Burning Rock Reports Second Quarter 2023 Financial Results

GUANGZHOU, China, Aug. 31, 2023 (GLOBE NEWSWIRE) — Burning Rock Biotech Limited (NASDAQ: BNR and LSE: 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, 2023.

Recent Business Updates

  • Therapy Selection and Minimal Residual Disease (MRD)
    • Presented study results on extensive-stage small-cell lung cancer and ovarian cancer at the ASCO in June 2023. “A Multicenter Phase I/II trial of Induction Chemotherapy Followed by Camrelizumab, Apatinib plus Chemotherapy as First-line Treatment for Extensive-stage Small-cell Lung Cancer” and “DNA methylation patterns between tissue and blood samples in ovarian cancers”.
    • Precision oncology diagnostics product supports advancement in late-stage breast cancer treatment, with results published in the New England Journal of Medicine in June 2023. The study, CAPItello-291, sponsored by our pharma client AstraZeneca, is a phase 3 trial that assessed the efficacy and safety of Capivasertib–fulvestrant therapy in advanced breast cancer patients with hormone receptor positive (HR+), human epidermal growth factor receptor 2 negative (HER2-) cancer whose disease had progressed during or after aromatase inhibitor therapy. The study demonstrated that Capivasertib–fulvestrant combination therapy resulted in significantly longer progression-free survival than treatment with fulvestrant alone.
    • Results of the study “Pharmaco-proteogenomic characterization of liver cancer organoids for precision oncology” were published at the Science Translational Medicine in August 2023. Through integrative analyses of LICOB pharmaco-proteogenomics data, we identified the molecular features associated with drug responses and predicted potential drug combinations for personalized patient treatment. The synergistic inhibition effect of mTOR inhibitor temsirolimus and the multitargeted tyrosine kinase inhibitor lenvatinib was validated in organoids and patient-derived xenografts models.
  • Pharma Services
    • New companion diagnostics (CDx) development for breast and prostatic cancer announced with AstraZeneca in China.
    • Total value of new contracts for the provision of pharma services entered into during the second quarter of 2023 amounted to RMB88 million, representing a 60% year-over-year increase.

Second Quarter 2023 Financial Results

Revenues were RMB146.3 million (US$20.2 million) for the three months ended June 30, 2023, representing a 11.8% increase from RMB130.8 million for the same period in 2022.

  • Revenue generated from central laboratory business was RMB66.2 million (US$9.1 million) for the three months ended June 30, 2023, representing a 15.7% decrease from RMB78.6 million for the same period in 2022, primarily due to a drop in the number of tests, as the Company continued to focus on its in-hospital business.
  • Revenue generated from in-hospital business was RMB53.8 million (US$7.4 million) for the three months ended June 30, 2023, representing a 57.5% increase from RMB34.2 million for the same period in 2022, driven by an increase in sales volume.
  • Revenue generated from pharma research and development services was RMB26.2 million (US$3.6 million) for the three months ended June 30, 2023, representing a 44.9% increase from RMB18.1 million for the same period in 2022, primarily attributable to a further increased testing volume performed and higher average contract value from existing and new customers.

Cost of revenues was RMB45.8 million (US$6.3 million) for the three months ended June 30, 2023, representing a 5.0% decrease from RMB48.2 million for the same period in 2022, primarily due to a decrease in cost of central laboratory business, which was in line with the decrease in revenue generated from this business.

Gross profit was RMB100.4 million (US$13.8 million) for the three months ended June 30, 2023, representing a 21.6% increase from RMB82.6 million for the same period in 2022. Gross margin was 68.7% for the three months ended June 30, 2023, compared to 63.1% for the same period in 2022. By channel, gross margin of central laboratory business was 78.3% for the three months ended June 30, 2023, compared to 73.3% during the same period in 2022, and such increase was primarily due to a decrease in inventory write down and royalty fee; gross margin of in-hospital business was 62.0% for the three months ended June 30, 2023, compared to 58.6% during the same period in 2022, and such increase was primarily due to an increase in sales volume to high margin hospitals; gross margin of pharma research and development services was 58.0% for the three months ended June 30, 2023, compared to 27.8% during the same period of 2022, and such increase was primarily due to an increase in test volume of higher margin projects.

