Q2 2026 Champions Oncology Inc Earnings Call

December 15, 2025

Speaker #1: Greetings. Welcome to the Champions Oncology second quarter fiscal year 2026 earnings call. At this time, all participants are on a listen-only mode. A question-and-answer session will follow the formal presentation.

Operator: Greetings. Welcome to the Champions Oncology second quarter fiscal year 2026 earnings call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. I will now turn the conference over to your host, Rob Brainin, Chief Executive Officer. You may begin.

Speaker #1: If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note, this conference is being recorded. I will now turn the conference over to your host, Rob Brainin, Chief Executive Officer.

Speaker #1: You may

Speaker #1: Good afternoon, and thank you for

Robert Brainin: Good afternoon, and thank you for participating in our Q2 fiscal 2026 earnings call. I'm joined today by our CFO, David Miller. Before we begin, I'll remind you that today's remarks may include forward-looking statements. Actual results may differ materially, and more information can be found in our filings with the SEC. Before we get into the quarter, I want to ground everyone in our three core goals for the year. One, deliver year-on-year revenue growth. Scaling matters, and we can get margin leverage in our core TOS business as we grow. Two, invest in our big growth levers, especially our data platforms, which opens the door to more strategic Biopharma relationships. And three, stay fiscally disciplined, maintain full-year positive Adjusted EBITDA, and self-fund our growth without shareholder dilution. These goals guide our priorities, our investments, and our execution focus.

Speaker #2: Thank you for participating in our second quarter fiscal 2026 earnings call. I'm joined today by our CFO, David Miller. Before we begin, I'll remind you that today's remarks may include forward-looking statements.

Speaker #2: Actual results may differ materially, and more information can be found in our filings with the SEC. Before we get into the quarter, I want to ground everyone in our three core goals for the year.

Speaker #2: One, deliver year-on-year revenue growth. Scaling matters, and we can get margin leverage in our core TOS business as we grow. Two, invest in our big growth levers, especially our data platforms, which open the door to more strategic biopharma relationships.

Speaker #2: And three, stay fiscally disciplined: maintain full-year positive adjusted EBITDA and self-fund our growth without shareholder dilution. These goals guide our priorities, our investments, and our execution focus.

Speaker #2: We remain committed to them and, importantly, based on our year-to-date results and visibility into the second half of the year, we believe we are on track to deliver on all of these.

Robert Brainin: We remain committed to them, and importantly, based on our year-to-date results and visibility into the second half of the year, we believe we are on track to deliver on all of these. Turning to the broader environment, we continue to see gradual improvement across pharma and biotech budgets. Funding levels are not fully restored, but customer engagement and our opportunity pipeline generation are gradually improving relative to what we experienced over the last year and a half. As R&D budgets reset for calendar 2026, we're cautiously optimistic for booking momentum in the next calendar year. Within that context, our focus continues to be on execution, maximizing conversion of existing bookings, improving operational efficiency, and advancing the capabilities to distinguish Champions in the market. Our second quarter reflects this execution focus. Revenue was up year-over-year, driven by stronger conversion of booked work due to a reduction in cancellations.

We remain committed to them, and importantly, based on our year-to-date results and visibility into the second half of the year, we believe we are on track to deliver on all of these. Turning to the broader environment, we continue to see gradual improvement across pharma and biotech budgets. Funding levels are not fully restored, but customer engagement and our opportunity pipeline generation are gradually improving relative to what we experienced over the last year and a half. As R&D budgets reset for calendar 2026, we're cautiously optimistic for booking momentum in the next calendar year. Within that context, our focus continues to be on execution, maximizing conversion of existing bookings, improving operational efficiency, and advancing the capabilities to distinguish Champions in the market. Our second quarter reflects this execution focus. Revenue was up year-over-year, driven by stronger conversion of booked work due to a reduction in cancellations.

Speaker #2: Turning to the broader environment, we continue to see gradual improvement across pharma and biotech budgets. Funding levels are not fully restored, but customer engagement and our opportunity pipeline generation are gradually improving relative to what we experienced over the last year and a half.

