actively seeking to out-license several programs while minimizing costs [7] - The company aims to improve operational efficiencies and scalability to support revenue growth with a smaller increase in operating costs [6][14] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism about emerging positive trends and a gradual loosening of R&D budgets leading to increased opportunities [3][13] - The company anticipates maintaining a cash-neutral position while improving bottom-line results in fiscal year 2025 [21][41] - Management is confident in returning to profitability and revenue growth compared to the first half of 2023 [41] Other Important Information - The company ended the year with $2.6 million in cash and no debt, with cash used in operating activities amounting to $1.8 million [21] - The company has made significant investments in prior periods to automate its ex-vivo platform, which is expected to enhance capacity and efficiency [21] Q&A Session Summary Question: Was the Q4 growth due to delayed projects or new business? - Management indicated that Q4 growth was a combination of improved opportunity generation, reduced cancellations, and operational efficiencies [24][25] Question: What operational improvements have been implemented? - Management confirmed that they have made significant operational changes to enhance efficiency and scalability, which are expected to yield benefits moving forward [27][28] Question: What percentage of revenues come from large pharma? - Approximately 40% of revenues are derived from top-tier customers, with a focus on deepening relationships with these clients [29]

[Financial Performance Overview](index=1&type=section&id=Financial%20Performance%20Overview) [Management Commentary & Outlook](index=1&type=section&id=Management%20Commentary%20%26%20Outlook) Management acknowledged fiscal 2024 challenges, but anticipates market recovery and sustained profitability in fiscal 2025, while seeking investment for its AI subsidiary Corellia - The company faced hurdles in fiscal 2024 due to a challenging biotech funding environment and variable spending from large pharma, leading to slower sales growth and increased cancellations[2](index=2&type=chunk) - Management believes the market is showing signs of recovery and that the company has 'turned a corner' entering fiscal 2025[2](index=2&type=chunk) - Strategic cost-cutting measures and operational efficiencies led to positive adjusted EBITDA in Q4, with expectations for sustained profitability in fiscal 2025[2](index=2&type=chunk) - The company is actively seeking investment for its wholly-owned AI subsidiary, Corellia, while managing its expenses[2](index=2&type=chunk) [Key Financial Highlights](index=1&type=section&id=Key%20Financial%20Highlights) The company reported **$14.0 million** revenue and positive adjusted EBITDA in Q4 FY2024, contrasting with **$50.2 million** revenue and an adjusted EBITDA loss for the full fiscal year Q4 Fiscal 2024 Highlights | Metric | Value | | :--- | :--- | | Revenue | $14.0 million (+7% YoY) | | Adjusted EBITDA Income | $884,000 | | Gross Margin (Pharmacology) | 49% | Full Fiscal Year 2024 Highlights | Metric | Value | | :--- | :--- | | Annual Revenue | $50.2 million (-7% YoY) | | Adjusted EBITDA Loss | $3.9 million | | Gross Margin (Pharmacology) | 42% | [Detailed Financial Results](index=1&type=section&id=Detailed%20Financial%20Results) [Fourth Quarter Fiscal 2024 Results](index=1&type=section&id=Fourth%20Quarter%20Fiscal%202024%20Results) Q4 FY2024 saw revenue grow 7% to **$14.0 million**, operating expenses decrease 9%, leading to a positive adjusted EBITDA of **$884,000** and gross margin expansion to **48%** Q4 FY2024 vs Q4 FY2023 Performance | Metric | Q4 FY2024 | Q4 FY2023 | Change | | :--- | :--- | :--- | :--- | | Total Revenue | $14.0M | $13.1M | +7% | | Total Operating Expenses | $14.2M | $15.6M | -9% | | Loss from Operations | ($190K) | ($2.5M) | +92% | | Adjusted EBITDA | $884K | ($922K) | N/A | - Gross margin for the quarter improved to **48%** from **44%** in the prior year, attributed to better revenue conversion and a stable cost structure[6](index=6&type=chunk) - Research and development (R&D) expenses decreased by **28%** to **$2.0 million** due to careful monitoring of spending[7](index=7&type=chunk) - Net cash used in operating activities was approximately **$1.8 million** for the quarter and the company ended the quarter with **$2.6 million** in cash and no debt[8](index=8&type=chunk) [Full Fiscal Year 2024 Results](index=2&type=section&id=Full%20Fiscal%20Year%202024%20Results) Full fiscal year 2024 saw total revenue decline **7%** to **$50.2 million**, leading to a widened net loss from operations of **$7.4 million** and an adjusted EBITDA loss of **$3.9 million**, with gross margin contracting to **41%** Fiscal Year 2024 vs 2023 Performance | Metric | FY 2024 | FY 2023 | Change | | :--- | :--- | :--- | :--- | | Total Revenue | $50.2M | $53.9M | -7% | | Total Operating Expenses | $57.5M | $59.1M | -3% | | Net Loss from Operations | ($7.4M) | ($5.3M) | -39.6% | | Adjusted EBITDA Loss | ($3.9M) | ($1.3M) | -200% | - The decline in annual revenue was primarily attributed to customer cancellations in fiscal year 2023, which impacted study revenue in fiscal year 2024[9](index=9&type=chunk) - Gross margin for the fiscal year decreased to **41%** from **45%** in the prior year, as the variable cost component did not decline meaningfully with the lower study volume[12](index=12&type=chunk) - Net cash used in operations for the fiscal year was **$6.1 million** and the company paused its stock repurchase program[14](index=14&type=chunk) [Financial Statements and Reconciliations](index=5&type=section&id=Financial%20Statements%20and%20Reconciliations) [Condensed Consolidated Statements of Operations](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) The company reported an annual net loss of **$7.3 million** for FY2024, while Q4 net loss significantly narrowed to **$109,000**, with annual revenue at **$50.2 million** and quarterly revenue at **$14.0 million** Statement of Operations Highlights (in thousands) | Metric | Twelve Months Ended Apr 30, 2024 | Twelve Months Ended Apr 30, 2023 | | :--- | :--- | :--- | | Oncology services revenue | $50,155 | $53,870 | | Loss from operations | $(7,356) | $(5,256) | | Net loss | $(7,276) | $(5,335) | | Net loss per share | $(0.54) | $(0.39) | [Condensed Consolidated Balance Sheets](index=8&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of April 30, 2024, cash decreased to **$2.6 million**, total assets declined to **$26.1 million**, and the company reported a stockholders' deficit of **$1.9 million** Balance Sheet Summary (in thousands) | Metric | April 30, 2024 | April 30, 2023 | | :--- | :--- | :--- | | Cash | $2,618 | $10,118 | | Total Current Assets | $13,639 | $19,457 | | Total Assets | $26,132 | $34,311 | | Total Current Liabilities | $21,541 | $21,733 | | Total Liabilities | $28,035 | $29,675 | | Stockholders' (Deficit) Equity | $(1,903) | $4,636 | [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For FY2024, net cash used in operating activities was **$6.1 million**, leading to a **$7.5 million** decrease in cash, with the year-end balance at **$2.6 million** Cash Flow Summary (in thousands) | Metric | Twelve Months Ended Apr 30, 2024 | Twelve Months Ended Apr 30, 2023 | | :--- | :--- | :--- | | Net cash (used in) provided by operating activities | $(6,137) | $3,972 | | Net cash used in investing activities | $(836) | $(2,872) | | Net cash (used in) provided by financing activities | $(527) | $11 | | (Decrease) increase in cash | $(7,500) | $1,111 | | Cash, end of period | $2,618 | $10,118 | [GAAP to Non-GAAP Reconciliation](index=5&type=section&id=GAAP%20to%20Non-GAAP%20Reconciliation) The company reconciles GAAP to Non-GAAP net income and EPS, primarily by excluding stock-based compensation, reporting a FY2024 Non-GAAP net loss of **$6.2 million** and Q4 Non-GAAP net income of **$154,000** GAAP to Non-GAAP Net Income (Loss) Reconciliation (in thousands) | Metric | Q4 FY2024 | Q4 FY2023 | FY 2024 | FY 2023 | | :--- | :--- | :--- | :--- | :--- | | Net loss - GAAP | $(109) | $(2,561) | $(7,276) | $(5,335) | | Stock-based compensation | $263 | $209 | $1,118 | $864 | | Net income (loss) - non-GAAP | $154 | $(2,352) | $(6,158) | $(4,471) | GAAP to Non-GAAP EPS Reconciliation (Basic) | Metric | Q4 FY2024 | Q4 FY2023 | FY 2024 | FY 2023 | | :--- | :--- | :--- | :--- | :--- | | EPS - GAAP, basic | $(0.01) | $(0.19) | $(0.54) | $(0.39) | | EPS - non-GAAP, basic | $0.01 | $(0.17) | $(0.46) | $(0.33) |

[PART I – FINANCIAL INFORMATION](index=4&type=section&id=PART%20I%20%E2%80%93%20FINANCIAL%20INFORMATION) [Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) Champions Oncology, Inc. reported a $7.2 million net loss on $36.2 million revenue for the nine months ended January 31, 2024, with total assets decreasing and operating cash flow turning negative [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets decreased to $26.8 million by January 31, 2024, primarily from reduced cash, leading to a $2.1 million stockholders' deficiency Condensed Consolidated Balance Sheet Highlights | Account | Jan 31, 2024 (unaudited) ($ thousands) | Apr 30, 2023 ($ thousands) | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $4,468 | $10,118 | | Accounts receivable, net | $7,895 | $8,011 | | Total current assets | $13,198 | $19,457 | | Total assets | $26,787 | $34,311 | | **Liabilities & Equity** | | | | Deferred revenue | $13,329 | $12,776 | | Total current liabilities | $21,969 | $21,733 | | Total liabilities | $28,845 | $29,675 | | Total stockholders' equity (deficiency) | $(2,058) | $4,636 | [Unaudited Condensed Consolidated Statements of