Burning Rock Biotech Limited, a company focused on the application of next generation sequencing technology in the field of precision oncology, reported financial results for the three months ended March 31, 2023.
GUANGZHOU, China, May 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 March 31, 2023.
Recent Business Updates
- Minimal Residual Disease (MRD)
- Results of the MEDAL (MEthylation Based Dynamic Analysis for Lung Cancer) study were published at the American Association for Cancer Research Annual Meeting 2023 (“AACR 2023”). Through parallel testing and comparison of Burning Rock’s personalized MRD test brPROPHET™ and fixed MRD assays, the objective of this study was to establish the best technique and application strategy of dynamic MRD detection for prognosis prediction and disease assessment among NSCLC patients. It shows that brPROPHET™ detected more MRD events with ultra-low ctDNA abundance yet meaningful prognostic significance. In addition, the dynamic change of longitudinal MRD was evaluated to explore the positive predictive value (PPV) and negative predictive value (NPV) of MRD detections over time, providing important insights for guiding the standardization of future surveillance applications.
- The results of the clinical performance of brPROPHET™ in patients with resectable gastric cancer and biliary tract cancer were also released at AACR 2023.
- Pharma Services
- Total value of new contracts entered into during the first quarter of 2023 amounted to RMB75 million, representing a 27% increase from the same period in 2022.
First Quarter 2023 Financial Results
Revenues were RMB142.5 million (US$20.8 million) for the three months ended March 31, 2023, representing a 5.2% increase from RMB135.5 million for the same period in 2022.
- Revenue generated from central laboratory business was RMB61.8 million (US$9.0 million) for the three months ended March 31, 2023, representing a 16.7% decrease from RMB74.2 million for the same period in 2022, primarily attributable to a drop in the number of tests performed resulting from the impact of COVID-19 pandemic in January and the Company’s focus on its in-hospital business.
- Revenue generated from in-hospital business was RMB51.6 million (US$7.5 million) for the three months ended March 31, 2023, representing a 5.3% increase from RMB49.0 million for the same period in 2022, driven by an increase in sales volume.
- Revenue generated from pharma research and development services was RMB29.2 million (US$4.3 million) for the three months ended March 31, 2023, representing a 135.5% increase from RMB12.4 million for the same period in 2022, primarily attributable to a further increased testing volume performed and higher average total contract value from our existing and new customers.
Cost of revenues was RMB43.7 million (US$6.4 million) for the three months ended March 31, 2023, representing a 8.8% decrease from RMB47.9 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 RMB98.8 million (US$14.4 million) for the three months ended March 31, 2023, representing a 12.8% increase from RMB87.6 million for the same period in 2022. Gross margin was 69.3% for the three months ended March 31, 2023, compared to 64.6% for the same period in 2022. By channel, gross margin of central laboratory business was 77.8% for the three months ended March 31, 2023, compared to 68.1% during the same period in 2022, primarily due to a decrease in inventory write down and royalty fee; gross margin of in-hospital business was 66.7% for the three months ended March 31, 2023, compared to 68.2% during the same period in 2022; gross margin of pharma research and development services was 55.8% for the three months ended March 31, 2023, compared to 29.2% during the same period of 2022, primarily due to an increase in test volume of higher margin projects.
Non-GAAP gross profit, which excludes depreciation and amortization expenses, was RMB107.9 million (US$15.7 million) for the three months ended March 31, 2023, representing a 16.4% increase from RMB92.7 million for the same period in 2022. Non-GAAP gross margin was 75.7% for the three months ended March 31, 2023, compared to 68.4% for the same period in 2022.
Operating expenses were RMB287.2 million (US$41.8 million) for the three months ended March 31, 2023, representing a 18.0% decrease from RMB350.4 million for the same period in 2022. The decrease was primarily driven by budget control measures and headcount reduction to improve the Company’s operating efficiency.
- Research and development expenses were RMB94.4 million (US$13.7 million) for the three months ended March 31, 2023, representing an 21.0% decrease from RMB119.5 million for the same period in 2022, primarily due to (i) a decrease in research and development personnel’s staff cost, and (ii) a decrease in royalty and license fee.
- Selling and marketing expenses were RMB64.8 million (US$9.4 million) for the three months ended March 31, 2023, representing a 27.4% decrease from RMB89.2 million for the same period in 2022, primarily due to (i) a decrease in staff cost resulted from the reorganization of the sales department and improvement in operating efficiency; (ii) a decrease in entertainment and travel expenses; and (iii) a decrease in advertising and marketing fee.
- General and administrative expenses were RMB128.0 million (US$18.6 million) for the three months ended March 31, 2023, representing a 9.7% decrease from RMB141.7 million for the same period in 2022, primarily due to (i) a decrease in general and administrative personnel’s staff cost, and (ii) a decrease in operating lease expense as a portion of the expense started to be recognized as cost of revenue following the commencement of production activities in the relevant parts of the property in the first half of 2022; (iii) a decrease in amortized expense on share-based compensation.
Net loss was RMB185.3 million (US$27.0 million) for the three months ended March 31, 2023, compared to RMB261.4 million for the same period in 2022.
Cash, cash equivalents, restricted cash and short-term investments were RMB803.1 million (US$116.9 million) as of March 31, 2023.
2023 Financial Guidance
We reiterate our 2023 full-year revenue guidance of approximately 20% growth over 2022.
Conference Call Information
Burning Rock will host a conference call to discuss the first quarter 2023 financial results at 8:00 a.m. U.S. Eastern Time (8:00 p.m. Hong Kong time) on May 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/BI70acdaea8afc4d3e8f3eec70e5cc3fa7.
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/p3h6zb7y.
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 | |||||||||
| March 31, 2022 | June 30, 2022 | September 30, 2022 | December 31, 2022 | March 31, 2023 | |||||
| Central Laboratory Channel: | |||||||||
| Number of patients tested | 7,743 | 8,060 | 7,989 | 6,419 | 6,139 | ||||
| Number of ordering physicians(1) | 994 | 767 | 897 | 797 | 792 | ||||
| Number of ordering hospitals(2) | 318 | 264 | 257 | 238 | 241 | ||||
(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, 2022 | June 30, 2022 | September 30, 2022 | December 31, 2022 | March 31, 2023 | |||||
| In-hospital Channel: | |||||||||
| Pipeline partner hospitals(1) | 24 | 25 | 22 | 28 | 29 | ||||
| Contracted partner hospitals(2) | 41 | 43 | 47 | 49 | 49 | ||||
| Total number of partnerhospitals | 65 | 68 | 69 | 77 | 78 | ||||
(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, 2022 | June 30, 2022 | September 30, 2022 | December 31, 2022 | March 31, 2023 | |||||
| (RMB in thousands) | ||||||||||
| Central laboratory channel | 74,211 | 78,597 | 89,992 | 71,970 | 61,804 | |||||
| In-hospital channel | 48,957 | 34,177 | 49,636 | 42,526 | 51,561 | |||||
| Pharma research and development channel | 12,356 | 18,072 | 15,003 | 27,741 | 29,151 | |||||
| Total revenues | 135,524 | 130,846 | 154,631 | 142,237 | 142,516 | |||||
| For the three months ended | ||||||||||
| Gross profit | March 31, 2022 | June 30, 2022 | September 30, 2022 | December 31, 2022 | March 31, 2023 | |||||
| (RMB in thousands) | ||||||||||
| Central laboratory channel | 50,574 | 57,575 | 69,991 | 54,507 | 48,090 | |||||
