Burning Rock Reports First Quarter 2021 Financial Results

May 25, 2021 12:20 AM EDT

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GUANGZHOU, China, May 25, 2021 (GLOBE NEWSWIRE) -- 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 March 31, 2021.

Recent Business Highlights

  • Early Detection  
    • Launched the 11,873-subject PRESCIENT (Pan-canceR Early-Stage deteCtion by lIquid Biopsy tEchNique projecT) study for developing our 22-cancer early detection test. This is in addition to our ongoing PREDICT (Pan-CanceR Early DetectIon ProjeCT) study for the development of our 9-cancer early detection test.
    • Presented at the 10th National Health Check-up Department Directors Summit (April 23 - April 25, 2021), where our early detection technology platform, product performance data and clinical programs were discussed at a keynote presentation.
  • Therapy Selection  
    • Achieved strong performance in the FDA-led SEQC2 (sequencing quality control) study. Full results of the liquid biopsy study were published in Nature Biotechnology (article link here), and results of the targeted tissue-based panels were also published separately (article link here).
    • Featured in the 2021 “Consensus on Colorectal Cancer High-throughput Sequencing Molecular Diagnostics in China,”1 in which our NGS-based bioinformatics algorithm for microsatellite instability (MSI) detection was endorsed and recommended.
  • Pharma Services
    • Launched with Abbisko Therapeutics the companion diagnostics (CDx) development for ABSK091, which is an innovative small molecule FGFR inhibitor that has obtained National Medical Products Administration (NMPA) investigational new drug (IND) approval for the treatment of patients with urothelial carcinoma.

First Quarter 2021 Financial Results

Revenues were RMB106.6 million (US$16.3 million) for the three months ended March 31, 2021, representing a 58.4% increase from RMB67.3 million for the same period in 2020, or a 19.1% sequential decrease from RMB131.7 million for the three months ended December 31, 2020. The sequential decrease was primarily due to negative impact associated with the COVID-19 pandemic in January 2021 and seasonality during the Chinese New Year holidays in February 2021.

  • Revenue generated from central laboratory business was RMB74.6 million (US$11.4 million) for the three months ended March 31, 2021, representing a 61.6% increase from RMB46.1 million for the same period in 2020, primarily attributable to the year-on-year volume growth of the central laboratory business. Number of patients tested in the central laboratory channel was 7,716 for the three months ended March 31, 2021, representing a 64.9% increase from 4,680 for the same period in 2020.
  • Revenue generated from in-hospital business was RMB29.0 million (US$4.4 million) for the three months ended March 31, 2021, representing a 69.3% increase from RMB17.1 million for the same period in 2020. Number of contracted partner hospitals in the in-hospital channel increased to 32 as of March 31, 2021 from 29 as of December 31, 2020 and 21 as of March 31, 2020.
  • Revenue generated from pharma research and development services was RMB3.1 million (US$0.5 million) for the three months ended March 31, 2021, representing a 24.5% decrease from RMB4.1 million for the same period in 2020, due to less pharmaceutical testing performed during the quarter, while the pipeline of our pharmaceutical projects has been building over time.

___________________________
1 Published in Chinese Clinical Oncology, Mar. 2021, Vol.26, No.3

Cost of revenues was RMB29.7 million (US$4.5 million) for the three months ended March 31, 2021, representing a 31.7% increase from RMB22.5 million for the same period in 2020, which was generally in line with the Company’s continued business growth.

Gross profit was RMB76.9 million (US$11.7 million) for the three months ended March 31, 2021, representing an 71.8% increase from RMB44.8 million for the same period in 2020. Gross margin was 72.2% for the three months ended March 31, 2021, compared to 66.5% for the same period in 2020.

Operating expenses were RMB248.8 million (US$38.0 million) for the three months ended March 31, 2021, representing a 138.9% increase from RMB104.1 million for the same period in 2020.

  • Research and development expenses were RMB77.4 million (US$11.8 million) for the three months ended March 31, 2021, representing an 93.5% increase from RMB40.0 million for the same period in 2020, primarily due to an increase in research and development personnel’s staff cost and share-based compensation expenses.
  • Selling and marketing expenses were RMB55.1 million (US$8.4 million) for the three months ended March 31, 2021, representing an 84.9% increase from RMB29.8 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 RMB116.3 million (US$17.7 million) for the three months ended March 31, 2021 from RMB34.3 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 RMB171.4 million (US$26.2 million) for the three months ended March 31, 2021, compared to RMB52.6 million for the same period in 2020.

Cash, cash equivalents, restricted cash and short-term investments were RMB 2,149.0 million (US$328.0 million) as of March 31, 2021.

