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Item 1. Business

2021-07-26 compared with 2020-07-28 · 123 added, 86 removed, 37 unchanged (85% of the section changed)

We are engaged in the development and sale of advanced technology solutions and products utilized in the development and use of oncology drugs.

Utilizing our TumorGraft Technology Platform (the "Platform"), a comprehensive bank of unique, well-characterized “Patient Derived XenoGrafts” or “PDX Models”, we provide select services to pharmaceutical and biotechnology companies seeking personalized approaches to drug development.

By performing studies to predict the efficacy of oncology drugs, our Platform facilitates drug discovery with lower costs and increased speed of drug development as well as increased adoption of existing drugs.

The current oncology drug development paradigm is challenging for the pharmaceutical and biotechnology industry.

We believe that on average, the clinical trial process in oncology currently:

costs more than $1.2 billion;

takes approximately 8 years to complete;

has a 93% failure rate;

results in approved compounds that cost more than $11,000 per month.

Our platform provides a novel approach to simulating the results of human clinical trials used in developing oncology drugs.

It can cost up to $100,000 per patient in oncology clinical trials and the typical cost for each phase of development per year increases from approximately $3 million in the pre-clinical setting to approximately $150 million in phase III clinical trials.

Simulating trials before executing them provides benefits to both pharmaceutical companies and patients.

Pharmaceutical companies can lower the risk of spending resources on drugs that do not show significant anti-cancer activities and increase the chance that the clinical development path they pursue will be focused on an appropriate patient population and a successful combination with other drugs.

TumorGraft Technology Platform

Our clinical trial simulation platform consists of processes, physical tumors, and information that we use to personalize the development and use of oncology drugs.

Each tumor from individual patients that we have preserved for future implantation in mice, along with the patient data and molecular information associated with these tumors, are referred to as “TumorGrafts” or “Patient Derived XenoGrafts” or “PDX Models”.

Our process technology involves the following:

implantation of human tumor fragments in immune-deficient mice;

expansion of the original human tumor into a larger colony of mice through the passage of the tumor to a limited number of generations of mice;

treatment of the implanted mice with oncology drugs;

measurement of tumor growth inhibition in treated mice relative to a control group of mice to determine the response of the tumor to the drug;

permanent cryo-preservation of fragments of tumor tissue for future use in additional clinical trial simulations.

A growing body of evidence demonstrates the power of PDX to predict the response of individual patients to oncology drugs.

Our platform has demonstrated a positive predictive value of approximately 87% and negative predictive value of approximately 94%.

As a result, we believe our PDX platform results in simulated clinical studies with approximately 90% accuracy in predicting human response with approximately 90% lower costs than a human clinical trial while shortening the timelines from 2-3 years for human trial to 6 months for PDX studies.

The collection of TumorGrafts that we have built is referred to as our "TumorBank".

We currently have approximately 1,500 PDX Models in our TumorBank that we believe reflect characteristics of patients who enroll in clinical trials (late stage, pretreated and metastic).

We implant tumors in mice to provide pharmaceutical and biotechnology companies the opportunity to test oncology compounds on multiple tumors to test efficacy and simulate the results of human clinical trials.

Increasing breadth and depth of the TumorBank is an important strategic effort of the Company.

We invest significant research and development resources to increase the number of PDX Models in our TumorBank and add unique and different sub-types of cancer that we have not historically addressed.

In addition, we have developed a proprietary data tool containing comprehensive information derived from our clinical studies.

This database includes certain information about the patient (e.g.

age, gender), the response of the tumors to different oncology drugs or drug combinations, mutational status of key oncogenes, and other genetic and epigenetic data about each tumor.

This data may be used by pharmaceutical companies seeking to develop new cancer drugs.

Based on our extensive knowledge of the industry, we believe that we are a leading provider of Patient Derived XenoGrafts and a pioneer in the use of PDX Models for use with efficacy studies, patients and clinical trial simulations.

Our research and development efforts and customer sponsored platform development has contributed to the acceptance of the accuracy of PDX Models as a valuable tool in the development and use of oncology drugs.

Our strategy is to use TumorGrafts as a platform technology to drive multiple synergistic revenue streams.

We continue to build this platform with investments in research and development.

Our goal is to populate our TumorBank and its related database with tumors and information we receive from patients, research collaborations and validation studies.

The tumors and information in the TumorBank are then available for work with pharmaceutical company customers.

In addition, we are currently working on a platform to monetize the data we are gathering about the tumors to develop proprietary biomarkers and signatures of response that can predict the resistance or sensitivity of individual patients to oncology drugs.

