GUANGZHOU, China, Aug. 11, 2020 (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 June 30, 2020.

Second Quarter 2020 Highlights

  • Revenues of RMB107.0 million (US$15.1 million) for the three months ended June 30, 2020, representing a 26.1% increase over the corresponding period in 2019.
  • Key publications:
    • BENEFIT biomarker study (with AstraZeneca) published in Journal of Thoracic Oncology1 
    • Blood-based MSI validation published in Journal of Molecular Diagnostics2
    • NSCLC liquid-biopsy real-world validation (COMPASS) published in Translational Lung Cancer Research3
    • Clinical validation and genetic landscape studies on multiple cancer types including breast cancer,4 lymphoma,5 etc.
  • Entered into collaboration with Illumina on developing IVD kit solutions on the NextSeq 550Dx system, building on the two companies’ successful collaboration back in 2015 on the MiSeq Dx system that led to the first NMPA (National Medical Products Administration) approved NGS panel for the China market.
  • Entered into collaboration with CStone Pharmaceuticals (2616.HK) on CDx development for pralsetinib.
  • Progressing on the training and validation of the Company’s 6-cancer test, which builds on the Company’s 3-cancer test demonstrated in January 2020, with improved assay and bioinformatics.
  • Launched the PREDICT (Pan-CanceR Early DetectIon ProjeCT) study, a prospective, multi-center study that is expected to enroll 14,000 patients in China, to develop and validate the Company’s pan-cancer early detection test.
  • Completed initial public offering and concurrent private placement, with an aggregate offering size of US$281.2 million (giving effect to the full exercise of the over-allotment option).

“We appreciate existing and new shareholders’ valuable support towards our IPO in June, the largest IPO by a molecular diagnostics company from China, as we look to leveraging the proceeds raised to catalyze our growth trajectory,” said Yusheng Han, chairman and chief executive officer of Burning Rock. “Amid sporadic COVID incidents in China during the second quarter, we returned to positive year-over-year revenue growth. We continued our efforts to bring NGS testing capability in-house for hospitals through our decentralized, kit based, in-hospital channel; we also advanced our market leadership position in the central-laboratory channel where samples are sent out to third-party laboratories for testing. For early cancer detection, after four years of internal R&D, we launched the 14,000 patient PREDICT study during the second quarter, the first early detection study in multiple cancer types in China, to further develop and validate our blood-based test.”

Second Quarter 2020 Financial Results

Revenues were RMB107.0 million (US$15.1 million) for the three months ended June 30, 2020, representing a 26.1% increase from RMB84.8 million for the same period in 2019.

  • Revenue generated from central laboratory business was RMB74.6 million (US$10.6 million) for the three months ended June 30, 2020, representing a 17.7% increase from RMB63.4 million for the same period in 2019, primarily attributable to resumed volume growth of the Company’s central laboratory business. This reversed the 37% year-over-year decreasing trend during the first quarter. Number of patients tested in the central laboratory channel increased by 19.9% to 7,252 for the three months ended June 30, 2020 from 6,047 for the same period in 2019.
  • Revenue generated from in-hospital business was RMB27.6 million (US$3.9 million) for the three months ended June 30, 2020, representing a 69.0% increase from RMB16.3 million for the same period in 2019, driven by resumed kit revenue growth of existing contracted hospitals and ramp-up of newly contracted hospitals. This reversed the 36% year-over-year decreasing trend during the first quarter. Number of contracted partner hospitals in the in-hospital channel increased to 24 as of June 30, 2020 from 21 as of March 31, 2020 and 19 as of December 31, 2019.
  • Revenue generated from pharma research and development services was RMB4.8 million (US$0.6 million) for the three months ended June 30, 2020, representing a 6.2% decrease from RMB5.1 million for the same period in 2019.

Cost of revenues was RMB28.6 million (US$4.0 million) for the three months ended June 30, 2020, representing a 25.6% increase from RMB22.8 million for the same period in 2019, which was in line with the Company’s continued business growth.

