Greetings. Welcome to the Champions Oncology Fourth Quarter Fiscal Year 2025 Earnings Call. [Operator Instructions] Please note this conference is being recorded. I will now turn the conference over to your host, Ronnie Morris, Chief Executive Officer. You may begin.

Good afternoon. I'm Ronnie Morris, CEO of Champions Oncology. Joining me today is David Miller, our Chief Financial Officer. Thank you for joining us for our quarterly earnings call. Before I begin, I will remind you that we will be making forward-looking statements during today's call and that actual results could differ materially from those indicated. Additional information on our risk factors can be found in our Form 10-Q and Form 10-K filings. A reconciliation of non-GAAP financial measures to GAAP financial measures is available in our earnings release. Looking back, fiscal 2025 may ultimately be seen as a pivotal year for Champions Oncology when marked by renewed momentum, strategic execution and foundational growth. Following a challenging fiscal 2024, we successfully reestablished revenue growth and returned to profitability. A highlight of the year was closing our inaugural data licensing deal in the third quarter, followed by several smaller transactions in the recent quarter as well as a growing pipeline showing clear validation of our long-term vision and strategic direction. Our core services business continues to be the foundation of Champions Oncology. Built on our industry-leading PDX bank and its extensive multi-omic characterization, our platform remains a critical resource for pharmacology studies across the biopharma sector. We have made targeted investments to strengthen our team and streamline operations, resulting in improved quality, greater efficiency and increased scalability. These enhancements have contributed meaningfully to our margin expansion and overall profitability. This progress is especially significant given ongoing macroeconomic headwinds, while they are early signs of recovery, biotech and pharma R&D budgets remain constrained. Despite the challenging market, we have begun to see a decrease in customer cancellations leading to a greater bookings-to-revenue conversion rate. We have also made strengthening our relationship with big pharma a core strategic focus as these customers are…

Thanks, Ronnie, and good afternoon, everyone. I'll review our results for the fourth quarter and for fiscal year 2025 and frame how we're thinking about fiscal 2026. Before I dive in, a reminder that our full audited results will be filed on Form 10-K with the SEC by Wednesday, July 29. As always, today, I'll reference certain non-GAAP metrics or reconciliations to GAAP are included in our earnings release. Fiscal year 2025 was a turnaround year for Champions. We returned to growth and profitability after the decline we saw in fiscal 2024. Our total revenue was a record $57 million compared to $50.2 million last year, a 14% increase. Our research services revenue was $52.3 million, up 4% year-over-year, and our data revenue stream contributed $4.7 million, reflecting our initial data licensing deals. Due to the combination of disciplined cost execution and revenue increase, including high-margin data, our adjusted EBITDA was $7.1 million versus an adjusted EBITDA loss of $3.9 million in fiscal 2024. Turning to our fourth quarter. As expected, our fourth quarter came in weaker both sequentially and compared to Q4 last year. Revenue was $12.1 million compared to $14 million last year. We recorded a GAAP operating loss of $2 million compared to a loss of $200,000 in 2024. This included approximately $800,000 in noncash expenses, mainly stock-based compensation, depreciation and a charge related to equipment disposal. Excluding those, adjusted EBITDA for the quarter was a loss of $1.2 million compared to a gain of $900,000 last year. Turning the focus to our cash-based results. Cost of sales for the fourth quarter were $7.3 million relatively flat versus last year, resulting in gross margin of 41%, down from 48% in Q4 2024. The margin decline reflects lower revenue on a relatively unchanged cost base, something we expect…

[Operator Instructions] The first question comes from Matt Hewitt with Craig-Hallum.

Congratulations on the improved year. But before I have my questions, Ronnie, it's been nice working with you and best wishes in your new role at Champions. As far as the first question, and you kind of teased this a little bit in your prepared remarks, but the current environment, obviously, '24 was a very challenging environment. We've seen hints that maybe this calendar year is going to show some improvement. You noted that you've seen a decline in cancellations. I'm just wondering if you could maybe provide a little bit more color on what you're seeing in the current environment and what your expectations are for fiscal '26?

Yes. Thank you, Matt, for your well wishes, and it's always great getting your questions. Yes. So the current environment is still not great, right? It's still pretty tight out there. We definitely agree with you that there are some glimpses of things turning around, and I think everyone is expecting it to turn around the general markets have kind of turned around and some of the other sectors have turned around. So waiting for biotech to fully come back. Having said that, I think when we look at things like opportunity generation, the amount of conversations we're having with big pharma, middle pharma, biotech, some of the services that we've added that are really much in need out there in the marketplace. We feel pretty confident that even though it's a tight marketplace, we still feel like we're going to be able to sustain the growth and be able to continue to grow and just because of the niche where we are, the PDX bank that we have, which is somewhat of a differentiated product. So there's a place for us, people need our services not as easy as it was a couple of years ago. But those are the times where we continue to double down and just become more efficient, get better using better tools for marketing and for sales and for how we think about our R&D and all the other stuff, it just makes us have to be a little bit better. But we feel cautiously optimistic that the next couple of quarters and the next year or 2 are going to be okay for us.