Translational Oncology Solutions Business

Our Translational Oncology Solutions ("TOS") business utilizes our technology platform to assist pharmaceutical and biotechnology companies with their drug development process.

We provide studies, or license tumors for use in studies, which we believe may predict the efficacy of experimental oncology drugs or approved drugs as stand-alone therapies or in combination with other drugs and can stimulate the results of human clinical trials.

We are a technology-enabled research organization engaged in creating transformative technology solutions to be utilized in drug discovery and development.

Our research center operates in both regulatory and non-regulatory environments and consists of a comprehensive set of computational and experimental research platforms.

Our pharmacology, biomarker, and data platforms are designed to facilitate drug discovery and development at lower costs and increased speeds.

At the core of our research platforms is our unique, proprietary bank of Patient Derived Xenograft (PDX) models.

This preeminent bank of PDX models is deployed into advanced in vivo and ex vivo pharmacology platforms, providing an enhanced level of insight into therapeutic programs.

We currently have approximately 1,500 PDX Models in our TumorBank that we believe reflect the characteristics of patients who enroll in clinical trials (late stage, pretreated and metastatic).

This characteristic of our TumorBank is an important differentiator to other established PDX banks.

We implant and expand these tumors in mice, which allows for future studies and additional characterization of the tumor.

Additional analytical and pharmacology experimental platforms are also available to augment the information gained from studies performed.

The PDX bank is highly characterized at the molecular, phenotypic and pharmacological levels, which provides a differentiated layer of data for our large oncology dataset (the “Datacenter”).

The Datacenter combines our proprietary dataset with other large publicly available datasets.

This dataset currently includes approximately 3,500 molecular datasets (genomics, transcriptomics, proteomics, phosphor-proteomics), approximately 3,000 clinical drug responses, approximately 3,500 in vivo drug responses, and the accompanying clinical information on the patients from which they were derived (pre and post tumor sample acquisition of drug treatments and responses, age, gender, ethnicity, tumor stage, tumor grade, location of tumor biopsy, histology, etc.) derived from our TumorBank.

One unique feature of this proprietary dataset is the fact that it is derived from a living TumorBank.

This allows us to continue characterizing the TumorBank over time, and increasing the depth of characterization of the accumulated data.

The combination of the breadth and depth of the TumorBank, and associated characterization, drives the value of our Datacenter.

The Datacenter also includes approximately 20,000 publicly available datasets including genomics, transcriptomics, proteomics, and functional genomics, and patient outcome.

This Datacenter facilitates our computational approach to drug discovery and provides the foundation to our Software as a Service ("SaaS") offerings.

Collectively, our computational and experimental research platforms enable a more rapid and precise approach to drug discovery and development.

Through our technology platforms, we have designed an ecosystem of business lines consisting of:

• The sale of research services utilizing our innovative research platforms to biopharmaceutical companies

• The sale of oncology research Software as a Service ("SaaS") tools to cancer research scientists

• The discovery and development of novel oncology therapeutics

Translational Oncology Solutions (TOS) Business

Research Services

Our research services utilize our research center to assist pharmaceutical and biotechnology companies with their drug development process.

We perform studies which we believe may predict the efficacy of experimental oncology drugs or approved drugs as stand-alone therapies or in combination with other drugs and can stimulate the results of human clinical trials.

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.

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The studies can also be used to identify specific sub-populations, often characterized by particular genetic mutations that are differentially sensitive or resistant to a drug or drug combination.

These studies, used in pre-clinical testing or during phase I or II of a clinical trial, can help guide the clinical development path of new compounds or find new indications or combinations for compounds that are already approved by the United States Food and Drug Administration, or FDA.

We believe that the results may lead to lower costs and shorter timeframes for drug development.

We have performed studies for approximately 500 different pharmaceutical and biotechnology companies over the past eight years.

We have a high rate of repeat business.

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.

These studies include the use of our in vivo, ex vivo, analytical and computational platforms.

Increasing the breadth of the TumorBank is an important strategic effort of the Company.

We invest significant research and development resources to increase the number of PDX Models in our TumorBank and add unique and different sub-types of cancer that are not historically addressed.

This effort also allows us to build highly valuable PDX models derived from patients with resistance to specific therapies or important molecular annotations.

We also invest significant resources to increase the depth of characterization of the TumorBank.

For each model, this characterization includes phenotypic analysis, molecular analyses, and pharmacologic analysis.

