REG - Burning Rock Biotech - BNR Reports Second Quarter 2023 Financial Results
31/08/2023 07:00
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RNS Number : 9287K Burning Rock Biotech Limited 31 August 2023
Burning Rock Reports Second Quarter 2023 Financial Results
GUANGZHOU, China, August 31, 2023-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)
o 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".
o 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.
o 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
o New companion diagnostics (CDx) development for breast and prostatic
cancer announced with AstraZeneca in China.
o 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
(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 (http://ir.brbiotech.com) or through link
https://edge.media-server.com/mmc/p/t4sgbsfb
(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.
((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, March 31, 2023 June 30, 2023
2022
(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, September 30, 2022 December 31,2022 March 31, 2023 June 30, 2023 June 30, 2023
2022
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 (232,422) (210,837) (222,175) (190,912) (116,413) (16,054)
shareholders
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, June 30, June 30,
2022 2023 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 (496,875) (307,325) (42,381)
shareholders
Burning Rock Biotech Limited
Unaudited Condensed Consolidated Balance Sheets
(In thousands)
As of
December 31, 2022 June 30, June 30,
2023 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, June 30,
2023 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, September 30, 2022 December 31, 2022 March 31, 2023 June 30, 2023
2022
(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%
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