2021 Financial Guidance

Burning Rock reiterates its guidance that, assuming there are no additional COVID-19 related restrictions imposed in China, which might negatively affect patient volumes and cancer testing, its full year 2021 revenues is expected to be approximately RMB610 million (US$93.1 million), implying a 41.9% growth over full year 2020.

Recent Developments

Mr. Hao Liu has resigned as the Company’s chief medical officer for personal reasons, effective May 31, 2021. Mr. Liu will continue to serve as a senior advisor to the Company.

“Hao has always been our prominent partner and close friend,” said Mr. Yusheng Han, chairman and chief executive officer of Burning Rock, “for the past six years, he has devoted himself to Burning Rock’s rapid growth with his deep knowledge of precision oncology. I am grateful to have worked alongside Hao and would like to thank him for his commitment and dedication to Burning Rock. We wish him the best of luck with his new endeavors.”

Mr. Liu said “There is no doubt that my years at Burning Rock have been the most extraordinary experience of my career. I am deeply honored to have worked alongside a group of people with passion, faith and dreams. These moments will remain vivid to me for years to come. Through our collective efforts, we have built Burning Rock from a startup into a global pioneer of its field. I am grateful to Yusheng and the management team for the trust and support, and I have a tremendous belief in the future of Burning Rock.”

Conference Call Information

Burning Rock will host a conference call to discuss the first quarter 2021 financial results at 8:00 a.m. U.S. Eastern Time (8:00 p.m. Hong Kong time) on May 25, 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:6193891

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
Central Laboratory Channel:         
Number of patients tested4,680 7,252 8,644 7,989 7,716
Number of ordering physicians(1)810 1,175 1,194 1,114 1,082
Number of ordering hospitals(2)232 284 289 294 303

___________________

(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
In-hospital Channel:         
Pipeline partner hospitals(1)23 23 22 23 22
Contracted partner hospitals(2)21 24 25 29 32
Total number of partner hospitals44 47 47 52 54

___________________

(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
  
 (RMB in thousands)
          
Central laboratory channel46,141 74,607 89,899 86,695 74,561
In-hospital channel17,123 27,588 31,704 41,457 28,994
Pharma research and development channel4,065 4,776 2,278 3,570 3,068
Total revenues67,329 106,971 123,881 131,722 106,623


 For the three months ended
Gross profit



March 31,
2020
 June 30,
2020
 September 30,
2020
 December 31,
2020
 March 31,
2021
  
 (RMB in thousands)
          
Central laboratory channel32,434 56,556 67,804 66,588 55,212
In-hospital channel10,126 19,269 22,410 30,218 20,070
Pharma research and development channel2,224 2,573 1,373 2,347 1,658
Total gross profit
44,784 78,398 91,587 99,153 76,940


 For the three months ended
Share-based compensation expenses



March 31,
2020
 June 30,
2020
 September 30,
2020
 December 31,
2020
 March 31,
2021
  
 (RMB in thousands)
          
Cost of revenues176 183 160 277 339
Research and development expenses2,072 25,314 10,572 11,843 22,404
Selling and marketing expenses253 491 341 2,372 2,633
General and administrative expenses1,665 1,639 57,805 58,057 59,382
Total share-based compensation
    expenses

4,166  27,627   68,878  72,549  84,758



Burning Rock Biotech Limited Unaudited Condensed Statements of Comprehensive (Loss) Income
(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  March 31, 2021
 
 RMB  RMB  RMB  RMB  RMB  US$
 
                  
Revenues67,329  106,971  123,881   131,722   106,623  16,274 
Cost of revenues(22,545) (28,573) (32,294) (32,569) (29,683) (4,530)
Gross profit44,784   78,398   91,587   99,153  76,940  11,744 
Operating expenses:                 
Research and development expenses(40,016) (71,176) (69,330) (83,418) (77,414) (11,816)
Selling and marketing expenses(29,815) (37,992) (44,174) (56,606) (55,130) (8,414)
General and administrative expenses(34,295) (42,272) (102,731) (114,502) (116,259) (17,745)
Total operating expenses(104,126) (151,440)  (216,235) (254,526 ) (248,803 ) (37,975 )
Loss from operations (59,342) (73,042)  (124,648) (155,373 ) (171,863 ) (26,231 )
Interest income3,985  44  698  1,341  787  120 
Interest expense(1,178) 1,939  (776) (652) (510) (78)
Other (expense) income, net(151) 122  (176) (682) 118  18 
Foreign exchange (loss) gain, net611  (118) (2,228) (1,112) 57  9 
Change in fair value of warrant liability3,503  -  -   -  -  - 
Loss before income tax(52,572) (71,055)  (127,130) (156,478 ) (171,411 ) (26,162 )
Income tax expenses-  -  -  -  -  - 
Net loss(52,572) (71,055)  (127,130) (156,478 ) (171,411 ) (26,162 )
Net loss attributable to Burning Rock Biotech Limited’s shareholders(52,572) (71,055) (127,130) (156,478) (171,411) (26,162)
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 ) (26,162 )
Loss per share:      
Ordinary shares - basic and diluted(3.15) (2.68) -  -  -  - 
Class A ordinary shares - basic and diluted-  -  (1.22) (1.51) (1.65) (0.25)
Class B ordinary shares - basic and diluted-  -  (1.22) (1.51) (1.65) (0.25)
Weighted average shares outstanding used in loss per share computation:       
Ordinary shares - basic and diluted25,031,575  40,786,167  -  -  -  - 
Class A ordinary shares - basic and diluted-  -  86,479,686  86,511,799  86,721,263  86,721,263 
Class B ordinary shares - basic and diluted-  -  17,324,848  17,324,848  17,324,848  17,324,848 
Other comprehensive (loss) income, net of tax of nil:      
Foreign currency translation adjustments11,422  (2,336) (91,093) (94,881) 14,080  2,149 
Total comprehensive loss(41,150) (73,391)  (218,223) (251,359) (157,331 ) (24,013 )
Total comprehensive loss attributable to Burning Rock Biotech Limited’s shareholders(41,150) (73,391)  (218,223) (251,359) (157,331 ) (24,013 )



