GUANGZHOU, China, Aug. 31, 2021 (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 June 30, 2021.

Business Updates

• Early Detection
  • Technology foundation manuscript was published in Nature Biomedical Engineering (article link here). The results demonstrate that our proprietary technology of deep methylation sequencing, aided by a machine-learning classifier of methylation patterns, enables ultrasensitive detection of circulating tumor DNA.
  • We continued to conduct an early-access program (over 2,000 volunteers tested) to prepare for operational readiness of our 6-cancer early detection product.
  • 2022 commercialization is well on track. We are entering into contract signing stage with 6 hospitals where our 6-cancer test will be offered at the health check-up departments of those hospitals.
• New products for early-stage cancer patients
  • Development of minimal residual disease (MRD) products is on track. Products are targeted to be launched in 2022. Lung-cancer data read-out is likely to take place in the first half of 2022. Clinical trials on colon, esophageal and other cancers are also under planning.
• Pharma Services
  • Biopharma service contracts backlog grew rapidly. Total value of the contracts entered into during the first half of 2021 amounted to RMB98.2 million, three times the amount in full-year 2020.
  • We are jointly developing, together with IMPACT Therapeutics, companion diagnostics (CDx) for a targeted oncology drug, Senaparib, (IMP4297), a PARP inhibitor, for the treatment of prostate cancer globally. Senaparib’s pivotal clinical study under the FDA pathway is in progress. This project uses our Clinical Laboratory Improvement Amendments (CLIA)-certified and College of American Pathologists (CAP)-accredited laboratory in California, US.
• Therapy Selection
  • Continued to strategically focus on the in-hospital channel. The volume of in-hospital NGS-based test kits grew 70% year-over-year to over 10,000 tests in the second quarter of 2021.

Second Quarter 2021 Financial Results

Revenues were RMB127.3 million (US$19.7 million) for the three months ended June 30, 2021, representing a 19.0% increase from RMB107.0 million for the same period in 2020, or a 19.4% sequential increase from RMB106.6 million for the three months ended March 31, 2021.

• Revenue generated from central laboratory business was RMB80.0 million (US$12.4 million) for the three months ended June 30, 2021, representing a 7.2% increase from RMB74.6 million for the same period in 2020, primarily attributable to the year-over-year volume growth of the central laboratory business. Number of patients tested in the central laboratory channel was 8,155 for the three months ended June 30, 2021, representing a 12.5% increase from 7,252 for the same period in 2020.
• Revenue generated from in-hospital business was RMB40.5 million (US$6.3 million) for the three months ended June 30, 2021, representing a 46.8% increase from RMB27.6 million for the same period in 2020, primarily attributable to the year-on-year volume growth of 70% of the in-hospital business. Number of contracted partner hospitals in the in-hospital channel increased to 34 as of June 30, 2021 from 32 as of March 31, 2020 and 24 as of June 30, 2020.
• Revenue generated from pharma research and development services was RMB6.8 million (US$1.0 million) for the three months ended June 30, 2021, representing a 41.9% increase from RMB4.8 million for the same period in 2020, primarily attributable to the building of pipeline of pharmaceutical projects.

Cost of revenues was RMB37.0 million (US$5.7 million) for the three months ended June 30, 2021, representing a 29.7% increase from RMB28.6 million for the same period in 2020, which was generally in line with the Company’s continued business growth.

Gross profit was RMB90.2 million (US$14.0 million) for the three months ended June 30, 2021, representing a 15.1% increase from RMB78.4 million for the same period in 2020. Gross margin was 70.9% for the three months ended June 30, 2021, compared to 73.3% for the same period in 2020.

Operating expenses were RMB292.3 million (US$45.3 million) for the three months ended June 30, 2021, representing a 93% increase from RMB151.4 million for the same period in 2020. The increase was primarily driven by headcount growth and increase in other costs to support business expansion.

