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.

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 tested8,060 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 channel78,597 89,992 71,970 61,804 66,239 
In-hospital channel34,177 49,636 42,526 51,561 53,835 
Pharma research and development channel18,072 15,003 27,741 29,151 26,194 
Total revenues130,846 154,631 142,237 142,516 146,268
 


 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 channel57,575 69,991 54,507 48,090 51,876
In-hospital channel20,012 31,593 26,999 34,409 33,353
Pharma research and development channel5,015 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 revenues441 481 496 353 627 
Research and development expenses11,923 13,978 14,673 13,612 15,301 
Selling and marketing expenses2,158 2,346 2,247 1,606 3,389 
General and administrative expenses62,615 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$
 
Revenues130,846  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 profit82,602  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 income2,685  2,001  2,838  3,144  5,255  725  
Interest expenses(29) 12  -  -  -  -  
Other income (expense), net127  (189) (84) 599  (118) (16) 
Foreign exchange (loss) gain, net624  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 diluted87,532,539  86,585,322  85,051,882  85,065,585  85,151,052  85,151,052  
Class B ordinary shares - basic and diluted17,324,848  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 adjustments29,715  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$
Revenues266,370   288,784   39,825  
Cost of revenues(96,188 ) (89,590) (12,355)
Gross profit170,182   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 income4,517  8,399  1,158 
Interest expenses90  -  - 
Other income, net425  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 diluted87,357,120  85,108,555  85,108,555 
Class B ordinary shares - basic and diluted17,324,848  17,324,848  17,324,848 
Other comprehensive income (loss), net of tax of nil:   
Foreign currency translation adjustments26,650  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 equivalents905,451 732,568 101,026
Restricted cash19,817 710 98
Accounts receivable, net109,954 143,322 19,765
Contract assets, net41,757 58,813 8,111
Inventories, net130,321 101,625 14,015
Prepayments and other current assets, net51,462 52,998 7,309
Total current assets 1,258,762   1,090,036   150,324
Non-current assets:     
Equity method investment690 505 70
Convertible note receivable5,105 5,105 704
Property and equipment, net251,829 191,017 26,342
Operating right-of-use assets48,205 31,037 4,280
Intangible assets, net1,986 1,204 166
Other non-current assets20,890 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 payable50,947  24,568  3,388 
Deferred revenue147,633  147,313  20,315 
Accrued liabilities and other current liabilities173,832  156,526  21,586 
Customer deposits1,803  1,197  165 
Current portion of operating lease liabilities37,236  23,400  3,227 
Total current liabilities 411,451    353,004    48,681  
Non-current liabilities:   
Non-current portion of operating lease liabilities13,551  7,128  983 
Other non-current liabilities4,124  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 shares117  117  16 
Class B ordinary shares21  21  3 
Additional paid-in capital4,582,790  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’ equity1,158,341   967,608   133,440  
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY1,587,467   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 activities30,729  (2,928) (404)
Net cash used in financing activities(69,559) (1,003) (138)
Effect of exchange rate on cash, cash equivalents and restricted cash26,279  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 period1,274,875  803,142  110,758 
Cash, cash equivalents and restricted cash at the end of period1,153,050   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 activities17,718  (6,987) (964)
Net cash used in financing activities(73,493) (1,035) (143)
Effect of exchange rate on cash, cash equivalents and restricted cash23,347  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 period1,439,112  925,268  127,600 
Cash, cash equivalents and restricted cash at the end of period1,153,050   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 channel57,575  69,991  54,507  48,090  51,876 
In-hospital channel20,012  31,593  26,999  34,409  33,353 
Pharma research and development channel5,015  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 channel2,545  3,138  3,609  2,567  2,645 
In-hospital channel1,428  2,479  2,449  2,582  2,637 
Pharma research and development channel4,327  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 channel60,120  73,129  58,116  50,657  54,521 
In-hospital channel21,440  34,072  29,448  36,991  35,990 
Pharma research and development channel9,342  9,815  22,822  20,247  18,858 
Total non-GAAP gross profit90,902  117,016  110,386  107,895  109,369
 
Non-GAAP gross margin:     
Central laboratory channel76.5% 81.3% 80.8% 82.0% 82.3%
In-hospital channel62.7% 68.6% 69.2% 71.7% 66.9%
Pharma research and development channel51.7% 65.4% 82.3% 69.5% 72.0%
Total non-GAAP gross margin69.5% 75.7% 77.6% 75.7% 74.8%


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