GUANGZHOU, China, Aug. 31, 2023 (GLOBE NEWSWIRE) -- Burning Rock Biotech Limited (NASDAQ: BNR and LSE: BNR, the “Company” or “Burning Rock”), a company focused on the application of next generation sequencing (NGS) technology in the field of precision oncology, today reported financial results for the three months ended June 30, 2023. Recent Business Updates Therapy Selection and Minimal Residual Disease (MRD) Presented study results on extensive-stage small-cell lung cancer and ovarian cancer at the ASCO in June 2023. “A Multicenter Phase I/II trial of Induction Chemotherapy Followed by Camrelizumab, Apatinib plus Chemotherapy as First-line Treatment for Extensive-stage Small-cell Lung Cancer” and “DNA methylation patterns between tissue and blood samples in ovarian cancers”.Precision oncology diagnostics product supports advancement in late-stage breast cancer treatment, with results published in the New England Journal of Medicine in June 2023. The study, CAPItello-291, sponsored by our pharma client AstraZeneca, is a phase 3 trial that assessed the efficacy and safety of Capivasertib–fulvestrant therapy in advanced breast cancer patients with hormone receptor positive (HR+), human epidermal growth factor receptor 2 negative (HER2-) cancer whose disease had progressed during or after aromatase inhibitor therapy. The study demonstrated that Capivasertib–fulvestrant combination therapy resulted in significantly longer progression-free survival than treatment with fulvestrant alone.Results of the study “Pharmaco-proteogenomic characterization of liver cancer organoids for precision oncology” were published at the Science Translational Medicine in August 2023. Through integrative analyses of LICOB pharmaco-proteogenomics data, we identified the molecular features associated with drug responses and predicted potential drug combinations for personalized patient treatment. The synergistic inhibition effect of mTOR inhibitor temsirolimus and the multitargeted tyrosine kinase inhibitor lenvatinib was validated in organoids and patient-derived xenografts models. Pharma Services New companion diagnostics (CDx) development for breast and prostatic cancer announced with AstraZeneca in China.Total value of new contracts for the provision of pharma services entered into during the second quarter of 2023 amounted to RMB88 million, representing a 60% year-over-year increase. Second Quarter 2023 Financial Results Revenues were RMB146.3 million (US$20.2 million) for the three months ended June 30, 2023, representing a 11.8% increase from RMB130.8 million for the same period in 2022. Revenue generated from central laboratory business was RMB66.2 million (US$9.1 million) for the three months ended June 30, 2023, representing a 15.7% decrease from RMB78.6 million for the same period in 2022, primarily due to a drop in the number of tests, as the Company continued to focus on its in-hospital business.Revenue generated from in-hospital business was RMB53.8 million (US$7.4 million) for the three months ended June 30, 2023, representing a 57.5% increase from RMB34.2 million for the same period in 2022, driven by an increase in sales volume.Revenue generated from pharma research and development services was RMB26.2 million (US$3.6 million) for the three months ended June 30, 2023, representing a 44.9% increase from RMB18.1 million for the same period in 2022, primarily attributable to a further increased testing volume performed and higher average contract value from existing and new customers. Cost of revenues was RMB45.8 million (US$6.3 million) for the three months ended June 30, 2023, representing a 5.0% decrease from RMB48.2 million for the same period in 2022, primarily due to a decrease in cost of central laboratory business, which was in line with the decrease in revenue generated from this business. Gross profit was RMB100.4 million (US$13.8 million) for the three months ended June 30, 2023, representing a 21.6% increase from RMB82.6 million for the same period in 2022. Gross margin was 68.7% for the three months ended June 30, 2023, compared to 63.1% for the same period in 2022. By channel, gross margin of central laboratory business was 78.3% for the three months ended June 30, 2023, compared to 73.3% during the same period in 2022, and such increase was primarily due to a decrease in inventory write down and royalty fee; gross margin of in-hospital business was 62.0% for the three months ended June 30, 2023, compared to 58.6% during the same period in 2022, and such increase was primarily due to an increase in sales volume to high margin hospitals; gross margin of pharma research and development services was 58.0% for the three months ended June 30, 2023, compared to 27.8% during the same period of 2022, and such increase was primarily due to an increase in test volume of higher margin projects. Non-GAAP gross profit, which excludes depreciation and amortization expenses, was RMB109.4 million (US$15.1 million) for the three months ended June 30, 2023, representing a 20.3% increase from RMB90.9 million for the same period in 2022. Non-GAAP gross margin was 74.8% for the three months ended June 30, 2023, compared to 69.5% for the same period in 2022. Operating expenses were RMB236.1 million (US$32.6 million) for the three months ended June 30, 2023, representing a 32.2% decrease from RMB348.1 million for the same period in 2022. The decrease was primarily driven by budget control measures and headcount reduction aimed at improving the Company’s operating efficiency. Research and development expenses were RMB95.8 million (US$13.2 million) for the three months ended June 30, 2023, representing a 4.0% increase from RMB92.1 million for the same period in 2022, primarily due to (i) an increase in research and development project cost due to the temporary disruption of R&D activities during Covid lock-down in 2022, and partially offset by (ii) a decrease in research and development personnel’s staff cost.Selling and marketing expenses were RMB70.8 million (US$9.8 million) for the three months ended June 30, 2023, representing a 32.9% decrease from RMB105.6 million for the same period in 2022, primarily due to (i) a decrease in staff cost resulted from the reorganization of our sales department and improved operating efficiency, and (ii) a decrease in marketing and conference fee.General and administrative expenses were RMB69.5 million (US$9.6 million) for the three months ended June 30, 2023, representing a 53.7% decrease from RMB150.3 million for the same period in 2022, primarily due to (i) a decrease in amortized expense on share-based compensation; (ii) a decrease in general and administrative personnel’s staff cost, and (iii) a decrease in allowance for doubtful accounts resulting from accelerated settlement with customers with longer accounts receivable. Net loss was RMB131.2 million (US$18.1 million) for the three months ended June 30, 2023, compared to RMB262.1 million for the same period in 2022. Cash, cash equivalents, restricted cash and short-term investments were RMB733.3 million (US$101.1 million) as of June 30, 2023. Conference Call Information Burning Rock will host a conference call to discuss the second quarter 2023 financial results at 8:00 a.m. U.S. Eastern Time (8:00 p.m. Hong Kong time) on August 31, 2023. Please register in advance of the conference using the link provided below and dial in 15 minutes prior to the call, using participant dial-in numbers and unique registrant ID which would be provided upon registering. PRE-REGISTER LINK: https://register.vevent.com/register/BI6587397828874b24931eb99fd4fb1c15. Additionally, a live and archived webcast of the conference call will also be available on the company’s investor relations website at http://ir.brbiotech.com or through link https://edge.media-server.com/mmc/p/t4sgbsfb. A replay of the webcast will be available for 12 months via the same link above. About Burning Rock Burning Rock Biotech Limited (NASDAQ: BNR and LSE: BNR), whose mission is to guard life via science, focuses on the application of next generation sequencing (NGS) technology in the field of precision oncology. Its business consists of i) NGS-based therapy selection testing for late-stage cancer patients, and ii) cancer early detection, which has moved beyond proof-of-concept R&D into the clinical validation stage. For more information about Burning Rock, please visit: ir.brbiotech.com. Safe Harbor Statement This press release contains forward-looking statements. These statements constitute “forward-looking” statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and as defined in the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as “will,” “expects,” “anticipates,” “future,” “intends,” “plans,” “believes,” “estimates,” “target,” “confident” and similar statements. Burning Rock may also make written or oral forward-looking statements in its periodic reports to the SEC, in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including statements about Burning Rock’s beliefs and expectations, are forward-looking statements. Such statements are based upon management’s current expectations and current market and operating conditions, and relate to events that involve known or unknown risks, uncertainties and other factors, all of which are difficult to predict and many of which are beyond Burning Rock’s control. Forward-looking statements involve risks, uncertainties and other factors that could cause actual results to differ materially from those contained in any such statements. All information provided in this press release is as of the date of this press release, and Burning Rock does not undertake any obligation to update any forward-looking statement as a result of new information, future events or otherwise, except as