This depth of characterization, in an individual tumor basis, is unique and not widely available.

We have performed studies for approximately 500 different pharmaceutical and biotechnology companies over the past ten years, have a high rate of repeat business, and contract with pharmaceutical and biotechnology companies across North America, Europe and Asia.

Studies are performed in a preclinical non-regulatory environment, as well as a Good Clinical Regulatory Practice (GCLP) regulatory environment for clinical evaluation.

Typical studies are in the $100,000 price range, with an increasing number of studies in the $250,000 to $500,000 range.

Revenue from this business has grown at a cumulative annual growth rate of 32% since 2015.

Our sales and marketing efforts are dependent on a dedicated sales force that sells our services directly to pharmaceutical and biotechnology companies.

We have a team of 27 professionals dedicated to this sales and marketing effort.

The team is focused on identifying and selling studies to new customers as well as increasing our revenue from existing customers.

We spend significant resources in informing our current customers and reaching out to new contacts within companies that we currently serve.

These efforts are aimed at moving our customers along the adoption curve for PDX-based clinical trial simulation and increasing the number of studies and the average study size of our existing customers.

Studies performed in a regulatory environment can be much larger than those performed within a non-regulatory environment.

Revenue from this business has grown at an average annual growth rate of 30% since 2015 and represents the primary source of our current revenue stream.

Software As A Service (SaaS) Business

Our SaaS business, launched in fiscal year 2021, is centered around our proprietary software platform and data tool, Lumin Bioinformatics ("Lumin”), which contains comprehensive information derived from our research services and clinical studies and is sold to customers on an annual subscriptions basis.

Our software development teams consist of bioinformatics scientists, mathematicians as well as software engineers.

Lumin leverages Champions’ large Datacenter coupled with analytics and artificial intelligence to provide a robust tool for computational cancer research.

It is the combination of the Datacenter and the analytics that create a unique foundation for Lumin.

Insights developed using Lumin can provide the basis for biomarker hypotheses, reveal potential mechanisms of therapeutic resistance, and guide the direction of additional preclinical evaluations.

Drug Discovery and Development Business

Our nascent drug discovery and development business leverages the computational and experimental capabilities within our platforms.

Our discovery strategy utilizes our Datacenter, coupled with artificial intelligence and other advanced computational analytics, to identify novel therapeutic targets.

We then employ the use of our proprietary experimental platforms to rapidly validate these targets for further drug development efforts.

Our efforts center around three areas of focus:

Targeted therapy with drug conjugates

Immune oncology

Our drug discovery and development business is dependent on a dedicated research and development team, made up of computational and experimental scientists.

Importantly, the scientific teams within our Drug Discovery and Development teams are appropriately segregated from our other businesses.

We have a rich pipeline of targets at various stages of discovery and validation, with a select group that has progressed to therapeutic development.

Our commercial strategy for the validated targets and therapeutics established from this business is wide-ranging and still being developed.

It will depend on many factors, and will be specific for each target or therapeutic area identified.

Our sales and marketing efforts are dependent on a dedicated sales force of approximately 36 professionals that sell our services directly to pharmaceutical and biotechnology companies.

Our research services team is focused on identifying and selling studies to new customers as well as increasing our revenue from our existing customer base.

We spend significant resources in informing our customers and reaching out to new contacts within companies that we currently serve.

These efforts are aimed at moving our customers along the adoption curve for our research platforms, thereby increasing the number of studies and the average study size.

Our success in these efforts is demonstrated by the growing number of customers who have increased their annual spend on our services over the past three years.

For the year ended April 30, 2020 , revenues from our TOS products totaled approximately $31.3 million , an increase of approximately 21.5% from the previous year.

Personalized Oncology Solutions Business

Our Personalized Oncology Solutions ("POS") business, offers physicians and patients information to help guide the development of personalized treatment plans.

Our core products, TumorGraft implants and drug panels, utilize TumorGraft technology to empirically test the response of a patient’s tumor to multiple oncology drugs or drug combinations.

The response of the tumors in the mice is tracked over time and analyzed to determine which drug or drug combination is providing the highest level of tumor growth inhibition in the mice.

By providing this product over the years, we achieved an important goal of adding PDX Models to our TumorBank, and gained valuable genomic data, both of which supports our TOS business.

As previously disclosed, however, our POS business is not the focus of our growth moving forward.

We will continue to phase out our POS offerings.

For the year ended April 30, 2020 , revenues from our POS business totaled approximately $790,000 , a decrease of approximately 38.1% from the previous year.