Speaker #2: As R&D budgets reset for calendar 2026, we're cautiously optimistic for booking momentum in the next calendar year. Within that context, our focus continues to be on execution.

Speaker #2: Maximizing conversion of existing bookings, improving operational efficiency, and advancing the capabilities that distinguish Champions in the market. Our second quarter reflects this execution focus.

Speaker #2: Revenue was up year over year, driven by stronger conversion of booked work due to a reduction in cancellations. Importantly, margin performance continued to improve, supported by the operational efficiencies we've implemented, as we capitalize on the leverage in our operating model as steady revenue increases.

Robert Brainin: Importantly, margin performance continued to improve, supported by the operational efficiencies we've implemented as we capitalize on the leverage in our operating model as steady revenue increases. A key highlight of the quarter was our continued success in our radio labeling and radio pharmaceutical support workflows. As we introduced recently, Champions operates, one of the very few labs in the industry, approved to perform this type of highly specialized radio labeling work. This is an emerging area of significant interest within oncology drug development, and the demand we're seeing from customers reinforces the strategic importance of this capability. Our radio labeling offering positions us uniquely with both established and emerging radio pharmaceutical testing, and we expect this segment to become an increasingly meaningful part of our service offering over time.

Importantly, margin performance continued to improve, supported by the operational efficiencies we've implemented as we capitalize on the leverage in our operating model as steady revenue increases. A key highlight of the quarter was our continued success in our radio labeling and radio pharmaceutical support workflows. As we introduced recently, Champions operates, one of the very few labs in the industry, approved to perform this type of highly specialized radio labeling work. This is an emerging area of significant interest within oncology drug development, and the demand we're seeing from customers reinforces the strategic importance of this capability. Our radio labeling offering positions us uniquely with both established and emerging radio pharmaceutical testing, and we expect this segment to become an increasingly meaningful part of our service offering over time.

Speaker #2: A key highlight of the quarter was our continued success in our radio labeling and radiopharmaceutical support workflows. As we introduced recently, Champions operates one of the very few labs in the industry approved to perform this type of highly specialized radio labeling work.

Speaker #2: This is an emerging area of significant interest within oncology drug development, and the demand we're seeing from customers reinforces the strategic importance of this capability.

Speaker #2: Our radio labeling offering positions us uniquely with both established and emerging radiopharmaceutical testing, and we expect this segment to become an increasingly meaningful part of our service offering over time.

Speaker #2: Bringing more of this work in-house over the coming quarters should also improve gross margin, as reliance on outsourced services declines. Alongside radio labeling, we continue to invest in our data platform, enhancing its functionality and expanding its utility for our pharma partners.

Robert Brainin: Bringing more of this work in-house over the coming quarters should also improve gross margin as reliance on outsourced services declines. Alongside radio labeling, we continue to invest in our data platform, enhancing its functionality and expanding its utility for our pharma partners. The combination of deep biological data, pharmacology capabilities, and our PDX assets gives us a differentiated platform that supports target identification, validation, and translational insights. Customer interest continues to grow, and we view this as a critical long-term value driver for Champions. We've made targeted investments in our commercial and business development teams to support the anticipated growth of these offerings. While these investments do increase near-term OpEx, they are aligned with our strategy and are necessary to expand our revenue base and customer footprint. I also want to address Corelia, our wholly-owned subsidiary focused on target discovery.

Bringing more of this work in-house over the coming quarters should also improve gross margin as reliance on outsourced services declines. Alongside radio labeling, we continue to invest in our data platform, enhancing its functionality and expanding its utility for our pharma partners. The combination of deep biological data, pharmacology capabilities, and our PDX assets gives us a differentiated platform that supports target identification, validation, and translational insights. Customer interest continues to grow, and we view this as a critical long-term value driver for Champions. We've made targeted investments in our commercial and business development teams to support the anticipated growth of these offerings. While these investments do increase near-term OpEx, they are aligned with our strategy and are necessary to expand our revenue base and customer footprint. I also want to address Corelia, our wholly-owned subsidiary focused on target discovery.