Operations](index=5&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Operations) For the nine months ended January 31, 2024, revenue decreased to $36.2 million, widening the net loss to $7.2 million from $2.8 million Consolidated Statements of Operations (in thousands, except per share data) | Metric | Three Months Ended Jan 31, 2024 ($ thousands) | Three Months Ended Jan 31, 2023 ($ thousands) | Nine Months Ended Jan 31, 2024 ($ thousands) | Nine Months Ended Jan 31, 2023 ($ thousands) | | :--- | :--- | :--- | :--- | :--- | | Oncology services revenue | $12,019 | $12,773 | $36,153 | $40,799 | | Total costs and operating expenses | $14,596 | $15,231 | $43,238 | $43,534 | | Loss from operations | $(2,577) | $(2,458) | $(7,085) | $(2,735) | | Net loss | $(2,530) | $(2,439) | $(7,167) | $(2,774) | | Net loss per share (basic and diluted) | $(0.19) | $(0.18) | $(0.53) | $(0.20) | [Unaudited Condensed Consolidated Statements of Changes in Stockholders' Equity (Deficiency)](index=6&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Stockholders%27%20Equity%20%28Deficiency%29) Stockholders' equity shifted from $4.6 million to a $2.1 million deficiency by January 31, 2024, driven by a $7.2 million net loss - The company's equity position shifted from a positive **$4,636 thousand** to a deficiency of **$(2,058) thousand** over the nine months ended January 31, 2024[39](index=39&type=chunk) - Key activities impacting equity included a net loss of **$7,167 thousand**, stock-based compensation of **$855 thousand**, and common stock repurchases totaling **$634 thousand**[39](index=39&type=chunk)[41](index=41&type=chunk) [Unaudited Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash used in operating activities was $4.3 million for the nine months ended January 31, 2024, leading to a $5.7 million overall cash decrease Consolidated Statements of Cash Flows Highlights | Cash Flow Activity | Nine Months Ended Jan 31, 2024 ($ thousands) | Nine Months Ended Jan 31, 2023 ($ thousands) | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $(4,321) | $4,664 | | Net cash used in investing activities | $(947) | $(2,112) | | Net cash provided by (used in) financing activities | $(382) | $86 | | **Increase (decrease) in cash** | **$(5,650)** | **$2,638** | | Cash at beginning of period | $10,118 | $9,007 | | **Cash at end of period** | **$4,468** | **$11,645** | [Notes to Unaudited Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) The notes detail accounting policies, revenue recognition, and liquidity, with management asserting sufficient cash for the next 12 months - The company is a technology-enabled research organization focused on drug discovery and development, operating through several subsidiaries, though none of the foreign subsidiaries generated revenue in the reported periods[17](index=17&type=chunk)[42](index=42&type=chunk) - Management believes that cash on hand (**$4.5 million**) and expected cash from operations are adequate to fund operations for at least 12 months, but has cost reduction strategies if revenue expectations are not met[21](index=21&type=chunk) - Revenue is recognized over time using a progress-based input method for its highly-integrated oncology services, which are typically completed within a year[53](index=53&type=chunk)[55](index=55&type=chunk)[79](index=79&type=chunk) - The company has a share repurchase program authorized for up to **$5.0 million** As of January 31, 2024, approximately **$708,000** had been used to repurchase shares, with **$4.3 million** remaining[127](index=127&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=20&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes the 11.4% revenue decrease and widened $7.1 million net loss to prior year study cancellations and fixed costs [Overview and Recent Developments](index=21&type=section&id=Overview%20and%20Recent%20Developments) The company provides drug discovery solutions via its TumorGraft Platform and Lumin SaaS, while evaluating strategic options for its pipeline - The company's core business involves providing Translational Oncology Solutions (TOS) using its proprietary platforms to facilitate drug discovery for pharmaceutical and biotech companies[114](index=114&type=chunk)[138](index=138&type=chunk) - The company offers a SaaS program, Lumin Bioinformatics, which leverages its large dataset with analytics and AI for computational cancer research[161](index=161&type=chunk) - Strategic options for its drug discovery business, such as spin-outs or capital raises, are under regular evaluation to create additional value[162](index=162&type=chunk) [Operating Results](index=22&type=section&id=Operating%20Results) Nine-month oncology services revenue decreased 11.4% to $36.2 million, leading to a gross margin drop and a 159% increase in operating loss Operating Results Summary (Nine Months Ended Jan 31, in thousands) | Line Item | 