Burning Rock Reports Fourth Quarter and Full Year 2020 Financial Results

March 10, 2021 7:00 PM EST

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GUANGZHOU, China, March 10, 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 and year ended December 31, 2020.

Recent Business Highlights

  • Early Detection  
    • Completed product development of the 6-cancer test (training and validation data released in November 2020 at the ESMO Asia Virtual Congress). Capacity ramp-up under way for volume production.
    • Early access programs initiated to gather real-world feedback, with preparation in progress for commercialization (targeted for 2022).
  • Therapy Selection  
    • Achieved strong performance in the FDA-led SEQC2 (sequencing quality control) consortium study on tissue-based and liquid-based targeted sequencing assays, with full results pending publication (manuscript for liquid-based study accepted by Nature Biotechnology).
    • OncoCompassTM Target (Burning Rock's top selling liquid-based ctDNA assay, 101-gene panel including bMSI) passed typing test in Oct 2020. This places OncoCompassTM Target in a leading position for the multi-gene ctDNA NMPA1 4-stage approval process, which comprises (i) analytical validation, (ii) typing test, (iii) clinical validation, and (iv) review and approval.

Fourth Quarter 2020 Financial Results

Revenues were RMB131.7 million (US$20.2 million) for the three months ended December 31, 2020, representing a 48.5% increase from RMB88.7 million for the same period in 2019, or a 6.3% sequential increase from RMB123.9 million for the three months ended September 30, 2020. The growth in revenues was achievable despite Covid-19 related restrictions, which negatively impacted growth of testing volumes in the fourth quarter, especially in December.

  • Revenue generated from central laboratory business was RMB86.7 million (US$13.3 million) for the three months ended December 31, 2020, representing a 22.5% increase from RMB70.7 million for the same period in 2019, primarily attributable to (i) an increase in average sales price per patient, and (ii) volume growth of the central laboratory business. Number of patients tested in the central laboratory channel was 7,989 for the three months ended December 31, 2020, representing a 5.5% increase from 7,576 for the same period in 2019.
  • Revenue generated from in-hospital business was RMB41.5 million (US$6.4 million) for the three months ended December 31, 2020, representing a 194.3% increase from RMB14.1 million for the same period in 2019. Number of contracted partner hospitals in the in-hospital channel increased to 29 as of December 31, 2020 from 25 as of September 30, 2020 and 19 as of December 31, 2019.
  • Revenue generated from pharma research and development services was RMB3.6 million (US$0.5 million) for the three months ended December 31, 2020, representing a 7.0% decrease from RMB3.8 million for the same period in 2019, due to declined pharmaceutical testing volumes.

Cost of revenues was RMB32.6 million (US$5.0 million) for the three months ended December 31, 2020, representing a 3.4% decrease from RMB33.7 million for the same period in 2019, primarily due to economies of scale and reduced unit cost of certain reagents.

Gross profit was RMB99.2 million (US$15.2 million) for the three months ended December 31, 2020, representing an 80.4% increase from RMB55.0 million for the same period in 2019. Gross margin was 75.3% for the three months ended December 31, 2020, compared to 62.0% for the same period in 2019.

Operating expenses were RMB254.5 million (US$39.0 million) for the three months ended December 31, 2020, representing a 69.2% increase from RMB150.5 million for the same period in 2019.

  • Research and development expenses were RMB83.4 million (US$12.8 million) for the three months ended December 31, 2020, representing an 59.7% increase from RMB52.2 million for the same period in 2019, primarily due to (i) an increase in staff cost of research and development personnel, and (ii) an increase in share-based compensation expenses for options granted to research and development personnel.
  • Selling and marketing expenses were RMB56.6 million (US$8.7 million) for the three months ended December 31, 2020, representing a 15.3% increase from RMB49.1 million for the same period in 2019, primarily due to an increase in staff cost of selling and marketing personnel as we continued the build-out of the sales organization.
  • General and administrative expenses increased significantly to RMB114.5 million (US$17.5 million) for the three months ended December 31, 2020 from RMB49.1 million for the same period in 2019, primarily due to (i) an increase in share-based compensation expenses for options granted to general and administrative personnel, and (ii) an increase in staff cost of general and administrative personnel.

Net loss was RMB156.5 million (US$24.0 million) for the three months ended December 31, 2020, compared to RMB95.1 million for the same period in 2019.

Cash, cash equivalents, restricted cash and short-term investments were RMB2.3 billion (US$350.6 million) as of December 31, 2020.

Full Year 2020 Financial Results

Revenues were RMB429.9 million (US$65.9 million) for 2020, representing a 12.6% increase from RMB381.7 million for 2019.

  • Revenue generated from central laboratory business was RMB297.3 million (US$45.6 million) for 2020, representing a 7.6% increase from RMB276.3 million for 2019. Number of patients tested in the central laboratory channel was 25,262 for 2020, representing a 9.5% increase from 23,075 for 2019.
  • Revenue generated from in-hospital business was RMB117.9 million (US$18.1 million) for 2020, representing a 34.4% increase from RMB87.7 million for 2019. Number of contracted partner hospitals in the in-hospital channel increased to 29 as of December 31, 2020 from 19 as of December 31, 2019.
  • Revenue generated from pharma research and development services was RMB14.7 million (US$2.2 million) for 2020, representing a 17.2% decrease from RMB17.7 million for 2019, due to declined pharmaceutical testing volumes.

Cost of revenues was RMB116.0 million (US$17.8 million) for 2020, representing a 7.0% increase from RMB108.3 million for 2019, which was in line with the Company’s continued business growth.

Gross profit was RMB313.9 million (US$48.1 million) for 2020, representing a 14.8% increase from RMB273.3 million for 2019. Gross margin was 73.0% for 2020, compared to 71.6% for 2019.

Operating expenses were RMB726.3 million (US$111.3 million) for 2020, representing a 64.2% increase from RMB442.4 million for 2019.

  • Research and development expenses were RMB263.9 million (US$40.5 million) for 2020, representing an 68.2% increase from RMB156.9 million for 2019, primarily due to (i) an increase in staff cost of research and development personnel, and (ii) an increase in share-based compensation expenses for options granted to research and development personnel.
  • Selling and marketing expenses were RMB168.6 million (US$25.8 million) for 2020, representing a 9.9% increase from RMB153.3 million for 2019, primarily due to an increase in staff cost of selling and marketing personnel.
  • General and administrative expenses increased significantly to RMB293.8 million (US$45.0 million) for 2020 from RMB132.2 million for 2019, primarily due to (i) an increase in share-based compensation expenses for options granted to general and administrative personnel, and (ii) an increase in staff cost of general and administrative personnel.

Net loss was RMB407.2 million (US$62.4 million) for 2020, compared to RMB169.2 million for 2019.

2021 Financial Guidance

Assuming there are no additional Covid-19 related restrictions imposed in China, which may negatively affect patient volumes and cancer testing, Burning Rock expects its full year 2021 revenues to be approximately RMB610 million (US$93.5 million), implying a 41.9% growth over full year 2020.

Conference Call Information

Burning Rock will host a conference call to discuss the fourth quarter 2020 financial results at 8:00 a.m. U.S. Eastern Time (9:00 p.m. Hong Kong time) on March 11, 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:5266945

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,
2019
 June 30,
2019
 September
30, 2019
 December
31, 2019
 March 31,
2020
 June 30,
2020
 September
30, 2020
 December
31, 2020
Central Laboratory Channel:               
Number of patients tested5,336 6,047 6,769 7,576 4,680 7,252 8,644 7,989
Number of ordering physicians(1)984 1,059 1,155 1,222 810 1,175 1,194 1,114
Number of ordering hospitals(2)249 265 281 304 232 284 289 294

_____________________________

(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,
2019
 June 30,
2019
 September
30, 2019
 December
31, 2019
 March 31,
2020
 June 30,
2020
 September
30, 2020
 December
31, 2020
In-hospital Channel:               
Pipeline partner hospitals(1)17 20 21 21 23 23 22 23
Contracted partner hospitals(2)14 15 19 19 21 24 25 29
Total number of partner hospitals31 35 40 40 44 47 47 52

_____________________________

(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
RevenuesMarch
31, 2019
 June 30,
2019
 September
30, 2019
 December
31, 2019
 March
31, 2020
 June 30,
2020
 September
30, 2020
 December
31, 2020
  