Speaker #2: The combination of deep biological data, pharmacology capabilities, and our PDX assets gives us a differentiated platform that supports target identification, validation, and translational insights.

Speaker #2: Customer interest continues to grow, and we view this as a critical long-term value driver for Champions. We've made targeted investments in our commercial and business development teams to support the anticipated growth of these offerings.

Speaker #2: While these investments do increase near-term OpEx, they are aligned with our strategy and are necessary to expand our revenue base and customer footprint. I also want to address Karelia, our wholly owned subsidiary focused on target discovery.

Speaker #2: We are making solid progress in discussions with potential venture capital funding partners, and are encouraged by the level of interest in that business. Until a transaction is completed, Karelia will continue to be reflected in our P&L, and that may remain the case through fiscal 2027.

Robert Brainin: We are making solid progress in discussions with potential venture capital funding partners and are encouraged by the level of interest in that business. Until a transaction is completed, Corelia will continue to be reflected in our P&L, and that may remain the case through fiscal 2027. Importantly, once external funding is secured, our plan is to redirect the majority of those investment dollars toward accelerating growth in our data business. We're not managing this transition for near-term P&L impact. Instead, the focus is on using capital efficiently to inflect longer-term revenue growth curves, particularly in areas where we believe that Champions has competitive advantages. Stepping back a bit, we're encouraged by the progress we've made during the quarter.

We are making solid progress in discussions with potential venture capital funding partners and are encouraged by the level of interest in that business. Until a transaction is completed, Corelia will continue to be reflected in our P&L, and that may remain the case through fiscal 2027. Importantly, once external funding is secured, our plan is to redirect the majority of those investment dollars toward accelerating growth in our data business. We're not managing this transition for near-term P&L impact. Instead, the focus is on using capital efficiently to inflect longer-term revenue growth curves, particularly in areas where we believe that Champions has competitive advantages. Stepping back a bit, we're encouraged by the progress we've made during the quarter.

Speaker #2: Importantly, once external funding is secured, our plan is to redirect the majority of those investment dollars toward accelerating growth in our data business. We're not managing this transition for near-term P&L impact.

Speaker #2: Instead, the focus is on using capital efficiently to inflect longer-term revenue growth curves, particularly in areas where we believe that Champions has competitive advantages.

Speaker #2: Stepping back a bit, we're encouraged by the progress we've made during the quarter. Our performance reflects improved operational discipline, a strengthening commercial position, and continued strategic investment in areas where we hold clear competitive advantages.

Robert Brainin: Our performance reflects improved operational discipline, a strengthening commercial position, and continued strategic investment in areas where we hold clear competitive advantages, namely our uniquely characterized tumor bank, radio labeling capability, and our data platform. As we enter the second half of the fiscal year, we remain focused on delivering year-over-year revenue growth and full-year positive Adjusted EBITDA, and we believe the actions we have taken position the company to meet these goals. With that, I'll turn the call over to David to discuss our financial results in more detail.

Our performance reflects improved operational discipline, a strengthening commercial position, and continued strategic investment in areas where we hold clear competitive advantages, namely our uniquely characterized tumor bank, radio labeling capability, and our data platform. As we enter the second half of the fiscal year, we remain focused on delivering year-over-year revenue growth and full-year positive Adjusted EBITDA, and we believe the actions we have taken position the company to meet these goals. With that, I'll turn the call over to David to discuss our financial results in more detail.

Speaker #2: Namely, our uniquely characterized tumor bank, radiolabeling capability, and our data platform. As we enter the second half of the fiscal year, we remain focused on delivering year-over-year revenue growth and full-year positive adjusted EBITDA, and we believe the actions we have taken position the company to meet these goals.

Speaker #2: With that, I'll turn the call over to David to discuss our financial results in more detail.

