Burning Rock Reports Fourth Quarter and Full Year 2021 Financial Results


GUANGZHOU, China, March 21, 2022 (GLOBE NEWSWIRE) — Burning Rock Biotech Limited (NASDAQ: 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 and the year ended December 31, 2021.

2021 Business Overview and Recent Updates

  • Therapy Selection  
    • Achieved 38% overall testing volume growth year-on-year during 2021 full-year, with accelerated transition towards the in-hospital segment, our strategic focus. 2021 fourth quarter testing volume growth accelerated to 33% year-on-year, from 14% year-on-year in the third quarter of 2021.
    • Obtained the National Medical Products Administration (NMPA) approval for our second NGS-based companion diagnostics (CDx) kit and software.
  • Minimal Residual Disease (MRD)
    • Completed product development, based on a personalized approach.
    • Clinical datasets (non-small cell lung cancer and colorectal cancer post-operative prognosis) reading out at American Association for Cancer Research (AACR) Annual Meeting 2022.
    • Commercially launched in March 2022.
  • Pharma Services
    • Fast build-up of project backlog. The total value of new contracts we entered into during 2021 amounted to RMB183 million, approximately 5.7 times of the new contract value signed in 2020.
    • Notable new projects entered during the fourth quarter of 2021 include a CDx development collaboration with Merck for the MET inhibitor tepotinib for the mainland China market, based on our liquid biopsy OncoCompass™ Target panel.  
  • Early Detection  
    • 9-cancer test development on track: first clinical study (the PROMISE study, NCT04972201, with c. 2,000 patients) completed enrollment and is expected to read out in 2022.

Fourth Quarter 2021 Financial Results

Revenues were RMB147.3 million (US$23.1 million) for the three months ended December 31, 2021, representing a 11.9% increase from RMB131.7 million for the same period in 2020, or a 16.4% sequential increase from RMB126.6 million for the three months ended September 30, 2021.

  • Revenue generated from central laboratory business was RMB86.0 million (US$13.5 million) for the three months ended December 31, 2021, representing a 0.8% decrease from RMB86.7 million for the same period in 2020, narrowing from a year-on-year decrease of 12.3% during the third quarter of 2021.
  • Revenue generated from in-hospital business was RMB51.9 million (US$8.1 million) for the three months ended December 31, 2021, representing a 25.2% increase from RMB41.5 million for the same period in 2020, driven by in-hospital testing volume growth. Both volume and revenue metrics reached a new quarterly high.
  • Revenue generated from pharma research and development services was RMB9.5 million (US$1.5 million) for the three months ended December 31, 2021, representing a 165.1% increase from RMB3.6 million for the same period in 2020, primarily attributable to increased testing performed for our pharma customers and growth in companion diagnostics development services.

Cost of revenues was RMB42.0 million (US$6.6 million) for the three months ended December 31, 2021, representing a 28.9% increase from RMB32.6 million for the same period in 2020, which was broadly in line with the Company’s continued business growth.

Gross profit was RMB105.4 million (US$16.5 million) for the three months ended December 31, 2021. Gross margin was 71.5% for the three months ended December 31, 2021, compared to 75.3% for the same period in 2020. By channel, gross margin of central laboratory business was 76.7% during the fourth quarter of 2021, compared to 76.8% during the same period in 2020; gross margin of in-hospital business was 65.9% during the fourth quarter of 2021, compared to 72.9% during the same period in 2020.

Operating expenses were RMB357.5 million (US$56.1 million) for the three months ended December 31, 2021, representing a 40.5% increase from RMB254.5 million for the same period in 2020. The increase was primarily driven by headcount growth to support our business expansion.

  • Research and development expenses were RMB112.7 million (US$17.7 million) for the three months ended December 31, 2021, representing a 35.1% increase from RMB83.4 million for the same period in 2020, primarily due to (i) an increase in expenditure for early cancer detection related research, and (ii) an increase in research and development personnel’s staff cost.
  • Selling and marketing expenses were RMB103.2 million (US$16.2 million) for the three months ended December 31, 2021, representing an 82.3% increase from RMB56.6 million for the same period in 2020, primarily due to an increase in staff cost resulted from an increase in headcount to strengthen our commercial presence in the therapy selection business and build-up our early detection commercialization team.
  • General and administrative expenses were RMB141.6 million (US$22.2 million) for the three months ended December 31, 2021, representing a 23.6% increase from RMB114.5 million for the same period in 2020, primarily due to an increase in general and administrative personnel’s staff cost resulted from an increase in headcount and an increase in share-based compensation expenses.