Gross profit was RMB78.4 million (US$11.1 million) for the three months ended June 30, 2020, representing a 26.3% increase from RMB62.0 million for the same period in 2019. Gross margin was 73.3% for the three months ended June 30, 2020, compared to 73.2% for the same period in 2019.

Operating expenses were RMB151.4 million (US$21.4 million) for the three months ended June 30, 2020, representing a 67.3% increase from RMB90.5 million for the same period in 2019.

  • Research and development expenses were RMB71.2 million (US$10.1 million) for the three months ended June 30, 2020, representing an 103.4% increase from RMB35.0 million for the same period in 2019, primarily due to an increase in share-based compensation expenses for options granted to research and development personnel.
  • Selling and marketing expenses were RMB38.0 million (US$5.4 million) for the three months ended June 30, 2020, representing an 8.8% increase from RMB34.9 million for the same period in 2019.
  • General and administrative expenses were RMB42.2 million (US$5.9 million) for the three months ended June 30, 2020, representing an 105.1% increase from RMB20.6 million for the same period in 2019, primarily due to (i) an increase in staff cost, which was in line with the continued growth of the Company’s business, and (ii) expenses related to the Company’s initial public offering.

Net loss was RMB71.1 million (US$10.1 million), compared to RMB26.0 million for the same period in 2019.

Cash, cash equivalents and restricted cash were RMB2.6 billion (US$363.2 million) as of June 30, 2020.

2020 Financial Guidance

Assuming no significant resurgence of the COVID pandemic in China, Burning Rock expects its full year 2020 revenues to be approximately RMB420 million (US$59.4 million), implying a 28% year-over-year growth in the second half of 2020 compared with the same period in 2019.

Conference Call Information

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

Details of the conference call are as follows:

International:+65 67135090
U.S.:18665194004
U.K.:08082346646
Hong Kong:+852 30186771
China Mobile:4006208038
China Landline:8008190121
Conference ID:4765946

A replay of the conference call will be available for two weeks (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 185,000 tissue and liquid-based tests completed cumulatively, and ii) NGS-based 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: www.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.

_____________________________

1 Refined Stratification Based on Baseline Concomitant Mutations and Longitudinal circulating tumor DNA Monitoring in Advanced EGFR-mutant Lung Adenocarcinoma under Gefitinib Treatment. Accepted, Journal of Thoracic Oncology.

2 Detection of Microsatellite Instability from Circulating Tumor DNA by Targeted Deep Sequencing. Journal of Molecular Diagnostic.

3 Circulating tumor DNA clearance predicts prognosis across treatment regimen in a large real-world longitudinally monitored advanced non-small cell lung cancer cohort. Translational Lung Cancer Research.

4 Characterizations of Cancer Gene Mutations in Chinese Metastatic Breast Cancer Patients. Frontiers in Oncology.

5 Molecular profiling of Chinese R-CHOP treated DLBCL patients: identifying a high-risk subgroup. International Journal of Cancer. Available at: https://pubmed.ncbi.nlm.nih.gov/32399964/.


Selected Operating Data

 Three months ended
 March 31,
2019
June 30,
2019
September 30,
2019
December 31,
2019
March 31,
2020
June 30,
2020
Central Laboratory Channel:      
Number of patients tested5,3366,0476,7697,5764,6807,252
Number of ordering physicians(1)9841,0591,1551,2228101,175
Number of ordering hospitals(2)249265281304232284

______________ 

(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
In-hospital Channel:      
Pipeline partner hospitals(1)172021212323
Contracted partner hospitals(2)141519192124
Total number of partner hospitals313540404447

_______________ 

(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 three months ended
RevenuesMarch 31,
2019
June 30,
2019
September 30,
2019
December 31,
2019
March 31,
2020
June 30,
2020
 (RMB in thousands)
Central laboratory channel72,80763,39469,30470,74946,14174,607
In-hospital channel26,55716,32930,70414,08817,12327,588
Pharma research and development channel5,1015,0903,7163,8384,0654,776
Total revenues104,46584,813103,72488,67567,329106,971