Speaker #3: Thank you, Rob, and good afternoon, everyone. Before I dive in, just a quick reminder that our full results will be filed on Form 10-Q with the SEC later today.

David Miller: Thank you, Rob, and good afternoon, everyone. Before I dive in, just a quick reminder that our full results will be filed on Form 10-Q with the SEC later today. As always, I'll reference certain non-GAAP metrics with reconciliations to GAAP included in our earnings release. As Rob highlighted, the second quarter reflected meaningful progress across both revenue and margin performance, supported by disciplined execution and a more stable operating environment. Total revenue for the quarter was $15 million, compared to $13.5 million last year, an increase of 11% year-over-year, driven by improved conversion of booked work due to a lower level of cancellations. Income from operations for the quarter was $185,000, and Adjusted EBITDA was approximately $800,000. Importantly, on a year-to-date basis, we remain on track to achieve full-year positive Adjusted EBITDA, which is one of our core financial goals for fiscal 2026.

Speaker #3: And as always, I'll reference certain non-GAAP metrics, with reconciliations to GAAP included in our earnings release. As Rob highlighted, the second quarter reflected meaningful progress across both revenue and margin performance.

Speaker #3: Supported by disciplined execution and a more stable operating environment. Total revenue for the quarter was $15.0 million compared to $13.5 million last year, an increase of 11% year over year.

Speaker #3: Driven by improved conversion of booked work due to a lower level of cancellations. Income from operations for the quarter was $185,000, and adjusted EBITDA was approximately $800,000.

Speaker #3: Importantly, on a year-to-date basis, we remain on track to achieve full-year positive adjusted EBITDA, which is one of our core financial goals for fiscal 2026.

Speaker #3: Turning to margins, cost of sales for the quarter was $7.3 million, compared to $7.4 million last year. Our flat cost of sales on an increased revenue base generated a gross margin of 52%, compared to 45% last year.

David Miller: Turning to margins, cost of sales for the quarter was $7.3 million, compared to $7.4 million last year. Our flat cost of sales on an increased revenue base generated gross margin of 52%, compared to 45% last year. While there is quarterly margin variability due to the timing of specific costs, such as outsourced lab services, this quarter is a good reflection on the margin expectations of our core business. Operating expenses for the quarter were $7 million, up about $2 million from last year, but the increase was in line with our strategic priorities, specifically investment in our data platform. Let me break that down. R&D increased by about $900,000 due to investments in sequencing and related costs to support the development of our data platform. Approximately $200,000 of the total increase was related to Corelia's target discovery initiative.

Turning to margins, cost of sales for the quarter was $7.3 million, compared to $7.4 million last year. Our flat cost of sales on an increased revenue base generated gross margin of 52%, compared to 45% last year. While there is quarterly margin variability due to the timing of specific costs, such as outsourced lab services, this quarter is a good reflection on the margin expectations of our core business. Operating expenses for the quarter were $7 million, up about $2 million from last year, but the increase was in line with our strategic priorities, specifically investment in our data platform. Let me break that down. R&D increased by about $900,000 due to investments in sequencing and related costs to support the development of our data platform. Approximately $200,000 of the total increase was related to Corelia's target discovery initiative.

Speaker #3: While there is quarterly margin variability due to the timing of specific costs, such as outsourced lab services, this quarter is a good reflection of the margin expectations for our core business.

Speaker #3: Operating expenses for the quarter were $7,000,000, up about $2,000,000 from last year, but the increase was in line with our strategic priorities—specifically, investment in our data platform.

Speaker #3: Let me break that down. R&D increased by about $900,000 due to investments in sequencing and related costs to support the development of our data platform.

Speaker #3: Approximately $200,000 of the total increase was related to Karelia's target discovery initiative. Sales and marketing increased modestly, driven by higher compensation as we strengthened our commercial organization to support data sales.

