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Burning Rock Q1 Revenues Rise 58 Percent

NEW YORK – Burning Rock Biotech reported on Tuesday morning that its first quarter revenues were up 58 percent year over year.

The Chinese precision oncology firm reported total revenues of RMB 106.6 million (US$16.3 million) for the three months ended March 31, compared to RMB 67.3 million in the same period of 2020.

Revenue generated from the company's central laboratory business was RMB 74.6 million during the quarter, a 62 percent increase from RMB 46.1 million for the same period last year. This was primarily due to growth in central laboratory testing volume: The company said it tested 7,716 patients through its central lab during the quarter compared to 4,680 in the same period in 2020.

Burning Rock's Q1 in-hospital testing revenue was RMB 29 million, up 69 percent from RMB 17.1 million during the same period in 2020. Pharma research and development services revenues totaled RMB 3.1 million, a 25 percent decrease from RMB 4.1 million for the same period in 2020.

During a call discussing the firm's quarterly results, Burning Rock CFO Leo Li said that anecdotal observations suggest that Burning Rock's in-hospital test growth was above the industry average for the quarter, "indicating that we've been able to gain some share in this period."

That said, the company faced the same challenges during the quarter as many others in its area. "January was impacted by COVID resurgence in Beijing, Shanghai, and a few other key cities in China. So that did have a negative impact on testing volumes for some of our key customers. And February was a quiet month due to Chinese New Year," he said. As a result, the firm's sequential growth rate was negative for the first quarter compared to Q4 2020.

Burning Rock's test revenues continue to be generated entirely from its therapy selection business, with no contribution yet from the early cancer detection application where the firm's research and development spending is now focused.

Among recent business milestones, company executives highlighted the announcement last week of the launch of a new trial, called PRESCIENT (Pan-Cancer Early-Stage Detection by Liquid Biopsy Technique Project), which will carry forward the development of its 22-cancer early detection test and joins ongoing studies to validate its previous smaller panels.

Joe Zhang, Burning Rock's chief technology officer, also noted the strong performance of the company's therapy selection assay in the FDA-led SEQC2 study.

Burning Rock's Q1 net loss rose to RMB 171.4 million, or RMB 1.65 per share, compared to RMB 52.6 million, or RMB 3.15 per share, in the prior year's quarter.

Its R&D expenses for the quarter were RMB 77.4 million, nearly double the RMB 40 million spent in the same period in 2020. This was primarily due to an increase in research and development personnel costs and share-based compensation expenses. The firm's SG&A expenses more than doubled year over year to RMB 171.4 million from RMB 64.1 million, also due to an increase in staff costs and share-based compensation expenses.

Burning Rock ended the quarter with RMB 2.15 billion in cash and cash equivalents, restricted cash, and short-term investments.

Assuming no additional COVID-19 related restrictions in China, the firm reiterated its guidance for 2021, which anticipates RMB 610 million in revenues, a 42 percent increase over 2020.

"We have not hit the monthly run rate yet to achieve that full-year target, so there is certainly more work that we need to do," Li said during the call.

"In terms of what we're doing [to drive] additional NGS penetration, we are, number one, making our test available at more hospitals, which we think is important for building NGS penetration because this is the most pivotal format of testing in China. Second, [we are continuing to execute] our multiyear National Medical Products Administration registration pipeline process, which will be key in terms of competitive differentiation," he added.

In morning trade on the New York Stock Exchange on Tuesday, shares of Burning Rock were down about 7 percent at $31.62.