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Item 2. Management’s Discussion and Analysis

2025-09-15 compared with 2025-03-17 · 38 added, 67 removed, 91 unchanged (54% of the section changed)

22 unchanged sentences

These studies include in vivo studies that rely on implanting multiple tumors from our TumorBank in mice and testing the therapy of interest on these tumors.

Studies may also include bioinformatics analysis that

reveal the differences in the genetic signatures of the tumors that responded to a therapy as compared to the tumors that did not respond.

Studies may also include bioinformatics analysis that reveal the differences in the genetic signatures of the tumors that responded to a therapy as compared to the tumors that did not respond.

Additionally, we provide computational or experimental support to identify novel therapeutic targets, select appropriate patient populations for clinical evaluation, identify potential therapeutic combination strategies, and develop biomarker hypothesis of sensitivity or resistance.

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We regularly evaluate strategic options to create additional value from our drug discovery business, which may include, but are not limited to, potential spin-out transactions or capital raises.

Liquidity and Going Concern

Under ASC Subtopic 205-40, Presentation of Financial Statements—Going Concern (“ASC 205-40”), the Company has the responsibility to evaluate whether conditions and/or events raise substantial doubt about its ability to meet its future financial obligations as they become due within one year after the date that the financial statements are issued.

The following conditions raised substantial doubt about our ability to continue as a going concern:

a history of net losses, working capital deficits, accumulated deficit and declining cash position.

Going concern matters are more fully discussed in Notes to the Consolidated Financial Statements, Note 2, Summary of Significant Accounting Policies.

No adjustments have been made to the financial statements as a result of this uncertainty.

Liquidity and Capital Resources

Our liquidity needs have typically arisen from the funding of our research and development programs and the launch of new products, working capital requirements, and other strategic initiatives.

Most recently, we have met these cash requirements through cash on hand, working capital management, and sales of products and services.

In the past, we have also received proceeds from certain private placements and public offerings of our securities.

For the nine months ended January 31, 2025, the Company had net income of approximately $6.5 million and cash provided by operations of approximately $518,000.

As of January 31, 2025, the Company had an accumulated deficit of approximately $78.1 million and cash on hand of approximately $3.2 million.

While we believe we have strategies to increase our revenues and reduce our costs which can be implemented without disrupting the business or completely restructuring the Company, there can be no assurances.

In order to continue to

fund our operations we may need to raise additional equity or debt capital in the near term and cannot provide any assurance that we will be successful in doing so, and if we can, on whether the terms will be acceptable to us.

If we are unable to obtain additional financing in the near future, we may be required to pursue a reorganization proceeding, including under applicable bankruptcy or insolvency laws.

In the past, we have met these cash requirements through our cash on hand, working capital management, proceeds from certain private placements and public offerings of our securities and sales of products and services.

For the three months ended July 31, 2025 and 2024, the Company had a net loss of $466,000 and net income of $1.3 million, respectively.

As of July 31, 2025, the Company had an accumulated deficit of approximately $80.4 million, negative working capital of $1.7 million and cash of $10.3 million.

For the three months ended July 31, 2025, the Company realized cash flow from operations of approximately $600,000.

Despite our negative working capital at this date, we believe that our cash on hand, together with expected cash flows from operations, are adequate to fund operations through at

least October 2026.

Should the Company be required to raise additional capital, there can be no assurance that management would be successful in raising such capital on terms acceptable to us, if at all.

Operating Results

The following table summarizes our operating results for the periods presented below (dollars in thousands):

For the Three Months Ended January 31,

Revenue 2024 % of

Oncology revenue $ 17,039 100.0 % $ 12,019 100.0 % 41.8 %

Costs and operating expenses:

Cost of oncology revenue 6,617 38.8 7,849 65.3 (15.7)

Research and development 1,719 10.1 2,186 18.2 (21.4)

Sales and marketing 1,806 10.6 1,797 15.0 0.5

General and administrative 2,398 14.1 2,764 23.0 (13.2)

Total costs and operating expenses 12,540 73.6 14,596 121.5 (14.1)

Income (loss) from operations $ 4,499 26.4 % $ (2,577) (21.4) % (274.6) %

For the Nine Months Ended January 31,

For the Three Months Ended July 31,

Revenue 2024 % of

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General and administrative 2,570 18.4 2,527 18.0 1.7

Loss on disposal of equipment 20 0.1 — — 100.0

Total costs and operating expenses 14,522 103.8 12,732 90.5 14.1

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Oncology Revenue

Oncology revenue, primarily derived from pharmacology studies, totaled $17.0 million for the three months ended January 31, 2025, compared to $12.0 million for the same period in 2024, an increase of $5.0 million or 41.8%.