| In-hospital channel | 33,396 | 20,012 | 31,593 | 26,999 | 34,409 | |||||
| Pharma research and development channel | 3,610 | 5,015 | 7,010 | 19,757 | 16,273 | |||||
| Total gross profit | 87,580 | 82,602 | 108,594 | 101,263 | 98,772 | |||||
| For the three months ended | ||||||||||
| Share-based compensation expenses | March 31, 2022 | June 30, 2022 | September 30, 2022 | December 31, 2022 | March 31, 2023 | |||||
| (RMB in thousands) | ||||||||||
| Cost of revenues | 365 | 441 | 481 | 496 | 353 | |||||
| Research and development expenses | 12,299 | 11,923 | 13,978 | 14,673 | 13,612 | |||||
| Selling and marketing expenses | 1,774 | 2,158 | 2,346 | 2,247 | 1,606 | |||||
| General and administrative expenses | 65,715 | 62,615 | 61,041 | 74,232 | 62,595 | |||||
| Total share-based compensation expenses | 80,153 | 77,137 | 77,846 | 91,648 | 78,166 | |||||
| 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 | ||||||||||||||||||||||||
| March 31, 2022 | June 30, 2022 | September 30, 2022 | December 31, 2022 | March 31, 2023 | March 31, 2023 | |||||||||||||||||||
| RMB | RMB | RMB | RMB | RMB | US$ | |||||||||||||||||||
| Revenues | 135,524 | 130,846 | 154,631 | 142,237 | 142,516 | 20,752 | ||||||||||||||||||
| Cost of revenues | (47,944 | ) | (48,244 | ) | (46,037 | ) | (40,974 | ) | (43,744 | ) | (6,370 | ) | ||||||||||||
| Gross profit | 87,580 | 82,602 | 108,594 | 101,263 | 98,772 | 14,382 | ||||||||||||||||||
| Operating expenses: | ||||||||||||||||||||||||
| Research and development expenses | (119,496 | ) | (92,112 | ) | (109,433 | ) | (100,827 | ) | (94,417 | ) | (13,748 | ) | ||||||||||||
| Selling and marketing expenses | (89,211 | ) | (105,634 | ) | (90,275 | ) | (85,174 | ) | (64,774 | ) | (9,432 | ) | ||||||||||||
| General and administrative expenses | (141,733 | ) | (150,316 | ) | (143,530 | ) | (132,705 | ) | (128,039 | ) | (18,644 | ) | ||||||||||||
| Total operating expenses | (350,440 | ) | (348,062 | ) | (343,238 | ) | (318,706 | ) | (287,230 | ) | (41,824 | ) | ||||||||||||
| Loss from operations | (262,860 | ) | (265,460 | ) | (234,644 | ) | (217,443 | ) | (188,458 | ) | (27,442 | ) | ||||||||||||
| Interest income | 1,832 | 2,685 | 2,001 | 2,838 | 3,144 | 458 | ||||||||||||||||||
| Interest expenses | 119 | (29 | ) | 12 | - | - | - | |||||||||||||||||
| Other income (expense), net | 298 | 127 | (189 | ) | (84 | ) | 599 | 87 | ||||||||||||||||
| Foreign exchange (loss) gain, net | (777 | ) | 624 | 1,337 | 365 | (116 | ) | (17 | ) | |||||||||||||||
| Loss before income tax | (261,388 | ) | (262,053 | ) | (231,483 | ) | (214,324 | ) | (184,831 | ) | (26,914 | ) | ||||||||||||
| Income tax expenses | - | (84 | ) | - | (1,901 | ) | (422 | ) | (61 | ) | ||||||||||||||
| Net loss | (261,388 | ) | (262,137 | ) | (231,483 | ) | (216,225 | ) | (185,253 | ) | (26,975 | ) | ||||||||||||
| Net loss attributable to Burning Rock Biotech Limited’s shareholders | (261,388 | ) | (262,137 | ) | (231,483 | ) | (216,225 | ) | (185,253 | ) | (26,975 | ) | ||||||||||||
| Net loss attributable to ordinary shareholders | (261,388 | ) | (262,137 | ) | (231,483 | ) | (216,225 | ) | (185,253 | ) | (26,975 | ) | ||||||||||||
| Loss per share for class A and class B ordinary shares: | ||||||||||||||||||||||||
| Class A ordinary shares - basic and diluted | (2.50 | ) | (2.50 | ) | (2.23 | ) | （2.11 | ) | (1.81 | ) | (0.26 | ) | ||||||||||||
