Business Overview and History
Champions Oncology, Inc. (CSBR) is a technology-enabled research organization that has established itself as a leader in the development of advanced preclinical oncology solutions. With a comprehensive set of computational and experimental research platforms, the company is driving innovation in drug discovery and development.
Champions Oncology was founded in 2007 with the mission of creating transformative technology solutions to be utilized in the oncology research space. The company’s journey began with the development of its unique and first-in-class Patient-Derived Xenograft (PDX) bank, a comprehensive collection of well-characterized tumor models that serve as a critical tool for pharmaceutical and biotechnology companies.
The company’s initial focus was on performing studies to predict the efficacy of oncology drugs, utilizing its TumorGraft Technology Platform. This work facilitated drug discovery with lower costs and increased speed of drug development, as well as increased adoption of existing drugs. As part of its expanding capabilities, Champions Oncology developed Lumin Bioinformatics, an oncology data-driven Software as a Service (SaaS) program that leverages the company’s large Datacenter coupled with analytics and artificial intelligence.
Throughout its history, Champions Oncology has faced various financial challenges. The company has relied on cash on hand, working capital management, and sales of products and services to meet its liquidity needs, which typically arose from funding research and development programs, launching new products, and other strategic initiatives. To support its operations, Champions Oncology has also received proceeds from private placements and public offerings of securities.
In recent years, the company has encountered external pressures such as weakness and retraction in the biotech sector, including tightness in the capital markets, which negatively affected its customers’ R&D budgets. This led to a decrease in bookings growth and revenue. Internally, Champions Oncology was also hampered by operational issues that led to cost inefficiencies and delays in revenue recognition, putting pressure on its bottom line. These challenges resulted in disappointing financial results compared to the company’s historical performance.
Despite these challenges, Champions Oncology has continued to invest in the growth of its pharmacology, biomarker, and data platforms. These integrated solutions enable the company to provide a wide range of services, from in vivo and ex vivo studies to computational analysis and biomarker identification. This holistic approach has made Champions Oncology a trusted partner for clients seeking to accelerate their drug development and translational research efforts.
In 2021, the company further strengthened its position by acquiring Corellia A.I., a subsidiary focused on the development of novel therapeutic targets and compounds. This strategic move has allowed Champions Oncology to leverage its expertise in computational biology and data analytics to drive its own drug discovery initiatives.
Financial Performance and Ratios
Champions Oncology’s financial performance has been a mix of successes and challenges in recent years. In the fiscal year 2024, the company reported annual revenue of $50.16 million, a 7% decrease from the previous year’s $53.9 million. This decline was primarily attributed to a weakening in the biotech sector, resulting in fewer bookings and smaller study sizes from the company’s customers. The net loss for fiscal year 2024 was $7.28 million, compared to a net loss of $5.3 million in the prior year.
However, the company has shown signs of improvement in recent quarters. For the first quarter of fiscal year 2025, Champions Oncology reported revenue of $14.06 million, an increase of 12% compared to the same period in the previous year. This growth was driven by operational improvements and efficiencies that led to an increase in the bookings to revenue conversion percentage. The company also reported net income of $1.31 million for Q1 2025, a significant improvement from the net loss of $2.57 million in the same quarter of the previous year.
Despite the revenue decline in fiscal year 2024, Champions Oncology has maintained a relatively strong financial position. As of July 31, 2024, the company had a current ratio of 0.69, indicating a healthy liquidity profile. The quick ratio also stood at 0.69, further demonstrating the company’s ability to meet its short-term obligations.
The company’s gross profit margin for the fiscal year 2024 was 41.3%, down from 45.2% in the previous year, reflecting the impact of the challenging market conditions. However, the first quarter of fiscal year 2025 saw a significant improvement, with the gross margin expanding to 50%, compared to 40% in the prior year quarter. This improvement was primarily due to reduced outsourced lab services and increased operational efficiencies.
In terms of cash flow, Champions Oncology reported negative operating cash flow (OCF) of $6.14 million and negative free cash flow (FCF) of $6.97 million for fiscal year 2024. However, the situation improved in Q1 2025, with the company generating positive OCF and FCF of $311,000.
Liquidity
Champions Oncology has maintained a stable liquidity position despite facing financial challenges. The company’s current ratio and quick ratio of 0.69 as of July 31, 2024, indicate its ability to meet short-term obligations. While these ratios are below 1, which is generally considered ideal, they still demonstrate the company’s efforts to maintain adequate liquidity in a challenging market environment.