David Miller: Sales and marketing increased modestly, driven by higher compensation as we strengthened our commercial organization to support data sales. G&A increased about $800,000, mostly related to leadership transitions and IT infrastructure investments. We expect some of those G&A increases to be temporary as we work through system inefficiencies and find ways to streamline costs. Although these investments raise Opex in the short term, they are essential to positioning the company for sustained growth and operating leverage. Turning to cash flows, net cash used in operating activities for the quarter was $1.9 million. The primary driver was a decrease in deferred revenue as we recognized revenue on cash received in advance. All changes in our working capital accounts were in the ordinary course of business. We ended the quarter with $8.5 million in cash and no debt, maintaining a solid financial position.

Sales and marketing increased modestly, driven by higher compensation as we strengthened our commercial organization to support data sales. G&A increased about $800,000, mostly related to leadership transitions and IT infrastructure investments. We expect some of those G&A increases to be temporary as we work through system inefficiencies and find ways to streamline costs. Although these investments raise Opex in the short term, they are essential to positioning the company for sustained growth and operating leverage. Turning to cash flows, net cash used in operating activities for the quarter was $1.9 million. The primary driver was a decrease in deferred revenue as we recognized revenue on cash received in advance. All changes in our working capital accounts were in the ordinary course of business. We ended the quarter with $8.5 million in cash and no debt, maintaining a solid financial position.

Speaker #3: And G&A increased about $800,000, mostly related to leadership transitions and IT infrastructure investments. We expect some of these G&A increases to be temporary as we work through system inefficiencies and find ways to streamline costs.

Speaker #3: Although these investments raise OpEx in the short term, they are essential to positioning the company for sustained growth and operating leverage. Turning to cash flows, net cash used in operating activities for the quarter was $1.9 million.

Speaker #3: The primary driver was a decrease in deferred revenue, as we recognized revenue on cash received in advance. All changes in our working capital accounts were in the ordinary course of business.

Speaker #3: We ended the quarter with $8.5 million in cash and no debt, maintaining a solid financial position. Looking ahead, our focus remains on driving consistent execution, strengthening margins, and supporting long-term growth through continued investment in strategic capabilities.

David Miller: Looking ahead, our focus remains on driving consistent execution, strengthening margins, and supporting long-term growth through continued investment in strategic capabilities. While quarterly results may fluctuate, with improving market conditions and increasing engagement across both services and data offerings, we believe the company is well-positioned to deliver year-over-year revenue growth and positive Adjusted EBITDA for the full fiscal year, while we continue to invest in our data platform and core services to drive our longer-term growth. With that, we'll open the call for questions.

Looking ahead, our focus remains on driving consistent execution, strengthening margins, and supporting long-term growth through continued investment in strategic capabilities. While quarterly results may fluctuate, with improving market conditions and increasing engagement across both services and data offerings, we believe the company is well-positioned to deliver year-over-year revenue growth and positive Adjusted EBITDA for the full fiscal year, while we continue to invest in our data platform and core services to drive our longer-term growth. With that, we'll open the call for questions.

Speaker #3: While quarterly results may fluctuate, with improving market conditions and increasing engagement across both services and data offerings, we believe the company is well positioned to deliver year-over-year revenue growth and positive adjusted EBITDA for the full fiscal year, while we continue to invest in our data platform and core services to drive our longer-term growth.

Speaker #3: With that, we'll open the call for questions.

Speaker #3: questions. Thank

Speaker #1: At this time, we will be conducting a question-and-answer session. If you would like to ask a question, please press *1 on your telephone keypad.

Operator: Thank you. At this time, we will be conducting a question-and-answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we pull for questions. Once again, please press star one if you have a question or a comment. The first question comes from Matt Hewitt with Craig-Hallam. Please proceed.

Speaker #1: A confirmation tone will indicate your line is in the question queue. You may press *2 if you would like to remove your question from the queue.

Speaker #1: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the * keys. One moment, please, while we pull for questions.

Speaker #1: Once again, please press *1 if you have a question or a comment. The first question comes from Matt Hewitt with Craig Hallum. Please.

Speaker #1: proceed. Good

Speaker #4: Good afternoon. Thanks for taking the questions. It sounds like cancellations have kind of gotten back to, maybe, historic levels, and the funding environment is improving.

