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, 2023In-hospital Channel: Pipeline partner hospitals(1)25 22 28 29 30 29Contracted partner hospitals(2)43 47 49 49 50 55Total 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 endedRevenuesSeptember
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 53,481In-hospital channel49,636 42,526 51,561 53,835 54,496Pharma research and development channel15,003 27,741 29,151 26,194 19,589Total revenues154,631 142,237 142,516 146,268
127,566
For the three months endedGross 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 41,487In-hospital channel31,593 26,999 34,409 33,353 35,459Pharma research and development channel7,010 19,757 16,273 15,193 8,974Total gross profit
108,594 101,263 98,772 100,422 85,920 For the three months endedShare-based compensation expensesSeptember
30, 2022 December
31, 2022 March
31, 2023 June
30, 2023 September
30, 2023 (RMB in thousands)
Cost of revenues481 496 353 627 680Research and development expenses13,978 14,673 13,612 15,301 12,161Selling and marketing expenses2,346 2,247 1,606 3,389 2,848General and administrative expenses61,041 74,232 62,595 18,502 57,704Total 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 87,211Restricted cash19,817 456 63Accounts receivable, net109,954 141,155 19,347Contract assets, net41,757 58,320 7,993Inventories, net130,321 86,522 11,859Prepayments and other current assets, net51,462 44,282 6,069Total current assets 1,258,762 967,028 132,542 Non-current assets: Equity method investment690 387 53Convertible note receivable5,105 5,105 700Property and equipment, net251,829 161,715 22,165Operating right-of-use assets48,205 20,380 2,793Intangible assets, net1,986 1,277 175Other non-current assets20,890 10,819 1,483Total 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 41,487In-hospital channel31,593 26,999 34,409 33,353 35,459Pharma research and development channel7,010 19,757 16,273 15,193 8,974Total gross profit
108,594 101,263 98,772 100,422 85,920Add: depreciation and amortization: Central laboratory channel3,138 3,609 2,567 2,645 2,550In-hospital channel2,479 2,449 2,582 2,637 2,751Pharma research and development channel2,805 3,065 3,974 3,665 3,863Total 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 44,037In-hospital channel34,072 29,448 36,991 35,990 38,210Pharma research and development channel9,815 22,822 20,247 18,858 12,837Total 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%