• Research and development expenses were RMB108.1 million (US$16.7 million) for the three months ended June 30, 2021, representing a 51.8% increase from RMB71.2 million for the same period in 2020, primarily due to an increase in research and development personnel’s staff cost and other costs incurred in research and development projects.
• Selling and marketing expenses were RMB68.1 million (US$10.5 million) for the three months ended June 30, 2021, representing a 79.1% increase from RMB38.0 million for the same period in 2020, primarily due to an increase in staff cost of sales and marketing personnel.
• General and administrative expenses increased significantly to RMB116.1 million (US$18.0 million) for the three months ended June 30, 2021 from RMB42.3 million for the same period in 2020, primarily due to an increase in general and administrative personnel’s staff cost and share-based compensation expenses.

Net loss was RMB203.7 million (US$31.5 million) for the three months ended June 30, 2021, compared to RMB71.1 million for the same period in 2020.

Cash, cash equivalents, restricted cash and short-term investments were RMB1,918.8 million (US$297.2 million) as of June 30, 2021.

Appointment of VP of Regulatory Affairs (US and Europe) and Quality Assurance

Dr. Sharon Liang joined Burning Rock as the VP of Regulatory Affairs (US and Europe) and Quality Assurance in late June this year. She is a human genetics expert with nearly two decades of experience in molecular cancer diagnostic medical device product development and regulatory in academia, government and industry. She was the US FDA committee member for the US President’s Precision Medicine Initiative (PMI) Project leading Bioinformatics group. She led and contributed to the development of many molecular diagnostic devices approved by the FDA, including the first NGS sequencer, first NGS Oncopanel, first NGS tumor profiling assay, first Direct-to-Consumer test, first microarray genetic tests, and companion diagnostics. Before joining Burning Rock, Dr. Liang worked at GRAIL, a cancer early detection diagnostic company, primarily responsible for regulatory strategy and execution.

2021 Financial Guidance

For the third quarter of this year, COVID-related travel restrictions in multiple major cities in China will impact our central-laboratory testing volumes and, to a lesser extent, the growth of our in-hospital testing volumes. The relatively stronger growth expected for in-hospital testing will also be driven by the industry structural shift from central-laboratory towards in-hospital testing. We believe that we are well-positioned in the in-hospital segment, and we view the revenues from in-hospital as higher quality, given our product and competitive advantages, leading to stickier revenues. As the testing mix of our therapy selection business transitions towards the in-hospital segment, our blended average sales price will decline, due to lower prices of IVD testing kits that we supply to hospitals in the in-hospital segment, compared with prices of LDT testing service that we charge to patients in the central-laboratory segment. This will result, during this transition period, in a lower revenue growth rate compared with volume growth rate, for our therapy selection business. As such, the Company adjusts its 2021 full-year revenue guidance to approximately RMB500 million.

Conference Call Information

Burning Rock will host a conference call to discuss the second quarter 2021 financial results at 8:00 a.m. U.S. Eastern Time (8:00 p.m. Hong Kong time) on August 31, 2021.

Details of the conference call are as follows:

International:	+65 67135090
U.S.:	+1 8456750437
U.K.:	+44 2036214779
Hong Kong:	+852 30186771
China Mobile:	4006208038
China Landline:	8008190121
Conference ID:	2309539

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, with the leading market share in China and over 273,000 tissue and liquid-based tests completed cumulatively, 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.

Selected Operating Data

	For the three months ended
	March 31, 2020		June 30, 2020		September 30, 2020		December 31, 2020		March 31, 2021		June 30, 2021
Central Laboratory Channel:
Number of patients tested	4,680		7,252		8,644		7,989		7,716		8,155
Number of ordering physicians(1)	810		1,175		1,194		1,114		1,082		1,013
Number of ordering hospitals(2)	232		284		289		294		303		300

_____________________

(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, 2020			June 30, 2020		September 30, 2020		December 31, 2020		March 31, 2021		June 30, 2021
In-hospital Channel:
Pipeline partner hospitals(1)	23			23		22		23		22		22
Contracted partner hospitals(2)	21			24		25		29		32		34
Total number of partner hospitals	44			47		47		52		54		56