That's very helpful. And then kind of just moving down the list here, the data licensing opportunity, another little win here this quarter or follow-on. I'm just wondering what that pipeline looks like, what your expectations are for contribution in fiscal '26?

Yes. So as I think about the data, as I think we've described on this call, it's somewhat of an early business for us, although we've been collating data for a long time. And we've always known that it's valuable and that it's going to be important at some point. So we really still feel like we're at the right place at the right time. We are -- the pipeline is growing. So some of the licensing deals will be smaller, and those will happen sooner and some of the larger licensing deals take more time. But I think that it's reasonable to expect that our licensing revenue will be somewhat in the same range for the next year or so, and then I think it's going to grow from there.

Got it. And then maybe 1 last one, and I'll hop back in the queue. But the new radiopharmaceutical service opportunity, what will those agreements look like size, margins? Any color that you could provide there would be helpful.

Yes. Those are going to look like the same types of statements of work that we've done for -- In Vivo work, it's going to have a higher price tag because radiopharmaceutical services are a little bit cost more than regular just In Vivo either, cell line or PDX work, but you can think of it as a fairly high margin somewhere 50% to 60% margin business. . The reason we're super excited about this line of business is because it's a very hot field right now, and there's a capacity constraint out there in terms of being able to get this work done. So we feel like there's a demand, and we have a great PDX bank and that's -- those are the type of models that people are going to want to test their radiopharmaceutical platform against.

[Operator Instructions] We have a follow-up question coming from Matt Hewitt.

All right. If no one else is going to jump in. Maybe first up, how should we be thinking about the capital allocation, obviously, a nice improvement this year versus last year. You're now sitting with a healthy amount of cash. But where do you see investments necessary to drive additional growth going forward?

Yes. So I think that a lot of our investment going forward is going to be in the creation of this data, the new data and to go deeper into the data and build different types of data sets. Now, I don't know that, that is going to be its own cost without the revenue associated with it. So I think that we're going to see what the market is interested in, we're going to build data sets that is going to be revenue producing. But that is where I see a lot of our R&D dollars. I don't see other capital expenditures, I see a lot of spend going into the data.

Got it. And then I guess kind of on the data side and some of the work that you have previously done with your Corellia AI, are you still kind of pursuing partnered programs there? Or any updates you could provide would be helpful.

Yes. So we have several programs within the Corellia portfolio. We are super excited about. One of the nice things about working on thousands of compounds for hundreds and hundreds of biotech and pharma companies is we see everything. We test all of these drugs that come through our clinic -- come through our labs. And we generally know which of the drugs that are going to become the $1 billion drugs out there. And we see them before they get approval. And we have some drugs that we've developed, and we don't want to waste time. So things that don't work in our playground in our platform with the PDXs, we don't waste a lot of time on. So we're super excited about the portfolio that we have, and we're out there raising money. As you know, it's a tough environment. We are talking to a whole bunch of people. And we really hope that over the next couple of months, we're going to be able to fund that company with outside capital. And we remain super excited about the methodology of how we came to these targets and the team that's been able to develop first-class drugs against these targets.

The next question comes from Richard [indiscernible], private investor.

Ronnie, thanks for your leadership over there at Champions. I wanted to -- I'm pretty excited about your announcement about your relationship with turbine AI. And I wanted to get some nuance to this relationship. Is the plan to monetize your data licensing together some percentage or some format? And how do you expect this partnership to accelerate your data licensing revenues? If you got some color to that?

Yes. So that is 1 example of -- so at the stage we're at right now, we're pretty much licensing out our data to companies like turbine some others. At the current stage, the licensing agreements are purely licensing agreements, and we haven't really built in any type of milestones or royalties, but we certainly see over time as we go further down this step, and we kind of work more with pharma and develop a deeper data set and have more experience that we will do more of a partnership and really work with some of these companies to develop drugs together. So I would say it's exciting because they're using it for what we always dreamed and thought was possible with their data and they're getting great value out of it. And over time, I think that the relationships with companies like Turbine and others will just become more of a partnership.

We have no further questions in the queue. I would like to turn the floor back to management for any closing remarks.

Well, thank you very much for tuning in to our quarterly and end of year call. We look forward to giving you another update in middle of September. We're certainly super excited about not only the core business, but our data. We're also excited about the drug development efforts that we have. So there's a lot to be excited about. And we look forward to updating everybody in another 6 weeks. Have a good evening, and thank you for joining us.

This concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation.