10-Q

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)

þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

   For the quarterly period ended January 31, 2012

Or

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

   For the transition period from to

Commission file number 0-17263

CHAMPIONS ONCOLOGY, INC.

(Exact name of registrant as defined in its charter)

Delaware	52-1401755
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)
One University Plaza, Suite 307	07601
Hackensack, New Jersey	(Zip Code)
(Address of principal executive offices)

(201) 808-8400

(Registrant’s telephone number, including area code)

855 N. Wolfe Street,

N/A

(Former name, former address, and former fiscal year, if changed from last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes þ No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ¨	Accelerated filer ¨	Non-accelerated filer ¨	Smaller reporting company þ
		(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ¨ No þ

The number of Common Shares of the Registrant outstanding as of February 29, 2012 was 47,011,276.

INDEX TO FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED JANUARY 31, 2012

PART I - FINANCIAL INFORMATION
Item 1.	Financial Statements.
Condensed Consolidated Balance Sheets as of January 31, 2012 (unaudited) and April 30, 2011		2
Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss for the
Three and Nine Months Ended January 31, 2012 and 2011		3
Unaudited Condensed Consolidated Statements of Cash Flows for the
Three and Nine Months Ended January 31, 2012 and 2011		4
Notes to Unaudited Condensed Consolidated Financial Statements		5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	13
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	17
Item 4.	Controls and Procedures	17
PART II - OTHER INFORMATION
Item 1.	Legal Proceedings	18
Item 1A.	Risk Factors	18
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	19
Item 3.	Defaults Upon Senior Securities	19
Item 4.	Mine Safety Disclosures	19
Item 5.	Other Information	19
Item 6.	Exhibits	20

1

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

CHAMPIONS ONCOLOGY, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in Thousands except per share amounts)

	January 31,			April 30,
	2012			2011
	(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	6,482		$	10,457
Accounts receivable		497			585
Grant receivable		505			517
Prepaid expenses and other current assets		110			276
Total current assets		7,594			11,835
Restricted cash		150			-
Property and equipment, net		452			146
Goodwill		669			669
Total assets	$	8,865		$	12,650
LIABILITIES, REDEEMABLE COMMON STOCK
AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable	$	1,623		$	1,580
Accrued liabilities		344			302
Deferred revenue		1,501			1,618
Total current liabilities		3,468			3,500
Warrant liability		618			972
Total liabilities		4,086			4,472
Commitments and Contingencies:
Redeemable common stock; $0.001 par value; 12,533,333 contingently puttable common shares outstanding as of January 31, 2012 and April 30, 2011		8,159			8,159
Stockholders' equity (deficit):
Preferred stock, $10 par value; 56,075 shares authorized; no shares issued and outstanding as of January 31, 2012 and April 30, 2011		-			-
Common stock, $.001 par value; 125,000,000 shares authorized, including redeemable common stock, 37,451,691 and 36,956,667 shares issued and 34,477,955 and 33,870,000 shares outstanding as of January 31, 2012 and April 30, 2011, respectively		38			37
Treasury stock, at cost, 3,236,000 common shares as of January 31, 2012 and April 30, 2011, respectively		(1,252	)		(1,252	)
Additional paid-in capital		20,494			17,784
Accumulated deficit		(22,593	)		(16,482	)
Accumulated other comprehensive loss		(67	)		(68	)
Total stockholders' deficit (equity)		(3,380	)		19
Total liabilities, redeemable common stock and stockholders' equity (deficit)	$	8,865		$	12,650

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

2

CHAMPIONS ONCOLOGY, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Dollars in Thousands except per share amounts)

	Three Months Ended						Nine Months Ended
	January 31,						January 31,
	2012			2011			2012			2011
Operating revenue:
Personalized oncology solutions	$	649		$	1,419		$	1,837		$	2,816
Translational oncology solutions		1,747			1,386			3,931			2,522
Total operating revenue		2,396			2,805			5,768			5,338
Costs and operating expenses:
Cost of personalized oncology solutions		528			725			1,463			1,213
Cost of translational oncology solutions		801			688			1,904			1,399
Research and development		930			434			2,558			2,117
Sales and marketing		623			239			1,885			356
General and administrative		1,287			1,505			4,421			2,649
Total costs and operating expenses		4,169			3,591			12,231			7,734
Loss from operations		(1,773	)		(786	)		(6,463	)		(2,396	)
Other income:
Grant income		(12	)		367			(12	)		1,327
Change in fair value of warrant liability		66			-			354			-
Other income		-			4			10			9
Total other income		54			371			352			1,336
Loss before provision for income taxes		(1,719	)		(415	)		(6,111	)		(1,060	)
Provision for income taxes		-			-			-			-
Net loss	$	(1,719	)	$	(415	)	$	(6,111	)	$	(1,060	)
Net loss per common share outstanding, including redeemable common stock, basic and diluted	$	(0.04	)	$	(0.01	)	$	(0.13	)	$	(0.03	)
Weighted average common shares outstanding, including redeemable common stock, basic and diluted		46,738,000			35,664,000			47,000,000			35,693,000
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
Net loss	$	(1,719	)	$	(415	)	$	(6,111	)	$	(1,060	)
Foreign currency translation adjustment		(13	)		12			2			(14	)
Comprehensive loss	$	(1,732	)	$	(403	)	$	(6,109	)	$	(1,074	)

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

3

CHAMPIONS ONCOLOGY, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in Thousands except per share amounts)

	Nine Months Ended
	January 31,
	2012			2011
Operating activities:
Net loss	$	(6,111	)	$	(1,060	)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation expense		2,612			1,578
Depreciation expense		65			30
Change in fair value of warrant liability		(354	)		-
Changes in operating assets and liabilities:
Accounts receivable		88			(319	)
Grant receivable		12			(367	)
Prepaid expenses, deposits and other		166			120
Restricted cash		(150	)		-
Accounts payable		43			1,139
Accrued liabilities		42			(67	)
Deferred revenue		(117	)		(550	)
Net cash (used in) provided by operating activities		(3,704	)		504
Investing activities:
Purchase of property and equipment		(371	)		(47	)
Net cash (used in) investing activities		(371	)		(47	)
Financing activities:
Purchase of treasury stock		-			(73	)
Proceeds from exercise of options and warrants		98			2
Net cash provided by (used in) financing activities		98			(71	)
Exchange rate effect on cash and cash equivalents		2			(17	)
Net change in cash and cash equivalents		(3,975	)		369
Cash and cash equivalents, beginning of period		10,457			2,572
Cash and cash equivalents, end of period	$	6,482		$	2,941

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

4

CHAMPIONS ONCOLOGY, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 1. Organization, Use of Estimates and Basis of Presentation

Champions Oncology, Inc. (the “Company”), is engaged in the development of advanced technology solutions and services to personalize the development and use of oncology drugs. The Company’s Tumorgraft Technology Platform is a novel approach to personalizing cancer care based upon the implantation of human tumors in immune deficient mice. The Company uses this technology to derive revenue for two customer groups: Personalized Oncology Solutions (“POS”), and Translational Oncology Solutions (“TOS”). POS assists physicians in developing personalized treatment options for their cancer patients through access to panels of expert medical professionals and tumor specific data. The Company’s TOS offer a technology platform to pharmaceutical and biotechnology companies using proprietary Tumorgraft studies, which have been shown to be predictive of how drugs may perform in clinical settings.

The unaudited condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All material intercompany transactions have been eliminated in consolidation. The financial statements of the Company’s foreign subsidiaries, all of which have a functional currency other than the U.S. dollar, have been translated into the U.S. dollar for each period presented. Translation gains and losses are recognized as a component of accumulated other comprehensive loss. The Company is subject to foreign exchange rate fluctuations in connection with the Company’s international operations.

These unaudited condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). All significant intercompany transactions and accounts have been eliminated. All figures are presented in thousands of U.S. dollars, except share data, or except where expressly stated otherwise. Certain information related to the Company’s organization, significant accounting policies and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) has been condensed or omitted. The accounting policies followed in the preparation of these unaudited condensed consolidated financial statements are consistent with those followed in the Company’s annual consolidated financial statements for the year ended April 30, 2011, as filed on Form 10-K. In the opinion of management, these unaudited condensed consolidated financial statements contain all material adjustments necessary to fairly state our financial position, results of operations and cash flows for the periods presented and the presentations and disclosures herein are adequate when read in conjunction with the Company’s Annual Report on Form 10-K for the year ended April 30, 2011. Certain reclassifications have been made to the prior period financial statement amounts to conform to current presentation.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and 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. Actual results could differ from those estimates. Significant estimates include valuation assumptions used for share-based compensation and warrant liability, accrued expenses carrying amounts of long-lived assets and deferred taxes.

Basic loss per share is calculated by dividing loss available to common shareholders by the weighted average number of common shares (including redeemable common stock) outstanding for the period. Diluted loss per share is calculated based on the weighted average number of common shares (including redeemable common stock) outstanding for the period, plus the dilutive effect of common stock purchase warrants, stock options and restricted stock units using the treasury stock method. Contingently issuable shares are included in the calculation of basic earnings per share when all contingencies surrounding the issuance of the shares are met and the shares are issued or issuable. Contingently issuable shares are included in the calculation of dilutive earnings per share as of the beginning of the reporting period if, at the end of the reporting period, all contingencies surrounding the issuance of the shares are satisfied or would be satisfied if the end of the reporting period were the end of the contingency period. Due to the net losses for the three and nine months ended January 31, 2012 and 2011, basic and diluted loss per share were the same, as the effect of potentially dilutive securities would have been anti-dilutive.