Net loss was RMB251.1 million (US$39.4 million) for the three months ended December 31, 2021, compared to RMB156.5 million for the same period in 2020.

Cash, cash equivalents, restricted cash and short-term investments were RMB1,502.9 million (US$235.8 million) as of December 31, 2021.

Full Year 2021 Financial Results

Revenues were RMB507.9 million (US$79.7 million) for 2021, representing an 18.1% increase from RMB429.9 million for 2020.

  • Revenue generated from central laboratory business was RMB319.4 million (US$50.1 million) for 2021, representing a 7.4% increase from RMB297.3 million for 2020.
  • Revenue generated from in-hospital business was RMB165.1 million (US$25.9 million) for 2021, representing a 40.1% increase from RMB117.9 million for 2020. Number of contracted partner hospitals in the in-hospital channel increased to 41 as of December 31, 2021 from 29 as of December 31, 2020.
  • Revenue generated from pharma research and development services was RMB23.4 million (US$3.7 million) for 2021, representing a 59.3% increase from RMB14.7 million for 2020, primarily attributable to increased testing performed for our pharma customers and growth in companion diagnostics development services.

Cost of revenues was RMB143.7 million (US$22.6 million) for 2021, representing a 23.9% increase from RMB116.0 million for 2020, which was in line with the Company’s continued business growth.

Gross profit was RMB364.1 million (US$57.1 million) for 2021, representing a 16.0% increase from RMB313.9 million for 2020. Gross margin was 71.7% for 2021, compared to 73.0% for 2020.

Operating expenses were RMB1,161.2 million (US$182.2 million) for 2021, representing a 59.9% increase from RMB726.3 million for 2020.

  • Research and development expenses were RMB367.9 million (US$57.7 million) for 2021, representing a 39.4% increase from RMB263.9 million for 2020, primarily due to (i) an increase in expenditure for early cancer detection related research, and (ii) an increase in staff cost of research and development personnel.
  • Selling and marketing expenses were RMB303.1 million (US$47.6 million) for 2021, representing a 79.8% increase from RMB168.6 million for 2020, primarily due to an increase in staff cost of selling and marketing personnel.
  • General and administrative expenses were RMB490.3 million (US$76.9 million) for 2021, representing a 66.9% increase from RMB293.8 million for 2020, primarily due to (i) an increase in share-based compensation expenses for options granted to general and administrative personnel, and (ii) an increase in staff cost of general and administrative personnel.

Net loss was RMB796.7 million (US$125.0 million) for 2021, compared to RMB 407.2 million for 2020.

2022 Financial Guidance

We currently expect our full year 2022 revenues to be approximately RMB620 million (US$97.3 million), implying a 22% growth over full year 2021.

Conference Call Information

Burning Rock will host a conference call to discuss the fourth quarter 2021 financial results at 8:00 a.m. U.S. Eastern Time (8:00 p.m. Hong Kong time) on March 22, 2022.

Details of the conference call are as follows:

International: +65 67135590
U.S.: +1 3322089468
U.K.: +44 2036928125
Hong Kong: +852 30186771
China Mobile: 4008205286
China Landline: 8008208659
Conference ID: 8596728

A replay of the conference call will be available for one week (dial-in number: +61 2 9003 4211); same conference ID as shown above).

About Burning Rock

Burning Rock Biotech Limited (NASDAQ: 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.

Selected Operating Data
 
  For the three months ended  
  March 31,
2020
  June 30,
2020
  September 30,
2020
  December 31,
2020
  March 31,
2021
  June 30,
2021
  September 30,
2021
  December 31,
2021
Central Laboratory Channel:                              
Number of patients tested 4,680   7,252   8,644   7,989   7,716   8,155   7,808   8,235
Number of ordering physicians(1) 810   1,175   1,194   1,114   1,082   1,013   920   917
Number of ordering hospitals(2) 232   284   289   294   303   300   287   306

(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.

     
  For the three months ended  
  March 31,
2020
  June 30,
2020
  September 30,
2020
  December 31,
2020
  March 31,
2021
  June 30,
2021
  September 30,
2021
  December 31,
2021
In-hospital Channel:                              
Pipeline partner hospitals(1) 23   23   22   23   22   22   24   23
Contracted partner hospitals(2) 21   24   25   29   32   34   34   41
Total number of partner hospitals 44   47   47   52   54   56   58   64

(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,
2020
  June 30,
2020
  September 30,
2020
  December 31,
2020
  March 31,
2021
  June 30,
2021
  September 30,
2021
  December 31,
2021
                               
  (RMB in thousands)
Central laboratory channel 46,141   74,607   89,899   86,695   74,561   79,999   78,817   85,976
In-hospital channel 17,123   27,588   31,704   41,457   28,994   40,502   43,714   51,906
Pharma research and development channel 4,065   4,776   2,278   3,570   3,068   6,778   4,084   9,463
Total revenues 67,329   106,971   123,881   131,722   106,623   127,279   126,615   147,345
  For the three months ended  
Gross profit March 31,
2020
  June 30,
2020
  September 30,
2020
  December 31,
2020
  March 31,
2021
  June 30,
2021
  September 30,
2021
  December 31,
2021
                               
  (RMB in thousands)
Central laboratory channel 32,434   56,556   67,804   66,588   55,212   58,681   58,387   65,985
In-hospital channel 10,126   19,269   22,410   30,218   20,070   29,426   31,111   34,194
Pharma research and development channel 2,224   2,573   1,373   2,347   1,658   2,124   2,098   5,200
Total gross profit 44,784   78,398   91,587   99,153   76,940   90,231   91,596   105,379
  For the three months ended  
Share-based compensation March 31,
2020
  June 30,
2020
  September 30,
2020
  December 31,
2020
  March 31,
2021
  June 30,
2021
  September 30,
2021
December 31,
2021
                                 
  (RMB in thousands)
Cost of revenues 176   183   160   277   339   406   267     492  
Research and development expenses 2,072   25,314   10,572   11,843   22,404   20,825   (9,559 )   (4,033 )
Selling and marketing expenses 253   491   341   2,372   2,633   2,809   2,044     2,126  
General and administrative expenses 1,665   1,639   57,805   58,057   59,382   59,369   60,803     62,126  
Total share-based compensation expenses 4,166   27,627   68,878   72,549   84,758   83,409   53,555     60,711  
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,
2020 
  June 30,
2020 
  September
30, 2020
 
  December
31, 2020
 
  March 31,
2021 
  June 30,
2021 
  September
30, 2021
 
  December
31, 2021
 
  December
31, 2021
  RMB    RMB    RMB    RMB    RMB    RMB    RMB    RMB    US$
Revenues 67,329     106,971     123,881     131,722     106,623     127,279     126,615     147,345     23,122  
Cost of revenues (22,545 )   (28,573 )   (32,294 )   (32,569 )   (29,683 )   (37,048 )   (35,019 )   (41,966 )   (6,585 )
Gross profit 44,784     78,398     91,587     99,153     76,940     90,231     91,596     105,379     16,537  
Operating expenses:                                                  
Research and development expenses (40,016 )   (71,176 )   (69,330 )   (83,418 )   (77,414 )   (108,071 )   (69,649 )   (112,724 )   (17,689 )
Selling and marketing expenses (29,815 )   (37,992 )   (44,174 )   (56,606 )   (55,130 )   (68,058 )   (76,687 )   (103,221 )   (16,198 )
General and administrative expenses (34,295 )   (42,272 )   (102,731 )   (114,502 )   (116,259 )   (116,130 )   (116,304 )   (141,563 )   (22,214 )
Total operating expenses (104,126 )   (151,440 )   (216,235 )   (254,526 )   (248,803 )   (292,259 )   (262,640 )   (357,508 )   (56,101 )
Loss from operations (59,342 )   (73,042 )   (124,648 )   (155,373 )   (171,863 )   (202,028 )   (171,044 )   (252,129 )   (39,564 )
Interest income 3,985     44     698     1,341     787     681     958     1,031     162  
Interest expense (1,178 )   1,939     (776 )   (652 )   (510 )   (565 )   (367 )   (94 )   (15 )
Other (expense) income, net (151 )   122     (176 )   (682 )   118     433     20     (372 )   (58 )
Foreign exchange gain (loss), net 611     (118 )   (2,228 )   (1,112 )   57     (560 )   380     (731 )   (115 )
Change in fair value of warrant liability 3,503                                  
Loss before income tax (52,572 )   (71,055 )   (127,130 )   (156,478 )   (171,411 )   (202,039 )   (170,053 )   (252,295 )   (39,590 )
Income tax (expenses) benefit                     (1,626 )   (424 )   1,151     181  
Net loss (52,572 )   (71,055 )   (127,130 )   (156,478 )   (171,411 )   (203,665 )   (170,477 )   (251,144 )   (39,409 )
Net loss attributable to Burning Rock Biotech Limited’s shareholders (52,572 )   (71,055 )   (127,130 )   (156,478 )   (171,411 )   (203,665 )   (170,477 )   (251,144 )   (39,409 )
Accretion of convertible preferred shares (26,288 )   (38,400 )                            
Net loss attributable to ordinary shareholders (78,860 )   (109,455 )   (127,130 )   (156,478 )   (171,411 )   (203,665 )   (170,477 )   (251,144 )   (39,409 )
Loss per share:                                                  
Ordinary shares – basic and diluted (3.15 )                                  
Class A ordinary shares – basic and diluted

   

(2.68

)

  (1.22 )   (1.51 )  

(1.65

)

 

(1.96

)

 

(1.64

)

 

(2.40

)

 

(0.38

)

Class B ordinary shares – basic and diluted     (2.68 )   (1.22 )   (1.51 )   (1.65 )   (1.96 )   (1.64 )   (2.40 )   (0.38 )
Weighted average shares outstanding used in loss per share computation:                                                  
Ordinary shares – basic and diluted 25,031,575                                  
Class A ordinary shares – basic and diluted

   

23,461,319

    86,479,686     86,511,799    

86,721,263

   

86,764,260

   

86,908,975

   

87,128,297

   

87,128,297

 
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

   

17,324,848

   

17,324,848

 
Other comprehensive (loss) income, net of tax of nil:                                                  
Foreign currency translation adjustments 11,422     (2,336 )   (91,093 )   (94,881 )   14,080     (34,980 )   6,146     (24,726 )   (3,880 )
Total comprehensive loss (41,150 )   (73,391 )   (218,223 )   (251,359 )   (157,331 )   (238,645 )   (164,331 )   (275,870 )   (43,289 )
Total comprehensive loss attributable to Burning Rock Biotech Limited’s shareholders (41,150 )   (73,391 )   (218,223 )   (251,359 )   (157,331 )   (238,645 )   (164,331 )   (275,870 )   (43,289 )
                                                     
Burning Rock Biotech Limited
 
Unaudited Condensed Statements of Comprehensive Loss
 
(in thousands, except for share and per share data)
 
  For the year ended
  December 31,
2020
  December 31,
2021
  December 31,
2021
  RMB
  RMB
  USD
Revenues 429,903     507,862     79,694  
Cost of revenues (115,981 )   (143,716 )   (22,553 )
Gross profit 313,922     364,146     57,141  
Operating expenses:                
Research and development expenses (263,940 )   (367,858 )   (57,725 )
Selling and marketing expenses (168,587 )   (303,096 )   (47,562 )
General and administrative expenses (293,800 )   (490,256 )   (76,932 )
Total operating expenses (726,327 )   (1,161,210 )   (182,219 )
Loss from operations (412,405 )   (797,064 )   (125,078 )
Interest income 6,068     3,457     542  
Interest expense (667 )   (1,536 )   (241 )
Other (expense) income, net (887 )   199     31  
Foreign exchange loss, net (2,847 )   (854 )   (134 )
Change in fair value of warrant liability 3,503          
Loss before income tax (407,235 )   (795,798 )   (124,880 )
Income tax expenses     (899 )   (141 )
Net loss (407,235 )   (796,697 )   (125,021 )
Net loss attributable to Burning Rock Biotech Limited’s shareholders (407,235 )   (796,697 )   (125,021 )
Accretion of convertible preferred shares (64,688 )        
Net loss attributable to ordinary shareholders (471,923 )   (796,697 )   (125,021 )
                 
Loss per share:                
Class A ordinary shares – basic and diluted (6.88 )   (7.65 )   (1.20 )
Class B ordinary shares – basic and diluted (6.88 )   (7.65 )   (1.20 )
                 
Weighted average shares outstanding used in loss per share computation:                
Class A ordinary shares – basic and diluted 51,309,631     86,883,011     86,883,011  
Class B ordinary shares – basic and diluted 17,324,848     17,324,848     17,324,848  
                 
Other comprehensive loss, net of tax of nil:                
Foreign currency translation adjustments
Foreign currency translation adjustments
(176,888 )   (39,480 )   (6,195 )
Total comprehensive loss (584,123 )   (836,177 )   (131,216 )
                 
Total comprehensivelossattributable to Burning Rock Biotech Limited’s shareholders (584,123 )   (836,177 )   (131,216 )
                 