For the nine months ended January 31, 2025, revenue reached $44.6 million, up from $36.2 million for the same period in 2024, reflecting growth of $8.4 million or 23.3%.

Oncology revenue, primarily derived from research services, totaled $14.0 million for the three months ended July 31, 2025, compared to $14.1 million for the same period in 2024, a decrease of $66,000 or 0.5%.

Our revenues are comprised of the following:

Three Months Ended

January 31, Nine Months Ended January 31,

(in 000s) 2025 2024

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Other TOS revenue 454 992

Personalized oncology services — — — 18

Total oncology revenue $ 13,995 $ 14,061

Pharmacology Services

• The increases for both the three and nine month periods ending January 31, 2025 were the result of a stronger bookings to revenue conversion rate.

• The slight increase in revenue comparing the three month periods ended July 31, 2025 to 2024 was the result of an increase in the bookings to revenue conversion rate.

Bookings, which represent the total value of signed statements of work, convert to revenue over time as the Company fulfills its contractual performance obligations.

improvements implemented throughout the year have enhanced execution efficiency, contributing to the improvement in the conversion percentage.

TOS License Revenue

• Revenue for the three and nine months ending January 31, 2025 resulted from the sale of data licenses.

TOS Data License Revenue

• Revenue for the three months ending July 31, 2025 resulted from the sale of data licenses.

There was no data license revenue for the three months ended July 31, 2024.

Other TOS Revenue

• Other TOS Revenue includes additional services provided to the Company's pharmaceutical and biotechnology customers, specifically flow cytometry and SaaS provided via Lumin.

• Our flow cytometry services revenue increased approximately $120,000 and $787,000 for the three and nine month periods ending January 31, 2025, respectively due to stronger bookings to revenue conversion rates.

• This increase in Other TOS Revenue was offset by decreases in our SaaS revenues for the three and nine month periods ending January 31, 2025 as compared with 2024 of $89,000 and $151,000, respectively.

The decreases resulted from a decrease in new and renewal subscriptions.

• Our flow cytometry services revenue decreased approximately $540,000 for the three months ended July 31, 2025, due to a decline in clinical bookings and a de-emphasis on this business unit.

The decrease in Other TOS Revenue was partially offset by a slight increase in our SaaS revenues for the three-month period ending July 31, 2025 as compared with 2024, of $1,000.

Cost of Oncology Revenue

For the three months ended January 31, 2025, cost of oncology revenue decreased $1.2 million or 15.7% to $6.6 million, compared to $7.8 million in the prior year period.

For the nine months ended January 31, 2025, costs declined $1.0 million or 4.7% to $21.1 million, compared to $22.2 million in the prior year.

These reductions were primarily driven by lower compensation and lab supply costs due to efficiency initiatives, along with a decrease in outsourced lab services, which fluctuate quarterly.

For the three months ended July 31, 2025, cost of oncology revenue increased $923,000 or 13.1% to $8.0 million, compared to $7.1 million in the prior year period.

The increase primarily reflects higher outsourced lab services for radiolabeling work, which will vary from quarter to quarter but should decrease as we migrate this work in-house.

Research and Development

Research and development expense for the three months ended January 31, 2025 and 2024 were $1.7 million and $2.2 million, respectively, a decrease of approximately $467,000 or 21.4%.

Research and development expense for the nine months ended January 31, 2025 and 2024 were $4.9 million and $7.5 million, respectively, a decrease of approximately $2.6 million or 35.1%.

Research and development expense for the three months ended July 31, 2025 and 2024 were $2.1 million and $1.5 million, respectively, an increase of approximately $628,000 or 43.2%.

The significant components of research and development expense are comprised of the following:

Three Months Ended

January 31, Nine Months Ended January 31,

(in 000s) 2025 2024

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Outside Services 448 52

The overall decreases in research and development expense for both the three and nine month periods were primarily the result of a reduction in investment in our developmental programs including Corellia, our wholly owned subsidiary focused on target discovery.

The overall increases in research and development expense for the three month period was primarily the result of an increase in outsourced lab services, compensation, and lab supplies as we increase investment in our data licensing platform and for Corellia, our wholly owned subsidiary focused on target discovery.

