Executive Summary / Key Takeaways

• Pivotal Turnaround and Profitability: Champions Oncology has successfully transitioned from a challenging fiscal 2024 to a record-breaking fiscal 2025, achieving $57 million in annual revenue and $4.6 million in net income, driven by operational efficiencies and strategic focus.
• Emerging High-Margin Data Business: The company's unique, deep multi-omic Patient Derived Xenograft (PDX) data platform is now a validated revenue stream, securing its inaugural licensing deal and contributing $4.7 million in FY2025, positioning CSBR for significant future margin expansion.
• Differentiated Technological Moat: Champions' proprietary TumorBank and Datacenter offer unparalleled biological depth, providing a critical advantage for AI/ML-driven drug discovery and radiopharmaceutical development, areas experiencing high demand and capacity constraints.
• Strategic Growth and Capital Allocation: Future investments are concentrated on expanding the high-value data platform and seeking external capital for its promising Corellia drug discovery subsidiary, aiming to unlock additional shareholder value without impacting core operations.
• Cautious Optimism Amidst Headwinds: While macroeconomic pressures persist in the biotech sector, operational improvements, a focus on resilient large pharma clients, and a differentiated service offering position Champions Oncology for sustained growth and expanding profitability.

The Evolution of Precision Oncology

Champions Oncology, Inc. stands at the forefront of personalized cancer care, transforming drug discovery and development through its innovative technology solutions. The company's journey began with a significant pivot in 2007, shifting from a sports theme restaurant concept to biotechnology, ultimately refining its focus on oncology in 2011. This strategic evolution laid the groundwork for its current position as a technology-enabled research organization, deeply embedded in the biopharmaceutical landscape.

At its core, Champions Oncology operates a comprehensive research center, integrating computational and experimental platforms designed to accelerate drug development at reduced costs. The company's overarching strategy centers on leveraging its diverse platform technologies to cultivate multiple synergistic revenue streams, fostering profitable growth across all business lines. This includes establishing global leadership in oncology research, driving innovation in R&D platforms, and building a solid reputation for data quality and interpretation.

Unveiling the Technological Edge: Deep Data and Predictive Power

Champions Oncology's competitive advantage is fundamentally rooted in its proprietary technology. The cornerstone is its Patient Derived Xenograft (PDX) TumorBank, comprising approximately 1,500 models. These models are unique because they reflect the characteristics of late-stage, pretreated, and metastatic patients, closely mirroring human clinical trial populations. This clinical relevance is a critical differentiator, providing an enhanced level of insight into therapeutic programs. The TumorBank is extensively characterized at molecular, phenotypic, and pharmacological levels, generating a rich, multi-omic dataset.

This proprietary dataset forms the foundation of Champions' Datacenter, which combines its unique data with over 20,000 publicly available datasets. A key feature of this proprietary data is its origin from a "living TumorBank," allowing continuous characterization and increasing data depth over time. This "deep" data approach, focusing on extensive characterization per tumor rather than broad longitudinal data, is particularly valuable for next-generation AI/ML-driven discovery pipelines. Management believes this approach offers a very unique and timely advantage for unearthing deeper insights into cancer biology and drug response.

The Datacenter powers Lumin Bioinformatics, the company's Software as a Service (SaaS) offering. Lumin leverages advanced analytics and artificial intelligence to provide a robust tool for computational cancer research. Insights from Lumin can inform biomarker hypotheses, reveal mechanisms of therapeutic resistance, and guide preclinical evaluations. While publicly available datasets exist, Champions' unique, deeply characterized proprietary data provides a differentiated layer for its SaaS tools.

A significant recent technological expansion is the full commercial launch of its radiopharmaceutical services platform in July 2025. This achievement was enabled by expanding the company's radioactive materials license and adding radiochemistry infrastructure. Champions now offers fully integrated radiopharmaceutical workflows, including in vitro and ex vivo biodistribution studies and therapeutic efficacy testing across various isotopes. This service is expected to be a high-margin business, with gross margins of 50% to 60%, due to its alignment with a "very hot field" experiencing "capacity constraint." The use of clinically relevant PDX tumor models in this platform further sets Champions apart, allowing developers to test compounds in systems that closely mirror human biology.

Competitive Dynamics and Strategic Positioning

The oncology research and drug development market is intensely competitive, with Champions Oncology operating across three distinct segments: research services, data/SaaS, and drug discovery. In research services, Champions faces competition from larger Clinical Research Organizations (CROs) and academic institutions. While many competitors possess greater resources, Champions differentiates itself through its unique PDX TumorBank and its ability to provide high-fidelity tumor modeling. Its platform offers greater tumor fidelity, potentially leading to higher predictive accuracy for drug efficacy in clinical trials compared to less complex models. However, this often comes with higher operating costs per unit due to the maintenance of animal models.

In the SaaS and data licensing space, Champions competes with other scientific software providers, larger technology companies, and in-house development by customers. While publicly available datasets are abundant and free, Champions' unique "deep" multi-omic dataset, derived from its living TumorBank, is a key differentiator. This focus on in-depth characterization per patient, rather than broad, less detailed longitudinal data, is gaining traction as AI and machine learning capabilities advance. While the barrier to entry for developing analytics-driven SaaS tools is relatively low, Champions' proprietary data provides a unique foundation.

The drug discovery and development business places Champions in direct competition with global biopharmaceutical companies, some of which are also its customers. This segment is highly competitive, driven by scientific and technological forces. Champions' strategy is to focus on differentiated therapeutic targets and research areas, leveraging its extensive internal data to identify novel candidates. The company's ability to test thousands of compounds for hundreds of biopharma companies provides it with unique insights into which drugs are likely to succeed.

Overall, Champions Oncology holds an estimated 2-5% market share in personalized oncology, with a growth trajectory that, while positive, has historically lagged some larger peers. The company's strength lies in its scientific leadership and the accuracy of its predictive models, particularly in preclinical R&D applications. However, its smaller scale can result in lower efficiency and profitability compared to larger, more diversified players. To mitigate these challenges, Champions is strategically strengthening relationships with larger pharmaceutical companies, which are more resilient to market cycles and engage in larger, multi-study programs.

Financial Resilience and Growth Trajectory

Fiscal year 2025 marked a significant turnaround for Champions Oncology, successfully reestablishing revenue growth and returning to profitability after a challenging fiscal 2024. Total revenue reached a record $57 million, representing a 14% increase year-over-year from $50.2 million in fiscal 2024. This growth was primarily driven by its core research services and the successful launch of its data licensing business.

Pharmacology services, the company's largest revenue component, contributed $48.585 million in FY2025, up from $47.035 million in FY2024. Other Translational Oncology Solutions (TOS) revenue, including flow cytometry and SaaS, increased to $3.683 million from $3.102 million. Notably, the inaugural TOS data license revenue stream generated $4.676 million in FY2025, a new and high-margin contribution that was absent in FY2024. This new revenue stream significantly bolstered the company's financial profile.

The company's gross margin expanded to 50% for the full fiscal year 2025, a substantial improvement from 42% in fiscal 2024. This expansion was a direct result of the high-margin data revenue and operational efficiencies that improved revenue conversion and contained costs. Cost of oncology revenue decreased by 3.4% to $28.389 million in FY2025, primarily due to lower compensation and lab supply costs stemming from operational improvements.

Champions Oncology also demonstrated disciplined cost management. Research and Development (R&D) expense decreased by 28.5% to $6.825 million in FY2025, reflecting a strategic reduction in investment in developmental programs, including Corellia, to prioritize bottom-line results. General and Administrative (G&A) expenses also saw a 15.6% reduction to $9.339 million, mainly due to lower compensation and professional fees. Sales and marketing expenses, however, increased by 6.8% to $7.545 million, driven by investments in the new data sales team and marketing efforts, which are expected to support future high-margin data revenue growth.