5

CHAMPIONS ONCOLOGY, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

The following table reflects the total potential share-based instruments outstanding at January 31, 2012 and 2011 that could have an effect on the future computation of dilution per common share:

	January 31,
	2012		2011
Stock options		15,064,866		14,878,948
Warrants		1,416,667		740,352
Restricted stock		37,500		150,000
Total common stock equivalents		16,519,033		15,769,300

Note 2. Recently Issued Accounting Pronouncements

During September 2011, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2011-08, “Testing Goodwill for Impairment” (“ASU 2011-08”). ASU 2011-08 is intended to simplify the testing of goodwill for impairment by permitting an entity to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the two-step goodwill impairment test, which is currently required for all companies that report goodwill. The amendments are effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011, although early adoption is permitted. The Company does not anticipate that the adoption of this guidance will have a material impact on its financial position and results of operations.

During June 2011, the FASB issued ASU No. 2011-05, “Presentation of Comprehensive Income” (“ASU 2011-05”). ASU 2011-05 provides for the option to present the total of comprehensive income, the components of net income and the components of other comprehensive income (“OCI”) either in a single continuous statement of comprehensive income or in two separate but consecutive statements. Regardless of which format is chosen, the amendments establish a requirement for entities to present on the face of the financial statements reclassification adjustments for items that are reclassified from OCI to net income in the statement(s) where the components of net income and the components of OCI are presented. The amendments in ASU 2011-05 are effective, on a retrospective basis, for public entities for interim and annual periods beginning after December 15, 2011; however, during December 2011 the FASB issued ASU No. 2011-12, which defers those changes in ASU 2011-05 that relate to the presentation of reclassification adjustments. The Company has adopted this standard, which only impacts the disclosures required, but has no impact on the financial position or results of operations.

During May 2011, the FASB issued ASU No. 2011-04, “Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRS” (“ASC 2011-04”). The amendments in ASC 2011-04 were issued in order to align the fair value measurement and disclosure requirements in GAAP and International Financial Reporting Standards. Consequently, the amendments change the wording used to describe many of the requirements in GAAP for measuring fair value and for disclosing information about fair value measurements. However, many of the amendments in ASC 2011-04 will not result in a change in the application of the requirements in ASC 820, Fair Value Measurement. The amendments in ASU 2011-04 are effective, on a prospective basis, for public entities for interim and annual periods beginning after December 15, 2011. The Company does not anticipate that the adoption of this guidance will have a material impact on its financial position and results of operations.

6

CHAMPIONS ONCOLOGY, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Note 3. Property and Equipment

Property and equipment is recorded at cost and consists of laboratory equipment, furniture and fixtures, and computer hardware and software. Depreciation is calculated on a straight-line basis over the estimated useful lives of the various assets ranging from three to seven years. Property and equipment consisted of the following:

	January 31,			April 30,
	2012			2011
(Dollars in thousands)
Furniture and fixtures	$	60		$	10
Computer equipment and software		273			120
Laboratory equipment		137			56
Leasehold improvements		2			2
Software in-progress		111			24
Total property and equipment		583			212
Less: Accumulated depreciation		(131	)		(66	)
Property and equipment, net	$	452		$	146

Depreciation expense was $16,000 and $11,000 for the three months ended January 31, 2012 and 2011, respectively, and $65,000 and $30,000 for the nine months ended January 31, 2012 and 2011, respectively.

Note 4. Share-Based Payments

The Company has in place a 2010 Equity Incentive Plan, a 2008 Equity Incentive Plan and a Director Compensation Plan of 2010, all of which are described in more detail in the Company’s Annual Report on Form 10-K for the year ended April 30, 2011. In general, these plans provide for stock-based compensation in the form (i) Non-statutory Stock Options; (ii) Restricted Stock Awards; and (iii) Stock Appreciation Rights to the Company’s employees, directors and non-employees. The plans also provide for limits on the aggregate number of shares that may be granted, the term of grants and the strike price of option awards.

Stock-based compensation in the amount of $743,000 and $1,209,000 was recognized for the three months ended January 31, 2012 and 2011, respectively, and $2,612,000 and $1,578,000 for the nine months ended January 31, 2012 and 2011, respectively. Stock-based compensation expense was recognized as follows:

	Three Months Ended					Nine Months Ended
	January 31,					January 31,
	2012			2011		2012		2011
(Dollars in thousands)
General and administrative	$	701		$	1,119	$	2,370	$	1,418
Cost of sales		1			-		2		-
Sales and marketing		49			51		168		53
Research and development		(8	)		39		72		107
Total stock-based compensation expense	$	743		$	1,209	$	2,612	$	1,578

7

CHAMPIONS ONCOLOGY, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Stock Option Grants

Black-Scholes assumptions used to calculate the fair value of options granted during the three and nine months ended January 31, 2012 and 2011 were as follows:

	Three Months Ended				Nine Months Ended
	January 31,				January 31,
	2012		2011		2012		2011
Expected term in years		3.0-6.0		6.0		3.0-6.0		6.0
Risk-free interest rates		.4%-1.9%		1.5% - 2.5%		.4%-2.2%		1.5% - 2.5%
Volatility		90%-101%		105% - 107%		90%-108%		104% - 107%
Dividend yield		0%		0%		0%		0%

The weighted average fair value of stock options granted during the three months ended January 31, 2012 and 2011 was $0.52 and $0.77, respectively. The weighted average fair value of stock options granted during the nine months ended January 31, 2012 and 2011 was $0.57 and $0.74, respectively. The Company’s stock options activity for the nine months ended January 31, 2012 is as follows:

												Weighted		Aggregate
										Weighted		Average		Intrinsic
				Directors						Average		Remaining		Value
	Non-			and						Exercise		Contractual		(Dollars in
	Employees			Employees			Total			Price		Life (Years)		Thousands)
Outstanding, May 1, 2011		1,610,000			12,710,948			14,320,948		$	0.88		8.4	$	1,780
Granted		75,000			1,310,000			1,385,000			0.77
Exercised		-			-			-			-
Forfeited		-			(301,915	)		(301,915	)		0.94
Expired		(315,000	)		(24,167	)		(339,167	)		0.24
Change in employee status		-			-			-			-
Outstanding, January 31, 2012		1,370,000			13,694,866			15,064,866		$	0.88		7.7	$	28
Vested and expected to vest as of January 31, 2012		1,370,000			13,694,866			15,064,866		$	0.88		7.7	$	28
Exercisable as of January 31, 2012		1,291,667			3,112,356			4,404,022		$	0.90		5.4	$	27

8

CHAMPIONS ONCOLOGY, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Restricted Stock Grants

A summary of the activity related to restricted stock grants is as follows:

				Weighted
				Average
				Grant
				Date Fair
	Total			Value Per
	Shares			Share
Nonvested as of May 1, 2011		100,000		$	0.90
Granted		50,000			0.75
Vested		(112,500	)		0.88
Forfeited		-			-
Expired		-			-
Nonvested as of January 31, 2012		37,500			0.75

The aggregate fair value of shares vested during the nine months ended January 31, 2012 was $84,000.

Stock Purchase Warrants

As of January 31, 2012, the Company has warrants outstanding for the purchase of 1,416,667 shares of its common stock, all of which are exercisable.  Of these warrants, 1,266,667 were issued in connection with the April 2011 financing arrangement and are accounted for as liabilities as further discussed in Note 5. As of January 31, 2012, the weighted average exercise price of these warrants was $0.91, the weighted average contractual life was four years. No warrants were exercised during the three months ended January 31, 2012. During nine months ended January 31, 2012, 495,352 warrants were exercised.

Note 5. Redeemable Common Stock and Stock Purchase Warrants

On March 24, 2011, the Company entered into a Securities Purchase Agreement with several accredited investors for the sale to the investors of an aggregate 12,533,333 shares of the Company’s Common Stock at a purchase price of $0.75 per share, or an aggregate of $9.4 million of which, $500,000 was sold to officers and directors of the Company. As part of this transaction, the Company also issued warrants to purchase an aggregate 1,266,667 shares of Common Stock at an exercise price of $0.90 per share. These warrants expire five years after the closing date, which occurred on April 4, 2011. The Securities Purchase Agreement contains certain anti-dilution protections for the investors and certain registration rights with respect to the shares of Common Stock issued to the investors. Furthermore, investors will have the right to require the Company to redeem the purchased common shares held by such investors (the “Put Option”) for cash for $0.75 per share upon a change of control or sale of substantially all of the company’s assets. The Put Option will terminate upon the achievement of certain financial milestones by the Company, the sale of 25% of the common shares purchased by an investor, with respect only to the shares owned by such investor, or in certain other circumstances as outlined in the Securities Purchase Agreement.

Due to the Put Option described above, the Company has accounted for Common Stock issued under the Securities Purchase Agreement as temporary equity, which is reflected under the caption “Redeemable common stock” on the accompanying Unaudited Condensed Consolidated Balance Sheets. The total amount allocated to these common shares was $8.2 million. This allocation is equal to the total proceeds of $9.4 million, less the amount allocated to the warrants of $936,000 and is also net of direct and incremental costs associated with the Securities Purchase Agreement of $305,000.

The warrants issued in connection with the Securities Purchase Agreement contain certain exercise price reset provisions. Under these provisions, the exercise price of the warrants may be adjusted downward should the Company have future sales of its Common Stock for no consideration or for a consideration per share less than the Per Share Price (as such term is defined in the Securities Purchase Agreement).