As of Q1 2025, Champions Oncology had a cash balance of $2.89 million. The company’s debt-to-equity ratio is 0, indicating that it does not have any long-term debt on its balance sheet. Champions Oncology does not disclose any details on credit facilities or credit lines.
Operational Highlights and Guidance
Despite the financial headwinds in fiscal year 2024, Champions Oncology has remained focused on enhancing its operational efficiency and expanding its capabilities. In the fourth quarter of fiscal year 2024, the company reported an improvement in its revenue conversion rate and a decline in cancellations, indicating a positive trend in its core business.
The positive momentum that began in the previous quarter has continued into the first quarter of fiscal year 2025. For Q1 2025, Champions Oncology reported GAAP income from operations of $1.3 million, compared to a loss of $2.6 million in the prior year period. Adjusted EBITDA was $2 million, compared to an adjusted loss of $1.7 million in the year-ago period.
Moreover, the company’s wholly-owned subsidiary, Corellia A.I., has continued to make progress in its drug discovery initiatives. Champions Oncology is actively engaged in discussions to out-license several of Corellia’s programs, demonstrating the potential value of this strategic investment.
For the upcoming fiscal year 2025, Champions Oncology has provided a cautiously optimistic outlook. While the company anticipates some volatility in revenue and EBITDA over the year, management is confident that with the expected strength in bookings and the operational corrections taking effect, they have returned to the path of delivering stronger financial results that should create value for shareholders.
Risks and Challenges
Champions Oncology operates in a highly competitive and rapidly evolving industry, which presents several risks and challenges. The company faces competition from both established players and emerging startups, which may potentially erode its market share or pricing power.
Additionally, the company’s reliance on a limited number of large customers, particularly in the biotech sector, exposes it to the volatility of this industry. A downturn in the biotech market or a change in the spending priorities of these key customers could have a significant impact on Champions Oncology’s financial performance.
The company’s drug discovery initiatives through Corellia A.I. also carry inherent risks, such as the uncertainty of regulatory approvals, the challenges of navigating the complex pharmaceutical landscape, and the need for additional funding to support the development of its pipeline.
Segment Information
Champions Oncology operates in a single reportable business segment focused on oncology services. The company’s primary business is providing oncology services to pharmaceutical and biotechnology companies through its Translational Oncology Solutions (TOS) platform. This platform includes a comprehensive set of computational and experimental research capabilities to facilitate drug discovery and development.
The core of the TOS platform is Champions Oncology’s TumorGraft Technology, which provides a bank of unique, well-characterized tumor models that the company uses to perform studies predicting the efficacy of oncology drugs. These in vivo studies involve implanting multiple tumors from the TumorBank into mice and testing experimental or approved drugs on these tumors. The company also provides bioinformatics analysis to identify genetic signatures and potential therapeutic combinations.
In addition to the pharmacology services, Champions Oncology offers other TOS services such as flow cytometry and software-as-a-service (SaaS) through its Lumin Bioinformatics platform. Lumin leverages the company’s extensive data and analytics to provide computational tools for oncology research.
Geographic Markets
Champions Oncology primarily operates in the US market, with some limited international operations in Israel, UK, and Italy. However, these international operations did not generate any revenue during the periods reviewed.
Research and Development
Champions Oncology has been actively managing its research and development expenses. In Q1 2025, the company’s R&D expenses decreased by 47.9% year-over-year to $1.45 million, as it reduced investment in its developmental programs including target discovery. This reduction in R&D spending contributed to the improved profitability in the quarter.
Conclusion
Champions Oncology has established itself as a leading provider of advanced preclinical oncology solutions, leveraging its comprehensive set of research platforms and expertise in computational biology and data analytics. While the company faced financial headwinds in fiscal year 2024, its focus on operational efficiency and strategic initiatives has begun to yield positive results in the first quarter of fiscal year 2025.
The company’s improved financial performance, including revenue growth, margin expansion, and a return to profitability, indicates that its operational corrections and strategic focus are taking effect. However, Champions Oncology acknowledges that some volatility in financial results may persist due to lingering market uncertainties.
As Champions Oncology navigates the dynamic oncology research landscape, its ability to deliver innovative solutions and maintain its reputation as a trusted partner will be critical to its long-term success. The company’s ongoing efforts to expand its capabilities, coupled with potential value creation from its Corellia A.I. subsidiary, position it well for future growth.
Investors should closely follow the company’s progress in executing its strategic initiatives, its ability to capitalize on the growing demand for personalized oncology research, and its success in maintaining the positive momentum observed in recent quarters. While challenges remain, Champions Oncology’s improved operational efficiency and strategic focus provide a solid foundation for potential long-term value creation in the rapidly evolving field of oncology research and drug development.
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