 (RMB in thousands)
Central laboratory channel72,807 63,394 69,304 70,749 46,141 74,607 89,899 86,695
In-hospital channel26,557 16,329 30,704 14,088 17,123 27,588 31,704 41,457
Pharma research and development channel5,101 5,090 3,716 3,838 4,065 4,776 2,278 3,570
Total revenues104,465 84,813 103,724 88,675 67,329 106,971 123,881 131,722


   For the three months ended
Gross profit

March
31, 2019
 June 30,
2019
 September
30, 2019
 December
31, 2019
 March
31, 2020
 June 30,
2020
 September
30, 2020
 December
31, 2020
  
 (RMB in thousands)
Central laboratory channel54,910 46,122 50,113 51,420 32,434 56,556 67,804 66,588
In-hospital channel19,870 12,571 25,412 319 10,126 19,269 22,410 30,218
Pharma research and development channel3,332 3,366 2,662 3,237 2,224 2,573 1,373 2,347
Total gross profit78,112 62,059 78,187 54,976 44,784 78,398 91,587 99,153


   For the three months ended
Share-based compensation expenses

March
31, 2019
 June 30,
2019
 September
30, 2019
 December
31, 2019
 March
31, 2020
 June 30,
2020
 September
30, 2020
 December
31, 2020
                
 (RMB in thousands)
Cost of revenues143 177 180 178 176 183 160 277
Research and development expenses722 708 1,486 6,461 2,072 25,314 10,572 11,843
Selling and marketing expenses364 517 485 (131) 253 491 341 2,372
General and administrative expenses429 537 1,149 9,387 1,665 1,639 57,805 58,057
Total share-based compensation expenses1,658  1,939   3,300   15,895  4,166  27,627   68,878  72,549
                

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,
2019
 June 30,
2019
 September
30, 2019
 December
31, 2019
 March 31,
2020
 June 30,
2020
 September
30, 2020
 December
31, 2020
 December
31, 2020
 RMB RMB RMB RMB RMB RMB RMB RMB US$
Revenues104,465  84,813  103,724  88,675  67,329  106,971  123,881   131,722  20,187 
Cost of revenues(26,353) (22,754) (25,537) (33,699) (22,545) (28,573) (32,294) (32,569) (4,991)
Gross profit78,112   62,059   78,187   54,976   44,784   78,398   91,587   99,153  15,196 
Operating expenses:                          
Research and development expenses(31,427) (34,992) (38,278) (52,238) (40,016) (71,176) (69,330) (83,418) (12,784)
Selling and marketing expenses(26,690) (34,929) (42,606) (49,109) (29,815) (37,992) (44,174) (56,606) (8,675)
General and administrative expenses(31,565) (20,614) (30,866) (49,112) (34,295) (42,272) (102,731) (114,502) (17,548)
Total operating expenses(89,682) (90,535) (111,750) (150,459) (104,126) (151,440)  (216,235) (254,526 ) (39,007 )
Loss from operations (11,570) (28,476) (33,563) (95,483) (59,342) (73,042)  (124,648) (155,373 ) (23,811 )
Interest income128  3,806  3,686  3,541  3,985  44  698  1,341  206 
Interest expense(4,210) (1,826) (1,650) (1,303) (1,178) 1,939  (776) (652) (100)
Other (expense) income, net(176) (329) (37) (341) (151) 122  (176) (682) (105)
Foreign exchange (loss) gain, net(101) 1,142  800  (355) 611  (118) (2,228) (1,112) (170)
Change in fair value of warrant liability64  (347) (1,403) (1,153) 3,503  -  -   -  - 
Loss before income tax(15,865) (26,030) (32,167) (95,094) (52,572) (71,055)  (127,130) (156,478 ) (23,980 )
Income tax expenses-  -  -  -  -  -  -  -  - 
Net loss(15,865) (26,030) (32,167) (95,094) (52,572) (71,055)  (127,130) (156,478 ) (23,980 )
Net loss attributable to Burning Rock Biotech Limited’s shareholders(15,865) (26,030) (32,167) (95,094) (52,572) (71,055) (127,130) (156,478) (23,980)
Accretion of convertible preferred shares(50,296) (41,770) (33,772) (39,173) (26,288) (38,400) -  -  - 
Net loss attributable to ordinary shareholders(66,161) (67,800) (65,939) (134,267) (78,860) (109,455) (127,130) (156,478) (23,980)
Loss per share:                          
Ordinary shares - basic and diluted(2.86) (2.93) (2.85) (5.49) (3.15) (2.68) -  -  - 
Class A ordinary shares - basic and diluted-  -  -  -  -  -  (1.22) (1.51) (0.23)
Class B ordinary shares - basic and diluted-  -  -  -  -  -  (1.22) (1.51) (0.23)
Weighted average shares outstanding used in loss per share computation:                           
Ordinary shares - basic and diluted23,167,232  23,167,232  23,167,232  24,437,444  25,031,575  40,786,167  -  -  - 
Class A ordinary shares - basic and diluted-  -  -  -  -  -  86,479,686  86,511,799  86,511,799 
Class B ordinary shares - basic and diluted-  -  -  -  -  -  17,324,848  17,324,848  17,324,848 
Other comprehensive (loss) income, net of tax of nil:                  
Foreign currency translation adjustments(278) (14,288) 45,317  (6,647) 11,422  (2,336) (91,093) (94,881) (14,541)
Total comprehensive (loss) income(16,143) (40,318) 13,150  (101,741) (41,150) (73,391)  (218,223) (251,359) (38,521)
Total comprehensive (loss) income attributable to Burning Rock Biotech Limited’s shareholders(16,143) (40,318) 13,150  (101,741) (41,150) (73,391)  (218,223) (251,359) (38,521)
                           

