GUANGZHOU, China, Nov. 20, 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 September 30, 2020.

Recent Business Highlights

  • Early Detection. Validated a new version of ELSA-seq to expand from 3 cancer types (lung, liver, and colon/rectum) to 6 cancer types (esophagus, pancreas, and ovary added). This demonstrates Burning Rock's continued progress on its blood-based, pan-cancer early detection R&D.

    ° The new version of the ELSA-seq assay was able to detect more cancer types (liver, colon/rectum, esophagus, pancreas, lung, and ovary) at early stages (I-III), demonstrated higher specificity, and was able to predict the tissue of origin with high accuracy.

    ° The validation data was presented at ESMO Asia Virtual Congress 2020 ("ESMO Asia") in a mini oral presentation (Company presentation link here). At 99.5% specificity (95% confidence interval [95% CI] 96.7-100), the sensitivity from cross validation was 79.9% (95% CI 74.6-84.4). These results generally held in the pre-allocated independent validation set, which demonstrated 98.3% specificity (95% CI 95.8-99.4) and 80.6% sensitivity (95% CI 76.0-84.6). The results show a significant improvement of specificity compared to the earlier version of the test (presented in January 2020 at AACR Special Conference on Liquid Biopsy, poster link here), which showed 95.1% specificity (95% CI 91.2-97.4) and 80.8% sensitivity (95% CI 77.0-84.1).

    ° In terms of identifying the location of the malignancies, the test produced a tissue-of-origin result in 98.6% of cases, and 81.0% (95% CI 77.2-84.3) of these predictions were correct.

  • Therapy Selection. Analytical validation data of Magnis BR using a 520-gene tissue-based panel and a 168-gene liquid-based panel was presented at the Association for Molecular Pathology (AMP) Annual Meeting in a platform presentation (abstract number TT04). Magnis BR demonstrated comparable testing accuracy, superior library quality repeatability, and shorter turnaround time compared to manual library preparation approach.

    ° Magnis BR, Burning Rock’s fully automated NGS library preparation system, is a key component of Burning Rock’s strategy of empowering hospitals to run NGS tests in-house with minimized lab space and staff requirement. Its fully automated “walk-away” 9-hour overnight library preparation procedure enables hospitals to generate NGS reports in as quickly as 3 days.

    ° As China’s first and only capture-based fully automated NGS library preparation system, Magnis BR further strengthens Burning Rock’s competitive position in the important in-hospital testing market.

  • Licensed-in the Myriad myChoice® test into China on an exclusive basis for collaborative drug development studies and clinics.

    ° Highly synergistic with Burning Rock's existing testing platforms, leveraging Burning Rock's strengths in oncology NGS testing and commercial access.

    ° This test offers significant benefits to Chinese patients with myChoice® regarded as the ‘gold-standard’ for determining HRD status, as PARP inhibitors demonstrate increasing significance in a range of cancer types.

Third Quarter 2020 Financial Results

Revenues were RMB123.9 million (US$18.2 million) for the three months ended September 30, 2020, representing a 19.4% increase from RMB103.7 million for the same period in 2019, or a 28.8% increase compared to the average of 3Q19 and 4Q19. Sequentially, revenues increased by 15.8% from RMB107.0 million for the three months ended June 30, 2020.

  • Revenue generated from central laboratory business was RMB89.9 million (US$13.2 million) for the three months ended September 30, 2020, representing a 29.7% increase from RMB69.3 million for the same period in 2019, or a 20.5% sequential increase from RMB74.6 million for the three months ended June 30, 2020, primarily attributable to resumed volume growth of the Company’s central laboratory business. Number of patients tested in the central laboratory channel was 8,644 for the three months ended September 30, 2020, representing a 27.7% increase from 6,769 for the same period in 2019, or a 19.2% increase from 7,252 for three months ended June 30, 2020.