Sales and Marketing

Sales and marketing expenses for the three months ended January 31, 2025 and 2024 were $1.8 million, with a slight increase of $9,000 or 0.5%.

Sales and marketing expenses for the nine months ended January 31, 2025 and 2024 were $5.2 million and $5.3 million, with a slight decrease of $52,000 or 1.0%.

Sales and marketing expenses are primarily comprised of compensation expenses to support business development.

Sales and marketing expenses for the three months ended July 31, 2025 and 2024 were $1.9 million and $1.7 million, an increase of $176,000 or 10.5%.

The increase was related to compensation expense to support the growth of our data license business.

General and Administrative

General and administrative expenses for the three months ended January 31, 2025 and 2024 were $2.4 million and $2.8 million, respectively, a decrease of $366,000, or 13.2%.

General and administrative expenses for the nine months ended January 31, 2025 and 2024 were $6.8 million and $8.3 million, respectively, a decrease of $1.5 million, or 18.0%.

General and administrative expenses for the three months ended July 31, 2025 and 2024 were $2.6 million and $2.5 million, respectively, a slight increase of $43,000, or 1.7%.

General and administrative expenses are primarily comprised of compensation, insurance, professional fees, IT and depreciation and amortization expenses.

The decrease for the three-month period ended January 31, 2025 was primarily from a decrease in compensation and employee recruitment expenses.

The decrease for the nine-month period ended January 31, 2025 resulted from the combination of a decrease in compensation and employee recruitment expenses.

The following discussion relates to the major components of our cash flows:

Cash Flows from Operating Activities

For nine months ended January 31, 2025, net cash provided by operating activities was $518,000.

The cash provided by operating activities was primarily due to net income from operations offset by an increase in accounts receivable.

Excluding the increase in accounts receivable attributable to the data licensing deal, changes in our accounts receivable was in the ordinary course of business.

For the nine months ended January 31, 2024, net cash used in operating activities was $4.3 million.

The cash used in operating activities was primarily due to the net operating loss during the period offset by changes in our working capital accounts in the ordinary course of business.

For three months ended July 31, 2025, net cash provided by operating activities was $600,000.

The cash provided by operating activities was supported by receivables conversion and normal working capital activity, partially offset by a quarterly net loss.

For the three months ended July 31, 2024, net cash provided by operating activities was $311,000.

The cash provided by operating activities was primarily due to income from operations offset by changes in our working capital accounts in the ordinary course of business.

Cash Flows from Investing Activities

Net cash used in investing activities was $136,000 and $839,000 for the nine months ended January 31, 2025 and 2024, respectively.

The cash used in investing activities for the current and prior year period was for the investment in additional lab and computer equipment.

Net cash used in investing activities for the quarter was approximately $46,000.

This was the result of purchases of lab and computer equipment during the quarter.

The cash used in investing activities for the three months ended July 31, 2024 was $0.

Cash Flows from Financing Activities

Net cash provided by financing activities was $202,000 for the nine months ended January 31, 2025 .

For the nine months ended January 31, 2025, the cash provided was from cash received from stock option exercises slightly offset by financing lease payments.

Net cash used in financing activities was $490,000 for the nine months ended January 31, 2024.

The cash used was due to the Company's' stock repurchase program plus financing lease payments offset by cash received from stock option exercises.

Net cash used in financing activities was $14,000 for the three months ended July 31, 2025 resulting from financing lease payments partially offset by proceeds received for stock options exercises.

Net cash used in financing activities was $37,000 for the three months ended July 31, 2024, resulting from financing lease payments.

Critical Accounting Estimates and Policies

The preparation of these condensed consolidated financial statements in conformity with GAAP requires management to apply methodologies and make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period.

Significant estimates of the Company include, among other things, accounts receivable realization, revenue recognition, and stock-based compensation assumptions.

Actual results could differ from those estimates.

The Company’s critical accounting policies are summarized in our 2024 Annual Report.

There have been no changes to our critical accounting policies during the three months ended July 31, 2025.

Critical accounting policies and the significant estimates made in accordance with such policies are regularly discussed with our Audit Committee.

Those policies are discussed under “Critical Accounting Policies” in “Part II.

Management's Discussion and Analysis of Financial Condition and Results of Operations” as well as in our Condensed Consolidated Financial Statements and the footnotes thereto, each included in our 2025 Annual Report.

Off-Balance Sheet Financing

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis