Release Date: March 11, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Champions Oncology Inc (NASDAQ:CSBR) reported record revenue of $17 million for Q3 2025, marking a transformative quarter.
• The company successfully closed its inaugural data deal, highlighting the strategic value of its multiomic data set.
• Core services business remains strong, driven by the industry-leading PDX bank and enhanced operational efficiencies.
• Gross margin improved to 61%, supported by high-margin data revenue and operational efficiencies.
• The company is exploring ways to extract greater value from its data, aligning with the rise of AI and machine learning in drug discovery.

Negative Points

• The biotech sector remains challenging, with a tight environment affecting performance volatility.
• Despite the successful data deal, it is premature to forecast the number of future deals or their financial impact.
• The company faces challenges in raising capital for its subsidiary, Karelia, amid a difficult funding environment.
• Research service margins are expected to fluctuate in the short term, with anticipated volatility in revenue and cost of sales.
• The company has not yet seen the impact of AI on its legacy business, indicating potential areas for growth remain untapped.

Q & A Highlights

• Warning! GuruFocus has detected 5 Warning Signs with CSBR.

Q: Could you provide details on the recent licensing deal and any other opportunities in the pipeline? A: The licensing deal was for a portion of our data, structured as a one-time fee. We are actively engaging with multiple partners in the biotech and pharma industries to explore further opportunities. (Respondent: Unidentified_5)

Q: How are tariffs and budget cuts affecting your customer conversations? A: While tariffs haven't directly impacted us, the environment remains tight, especially in the biotech sector. Our strong reputation and diverse customer base have somewhat shielded us, but the sector is not as robust as it was a few years ago. (Respondent: Unidentified_5)

Q: Can you elaborate on the capital raising for your subsidiary and its impact on the company's capital structure? A: We are raising capital for our wholly-owned subsidiary focused on drug development. This will not affect Champions Oncology's cash flow or ownership interest. The subsidiary will have a separate investor base, and Champions will retain a percentage of ownership. (Respondent: Unidentified_5)

Q: Are you exploring different pricing models for your data licensing, and what might that look like in the future? A: We are considering various models, including licensing fees and potential royalties or milestones. Our focus is on understanding the value of our data and engaging with customers to demonstrate its importance. (Respondent: Unidentified_5)

Q: How do you see AI impacting your legacy business and data initiatives? A: AI has not yet significantly impacted our core business, but it enhances the value of our data sets by enabling deeper insights. We continue to explore AI's potential in both drug discovery and biomarker identification. (Respondent: Unidentified_5)

For the complete transcript of the earnings call, please refer to the full earnings call transcript.