Champions Oncology, Inc.: Form 10-Q for the period ended Jul 31, 2026

The following discussion of our historical results of operations and our liquidity and capital resources should be read in conjunction with the condensed consolidated financial statements and related notes that appear elsewhere in this Report and our 2026 Annual Report.

Forward-Looking Statements

This Report contains certain “forward-looking statements,” which include information relating to future events, future financial performance, strategies, expectations, competitive environment, regulation, and availability of resources. These forward-looking statements include, without limitation, statements regarding: proposed new programs; expectations that regulatory developments or other matters will not have a material adverse effect on our financial position, results of operations, or liquidity; statements concerning projections, predictions, expectations, estimates, or forecasts as to our business, financial and operational results, and future economic performance; and statements of management’s goals and objectives and other similar expressions concerning matters that are not historical facts. Words such as “may,” “should,” “could,” “would,” “predicts,” “potential,” “continue,” “expects,” “anticipates,” “future,” “intends,” “plans,” “believes,” “estimates” and similar expressions, as well as statements in future tense, identify forward-looking statements.

Forward-looking statements should not be read as a guarantee of future performance or results and will not necessarily be accurate indications of the times at, or by, which such performance or results will be achieved. Forward-looking statements are based on information available at the time those statements are made or management’s good faith belief as of that time with respect to future events, and are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking statements.

Forward-looking statements speak only as of the date the statements are made. Factors that could cause actual results to differ from those discussed in the forward-looking statements include, but are not limited to, those described in “Risk Factors” in Part I, Item 1A of our 2026 Annual Report, as updated in our subsequent reports filed with the SEC, including any updates found in Part II, Item 1A of this or other reports on Form 10-Q, if any. You should not put undue reliance on any forward-looking statements. We assume no obligation to update forward-looking statements to reflect actual results, changes in assumptions, or changes in other factors affecting forward-looking information, except to the extent required by applicable securities laws. If we do update one or more forward-looking statements, no inference should be drawn that we will make additional updates with respect to those or other forward-looking statements.

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 simulate 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 as a Service ("SaaS") program. Our Lumin software contains comprehensive information derived from our research services and clinical studies. Lumin leverages our large Datacenter coupled with analytics and artificial intelligence to provide a robust tool for computational cancer research. 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 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 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 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. All 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.

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 three months ended July 31, 2026 and 2025, the Company had net losses of $426,000 and $466,000, respectively. As of July 31, 2026, the Company had an accumulated deficit of approximately $81.5 million, working capital of $563,000 and cash of $4.4 million. For the three months ended July 31, 2026, the Company used cash flow in operations of approximately $492,000. Despite our cash used in operations for the period, we believe that our cash on hand, together with expected cash flows from operations, are adequate to fund operations through at least September 2027. 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.

Operating Results

The following table summarizes our operating results for the periods presented below (dollars in thousands):

Oncology Revenue

Oncology revenue, primarily derived from research services, totaled $15.2 million for the three months ended July 31, 2026, compared to $14.0 million for the same period in 2025, an increase of $1.2 million or 8.8%.

Our revenues are comprised of the following:

Pharmacology Services

• Pharmacology services revenue increased for the three-month period ended July 31, 2026 compared to the same period in 2025, primarily due to increased sales and improved conversion rates, with a greater proportion of contracted work converting to revenue.

TOS Data License Revenue

• Data license revenue increased to $893,000 for the three-month period ended July 31, 2026, compared to $311,000 in the same period in 2025, reflecting increased commercial activity around our data offerings. We continue to see a growing pipeline of opportunities as we expand our commercial efforts and customer engagement in this area.

Other TOS Revenue

• Other TOS Revenue includes additional services provided to the Company's pharmaceutical and biotechnology customers, including flow cytometry and SaaS offerings provided through Lumin which are not part of the Company's current strategic focus.
• Other TOS revenue decreased for the three-month period ended July 31, 2026 compared to the same period in 2025, primarily due to lower flow cytometry and Lumin SaaS revenue as the Company continued to shift its strategic focus and investment away from these areas of the business.

Cost of Oncology Revenue

Cost of oncology revenue decreased $461,000 or 5.8% to $7.5 million for the three months ended July 31, 2026, as compared to $8.0 million in the prior year period. The decrease was primarily attributable to lower outsourced laboratory service costs, including radiolabeling work performed by third-party laboratories, partially offset by higher royalty costs associated with the increase in revenue.

Research and Development

Research and development expense for the three months ended July 31, 2026 and 2025 were $2.3 million and $2.1 million, respectively, an increase of approximately $262,000 or 12.6%. The increase was primarily attributable to higher share-based compensation expense related to Corellia, our wholly owned subsidiary focused on target discovery.