Non-GAAP gross profit, which excludes depreciation and amortization expenses, was RMB109.4 million (US$15.1 million) for the three months ended June 30, 2023, representing a 20.3% increase from RMB90.9 million for the same period in 2022. Non-GAAP gross margin was 74.8% for the three months ended June 30, 2023, compared to 69.5% for the same period in 2022.

Operating expenses were RMB236.1 million (US$32.6 million) for the three months ended June 30, 2023, representing a 32.2% decrease from RMB348.1 million for the same period in 2022. The decrease was primarily driven by budget control measures and headcount reduction aimed at improving the Company’s operating efficiency.

  • Research and development expenses were RMB95.8 million (US$13.2 million) for the three months ended June 30, 2023, representing a 4.0% increase from RMB92.1 million for the same period in 2022, primarily due to (i) an increase in research and development project cost due to the temporary disruption of R&D activities during Covid lock-down in 2022, and partially offset by (ii) a decrease in research and development personnel’s staff cost.
  • Selling and marketing expenses were RMB70.8 million (US$9.8 million) for the three months ended June 30, 2023, representing a 32.9% decrease from RMB105.6 million for the same period in 2022, primarily due to (i) a decrease in staff cost resulted from the reorganization of our sales department and improved operating efficiency, and (ii) a decrease in marketing and conference fee.
  • General and administrative expenses were RMB69.5 million (US$9.6 million) for the three months ended June 30, 2023, representing a 53.7% decrease from RMB150.3 million for the same period in 2022, primarily due to (i) a decrease in amortized expense on share-based compensation; (ii) a decrease in general and administrative personnel’s staff cost, and (iii) a decrease in allowance for doubtful accounts resulting from accelerated settlement with customers with longer accounts receivable.

Net loss was RMB131.2 million (US$18.1 million) for the three months ended June 30, 2023, compared to RMB262.1 million for the same period in 2022.

Cash, cash equivalents, restricted cash and short-term investments were RMB733.3 million (US$101.1 million) as of June 30, 2023.

Conference Call Information

Burning Rock will host a conference call to discuss the second quarter 2023 financial results at 8:00 a.m. U.S. Eastern Time (8:00 p.m. Hong Kong time) on August 31, 2023.

Please register in advance of the conference using the link provided below and dial in 15 minutes prior to the call, using participant dial-in numbers and unique registrant ID which would be provided upon registering.

PRE-REGISTER LINK: https://register.vevent.com/register/BI6587397828874b24931eb99fd4fb1c15.

Additionally, a live and archived webcast of the conference call will also be available on the company’s investor relations website at http://ir.brbiotech.com or through link https://edge.media-server.com/mmc/p/t4sgbsfb.

A replay of the webcast will be available for 12 months via the same link above.

About Burning Rock

Burning Rock Biotech Limited (NASDAQ: BNR and LSE: 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, 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.

Non-GAAP Measures

In evaluating the business, the company considers and uses non-GAAP measures, such as non-GAAP gross profit and non-GAAP gross margin, as supplemental measures to review and assess operating performance. The presentation of these non-GAAP financial measures is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The company defines non-GAAP gross profit as gross profit excluding depreciation and amortization. The company defines non-GAAP gross margin as gross margin excluding depreciation and amortization.

The company presents these non-GAAP financial measures because they are used by management to evaluate operating performance and formulate business plans. The company believe non-GAAP gross profit and non-GAAP gross margin excluding non-cash impact of depreciation and amortization reflect the company’s ongoing business operations in a manner that allows more meaningful period-to-period comparisons.

Contact: IR@brbiotech.com

Selected Operating Data

   
  For the three months ended
  June 30,
2022
  September 30,
2022
  December 31,
2022
  March 31,
2023
  June 30,
2023
Central Laboratory Channel:                  
Number of patients tested 8,060   7,989   6,419   6,139   6,585
Number of ordering physicians(1) 767   897   797   792   725
Number of ordering hospitals(2) 264   257   238   241   225
                   

(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
  June 30,
2022
  September 30,
2022
  December 31,
2022
  March 31,
2023
  June 30,
2023
In-hospital Channel:                  
Pipeline partner hospitals(1) 25   22   28   29   30
Contracted partner hospitals(2) 43   47   49   49   50
Total number of partner hospitals 68   69   77   78   80
                   