Burning Rock Biotech Limited
 
Unaudited Condensed Consolidated Balance Sheets
 
(In thousands)
   
  As of
  December 31,
2020
  December 31,
2021
  December 31,
2021
  RMB   RMB   US$
ASSETS          
Current assets:          
Cash and cash equivalents 1,895,308   1,431,317   224,605
Restricted cash 29,898   7,795   1,223
Short-term investments 362,132   63,757   10,005
Accounts receivable, net 88,218   92,197   14,468
Contract assets, net 22,534   42,391   6,652
Amounts due from related parties 212    
Inventories 68,021   123,210   19,335
Prepayments and other current assets, net 57,329   60,279   9,460
Total current assets 2,523,652   1,820,946   285,748
Non-current assets:          
Equity method investment 1,417   910   143
Property and equipment, net 111,481   325,438   51,068
Operating right-of-use assets   81,007   12,712
Intangible assets, net 3,457   5,150   808
Other non-current assets 23,021   45,136   7,083
Total non-current assets 139,376   457,641   71,814
TOTAL ASSETS 2,663,028   2,278,587   357,562
           
Burning Rock Biotech Limited
 
Unaudited Condensed Consolidated Balance Sheets (Continued)
 
(in thousands)
   
  As of
  December 31,
2020

  December 31,
2021
  December 31,
2021
  RMB
  RMB
  US$
LIABILITIES AND SHAREHOLDERS’ EQUITY                
Current liabilities:                
Accounts payable 35,482     63,080     9,899  
Deferred revenue 74,402     142,871     22,420  
Capital lease obligations, current 4,816          
Accrued liabilities and other current liabilities 83,648     127,892     20,070  
Customer deposits 1,120     972     153  
Short-term borrowings 7,370     2,370     372  
Current portion of long-term borrowings 34,695          
Current portion of operating lease liabilities     34,999     5,492  
Total current liabilities 241,533     372,184     58,406  
Non-current liabilities:                
Deferred government grants 263          
Non-current portion of operating lease liabilities     49,316     7,739  
Other non-current liabilities 228     11,776     1,848  
Total non-current liabilities 491     61,092     9,587  
TOTAL LIABILITIES 242,024     433,276     67,993  
                 
Shareholders’ equity:                
Class A ordinary shares 116     116     18  
Class B ordinary shares 21     21     3  
Additional paid-in capital 4,006,616     4,280,956     671,775  
Accumulated deficits (1,418,160 )   (2,228,713 )   (349,733 )
Accumulated other comprehensive loss (167,589 )   (207,069 )   (32,494 )
Total shareholders’ equity 2,421,004     1,845,311     289,569  
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY 2,663,028     2,278,587     357,562  
                 
Burning Rock Biotech Limited
 
Unaudited Condensed Statements of Cash Flows
 
(in thousands)
   
  For the three months ended
  December 31,
2020

  December 31,
2021

  December 31,
2021
  RMB
  RMB
  US$
Net cash used in operating activities (90,659 )   (112,349 )   (17,628 )
Net cash used in investing activities (36,428 )   (66,970 )   (10,508 )
Net cash generated from (used in) financing activities 68,477     (6,781 )   (1,065 )
Effect of exchange rate on cash, cash equivalents and restricted cash (78,013 )   (24,498 )   (3,844 )
Net decrease cash, cash equivalents and restricted cash (136,623 )   (210,598 )   (33,045 )
Cash, cash equivalents and restricted cash at the beginning of period 2,061,829     1,649,710     258,873  
Cash, cash equivalents and restricted cash at the end of period 1,925,206     1,439,112     225,828  
                 
  For the year ended
  December 31,
2020

  December 31,
2021

  December 31,
2021
  RMB
  RMB
  US$
Net cash used in operating activities (73,543 )   (477,886 )   (74,993 )
Net cash generated from (used in) investing activities (109,312 )   81,697     12,823  
Net cash generated from (used in) financing activities 2,165,719     (52,899 )   (8,301 )
Effect of exchange rate on cash, cash equivalents and restricted cash (155,902 )   (37,006 )   (5,808 )
Net increase (decrease) cash, cash equivalents and restricted cash 1,826,962     (486,094 )   (76,279 )
Cash, cash equivalents and restricted cash at the beginning of period 98,244     1,925,206     302,107  
Cash, cash equivalents and restricted cash at the end of period 1,925,206     1,439,112     225,828  
                 

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