____________________

(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, 2020		June 30, 2020		September 30, 2020		December 31, 2020		March 31, 2021				June 30 2021
	(RMB in thousands)
Central laboratory channel	46,141		74,607		89,899		86,695		74,561				79,999
In-hospital channel	17,123		27,588		31,704		41,457		28,994				40,502
Pharma research and development channel	4,065		4,776		2,278		3,570		3,068				6,778
Total revenues	67,329		106,971		123,881		131,722		106,623				127,279

	For the three months ended
Gross profit	March 31, 2020		June 30, 2020		September 30, 2020				December 31, 2020		March 31, 2021				June 30 2021
	(RMB in thousands)
Central laboratory channel	32,434		56,556		67,804				66,588		55,212				58,681
In-hospital channel	10,126		19,269		22,410				30,218		20,070				29,426
Pharma research and development channel	2,224		2,573		1,373				2,347		1,658				2,124
Total gross profit	44,784		78,398		91,587				99,153		76,940				90,231

	For the three months ended
Share-based compensation expenses	March 31, 2020		June 30, 2020		September 30, 2020		December 31, 2020		March 31, 2021		June 30， 2021
	(RMB in thousands)
Cost of revenues	176		183		160		277		339		406
Research and development expenses	2,072		25,314		10,572		11,843		22,404		20,825
Selling and marketing expenses	253		491		341		2,372		2,633		2,809
General and administrative expenses	1,665		1,639		57,805		58,057		59,382		59,369
Total share-based compensation expenses	4,166		27,627		68,878		72,549		84,758		83,409

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, 2020		June 30, 2020		September 30, 2020				December 31, 2020		March 31, 2021		June 30, 2021				June 30, 2021
	RMB		RMB		RMB				RMB		RMB		RMB				US$
Revenues	67,329		106,971		123,881				131,722		106,623		127,279				19,713
Cost of revenues	(22,545)		(28,573)		(32,294)				(32,569)		(29,683)		(37,048)				(5,738)
Gross profit	44,784		78,398		91,587				99,153		76,940		90,231				13,975
Operating expenses:
Research and development expenses	(40,016)		(71,176)		(69,330)				(83,418)		(77,414)		(108,071)				(16,738)
Selling and marketing expenses	(29,815)		(37,992)		(44,174)				(56,606)		(55,130)		(68,058)				(10,541)
General and administrative expenses	(34,295)		(42,272)		(102,731)				(114,502)		(116,259)		(116,130)				(17,986)
Total operating expenses	(104,126)		(151,440)		(216,235)				(254,526)		(248,803)		(292,259)				(45,265)
Loss from operations	(59,342)		(73,042)		(124,648)				(155,373)		(171,863)		(202,028)				(31,290)
Interest income	3,985		44		698				1,341		787		681				105
Interest expense	(1,178)		1,939		(776)				(652)		(510)		(565)				(88)
Other (expense) income, net	(151)		122		(176)				(682)		118		433				67
Foreign exchange gain (loss), net	611		(118)		(2,228)				(1,112)		57		(560)				(87)
Change in fair value of warrant liability	3,503		-		-				-		-		-				-
Loss before income tax	(52,572)		(71,055)		(127,130)				(156,478)		(171,411)		(202,039)				(31,293)
Income tax expenses	-		-		-				-		-		(1,626)				(252)
Net loss	(52,572)		(71,055)		(127,130)				(156,478)		(171,411)		(203,665)				(31,545)
Net loss attributable to Burning Rock Biotech Limited’s shareholders	(52,572)		(71,055)		(127,130)				(156,478)		(171,411)		(203,665)				(31,545)
Accretion of convertible preferred shares	(26,288)		(38,400)		-				-		-		-				-
Net loss attributable to ordinary shareholders	(78,860)		(109,455)		(127,130)				(156,478)		(171,411)		(203,665)				(31,545)
Loss per share:
Ordinary shares - basic and diluted	(3.15)		-		-				-		-		-
Class A ordinary shares - basic and diluted	-		(2.68)		(1.22)				(1.51)		(1.65)		(1.96)				(0.30)
Class B ordinary shares - basic and diluted	-		(2.68)		(1.22)				(1.51)		(1.65)		(1.96)				(0.30)
Weighted average shares outstanding used in loss per share computation:
Ordinary shares - basic and diluted	25,031,575		-		-				-		-		-				-
Class A ordinary shares - basic and diluted	-		23,461,319		86,479,686				86,511,799		86,721,263		86,764,260				86,764,260
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 (loss) income, net of tax of nil:
Foreign currency translation adjustments	11,422		(2,336)		(91,093)				(94,881)		14,080		(34,980)				(5,418)
Total comprehensive loss	(41,150)		(73,391)		(218,223)				(251,359)		(157,331)		(238,645)				(36,963)
Total comprehensive loss attributable to Burning Rock Biotech Limited’s shareholders	(41,150)		(73,391)		(218,223)				(251,359)		(157,331)		(238,645)				(36,963)