2024 ($ thousands) | 2023 ($ thousands) | % Change | | :--- | :--- | :--- | :--- | | Oncology services revenue | $36,153 | $40,799 | (11.4)% | | Cost of oncology services | $22,151 | $22,194 | (0.2)% | | Research and development | $7,494 | $8,693 | (13.8)% | | Sales and marketing | $5,288 | $5,153 | 2.6% | | General and administrative | $8,305 | $7,494 | 10.8% | | **Loss from operations** | **$(7,085)** | **$(2,735)** | **159.0%** | - The decrease in revenue was attributed to an increase in study cancellations during fiscal year 2023, which reduced the available convertible revenue for the current year[142](index=142&type=chunk) - The decline in gross margin for both the three and nine-month periods was primarily due to the drop in revenue against a generally unchanged cost base[119](index=119&type=chunk) [Liquidity and Capital Resources](index=21&type=section&id=Liquidity%20and%20Capital%20Resources) As of January 31, 2024, the company had $4.5 million in cash, asserting sufficient liquidity for 12 months despite a $7.2 million net loss - The company had cash on hand of approximately **$4.5 million** and an accumulated deficit of **$84.5 million** as of January 31, 2024[163](index=163&type=chunk) - Management asserts that cash on hand plus expected cash flows are adequate for at least 12 months, but has contingency plans for cost reduction if revenue targets are not met[163](index=163&type=chunk) [Cash Flows](index=23&type=section&id=Cash%20Flows) For the nine months ended January 31, 2024, the company used $4.3 million in operating cash, $0.9 million in investing, and $0.4 million in financing - Net cash used in operating activities was **$4.3 million**, driven by the period's net loss[171](index=171&type=chunk) - Investing activities consisted of **$947,000** used for purchasing lab and computer equipment[172](index=172&type=chunk) - Financing activities used **$382,000**, mainly for the stock repurchase program[173](index=173&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=24&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a smaller reporting company, Champions Oncology, Inc. is exempt from providing market risk disclosures - The company is a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and is not required to provide the information otherwise required under this Item[148](index=148&type=chunk) [Controls and Procedures](index=24&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls were effective as of January 31, 2024, with no material changes to internal controls during the quarter - Management concluded that the company's disclosure controls and procedures were effective as of January 31, 2024, at a reasonable assurance level[150](index=150&type=chunk) - There were no changes in internal control over financial reporting during the quarter that have materially affected, or are reasonably likely to materially affect, these controls[178](index=178&type=chunk) [PART II – OTHER INFORMATION](index=26&type=section&id=PART%20II%20%E2%80%93%20OTHER%20INFORMATION) [Legal Proceedings](index=26&type=section&id=Item%201.%20Legal%20Proceedings) To management's knowledge, no litigation is currently pending or contemplated against the company, its officers, or directors - The company is not currently party to any legal proceedings[180](index=180&type=chunk) [Risk Factors](index=26&type=section&id=Item%201A.%20Risk%20Factors) No material changes to previously disclosed risk factors from the company's 2023 Annual Report on Form 10-K have occurred - As a smaller reporting company, risk factors are not required in this report There have been no material changes from the risk factors disclosed in the 2023 Annual Report[181](index=181&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=26&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reported no unregistered sales of equity securities or information on the use of proceeds during the period - There were no unregistered sales of equity securities during the period[154](index=154&type=chunk) [Defaults Upon Senior Securities](index=26&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This item is not applicable as the company reported no defaults upon senior securities - Not applicable[155](index=155&type=chunk) [Mine Safety Disclosures](index=26&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company's operations, therefore no mine safety disclosures are reported - None[183](index=183&type=chunk) [Other Information](index=26&type=section&id=Item%205.%20Other%20Information) No other information was reported for the period - None[187](index=187&type=chunk) [Exhibits](index=27&type=section&id=Item%206.%20Exhibits) The report lists filed exhibits, including CEO and CFO certifications and iXBRL documents - Exhibits filed include CEO and CFO certifications (31.1, 31.2, 32.1) and iXBRL Instance Documents[3](index=3&type=chunk)[184](index=184&type=chunk)