Burning Rock Reports Third Quarter 2023 Financial Results


GUANGZHOU, China, Nov. 30, 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 September 30, 2023.

Recent Business Updates

  • Therapy Selection and Minimal Residual Disease (MRD)
    • Personalized Minimal Residual Disease (MRD) product, brPROPHETTM supports advancement in early-stage non-small cell lung cancer treatment, with results published in the Cancer Cell in September 2023. The study, MEDAL, is a 5-year study that aimed to investigate the clinical utility of MRD in patients with non-small cell lung cancer (NSCLC) with various approaches to ctDNA detection, including MEDAL-Methylation and MEDAL-PROPHET. In MEDAL-PROPHET study, brPROPHETTM demonstrated superior performance in head-to-head comparisons with tumor-agnostic fixed-panel and tumor-informed fixed-panel MRD assays.
  • Early Detection
    • Following the Breakthrough Device Designation granted by the US Food and Drug Administration (FDA) for our OverC™ Multi-Cancer Detection Blood Test (MCDBT) in January 2023, our OverC™ MCDBT also received the Breakthrough Device Designation by China’s National Medical Products Administration (NMPA) in October 2023, making it the only test globally that has received Breakthrough Device Designation from both the FDA and the NMPA.
  • Pharma Services
    • Entered into a Master Service Agreement in Oncology Companion Diagnostics (CDx) with Boehringer Ingelheim, aiming to focus on advancing the clinical trials related to Boehringer Ingelheim's MDM2-p53 antagonist, brigimadlin (BI 907828), and the development of CDx products in China.
    • Total value of new contracts for the provision of pharma services entered into during the third quarter of 2023 amounted to RMB90 million, representing an 8% year-over-year increase.

Third Quarter 2023 Financial Results

Revenues were RMB127.6 million (US$17.5 million) for the three months ended September 30, 2023, representing a 17.5% decrease from RMB154.6 million for the same period in 2022.

  • Revenue generated from central laboratory business was RMB53.5 million (US$7.3 million) for the three months ended September 30, 2023, representing a 40.6% decrease from RMB90.0 million for the same period in 2022, primarily due to a decrease in the number of tests, as the Company continued to focus on its in-hospital business.
  • Revenue generated from in-hospital business was RMB54.5 million (US$7.5 million) for the three months ended September 30, 2023, representing a 9.8% increase from RMB49.6 million for the same period in 2022, driven by an increase in sales volume from existing hospitals and new contracted partner hospitals.
  • Revenue generated from pharma research and development services was RMB19.6 million (US$2.7 million) for the three months ended September 30, 2023, representing a 30.6% increase from RMB15.0 million for the same period in 2022, primarily attributable to increased development and testing services performed for our pharma customers.

Cost of revenues was RMB41.6 million (US$5.7 million) for the three months ended September 30, 2023, representing a 9.5% decrease from RMB46.0 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 RMB85.9 million (US$11.8 million) for the three months ended September 30, 2023, representing a 20.9% decrease from RMB108.6 million for the same period in 2022. Gross margin was 67.4% for the three months ended September 30, 2023, compared to 70.2% for the same period in 2022. By channel, gross margin of central laboratory business was 77.6% for the three months ended September 30, 2023, compared to 77.8% during the same period in 2022; gross margin of in-hospital business was 65.1% for the three months ended September 30, 2023, compared to 63.6% 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 45.8% for the three months ended September 30, 2023, compared to 46.7% during the same period of 2022.

Non-GAAP gross profit, which excludes depreciation and amortization expenses, was RMB95.1 million (US$13.0 million) for the three months ended September 30, 2023, representing a 18.7% decrease from RMB117.0 million for the same period in 2022. Non-GAAP gross margin was 74.5% for the three months ended September 30, 2023, compared to 75.7% for the same period in 2022.

Operating expenses were RMB264.7 million (US$36.3 million) for the three months ended September 30, 2023, representing a 22.9% decrease from RMB343.2 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 RMB83.7 million (US$11.5 million) for the three months ended September 30, 2023, representing a 23.5% decrease from RMB109.4 million for the same period in 2022, primarily due to a decrease in staff cost resulted from the reorganization of our research and development department to improve operating efficiency.
  • Selling and marketing expenses were RMB62.3 million (US$8.5 million) for the three months ended September 30, 2023, representing a 31.0% decrease from RMB90.3 million for the same period in 2022, primarily due to (i) a decrease in staff cost resulted from the reorganization of our sales department to improve operating efficiency, and (ii) a decrease in marketing and conference fee.
  • General and administrative expenses were RMB118.7 million (US$16.3 million) for the three months ended September 30, 2023, representing a 17.3% decrease from RMB143.5 million for the same period in 2022, primarily due to (i) a decrease in amortized expense on share-based compensation; (ii) a decrease in professional service fee; (iii) a decrease in allowance for doubtful accounts resulting from accelerated settlement with customers with long accounts receivable; and (iv) a decrease in staff cost resulted from the reorganization of our general and administrative department to improve operating efficiency.

Net loss was RMB175.0 million (US$24.0 million) for the three months ended September 30, 2023, compared to RMB231.5 million for the same period in 2022.

Cash, cash equivalents, restricted cash and short-term investments were RMB636.7 million (US$87.3 million) as of September 30, 2023.

Conference Call Information

Burning Rock will host a conference call to discuss the third quarter 2023 financial results at 7:00 a.m. U.S. Eastern Time (8:00 p.m. Hong Kong time) on November 30, 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/BIac92af260980471bb07fff2b22f7e50e.

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/fo9urjv8.

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 provides more information regarding period-to-period comparisons.

Selected Operating Data


 As of           
 June 30,
2022
 September 30,
2022
 December 31,
2022
 March 31,
2023
 June 30,
2023
 September
30, 2023
In-hospital Channel:           
Pipeline partner hospitals(1)25 22 28 29 30 29
Contracted partner hospitals(2)43 47 49 49 50 55
Total number of partner hospitals 68 69 77 78 80 84

(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

September
30, 2022
 December
31, 2022
 March
31, 2023
 June
30, 2023
 September
30, 2023
 (RMB in thousands)
Central laboratory channel89,992 71,970 61,804 66,239 53,481
In-hospital channel49,636 42,526 51,561 53,835 54,496
Pharma research and development channel15,003 27,741 29,151 26,194 19,589
Total revenues154,631 142,237 142,516 146,268
 127,566


 For the three months ended
Gross profit

September
30, 2022
 December
31, 2022
 March
31, 2023
 June 30,
2023
 September
30, 2023
 (RMB in thousands)
Central laboratory channel69,991 54,507 48,090 51,876 41,487
In-hospital channel31,593 26,999 34,409 33,353 35,459
Pharma research and development channel7,010 19,757 16,273 15,193 8,974
Total gross profit
108,594 101,263 98,772 100,422 85,920


 For the three months ended
Share-based compensation expenses

September
30, 2022
 December
31, 2022
 March
31, 
2023
 June
30, 
2023
 September
30, 2023
 (RMB in thousands)
Cost of revenues481 496 353 627 680
Research and development expenses13,978 14,673 13,612 15,301 12,161
Selling and marketing expenses2,346 2,247 1,606 3,389 2,848
General and administrative expenses61,041 74,232 62,595 18,502 57,704
Total share-based compensation expenses
77,846  91,648  78,166   37,819   73,393