  • Revenue generated from in-hospital business was RMB31.7 million (US$4.7 million) for the three months ended September 30, 2020, representing a 3.3% increase from RMB30.7 million for the same period in 2019, or a 41.6% increase compared to the average of 3Q19 and 4Q19. Sequentially, revenue generated from in-hospital business increased by 14.9% from RMB27.6 million for the three months ended June 30, 2020. Number of contracted partner hospitals in the in-hospital channel increased to 25 as of September 30, 2020 from 24 as of June 30, 2020 and 19 as of December 31, 2019.

  • Revenue generated from pharma research and development services was RMB2.3 million (US$0.3 million) for the three months ended September 30, 2020, representing a 38.7% decrease from RMB3.7 million for the same period in 2019, due to declined pharma testing volumes.

Cost of revenues was RMB32.3 million (US$4.8 million) for the three months ended September 30, 2020, representing a 26.5% increase from RMB25.5 million for the same period in 2019, which was generally in line with the Company’s continued business growth.

Gross profit was RMB91.6 million (US$13.5 million) for the three months ended September 30, 2020, representing a 17.1% increase from RMB78.2 million for the same period in 2019. Gross margin was 73.9% for the three months ended September 30, 2020, compared to 75.4% for the same period in 2019.

Operating expenses were RMB216.2 million (US$31.8 million) for the three months ended September 30, 2020, representing a 93.5% increase from RMB111.8 million for the same period in 2019.

  • Research and development expenses were RMB69.3 million (US$10.2 million) for the three months ended September 30, 2020, representing an 81.1% increase from RMB38.3 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 RMB44.2 million (US$6.5 million) for the three months ended September 30, 2020, representing a 3.7% increase from RMB42.6 million for the same period in 2019.

  • General and administrative expenses increased significantly to RMB102.7 million (US$15.1 million) for the three months ended September 30, 2020 from RMB30.9 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 RMB127.1 million (US$18.7 million), compared to RMB32.2 million for the same period in 2019.

Cash, cash equivalents, restricted cash and short-term investments were RMB2.4 billion (US$353.8 million) as of September 30, 2020.

2020 Financial Guidance

The Company reiterates its 2020 full-year revenue guidance of approximately RMB420 million (US$61.9 million).

Conference Call Information

Burning Rock will host a conference call to discuss the third quarter 2020 financial results at 8:00 a.m. U.S. Eastern Time (9:00 p.m. Hong Kong time) on November 20, 2020.

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:5637209

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 185,000 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
Central Laboratory Channel:             
Number of patients tested5,336 6,047 6,769 7,576 4,680 7,252 8,644
Number of ordering physicians(1)984 1,059 1,155 1,222 810 1,175 1,194
Number of ordering hospitals(2)249 265 281 304 232 284 289

 

________________________ 
(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
In-hospital Channel:             
Pipeline partner hospitals(1)17 20 21 21 23 23 22
Contracted partner hospitals(2)14 15 19 19 21 24 25
Total number of partner hospitals31 35 40 40 44 47 47

 

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


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


 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
  
 (RMB in thousands)
Cost of revenues 143  177  180  178   176  183  160
Research and development expenses 722  708  1,486  6,461   2,072  25,314  10,572
Selling and marketing expenses 364  517  485  (131)  253  491  341
General and administrative expenses 429  537  1,149  9,387   1,665  1,639  57,805
Total share-based compensation expenses1,658  1,939  3,300  15,895   4,166  27,627  68,878


 
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

 September
30, 2020

 RMB
 RMB
 RMB
 RMB
 RMB
 RMB
 RMB
 US$
Revenues104,465  84,813  103,724  88,675  67,329  106,971  123,881   18,246  
Cost of revenues(26,353) (22,754) (25,537) (33,699) (22,545) (28,573) (32,294) (4,757)
Gross profit78,112   62,059   78,187   54,976   44,784   78,398   91,587   13,489  
         