(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
June 30,
2022
  September 30,
2022
  December 31,
2022
  March 31,
2023
  June 30,
2023
 
  (RMB in thousands)
Central laboratory channel 78,597   89,992   71,970   61,804   66,239  
In-hospital channel 34,177   49,636   42,526   51,561   53,835  
Pharma research and development channel 18,072   15,003   27,741   29,151   26,194  
Total revenues 130,846   154,631   142,237   142,516   146,268  

  For the three months ended
Gross profit
June 30,
2022
  September 30,
2022
  December 31,
2022
  March 31,
2023
  June 30,
2023
  (RMB in thousands)
Central laboratory channel 57,575   69,991   54,507   48,090   51,876
In-hospital channel 20,012   31,593   26,999   34,409   33,353
Pharma research and development channel 5,015   7,010   19,757   16,273   15,193
Total gross profit 82,602   108,594   101,263   98,772   100,422

  For the three months ended  
Share-based compensation expenses
June 30,
2022
  September 30,
2022
  December 31,
2022
  March 31,
2023
  June 30,
2023
 
  (RMB in thousands)
Cost of revenues 441   481   496   353   627  
Research and development expenses 11,923   13,978   14,673   13,612   15,301  
Selling and marketing expenses 2,158   2,346   2,247   1,606   3,389  
General and administrative expenses 62,615   61,041   74,232   62,595   18,502  
Total share-based compensation expenses 77,137   77,846   91,648   78,166   37,819  

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
  June 30,
2022
  September 30, 2022
  December 31,
2022

  March 31,
2023

  June 30,
2023

  June 30,
2023

 
  RMB
  RMB
  RMB
  RMB
  RMB
  US$
 
Revenues 130,846     154,631     142,237     142,516     146,268     20,172    
Cost of revenues (48,244 )   (46,037 )   (40,974 )   (43,744 )   (45,846 )   (6,323 )  
Gross profit 82,602     108,594     101,263     98,772     100,422     13,849    
Operating expenses:              
Research and development expenses (92,112 )   (109,433 )   (100,827 )   (94,417 )   (95,779 )   (13,209 )  
Selling and marketing expenses (105,634 )   (90,275 )   (85,174 )   (64,774 )   (70,842 )   (9,770 )  
General and administrative expenses (150,316 )   (143,530 )   (132,705 )   (128,039 )   (69,525 )   (9,588 )  
Total operating expenses (348,062 )   (343,238 )   (318,706 )   (287,230 )   (236,146 )   (32,567 )  
Loss from operations  (265,460 )   (234,644 )   (217,443 )   (188,458 )   (135,724 )   (18,718 )  
Interest income 2,685     2,001     2,838     3,144     5,255     725    
Interest expenses (29 )   12                    
Other income (expense), net 127     (189 )   (84 )   599     (118 )   (16 )  
Foreign exchange (loss) gain, net 624     1,337     365     (116 )   (210   (29  
Loss before income tax (262,053 )   (231,483 )   (214,324 )   (184,831 )   (130,797 )   (18,038 )  
Income tax expenses (84 )       (1,901 )   (422 )   (445 )   (61 )  
Net loss (262,137 )   (231,483 )   (216,225 )   (185,253 )   (131,242 )   (18,099 )  
Net loss attributable to Burning Rock Biotech Limited’s shareholders (262,137 )   (231,483 )   (216,225 )   (185,253 )   (131,242 )   (18,099 )  
Net loss attributable to ordinary shareholders (262,137 )   (231,483 )   (216,225 )   (185,253 )   (131,242 )   (18,099 )  
Loss per share for class A and class B ordinary shares:              
Class A ordinary shares – basic and diluted (2.50 )   (2.23 )   (2.11 )   (1.81 )   (1.28 )   (0.18 )  
Class B ordinary shares – basic and diluted (2.50 )   (2.23 )   (2.11 )   (1.81 )   (1.28 )   (0.18 )  
Weighted average shares outstanding used in loss per share computation:              
Class A ordinary shares – basic and diluted 87,532,539     86,585,322     85,051,882     85,065,585     85,151,052     85,151,052    
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 income (loss), net of tax of nil:              
Foreign currency translation adjustments 29,715     20,646     (5,950 )   (5,659 )   14,829     2,045    
Total comprehensive loss (232,422 )   (210,837 )   (222,175 )   (190,912 )   (116,413 )   (16,054 )  
Total comprehensive loss attributable to Burning Rock Biotech Limited’s shareholders (232,422 )   (210,837 )   (222,175 )   (190,912 )   (116,413 )   (16,054 )  
                                     

