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Burning Rock Q3 Revenues Up 19 Percent

NEW YORK – Burning Rock Biotech reported on Friday morning that its third quarter revenues grew more than 19 percent year over year.

The Chinese precision oncology firm, which completed a $256.2 million IPO in June, reported total revenues of RMB123.9 million (US$18.2 million) for the three months ended September 30, compared to RMB103.7 million in the same period of 2019.

Revenue generated from Burning Rock's central laboratory business was RMB89.9 million in Q3, a 30 percent increase from RMB69.3 million for the same period last year. The company said it tested 8,644 patients through its central laboratory channel during the quarter, also an approximately 30 percent increase from 6,769 in Q3 2019.

The firm's Q3 in-hospital test revenue was RMB31.7 million, up 3 percent from RMB30.7 million for the same period of 2019. Burning Rock said it grew its number of contracted partner hospitals to 25 as of Sept. 30. During a call discussing the company's financial results, CFO Leo Li said that the minimal year-over-year in-hospital revenue growth reflects bumpiness in its business in 2019, with billing and contract timing factors contributing to especially high revenue in the corresponding quarter. Looking at an average of 2019 in-hospital revenues for the last two quarters of that year, Q3 2019 represents a much higher increase, he said.

Pharma research and development services revenues totaled RMB2.3 million for the quarter, a 39 percent decrease from RMB3.7 million for the same period in 2019, due to lower pharma testing volumes.

On the call, Li said that the firm's sequential and year-over-year growth is important in the context of increasing competition in China's precision medicine and genomic testing industry.

For example, he said, the company's 16 percent sequential revenue growth was higher than that reported by other competing public and private companies, and its quarter-over-quarter lab volume also appears to be beating out at least some others in the industry.

"Although there is no published industry-wide data, we believe we are gaining market share," he added.

Among recent business highlights, the firm noted its in-licensing of Myriad Genetics' myChoice test, announced earlier this week.

Burning Rock also announced it had further validated its ELSA-seq early cancer detection technology in three additional cancer types, with updated data presented at the ESMO Asia Virtual Congress 2020 showing a significant improvement of specificity compared to the earlier version of the test.

The firm conducted a separate presentation this week at the Association for Molecular Pathology Annual Meeting on its Magnis BR fully automated NGS library preparation system.

According to Li, the demand for Magnis BR, which Burning Rock launched in November 2019, has been strong. However, he said, the firm encountered external supply issues over the past few quarters, which although now resolved, means that it was not able to fulfill some of this demand.

That said, the system has now been placed in more than 10 hospitals so far, he added, with associated revenues expected to come in mainly next year, along with additional placements.

Burning Rock's Q3 net loss rose to RMB127.1 million, or RMB1.22 per share, from RMB32.2 million, or RMB2.85 per share, in the prior year's quarter. The company used approximately 103.8 million shares to calculate per-share loss in the recently completed quarter compared to about 23.2 million shares a year ago.

The company's R&D expenses increased 81 percent year over year to RMB69.3 million from RMB38.3 million in Q3 of 2019. This was primarily due to an increase in staff costs for research and development personnel and an increase in share-based compensation expenses for options granted to these employees.

SG&A expenses doubled year over year to RMB146.9 million from RMB73.5 million, also due to staff costs and share-based compensation expenses.

The firm ended the quarter with RMB2.06 billion in cash and cash equivalents and RMB340.5 million in short-term investments.