Burning Rock Biotech Limited

Unaudited Condensed Consolidated Balance Sheets

(In thousands)

 As of
 December 31,
2020
 March 31,
2021
 March 31,
2021
 RMB  RMB US$
ASSETS     
Current assets:     
Cash and cash equivalents1,895,308 2,085,170 318,259
Restricted cash29,898 27,716 4,230
Short-term investment362,132 36,142 5,516
Accounts receivable88,218 76,159 11,625
Contract assets22,534 24,636 3,760
Amounts due from related parties212 515 79
Inventories68,021 97,752 14,920
Prepayments and other current assets57,329 62,111 9,481
Total current assets2,523,652  2,410,201  367,870
Non-current assets:     
Equity method investment1,417 1,489 227
Property and equipment, net111,481 145,438 22,197
Right-of-use assets- 99,167 15,136
Intangible assets, net3,457 3,374 515
Other non-current assets23,021 22,777 3,476
Total non-current assets139,376 272,245 41,551
TOTAL ASSETS  2,663,028  2,682,446  409,421



Burning Rock Biotech Limited

Unaudited Condensed Consolidated Balance Sheets (Continued)

(in thousands)

 As of
 December 31,
2020
  March 31,
2021
  March 31,
2021
 
 RMB   RMB  US$ 
LIABILITIES, MEZZANINE EQUITY AND SHAREHOLDERS’ (DEFICIT) EQUITY        
Current liabilities:        
Accounts payable35,482  49,861  7,610 
Deferred revenue74,402  91,091  13,903 
Capital lease obligations, current4,816  -  - 
Accrued liabilities and other current liabilities83,648  60,454  9,228 
Customer deposits1,120  1,042  159 
Short-term borrowing7,370  7,370  1,125 
Current portion of long-term borrowings34,695  32,714  4,993 
Current portion of operating lease liabilities-  29,039  4,432 
Current portion of financing lease liabilities-  3,510  536 
Total current liabilities241,533  275,081  41,986 
Non-current liabilities:   
Deferred government grants263  -  - 
Operating lease liabilities-  73,435  11,208 
Other non-current liabilities228  230  35 
Total non-current liabilities491  73,665  11,243 
TOTAL LIABILITIES242,024  348,746  53,229 


Shareholders’ equity:
   
Class A ordinary shares116  116  18 
Class B ordinary shares21  21  3 
Additional paid-in capital4,006,616  4,090,499  624,332 
Accumulated deficits(1,418,160) (1,603,427) (244,731)
Accumulated other comprehensive loss(167,589) (153,509) (23,430)
Total shareholders’ equity2,421,004  2,333,700   356,192  
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY2,663,028  2,682,446   409,421  



Burning Rock Biotech Limited

Unaudited Condensed Statements of Cash Flows

(in thousands)

 For the three months ended
 March 31,
2020
 March 31,
2021
 March 31,
2021
 RMB
 RMB
 US$
          
Net cash used in operating activities(6,956) (113,145) (17,268) 
Net cash (used in) generated from investing activities(3,613) 288,329  44,005  
Net cash generated from (used in) financing activities272,228  (4,162) (635) 
Effect of exchange rate on cash, cash equivalents and restricted cash4,641  16,658  2,543  
Net increase cash, cash equivalents and restricted cash 266,300  187,680  28,645  
Cash, cash equivalents and restricted cash at the beginning of period98,244  1,925,206  293,844  
Cash, cash equivalents and restricted cash at the end of period364,544  2,112,886  322,489  
    


 




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