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Burning Rock Q4 Revenues up 12 Percent

NEW YORK – Burning Rock Biotech reported late Monday that its fourth quarter 2021 revenues were up approximately 12 percent compared to the same quarter last year

The firm reported total revenues of RMB 147.3 million (US$23.1 million) for the three months ended Dec. 31, 2021, up from RMB 131.7 million for the same period in 2020.

Revenue from the Chinese company's central laboratory business was RMB 86.0 million, about 1 percent less than the RMB 86.7 million it saw in the same period of 2020.

The firm's in-hospital business brought in RMB 51.9 million during the quarter, up 25 percent from RMB 41.5 million in the same period in 2020, while its pharma research and development services took in RMB 9.5 million in revenue in Q4 2021, more than double the RMB 3.6 million earned in the same period of 2020.

The company reported R&D expenses of RMB 112.7 million for the quarter, up 35 percent from RMB 83.4 million in the same period in 2020. Burning Rock CFO Leo Li said the increase was primarily driven by good progress in the firm's early detection and MRD programs as enrollment and testing accelerated during the quarter.

"We have two large studies, each over 10,000 subjects, currently ongoing and we are launching another 10,000-person, intended-use population, interventional study this year," he said during a call discussing the firm's financial results.

The firm's SG&A expenses were up 43 percent year over year to RMB 244.8 million from RMB 171.1 million.

Burning Rock's Q4 net loss rose to RMB 251.1 million, or RMB 2.40 per share, from RMB 156.5 million, or RMB 1.51 per share, in the prior year's quarter.

The company said development of its nine-cancer early detection test remains on track with the first clinical study, PROMISE, having completed enrollment of 2,000 subjects and expected to read out in 2022.

For the full year 2021, Burning Rock reported total revenues of RMB 507.9 million, up 18 percent from RMB 429.9 million for 2020.

"As we mentioned back in November during our last quarterly results, COVID was spreading in China in late 2021. Despite that challenge, we closed the fourth quarter with strong volume and top line numbers," Li said.

Burning Rock's central laboratory business contributed RMB 319.4 million to its total revenues, up about 7 percent from RMB 297.3 million in 2020.

Revenue generated from the firm's in-hospital business was RMB 165.1 million, up 40 percent from RMB 117.9 million in 2020. Burning Rock reported that the number of contracted partner hospitals in its in-hospital channel increased to 41 as of the end of 2021 compared to 29 at the same point in 2020. This March, the company launched a new nine-gene version of its NGS kit product, which is expected to contribute to continued growth in 2022.

Li said that the boost to its disseminated kit sales in 2021 was driven by the COVID-19 pandemic, which led to increased preference among hospitals to run NGS tests in house. In the second quarter, "we saw a strong jump in volumes in in-hospital channel, and we saw continued strength in the hospital segments throughout the year," he said.

Although that translated to a corresponding drop for the company's central lab testing at first, Burning rock was able to reverse that by the fourth quarter, supported by the launch of new products, including the in-licensed DetermaRx assay from US firm Oncocyte, and the MYChoice HRD assay from Myriad Genetics, which Li said are "highly differentiated in the market in China."

This trend of positive central lab growth continued in January and February this year, he added.

The company's pharma research and development services revenues totaled RMB 23.4 million in 2021, up about 59 percent from RMB 14.7 million during 2020.

Burning Rock said that the total value of new contracts it inked- during the year works out to about RMB 183 million, approximately 5.7 times what it signed in 2020.

Notable new projects entered during the fourth quarter of 2021 include a CDx development collaboration with Merck for the MET inhibitor tepotinib for the mainland China market, based on the firm's liquid biopsy OncoCompass Target panel. 

Burning Rock's full-year R&D expenses were RMB 367.9 million, up more than 39 percent from RMB 263.9 million in 2020. It's SG&A costs rose about 72 percent to RMB 793.4 million from RMB 462.4 million, mostly driven by headcount expansions and the build-out of the firm's new early detection lab and office building.

Burning Rock's full-year net loss was RMB 796.7 million, or RMB 7.65 per share, compared to a loss of RMB 407.2 million, or RMB 6.88 per share, in 2020.

The firm ended Q4 2021 with RMB 1.43 billion in cash and cash equivalents, RMB 7.8 million in restricted cash, and RMB 63.8 million in short term investments.

For the upcoming year, Burning Rock projected revenues of approximately RMB 620 million, which would imply 22 percent growth over full-year 2021.

Li said that although Burning Rock had strong numbers during January and February, with the downward trend in its central lab business shifting back to positive growth, "the current [COVID-19] wave in March is looking pretty severe, and it is actually the worst I have seen since China imposed a nationwide lockdown back in the first quarter 2020, when COVID first erupted."

"We know that Shanghai has many of China's top oncology centers. It's a large market for us and it is heavily impacted for the month of March … [so] at the moment, we can't take the January, February numbers as an indication for our first quarter. We'll need to see how large of an impact that makes, and if there is any change to the COVID-zero strategy in China," he added.