Burning Rock Biotech Limited

Unaudited Condensed Statements of Comprehensive (Loss) Income

 (in thousands, except for number of shares and per share data)

 For the year ended
 December 31,
2019
 December 31,
2020
 December 31,
2020
 RMB  RMB US$
Revenues381,677  429,903  65,885 
Cost of revenues(108,343) (115,981) (17,775)
Gross profit273,334  313,922  48,110  
Operating expenses:        
Research and development expenses(156,935) (263,940) (40,451)
Selling and marketing expenses(153,334) (168,587) (25,837)
General and administrative expenses(132,157) (293,800) (45,027)
Total operating expenses (442,426) (726,327) (111,315)
Loss from operations  (169,092) (412,405) (63,205)
Interest income11,161  6,068  930 
Interest expense(8,989) (667) (102)
Other expense, net(883) (887) (136)
Foreign exchange gain (loss), net1,486  (2,847) (436)
Change in fair value of warrant liability(2,839) 3,503  537 
Loss before income tax (169,156) (407,235) (62,412)
Income tax expenses-  -  - 
Net loss(169,156) (407,235) (62,412)
Net loss attributable to Burning Rock Biotech Limited’s shareholders(169,156) (407,235) (62,412)
Accretion of convertible preferred shares(165,011) (64,688) (9,914)
Net loss attributable to ordinary shareholders(334,167) (471,923) (72,326)
         
Loss per share for class A and class B ordinary shares:
Ordinary shares - basic and diluted
(14.23) -  - 
Class A ordinary shares - basic and diluted-  (6.88) (1.05)
Class B ordinary shares - basic and diluted-  (6.88) (1.05)
         
Weighted average shares outstanding used in loss per share computation:
Ordinary shares - basic and diluted
23,483,915  -  - 
Class A ordinary shares - basic and diluted-  51,309,631  51,309,631 
Class B ordinary shares - basic and diluted-  17,324,848  17,324,848 
         
Other comprehensive income (loss), net of tax of nil:        
Foreign currency translation adjustments24,104  (176,888) (27,109)
Total comprehensive loss(145,052) (584,123) (89,521)
Total comprehensive loss attributable to Burning Rock Biotech Limited’s shareholders(145,052) (584,123) (89,521)
         

Burning Rock Biotech Limited

Unaudited Condensed Consolidated Balance Sheets

(In thousands)