Matt Hewitt: Good afternoon. Thanks for taking the questions. It sounds like cancellations have kind of gotten back to maybe historic levels. The funding environment is improving, so a lot of good things from an external standpoint. I'm just curious, from an RFP perspective, the inbound call volume that you're receiving, have you seen an uptick there? And how quickly do you think you can translate that into kind of getting back to that recurring double-digit revenue growth?

Matthew Hewitt: Good afternoon. Thanks for taking the questions. It sounds like cancellations have kind of gotten back to maybe historic levels. The funding environment is improving, so a lot of good things from an external standpoint. I'm just curious, from an RFP perspective, the inbound call volume that you're receiving, have you seen an uptick there? And how quickly do you think you can translate that into kind of getting back to that recurring double-digit revenue growth?

Speaker #4: So, a lot of good things from an external standpoint. I'm just curious, from an RFP perspective—the inbound call volume that you're receiving—have you seen an uptick there?

Speaker #4: And how quickly do you think you can translate that into kind of getting back to that recurring double-digit revenue growth?

Speaker #2: Yeah, I'll take that one, and David, maybe you want to weigh in. Thanks for the question. We're definitely feeling good about what we call opt-gen, the opportunity generations we're seeing.

Robert Brainin: Yeah, I'll take that one, and David maybe you want to weigh in. Thanks for the question. We're definitely feeling good about what we call op gen, the opportunity generations we're seeing. It still is a tough market out there, but it is improving, and we have optimism. Endpoints News did a recent survey of 77 biotech execs, and over 1/3 of them talked about increasing their outsourcing next year. It wasn't specific to preclinical pharmacology, but in general, with less than 2% forecasting a decline. And so we can play right into that. As David mentioned, we've built out some investments in our commercial team as well, so we feel really well-positioned as the market continues to recover with what we'll be able to do there.

Speaker #2: It's still a tough market out there, but it is improving. And we have optimism. On a point of news, I did a recent survey of 77 biotech execs, and over a third of them talked about increasing their outsourcing next year.

Speaker #2: It wasn't specific to preclinical pharmacology, but in general, with less than 2% forecasting a decline. And so we can play right into that. As David mentioned, we've built out some investments in our commercial team as well.

Speaker #2: So we feel really well positioned as the market continues to recover with what we'll be able to do there.

Speaker #4: That's great. And regarding the data platform, it's nice to see that you're making some investments there. When you look at the sales and marketing investments specifically, are those new hires, and are they specifically or exclusively targeting the data opportunity?

Operator: That's great. Regarding the data platform, it's nice to see that you're making some investments there. When you look at the sales and marketing investments specifically, are those new hires, are they specifically and exclusively targeting the data opportunity, or are they also supporting the PDX and some of the other services that you provide?

Matthew Hewitt: That's great. Regarding the data platform, it's nice to see that you're making some investments there. When you look at the sales and marketing investments specifically, are those new hires, are they specifically and exclusively targeting the data opportunity, or are they also supporting the PDX and some of the other services that you provide?

Speaker #4: Or are they also supporting the PDX and some of the other services that you provide?

Speaker #2: To some extent, some or both, but I really want to highlight a recent hire we just made. I was very excited to be able to bring on Dr. Tamara Farid to lead the data business as a general manager.

Robert Brainin: To some extent, some or both, but I really want to highlight a recent hire we just made. I was very excited to be able to bring on Dr. Tamer Farid to lead the data business as a general manager. He joined us most recently from Illumina, but spent a chunk of his early career at the Boston Consulting Group. So he brings not only a very strategic mindset to the business, but also important domain expertise that will serve us well, not only as we execute against the opportunities we have in the near-term pipeline, which we're seeing and getting excited about, but also then longer term as we really think strategically about what is the right way to grow this business and to partner with our customer base around their opportunities to use this data in ways that will really enhance their discovery and development programs.