The company achieved net income of $4.7 million in fiscal 2025, a dramatic swing from a net loss of $7.28 million in fiscal 2024. Adjusted EBITDA for the year was $7.1 million, a significant improvement from an adjusted EBITDA loss of $3.9 million in the prior year. This turnaround underscores the team's disciplined execution and the ability to translate top-line growth into bottom-line improvement.

Liquidity and Capital Allocation

Champions Oncology ended fiscal year 2025 with a robust cash balance of $9.8 million, a substantial increase from $2.6 million a year prior, and remains debt-free. The company generated approximately $7.4 million in cash flow from operations for the twelve months ended April 30, 2025, primarily due to its net income and an increase in deferred revenue.

Despite a negative working capital of $1.5 million as of April 30, 2025, management expresses confidence in its liquidity position, stating that current cash on hand, combined with expected cash flows from operations, are sufficient to fund operations through at least August 2026. The company anticipates remaining cash neutral in the immediate next quarter, with projected cash growth in the second half of fiscal 2026 as revenue increases and margin improvements solidify. No significant capital expenditures are expected, allowing the company to focus on organic strategic growth.

Future capital allocation will primarily target the expansion and deepening of the company's data sets, with the expectation that these investments will be revenue-producing. For Corellia AI, Inc., its wholly-owned drug development subsidiary, Champions is actively seeking outside capital to fund its progression to Phase I and Phase II clinical trials. This strategy aims to unlock additional value from Corellia's promising pipeline without burdening Champions' core cash flow, with Champions expecting to retain a percentage ownership.

Outlook and Risks

Champions Oncology's outlook for fiscal 2026 is one of cautious optimism, building on the strong momentum of fiscal 2025. Management has reaffirmed its full-year revenue growth guidance of 10% to 15% for fiscal 2025, with adjusted EBITDA expected to remain positive. While a slight sequential decline in research service revenues is anticipated for the first quarter of fiscal 2026, a reacceleration is projected for the fourth quarter of fiscal 2025 and into fiscal 2026. Long-term, the company anticipates research service margins to exceed 50% as revenue grows and costs stabilize.

However, the path forward is not without challenges. Macroeconomic headwinds, particularly constrained R&D budgets in the biotech and pharma sectors, persist, although early signs of recovery are noted. The funding environment for biotech remains tight, which could lead to performance volatility. The company acknowledges that its proprietary TumorGraft Technology Platform is not patented, making it susceptible to competitors developing similar procedures. Additionally, protecting trade secrets remains a challenge due to potential disclosures. Changes in customer development plans can lead to cancellations or modifications of studies, impacting revenue. Geopolitical instability, particularly in Israel where the CEO resides and some customers are based, presents a risk to leadership continuity and business operations.

To mitigate these risks, Champions Oncology has focused on strengthening relationships with larger pharmaceutical clients, who are generally more resilient to market fluctuations. Operational improvements have enhanced efficiency and scalability, and R&D investments are now more judiciously allocated to core strategic areas. The company's unique data asset and its pioneering approach to deep multi-omic data are expected to provide a strong competitive moat, particularly as AI and machine learning become more central to drug discovery.

Conclusion

Champions Oncology has demonstrated remarkable resilience and strategic foresight, transforming a challenging period into a pivotal year of growth and profitability. The company's core investment thesis now hinges on its ability to leverage its highly differentiated Patient Derived Xenograft (PDX) TumorBank and its rich, multi-omic Datacenter. This unique asset not only underpins its robust translational oncology services but also fuels a nascent, high-margin data licensing business and a promising drug discovery subsidiary.

The strategic shift towards monetizing its deep data, coupled with the launch of high-demand radiopharmaceutical services, positions Champions Oncology for sustained expansion. While macroeconomic uncertainties and competitive pressures remain, the company's disciplined operational execution, focus on resilient customer segments, and continuous technological innovation provide a compelling foundation. Investors should recognize CSBR as a company that has successfully adapted to market dynamics, poised to unlock significant value by becoming a leader in AI/ML-driven oncology research through its unparalleled biological data.