Burning Rock Reports Second Quarter 2021 Financial Results

GUANGZHOU, China, Aug. 31, 2021 (Globalrelease Wire) — Burning Rock Biotech Limited (NASDAQ: BNR, the “Company” or “Burning Rock”), a company focused on the application of next generation sequencing (NGS) technology in the field of precision oncology, today reported financial results for the three months ended June 30, 2021.

Business Updates

  • Early Detection
    • Technology foundation manuscript was published in Nature Biomedical Engineering (article link here). The results demonstrate that our proprietary technology of deep methylation sequencing, aided by a machine-learning classifier of methylation patterns, enables ultrasensitive detection of circulating tumor DNA.
    • We continued to conduct an early-access program (over 2,000 volunteers tested) to prepare for operational readiness of our 6-cancer early detection product.
    • 2022 commercialization is well on track. We are entering into contract signing stage with 6 hospitals where our 6-cancer test will be offered at the health check-up departments of those hospitals.
  • New products for early-stage cancer patients
    • Development of minimal residual disease (MRD) products is on track. Products are targeted to be launched in 2022. Lung-cancer data read-out is likely to take place in the first half of 2022. Clinical trials on colon, esophageal and other cancers are also under planning.
  • Pharma Services
    • Biopharma service contracts backlog grew rapidly. Total value of the contracts entered into during the first half of 2021 amounted to RMB98.2 million, three times the amount in full-year 2020.
    • We are jointly developing, together with IMPACT Therapeutics, companion diagnostics (CDx) for a targeted oncology drug, Senaparib, (IMP4297), a PARP inhibitor, for the treatment of prostate cancer globally. Senaparib’s pivotal clinical study under the FDA pathway is in progress. This project uses our Clinical Laboratory Improvement Amendments (CLIA)-certified and College of American Pathologists (CAP)-accredited laboratory in California, US.
  • Therapy Selection
    • Continued to strategically focus on the in-hospital channel. The volume of in-hospital NGS-based test kits grew 70% year-over-year to over 10,000 tests in the second quarter of 2021.

Second Quarter 2021 Financial Results

Revenues were RMB127.3 million (US$19.7 million) for the three months ended June 30, 2021, representing a 19.0% increase from RMB107.0 million for the same period in 2020, or a 19.4% sequential increase from RMB106.6 million for the three months ended March 31, 2021.

  • Revenue generated from central laboratory business was RMB80.0 million (US$12.4 million) for the three months ended June 30, 2021, representing a 7.2% increase from RMB74.6 million for the same period in 2020, primarily attributable to the year-over-year volume growth of the central laboratory business. Number of patients tested in the central laboratory channel was 8,155 for the three months ended June 30, 2021, representing a 12.5% increase from 7,252 for the same period in 2020.
  • Revenue generated from in-hospital business was RMB40.5 million (US$6.3 million) for the three months ended June 30, 2021, representing a 46.8% increase from RMB27.6 million for the same period in 2020, primarily attributable to the year-on-year volume growth of 70% of the in-hospital business. Number of contracted partner hospitals in the in-hospital channel increased to 34 as of June 30, 2021 from 32 as of March 31, 2020 and 24 as of June 30, 2020.
  • Revenue generated from pharma research and development services was RMB6.8 million (US$1.0 million) for the three months ended June 30, 2021, representing a 41.9% increase from RMB4.8 million for the same period in 2020, primarily attributable to the building of pipeline of pharmaceutical projects.

Cost of revenues was RMB37.0 million (US$5.7 million) for the three months ended June 30, 2021, representing a 29.7% increase from RMB28.6 million for the same period in 2020, which was generally in line with the Company’s continued business growth.

Gross profit was RMB90.2 million (US$14.0 million) for the three months ended June 30, 2021, representing a 15.1% increase from RMB78.4 million for the same period in 2020. Gross margin was 70.9% for the three months ended June 30, 2021, compared to 73.3% for the same period in 2020.

Operating expenses were RMB292.3 million (US$45.3 million) for the three months ended June 30, 2021, representing a 93% increase from RMB151.4 million for the same period in 2020. The increase was primarily driven by headcount growth and increase in other costs to support business expansion.

