Burning
Rock Reports
Fourth Quarter and Full Year 2023
Financial Results
GUANGZHOU, China, March 28,
2024-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 and the year ended December 31, 2023.
2023 Business Overview and Recent Updates
·
Corporate
Updates
o Completed profitability-driven organizational optimization,
execution towards profitability well underway
·
Early
Detection
o Following the Breakthrough Device Designation granted by the
US Food and Drug Administration (FDA) for our OverCâ„¢ Multi-Cancer
Detection Blood Test (MCDBT) in January 2023, our OverCâ„¢ 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.
·
Therapy Selection
and Minimal Residual Disease (MRD)
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 has progressed
during or after aromatase inhibitor therapy. The study demonstrates
that Capivasertib-fulvestrant combination therapy results in
significantly longer progression-free survival than treatment with
fulvestrant alone.
·
Pharma
Services
o New
companion diagnostics (CDx) development for breast and prostatic
cancer announced with AstraZeneca in China.
o Entered into a Master Service Agreement in Oncology Companion
Diagnostics (CDx) with Boehringer Ingelheim, focusing on advancing
the clinical trials related to Boehringer Ingelheim's MDM2-p53
antagonist, brigimadlin (BI 907828), and the development of CDx
products in China.
o Total value of new contracts entered
into during 2023 amounted to RMB310 million,
representing a 24% increase from 2022.
Fourth Quarter 2023 Financial Results
Revenues were RMB121.1 million (US$17.1 million) for the three months
ended December 31, 2023, representing a 14.9% decrease from
RMB142.2 million for the same period in
2022.
· Revenue generated from central laboratory business was RMB51.3
million (US$7.2 million) for the three months ended December 31,
2023, representing a 28.7% decrease from RMB72.0 million for the
same period in 2022, primarily attributable to a decrease in the
number of tests, as we continued to focus on our in-hospital
business.
· Revenue generated from in-hospital business was RMB28.8
million (US$4.1 million) for the three months ended December 31,
2023, representing a 32.3% decrease from RMB42.5 million for the
same period in 2022, primarily attributable to one-off adjustment
with two hospitals. Exclude such two, revenue generated from
in-hospital business for the three months ended December 31, 2023
would have remained relatively stable (decreasing by 1%)
year-over-year.
· Revenue generated from pharma research and development
services was RMB41.0 million (US$5.8 million) for the three months
ended December 31, 2023, representing a 47.8% increase from RMB27.7
million for the same period in 2022, primarily attributable to
increased development and testing services performed for our pharma
customers.
Cost of revenues remained relatively stable at RMB43.0
million (US$6.1 million) for the three months ended December 31,
2023, compared to RMB41.0 million for the same period in
2022.
Gross profit was RMB78.1 million (US$11.0 million) for the three months
ended December 31, 2023, representing a
22.9% decrease from RMB101.3
million for the same
period in 2022. Gross margin was 64.5% for
the three months ended December 31, 2023, compared to 71.2% for the
same period in 2022. By channel, gross margin of central laboratory
business was 81.7% for the three months ended December 31, 2023,
compared to 75.7% during the same period in 2022, primarily due to
a decrease in inventory write down; gross margin of in-hospital
business was 44.8% for the three months ended December 31, 2023,
compared to 63.5% during the same period in 2022, primarily due to
a decrease in revenue generated from two hospitals
due to one-off adjustment. Exclude such two, gross
margin of in-hospital business was 65.0% for the three months ended
December 31, 2023, compared to 66.6% during the same period in
2022; gross margin of pharma research and
development services was 56.9% for the three months ended December
31, 2023, compared to 71.2% during the same period of 2022,
primarily due to a decrease in test volume of higher margin
projects.
Non-GAAP gross profit, which
excludes depreciation and amortization expenses,
was RMB87.1 million (US$12.3 million) for the
three months ended December 31, 2023, representing a 21.1% decrease from
RMB110.4 million for the same period in 2022. Non-GAAP
gross margin was 71.9% for the three months ended
December 31, 2023, compared to 77.6% for the same period in
2022.
Operating expenses
were RMB244.4 million (US$34.4 million)
for the three months ended December 31, 2023,
representing a 23.3% decrease from RMB318.7 million for the same
period in 2022. The decrease was primarily
driven by budget control measures, including headcount
reduction, to improve our operating efficiency.
·
Research and development expenses were
RMB73.1 million (US$10.3 million) for the
three months ended December 31, 2023, representing an 27.5% decrease from
RMB100.8 million for the same period in 2022, primarily due to (i)
a decrease in the expenditure for detection research, and (ii) a
decrease in staff cost resulted from the reorganization of our
research and development department to improve operating
efficiency.
·
Selling and marketing expenses were
RMB49.8 million (US$7.0 million) for the
three months ended December 31, 2023, representing a 41.5% decrease
from RMB85.2 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
RMB121.5 million (US$17.1 million) for the
three months ended December 31, 2023, representing a 8.4% decrease
from RMB132.7 million for the same period in 2022, primarily due to
a decrease in professional service fee.