Burning Rock Biotech Limited 
Unaudited Condensed Statements of Comprehensive Loss 
(in thousands, except for share and per share data)

	For the six months ended
	June 30, 2020						June 30, 2021				June 30, 2021
	RMB					RMB				USD
Revenues	174,300						233,902				36,226
Cost of revenues	(51,118)						(66,731)				(10,336)
Gross profit	123,182						167,171				25,890
Operating expenses:
Research and development expenses	(111,192)						(185,485)				(28,728)
Selling and marketing expenses	(67,807)						(123,188)				(19,079)
General and administrative expenses	(76,567)						(232,389)				(35,992)
Total operating expenses	(255,566)						(541,062)				(83,799)
Loss from operations	(132,384)						(373,891)				(57,909)
Interest income	4,029						1,468				227
Interest expense	761						(1,075)				(166)
Other (expense) income, net	(29)						551				85
Foreign exchange gain (loss), net	493						(503)				(78)
Change in fair value of warrant liability	3,503						-				-
Loss before income tax	(123,627)						(373,450)				(57,841)
Income tax expenses	-						(1,626)				(252)
Net loss	(123,627)						(375,076)				(58,093)
Net loss attributable to Burning Rock Biotech Limited’s shareholders	(123,627)						(375,076)				(58,093)
Accretion of convertible preferred shares	(64,688)						-				-
Net loss attributable to ordinary shareholders	(188,315)						(375,076)				(58,093)
Loss per share:
Class A ordinary shares - basic and diluted	(5.73)						(3.60)				(0.56)
Class B ordinary shares - basic and diluted	(5.73)						(3.60)				(0.56)
Weighted average shares outstanding used in loss per share computation:
Class A ordinary shares - basic and diluted	15,540,502						86,742,880				86,742,880
Class B ordinary shares - basic and diluted	17,324,848						17,324,848				17,324,848
Other comprehensive income (loss), net of tax of nil:
Foreign currency translation adjustments Foreign currency translation adjustments	9,086						(20,900)				(3,237)
Total comprehensive loss	(114,541)						(395,976)				(61,330)
Total comprehensive loss attributable to Burning Rock Biotech Limited’s shareholders	(114,541)						(395,976)				(61,330)

Burning Rock Biotech Limited 
Unaudited Condensed Consolidated Balance Sheets 
(In thousands)