9

CHAMPIONS ONCOLOGY, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

The Company has granted demand registration rights in connection with the investment in common shares and the common shares underlying the warrants. These rights include the requirement of the Company to file certain registration statements within a specified time period and to have these registration statements declared effective within a specified time period. If the Company is not able to comply with these registration requirements, the Company will be required to pay cash penalties equal to 1.0% of the aggregate Purchase Price paid by the investors for each 30-day period in which a Registration Default, as defined in the Securities Purchase Agreement, exists. The Company may become subject to these penalty provisions if it fails to have a registration statement for the common shares declared effective, or to maintain the effectiveness of such registration statement. The total amount of potential penalties under this registration payment arrangement is $41,000 for each 30-day period in which a registration default exists; however, as of the date of this filing, the Company does not believe these penalties to be probable and accordingly, has not established an accrual for such registration payment arrangements.

The Company has accounted for the warrants issued in connection with the Securities Purchase Agreement as liabilities based on the exercise price reset provisions described above. This liability, which is recorded at fair value on the accompanying unaudited condensed consolidated balance sheets, totaled $936,000 at the time of the close of the Securities Purchase Agreement. As of April 30, 2011, the fair value of these warrants increased $356,000 to $972,000. During the nine months ended January 31, 2012, the fair value of these warrants decreased by $354,000 to $618,000. The change in fair value of these warrants has been, and will be, recognized as other income (expense) on the Company’s unaudited condensed consolidated Statements of Operations. The fair value of these warrants was calculated by the Monte Carlo simulation valuation method. Assumptions used to calculate the fair value of these warrants were as follows:

	January 31,		April 30,
	2012		2011
Expected term in years		4.2		5.0
Risk-free interest rates		0.5%		2.0%
Volatility		105%		102%
Dividend yield		0%		0%

The Company will continue to adjust the warrant liability for changes in fair value until the earlier of the exercise of the warrants, at which time the liability will be reclassified to stockholders' equity, or expiration of the warrants.

Note 6. Related Party Transactions

Related party transactions include transactions between the Company and certain of its shareholders, management and affiliates. The following transactions were in the normal course of operations and were measured at the exchange amount, which is the amount of consideration established and agreed to by the parties.

Consulting Services

During the nine months ended January 31, 2012 and 2011, the Company paid one of its directors and former Chief Executive Officer, $18,000 and $75,000, respectively, in consulting fees. During the nine months ended January 31, 2012 and 2011, the Company paid certain members of its Board of Directors $103,000 and $45,000, respectively, for consulting services unrelated to their duties as board members.

Revenue

During the nine months ended January 31, 2012, the Company recognized $20,000 in revenues from companies whose board members were also members of the Company’s Board of Directors. No such revenues were recognized for the nine months ended January 31, 2011.   

10

CHAMPIONS ONCOLOGY, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Note 7. Commitments and Contingencies

Operating Leases

As of January 31, 2012, the Company leases office and laboratory space under a non-cancelable operating lease in Baltimore, Maryland, which expires in April 2014, office space under a non-cancelable operating lease in Ra’anana, Israel, which expires in July 2012, and office space in Hackensack, New Jersey under a non-cancellable operating lease, which expires in April 2014. Rent expense under all lease agreements was approximately $44,000 and $15,000 for the three months ended January 31, 2012 and 2011, respectively, and $126,000 and $43,000 for the nine months ended January 31, 2012 and 2011, respectively.

Research and Development Materials Purchase Agreement

In February 2010, the Company entered into a research and development materials purchase agreement with a foreign hospital for the acquisition of Tumorgrafts. Under the agreement, the Company made monthly payments to the foreign hospital of approximately $37,000 per month, commencing March 1, 2010 and ending April 1, 2011. The accrued liability outstanding at April 30, 2011 totaled $147,000. As of January 31, 2012, the Company entered into a Mutual Release Agreement on December 15, 2011 and reversed this liability.

Legal Matters

The Company is party to certain legal matters arising in the ordinary course of its business. The Company has evaluated its potential exposure to these legal matters, and has concluded that there were no reasonably possible or probable liabilities at January 31, 2012 and April 30, 2011. The Company is not aware of any other matters that would have a material impact on the Company’s financial position or results of operations.

Registration Payment Arrangements

The Company has entered into registration rights agreements in connection with a private placement of its securities, which closed during April 2011 and is discussed more fully in Note 5. This registration rights agreement contains provisions that may call for the Company to pay penalties in certain circumstances. This registration payment arrangement primarily relates to the Company’s ability to file a registration statement within a particular time period, have a registration statement declared effective within a particular time period and to maintain the effectiveness of the registration statement for a particular time period. The Company does not believe it is probable that penalty payments will be made for the registration rights agreement discussed above and, accordingly, has not accrued for such potential penalties as of January 31, 2012.

Note 8. Licensing Agreements

During fiscal 2011, the Company was a party to several different licensing agreements, all of which are described in more detail in the Company’s Annual Report on Form 10-K for the year ended April 30, 2011. During April 2011, the Company terminated all of these licensing agreements with the exception of the Liposome Option Agreement, which is described further below. All rights related to all other licensing agreements that were terminated during April 2011 were returned to the underlying companies and no amounts were due under these other agreements as of April 30, 2011.

In February 2010, the Company entered into an exclusive option agreement with a Canadian company for which it paid and expensed $40,000 during the Company’s fiscal 2010 year. The option agreement granted the Company the exclusive right to review Irinophore C, a nanoparticle drug compound, for the treatment of various forms of cancer, including melanoma, prostate, breast and lung cancer through April 2011. During the option year, the Company performed various tumorgraft testing on the nanoparticle compound. In March 2011, the Company exercised its option to license Irinophore C, a liposomal formulation of Irinotecan. Under the terms of the agreement, the company’s exercise of the option resulted in amounts due to the Canadian company of $85,000 comprised of the option exercise price and reimbursement to the Canadian company for past patent costs, which was expensed in the Company’s fiscal year ended April 30, 2011. As of January 31, 2012, the Company has satisfied this obligation. Under the terms of the license agreement, the Company will be required to pay up to $3 million in development milestones. Upon commercialization, the Company would also be required to make royalty payments and sales milestone based upon revenues. Commencing with the second anniversary of the agreement (March 2013), the Company will be obligated to pay a minimum annual royalty of $10,000 (Canadian).

11

CHAMPIONS ONCOLOGY, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Note 9. Cephalon Agreement

On March 16, 2011, the Company entered into an agreement with Cephalon, Inc., (“Cephalon”), a wholly owned subsidiary of Teva Pharmaceutical Industries Ltd., pursuant to which the Company will conduct Tumorgraft studies on proprietary chemical compounds provided by Cephalon to determine the activity or response of a compound in potential clinical indications. In April 2011, Cephalon paid an initiation fee of $1.4 million to the Company, which is reflected within deferred revenue on the Condensed Consolidated Balance Sheet as of April 30, 2011. The Company anticipates that the studies will be completed within 18 months of the execution of the agreement. As models, along with required reports, are delivered, the deferred revenue will be recognized on a proportionate basis in accordance with the Company’s revenue recognition policies. Under this agreement, revenue of $444,000 and $681,000 was recognized during the three and nine months ended January 31, 2012. Cephalon will, under certain conditions, also pay the Company various amounts upon achieving certain milestones. Potential milestone payments to be received under the Agreement total $27 million. No milestones have been achieved to date. In addition, under certain conditions, Cephalon will pay the Company royalties on any commercialized products developed under the Agreement. No royalties have been received or earned to date.

Note 10. Grant Income

In October 2010, the Company was notified that it was awarded total cash grants of approximately $1.5 million under the Qualifying Therapeutic Discovery Project program administered under section 48D of the Internal Revenue Code, of which approximately $1.0 million related to qualifying expenses the Company had previously incurred during fiscal 2010 and $0.5 million related to qualifying expenses which the Company expected to incur during fiscal 2011. In November 2010, the Company received approximately $1.0 million related to the 2010 expenditures. As of January 31, 2012, $0.5 million related to the 2011 expenditures was still outstanding. The Company received this payment on February 13, 2012.

On August 8, 2011 the Company was notified that it was selected for a tax examination by the Internal Revenue Service (IRS) on the Application for Certification of Qualified Investments Eligible for Credits and Grants Under the Qualifying Therapeutic Discovery Project program filed under the Patient Protection and Affordable Care Act of 2010 for the 2009 and 2010 tax years. The examination commenced on September 30, 2011 and as of the date of this filing was still ongoing.

The IRS expanded its scope to include the fiscal year 2011 tax return, which was filed in January 2012. Based on the examination to date, the Company does not believe that the results of this examination will have a material effect on its financial statements for any period under examination and that the Company has a sufficient Net Operating Loss carry forward that will offset any adjustment.

Note 11. Subsequent Events

None.

12

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion of our historical results of operations and our liquidity and capital resources should be read in conjunction with the condensed consolidated financial statements and related notes that appear elsewhere in this report.