Operating expenses:        
Research and
  development expenses
(31,427) (34,992) (38,278) (52,238) (40,016) (71,176) (69,330) (10,211)
Selling and
  marketing expenses
(26,690) (34,929) (42,606) (49,109) (29,815) (37,992) (44,174) (6,506)
General and
  administrative expenses
(31,565) (20,614) (30,866) (49,112) (34,295) (42,272) (102,731) (15,131)
Total operating expenses(89,682) (90,535) (111,750) (150,459) (104,126) (151,440)  (216,235)  (31,848)
Loss from operations (11,570) (28,476) (33,563) (95,483) (59,342) (73,042)  (124,648)  (18,359)
Interest income128  3,806  3,686  3,541  3,985  44  698  103 
Interest expense(4,210) (1,826) (1,650) (1,303) (1,178) 1,939  (776) (114)
Other (expense) income, net(176) (329) (37) (341) (151) 122  (176) (26)
Foreign exchange
  (loss) gain, net
(101) 1,142  800  (355) 611  (118) (2,228) (328)
Change in fair value
  of warrant liability
64  (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)  (18,724)
Income tax expenses-  -  -  -  -  -  -  - 
Net loss(15,865) (26,030) (32,167) (95,094) (52,572) (71,055)  (127,130)  (18,724)
Net loss attributable to
  Burning Rock Biotech
  Limited’s shareholders
(15,865) (26,030) (32,167) (95,094) (52,572) (71,055) (127,130) (18,724)
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


)
  

 (18,724


)
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) (0.18)
Class B ordinary shares -
  basic and diluted
-  -  -  -  -  -  (1.22) (0.18)
Weighted average shares
  outstanding used in loss
  per share computation:
        
Ordinary shares - basic
  and diluted
23,167,232  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  86,479,686 
Class B ordinary shares -
  basic and diluted
-  -  -  -  -  -  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) (13,417)
Total comprehensive
  (loss) income
(16,143) (40,318) 13,150   (101,741) (41,150) (73,391)  (218,223)  (32,141)
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) (32,141)


 
Burning Rock Biotech Limited

Unaudited Condensed Statements of Comprehensive (Loss) Income

 (in thousands, except for number of shares and per share data)
 
 For the nine months ended
 September 30,
2019

 September 30,
2020

 September 30,
2020

 RMB
 RMB
 US$
Revenues293,002  298,181   43,917  
Cost of revenues(74,644) (83,412) (12,286)
Gross profit218,358   214,769   31,631  
    
Operating expenses:   
Research and development expenses(104,697) (180,522) (26,588)
Selling and marketing expenses(104,225) (111,981) (16,493)
General and administrative expenses(83,045) (179,298) (26,408)
Total operating expenses(291,967)  (471,801)  (69,489)
Loss from operations (73,609)  (257,032)  (37,858)
Interest income7,620  4,727  696 
Interest expense(7,686) (15) (2)
Other expense, net(542) (205) (30)
Foreign exchange (loss) gain, net1,841  (1,735) (256)
Change in fair value of warrant liability(1,686) 3,503  516 
Loss before income tax(74,062)  (250,757)  (36,934)
Income tax expenses-  -  - 
Net loss(74,062)  (250,757)  (36,934)
Net loss attributable to Burning Rock Biotech Limited’s shareholders(74,062) (250,757) (36,934)
Accretion of convertible preferred shares(125,838) (64,688) (9,528)
Net loss attributable to ordinary shareholders(199,900)  (315,445)  (46,462)
    
    
    
Loss per share for class A and class B ordinary shares:
Ordinary shares - basic and diluted
(8.63) -  - 
Class A ordinary shares - basic and diluted-  (5.56) (0.82)
Class B ordinary shares - basic and diluted-  (5.56) (0.82)
    
Weighted average shares outstanding used in loss per share computation:
Ordinary shares - basic and diluted
23,167,232  -  - 
Class A ordinary shares - basic and diluted-  39,446,747  39,446,747 
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 adjustments30,751  (82,007) (12,078)
Total comprehensive loss(43,311)  (332,764)  (49,012)
Total comprehensive loss attributable to Burning Rock Biotech Limited’s shareholders(43,311 ) (332,764) (49,012)
         



 
Burning Rock Biotech Limited

Unaudited Condensed Consolidated Balance Sheets

(In thousands)
 
