NEW YORK – Burning Rock Biotech reported on Tuesday morning that its third quarter revenues rose about 2 percent year over year.
The Chinese precision oncology firm reported total revenues of RMB 126.6 million ($19.7 million) for the three months ended Sept. 30, compared to RMB 123.9 million in the same period of 2020.
Revenue generated from Burning Rock's central laboratory business was RMB 78.8 million in Q3, a 12 percent decrease from RMB 89.9 million for the same period last year. This reflected a 10 percent year-over-year decrease in the number of patients tested in the firm's central laboratory channel from 8,644 to 7,808.
The firm's in-hospital test revenue was RMB 43.7 million in Q3, up 38 percent from RMB 31.7 million for the same period last year. Its number of contracted partner hospitals was 34 as of Sept. 30.
During a call discussing the financial results, Burning Rock CEO Yusheng Han said that this performance, despite pandemic pressures, offers some proof that the hospital market Burning Rock is increasingly prioritizing is a "much more stable and reliable model" than central laboratory services.
Pharma research and development services revenues totaled RMB 4.1 million for the quarter, a 90 percent increase from RMB 2.3 million during the same period in 2020.
Han said that by the end of Q3, Burning Rock's total pharma contracts for the first nine months of the year grew to RMB 144 million, compared to RMB 98 million at the end of Q2. This is more than four times what the company reported for full-year 2020.
Citing factors like new regulatory policies for targeted drugs and companion diagnostics and the need for registration trial and companion diagnostic capability in both the US and China, Han argued that a Chinese NGS company with global operations is increasingly becoming the "ideal choice" for pharmaceutical firms.
Burning Rock's Q3 net loss rose to RMB 170.5 million, or RMB 1.64 per share, from RMB 127.1 million, or RMB 1.22 per share, in the prior year's quarter.
The firm's R&D expenses were up a fraction of a percent year over year to RMB 69.6 million from RMB 69.3 million in Q3 of 2020. Burning Rock said a rise in research personnel costs was offset by a decrease in share-based compensation for R&D personnel. Its SG&A expenses rose about 31 percent year over year to RMB 193.0 million from RMB 146.9 million.
The company ended the quarter with RMB 1.69 billion in cash and cash equivalents and RMB 35.7 million in short-term investments.
Burning Rock said that considering COVID-19 resurgences in multiple cities in China, with subsequent governmental travel restrictions, it expects its central lab testing volumes and, to a lesser extent, its in-hospital testing growth to be "significantly affected." The firm said it expects its 2021 full-year revenue to be at or around RMB 500 million.
Leo Li, the company's CFO, explained that China still follows a zero-case COVID strategy. "But I think at some point ... we would expect that China will go back to normal," he said. "So that will help alleviate some of the impacts that we're seeing."
He added that new product launches planned for early next year should also boost the company's central lab revenues, hopefully offsetting COVID headwinds.