 For three months ended
Gross profitMarch 31,
2019
June 30,
2019
September 30,
2019
December 31,
2019
March 31,
2020
June 30,
2020
 (RMB in thousands)
Central laboratory channel54,91046,12250,11351,42032,43456,556
In-hospital channel19,87012,57125,41231910,12619,269
Pharma research and development channel3,3323,3662,6623,2372,2242,573
Total gross profit78,11262,05978,18754,97644,78478,398


Burning Rock Biotech Limited

Unaudited Condensed Statements of Comprehensive Loss

 (in thousands, except for share 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
June 30,
2020
 RMBRMBRMBRMBRMBRMBUS$
Revenues104,465 84,813 103,724 88,675 67,329 106,971 15,141 
Cost of revenues(26,353)(22,754)(25,537)(33,699)(22,545)(28,573)(4,044)
Gross profit78,112  62,059  78,187  54,976  44,784  78,398  11,097  
Operating expenses:       
Research and development expenses(31,427)(34,992)(38,278)(52,238)(40,016)(71,176)(10,074)
Selling and marketing expenses(26,690)(34,929)(42,606)(49,109)(29,815)(37,992)(5,377)
General and administrative expenses(31,565)(20,614)(30,866)(49,112)(34,295)(42,272)(5,983)
Total operating expenses(89,682)(90,535)(111,750)(150,459)(104,126)(151,440)(21,434)
Loss from operations (11,570)(28,476)(33,563)(95,483)(59,342)(73,042)(10,337)
Interest income128 3,806 3,686 3,541 3,985 44 6 
Interest expense(4,210)(1,826)(1,650)(1,303)(1,178)1,939 274 
Other (expense) income, net(176)(329)(37)(341)(151)122 17 
Foreign exchange (loss) gain, net(101)1,142 800 (355)611 (118)(17)
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)(10,057)
Income tax expenses- - - - - -  
Net loss(15,865)(26,030)(32,167)(95,094)(52,572)(71,055)(10,057)
Net loss attributable to Burning Rock Biotech Limited’s shareholders(15,865)(26,030)(32,167)(95,094)(52,572)(71,055)(10,057)
Accretion of convertible preferred shares(50,296)(41,770)(33,772)(39,173)(26,288)(38,400)(5,435)
Net loss attributable to ordinary shareholders(66,161)(67,800)(65,939)(134,267)(78,860)(109,455)(15,492)
Loss per share:              
Basic and diluted(2.86)(2.93)(2.85)(5.49)(3.15)(2.68)(0.38)
Weighted average shares outstanding used in loss per share computation:              
Basic and diluted23,167,232 23,167,232 23,167,232 24,437,444 25,031,575 40,786,167 40,786,167 
Other comprehensive (loss) income, net of tax of nil:       
Foreign currency translation adjustments(278)(14,288)45,317 (6,647)11,422 (2,336)(331)
Total comprehensive loss(16,143)(40,318)13,150  (101,741)(41,150)(73,391)(10,388)
Total comprehensive loss attributable to Burning Rock Biotech Limited’s shareholders(16,143)(40,318)13,150  (101,741)(41,150)(73,391)(10,388)



 For the six months ended
 June 30,
2019
June 30,
2020
June 30,
2020
 RMBRMBUS$
Revenues189,278  174,300  24,670  
Cost of revenues(49,107)(51,118)(7,235)
Gross profit140,171  123,182  17,435  
Operating expenses:   
Research and development expenses(66,419)(111,192)(15,738)
Selling and marketing expenses(61,619)(67,807)(9,597)
General and administrative expenses(52,179)(76,567)(10,837)
Total operating expenses(180,217)(255,566)(36,172)
Loss from operations (40,046)(132,384)(18,737)
Interest income3,934 4,029 570 
Interest expense(6,036)761 108 
Other expense, net(505)(29)(4)
Foreign exchange gain, net1,041 493 70 
Change in fair value of warrant liability(283)3,503 496 
Loss before income tax(41,895)(123,627)(17,497)
Income tax expenses- - - 
Net loss(41,895)(123,627)(17,497)
Net loss attributable to Burning Rock Biotech Limited’s shareholders(41,895)(123,627)(17,497)
Accretion of convertible preferred shares(92,066)(64,688)(9,156)
Net loss attributable to ordinary shareholders(133,961)(188,315)(26,653)
Loss per share:      
Basic and diluted(5.78)(5.73)(0.81)
Weighted average shares outstanding used in loss per share computation:
   