Net loss was RMB162.2 million (US$22.8 million) for the three months ended
December 31, 2023, compared to RMB216.2 million for the same period
in 2022.
Cash, cash equivalents, restricted
cash were RMB615.2 million
(US$86.7
million) as of December
31, 2023.
Full Year 2023 Financial Results
Revenues were RMB537.4 million (US$75.7 million) for 2023, representing a 4.6%
decrease from RMB563.2 million for 2022.
·
Revenue generated from central laboratory business
was RMB232.8 million (US$32.8 million) for
2023, representing a 26.0% decrease from RMB314.8 million for 2022,
primarily attributable to a decrease in the number of tests, as we
continued to focus on our in-hospital business.
·
Revenue generated from in-hospital business was
RMB188.7 million (US$26.6 million) for
2023, representing a 7.6% increase from RMB175.3 million for 2022,
primarily due to demand from ten new contracted partner hospitals
added to the Company's in-hospital channel in 2023.
·
Revenue generated from pharma research and
development services was RMB115.9 million (US$16.3 million) for
2023, representing a 58.4% increase from RMB73.2 million for 2022,
primarily attributable to increased development and testing
services performed for our pharma customers.
Cost of revenues was RMB174.2
million (US$24.5 million) for 2023,
representing a 4.9% decrease from RMB183.2 million for 2022,
primarily due to a decrease in cost of revenues for our central lab
business, as we continued to focus on our
in-hospital business.
Gross profit was
RMB363.2 million (US$51.2 million) for
2023, representing a 4.4% decrease from RMB380.0 million for 2022.
Gross margin increased to 67.6% for 2023 from 67.5% for
2022.
Non-GAAP gross profit, which
excludes depreciation and amortization expenses,
was RMB399.4 million (US$56.3 million) for
2023, representing
a 2.8% decrease from RMB411.0 million for 2022. Non-GAAP
gross margin was 74.3% for 2023, compared to 73.0%
for 2022.
Operating expenses were
RMB1,032.5 million (US$145.4 million) for
2023, representing a 24.1% decrease from RMB1,360.4 million for
2022.
· Research and development expenses were RMB347.0 million (US$48.9 million) for 2023, representing a 17.7%
decrease from RMB421.9 million for 2022, primarily due to (i) a
decrease in the expenditure for detection research, (ii) a decrease
in royalty and license fee, and (iii) a decrease in staff cost
resulted from the reorganization of our research and development
department to improve operating efficiency.
·
Selling and marketing expenses were RMB247.7
million (US$34.9 million) for 2023,
representing a 33.1% decrease from RMB370.3 million for 2022,
primarily due to (i) a decrease in staff cost resulted from the
reorganization of our sales department to improve operating
efficiency, (ii) a decrease in marketing
and conference fee; and (iii) a decrease in entertainment
fee.
· General and administrative expenses were
RMB437.8 million (US$61.7 million) for
2023, representing a 23.0% decrease from RMB568.3 million for 2022,
primarily due to (i) a decrease in professional service fee; (ii) a
decrease in allowance for doubtful accounts resulting from
accelerated settlement with customers with long aging accounts
receivable; and (iii) a decrease in staff cost resulted from the
reorganization of our general and administrative department to
improve operating efficiency.
Net loss was RMB653.7 million (US$92.1 million) for 2023, compared to RMB971.2
million for 2022.
2024 Financial Guidance
We currently expect to achieve
breakeven (measured by non-GAAP gross profit minus non-GAAP
SG&A) in the first half of 2024.
Non-GAAP gross profit refers to
gross profit excluding depreciation and amortization. Non-GAAP
SG&A refers to selling and marketing expenses and general and
administrative expenses, both excluding their respective
share-based compensation and depreciation and
amortization.
Conference Call Information
Burning Rock will host a conference
call to discuss the fourth quarter and full year 2023 financial
results at 8:00 a.m. U.S. Eastern Time (8:00 p.m. Hong Kong time)
on March 29, 2024.
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/BIa8b469b65e8e428e942decdf0c4c6687.
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/hrphgr99.