  • Research and development expenses were RMB108.1 million (US$16.7 million) for the three months ended June 30, 2021, representing a 51.8% increase from RMB71.2 million for the same period in 2020, primarily due to an increase in research and development personnel’s staff cost and other costs incurred in research and development projects.
  • Selling and marketing expenses were RMB68.1 million (US$10.5 million) for the three months ended June 30, 2021, representing a 79.1% increase from RMB38.0 million for the same period in 2020, primarily due to an increase in staff cost of sales and marketing personnel.
  • General and administrative expenses increased significantly to RMB116.1 million (US$18.0 million) for the three months ended June 30, 2021 from RMB42.3 million for the same period in 2020, primarily due to an increase in general and administrative personnel’s staff cost and share-based compensation expenses.

Net loss was RMB203.7 million (US$31.5 million) for the three months ended June 30, 2021, compared to RMB71.1 million for the same period in 2020.

Cash, cash equivalents, restricted cash and short-term investments were RMB1,918.8 million (US$297.2 million) as of June 30, 2021.

Appointment of VP of Regulatory Affairs (US and Europe) and Quality Assurance

Dr. Sharon Liang joined Burning Rock as the VP of Regulatory Affairs (US and Europe) and Quality Assurance in late June this year. She is a human genetics expert with nearly two decades of experience in molecular cancer diagnostic medical device product development and regulatory in academia, government and industry. She was the US FDA committee member for the US President’s Precision Medicine Initiative (PMI) Project leading Bioinformatics group. She led and contributed to the development of many molecular diagnostic devices approved by the FDA, including the first NGS sequencer, first NGS Oncopanel, first NGS tumor profiling assay, first Direct-to-Consumer test, first microarray genetic tests, and companion diagnostics. Before joining Burning Rock, Dr. Liang worked at GRAIL, a cancer early detection diagnostic company, primarily responsible for regulatory strategy and execution.

2021 Financial Guidance

For the third quarter of this year, COVID-related travel restrictions in multiple major cities in China will impact our central-laboratory testing volumes and, to a lesser extent, the growth of our in-hospital testing volumes. The relatively stronger growth expected for in-hospital testing will also be driven by the industry structural shift from central-laboratory towards in-hospital testing. We believe that we are well-positioned in the in-hospital segment, and we view the revenues from in-hospital as higher quality, given our product and competitive advantages, leading to stickier revenues. As the testing mix of our therapy selection business transitions towards the in-hospital segment, our blended average sales price will decline, due to lower prices of IVD testing kits that we supply to hospitals in the in-hospital segment, compared with prices of LDT testing service that we charge to patients in the central-laboratory segment. This will result, during this transition period, in a lower revenue growth rate compared with volume growth rate, for our therapy selection business. As such, the Company adjusts its 2021 full-year revenue guidance to approximately RMB500 million.

Conference Call Information

Burning Rock will host a conference call to discuss the second quarter 2021 financial results at 8:00 a.m. U.S. Eastern Time (8:00 p.m. Hong Kong time) on August 31, 2021.

Details of the conference call are as follows:

International: +65 67135090
U.S.: +1 8456750437
U.K.: +44 2036214779
Hong Kong: +852 30186771
China Mobile: 4006208038
China Landline: 8008190121
Conference ID: 2309539

A replay of the conference call will be available for one week (dial-in number: +61 2 8199 0299; same conference ID as shown above).

About Burning Rock

Burning Rock Biotech Limited (NASDAQ: BNR), whose mission is to guard life via science, focuses on the application of next generation sequencing (NGS) technology in the field of precision oncology. Its business consists of i) NGS-based therapy selection testing for late-stage cancer patients, with the leading market share in China and over 273,000 tissue and liquid-based tests completed cumulatively, and ii) cancer early detection, which has moved beyond proof-of-concept R&D into the clinical validation stage.

For more information about Burning Rock, please visit: ir.brbiotech.com.

Safe Harbor Statement

This press release contains forward-looking statements. These statements constitute “forward-looking” statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and as defined in the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as “will,” “expects,” “anticipates,” “future,” “intends,” “plans,” “believes,” “estimates,” “target,” “confident” and similar statements. Burning Rock may also make written or oral forward-looking statements in its periodic reports to the SEC, in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including statements about Burning Rock’s beliefs and expectations, are forward-looking statements. Such statements are based upon management’s current expectations and current market and operating conditions, and relate to events that involve known or unknown risks, uncertainties and other factors, all of which are difficult to predict and many of which are beyond Burning Rock’s control. Forward-looking statements involve risks, uncertainties and other factors that could cause actual results to differ materially from those contained in any such statements. All information provided in this press release is as of the date of this press release, and Burning Rock does not undertake any obligation to update any forward-looking statement as a result of new information, future events or otherwise, except as required under applicable law.