Our SaaS business development team is focused on identifying and selling subscriptions to new customers, ensuring a high level of use from these subscribers, and increasing our revenue from existing customers through the use of our cloud computing environment.

Our sales approach is based on in informing our current research services customers and reaching out to new contacts within companies that we currently serve.

For the year ended April 30, 2021, revenues from our products and services totaled approximately $40.9 million, an increase of approximately 28% from the previous year.

Our Current Strategy

Our strategy is to use our various platform technologies to drive multiple synergistic revenue streams.

We continue to build upon this with investments in research and development.

Our enterprise strategy consists of the following:

• Establish a global leadership position in oncology research

• A focus on bringing better drugs to patients faster

• Leading innovation in oncology research and development platforms

• Cultivating a solid reputation for the quality of data acquisition and interpretation

• Collaborations across the global biopharma landscape

• Profitable growth across all business lines

Our Growth and Expansion Strategy

Our strategy is to continue to use TumorGrafts as a platform technology to drive multiple synergistic revenue streams.

Our current strategy for growth has multiple components:

Our strategy is to continue to use our various platform technologies to drive multiple synergistic revenue streams.

Our strategy for growth has multiple components:

• Growing our TumorBank:

We grow our TumorBank in two ways.

First, we increase the number of TumorGrafts in the bank for our existing tumor types to ensure customers are finding the specific models they need for their studies.

Second, we add new tumor types to the bank to enable studies in tumor types that we have not historically been able to run for our pharmaceutical and biotechnology customers.

Adding new PDX technologies:

The fields of oncology research and drug development are evolving.

To keep up with new approaches, we add new technologies to our PDX platform.

We are currently investing in developing ImmunoGrafts, a new PDX model that is developed in a mouse with a humanized immune system.

These models are built to specifically serve the needs of pharmaceutical and biotechnology companies developing immune oncology drugs.

This is a relatively new area of oncology research that has shown significant promise and is attracting a significant amount of research and development interest.

Increasing the scale of studies:

We have facilitated studies for over 500 pharmaceutical and biotechnology companies.

We believe there is significant opportunity to grow our revenue by increasing the size of the studies these customers run.

To accomplish this, we are developing new study designs that offer solutions to compounds that are in phase I and phase II clinical trials.

We believe that the increased budgets of these drugs, as compared to drugs in the pre-clinical stage, will enable us to sell larger studies.

Our TumorGraft Technology Platform is proprietary and requires significant know-how to both initiate and operate, but is not patented.

It is, therefore, possible for competitors to develop other implantation procedures or to discover the same procedures utilized by the Company that could compete with the Company in its market.

Competition in our industry is intense and based significantly on scientific, technological, and market forces, which include the effectiveness of the technology and products and the ability to commercialize technological developments.

First, leverage a medical affairs team that works with a well established clinical network to facilitate access to patients diagnosed with prioritized tumors subtypes.

Second, we utilize our legacy Personalized Oncology Services business to establish novel PDX models from patients who use this service.

The PDX models are then deeply characterized at the phenotypic, molecular, and pharmacologic levels.

This data characterization is then added to our DataCenter.

• Adding new experimental technologies:

The fields of oncology research and drug development are evolving rapidly.

To keep up with new approaches, we continuously add new technologies to platform.

We are currently investing in developing additional proprietary pharmacology platforms aimed at enhancing the scientific output and driving innovation in the oncology research sector.

We are also investing in the acquisition of sophisticated analytical platforms which allow scientists to derive deeper insights when using our pharmacology platforms.

Once these experimental technologies are established they are made available to our research and development and target discovery teams.

• Continued development of computational power:

We have developed sophisticated and innovative computational approaches.

We continue to invest in the development of novel artificial intelligence, data structures, and analytics.

Our goal is to leverage our unique Datacenter to establish elegant ways to better understand the molecular dynamics of cancer, and the development novel therapeutics.

Champions currently competes in three different markets:

Research Services :

Pharmaceutical companies rely on outsourcing preclinical studies to Clinical Research Organizations ("CROs").

Competition in this industry is intense and based significantly on scientific, technological, and market forces, which include the effectiveness of the technology and products and the ability to commercialize technological developments.

The Company faces significant competition from other healthcare companies in the United States and abroad.

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These companies, as well as academic institutions, governmental agencies, and private research organizations also compete with us in recruiting and retaining highly qualified scientific, technical and professional personnel and consultants.

There are two important components of Lumin Bioinformatics:

the Datacenter and the Analytics.

