GUANGZHOU, China, May 31, 2022 (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 March 31, 2022.

Recent Business Updates

• Therapy Selection and Minimal Residual Disease (MRD)
  • Continued growth through (i) market share gain through continued focus on the in-hospital segment and (ii) new product launch. Achieved 42% overall testing volume growth year-on-year during the first quarter of 2022, driven by the 83% testing volume growth of in-hospital segment year-on-year during the same period, while the testing volume of central laboratory segment grew 0.3% year-on-year. New products’ sales contributed 7% of the central laboratory segmental revenues for March 2022;
    • Burning Rock Liquid Biopsy Conference was successfully held in April 2022. The 2-day online session was chaired by Professor Jia Fan, Jinming Yu and Xu Zhang, with participation from over 140 oncologists, during which the Consensus on NGS Clinical Report Interpretation was released;
    • MRD data was released at American Association for Cancer Research (AACR) Annual Meeting 2022 for non-small cell lung cancer (NSCLC) and colorectal cancer (CRC);
    • MRD product was commercially launched in March 2022.
• Early Detection  
  • Data release at AACR on analytical validation;
  • Commercialization in progress, with a few hospitals having completed product on-boarding and generating revenues.
• Pharma Services
  • Continued revenue growth, with 302.7% revenue growth year-on-year during the first quarter of 2022. Pharma service contract backlog continues to build rapidly. The total value of new contracts we entered into during the first quarter of 2022 amounted to RMB59 million, representing approximately 125% increase from the first quarter of 2021.

First Quarter 2022 Financial Results

Revenues were RMB135.5 million (US$21.4 million) for the three months ended March 31, 2022, representing a 27.1% increase from RMB106.6 million for the same period in 2021.

• Revenue generated from central laboratory business was RMB74.2 million (US$11.7 million) for the three months ended March 31, 2022, representing a 0.5% decrease from RMB74.6 million for the same period in 2021.
• Revenue generated from in-hospital business was RMB49.0 million (US$7.7 million) for the three months ended March 31, 2022, representing a 68.9% increase from RMB29.0 million for the same period in 2021, driven by in-hospital testing volume growth.
• Revenue generated from pharma research and development services was RMB12.4 million (US$1.9 million) for the three months ended March 31, 2022, representing a 302.7% increase from RMB3.1 million for the same period in 2021, primarily attributable to increased testing performed for our pharma customers.
  

Cost of revenues was RMB47.9 million (US$7.6 million) for the three months ended March 31, 2022, representing a 61.5% increase from RMB29.7 million for the same period in 2021, primarily due to the Company’s continued business growth, increased depreciation in relation to our new laboratory and inventory write downs.

Gross profit was RMB87.6 million (US$13.8 million) for the three months ended March 31, 2022, representing a 13.8% increase from RMB76.9 million for the same period in 2021. Gross margin was 64.6% for the three months ended March 31, 2022, which decreased from 72.2% for the same period in 2021 primarily due to the increased depreciation in relation to our new laboratory and inventory write downs.

Non-GAAP gross profit, which excludes depreciation and amortization, was RMB92.7 million (US$14.6 million) for the three months ended March 31, 2022, representing a 20.2% increase from RMB77.1 million for the same period in 2021. Non-GAAP gross margin was 68.4% for the three months ended March 31, 2022, compared to 72.4% for the same period in 2021 primarily due to an increase of RMB4.8 million in inventory write downs (which resulted in a 3.5 percentage-point decrease of gross margin).

Operating expenses were RMB350.4 million (US$55.3 million) for the three months ended March 31, 2022, representing a 40.9% increase from RMB248.8 million for the same period in 2021. The increase was primarily driven by headcount growth to support our business expansion.

• Research and development expenses were RMB119.5 million (US$18.9 million) for the three months ended March 31, 2022, representing a 54.4% increase from RMB77.4 million for the same period in 2021, primarily due to (i) an increase in research and development staff cost which resulted from an increase in headcount and (ii) and increase in costs for certain research and development for early detection.
• Selling and marketing expenses were RMB89.2 million (US$14.1 million) for the three months ended March 31, 2022, representing a 61.8% increase from RMB55.1 million for the same period in 2021, primarily due to an increase in staff cost resulted from increase in headcount to strengthen our commercial presence in the therapy selection business and build up our early detection commercialization team.
• General and administrative expenses were RMB141.7 million (US$22.4 million) for the three months ended March 31, 2022, representing a 21.9% increase from RMB116.3 million for the same period in 2021, primarily due to an increase in general and administrative personnel’s staff cost resulted from an increase in headcount.
  

Net loss was RMB261.4 million (US$41.2 million) for the three months ended March 31, 2022, compared to RMB171.4 million for the same period in 2021.

Cash, cash equivalents, restricted cash and short-term investments were RMB1,502.9 million and RMB1,338.4 million (US$211.1 million) as of December 31, 2021 and March 31, 2022, respectively.