Forward-Looking Statements

This Quarterly Report on Form 10-Q, including Item 2, Management’s Discussion and Analysis of Financial Condition and Results of Operations, contains certain “forward-looking statements,” which include information relating to future events, future financial performance, strategies, expectations, competitive environment, regulation, and availability of resources. These forward-looking statements include, without limitation, statements regarding: proposed new programs; expectations that regulatory developments or other matters will not have a material adverse effect on our financial position, results of operations, or liquidity; statements concerning projections, predictions, expectations, estimates, or forecasts as to our business, financial and operational results, and future economic performance; and statements of management’s goals and objectives and other similar expressions concerning matters that are not historical facts. Words such as “may,” “should,” “could,” “would,” “predicts,” “potential,” “continue,” “expects,” “anticipates,” “future,” “intends,” “plans,” “believes,” “estimates” and similar expressions, as well as statements in future tense, identify forward-looking statements.

Forward-looking statements should not be read as a guarantee of future performance or results, and will not necessarily be accurate indications of the times at, or by, which such performance or results will be achieved. Forward-looking statements are based on information available at the time those statements are made or management’s good faith belief as of that time with respect to future events, and are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking statements.

Forward-looking statements speak only as of the date the statements are made. Factors that could cause actual results to differ from those discussed in the forward-looking statements include, but are not limited to, those described in “Risk Factors” in Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended April 30, 2011, as updated in our subsequent reports filed with the SEC, including any updates found in Part II, Item 1A of this or other reports on Form 10-Q. You should not put undue reliance on any forward-looking statements. We assume no obligation to update forward-looking statements to reflect actual results, changes in assumptions, or changes in other factors affecting forward-looking information, except to the extent required by applicable securities laws. If we do update one or more forward-looking statements, no inference should be drawn that we will make additional updates with respect to those or other forward-looking statements.

Overview and Recent Developments

Champions Oncology, Inc. (the “Company”), is engaged in the development of advanced technology solutions and services to personalize the development and use of oncology drugs. The Company’s Tumorgraft Technology Platform is a novel approach to personalizing cancer care based upon the implantation of human tumors in immune deficient mice. The Company uses this technology to derive revenue for two customer groups: Personalized Oncology Solutions (“POS”), and Translational Oncology Solutions (“TOS”). POS assist physicians in developing personalized treatment options for their cancer patients through access to panels of expert medical professionals and tumor specific data. TOS offers a technology platform to pharmaceutical and biotechnology companies using proprietary Tumorgraft studies, which have been shown to be predictive of how drugs may perform in clinical settings.

As explained in Item 1, “Business” of our Form 10-K for the year ended April 30, 2011, our operations have recently been refocused to emphasize our POS and TOS lines of business. We also plan to continue our research and development efforts to expand our Tumorgraft Technology Platform in order to expand our TOS program.

In fiscal 2011, the Company modified its POS business strategy to focus on growing its core technology products, which includes Tumorgraft implants and drug studies.  As a result, the Company significantly reduced the price of the core technology products to make the products affordable to a broader patient base. In addition, the Company has increased spending on sales and marketing efforts to support this strategy. The Company will continue to offer related personalized oncology services to our customers, including personalized tumor panels and gene sequencing, however, we expect future POS revenue growth to be driven by our core products.

During fiscal 2012, the Company started transitioning the laboratory activities that support the POS and TOS services to our facility in Baltimore, Maryland. To facilitate this strategy and support the increase in current and expected volume, we have invested in the infrastructure and increased our laboratory staff and are evaluating options to increase our lab capacity to meet the future demand.  We believe that bringing these activities in house will significantly reduce the cost of providing our services and allow us to maintain a more aggressive pricing strategy.  We expect the transition to be largely complete by the end of the first quarter of fiscal 2013.

13

Operating Results

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

	For the Three Months Ended January 31,
				% of						% of			%
	2012			Revenue			2011			Revenue			Change
Operating revenue:
Personalized oncology solutions	$	649			27.1	%	$	1,419			50.6	%		(54.3	)%
Translational oncology solutions		1,747			72.9			1,386			49.4			26.0
Total operating revenue		2,396			100.0			2,805			100.0			(14.6	)
Costs and operating expenses:
Cost of personalized oncology solutions		528			22.0			725			25.8			(27.2	)
Cost of translational oncology solutions		801			33.4			688			24.5			16.4
Research and development		930			38.8			434			15.5			114.3
Sales and marketing		623			26.0			239			8.5			160.7
General and administrative		1,287			53.7			1,505			53.7			(14.5	)
Total costs and operating expenses		4,169			174.0			3,591			128.0			16.1
Operating loss	$	(1,773	)		(74.0	)%	$	(786	)		(28.0	)%		125.6	%

	For the Nine Months Ended January 31,
				% of						% of			%
	2012			Revenue			2011			Revenue			Change
Operating revenue:
Personalized oncology solutions	$	1,837			31.8	%	$	2,816			52.8	%		(34.8	)%
Translational oncology solutions		3,931			68.2			2,522			47.2			55.9
Total operating revenue		5,768			100.0			5,338			100.0			8.1
Costs and operating expenses:
Cost of personalized oncology solutions		1,463			25.4			1,213			22.7			20.6
Cost of translational oncology solutions		1,904			33.0			1,399			26.2			36.1
Research and development		2,558			44.3			2,117			39.7			20.8
Sales and marketing		1,885			32.7			356			6.7			429.5
General and administrative		4,421			76.6			2,649			49.6			66.9
Total costs and operating expenses		12,231			212.0			7,734			144.9			58.1
Operating loss	$	(6,463	)		(112.0	)%	$	(2,396	)		(44.9	)%		169.7	%

Operating Revenues

Operating revenues were $2.4 million and $2.8 million for the three months ended January 31, 2012 and 2011, respectively, and $5.8 million and $5.3 million for the nine months ended January 31, 2011 and 2010, respectively.

14

POS revenues were $0.6 million and $1.4 million for the three months ended January 31, 2012 and 2011, respectively, a decrease of $0.8 million, or 54 %. POS revenues were $1.8 million and $2.8 million for the nine months ended January 31, 2012 and 2011, respectively, a decrease of $1.0 million, or 35%. Panel revenue, a component of POS revenue, decreased $0.9 million and $1.0 million for the three and nine months ended January 31, 2012, respectively. This decrease is primarily attributable to a decrease in pricing per panel. Excluding panel revenue, POS revenue was $0.59 million and $0.5 million for three months ended January 31, 2012 and 2011, an increase of $0.09 million and $1.35 million and $1.32 million for nine months ended January 31, 2012 and 2011, respectively, an increase of $0.03 million. The Company experienced significantly higher volumes of implants and drug studies compared to the prior year. For the three months ended January 31, 2012, the Company performed 25 tumorgraft implants compared to one in the same quarter last year. For the nine months ended January 31, 2012, the Company performed 70 tumorgraft implants compared to nine in the prior year. For the three months ended January 31, 2012, the Company completed five drug studies compared to zero in the same quarter last year. For the nine months ended January 31, 2012, the Company completed nine drug studies compared to three in the prior year. However, the increase in volume was partially offset by a strategic decision to lower pricing for both the tumorgraft implants and drug studies.

TOS revenues were $1.7 million and $1.4 million for the three months ended January 31, 2012 and 2011, respectively, an increase of $0.3 million or 26%. TOS revenues were $3.9 million and $2.5 million for the nine months ended January 31, 2012 and 2011, respectively, an increase of $1.4 million or 56%. These increases in TOS revenues were due primarily to increased sales efforts and investments in growing our Tumorbank.

Cost of POS

Cost of POS was $0.5 million and $0.7 million for the three months ended January 31, 2012 and 2011, respectively, a decrease of $0.2 million, or 27%. Cost of POS was $1.5 million and $1.2 million for the nine months ended January 31, 2012 and 2011, respectively, an increase of $0.3 million, or 21%.  Gross margin for POS was 19% and 49% for the three months ended January 31, 2012 and 2011, respectively, and 20% and 57% for the nine months ended January 31, 2012 and 2011, respectively.  In the fiscal third quarter, the Company has begun the transition of moving its laboratory work internally from a third party provider. While this has resulted in increased cost in the current quarter, it is expected to yield future savings. This laboratory transition in combination with the Company’s strategic decision to lower price points across service lines in the current year contributed to the declines in gross margin.

Cost of TOS

Cost of TOS was $0.8 million and $0.7 million for the three months ended January 31, 2012 and 2011, respectively, an increase of $0.1 million, or 16%. Cost of TOS was $1.9 million and $1.4 million for the nine months ended January 31, 2012 and 2011, respectively, an increase of $0.5 million, or 36%.  The increase in costs was due to the increased volume of TOS business. Gross margin for TOS was 54% and 50% for the three months ended January 31, 2012 and 2011, respectively, and 52% and 45% for the nine months ended January 31, 2012 and 2011, respectively. The increases in gross margin can be attributed to the mix and complexity of drug studies that were completed in the respective periods.  

Research and Development

Research and development expense was $0.9 million and $0.4 million for the three months ended January 31, 2012 and 2011, respectively, an increase of $0.5 million, or 114%.  Research and development expense was $2.6 million and $2.1 million for the nine months ended January 31, 2012 and 2011, respectively, an increase of $0.5 million, or 21%.  The increases from prior year periods are primarily related to increased costs resulting from our continued investment in our Tumorbank and technology platform.

Sales and Marketing

Sales and marketing expense was $0.6 million and $0.2 million for the three months ended January 31, 2012 and 2011, respectively, an increase of $0.4 million, or 161%.  Sales and marketing expense was $1.9 million and $0.4 million for the nine months ended January 31, 2012 and 2011, respectively, an increase of $1.5 million. The increases from prior year periods are primarily related to our continued investment in the infrastructure in POS, increases in our sales force, and increases in marketing costs.