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
 September
30, 2022
 
 December
31, 2022
 
 March
31, 2023
 
 June
30, 2023
 
 September
30, 2023
 
 September
30, 2023
 
 RMB  RMB  RMB  RMB  RMB  US$ 
Revenues154,631  142,237  142,516  146,268  127,566   17,485 
Cost of revenues(46,037) (40,974) (43,744) (45,846) (41,646) (5,708)
Gross profit108,594  101,263  98,772  100,422   85,920   11,777  
Operating expenses:                 
Research and development expenses(109,433) (100,827) (94,417) (95,779) (83,701) (11,472)
Selling and marketing expenses(90,275) (85,174) (64,774) (70,842) (62,310) (8,540)
General and administrative expenses(143,530) (132,705) (128,039) (69,525) (118,724) (16,272)
Total operating expenses(343,238) (318,706) (287,230) (236,146 )  (264,735) (36,284)
Loss from operations (234,644) (217,443) (188,458) (135,724) (178,815) (24,507)
Interest income2,013  2,838  3,144  5,255  4,018  551 
Other (expense) income, net(189) (84) 599  (118) (157) (22)
Foreign exchange gain (loss), net1,337  365  (116) (210 423  58 
Loss before income tax(231,483) (214,324) (184,831) (130,797)  (174,531) (23,920)
Income tax expenses-  (1,901) (422) (445) (450) (62)
Net loss(231,483) (216,225) (185,253) (131,242) (174,981 ) (23,982 )
Net loss attributable to Burning Rock Biotech Limited’s shareholders(231,483) (216,225) (185,253) (131,242) (174,981) (23,982)
Net loss attributable to ordinary shareholders(231,483) (216,225) (185,253) (131,242)  (174,981) (23,982)
Loss per share for class A and class B ordinary shares:      
Class A ordinary shares - basic and diluted(2.23) (2.11) (1.81) (1.28) (1.71) (0.23)
Class B ordinary shares - basic and diluted(2.23) (2.11) (1.81) (1.28) (1.71) (0.23)
Weighted average shares outstanding used in loss per share computation:       
Class A ordinary shares - basic and diluted86,585,322  85,051,882  85,065,585  85,151,052  85,000,869  85,000,869 
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 adjustments20,646  (5,950) (5,659) 14,829  (1,955) (268)
Total comprehensive loss(210,837) (222,175) (190,912) (116,413)  (176,936 ) (24,250)
Total comprehensive loss attributable to Burning Rock Biotech Limited’s shareholders(210,837) (222,175) (190,912) (116,413)  (176,936) (24,250)
        


Burning Rock Biotech Limited
Unaudited Condensed Statements of Comprehensive Loss
(in thousands, except for number of shares and per share data)

 For the nine months ended
 September 30,
2022
 September 30,
2023
 September 30,
2023
 RMBRMBUS$
Revenues421,001   416,350   57,065  
Cost of revenues(142,225 ) (131,236) (17,987)
Gross profit278,776   285,114   39,078  
Operating expenses:   
Research and development expenses(321,041) (273,897) (37,541)
Selling and marketing expenses(285,120) (197,926) (27,128)
General and administrative expenses(435,579) (316,288) (43,351)
Total operating expenses(1,041,740) (788,111) (108,020)
Loss from operations (762,964) (502,997) (68,942)
Interest income6,620  12,417  1,702 
Other income, net236  324  44 
Foreign exchange gain net1,184  97  14 
Loss before income tax(754,924) (490,159) (67,182)
Income tax expenses(84) (1,317) (181)
Net loss(755,008) (491,476) (67,363)
Net loss attributable to Burning Rock Biotech Limited’s shareholders(755,008) (491,476) (67,363)
Net loss attributable to ordinary shareholders(755,008) (491,476) (67,363 )
Loss per share for class A and class B ordinary shares:   
Class A ordinary shares - basic and diluted(7.23) (4.80) (0.66)
Class B ordinary shares - basic and diluted(7.23) (4.80) (0.66)
Weighted average shares outstanding used in loss per share computation:    
Class A ordinary shares - basic and diluted87,097,027  85,070,921  85,070,921 
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 adjustments47,296  7,215  989 
Total comprehensive loss(707,712) (484,261) (66,374 )
Total comprehensive loss attributable to Burning Rock Biotech Limited’s shareholders(707,712 ) (484,261) (66,374 )
    


Burning Rock Biotech Limited
Unaudited Condensed Consolidated Balance Sheets
(In thousands)
 As of
 December 31,
2022
 September 30,
2023
 September 30,
2023
 RMB  RMB US$
ASSETS     
Current assets:     
Cash and cash equivalents905,451 636,293 87,211
Restricted cash19,817 456 63
Accounts receivable, net109,954 141,155 19,347
Contract assets, net41,757 58,320 7,993
Inventories, net130,321 86,522 11,859
Prepayments and other current assets, net51,462 44,282 6,069
Total current assets 1,258,762   967,028   132,542
Non-current assets:     
Equity method investment690 387 53
Convertible note receivable5,105 5,105 700
Property and equipment, net251,829 161,715 22,165
Operating right-of-use assets48,205 20,380 2,793
Intangible assets, net1,986 1,277 175
Other non-current assets20,890 10,819 1,483
Total non-current assets 328,705  199,683   27,369
TOTAL ASSETS   1,587,467   1,166,711   159,911