2022 Financial Guidance

Given the strong first quarter business performance and assuming that the impact of COVID-19 dissipates over time in China, Burning Rock reiterates its full year 2022 revenue guidance of approximately RMB620 million (US$97.8 million), implying a 22% growth over full year 2021.

Conference Call Information

Burning Rock will host a conference call to discuss the first quarter 2022 financial results at 8:30 a.m. U.S. Eastern Time (8:30 p.m. Hong Kong time) on May 31, 2022.

Details of the conference call are as follows:

International:	+65 67135640
U.S.:	+1 3322089718
U.K.:	+44 2036928124
Hong Kong:	+852 30186768
China Mobile:	4008209615
China Landline:	8008207535
Conference ID:	8942518

A replay of the conference call will be available for one week (dial-in number: +61 2 8199 0299; same conference ID as shown above).

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
	For the three months ended
	March 31, 2021		June 30, 2021		September 30, 2021		December 31, 2021		March 31, 2022
Central Laboratory Channel:
Number of patients tested	7,716		8,155 1,013 300		7,808		8,235		7,743
Number of ordering physicians(1)	1,082		1,013		920		917		994
Number of ordering hospitals(2)	303		300		287		306		318

⁽¹⁾ Represents physicians who on average order at least one test from us every month during a relevant period in the central laboratory channel.
⁽²⁾ Represents hospitals whose residing physicians who on average order at least one test from us every month during a relevant period in the central laboratory channel.

	As of
	March 31, 2021		June 30, 2021		September 30, 2021		December 31, 2021		March 31, 2022
In-hospital Channel:
Pipeline partner hospitals(1)	22		22		24		23		24
Contracted partner hospitals(2)	32		34		34		41		41
Total number of partnerhospitals	54		56		58		64		65

⁽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	March 31, 2021		June 30, 2021		September 30, 2021		December 31, 2021		March 31, 2022
	(RMB in thousands)
Central laboratory channel	74,561		79,999		78,817		85,976		74,211
In-hospital channel	28,994		40,502		43,714		51,906		48,957
Pharma research and development channel	3,068		6,778		4,084		9,463		12,356
Total revenues	106,623		127,279		126,615		147,345		135,524

	For the three months ended
Gross profit	March 31, 2021		June 30, 2021		September 30, 2021		December 31, 2021		March 31, 2022
	(RMB in thousands)
Central laboratory channel	55,212		58,681		58,387		65,985		50,574
In-hospital channel	20,070		29,426		31,111		34,194		33,396
Pharma research and development channel	1,658		2,124		2,098		5,200		3,610
Total gross profit	76,940		90,231		91,596		105,379		87,580

	For the three months ended
Share-based compensation expenses	March 31, 2021		June 30, 2021		September 30, 2021			December 31, 2021			March 31, 2022
	(RMB in thousands)
Cost of revenues	339		406		267			492			365
Research and development expenses	22,404		20,825		(9,559	)		(4,033	)		12,299
Selling and marketing expenses	2,633		2,809		2,044			2,126			1,774
General and administrative expenses	59,382		59,369		60,803			62,126			65,715
Total share-based compensation expenses	84,758		83,409		53,555			60,711			80,153

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
	March 31, 2021			June 30, 2021			September 30, 2021			December 31, 2021			March 31, 2022			March 31, 2022
	RMB			RMB			RMB			RMB			RMB			US$
Revenues	106,623			127,279			126,615			147,345			135,524			21,379
Cost of revenues	(29,683	)		(37,048	)		(35,019	)		(41,966	)		(47,944	)		(7,563		)
Gross profit	76,940			90,231			91,596			105,379			87,580			13,816
Operating expenses:
Research and development expenses	(77,414	)		(108,071	)		(69,649	)		(112,724	)		(119,496	)		(18,850		)
Selling and marketing expenses	(55,130	)		(68,058	)		(76,687	)		(103,221	)		(89,211	)		(14,073		)
General and administrative expenses	(116,259	)		(116,130	)		(116,304	)		(141,563	)		(141,733	)		(22,358		)
Total operating expenses	(248,803	)		(292,259	)		(262,640	)		(357,508	)		(350,440	)		(55,281		)
Loss from operations	(171,863	)		(202,028	)		(171,044	)		(252,129	)		(262,860	)		(41,465		)
Interest income	787			681			958			1,031			1,832			289
Interest expenses	(510	)		(565	)		(367	)		(94	)		119			19
Other income (expense), net	118			433			20			(372	)		298			47
Foreign exchange gain (loss), net	57			(560	)		380			(731	)		(777	)		(123		)
Loss before income tax	(171,411	)		(202,039	)		(170,053	)		(252,295	)		(261,388	)		(41,233		)
Income tax (benefits) expenses	-			(1,626	)		(424	)		1,151			-			-
Net loss	(171,411	)		(203,665	)		(170,477	)		(251,144	)		(261,388	)		(41,233		)
Net loss attributable to Burning Rock Biotech Limited’s shareholders	(171,411	)		(203,665	)		(170,477	)		(251,144	)		(261,388	)		(41,233		)
Net loss attributable to ordinary shareholders	(171,411	)		(203,665	)		(170,477	)		(251,144	)		(261,388	)		(41,233		)
Loss per share for class A and class B ordinary shares:
Class A ordinary shares - basic and diluted	(1.65	)		(1.96	)		(1.64	)		(2.40	)		(2.50	)		(0.39		)
Class B ordinary shares - basic and diluted	(1.65	)		(1.96	)		(1.64	)		(2.40	)		(2.50	)		(0.39		)
Weighted average shares outstanding used in loss per share computation:
Class A ordinary shares - basic and diluted	86,721,263			86,764,260			86,908,975			87,128,297			87,179,752			87,179,752
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	14,080			(34,980	)		6,146			(24,726	)		(3,065	)		(483		)
Total comprehensive loss	(157,331	)		(238,645	)		(164,331	)		(275,870	)		(264,453	)		(41,716		)
Total comprehensive loss attributable to Burning Rock Biotech Limited’s shareholders	(157,331	)		(238,645	)		(164,331	)		(275,870	)		(264,453	)		(41,716		)