15

General and Administrative

General and administrative expense was $1.3 million and $1.5 million for the three months ended January 31, 2012 and 2011, respectively, a decrease of $0.2 million, or 15%. Stock-based compensation was $0.7 million and $1.2 million for the three months ended January 31, 2012 and 2011, respectively. Excluding stock-based compensation, general and administrative expenses were $0.5 million and $0.3 million for the three months ended January 31, 2012 and 2011, respectively, an increase of $0.2 million. General and administrative expense was $4.4 million and $2.6 million for the nine months ended January 31, 2012 and 2011, respectively, an increase of $1.8 million, or 67%.  Stock-based compensation was $2.6 million and $1.6 million for the nine months ended January 31, 2012 and 2011, respectively. Excluding stock-based compensation, general and administrative expenses were $1.8 million and $1.0 million for the nine months ended January 31, 2012 and 2011, respectively, an increase of $0.8 million. The increases from the prior periods are related to the expansion of our infrastructure, the addition of our corporate offices in New Jersey, and other costs associated with the Company’s growth strategy.

Other Income (Expense)

Other income was $0.05 million and $0.4 for the three months ended January 31, 2012 and 2011, respectively, a decrease of $0.3 million. Other income was $0.4 million and $1.3 million for the nine months ended January 31, 2012 and 2011, respectively, a decrease of $0.9 million. During the three and nine months ended January 31, 2012, the Company recognized income of $0.06 million and $0.3 million, respectively, for the change in fair value of warrants that are accounted for as liabilities on the unaudited condensed consolidated balance sheets and are described further below and in Note 5 to the accompanying unaudited condensed consolidated financial statements. In the prior year, other income primarily consisted of cash grants awarded to the Company under the Qualifying Therapeutic Discovery Project program administered under section 48D of the Internal Revenue Code which income was not repeated for the 2012 period.

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. In the past, we have met these cash requirements through our cash and cash equivalents, working capital management and proceeds from certain private placements of our securities. As of January 31, 2012, we had working capital of $4.1 million and cash and cash equivalents of $6.5 million. We believe that our cash and cash equivalents on hand at January 31, 2012 are adequate to fund operations for at least the next twelve months.

On March 24, 2011, the Company entered into a Securities Purchase Agreement with several accredited investors for the sale to the investors of an aggregate 12,533,333 shares of the Company’s common stock at a purchase price of $0.75 per share, or an aggregate of $9.4 million, of which, $0.5 million was sold to officers and directors of the Company. As part of this transaction, we issued warrants to purchase an aggregate 1,266,667 shares of common stock at an exercise price of $0.90 per share. These warrants expire five years after the closing date, which occurred on April 4, 2011. The Securities Purchase Agreement contains certain anti-dilution protections for the investors and certain registration rights with respect to the shares of common stock issued to the investors. Furthermore, investors will have the right to require the Company to repurchase the purchased common shares held (the “Put Option”) for cash for $0.75 per share upon a change of control or sale of substantially all of the company’s assets. The Put Option will terminate upon the achievement of certain financial milestones by the Company, the sale of 25% of the common shares purchased by an investor, with respect only to the shares owned by such investor, or in certain other circumstances as outlined in the Securities Purchase Agreement.

The warrants issued in connection with the Securities Purchase Agreement contain certain exercise price reset provisions. Under these provisions, the exercise price of the warrants may be adjusted downward should the Company have future sales of its common stock for no consideration or for a consideration per share less than the Per Share Price (as such term is defined in the Securities Purchase Agreement).

If we require additional cash, there can be no assurance that management will be successful in raising additional capital on terms acceptable to us, if at all. Our ability to successfully complete a raise of capital will depend on the conditions of the capital markets and our financial condition and prospects. Even if we are able to successfully raise additional capital, such capital could be in the form of debt and could be at high interest rates and/or require us to comply with restrictive covenants that limit financial and business activities. In addition, even if we are able to successfully raise equity capital, this could dilute the interest of existing shareholders and/or be issued with preferential liquidation, dividend or voting rights to those currently held by our common stockholders

16

Cash Flows

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

Cash Flows from Operating Activities

Net cash used in operating activities was $3.7 million for the nine months ended January 31, 2012. Net cash provided by operating activities was $0.5 million for the nine months ended January 31, 2011. The increase of $4.2 million of cash used in operating activities was primarily due to higher working capital requirements.

Cash Flows from Investing Activities

Net cash used in investing activities was $371,000 and less than $47,000 for the nine months ended January 31, 2012 and 2011, respectively. Cash used for the nine months ended January 31, 2012 and 2011 relates to the purchase of property and equipment for both the operations of the Company and the establishment of our new corporate headquarters in Hackensack, New Jersey.

Cash Flows from Financing Activities

Net cash provided by financing activities was $98,000 for the nine months ended January 31, 2012, which relates to the exercise of warrants. Net cash used in financing activities was $71,000 for the nine months ended January 31, 2011, which primarily relates to the purchase of treasury stock.

Critical Accounting Estimates and Policies

The preparation of financial statements in conformity with accounting principles generally accepted in the United States 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, valuation allowances for deferred tax assets, valuation of goodwill, and stock compensation assumptions. Actual results could differ from those estimates. The Company’s critical accounting policies are summarized in the Company’s Annual Report on Form 10-K, filed with the SEC on July 15, 2011.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Not applicable.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

It is management’s responsibility to establish and maintain “disclosure controls and procedures” as such term is defined in Rule 13a-15 under the Securities Exchange Act of 1934 (the “Exchange Act”). Our management, with the participation of our Chief Executive Officer and our Chief Financial Officer, have reviewed and evaluated the effectiveness of our disclosure controls and procedures as of a date within ninety (90) days of the filing date of this Form 10-Q quarterly report. Based on that evaluation, our management, including our Chief Executive Officer and our Chief Financial Officer, have concluded that our disclosure controls and procedures were effective as of the end of the period covered by this Form 10-Q at the reasonable assurance level in ensuring that information required to be disclosed in the reports that we file or submit under the Securities Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms and is accumulated and communicated to management, including our Chief Executive Officer and our Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

17

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting in connection with the evaluation required by Rule 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the period covered by this Quarterly Report on Form 10-Q that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

18

PART II – OTHER INFORMATION

Item 1. Legal Proceedings

From time to time we are involved in litigation incidental to the conduct of our business. While the outcome of lawsuits and other proceedings against us cannot be predicted with certainty, in the opinion of management, individually or in the aggregate, no such lawsuits are expected to have a material effect on our financial position or results of operations. As of the date of this filing, we were not involved in any litigation.

Item 1A. Risk Factors

There have been no material changes in risk factors previously disclosed in our Form 10-K for the year ended April 30, 2011.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

None.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

19

Item 6. Exhibits

No.	Exhibit
31.1	8650 Section 302 Certification of Chief Executive Officer
31.2	8650 Section 302 Certification of Chief Financial Officer
32.1	Certification Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of  2002
101	Interactive data files providing financial information from the Registrant’s Quarterly Report on Form 10-Q for the quarter ended January 31, 2012 in XBRL (eXtensible Business Reporting Language) pursuant to Rule 405 of Regulation S-T: (i) Consolidated Balance Sheets, January 31, 2012 and April 30, 2011, (ii) Consolidated Statements of Operations and Comprehensive Loss for the three and nine months ended January 31, 2012 and 2011, (iii) Consolidated Statements of Cash Flows for the nine months ended January 31, 2012 and 2011, and (v) Notes to Unaudited Condensed Consolidated Financial Statements

20

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	CHAMPIONS ONCOLOGY, INC. (Registrant)
Date: March 14, 2012	By:	/s/ Joel Ackerman
		Joel Ackerman
		Chief Executive Officer
	By:	/s/ Gary G. Gemignani
		Gary G. Gemignani
		Chief Financial Officer

21

EX-31.1

EXHIBIT 31.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER
Section 302 Certification

I, Joel Ackerman, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Champions Oncology, Inc., a Delaware corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting

Date: March 14, 2012	/s/ Joel Ackerman
	Joel Ackerman
	Chief Executive Officer (Principal Executive Officer)

EX-31.2

EXHIBIT 31.2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER
Section 302 Certification

I, Gary G. Gemignani, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Champions Oncology, Inc., a Delaware corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting

Date: March 14, 2012	/s/ Gary G. Gemignani
	Gary G. Gemignani
	Chief Financial Officer (Principal Financial Officer)

EX-32.1

EXHIBIT 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Champions Biotechnology, Inc. (the “Company”) on Form 10-Q for the period ending January 31, 2012 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), each of the undersigned, in the capacities and on the dates indicated below, hereby certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to their knowledge:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operation of the Company.

Date: March 14, 2012	/s/ Joel Ackerman
	Joel Ackerman
	Chief Executive Officer (Principal Executive Officer)
	/s/ Gary G. Gemignani
	Gary G. Gemignani
	Chief Financial Officer (Principal Financial Officer)

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Property and Equipment

9 Months Ended

Jan. 31, 2012

Property, Plant and Equipment [Abstract]

Property, Plant and Equipment Disclosure [Text Block]

Note 3. Property and Equipment

Property and equipment is recorded at cost and consists of laboratory equipment, furniture and fixtures, and computer hardware and software. Depreciation is calculated on a straight-line basis over the estimated useful lives of the various assets ranging from three to seven years. Property and equipment consisted of the following:

	January 31,			April 30,
	2012			2011
(Dollars in thousands)
Furniture and fixtures	$	60		$	10
Computer equipment and software		273			120
Laboratory equipment		137			56
Leasehold improvements		2			2
Software in-progress		111			24
Total property and equipment		583			212
Less: Accumulated depreciation		(131	)		(66	)
Property and equipment, net	$	452		$	146

Depreciation expense was $16,000 and $11,000 for the three months ended January 31, 2012 and 2011, respectively, and $65,000 and $30,000 for the nine months ended January 31, 2012 and 2011, respectively.

