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Burning Rock Reports Third Quarter 2024 Financial Results

/EIN News/ -- GUANGZHOU, China, Dec. 03, 2024 (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 ended September 30, 2024.

Recent Business Updates

  • Therapy Selection
    • Presented study results at the 2024 World Conference on Lung Cancer in September 2024. “Neoadjuvant sintilimab plus chemotherapy could be an optional treatment modality in selected EGFR-mutant NSCLC” and “Distinct Genomic and Immune Microenvironment Features of Solid or Micropapillary Predominant Subtype in Stage I Lung Adenocarcinomas”.
    • Signed a strategic cooperation agreement with MGI Tech Co., Ltd in October 2024, aiming to fully complement each other's platform and technological advantages to further promote the clinical application progress and global business of precision oncology.
  • Pharma Services
    • The companion diagnostic (CDx) for EGFR exon 20 insertion mutation (exon20ins) for sunvozertinib, developed through the collaboration of Burning Rock and Dizal, has been approved by the National Medical Products Administration (NMPA) of China, which marks the first co-developed NGS-based CDx for lung cancer approved by NMPA since the release of the CDx guideline in China.

Third Quarter 2024 Financial Results

Total revenues were RMB128.6 million (US$18.3 million) for the three months ended September 30, 2024, representing a 0.8% increase from RMB127.6 million for the same period in 2023, the increased revenue of in-hospital business was offset by the decrease of central-lab business, as we transition from central-lab to more in-hospital based testing.

  • Revenue generated from in-hospital business was RMB63.8 million (US$9.1 million) for the three months ended September 30, 2024, representing a 17.0% increase from RMB54.5 million for the same period in 2023, driven by an increase in sales volume.
  • Revenue generated from central laboratory business was RMB40.0 million (US$5.7 million) for the three months ended September 30, 2024, representing a 25.2% decrease from RMB53.5 million for the same period in 2023, primarily attributable to a decrease in the number of tests, as we continued our transition towards in-hospital testing.
  • Revenue generated from pharma research and development services was RMB24.9 million (US$3.5 million) for the three months ended September 30, 2024, representing a 27.1% increase from RMB19.6 million for the same period in 2023, primarily attributable to an increased development and testing services performed for our pharma customers.

Cost of revenues was RMB36.8 million (US$5.2 million) for the three months ended September 30, 2024, representing an 11.6% decrease from RMB41.6 million for the same period in 2023, primarily due to (i) a decrease in cost of central laboratory business, which was in line with the decrease in revenue generated from this business; (ii) a decrease in amortization expense for all kinds of business; and (iii) the receipt of a government grant for Guangzhou headquarters building.

Gross profit was RMB91.8 million (US$13.1 million) for the three months ended September 30, 2024, representing a 6.9% increase from RMB85.9 million for the same period in 2023. Gross margin was 71.4% for the three months ended September 30, 2024, compared to 67.4% for the same period in 2023. By channel, gross margin of central laboratory business was 83.2% for the three months ended September 30, 2024, compared to 77.6% during the same period in 2023, primarily due to the decreased depreciation and rental cost in relation to our laboratory of Guangzhou headquarters; gross margin of in-hospital business was 73.0% for the three months ended September 30, 2024, compared to 65.1% during the same period in 2023, primarily due to the same reason; gross margin of pharma research and development services was 48.2% for the three months ended September 30, 2024, compared to 45.8% during the same period of 2023.

Non-GAAP gross profit, which excludes depreciation and amortization expenses, was RMB97.8 million (US$13.9million) for the three months ended September 30, 2024, representing a 2.8% increase from RMB95.1 million for the same period in 2023. Non-GAAP gross margin was 76.0% for the three months ended September 30, 2024, compared to 74.5% for the same period in 2023.

Operating expenses were RMB130.4 million (US$18.6 million) for the three months ended September 30, 2024, representing a 50.7% decrease from RMB264.7 million for the same period in 2023. The decrease was primarily driven by decreases in amortized expense on share-based compensation, budget control measures and headcount reduction to improve the Company’s operating efficiency.

  • Research and development expenses were RMB49.2 million (US$7.0 million) for the three months ended September 30, 2024, representing a 41.3% decrease from RMB83.7 million for the same period in 2023, primarily due to (i) a decrease in staff cost resulted from the reorganization of our research and development department to improve operating efficiency; (ii) a decrease in the expenditure for research projects; (iii) a decrease in amortized expense on share-based compensation; and (iv) a decrease in amortized expenses for office building decoration.
  • Selling and marketing expenses were RMB48.4 million (US$6.9 million) for the three months ended September 30, 2024, representing a 22.3% decrease from RMB62.3 million for the same period in 2023, primarily due to (i) a decrease in staff cost resulted from the reorganization of the sales department and improvement in operating efficiency; (ii) a decrease in conference fee; and (iii) a decrease in entertainment expense.
  • General and administrative expenses were RMB32.9 million (US$4.7 million) for the three months ended September 30, 2024, representing a 72.3% decrease from RMB118.7 million for the same period in 2023, primarily due to (i) a decrease in amortized expense on share-based compensation; (ii) a decrease in amortized expenses for office building decoration; (iii) a decrease in operating lease; and (iv) a decrease in general and administrative personnel’s staff cost.

Net loss was RMB35.7 million (US$5.10 million) for the three months ended September 30, 2024, compared to RMB175.0 million for the same period in 2023.

Cash, cash equivalents, restricted cash and short-term investments were RMB498.2 million (US$71.0 million) as of September 30, 2024.

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.

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

  As of
  September
30, 2023
December
31, 2023
March 31,
2024
June 30,
2024
September
30, 2024
In-hospital Channel:          
Pipeline partner hospitals(1) 29 28 28 29 30
Contracted partner hospitals(2) 55 59 59 59 61
Total number of partner hospitals 84 87 87 88 91
(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

September
30, 2023
December
31, 2023
March 31,
2024
June 30,
2024
September
30, 2024
 
  (RMB in thousands)
Central laboratory channel 53,481 51,288 47,614 48,773 39,984  
In-hospital channel 54,496 28,809  57,387 59,872 63,769  
Pharma research and development channel 19,589 40,988 20,622 26,888 24,891  
Total revenues 127,566
121,085 125,623 135,533 128,644  


  For the three months ended  
Gross profit

September
30, 2023
December
31, 2023
March 31,
2024
June 30,
2024
September
30, 2024
 
  (RMB in thousands)
Central laboratory channel 41,487 41,886
37,002 38,424 33,262  
In-hospital channel 35,459 12,910
39,192 44,058 46,580  
Pharma research and development channel 8,974 23,317
9,500 12,956 12,004  
Total gross profit
85,920    78,113 85,694 95,438 91,846  


  For the three months ended  
Share-based compensation expenses

September
30, 2023
December
31, 2023
March 31,
2024
June 30,
2024
September
30, 2024
 
  (RMB in thousands)
Cost of revenues 680 654
596 464 289  
Research and development expenses 12,161 12,401 12,287 12,008 3,180  
Selling and marketing expenses 2,848 1,816 508 1,232 1,917  
General and administrative expenses 57,704 56,472 55,990 54,407 4,732  
Total share-based compensation expenses
73,393 71,343 69,381 68,111 10,118  
             


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, 2023
  December
31,2023
  March 31,
2024
  June 30,
2024
  September
30, 2024
  September
30, 2024
 
  RMB   RMB   RMB   RMB   RMB   US$  
Revenues 127,566   121,085   125,623   135,533   128,644   18,331    
Cost of revenues (41,646 ) (42,972 ) (39,929 ) (40,095 ) (36,798 ) (5,243 )  
Gross profit 85,920   78,113   85,694   95,438   91,846   13,088    
Operating expenses:              
                           
Research and development expenses (83,701 ) (73,119 ) (65,985 ) (64,952 ) (49,150 ) (7,004 )  
Selling and marketing expenses (62,310 ) (49,785 ) (46,856 ) (48,907 ) (48,411 ) (6,899 )  
General and administrative expenses (118,724 ) (121,533 ) (98,681 ) (92,794 ) (32,874 ) (4,685 )  
Total operating expenses    (264,735 )    (244,437 ) (211,522 ) (206,653 ) (130,435 ) (18,588 )  
Loss from operations  (178,815 ) (166,324 ) (125,828 ) (111,215 ) (38,589 ) (5,500 )  
Interest income 4,018   5,539   4,038   3,187   3,173   452    
Other income (expense), net (157 ) 160   434   (82 ) 1   -    
Foreign exchange (loss) gain, net 423   (517 ) (13 ) 262   (129 ) (18 )  
Loss before income tax (174,531 ) (161,142 ) (121,369 ) (107,848 ) (35,544 ) (5,066 )  
Income tax expenses       (450 )      (1,071 ) (180 )     (190 ) (201 ) (29 )  
Net loss    (174,981 )    (162,213 ) (121,549 ) (108,038 ) (35,745 ) (5,095 )  
Net loss attributable to Burning Rock Biotech Limited’s shareholders (174,981 ) (162,213 ) (121,549 ) (108,038 ) (35,745 ) (5,095 )  
Net loss attributable to ordinary shareholders (174,981 ) (162,213 ) (121,549 ) (108,038 ) (35,745 ) (5,095 )  
Loss per share for class A and class B ordinary shares:              
Class A ordinary shares - basic and diluted (1.71 ) (1.58 ) (1.19 ) (1.05 ) (0.35 ) (0.05 )  
Class B ordinary shares - basic and diluted (1.71 ) (1.58 ) (1.19 ) (1.05 ) (0.35 ) (0.05 )  
Weighted average shares outstanding used in loss per share computation:              
Class A ordinary shares - basic and diluted 85,000,869   85,071,360   85,219,188   85,271,858   85,902,670   85,902,670    
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 (1,955 ) (3,026 ) 590   940   (4,054 ) (578 )  
Total comprehensive loss (176,936 ) (165,239 ) (120,959 ) (107,098 ) (39,799 ) (5,673 )  
Total comprehensive loss attributable to Burning Rock Biotech Limited’s shareholders (176,936 ) (165,239 ) (120,959 ) (107,098 ) (39,799 ) (5,673 )  
                           


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,
2023
  September 30,
2024
  September 30,
2024
 
  RMB RMB US$
Revenues 416,350   389,800   55,546  
Cost of revenues (131,236 ) (116,822 ) (16,648 )
Gross profit 285,114   272,978   38,898  
Operating expenses:      
Research and development expenses (273,897 ) (180,087 ) (25,662 )
Selling and marketing expenses (197,926 ) (144,174 ) (20,545 )
General and administrative expenses (316,288 ) (224,349 ) (31,969 )
Total operating expenses (788,111 ) (548,610 ) (78,176 )
Loss from operations  (502,997 ) (275,632 ) (39,278 )
Interest income 12,417   10,398   1,482  
Other income, net 324   353   50  
Foreign exchange gain, net 97   120   17  
Loss before income tax (490,159 ) (264,761 ) (37,729 )
Income tax expenses (1,317 ) (571 ) (81 )
Net loss (491,476 ) (265,332 ) (37,810 )
Net loss attributable to Burning Rock Biotech Limited’s shareholders (491,476 ) (265,332 ) (37,810 )
Net loss attributable to ordinary shareholders (491,476 ) (265,332 ) (37,810 )
Loss per share for class A and class B ordinary shares:      
Class A ordinary shares - basic and diluted (4.80 ) (2.58 ) (0.37 )
Class B ordinary shares - basic and diluted (4.80 ) (2.58 ) (0.37 )
Weighted average shares outstanding used in loss per share computation:      
Class A ordinary shares - basic and diluted 85,070,921   85,467,131   85,467,131  
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 7,215   (2,524 ) (360 )
Total comprehensive loss (484,261 ) (267,856 ) (38,170 )
Total comprehensive loss attributable to Burning Rock Biotech Limited’s shareholders (484,261 ) (267,856 ) (38,170 )
             


 
Burning Rock Biotech Limited
Unaudited Condensed Consolidated Balance Sheets
(In thousands)

  As of
  December 31,
2023
September 30,
2024
September 30,
2024
  RMB RMB US$
ASSETS      
Current assets:      
Cash and cash equivalents 615,096 497,969 70,960
Restricted cash 120 278 40
Accounts receivable, net 126,858 166,491 23,725
Contract assets, net 22,748 17,750 2,529
Inventories, net 69,020 66,444 9,468
Prepayments and other current assets, net 50,254 30,623 4,364
Convertible note receivable - 5,320 758
Total current assets 884,096 784,875 111,844


Non-current assets:
     
Equity method investment 337 243 35
Convertible note receivable 5,320 - -
Property and equipment, net 131,912 90,139 12,845
Operating right-of-use assets 12,284 99,301 14,150
Intangible assets, net 964 525 75
Other non-current assets 5,088 9,722 1,385
Total non-current assets 155,905 199,930 28,490
TOTAL ASSETS   1,040,001 984,805 140,334
       


Burning Rock Biotech Limited
Unaudited Condensed Consolidated Balance Sheets (Continued)
(in thousands)