| Class B ordinary shares - basic and diluted | (2.50 | ) | (2.50 | ) | (2.23 | ) | （2.11 | ) | (1.81 | ) | (0.26 | ) | ||||||||||||
| Weighted average shares outstanding used in loss per share computation: | ||||||||||||||||||||||||
| Class A ordinary shares - basic and diluted | 87,179,752 | 87,532,539 | 86,585,322 | 85,051,882 | 85,065,585 | 85,065,585 | ||||||||||||||||||
| 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 | (3,065 | ) | 29,715 | 20,646 | (5,950 | ) | (5,659 | ) | (824 | ) | ||||||||||||||
| Total comprehensive loss | (264,453 | ) | (232,422 | ) | (210,837 | ) | (222,175 | ) | (190,912 | ) | (27,799 | ) | ||||||||||||
| Total comprehensive loss attributable to Burning Rock Biotech Limited’s shareholders | (264,453 | ) | (232,422 | ) | (210,837 | ) | (222,175 | ) | (190,912 | ) | (27,799 | ) | ||||||||||||
| Burning Rock Biotech Limited Unaudited Condensed Consolidated Balance Sheets (In thousands) | ||||||||||||
| As of | ||||||||||||
| December 31, 2022 | March 31, 2023 | March 31, 2023 | ||||||||||
| RMB | RMB | US$ | ||||||||||
| ASSETS | ||||||||||||
| Current assets: | ||||||||||||
| Cash and cash equivalents | 905,451 | 793,484 | 115,540 | |||||||||
| Restricted cash | 19,817 | 9,658 | 1,406 | |||||||||
| Accounts receivable, net | 109,954 | 125,554 | 18,282 | |||||||||
| Contract assets, net | 41,757 | 48,887 | 7,118 | |||||||||
| Inventories, net | 130,321 | 113,895 | 16,584 | |||||||||
| Prepayments and other current assets, net | 51,462 | 47,209 | 6,874 | |||||||||
| Total current assets | 1,258,762 | 1,138,687 | 165,804 | |||||||||
| Non-current assets: | ||||||||||||
| Equity method investment | 690 | 599 | 87 | |||||||||
| Convertible note receivable | 5,105 | 5,105 | 743 | |||||||||
| Property and equipment, net | 251,829 | 220,342 | 32,084 | |||||||||
| Operating right-of-use assets | 48,205 | 39,351 | 5,730 | |||||||||
| Intangible assets, net | 1,986 | 1,701 | 248 | |||||||||
| Other non-current assets | 20,890 | 11,583 | 1,687 | |||||||||
| Total non-current assets | 328,705 | 278,681 | 40,579 | |||||||||
| TOTAL ASSETS | 1,587,467 | 1,417,368 | 206,383 | |||||||||
| Burning Rock Biotech Limited Unaudited Condensed Consolidated Balance Sheets (Continued) (in thousands) | ||||||||||||
| As of | ||||||||||||
| December 31, 2022 | March 31, 2023 | March 31, 2023 | ||||||||||
| RMB | RMB | US$ | ||||||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||||
| Current liabilities: | ||||||||||||
| Accounts payable | 50,947 | 23,593 | 3,435 | |||||||||
| Deferred revenue | 147,633 | 154,317 | 22,470 | |||||||||
| Accrued liabilities and other current liabilities | 173,832 | 146,697 | 21,361 | |||||||||
| Customer deposits | 1,803 | 1,197 | 174 | |||||||||
| Current portion of operating lease liabilities | 37,236 | 32,312 | 4,705 | |||||||||
| Total current liabilities | 411,451 | 358,116 | 52,145 | |||||||||
| Non-current liabilities: | ||||||||||||
| Non-current portion of operating lease liabilities | 13,551 | 9,144 | 1,331 | |||||||||
| Other non-current liabilities | 4,124 | 4,545 | 661 | |||||||||
| Total non-current liabilities | 17,675 | 13,689 | 1,992 | |||||||||
| TOTAL LIABILITIES | 429,126 | 371,805 | 54,137 | |||||||||
| Shareholders’ equity: | ||||||||||||
| Class A ordinary shares | 117 | 117 | 17 | |||||||||