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Recently Issued Accounting Pronouncements

9 Months Ended

Jan. 31, 2012

Accounting Changes and Error Corrections [Abstract]

Accounting Changes and Error Corrections [Text Block]

Note 2. Recently Issued Accounting Pronouncements

During September 2011, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2011-08, “Testing Goodwill for Impairment” (“ASU 2011-08”). ASU 2011-08 is intended to simplify the testing of goodwill for impairment by permitting an entity to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the two-step goodwill impairment test, which is currently required for all companies that report goodwill. The amendments are effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011, although early adoption is permitted. The Company does not anticipate that the adoption of this guidance will have a material impact on its financial position and results of operations.

During June 2011, the FASB issued ASU No. 2011-05, “Presentation of Comprehensive Income” (“ASU 2011-05”). ASU 2011-05 provides for the option to present the total of comprehensive income, the components of net income and the components of other comprehensive income (“OCI”) either in a single continuous statement of comprehensive income or in two separate but consecutive statements. Regardless of which format is chosen, the amendments establish a requirement for entities to present on the face of the financial statements reclassification adjustments for items that are reclassified from OCI to net income in the statement(s) where the components of net income and the components of OCI are presented. The amendments in ASU 2011-05 are effective, on a retrospective basis, for public entities for interim and annual periods beginning after December 15, 2011; however, during December 2011 the FASB issued ASU No. 2011-12, which defers those changes in ASU 2011-05 that relate to the presentation of reclassification adjustments. The Company has adopted this standard, which only impacts the disclosures required, but has no impact on the financial position or results of operations.

During May 2011, the FASB issued ASU No. 2011-04, “Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRS” (“ASC 2011-04”). The amendments in ASC 2011-04 were issued in order to align the fair value measurement and disclosure requirements in GAAP and International Financial Reporting Standards. Consequently, the amendments change the wording used to describe many of the requirements in GAAP for measuring fair value and for disclosing information about fair value measurements. However, many of the amendments in ASC 2011-04 will not result in a change in the application of the requirements in ASC 820, Fair Value Measurement. The amendments in ASU 2011-04 are effective, on a prospective basis, for public entities for interim and annual periods beginning after December 15, 2011. The Company does not anticipate that the adoption of this guidance will have a material impact on its financial position and results of operations.

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CONDENSED CONSOLIDATED BALANCE SHEETS (USD $) In Thousands, unless otherwise specified	Jan. 31, 2012	Apr. 30, 2011
ASSETS
Cash and cash equivalents	$ 6,482	$ 10,457
Accounts receivable	497	585
Grant receivable	505	517
Prepaid expenses and other current assets	110	276
Total current assets	7,594	11,835
Restricted cash	150	0
Property and equipment, net	452	146
Goodwill	669	669
Total assets	8,865	12,650
LIABILITIES, REDEEMABLE COMMON STOCK AND STOCKHOLDERS' EQUITY (DEFICIT)
Accounts payable	1,623	1,580
Accrued liabilities	344	302
Deferred revenue	1,501	1,618
Total current liabilities	3,468	3,500
Warrant liability	618	972
Total liabilities	4,086	4,472
Commitments and Contingencies:
Redeemable common stock; $0.001 par value; 12,533,333 contingently puttable common shares outstanding as of January 31, 2012 and April 30, 2011	8,159	8,159
Stockholders' equity (deficit):
Preferred stock, $10 par value; 56,075 shares authorized; no shares issued and outstanding as of January 31, 2012 and April 30, 2011	0	0
Common stock, $.001 par value; 125,000,000 shares authorized, including redeemable common stock, 37,451,691 and 36,956,667 shares issued and 34,477,955 and 33,870,000 shares outstanding as of January 31, 2012 and April 30, 2011, respectively	38	37
Treasury stock, at cost, 3,236,000 common shares as of January 31, 2012 and April 30, 2011, respectively	(1,252)	(1,252)
Additional paid-in capital	20,494	17,784
Accumulated deficit	(22,593)	(16,482)
Accumulated other comprehensive loss	(67)	(68)
Total stockholders' deficit (equity)	(3,380)	19
Total liabilities, redeemable common stock and stockholders' equity (deficit)	$ 8,865	$ 12,650

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UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Jan. 31, 2012	Jan. 31, 2011
Operating activities:
Net loss	$ (6,111)	$ (1,060)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation expense	2,612	1,578
Depreciation expense	65	30
Change in fair value of warrant liability	(354)	0
Changes in operating assets and liabilities:
Accounts receivable	88	(319)
Grant receivable	12	(367)
Prepaid expenses, deposits and other	166	120
Restricted cash	(150)	0
Accounts payable	43	1,139
Accrued liabilities	42	(67)
Deferred revenue	(117)	(550)
Net cash (used in) provided by operating activities	(3,704)	504
Investing activities:
Purchase of property and equipment	(371)	(47)
Net cash (used in) investing activities	(371)	(47)
Financing activities:
Purchase of treasury stock	0	(73)
Proceeds from exercise of options and warrants	98	2
Net cash provided by (used in) financing activities	98	(71)
Exchange rate effect on cash and cash equivalents	2	(17)
Net change in cash and cash equivalents	(3,975)	369
Cash and cash equivalents, beginning of period	10,457	2,572
Cash and cash equivalents, end of period	$ 6,482	$ 2,941

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Organization, Use of Estimates and Basis of Presentation

9 Months Ended

Jan. 31, 2012

Accounting Policies [Abstract]

Organization, Consolidation and Presentation of Financial Statements Disclosure [Text Block]

Note 1. Organization, Use of Estimates and Basis of Presentation

Champions Oncology, Inc. (the “Company”), is engaged in the development of advanced technology solutions and services to personalize the development and use of oncology drugs. The Company’s Tumorgraft Technology Platform is a novel approach to personalizing cancer care based upon the implantation of human tumors in immune deficient mice. The Company uses this technology to derive revenue for two customer groups: Personalized Oncology Solutions (“POS”), and Translational Oncology Solutions (“TOS”). POS assists physicians in developing personalized treatment options for their cancer patients through access to panels of expert medical professionals and tumor specific data. The Company’s TOS offer a technology platform to pharmaceutical and biotechnology companies using proprietary Tumorgraft studies, which have been shown to be predictive of how drugs may perform in clinical settings.

The unaudited condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All material intercompany transactions have been eliminated in consolidation. The financial statements of the Company’s foreign subsidiaries, all of which have a functional currency other than the U.S. dollar, have been translated into the U.S. dollar for each period presented. Translation gains and losses are recognized as a component of accumulated other comprehensive loss. The Company is subject to foreign exchange rate fluctuations in connection with the Company’s international operations.

These unaudited condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). All significant intercompany transactions and accounts have been eliminated. All figures are presented in thousands of U.S. dollars, except share data, or except where expressly stated otherwise. Certain information related to the Company’s organization, significant accounting policies and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) has been condensed or omitted. The accounting policies followed in the preparation of these unaudited condensed consolidated financial statements are consistent with those followed in the Company’s annual consolidated financial statements for the year ended April 30, 2011, as filed on Form 10-K. In the opinion of management, these unaudited condensed consolidated financial statements contain all material adjustments necessary to fairly state our financial position, results of operations and cash flows for the periods presented and the presentations and disclosures herein are adequate when read in conjunction with the Company’s Annual Report on Form 10-K for the year ended April 30, 2011. Certain reclassifications have been made to the prior period financial statement amounts to conform to current presentation.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and 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. Actual results could differ from those estimates. Significant estimates include valuation assumptions used for share-based compensation and warrant liability, accrued expenses carrying amounts of long-lived assets and deferred taxes.

Basic loss per share is calculated by dividing loss available to common shareholders by the weighted average number of common shares (including redeemable common stock) outstanding for the period. Diluted loss per share is calculated based on the weighted average number of common shares (including redeemable common stock) outstanding for the period, plus the dilutive effect of common stock purchase warrants, stock options and restricted stock units using the treasury stock method. Contingently issuable shares are included in the calculation of basic earnings per share when all contingencies surrounding the issuance of the shares are met and the shares are issued or issuable. Contingently issuable shares are included in the calculation of dilutive earnings per share as of the beginning of the reporting period if, at the end of the reporting period, all contingencies surrounding the issuance of the shares are satisfied or would be satisfied if the end of the reporting period were the end of the contingency period. Due to the net losses for the three and nine months ended January 31, 2012 and 2011, basic and diluted loss per share were the same, as the effect of potentially dilutive securities would have been anti-dilutive.