Selected Operating Data

  For the three months ended    
  March 31,
2020
  June 30,
2020
  September 30,
2020
  December 31,
2020
  March 31,
2021
  June 30,
2021
Central Laboratory Channel:                      
Number of patients tested 4,680   7,252   8,644   7,989   7,716   8,155
Number of ordering physicians(1) 810   1,175   1,194   1,114   1,082   1,013
Number of ordering hospitals(2) 232   284   289   294   303   300

_____________________

(1)    Represents physicians who on average order at least one test from us every month during a relevant period in the central laboratory channel.
(2)    Represents hospitals whose residing physicians who on average order at least one test from us every month during a relevant period in the central laboratory channel.
  As of  
  March 31,
2020
  June 30,
2020
  September 30,
2020
  December 31,
2020
  March 31,
2021
  June 30,
2021
In-hospital Channel:                      
Pipeline partner hospitals(1) 23   23   22   23   22   22
Contracted partner hospitals(2) 21   24   25   29   32   34
Total number of partner hospitals 44   47   47   52   54   56

____________________

(1)    Refers to hospitals that are in the process of establishing in-hospital laboratories, laboratory equipment procurement or installation, staff training or pilot testing using the Company’s products.
(2)   Refers to hospitals that have entered into contracts to purchase the Company’s products for use on a recurring basis in their respective in-hospital laboratories the Company helped them establish. Kit revenue is generated from contracted hospitals.

Selected Financial Data

  For the three months ended
Revenues March 31,
2020
  June 30,
2020
  September 30,
2020
  December 31,
2020
  March 31,
2021
  June 30
2021
  (RMB in thousands)
Central laboratory channel 46,141   74,607   89,899   86,695   74,561   79,999
In-hospital channel 17,123   27,588   31,704   41,457   28,994   40,502
Pharma research and development channel 4,065   4,776   2,278   3,570   3,068   6,778
Total revenues 67,329   106,971   123,881   131,722   106,623   127,279
  For the three months ended
Gross profit March 31,
2020
  June 30,
2020
  September 30,
2020
  December 31,
2020
  March 31,
2021
  June 30
2021
  (RMB in thousands)
Central laboratory channel 32,434   56,556   67,804   66,588   55,212   58,681
In-hospital channel 10,126   19,269   22,410   30,218   20,070   29,426
Pharma research and development channel 2,224   2,573   1,373   2,347   1,658   2,124
Total gross profit 44,784   78,398   91,587   99,153   76,940   90,231
  For the three months ended  
Share-based compensation expenses March 31,
2020
  June 30,
2020
  September 30,
2020
  December 31,
2020
  March 31,
2021
  June 30,
2021
  (RMB in thousands)
Cost of revenues 176   183   160   277   339   406
Research and development expenses 2,072   25,314   10,572   11,843   22,404   20,825
Selling and marketing expenses 253   491   341   2,372   2,633   2,809
General and administrative expenses 1,665   1,639   57,805   58,057   59,382   59,369
Total share-based compensation expenses 4,166   27,627   68,878   72,549   84,758   83,409

Burning Rock Biotech Limited 
Unaudited Condensed Statements of Comprehensive Loss 
(in thousands, except for number of shares and per share data)