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
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As of
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|
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|
|
|
|
|
|
|
|
|
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|
In-hospital Channel:
|
|
|
|
|
|
|
|
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|
Pipeline partner
hospitals(1)
|
|
|
|
|
|
|
|
|
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|
Contracted partner
hospitals(2)
|
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Total number of partner hospitals
|
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(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
|
|
|
|
|
|
|
|
|
|
|
(RMB in
thousands)
|
|
|
Central laboratory channel
|
|
|
|
|
|
|
|
|
|
In-hospital channel
|
|
|
|
|
|
|
|
28,809
|
|
Pharma research and development
channel
|
|
|
|
|
|
|
|
|
|
Total revenues
|
|
|
|
|
|
|
|
121,085
|
|
|
|
For the three months
ended
|
|
|
|
Gross profit
|
|
|
|
|
|
|
|
|
|
|
(RMB in
thousands)
|
|
|
Central laboratory channel
|
|
|
|
|
|
|
|
41,886
|
|
In-hospital channel
|
|
|
|
|
|
|
|
12,910
|
|
Pharma research and development
channel
|
|
|
|
|
|
|
|
23,317
|
|
Total gross profit
|
|
|
|
|
|
|
|
78,113
|
|
|
|
For the three months
ended
|
|
|
|
Share-based compensation expenses
|
|
|
|
|
|
|
|
|
|
|
(RMB in
thousands)
|
|
|
Cost of revenues
|
|
|
|
|
|
|
|
654
|
|
Research and development
expenses
|
|
|
|
|
|
|
|
|
|
Selling and marketing
expenses
|
|
|
|
|
|
|
|
|
|
General and administrative
expenses
|
|
|
|
|
|
|
|
|
|
Total share-based compensation expenses
|
|
|
|
|
|
|
|
|
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
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RMB
|
RMB
|
RMB
|
RMB
|
RMB
|
RMB
|
RMB
|
RMB
|
US$
|
|
Revenues
|
135,524
|
130,846
|
154,631
|
142,237
|
142,516
|
146,268
|
127,566
|
121,085
|
17,054
|
|
Cost of revenues
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
87,580
|
82,602
|
108,594
|
101,263
|
98,772
|
100,422
|
85,920
|
78,113
|
11,002
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
Research and development
expenses
|
(119,496)
|
(92,112)
|
(109,433)
|
(100,827)
|
(94,417)
|
(95,779)
|
(83,701)
|
(73,119)
|
(10,299)
|
|
Selling and marketing
expenses
|
(89,211)
|
(105,634)
|
(90,275)
|
(85,174)
|
(64,774)
|
(70,842)
|
(62,310)
|
(49,785)
|
(7,012)
|
|
General and administrative
expenses
|
(141,733)
|
(150,316)
|
(143,530)
|
(132,705)
|
(128,039)
|
(69,525)
|
(118,724)
|
(121,533)
|
(17,118)
|
|
Total operating expenses
|
|
|
|
|
|
|
|
|
|
|
Loss from operations
|
|
|
|
|
|
|
|
|
|
|
Interest income
|
1,932
|
2,656
|
2,013
|
2,838
|
3,144
|
5,255
|
4,018
|
5,539
|
780
|
|
Other income (expense),
net
|
298
|
127
|
(189)
|
(84)
|
599
|
(118)
|
(157)
|
160
|
23
|
|
Foreign exchange (loss) gain,
net
|
(777)
|
624
|
1,337
|
365
|
(116)
|
（210）
|
423
|
(517)
|
(73)
|
|
Loss before income tax
|
|
|
|
|
|
|
|
|
|
|
Income tax expenses
|
|
|
|
|
|
|
|
|
|
|
Net
loss
|
|
|
|
|
|
|
|
|
|
|
Net
loss attributable to Burning Rock Biotech Limited's
shareholders
|
(261,388)
|
(262,137)
|
(231,483)
|
(216,225)
|
(185,253)
|
(131,242)
|
(174,981)
|
(162,213)
|
(22,848)
|
|
Net
loss attributable to ordinary shareholders
|
(261,388)
|
(262,137)
|
(231,483)
|
(216,225)
|
(185,253)
|
(131,242)
|
(174,981)
|
(162,213)
|
(22,848)
|
|
Loss per share for class A and class B ordinary
shares:
|
|
|
|
|
|
|
|
|
|
|
Class A ordinary shares - basic and
diluted
|
(2.50)
|
(2.50)
|
(2.23)
|
（2.11）
|
(1.81)
|
(1.28)
|
(1.71)
|
(1.58)
|
(0.22)
|
|
Class B ordinary shares - basic and
diluted
|
(2.50)
|
(2.50)
|
(2.23)
|
（2.11）
|
(1.81)
|
(1.28)
|
(1.71)
|
(1.58)
|
(0.22)
|
|
Weighted average shares outstanding used in loss per share
computation:
|
|
|
|
|
|
|
|
|
|
|
Class A ordinary shares - basic and
diluted
|
87,179,752
|
87,532,539
|
86,585,322
|
85,051,882
|
85,065,585
|
85,151,052
|
85,000,869
|
85,071,360
|
85,071,360
|
|
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
|
17,324,848
|
|
Other comprehensive (loss) income, net of tax of
nil:
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation
adjustments
|
(3,065)
|
29,715
|
20,646
|
(5,950)
|
(5,659)
|
14,829
|
(1,955)
|
(3,026)
|
(426)
|
|
Total comprehensive loss
|
(264,453)
|
(232,422)
|
(210,837)
|
(222,175)
|
(190,912)
|
(116,413)
|
(176,936)
|
(165,239)
|
(23,274)
|
|
Total comprehensive loss attributable to Burning Rock Biotech
Limited's shareholders
|
(264,453)
|
(232,422)
|
(210,837)
|
(222,175)
|
(190,912)
|
(116,413)
|
(176,936)
|
(165,239)
|
(23,274)
|