The following table reflects the total potential share-based instruments outstanding at January 31, 2012 and 2011 that could have an effect on the future computation of dilution per common share:

	January 31,
	2012		2011
Stock options		15,064,866		14,878,948
Warrants		1,416,667		740,352
Restricted stock		37,500		150,000
Total common stock equivalents		16,519,033		15,769,300

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CONDENSED CONSOLIDATED BALANCE SHEETS [Parenthetical] (USD $)	Jan. 31, 2012	Apr. 30, 2011
Redeemable common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Redeemable common stock, shares outstanding	12,533,333	12,533,333
Preferred stock, par value (in dollars per share)	$ 10	$ 10
Preferred stock, shares authorized	56,075	56,075
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, shares authorized	125,000,000	125,000,000
Common stock, shares issued	37,451,691	36,956,667
Common stock, shares outstanding	34,477,955	33,870,000
Treasury stock, shares	3,236,000	3,236,000

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Subsequent Events

9 Months Ended

Jan. 31, 2012

Subsequent Events [Abstract]

Subsequent Events [Text Block]

Note 11. Subsequent Events

None.

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DOCUMENT AND ENTITY INFORMATION	9 Months Ended
	Jan. 31, 2012	Feb. 29, 2012
Entity Registrant Name	CHAMPIONS ONCOLOGY, INC.
Entity Central Index Key	0000771856
Current Fiscal Year End Date	--04-30
Entity Filer Category	Smaller Reporting Company
Trading Symbol	csbr
Entity Common Stock, Shares Outstanding		47,011,276
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jan. 31, 2012
Document Fiscal Period Focus	Q3
Document Fiscal Year Focus	2012

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UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended		9 Months Ended
	Jan. 31, 2012	Jan. 31, 2011	Jan. 31, 2012	Jan. 31, 2011
Operating revenue:
Personalized oncology solutions	$ 649	$ 1,419	$ 1,837	$ 2,816
Translational oncology solutions	1,747	1,386	3,931	2,522
Total operating revenue	2,396	2,805	5,768	5,338
Costs and operating expenses:
Cost of personalized oncology solutions	528	725	1,463	1,213
Cost of translational oncology solutions	801	688	1,904	1,399
Research and development	930	434	2,558	2,117
Sales and marketing	623	239	1,885	356
General and administrative	1,287	1,505	4,421	2,649
Total costs and operating expenses	4,169	3,591	12,231	7,734
Loss from operations	(1,773)	(786)	(6,463)	(2,396)
Other income:
Grant income	(12)	367	(12)	1,327
Change in fair value of warrant liability	66	0	354	0
Other income	0	4	10	9
Total other income	54	371	352	1,336
Loss before provision for income taxes	(1,719)	(415)	(6,111)	(1,060)
Provision for income taxes	0	0	0	0
Net loss	$ (1,719)	$ (415)	$ (6,111)	$ (1,060)
Net loss per common share outstanding, including redeemable common stock, basic and diluted (in dollars per share)	$ (0.04)	$ (0.01)	$ (0.13)	$ (0.03)
Weighted average common shares outstanding, including redeemable common stock, basic and diluted (in shares)	46,738,000	35,664,000	47,000,000	35,693,000

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Related Party Transactions

9 Months Ended

Jan. 31, 2012

Related Party Transactions [Abstract]

Related Party Transactions Disclosure [Text Block]

Note 6. Related Party Transactions

Related party transactions include transactions between the Company and certain of its shareholders, management and affiliates. The following transactions were in the normal course of operations and were measured at the exchange amount, which is the amount of consideration established and agreed to by the parties.

Consulting Services

During the nine months ended January 31, 2012 and 2011, the Company paid one of its directors and former Chief Executive Officer, $18,000 and $75,000, respectively, in consulting fees. During the nine months ended January 31, 2012 and 2011, the Company paid certain members of its Board of Directors $103,000 and $45,000, respectively, for consulting services unrelated to their duties as board members.

Revenue

During the nine months ended January 31, 2012, the Company recognized $20,000 in revenues from companies whose board members were also members of the Company’s Board of Directors. No such revenues were recognized for the nine months ended January 31, 2011.

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Redeemable Common Stock and Stock Purchase Warrant

9 Months Ended

Jan. 31, 2012

Redeemable Common Stock and Stock Purchase Warrant [Abstract]

Redeemable Common Stock and Stock Purchase Warrant [Text Block]

Note 5. Redeemable Common Stock and Stock Purchase Warrants

On March 24, 2011, the Company entered into a Securities Purchase Agreement with several accredited investors for the sale to the investors of an aggregate 12,533,333 shares of the Company’s Common Stock at a purchase price of $0.75 per share, or an aggregate of $9.4 million of which, $500,000 was sold to officers and directors of the Company. As part of this transaction, the Company also issued warrants to purchase an aggregate 1,266,667 shares of Common Stock at an exercise price of $0.90 per share. These warrants expire five years after the closing date, which occurred on April 4, 2011. The Securities Purchase Agreement contains certain anti-dilution protections for the investors and certain registration rights with respect to the shares of Common Stock issued to the investors. Furthermore, investors will have the right to require the Company to redeem the purchased common shares held by such investors (the “Put Option”) for cash for $0.75 per share upon a change of control or sale of substantially all of the company’s assets. The Put Option will terminate upon the achievement of certain financial milestones by the Company, the sale of 25% of the common shares purchased by an investor, with respect only to the shares owned by such investor, or in certain other circumstances as outlined in the Securities Purchase Agreement.

Due to the Put Option described above, the Company has accounted for Common Stock issued under the Securities Purchase Agreement as temporary equity, which is reflected under the caption “Redeemable common stock” on the accompanying Unaudited Condensed Consolidated Balance Sheets. The total amount allocated to these common shares was $8.2 million. This allocation is equal to the total proceeds of $9.4 million, less the amount allocated to the warrants of $936,000 and is also net of direct and incremental costs associated with the Securities Purchase Agreement of $305,000.

The warrants issued in connection with the Securities Purchase Agreement contain certain exercise price reset provisions. Under these provisions, the exercise price of the warrants may be adjusted downward should the Company have future sales of its Common Stock for no consideration or for a consideration per share less than the Per Share Price (as such term is defined in the Securities Purchase Agreement).
 

The Company has granted demand registration rights in connection with the investment in common shares and the common shares underlying the warrants. These rights include the requirement of the Company to file certain registration statements within a specified time period and to have these registration statements declared effective within a specified time period. If the Company is not able to comply with these registration requirements, the Company will be required to pay cash penalties equal to 1.0% of the aggregate Purchase Price paid by the investors for each 30-day period in which a Registration Default, as defined in the Securities Purchase Agreement, exists. The Company may become subject to these penalty provisions if it fails to have a registration statement for the common shares declared effective, or to maintain the effectiveness of such registration statement. The total amount of potential penalties under this registration payment arrangement is $41,000 for each 30-day period in which a registration default exists; however, as of the date of this filing, the Company does not believe these penalties to be probable and accordingly, has not established an accrual for such registration payment arrangements.

The Company has accounted for the warrants issued in connection with the Securities Purchase Agreement as liabilities based on the exercise price reset provisions described above. This liability, which is recorded at fair value on the accompanying unaudited condensed consolidated balance sheets, totaled $936,000 at the time of the close of the Securities Purchase Agreement. As of April 30, 2011, the fair value of these warrants increased $356,000 to $972,000. During the nine months ended January 31, 2012, the fair value of these warrants decreased by $354,000 to $618,000. The change in fair value of these warrants has been, and will be, recognized as other income (expense) on the Company’s unaudited condensed consolidated Statements of Operations. The fair value of these warrants was calculated by the Monte Carlo simulation valuation method. Assumptions used to calculate the fair value of these warrants were as follows:

	January 31,		April 30,
	2012		2011
Expected term in years		4.2		5.0
Risk-free interest rates		0.5%		2.0%
Volatility		105%		102%
Dividend yield		0%		0%

The Company will continue to adjust the warrant liability for changes in fair value until the earlier of the exercise of the warrants, at which time the liability will be reclassified to stockholders' equity, or expiration of the warrants.

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Cephalon Agreement

9 Months Ended

Jan. 31, 2012

Cephalon Agreement [Abstract]

Cephalon Agreement [Text Block]

Note 9. Cephalon Agreement

On March 16, 2011, the Company entered into an agreement with Cephalon, Inc., (“Cephalon”), a wholly owned subsidiary of Teva Pharmaceutical Industries Ltd., pursuant to which the Company will conduct Tumorgraft studies on proprietary chemical compounds provided by Cephalon to determine the activity or response of a compound in potential clinical indications. In April 2011, Cephalon paid an initiation fee of $1.4 million to the Company, which is reflected within deferred revenue on the Condensed Consolidated Balance Sheet as of April 30, 2011. The Company anticipates that the studies will be completed within 18 months of the execution of the agreement. As models, along with required reports, are delivered, the deferred revenue will be recognized on a proportionate basis in accordance with the Company’s revenue recognition policies. Under this agreement, revenue of $444,000 and $681,000 was recognized during the three and nine months ended January 31, 2012. Cephalon will, under certain conditions, also pay the Company various amounts upon achieving certain milestones. Potential milestone payments to be received under the Agreement total $27 million. No milestones have been achieved to date. In addition, under certain conditions, Cephalon will pay the Company royalties on any commercialized products developed under the Agreement. No royalties have been received or earned to date.

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Commitments and Contingencies

9 Months Ended

Jan. 31, 2012

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies Disclosure [Text Block]

Note 7. Commitments and Contingencies

Operating Leases

As of January 31, 2012, the Company leases office and laboratory space under a non-cancelable operating lease in Baltimore, Maryland, which expires in April 2014, office space under a non-cancelable operating lease in Ra’anana, Israel, which expires in July 2012, and office space in Hackensack, New Jersey under a non-cancellable operating lease, which expires in April 2014. Rent expense under all lease agreements was approximately $44,000 and $15,000 for the three months ended January 31, 2012 and 2011, respectively, and $126,000 and $43,000 for the nine months ended January 31, 2012 and 2011, respectively.