Basic and diluted 23,167,232 32,865,350 32,865,350 
Other comprehensive (loss) income, net of tax of nil:
   
Foreign currency translation adjustments(14,566)9,086 1,286 
Total comprehensive loss (56,461)(114,541)(16,211)
Total comprehensive loss attributable to Burning Rock Biotech Limited’s shareholders(56,461)(114,541)(16,211)


Burning Rock Biotech Limited

Unaudited Condensed Consolidated Balance Sheets

(In thousands)

 As of
December
31, 2019
As of
 June 30, 2020
 RMBRMBUS$
ASSETS   
Current assets:   
Cash and cash equivalents94,2352,565,973363,190
Restricted cash4,00926337
Short-term investment313,988--
Accounts receivable88,82283,12011,765
Contract assets90918,0762,558
Amounts due from related parties74,368--
Inventories58,11667,3759,536
Prepayments and other current assets72,34058,6338,301
Total current assets706,7872,793,440395,387
Non-current assets:   
Equity method investment1,7901,764250
Long-term investment38,36938,9375,511
Property and equipment, net89,31490,71112,839
Intangible assets, net34323934
Other non-current assets10,95416,5362,341
Total non-current assets140,770148,18720,975
TOTAL ASSETS847,5572,941,627416,362



Burning Rock Biotech Limited

Unaudited Condensed Consolidated Balance Sheets (Continued)

(in thousands)

 As of December 31, 2019As of June 30, 2020As of June 30, 2020
 RMBRMBUS$
LIABILITIES, MEZZANINE EQUITY AND SHAREHOLDERS’ (DEFICIT) EQUITY   
Current liabilities:   
Accounts payable12,348 26,741 3,785 
Deferred revenue49,539 57,643 8,159 
Capital lease obligations, current4,893 5,157 730 
Accrued liabilities and other current liabilities54,059 102,603 14,523 
Customer deposits4,104 15,631 2,212 
Short-term borrowing2,370 2,370 335 
Current portion of long-term borrowings37,129 14,035 1,987 
Total current liabilities164,442 224,180
 31,731 
Non-current liabilities:   
Deferred government grants991 263 37 
Capital lease obligations4,816 2,169 307 
Long-term borrowings18,266 32,178 4,555 
Warrant liability23,503 - - 
Total non-current liabilities47,576 34,610 4,899 
TOTAL LIABILITIES212,018 258,790 36,630 
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- 114 17 
Class B ordinary shares- 21 3 
Additional paid-in capital45,640 3,798,869 537,695 
Accumulated deficits(946,464)(1,134,552)(160,585)
Accumulated other comprehensive income9,299 18,385 2,602 
Total shareholders’ (deficit) equity(891,494)2,682,837 379,732 
TOTAL LIABILITIES, MEZZANIE EQUITY AND SHAREHOLDERS’ (DEFICIT) EQUITY847,557 2,941,627 416,362 



Burning Rock Biotech Limited

Unaudited Condensed Statements of Cash Flow

(in thousands)

 For the three months ended June 30,
 2019 2020 
 RMBRMBUS$
Net cash (used in) generated from operating activities(54,992)61,124 8,652 
Net cash (used in) generated from investing activities(168,462)296,102 41,910 
Net cash generated from financing activities3,075 1,845,953 261,278 
Effect of exchange rate on cash, cash equivalents and restricted cash(1,748)(1,487)(211)
Net (decrease) increase cash, cash equivalents and restricted cash (222,127)2,201,692 311,629 
Cash, cash equivalents and restricted cash at the beginning of period407,867 364,544 51,598 
Cash, cash equivalents and restricted cash at the end of period185,740 2,566,236 363,227 


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