Speaker #2: He joined us most recently from Illumina, but spent a chunk of his early career at the Boston Consulting Group. So he brings not only a very strategic mindset to the business, but also important domain expertise that will serve us well—not only as we execute against the opportunities we have in the near-term pipeline, which we're seeing and getting excited about, but also, then, longer term as we really think strategically about what is the right way to grow this business and to partner with our customer base around their opportunities to use this data in ways that will really enhance their discovery and development programs.

Speaker #2: We still have a lot of work to do, just to be clear, but we're believers in it and we'll continue to invest.

Robert Brainin: We still have a lot of work to do, just to be clear, but we're believers in it, and we'll continue to invest there.

Speaker #2: there. Got it.

Operator: Got it. I guess lastly is on the margin side, specifically gross margins, a nice pop here, both sequentially and year-over-year. It sounds like this is kind of a way to think about the base business or the core business. As you look out over the remainder of the year, where could those go? You've obviously added a few people. I don't know if that's going to necessarily impact gross margins. It sounds like it's more Opex, but can we expect to see further growth in gross margins, which in theory should be flowing through to the bottom line, or is there something that would cause those to kind of trickle down a little bit here, maybe in Q3 or Q4? Thank you.

Matthew Hewitt: Got it. I guess lastly is on the margin side, specifically gross margins, a nice pop here, both sequentially and year-over-year. It sounds like this is kind of a way to think about the base business or the core business. As you look out over the remainder of the year, where could those go? You've obviously added a few people. I don't know if that's going to necessarily impact gross margins. It sounds like it's more Opex, but can we expect to see further growth in gross margins, which in theory should be flowing through to the bottom line, or is there something that would cause those to kind of trickle down a little bit here, maybe in Q3 or Q4? Thank you.

Speaker #4: I guess lastly is on the margin side, specifically gross margins. A nice pop here, both sequentially and year over year. It sounds like this is kind of a way to think about the base business or the core business.

Speaker #4: As you look out over the remainder of the year, where could those go? You've obviously added a few people, but I don't know if that's going to necessarily impact gross margin.

Speaker #4: It sounds like it's more OpEx. But can we expect to see further growth in gross margins, which in theory should be flowing through to the bottom line?

Speaker #4: Or is there something that would cause those to kind of trickle down a little bit here, maybe in Q3 or Q4? Thank you.

Speaker #4: Or is there something that would cause those to kind of trickle down a little bit here, maybe in Q3 or Q4? Thank you. Yes, I could take—

David Miller: Yes, I could take that one. So a couple of things. So I think this is really where we see the margin for the service business being in the 50, 52, even a little bit higher range, all things remaining equal. We all, and I think this has occurred on several quarters over the years, there can be various expenses that hit in a given quarter. We mentioned one of them, which is outsourced lab service costs, specifically related to radio labeling. So while we bring some of that work in-house, we are still in the middle of the transition, and there can be some leftover outsourced services costs that will hit in a future quarter, which can impact margin. So that would be a change. But overall, this is the area we really expect to be in our core services business.

Speaker #3: That one. So, a couple of things. I think this is really where we see the margin for the service business being in the 50%, 52%, even a little bit higher range.

Speaker #3: All things remaining equal, we are all asking for some sort of carrot on several calls, several quarters over the years. There can be various expenses that hit in a given quarter—we mentioned one of them, which is outsourced lab service costs, specifically related to radio labeling.

Speaker #3: So while we bring some of that work in-house, we are still in the middle of the transition, and there can be some leftover outsourced services costs that will hit in a future quarter, which can impact margin, so that would be a change.

Speaker #3: But overall, this is the area where we're really expected to be in our core services business. And obviously, when we get more heavily into data, we can certainly see an overall lift to margins.

David Miller: Obviously, when we get more heavily into data, we can certainly see an overall lift to margins. Then similarly, based on variances, fluctuations in revenue, that would impact the margins. But overall, this is the way we're thinking about the business.

Speaker #3: And then, similarly, based on variances and fluctuations in revenue, that would impact the margins. But overall, this is the way we're thinking about the business.