 As of
 December 31,
2019
 September 30,
2020
 September 30,
2020
 RMB
 RMB
 US$
ASSETS     
Current assets:     
Cash and cash equivalents94,235 2,061,566 303,636
Restricted cash4,009 263 39
Short-term investment313,988 340,505 50,151
Accounts receivable88,822 93,839 13,821
Contract assets909 20,257 2,984
Amounts due from related parties74,368 - -
Inventories58,116 69,805 10,281
Prepayments and other current assets72,340 60,970 8,980
Total current assets706,787  2,647,205   389,892
Non-current assets:     
Equity method investment1,790 1,527 225
Long-term investment38,369 37,456 5,517
Property and equipment, net89,314 96,688 14,241
Intangible assets, net343 3,455 509
Other non-current assets10,954 16,162 2,380
Total non-current assets140,770  155,288   22,872
TOTAL ASSETS847,557  2,802,493   412,764
      


 
Burning Rock Biotech Limited

Unaudited Condensed Consolidated Balance Sheets (Continued)

(in thousands)
 
 As of
 December 31,
2019

 September 30,
2020

 September 30,
2020

 RMB
 RMB
 US$
LIABILITIES, MEZZANINE EQUITY AND SHAREHOLDERS’ (DEFICIT) EQUITY   
Current liabilities:   
Accounts payable12,348  30,284  4,460 
Deferred revenue49,539  67,109  9,884 
Capital lease obligations, current4,893  5,300  781 
Accrued liabilities and other current liabilities54,059  110,545  16,282 
Customer deposits4,104  16,076  2,368 
Short-term borrowing2,370  2,370  349 
Current portion of long-term borrowings37,129  37,208  5,480 
Total current liabilities164,442   268,892    39,604  
    
    
    
    
         
    
         
Non-current liabilities:   
Deferred government grants991  263  39 
Capital lease obligations4,816  787  116 
Long-term borrowings18,266  -  - 
Warrant liability23,503  -  - 
Total non-current liabilities47,576   1,050    155  
TOTAL LIABILITIES212,018   269,942    39,759  
    
    
    
    
         
    
         
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  3,866,806  569,519 
Accumulated deficits(946,464) (1,261,682) (185,826)
Accumulated other comprehensive income (loss)9,299  (72,708) (10,708)
Total shareholders’ (deficit) equity(891,494)  2,532,551    373,005  
TOTAL LIABILITIES, MEZZANIE EQUITY AND SHAREHOLDERS’ (DEFICIT) EQUITY847,557  2,802,493  412,764 
    
         
    
         
         


 
Burning Rock Biotech Limited

Unaudited Condensed Statements of Cash Flows

(in thousands)
 
 For the three months ended
 September 30,
2019

 September 30,
2020

 September 30,
2020

 RMB
 RMB
 US$
Net cash used in operating activities(17,395) (37,052) (5,457)
Net cash used in investing activities(25,684) (365,373) (53,814)
Net cash used in financing activities(22,878) (20,939) (3,084)
Effect of exchange rate on cash, cash equivalents and restricted cash5,501  (81,043) (11,936)
Net decrease cash, cash equivalents and restricted cash (60,456) (504,407) (74,291)
Cash, cash equivalents and restricted cash at the beginning of period185,740  2,566,236  377,966 
Cash, cash equivalents and restricted cash at the end of period125,284   2,061,829   303,675  
    


 For the nine months ended
 September 30,
2019

 September 30,
2020

 September 30,
2020

 RMB

 RMB

 US$

Net cash (used in) generated from operating activities(177,905) 17,116   2,519  
Net cash used in investing activities(368,922) (72,884) (10,734)
Net cash generated from financing activities570,643   2,097,242   308,891  
Effect of exchange rate on cash, cash equivalents and restricted cash6,134  (77,889) (11,471)
Net increase cash, cash equivalents and restricted cash 29,950   1,963,585   289,205  
Cash, cash equivalents and restricted cash at the beginning of period95,334  98,244  14,470 
Cash, cash equivalents and restricted cash at the end of period125,284   2,061,829   303,675  
    
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