Burning Rock Biotech Limited
Unaudited Condensed Statements of Comprehensive Loss
(in thousands, except for number of shares and per share data)
 
 
  For the six months ended
  June 30,
2022
  June 30,
2023
  June 30,
2023
  RMB
  RMB
  US$
Revenues 266,370     288,784     39,825  
Cost of revenues (96,188 )   (89,590 )   (12,355 )
Gross profit 170,182     199,194     27,470  
Operating expenses:      
Research and development expenses (211,608 )   (190,196 )   (26,229 )
Selling and marketing expenses (194,845 )   (135,616 )   (18,702 )
General and administrative expenses (292,049 )   (197,564 )   (27,245 )
Total operating expenses (698,502 )   (523,376 )   (72,176 )
Loss from operations  (528,320 )   (324,182 )   (44,706 )
Interest income 4,517     8,399     1,158  
Interest expenses 90          
Other income, net 425     481     67  
Foreign exchange loss, net (153 )   (326 )   (45 )
Loss before income tax (523,441 )   (315,628 )   (43,526 )
Income tax expenses (84 )   (867 )   (120 )
Net loss (523,525 )   (316,495 )   (43,646 )
Net loss attributable to Burning Rock Biotech Limited’s shareholders (523,525 )   (316,495 )   (43,646 )
Net loss attributable to ordinary shareholders (523,525 )   (316,495 )   (43,646 )
Loss per share for class A and class B ordinary shares:      
Class A ordinary shares – basic and diluted (5.00 )   (3.09 )   (0.43 )
Class B ordinary shares – basic and diluted (5.00 )   (3.09 )   (0.43 )
Weighted average shares outstanding used in loss per share computation:      
Class A ordinary shares – basic and diluted 87,357,120     85,108,555     85,108,555  
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 26,650     9,170     1,265  
Total comprehensive loss (496,875 )   (307,325 )   (42,381 )
Total comprehensive loss attributable to Burning Rock Biotech Limited’s shareholders (496,875 )   (307,325 )   (42,381 )

Burning Rock Biotech Limited
Unaudited Condensed Consolidated Balance Sheets
(In thousands)
 
  As of
  December 31,
2022
  June 30,
2023
  June 30,
2023
  RMB   RMB   US$
ASSETS          
Current assets:          
Cash and cash equivalents 905,451   732,568   101,026
Restricted cash 19,817   710   98
Accounts receivable, net 109,954   143,322   19,765
Contract assets, net 41,757   58,813   8,111
Inventories, net 130,321   101,625   14,015
Prepayments and other current assets, net 51,462   52,998   7,309
Total current assets 1,258,762   1,090,036   150,324
Non-current assets:          
Equity method investment 690   505   70
Convertible note receivable 5,105   5,105   704
Property and equipment, net 251,829   191,017   26,342
Operating right-of-use assets 48,205   31,037   4,280
Intangible assets, net 1,986   1,204   166
Other non-current assets 20,890   11,852   1,634
Total non-current assets 328,705   240,720   33,196
TOTAL ASSETS 1,587,467   1,330,756   183,520
           

Burning Rock Biotech Limited
Unaudited Condensed Consolidated Balance Sheets (Continued)
(in thousands)
  As of
  December 31,
2022
    June 30,
2023
    June 30,
2023
 
  RMB     RMB     US$  
LIABILITIES AND SHAREHOLDERS’ EQUITY                
Current liabilities:                
Accounts payable 50,947     24,568     3,388  
Deferred revenue 147,633     147,313     20,315  
Accrued liabilities and other current liabilities 173,832     156,526     21,586  
Customer deposits 1,803     1,197     165  
Current portion of operating lease liabilities 37,236     23,400     3,227  
Total current liabilities 411,451     353,004     48,681  
Non-current liabilities:      
Non-current portion of operating lease liabilities 13,551     7,128     983  
Other non-current liabilities 4,124     3,016     416  
Total non-current liabilities 17,675     10,144     1,399  
TOTAL LIABILITIES 429,126     363,148     50,080  