  As of
  December 31,
2023
  September 30,
2024
  September 30,
2024
 
  RMB RMB US$
LIABILITIES AND SHAREHOLDERS’ EQUITY      
Current liabilities:      
Accounts payable 18,061   25,213   3,593  
Deferred revenue 130,537   110,748   15,781  
Accrued liabilities and other current liabilities 104,935   94,110   13,411  
Customer deposits 1,197   567   81  
Current portion of operating lease liabilities 8,634   27,842   3,967  
Total current liabilities 263,364   258,480   36,833  
Non-current liabilities:      
Non-current portion of operating lease liabilities 3,690   73,055   10,410  
Other non-current liabilities 4,537   5,104   728  
Total non-current liabilities 8,227   78,159   11,138  
TOTAL LIABILITIES 271,591   336,639   47,971  


Shareholders’ equity:
     
Class A ordinary shares 116   118   17  
Class B ordinary shares 21   21   3  
Additional paid-in capital 4,849,337   4,996,947   712,059  
Treasury stock (65,896 ) (65,896 ) (9,390 )
Accumulated deficits (3,853,635 ) (4,118,967 ) (586,948 )
Accumulated other comprehensive loss (161,533 ) (164,057 ) (23,378 )
Total shareholders’ equity 768,410   648,166   92,363  
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY 1,040,001   984,805   140,334  
             


Burning Rock Biotech Limited
Unaudited Condensed Statements of Cash Flows
(in thousands)

  For the three months ended
  September
30, 2023
September
30, 2024
September
30,
2024
  RMB RMB US$
Net cash used in operating activities (47,417 ) (30,278 ) (4,315 )
Net cash used in investing activities (1,985 ) (987 ) (141 )
Net cash (used in)/generated from financing activities (45,888 ) 2   -  
Effect of exchange rate on cash, cash equivalents and restricted cash (1,239 ) (3,537 ) (503 )
Net decrease in cash, cash equivalents and restricted cash (96,529 ) (34,800 ) (4,959 )
Cash, cash equivalents and restricted cash at the beginning of period 733,278   533,047   75,959  
Cash, cash equivalents and restricted cash at the end of period 636,749   498,247   71,000  
       


  For the nine months ended
  September
30, 2023
September
30, 2024
September
30, 2024
  RMB RMB US$
Net cash used in operating activities (239,764 ) (111,323 ) (15,863 )
Net cash used in investing activities (8,972 ) (3,600 ) (513 )
Net cash (used in)/generated from financing activities (46,923 ) 2   -  
Effect of exchange rate on cash, cash equivalents and restricted cash 7,140   (2,048 ) (292 )
Net decrease in cash, cash equivalents and restricted cash (288,519 ) (116,969 ) (16,668 )
Cash, cash equivalents and restricted cash at the beginning of period 925,268   615,216   87,668  
Cash, cash equivalents and restricted cash at the end of period 636,749   498,247   71,000  
       


Burning Rock Biotech Limited
Reconciliations of GAAP and Non-GAAP Results

    For the three months ended
  September
30, 2023
  December
31, 2023
  March 31,
2024
  June 30,
2024
  September
30, 2024
 
    (RMB in thousands)
Gross profit:

   
Central laboratory channel 41,487   41,886   37,002   38,424   33,262  
In-hospital channel 35,459   12,910   39,192   44,058   46,580  
Pharma research and development channel 8,974   23,317   9,500   12,956   12,004  
Total gross profit

85,920   78,113   85,694   95,438   91,846  
Add: depreciation and amortization:          
Central laboratory channel 2,550   2,414   1,919   1,226   1,277  
In-hospital channel 2,751   2,728   1,524   824   798  
Pharma research and development channel 3,863   3,808   3,856   4,417   3,846  
Total depreciation and amortization included in cost of revenues

9,164   8,950   7,299   6,467   5,921  
Non-GAAP gross profit:          
Central laboratory channel 44,037   44,300   38,921   39,650   34,539  
In-hospital channel 38,210   15,638   40,716   44,882   47,378  
Pharma research and development channel 12,837   27,125   13,356   17,373   15,850  
Total non-GAAP gross profit 95,084   87,063   92,993   101,905   97,767  
Non-GAAP gross margin:          
Central laboratory channel 82.3 % 86.4 % 81.7 % 81.3 % 86.4 %
In-hospital channel 70.1 % 54.3 % 70.9 % 75.0 % 74.3 %
Pharma research and development channel 65.5 % 66.2 % 64.8 % 64.6 % 63.7 %
Total non-GAAP gross margin 74.5 % 71.9 % 74.0 % 75.2 % 76.0 %

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