 As of
 December 31,
2019

 December 31,
2020

 December 31,
2020

 RMB
 RMB
 US$
ASSETS        
Current assets:        
Cash and cash equivalents94,235  1,895,308  290,469 
Restricted cash4,009  29,898  4,582 
Short-term investment313,988  362,132  55,499 
Accounts receivable88,822  88,218  13,520 
Contract assets909  22,534  3,453 
Amounts due from related parties74,368   212   32 
Inventories58,116  68,021  10,425 
Prepayments and other current assets72,340  57,329  8,789 
Total current assets706,787   2,523,652   386,769 
Non-current assets:        
Equity method investment1,790  1,417  217 
Long-term investment38,369   -     -   
Property and equipment, net89,314  111,481  17,085 
Intangible assets, net343  3,457  530 
Other non-current assets10,954  23,021  3,528 
Total non-current assets140,770  139,376   21,360  
TOTAL ASSETS 847,557   2,663,028   408,129 
         

Burning Rock Biotech Limited

Unaudited Condensed Consolidated Balance Sheets (Continued)

(in thousands)

 As of
 December 31,
2019

 December 31,
2020

 December 31,
2020

 RMB
 RMB
 US$
LIABILITIES, MEZZANINE EQUITY AND SHAREHOLDERS’ (DEFICIT) EQUITY        
Current liabilities:        
Accounts payable12,348  35,482  5,438 
Deferred revenue49,539  74,402  11,403 
Capital lease obligations, current4,893  4,816  738 
Accrued liabilities and other current liabilities54,059  83,648  12,820 
Customer deposits4,104  1,120  172 
Short-term borrowing2,370  7,370  1,130 
Current portion of long-term borrowings37,129  34,695  5,317 
Total current liabilities164,442  241,533  37,018 
Non-current liabilities:        
Deferred government grants991  263  40 
Capital lease obligations4,816  -  - 
Long-term borrowings18,266  -  - 
Warrant liability23,503  -  - 
Other non-current liabilities-  228  35 
Total non-current liabilities47,576   491    75  
TOTAL LIABILITIES212,018  242,024  37,093 
         
Mezzanine equity:        
Series A convertible preferred shares186,991  -  - 
Series B convertible preferred shares466,983  -  - 
Series C convertible preferred shares873,059  -  - 
Total mezzanine equity1,527,033  -  - 
         
Shareholders’ (deficit) equity:        
Ordinary shares31  -  - 
Class A ordinary shares-  116  18 
Class B ordinary shares-  21  3 
Additional paid-in capital45,640  4,006,616  614,041 
Accumulated deficits(946,464) (1,418,160) (217,343)
Accumulated other comprehensive income (loss)9,299  (167,589) (25,683)
Total shareholders’ (deficit) equity(891,494) 2,421,004  371,036 
TOTAL LIABILITIES, MEZZANIE EQUITY AND SHAREHOLDERS’ (DEFICIT) EQUITY847,557  2,663,028  408,129 
         

Burning Rock Biotech Limited

Unaudited Condensed Statements of Cash Flows

(in thousands)

 For the three months ended
 December 31,
2019
 December 31,
2020
 December 31,
2020
 RMB  RMB US$
Net cash used in operating activities(50,136) (90,659) (13,890)
Net cash generated from (used in) investing activities22,262  (36,428) (5,583)
Net cash generated from financing activities1,092  68,477  10,494 
Effect of exchange rate on cash, cash equivalents and restricted cash(258) (78,013) (11,959)
Net decrease cash, cash equivalents and restricted cash (27,040) (136,623 ) (20,938 )
Cash, cash equivalents and restricted cash at the beginning of period125,284  2,061,829  315,989 
Cash, cash equivalents and restricted cash at the end of period98,244   1,925,206   295,051  
         


 For the year ended
 December 31,
2019
 December 31,
2020
 December 31,
2020
 RMB  RMB US$
Net cash used in operating activities(228,041) (73,543) (11,271)
Net cash used in investing activities(346,660) (109,312) (16,752)
Net cash generated from financing activities571,735  2,165,719  331,910 
Effect of exchange rate on cash, cash equivalents and restricted cash5,876  (155,902) (23,893)
Net increase cash, cash equivalents and restricted cash 2,910   1,826,962  279,994 
Cash, cash equivalents and restricted cash at the beginning of period95,334  98,244  15,057 
Cash, cash equivalents and restricted cash at the end of period98,244   1,925,206  295,051 
         

_____________________________
1
National Medical Products Administration of China




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