Research and Development Materials Purchase Agreement

In February 2010, the Company entered into a research and development materials purchase agreement with a foreign hospital for the acquisition of Tumorgrafts. Under the agreement, the Company made monthly payments to the foreign hospital of approximately $37,000 per month, commencing March 1, 2010 and ending April 1, 2011. The accrued liability outstanding at April 30, 2011 totaled $147,000. As of January 31, 2012, the Company entered into a Mutual Release Agreement on December 15, 2011 and reversed this liability.

Legal Matters

The Company is party to certain legal matters arising in the ordinary course of its business. The Company has evaluated its potential exposure to these legal matters, and has concluded that there were no reasonably possible or probable liabilities at January 31, 2012 and April 30, 2011. The Company is not aware of any other matters that would have a material impact on the Company’s financial position or results of operations.

Registration Payment Arrangements

The Company has entered into registration rights agreements in connection with a private placement of its securities, which closed during April 2011 and is discussed more fully in Note 5. This registration rights agreement contains provisions that may call for the Company to pay penalties in certain circumstances. This registration payment arrangement primarily relates to the Company’s ability to file a registration statement within a particular time period, have a registration statement declared effective within a particular time period and to maintain the effectiveness of the registration statement for a particular time period. The Company does not believe it is probable that penalty payments will be made for the registration rights agreement discussed above and, accordingly, has not accrued for such potential penalties as of January 31, 2012.

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Licensing Agreements

9 Months Ended

Jan. 31, 2012

Licensing Agreements [Abstract]

Licensing Agreements Disclosure [Text Block]

Note 8. Licensing Agreements

During fiscal 2011, the Company was a party to several different licensing agreements, all of which are described in more detail in the Company’s Annual Report on Form 10-K for the year ended April 30, 2011. During April 2011, the Company terminated all of these licensing agreements with the exception of the Liposome Option Agreement, which is described further below. All rights related to all other licensing agreements that were terminated during April 2011 were returned to the underlying companies and no amounts were due under these other agreements as of April 30, 2011.

In February 2010, the Company entered into an exclusive option agreement with a Canadian company for which it paid and expensed $40,000 during the Company’s fiscal 2010 year. The option agreement granted the Company the exclusive right to review Irinophore C, a nanoparticle drug compound, for the treatment of various forms of cancer, including melanoma, prostate, breast and lung cancer through April 2011. During the option year, the Company performed various tumorgraft testing on the nanoparticle compound. In March 2011, the Company exercised its option to license Irinophore C, a liposomal formulation of Irinotecan. Under the terms of the agreement, the company’s exercise of the option resulted in amounts due to the Canadian company of $85,000 comprised of the option exercise price and reimbursement to the Canadian company for past patent costs, which was expensed in the Company’s fiscal year ended April 30, 2011. As of January 31, 2012, the Company has satisfied this obligation. Under the terms of the license agreement, the Company will be required to pay up to $3 million in development milestones. Upon commercialization, the Company would also be required to make royalty payments and sales milestone based upon revenues. Commencing with the second anniversary of the agreement (March 2013), the Company will be obligated to pay a minimum annual royalty of $10,000 (Canadian).

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Grant Income

9 Months Ended

Jan. 31, 2012

Grant Income [Abstract]

Grant Income [Text Block]

Note 10. Grant Income

In October 2010, the Company was notified that it was awarded total cash grants of approximately $1.5 million under the Qualifying Therapeutic Discovery Project program administered under section 48D of the Internal Revenue Code, of which approximately $1.0 million related to qualifying expenses the Company had previously incurred during fiscal 2010 and $0.5 million related to qualifying expenses which the Company expected to incur during fiscal 2011. In November 2010, the Company received approximately $1.0 million related to the 2010 expenditures. As of January 31, 2012, $0.5 million related to the 2011 expenditures was still outstanding. The Company received this payment on February 13, 2012.

On August 8, 2011 the Company was notified that it was selected for a tax examination by the Internal Revenue Service (IRS) on the Application for Certification of Qualified Investments Eligible for Credits and Grants Under the Qualifying Therapeutic Discovery Project program filed under the Patient Protection and Affordable Care Act of 2010 for the 2009 and 2010 tax years. The examination commenced on September 30, 2011 and as of the date of this filing was still ongoing.

The IRS expanded its scope to include the fiscal year 2011 tax return, which was filed in January 2012. Based on the examination to date, the Company does not believe that the results of this examination will have a material effect on its financial statements for any period under examination and that the Company has a sufficient Net Operating Loss carry forward that will offset any adjustment.

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UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Jan. 31, 2012	Jan. 31, 2011	Jan. 31, 2012	Jan. 31, 2011
Net loss	$ (1,719)	$ (415)	$ (6,111)	$ (1,060)
Foreign currency translation adjustment	(13)	12	2	(14)
Comprehensive loss	$ (1,732)	$ (403)	$ (6,109)	$ (1,074)

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Share-Based Payments

9 Months Ended

Jan. 31, 2012

Disclosure Of Compensation Related Costs, Share-Based Payments [Abstract]

Disclosure of Compensation Related Costs, Share-based Payments [Text Block]

Note 4. Share-Based Payments

The Company has in place a 2010 Equity Incentive Plan, a 2008 Equity Incentive Plan and a Director Compensation Plan of 2010, all of which are described in more detail in the Company’s Annual Report on Form 10-K for the year ended April 30, 2011. In general, these plans provide for stock-based compensation in the form (i) Non-statutory Stock Options; (ii) Restricted Stock Awards; and (iii) Stock Appreciation Rights to the Company’s employees, directors and non-employees. The plans also provide for limits on the aggregate number of shares that may be granted, the term of grants and the strike price of option awards.

Stock-based compensation in the amount of $743,000 and $1,209,000 was recognized for the three months ended January 31, 2012 and 2011, respectively, and $2,612,000 and $1,578,000 for the nine months ended January 31, 2012 and 2011, respectively. Stock-based compensation expense was recognized as follows:

	Three Months Ended					Nine Months Ended
	January 31,					January 31,
	2012			2011		2012		2011
(Dollars in thousands)
General and administrative	$	701		$	1,119	$	2,370	$	1,418
Cost of sales		1			-		2		-
Sales and marketing		49			51		168		53
Research and development		(8	)		39		72		107
Total stock-based compensation expense	$	743		$	1,209	$	2,612	$	1,578

Stock Option Grants

Black-Scholes assumptions used to calculate the fair value of options granted during the three and nine months ended January 31, 2012 and 2011 were as follows:

	Three Months Ended				Nine Months Ended
	January 31,				January 31,
	2012		2011		2012		2011
Expected term in years		3.0-6.0		6.0		3.0-6.0		6.0
Risk-free interest rates		.4%-1.9%		1.5% - 2.5%		.4%-2.2%		1.5% - 2.5%
Volatility		90%-101%		105% - 107%		90%-108%		104% - 107%
Dividend yield		0%		0%		0%		0%

The weighted average fair value of stock options granted during the three months ended January 31, 2012 and 2011 was $0.52 and $0.77, respectively. The weighted average fair value of stock options granted during the nine months ended January 31, 2012 and 2011 was $0.57 and $0.74, respectively. The Company’s stock options activity for the nine months ended January 31, 2012 is as follows:

												Weighted		Aggregate
										Weighted		Average		Intrinsic
				Directors						Average		Remaining		Value
	Non-			and						Exercise		Contractual		(Dollars in
	Employees			Employees			Total			Price		Life (Years)		Thousands)
Outstanding, May 1, 2011		1,610,000			12,710,948			14,320,948		$	0.88		8.4	$	1,780
Granted		75,000			1,310,000			1,385,000			0.77
Exercised		-			-			-			-
Forfeited		-			(301,915	)		(301,915	)		0.94
Expired		(315,000	)		(24,167	)		(339,167	)		0.24
Change in employee status		-			-			-			-
Outstanding, January 31, 2012		1,370,000			13,694,866			15,064,866		$	0.88		7.7	$	28
Vested and expected to vest as of January 31, 2012		1,370,000			13,694,866			15,064,866		$	0.88		7.7	$	28
Exercisable as of January 31, 2012		1,291,667			3,112,356			4,404,022		$	0.90		5.4	$	27

Restricted Stock Grants

A summary of the activity related to restricted stock grants is as follows:

				Weighted
				Average
				Grant
				Date Fair
	Total			Value Per
	Shares			Share
Nonvested as of May 1, 2011		100,000		$	0.90
Granted		50,000			0.75
Vested		(112,500	)		0.88
Forfeited		-			-
Expired		-			-
Nonvested as of January 31, 2012		37,500			0.75

The aggregate fair value of shares vested during the nine months ended January 31, 2012 was $84,000.

Stock Purchase Warrants

As of January 31, 2012, the Company has warrants outstanding for the purchase of 1,416,667 shares of its common stock, all of which are exercisable.  Of these warrants, 1,266,667 were issued in connection with the April 2011 financing arrangement and are accounted for as liabilities as further discussed in Note 5. As of January 31, 2012, the weighted average exercise price of these warrants was $0.91, the weighted average contractual life was four years. No warrants were exercised during the three months ended January 31, 2012. During nine months ended January 31, 2012, 495,352 warrants were exercised.