  For the three months ended
  March 31,
2020
  June 30,
2020
  September 30,
2020
  December 31,
2020
  March 31,
2021
  June 30,
2021
  June 30,
2021
  RMB   RMB   RMB   RMB   RMB   RMB   US$
Revenues 67,329   106,971   123,881   131,722   106,623   127,279   19,713
Cost of revenues (22,545)   (28,573)   (32,294)   (32,569)   (29,683)   (37,048)   (5,738)
Gross profit 44,784   78,398   91,587   99,153   76,940   90,231   13,975
Operating expenses:                          
Research and development expenses (40,016)   (71,176)   (69,330)   (83,418)   (77,414)   (108,071)   (16,738)
Selling and marketing expenses (29,815)   (37,992)   (44,174)   (56,606)   (55,130)   (68,058)   (10,541)
General and administrative expenses (34,295)   (42,272)   (102,731)   (114,502)   (116,259)   (116,130)   (17,986)
Total operating expenses (104,126)   (151,440)   (216,235)   (254,526)   (248,803)   (292,259)   (45,265)
Loss from operations  (59,342)   (73,042)   (124,648)   (155,373)   (171,863)   (202,028)   (31,290)
Interest income 3,985   44   698   1,341   787   681   105
Interest expense (1,178)   1,939   (776)   (652)   (510)   (565)   (88)
Other (expense) income, net (151)   122   (176)   (682)   118   433   67
Foreign exchange gain (loss), net 611   (118)   (2,228)   (1,112)   57   (560)   (87)
Change in fair value of warrant liability 3,503            
Loss before income tax (52,572)   (71,055)   (127,130)   (156,478)   (171,411)   (202,039)   (31,293)
Income tax expenses           (1,626)   (252)
Net loss (52,572)   (71,055)   (127,130)   (156,478)   (171,411)   (203,665)   (31,545)
Net loss attributable to Burning Rock Biotech Limited’s shareholders (52,572)   (71,055)   (127,130)   (156,478)   (171,411)   (203,665)   (31,545)
Accretion of convertible preferred shares (26,288)   (38,400)          
Net loss attributable to ordinary shareholders (78,860)   (109,455)   (127,130)   (156,478)   (171,411)   (203,665)   (31,545)
Loss per share:                          
Ordinary shares – basic and diluted (3.15)              
Class A ordinary shares – basic and diluted   (2.68)   (1.22)   (1.51)   (1.65)   (1.96)   (0.30)
Class B ordinary shares – basic and diluted   (2.68)   (1.22)   (1.51)   (1.65)   (1.96)   (0.30)
Weighted average shares outstanding used in loss per share computation:                          
Ordinary shares – basic and diluted 25,031,575            
Class A ordinary shares – basic and diluted   23,461,319   86,479,686   86,511,799   86,721,263   86,764,260   86,764,260
Class B ordinary shares – basic and diluted   17,324,848   17,324,848   17,324,848   17,324,848   17,324,848   17,324,848
Other comprehensive (loss) income, net of tax of nil:                          
Foreign currency translation adjustments 11,422   (2,336)   (91,093)   (94,881)   14,080   (34,980)   (5,418)
Total comprehensive loss (41,150)   (73,391)   (218,223)   (251,359)   (157,331)   (238,645)   (36,963)
Total comprehensive loss attributable to Burning Rock Biotech Limited’s shareholders (41,150)   (73,391)   (218,223)   (251,359)   (157,331)   (238,645)   (36,963)

Burning Rock Biotech Limited 
Unaudited Condensed Statements of Comprehensive Loss 
(in thousands, except for share and per share data)

    For the six months ended
  June 30,
2020
  June 30,
2021
  June 30,
2021
  RMB   RMB   USD
Revenues 174,300   233,902   36,226
Cost of revenues (51,118)   (66,731)   (10,336)
Gross profit 123,182   167,171   25,890
Operating expenses:          
Research and development expenses (111,192)   (185,485)   (28,728)
Selling and marketing expenses (67,807)   (123,188)   (19,079)
General and administrative expenses (76,567)   (232,389)   (35,992)
Total operating expenses (255,566)   (541,062)   (83,799)
Loss from operations  (132,384)   (373,891)   (57,909)
Interest income 4,029   1,468   227
Interest expense 761   (1,075)   (166)
Other (expense) income, net (29)   551   85
Foreign exchange gain (loss), net 493   (503)   (78)
Change in fair value of warrant liability 3,503    
Loss before income tax (123,627)   (373,450)   (57,841)
Income tax expenses   (1,626)   (252)
Net loss (123,627)   (375,076)   (58,093)
Net loss attributable to Burning Rock Biotech Limited’s shareholders (123,627)   (375,076)   (58,093)
Accretion of convertible preferred shares (64,688)    
Net loss attributable to ordinary shareholders (188,315)   (375,076)   (58,093)
           
Loss per share:          
Class A ordinary shares – basic and diluted (5.73)   (3.60)   (0.56)
Class B ordinary shares – basic and diluted (5.73)   (3.60)   (0.56)
           
Weighted average shares outstanding used in loss per share computation:          
Class A ordinary shares – basic and diluted 15,540,502   86,742,880   86,742,880
Class B ordinary shares – basic and diluted 17,324,848   17,324,848   17,324,848
           
Other comprehensive income (loss), net of tax of nil:          
Foreign currency translation adjustments
Foreign currency translation adjustments
9,086   (20,900)   (3,237)
Total comprehensive loss (114,541)   (395,976)   (61,330)
Total comprehensive loss attributable to Burning Rock Biotech Limited’s shareholders (114,541)   (395,976)   (61,330)