Burning Rock Biotech Limited
Unaudited Condensed Consolidated Balance Sheets (Continued)
(in thousands)
 As of
 December 31,
2022
 September 30,
2023
 September 30,
2023
 RMB RMBUS$
LIABILITIES AND SHAREHOLDERS’ EQUITY   
Current liabilities:   
Accounts payable50,947  24,103  3,304 
Deferred revenue147,633  144,287  19,776 
Accrued liabilities and other current liabilities173,832  111,595  15,295 
Customer deposits1,803  1,197  164 
Current portion of operating lease liabilities37,236  13,985  1,917 
Total current liabilities 411,451    295,167    40,456  
Non-current liabilities:   
Non-current portion of operating lease liabilities13,551  5,110  700 
Other non-current liabilities4,124  3,468  475 
Total non-current liabilities 17,675    8,578    1,175  
TOTAL LIABILITIES 429,126    303,745    41,631  


Shareholders’ equity:
   
Class A ordinary shares117  116  16 
Class B ordinary shares21  21  3 
Additional paid-in capital4,582,790  4,778,636  654,967 
Treasury stock(58,919) (65,878) (9,029)
Accumulated deficits(3,199,946) (3,691,422) (505,952)
Accumulated other comprehensive loss(165,722) (158,507) (21,725)
Total shareholders’ equity1,158,341   862,966   118,280  
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY1,587,467   1,166,711   159,911  


Burning Rock Biotech Limited
Unaudited Condensed Statements of Cash Flows
(in thousands)
 For the three months ended
 September 30,
2022
 September 30,
2023
 September 30,
2023
 RMB RMB US$
Net cash used in operating activities(135,467) (47,417) (6,499)
Net cash used in investing activities(20,148) (1,985) (272)
Net cash used in financing activities(2,671) (45,888) (6,289)
Effect of exchange rate on cash, cash equivalents and restricted cash19,242  (1,239) (170)
Net decrease in cash, cash equivalents and restricted cash (139,044) (96,529) (13,230 )
Cash, cash equivalents and restricted cash at the beginning of period1,153,050  733,278  100,504 
Cash, cash equivalents and restricted cash at the end of period1,014,006   636,749   87,274  
    


 For the nine months ended
 September 30,
2022

 September 30,
2023

 September 30,
2023
 RMBRMB  US$
Net cash used in operating activities(389,101) (239,764) (32,862)
Net cash used in investing activities(2,430) (8,972) (1,230)
Net cash used in financing activities(76,164) (46,923) (6,431)
Effect of exchange rate on cash, cash equivalents and restricted cash42,590
  7,140  978 
Net decrease in cash, cash equivalents and restricted cash (425,105) (288,519) (39,545)
Cash, cash equivalents and restricted cash at the beginning of period1,439,112  925,268  126,819 
Cash, cash equivalents and restricted cash at the end of period1,014,007   636,749   87,274  
   


Burning Rock Biotech Limited
Reconciliations of GAAP and Non-GAAP Results

 For the three months ended
 September
30, 2022
 December
31, 2022
 March
31, 2023
 June
30,
 2023
 September
30, 2023
  (RMB in thousands)
Gross profit:
  
Central laboratory channel69,991 54,507 48,090 51,876 41,487
In-hospital channel31,593 26,999 34,409 33,353 35,459
Pharma research and development channel7,010 19,757 16,273 15,193 8,974
Total gross profit
108,594 101,263 98,772 100,422 85,920
Add: depreciation and amortization:      
Central laboratory channel3,138 3,609 2,567 2,645 2,550
In-hospital channel2,479 2,449 2,582 2,637 2,751
Pharma research and development channel2,805 3,065 3,974 3,665 3,863
Total depreciation and amortization included in cost of revenues
8,422  9,123   9,123   8,947   9,164
Non-GAAP gross profit:     
Central laboratory channel73,129 58,116 50,657 54,521 44,037
In-hospital channel34,072 29,448 36,991 35,990 38,210
Pharma research and development channel9,815 22,822 20,247 18,858 12,837
Total non-GAAP gross profit117,016 110,386   107,895  109,369
 95,084
Non-GAAP gross margin:     
Central laboratory channel81.3% 80.8% 82.0% 82.3% 82.3%
In-hospital channel68.6% 69.2% 71.7% 66.9% 70.1%
Pharma research and development channel65.4% 82.3% 69.5% 72.0% 65.5%
Total non-GAAP gross margin75.7% 77.6% 75.7% 74.8% 74.5%


Contact Data