| Class B ordinary shares | 21 | 21 | 3 | |||||||||
| Additional paid-in capital | 4,582,790 | 4,660,924 | 678,683 | |||||||||
| Treasury stock | (58,919 | ) | (58,919 | ) | (8,579 | ) | ||||||
| Accumulated deficits | (3,199,946 | ) | (3,385,199 | ) | (492,923 | ) | ||||||
| Accumulated other comprehensive loss | (165,722 | ) | (171,381 | ) | (24,955 | ) | ||||||
| Total shareholders’ equity | 1,158,341 | 1,045,563 | 152,246 | |||||||||
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | 1,587,467 | 1,417,368 | 206,383 | |||||||||
| Burning Rock Biotech Limited Unaudited Condensed Statements of Cash Flows (in thousands) | ||||||||||
| For the three months ended | ||||||||||
| March 31, 2022 | March 31, 2023 | March 31, 2023 | ||||||||
| RMB | RMB | US$ | ||||||||
| Net cash used in operating activities | (144,361 | ) | (113,143 | ) | (16,475 | ) | ||||
| Net cash used in investing activities | (13,011 | ) | (4,059 | ) | (591 | ) | ||||
| Net cash used in financing activities | (3,934 | ) | (32 | ) | (5 | ) | ||||
| Effect of exchange rate on cash, cash equivalents and restricted cash | (2,931 | ) | (4,892 | ) | (712 | ) | ||||
| Net decrease in cash, cash equivalents and restricted cash | (164,237 | ) | (122,126 | ) | (17,783 | ) | ||||
| Cash, cash equivalents and restricted cash at the beginning of period | 1,439,112 | 925,268 | 134,729 | |||||||
| Cash, cash equivalents and restricted cash at the end of period | 1,274,875 | 803,142 | 116,946 | |||||||
| Burning Rock Biotech Limited Reconciliations of GAAP and Non-GAAP Results | ||||||||||||||
| For the three months ended | ||||||||||||||
| March 31, 2022 | June 30, 2022 | September 30, 2022 | December 31, 2022 | March 31, 2023 | ||||||||||
| (RMB in thousands) | ||||||||||||||
| Gross profit: | ||||||||||||||
| Central laboratory channel | 50,574 | 57,575 | 69,991 | 54,507 | 48,090 | |||||||||
| In-hospital channel | 33,396 | 20,012 | 31,593 | 26,999 | 34,409 | |||||||||
| Pharma research and development channel | 3,610 | 5,015 | 7,010 | 19,757 | 16,273 | |||||||||
| Total gross profit | 87,580 | 82,602 | 108,594 | 101,263 | 98,772 | |||||||||
| Add: depreciation and amortization: | ||||||||||||||
| Central laboratory channel | 2,553 | 2,545 | 3,138 | 3,609 | 2,567 | |||||||||
| In-hospital channel | 93 | 1,428 | 2,479 | 2,449 | 2,582 | |||||||||
| Pharma research and development channel | 2,493 | 4,327 | 2,805 | 3,065 | 3,974 | |||||||||
| Total depreciation and amortization included in cost of revenues | 5,139 | 8,300 | 8,422 | 9,123 | 9,123 | |||||||||
| Non-GAAP gross profit: | ||||||||||||||
| Central laboratory channel | 53,127 | 60,120 | 73,129 | 58,116 | 50,657 | |||||||||
| In-hospital channel | 33,489 | 21,440 | 34,072 | 29,448 | 36,991 | |||||||||
| Pharma research and development channel | 6,103 | 9,342 | 9,815 | 22,822 | 20,247 | |||||||||
| Total non-GAAP gross profit | 92,719 | 90,902 | 117,016 | 110,386 | 107,895 | |||||||||
| Non-GAAP gross margin: | ||||||||||||||
| Central laboratory channel | 71.6 | % | 76.5 | % | 81.3 | % | 80.8 | % | 82.0 | % | ||||
| In-hospital channel | 68.4 | % | 62.7 | % | 68.6 | % | 69.2 | % | 71.7 | % | ||||
| Pharma research and development channel | 49.4 | % | 51.7 | % | 65.4 | % | 82.3 | % | 69.5 | % | ||||
| Total non-GAAP gross margin | 68.4 | % | 69.5 | % | 75.7 | % | 77.6 | % | 75.7 | % | ||||