	As of
	December 31, 2020		June 30, 2021		June 30, 2021
	RMB		RMB		US$
ASSETS
Current assets:
Cash and cash equivalents	1,895,308		1,852,927		286,982
Restricted cash	29,898		30,338		4,699
Short-term investment	362,132		35,531		5,503
Accounts receivable	88,218		78,141		12,103
Contract assets	22,534		28,345		4,390
Amounts due from related parties	212		628		97
Inventories	68,021		114,434		17,724
Prepayments and other current assets	57,329		76,157		11,795
Total current assets	2,523,652		2,216,501		343,293
Non-current assets:
Equity method investment	1,417		1,261		195
Property and equipment, net	111,481		198,324		30,716
Operating Right-of-use assets	-		89,307		13,832
Intangible assets, net	3,457		4,882		756
Other non-current assets	23,021		29,284		4,536
Total non-current assets	139,376		323,058		50,035
TOTAL ASSETS	2,663,028		2,539,559		393,328

Burning Rock Biotech Limited 
Unaudited Condensed Consolidated Balance Sheets (Continued) 
(in thousands)

	As of
	December 31, 2020			June 30, 2021			June 30, 2021
	RMB			RMB			US$
LIABILITIES AND SHAREHOLDERS’ (DEFICIT) EQUITY
Current liabilities:
Accounts payable	35,482			47,983			7,432
Deferred revenue	74,402			101,517			15,723
Capital lease obligations, current	4,816			-
Accrued liabilities and other current liabilities	83,648			79,773			12,356
Customer deposits	1,120			1,042			161
Short-term borrowing	7,370			7,370			1,141
Current portion of long-term borrowings	34,695			30,118			4,665
Current portion of operating lease liabilities	-			32,789			5,078
Current portion of financing lease liabilities	-			2,169			336
Total current liabilities	241,533			302,761			46,892
Non-current liabilities:
Deferred government grants	263			-			-
Operating lease liabilities	-			63,132			9,778
Other non-current liabilities	228			226			35
Total non-current liabilities	491			63,358			9,813
TOTAL LIABILITIES	242,024			366,119			56,705
Shareholders’ equity:
Class A ordinary shares	116			116			18
Class B ordinary shares	21			21			3
Treasury stock	-			(4,270	)		(661	)
Additional paid-in capital	4,006,616			4,173,154			646,339
Accumulated deficits	(1,418,160	)		(1,807,092	)		(279,883	)
Accumulated other comprehensive loss	(167,589	)		(188,489	)		(29,193	)
Total shareholders’ equity	2,421,004			2,173,440			336,623
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	2,663,028			2,539,559			393,328

Burning Rock Biotech Limited 
Unaudited Condensed Statements of Cash Flows 
(in thousands)

	For the three months ended
	June 30, 2020			June 30, 2021							June 30, 2021
	RMB			RMB							US$
Net cash generated from (used in) operating activities	61,124			(118,998					)		(18,433	)
Net cash generated from (used in) investing activities	296,102			(67,577					)		(10,463	)
Net cash generated from (used in) financing activities	1,845,953			(8,961					)		(1,388	)
Effect of exchange rate on cash, cash equivalents and restricted cash	(1,487	)		(34,085					)		(5,279	)
Net increase cash, cash equivalents and restricted cash	2,201,692			(229,621					)		(35,563	)
Cash, cash equivalents and restricted cash at the beginning of period	364,544			2,112,886							327,244
Cash, cash equivalents and restricted cash at the end of period	2,566,236			1,883,265							291,681

	For the six months ended
	June 30, 2020		June 30, 2021						June 30, 2021
	RMB		RMB						US$
Net cash generated from (used in) operating activities	54,168		(232,143				)		(35,952	)
Net cash generated (used in) investing activities	292,489		220,752						34,188
Net cash generated from (used in) financing activities	2,118,181		(13,123				)		(2,032	)
Effect of exchange rate on cash, cash equivalents and restricted cash	3,154		(17,427				)		(2,699	)
Net increase cash, cash equivalents and restricted cash	2,467,992		(41,941				)		(6,495	)
Cash, cash equivalents and restricted cash at the beginning of period	98,244		1,925,206						298,176
Cash, cash equivalents and restricted cash at the end of period	2,566,236		1,883,265						291,681