Shareholders’ equity:

     
Class A ordinary shares 117     117     16  
Class B ordinary shares 21     21     3  
Additional paid-in capital 4,582,790     4,705,734     648,950  
Treasury stock (58,919 )   (65,271 )   (9,001 )
Accumulated deficits (3,199,946 )   (3,516,441 )   (484,938 )
Accumulated other comprehensive loss (165,722 )   (156,552 )   (21,590 )
Total shareholders’ equity 1,158,341     967,608     133,440  
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY 1,587,467     1,330,756     183,520  

Burning Rock Biotech Limited
Unaudited Condensed Statements of Cash Flows
(in thousands)
 
  For the three months ended
  June 30, 2022     June 30, 2023     June 30, 2023  
  RMB     RMB     US$  
Net cash used in operating activities (109,274 )   (79,204 )   (10,923 )
Net cash generated from (used in) investing activities 30,729     (2,928 )   (404 )
Net cash used in financing activities (69,559 )   (1,003 )   (138 )
Effect of exchange rate on cash, cash equivalents and restricted cash 26,279     13,271     1,831  
Net decrease in cash, cash equivalents and restricted cash (121,825 )   (69,864 )   (9,634 )
Cash, cash equivalents and restricted cash at the beginning of period 1,274,875     803,142     110,758  
Cash, cash equivalents and restricted cash at the end of period 1,153,050     733,278     101,124  
                 

  For the six months ended
  June 30, 2022
  June 30, 2023
  June 30, 2023  
  RMB
  RMB
  US$  
Net cash used in operating activities (253,634 )   (192,347 )   (26,526 )
Net cash generated from (used in) investing activities 17,718     (6,987 )   (964 )
Net cash used in financing activities (73,493 )   (1,035 )   (143 )
Effect of exchange rate on cash, cash equivalents and restricted cash 23,347     8,379     1,157  
Net decrease in cash, cash equivalents and restricted cash (286,062 )   (191,990 )   (26,476 )
Cash, cash equivalents and restricted cash at the beginning of period 1,439,112     925,268     127,600  
Cash, cash equivalents and restricted cash at the end of period 1,153,050     733,278     101,124  
                 

Burning Rock Biotech Limited
Reconciliations of GAAP and Non-GAAP Results
 
    For the three months ended
  June 30,
2022
  September
30, 2022

  December
31, 2022

  March 31,
2023

  June 30, 
2023
    (RMB in thousands)
Gross profit:
   
Central laboratory channel 57,575     69,991     54,507     48,090     51,876  
In-hospital channel 20,012     31,593     26,999     34,409     33,353  
Pharma research and development channel 5,015     7,010     19,757     16,273     15,193  
Total gross profit 82,602     108,594     101,263     98,772     100,422  
Add: depreciation and amortization:          
Central laboratory channel 2,545     3,138     3,609     2,567     2,645  
In-hospital channel 1,428     2,479     2,449     2,582     2,637  
Pharma research and development channel 4,327     2,805     3,065     3,974     3,665  
Total depreciation and amortization included in cost of revenues 8,300     8,422     9,123     9,123     8,947  
Non-GAAP gross profit:          
Central laboratory channel 60,120     73,129     58,116     50,657     54,521  
In-hospital channel 21,440     34,072     29,448     36,991     35,990  
Pharma research and development channel 9,342     9,815     22,822     20,247     18,858  
Total non-GAAP gross profit 90,902     117,016     110,386     107,895     109,369  
Non-GAAP gross margin:          
Central laboratory channel 76.5 %   81.3 %   80.8 %   82.0 %   82.3 %
In-hospital channel 62.7 %   68.6 %   69.2 %   71.7 %   66.9 %
Pharma research and development channel 51.7 %   65.4 %   82.3 %   69.5 %   72.0 %
Total non-GAAP gross margin 69.5 %   75.7 %   77.6 %   75.7 %   74.8 %

error: Content is protected !!
Exit mobile version