Burning Rock Biotech Limited Unaudited Condensed Consolidated Balance Sheets (In thousands)
	As of
	December 31, 2021		March 31, 2022		March 31, 2022
	RMB		RMB		US$
ASSETS
Current assets:
Cash and cash equivalents	1,431,317		1,265,792		199,674
Restricted cash	7,795		9,083		1,433
Short-term investments	63,757		63,482		10,014
Accounts receivable, net	92,197		103,616		16,345
Contract assets, net	42,391		43,923		6,928
Inventories, net	123,210		130,175		20,535
Prepayments and other current assets, net	60,279		69,331		10,937
Total current assets	1,820,946		1,685,402		265,866
Non-current assets:
Equity method investment	910		773		122
Property and equipment, net	325,438		322,171		50,821
Operating right-of-use assets	81,007		72,501		11,437
Intangible assets, net	5,150		4,246		669
Other non-current assets	45,136		22,703		3,581
Total non-current assets	457,641		422,394		66,630
TOTAL ASSETS	2,278,587		2,107,796		332,496

Burning Rock Biotech Limited Unaudited Condensed Consolidated Balance Sheets (Continued) (in thousands)
	As of
	December 31, 2021			March 31, 2022			March 31, 2022
	RMB			RMB			US$
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	63,080			97,892			15,442
Deferred revenue	142,871			159,148			25,105
Accrued liabilities and other current liabilities	127,892			104,092			16,420
Customer deposits	972			972			153
Short-term borrowing	2,370			2,370			374
Current portion of operating lease liabilities	34,999			35,298			5,568
Total current liabilities	372,184			399,772			63,062
Non-current liabilities:
Non-current portion of operating lease liabilities	49,316			39,811			6,280
Other non-current liabilities	11,776			13,636			2,151
Total non-current liabilities	61,092			53,447			8,431
TOTAL LIABILITIES	433,276			453,219			71,493
Shareholders’ equity:
Class A ordinary shares	116			116			19
Class B ordinary shares	21			21			3
Treasury stock	-			(3,258	)		(514	)
Additional paid-in capital	4,280,956			4,357,933			687,447
Accumulated deficits	(2,228,713	)		(2,490,101	)		(392,804	)
Accumulated other comprehensive loss	(207,069	)		(210,134	)		(33,148	)
Total shareholders’ equity	1,845,311			1,654,577			261,003
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	2,278,587			2,107,796			332,496

Burning Rock Biotech Limited Unaudited Condensed Statements of Cash Flows (in thousands)
	For the three months ended
	March 31, 2021			March 31, 2022			March 31, 2022
	RMB			RMB			US$
Net cash used in operating activities	(113,145	)		(144,361	)		(22,772	)
Net cash generated from (used in) investing activities	288,329			(13,011	)		(2,050	)
Net cash used in financing activities	(4,162	)		(3,934	)		(621	)
Effect of exchange rate on cash, cash equivalents and restricted cash	16,658			(2,931	)		(464	)
Net increase (decrease) in cash, cash equivalents and restricted cash	187,680			(164,237	)		(25,907	)
Cash, cash equivalents and restricted cash at the beginning of period	1,925,206			1,439,112			227,014
Cash, cash equivalents and restricted cash at the end of period	2,112,886			1,274,875			201,107

Burning Rock Biotech Limited Reconciliations of GAAP and Non-GAAP Results
	For the three months ended
	March 31, 2021			June 30, 2021			September 30, 2021			December 31, 2021			March 31, 2022
	(RMB in thousands)
Gross profit	76,940			90,231			91,596			105,379			87,580
Add: depreciation and amortization	206			437			1,382			1,981			5,139
Non-GAAP gross profit	77,146			90,668			92,978			107,360			92,719
Total revenues	106,623			127,279			126,615			147,345			135,524
Gross margin	72.2	%		70.9	%		72.3	%		71.5	%		64.6	%
Non-GAAP gross margin	72.4	%		71.2	%		73.4	%		72.9	%		68.4	%