required under applicable law. Non-GAAP Measures In evaluating the business, the company considers and uses non-GAAP measures, such as non-GAAP gross profit and non-GAAP gross margin, as supplemental measures to review and assess operating performance. The presentation of these non-GAAP financial measures is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The company defines non-GAAP gross profit as gross profit excluding depreciation and amortization. The company defines non-GAAP gross margin as gross margin excluding depreciation and amortization. The company presents these non-GAAP financial measures because they are used by management to evaluate operating performance and formulate business plans. The company believe non-GAAP gross profit and non-GAAP gross margin excluding non-cash impact of depreciation and amortization reflect the company’s ongoing business operations in a manner that allows more meaningful period-to-period comparisons. Contact: IR@brbiotech.com Selected Operating Data For the three months ended June 30,2022 September 30,2022 December 31,2022 March 31,2023 June 30,2023Central Laboratory Channel:
Number of patients tested8,060 7,989 6,419 6,139 6,585Number of ordering physicians(1)767 897 797 792 725Number 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 30,2023In-hospital Channel:
Pipeline partner hospitals(1)25 22 28 29 30Contracted partner hospitals(2)43 47 49 49 50Total 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 endedRevenuesJune 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 endedGross profitJune 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 51,876In-hospital channel20,012 31,593 26,999 34,409 33,353Pharma research and development channel5,015 7,010 19,757 16,273 15,193Total gross profit82,602 108,594 101,263 98,772 100,422 For the three months ended Share-based compensation expensesJune 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 expenses77,137 77,846 91,648 78,166 37,819 Burning Rock Biotech LimitedUnaudited 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 LimitedUnaudited 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$Revenues266,370 288,784 39,825 Cost of revenues(96,188 ) (89,590) (12,355)Gross profit170,182 199,194 27,470 Operating expenses: Research and development expenses(211,608) (190,196) (26,229)Selling and marketing expenses(194,845) (135,616) (18,702)General and administrative expenses(292,049) (197,564) (27,245)Total operating expenses(698,502) (523,376) (72,176)Loss from operations (528,320) (324,182) (44,706)Interest income4,517 8,399 1,158 Interest expenses90 - - Other income, net425 481 67 Foreign exchange loss, net(153) (326) (45)Loss before income tax(523,441) (315,628) (43,526)Income tax expenses(84) (867) (120)Net loss(523,525) (316,495) (43,646)Net loss attributable to Burning Rock Biotech Limited’s shareholders(523,525) (316,495) (43,646)Net loss attributable to ordinary shareholders(523,525) (316,495) (43,646)Loss per share for class A and class B ordinary shares: Class A ordinary shares - basic and diluted(5.00) (3.09) (0.43)Class B ordinary shares - basic and diluted(5.00) (3.09) (0.43)Weighted average shares outstanding used in loss per share computation: Class A ordinary shares - basic and diluted87,357,120 85,108,555 85,108,555 Class B ordinary shares - basic and diluted17,324,848 17,324,848 17,324,848 Other comprehensive income (loss), net of tax of nil: Foreign currency translation adjustments26,650 9,170 1,265 Total comprehensive loss(496,875) (307,325) (42,381)Total comprehensive loss attributable to Burning Rock Biotech Limited’s shareholders(496,875) (307,325) (42,381) Burning Rock Biotech LimitedUnaudited Condensed Consolidated Balance Sheets(In thousands) As of December 31,2022 June 30, 2023 June 30, 2023 RMB RMB US$ASSETS
Current assets:
Cash and cash equivalents905,451 732,568 101,026Restricted cash19,817 710 98Accounts receivable, net109,954 143,322 19,765Contract assets, net41,757 58,813 8,111Inventories, net130,321 101,625 14,015Prepayments and other current assets, net51,462 52,998 7,309Total current assets 1,258,762 1,090,036 150,324 Non-current assets:
Equity method investment690 505 70Convertible note receivable5,105 5,105 704Property and equipment, net251,829 191,017 26,342Operating right-of-use assets48,205 31,037 4,280Intangible assets, net1,986 1,204 166Other non-current assets20,890 11,852 1,634Total non-current assets 328,705 240,720 33,196 TOTAL ASSETS 1,587,467 1,330,756 183,520
Burning Rock Biotech LimitedUnaudited 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 LimitedUnaudited 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 LimitedReconciliations of GAAP and Non-GAAP Results For the three months ended June 30, 2022 September30, 2022 December31, 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 profit82,602 108,594 101,263 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%