Speaker #4: Very helpful. Thank

Operator: Very helpful. Thank you. Once again, if you have a question or a comment, please press star one. The next question comes from Richard Vaffarini, private investor. Please proceed.

Matthew Hewitt: Very helpful. Thank you.

Operator: Once again, if you have a question or a comment, please press star one. The next question comes from Richard Vaffarini, private investor. Please proceed.

Speaker #1: Once again, if you have a question or a comment, please press *1. The next question comes from Richard Bafarin, private investor. Please proceed.

Speaker #5: Hi, thanks for taking my question. Can you comment on how far along your drug candidates are for Queralia before Queralia files for an IND application?

Richard Vaffarini: Hi, thanks for taking my question. Can you comment on how far along your drug candidates are for Corelia before Corelia files for an IND application? Can you comment on that? And as a follow-up, can you comment or give us a range as to what kind of valuation you're looking at or the investors are looking at to fund Corelia, please?

[Analyst]: Hi, thanks for taking my question. Can you comment on how far along your drug candidates are for Corelia before Corelia files for an IND application? Can you comment on that? And as a follow-up, can you comment or give us a range as to what kind of valuation you're looking at or the investors are looking at to fund Corelia, please?

Speaker #5: Can you comment on that? And as a follow-up, can you comment or give us a range as to what kind of valuation you're looking at or the investors are looking at to fund Queralia?

Speaker #5: Please.

Speaker #2: Yeah, hey Richard, thanks for the—

Robert Brainin: Yeah. Hey, Richard, thanks for the question. We really haven't shared that information publicly about Corelia. What I will share is that we're very excited about the data we're seeing and where we are on our lead program and programs. And the traction we're starting to get with some of these VC partners as we share that story is gaining real traction. So I think we'll have to leave that one as a watch this space coming attractions, and we'll be sure to share that information as soon as there's something more meaningful and relevant that we can share.

Speaker #2: We really haven't shared that information publicly about Queralia. What I will share is that we're very excited about the data we're seeing and where we are.

Speaker #2: On our lead program and programs, and the traction we're starting to get with some of these VC partners as we share that story, is gaining real traction.

Speaker #2: So I think we'll have to leave that one as a 'watch this space'—coming attractions. And we'll be sure to share that information as soon as there's something more meaningful and relevant that we can share.

Speaker #5: Thank

Speaker #5: you. If there are any

Operator: Thank you. If there are any remaining questions, please indicate so now by pressing star one on your touch-tone phone. Okay. We currently have no further questions in the queue. I would like to turn the floor back to management for any closing remarks.

[Analyst]: Thank you.

Operator: If there are any remaining questions, please indicate so now by pressing star one on your touch-tone phone. Okay. We currently have no further questions in the queue. I would like to turn the floor back to management for any closing remarks.

Speaker #1: remaining questions, please indicate so now by pressing *1 on your touchdown phone. Okay, we currently have no further questions in the queue. I would like to turn the floor back to management for any closing

Speaker #1: Remarks. Yeah, I just want to say thank you.

Robert Brainin: Yeah, I just want to say thank you all for joining. As you can tell from what David and I have shared, we're excited about the business and the direction we're heading. We're looking forward to updating you more in future quarters about our radio opportunities, about our data opportunities, about Corelia, to be able to give more clarity and crispness around where we are on those. But in the meanwhile, just want to wish everyone a happy holidays, and thank you again for joining. Have a great afternoon and evening.

Speaker #2: Thank you all for joining. As you can tell from what David and I have shared, we're excited about the business and the direction we're heading.

Speaker #2: We're looking forward to updating you more in future quarters about our radio opportunities, about our data opportunities, about Queralia, to be able to give more clarity and crispness around where we are on those.

Speaker #2: But in the meanwhile, I just want to wish everyone happy holidays, and thank you again for joining. Have a great afternoon and evening.

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

Q2 2026 Champions Oncology Inc Earnings Call

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