While we feel our Datacenter is unique, there are a large number of publicly available datasets that can be accessed free of charge for computational research.

This publicly available data repertoire is constantly growing as academic labs publish results.

We continue to find ways to differentiate our dataset, however there can be no assurance that developments by other companies or academic institutions in data curation will not render our Datacenter obsolete or non-competitive.

The second component of Lumin Bioinformatics is the data analytics.

While there are a minimal number of software solutions that offer the degree of analytics available within Lumin Bioinformatics, the know-how and workflows of these analytics are well established in bioinformatics labs across academia and the biopharmaceutical industry.

As a result, the barrier to entry for developing a SaaS tool leveraging these analytics is relatively low.

Drug Discovery and Developmen t:

Our Drug Discovery and Development business places us in a good position of also competing against the same customers of our Research Services and/or SaaS businesses:

the global biopharmaceutical industry.

The global oncology drug market is estimated to be $85B.

Competition in this industry is strong and based significantly on scientific and technological forces, which rely solely on the effectiveness of therapeutics designed to treat cancer.

The Company faces significant competition from other biopharmaceutical companies in the United States and abroad.

The competitors have a wide range of strategic and operational approaches.

Our business strategy is to work with differentiated therapeutic targets and research areas.

However, given the intense degree of privacy from our competitors, we cannot guarantee that others within the industry are not also working on these targets.

Further, some competitors will operate with no laboratory or experimental operations, while others will have varying degrees of laboratory space and experimental capabilities.

There can be no assurance that developments by other companies will not render experimental platforms obsolete or non-competitive or that we will be able to keep pace with the technological or product developments of our competitors.

Research and Development

For the years ended April 30, 2020 and 2019 , we spent approximately $5.9 million and $4.8 million , respectively, to develop our TumorGraft Technology Platform.

We continue to expand our TumorBank through the inclusion of tumor tissue and implanted models through research collaborations and relationships with hospitals and academic institutions.

For the years ended April 30, 2021 and 2020, we spent approximately $7.2 million and $5.9 million, respectively, to further develop our platforms.

We continue to expand our TumorBank via the inclusion of tumor tissue and implanted models through research collaborations and relationships with hospitals and academic institutions.

Our research and development efforts were focused on increasing our understanding of our TumorGraft models, their clinical predictability, improving growth and tumor take rates, and other biological and molecular characteristics of the models.

Additionally, during fiscal year 2020 we invested resources for the development of new product offerings.

We are investing in developing additional proprietary pharmacology platforms aimed at enhancing the scientific output and driving innovation in the oncology research sector.

We are also investing in the acquisition of sophisticated analytical platforms which allow scientists to derive deeper insights when using our pharmacology platforms.

Government Regulation

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These regulations require interstate, intrastate, and foreign shipments comply with applicable labeling, documentation, and training requirements.

Human Capital Resources

As of July 16, 2021, we had 194 full-time employees, including 61 with doctoral or other advanced degrees.

Of our workforce, 143 employees are engaged in research and development and laboratory operations, 36 employees are engaged in sales and marketing, and 15 employees are engaged in finance and administration.

We believe that our future success will depend, in part, on our ability to continue to attract, hire, and retain qualified personnel.

We continue to seek additions to our science and technical staff, although the competition for such personnel in the pharmaceutical and biotechnology industries is intense.

Attracting, developing, and retaining skilled and experienced employees in our industry is crucial to our ability to compete effectively.

Our ability to recruit and retain such employees depends on a number of factors, including our corporate culture and work environment, our corporate philosophy, internal talent development and career opportunities, and compensation and benefits.

None of our employees are represented by a labor union or covered by collective bargaining agreements.

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Through our website, we make available, free of charge, access to all reports filed with the United States Securities and Exchange Commission, or SEC, including our Annual Reports on Form 10-K, our Quarterly Reports on Form 10-Q, our Current Reports on Form 8-K, our Proxy Statements on Schedules 14A and amendments to those reports, as filed with or furnished to the SEC pursuant to Section 13(a) or 15(d) of the Exchange Act, as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC.

Copies of any materials we file with, or furnish to, the SEC can also be obtained free of charge through the SEC’s website at http://www.sec.gov or at the SEC’s Public Reference Room at 100 F Street, N.E., Room 1580, Washington, DC 20549.

You may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330.

Copies of any materials we file with, or furnish to, the SEC can also be obtained free of charge through the SEC’s website at http://www.sec.gov.

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What changed 10-K

Item 1. Business