The significant components of research and development expense are comprised of the following:

Sales and Marketing

Sales and marketing expenses were $3.1 million for the three months ended July 31, 2026, compared to $1.9 million for the same period in 2025, an increase of $1.2 million or 66.6%. The increase was primarily driven by higher compensation expense associated with the expansion of the Company’s commercial organization, including personnel supporting both the Company’s core research services business and its data licensing initiatives. Sales and marketing expenses are expected to remain elevated as the Company continues to invest in commercial capabilities to support these growth initiatives.

General and Administrative

General and administrative expenses were $2.7 million for the three months ended July 31, 2026, compared to $2.6 million for the same period in 2025, an increase of $103,000, or 4.0%. General and administrative expenses primarily consist of compensation, insurance, professional fees, IT infrastructure, and depreciation and amortization. The increase was primarily attributable to higher compensation expenses associated with executive leadership changes made in the second quarter of fiscal 2026 offset by a decrease in IT infrastructure costs.

Cash Flows

The following discussion relates to the major components of our cash flows:

Cash Flows from Operating Activities

For the three months ended July 31, 2026, net cash used in operating activities was $492,000. The use of cash was primarily driven by the net loss for the quarter. For the three months ended July 31, 2025, net cash provided by operating activities was $600,000. The cash provided by operating activities in the prior year period was supported by receivables conversion and normal working capital activity, partially offset by a quarterly net loss.

Cash Flows from Investing Activities

Net cash used in investing activities for the three months ended July 31, 2026 and 2025 was approximately $55,000 and $46,000. Cash used in investing activities was for the purchases of lab and computer equipment.

Cash Flows from Financing Activities

Net cash provided by financing activities was $33,000 for the three months ended July 31, 2026 resulting from proceeds received for stock option exercises, partially offset by financing lease payments. Net cash used in financing activities was $14,000 for the three months ended July 31, 2025, resulting from financing lease payments.

Critical Accounting Estimates and Policies

There have been no changes to our critical accounting policies during the three months ended July 31, 2026. Critical accounting policies and the significant estimates made in accordance with such policies are regularly discussed with our Audit Committee. Those policies are discussed under “Critical Accounting Policies” in “Part II. Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations” as well as in our Condensed Consolidated Financial Statements and the footnotes thereto, each included in our 2026 Annual Report.

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.

We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information otherwise required under this Item.

Evaluation of Disclosure Controls and Procedures

It is management’s responsibility to establish and maintain “disclosure controls and procedures” as such term is defined in Rule 13a-15(e) under the Exchange Act. Our management, with the participation of our Chief Executive Officer and our Chief Financial Officer, have reviewed and evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this Report. In designing and evaluating our disclosure controls and procedures, our management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and our management necessarily is required to apply its judgment in evaluating the relationship between the benefit of desired controls and procedures and the cost of implementing new controls and procedures.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies and procedures may deteriorate.

Our management has assessed the effectiveness of our internal control over financial reporting as of July 31, 2026. Based on that assessment, our management, including our Chief Executive Officer and our Chief Financial Officer, have concluded that our disclosure controls and procedures were effective as of July 31, 2026 at the reasonable assurance level in ensuring that information required to be disclosed in the reports that we file or submit under the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and is accumulated and communicated to management, including our Chief Executive Officer and our Chief Financial Officer as appropriate, to allow timely decisions regarding required disclosure. Further, management concluded that our condensed consolidated financial statements in this Report present fairly, in all material respects, the Company’s financial position, results of operations and cash flows as of the dates, and for the periods presented, in conformity with GAAP.

Changes in Internal Control Over Financial Reporting

No changes in our internal control over financial reporting occurred during the fiscal quarter ended July 31, 2026 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

As a smaller reporting company under Rule 12b-2 of the Exchange Act, we are not required to include risk factors in this Report. However, as of the date of this Report, there have been no material changes with respect to those risk factors previously disclosed in our 2026 Annual Report. Any of these factors could result in a significant or material adverse effect on our results of operations or financial condition. Additional risks could arise that may also affect our business. We may disclose changes to such risk factors or disclose additional risk factors from time to time in our future filings with the SEC.

Factors That May Adversely Affect our Results of Operations

Our results of operations may be adversely affected by various factors that could cause economic uncertainty and volatility in the financial markets, many of which are beyond our control. Our business could be impacted by, among other things, downturns in the financial markets or in economic conditions, increases in oil prices, inflation, increases in interest rates, supply chain disruptions, declines in consumer confidence and spending, the effects of a resurgence or emergence of pandemic-like viruses, and geopolitical instability, such as the military conflicts in Ukraine and the Middle East. We cannot at this time fully predict the likelihood of one or more of the above events, their duration, or magnitude or the extent to which they may negatively impact our business.