Burning Rock Biotech Limited 
Unaudited Condensed Consolidated Balance Sheets 
(In thousands)

  As of
  December 31,
2020
  June 30,
2021
  June 30,
2021
  RMB   RMB   US$
ASSETS          
Current assets:          
Cash and cash equivalents 1,895,308   1,852,927   286,982
Restricted cash 29,898   30,338   4,699
Short-term investment 362,132   35,531   5,503
Accounts receivable 88,218   78,141   12,103
Contract assets 22,534   28,345   4,390
Amounts due from related parties 212   628   97
Inventories 68,021   114,434   17,724
Prepayments and other current assets 57,329   76,157   11,795
Total current assets 2,523,652   2,216,501   343,293
Non-current assets:          
Equity method investment 1,417   1,261   195
Property and equipment, net 111,481   198,324   30,716
Operating Right-of-use assets   89,307   13,832
Intangible assets, net 3,457   4,882   756
Other non-current assets 23,021   29,284   4,536
Total non-current assets 139,376   323,058   50,035
TOTAL ASSETS 2,663,028   2,539,559   393,328

Burning Rock Biotech Limited 
Unaudited Condensed Consolidated Balance Sheets (Continued) 
(in thousands)

  As of
  December 31,
2020
  June 30,
2021
  June 30,
2021
  RMB   RMB
  US$
LIABILITIES AND SHAREHOLDERS’ (DEFICIT) EQUITY      
Current liabilities:      
Accounts payable 35,482     47,983     7,432  
Deferred revenue 74,402     101,517     15,723  
Capital lease obligations, current 4,816        
Accrued liabilities and other current liabilities 83,648     79,773     12,356  
Customer deposits 1,120     1,042     161  
Short-term borrowing 7,370     7,370     1,141  
Current portion of long-term borrowings 34,695     30,118     4,665  
Current portion of operating lease liabilities     32,789     5,078  
Current portion of financing lease liabilities     2,169     336  
Total current liabilities 241,533     302,761     46,892  
Non-current liabilities:      
Deferred government grants 263          
Operating lease liabilities     63,132     9,778  
Other non-current liabilities 228     226     35  
Total non-current liabilities 491     63,358     9,813  
TOTAL LIABILITIES 242,024     366,119     56,705  

Shareholders’ equity:

     
Class A ordinary shares 116     116     18  
Class B ordinary shares 21     21     3  
Treasury stock     (4,270 )   (661 )
Additional paid-in capital 4,006,616     4,173,154     646,339  
Accumulated deficits (1,418,160 )   (1,807,092 )   (279,883 )
Accumulated other comprehensive loss (167,589 )   (188,489 )   (29,193 )
Total shareholders’ equity 2,421,004     2,173,440     336,623  
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY 2,663,028     2,539,559     393,328  

Burning Rock Biotech Limited 
Unaudited Condensed Statements of Cash Flows 
(in thousands)

  For the three months ended
  June 30, 2020   June 30, 2021   June 30, 2021
  RMB   RMB   US$
Net cash generated from (used in) operating activities 61,124     (118,998 )   (18,433 )
Net cash generated from (used in) investing activities 296,102     (67,577 )   (10,463 )
Net cash generated from (used in) financing activities 1,845,953     (8,961 )   (1,388 )
Effect of exchange rate on cash, cash equivalents and restricted cash (1,487 )   (34,085 )   (5,279 )
Net increase cash, cash equivalents and restricted cash 2,201,692     (229,621 )   (35,563 )
Cash, cash equivalents and restricted cash at the beginning of period 364,544     2,112,886     327,244  
Cash, cash equivalents and restricted cash at the end of period 2,566,236     1,883,265     291,681  
       
  For the six months ended
  June 30, 2020   June 30, 2021   June 30, 2021
  RMB   RMB   US$
Net cash generated from (used in) operating activities 54,168   (232,143 )   (35,952 )
Net cash generated (used in) investing activities 292,489   220,752     34,188  
Net cash generated from (used in) financing activities 2,118,181   (13,123 )   (2,032 )
Effect of exchange rate on cash, cash equivalents and restricted cash 3,154   (17,427 )   (2,699 )
Net increase cash, cash equivalents and restricted cash 2,467,992   (41,941 )   (6,495 )
Cash, cash equivalents and restricted cash at the beginning of period 98,244   1,925,206     298,176  
Cash, cash equivalents and restricted cash at the end of period 2,566,236   1,883,265     291,681  
       

 

Leave a Reply

Your email address will not be published. Required fields are marked *