SEC Filing | Burning Rock Biotech Limited

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Form 6-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 6-K

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13a-16 OR 15d-16

UNDER THE SECURITIES EXCHANGE ACT OF 1934

For the month of November, 2020

Commission File Number: 001-39316

BURNING ROCK BIOTECH LIMITED

(Registrant’s Name)

601, 6/F, Building 3, Standard Industrial Unit 2

No.7 Luoxuan 4th Road, International Bio Island

Guangzhou, Guangdong

People’s Republic of China

(Address of principal executive offices)

Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.

Form 20-F ☒ Form 40-F ☐

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ☐

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ☐

EXHIBIT INDEX


Number		Description of Document

99.1		Press release

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


	Burning Rock Biotech Limited

	By:	/s/ Leo Li
	Name:	Leo Li
	Title:	Chief Financial Officer

Date: November 20, 2020

EX-99.1

Exhibit 99.1

Burning Rock Reports Third Quarter 2020 Financial Results

GUANGZHOU, China, November 20, 2020—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 September 30, 2020.

Recent Business Highlights

•

Early Detection. Validated a new version of ELSA-seq to expand from 3 cancer types (lung, liver, and colon/rectum) to 6 cancer types (esophagus, pancreas, and ovary added). This demonstrates Burning Rock’s continued progress on its blood-based, pan-cancer early detection R&D.

^○

The new version of the ELSA-seq assay was able to detect more cancer types (liver, colon/rectum, esophagus, pancreas, lung, and ovary) at early stages (I-III), demonstrated higher specificity, and was able to predict the tissue of origin with high accuracy.

^○

The validation data was presented at ESMO Asia Virtual Congress 2020 (“ESMO Asia”) in a mini oral presentation (Company presentation link here: https://brbiotech.gcs-web.com/static-files/5856cf76-36ef-4a0e-8632-c654b5652187). At 99.5% specificity (95% confidence interval [95% CI] 96.7-100), the sensitivity from cross validation was 79.9% (95% CI 74.6-84.4). These results generally held in the pre-allocated independent validation set, which demonstrated 98.3% specificity (95% CI 95.8-99.4) and 80.6% sensitivity (95% CI 76.0-84.6). The results show a significant improvement of specificity compared to the earlier version of the test (presented in January 2020 at AACR Special Conference on Liquid Biopsy, poster link here: https://brbiotech.gcs-web.com/static-files/81388e0e-e5b5-4c34-baab-e7ddb41427e4), which showed 95.1% specificity (95% CI 91.2-97.4) and 80.8% sensitivity (95% CI 77.0-84.1).

^○

In terms of identifying the location of the malignancies, the test produced a tissue-of-origin result in 98.6% of cases, and 81.0% (95% CI 77.2-84.3) of these predictions were correct.

•

Therapy Selection. Analytical validation data of Magnis BR using a 520-gene tissue-based panel and a 168-gene liquid-based panel was presented at the Association for Molecular Pathology (AMP) Annual Meeting in a platform presentation (abstract number TT04). Magnis BR demonstrated comparable testing accuracy, superior library quality repeatability, and shorter turnaround time compared to manual library preparation approach.

^○

Magnis BR, Burning Rock’s fully automated NGS library preparation system, is a key component of Burning Rock’s strategy of empowering hospitals to run NGS tests in-house with minimized lab space and staff requirement. Its fully automated “walk-away” 9-hour overnight library preparation procedure enables hospitals to generate NGS reports in as quickly as 3 days.

^○

As China’s first and only capture-based fully automated NGS library preparation system, Magnis BR further strengthens Burning Rock’s competitive position in the important in-hospital testing market.

•

Licensed-in the Myriad myChoice^® test into China on an exclusive basis for collaborative drug development studies and clinics.

^○

Highly synergistic with Burning Rock’s existing testing platforms, leveraging Burning Rock’s strengths in oncology NGS testing and commercial access.

^○

This test offers significant benefits to Chinese patients with myChoice^® regarded as the ‘gold-standard’ for determining HRD status, as PARP inhibitors demonstrate increasing significance in a range of cancer types.

Third Quarter 2020 Financial Results

Revenues were RMB123.9 million (US$18.2 million) for the three months ended September 30, 2020, representing a 19.4% increase from RMB103.7 million for the same period in 2019, or a 28.8% increase compared to the average of 3Q19 and 4Q19. Sequentially, revenue increased by 15.8% from RMB107.0 million for the three months ended June 30, 2020.

•

Revenue generated from central laboratory business was RMB89.9 million (US$13.2 million) for the three months ended September 30, 2020, representing a 29.7% increase from RMB69.3 million for the same period in 2019, or a 20.5% sequential increase from RMB74.6 million for the three months ended June 30, 2020, primarily attributable to resumed volume growth of the Company’s central laboratory business. Number of patients tested in the central laboratory channel was 8,644 for the three months ended September 30, 2020, representing a 27.7% increase from 6,769 for the same period in 2019, or a 19.2% increase from 7,252 for three months ended June 30, 2020.

•

Revenue generated from in-hospital business was RMB31.7 million (US$4.7 million) for the three months ended September 30, 2020, representing a 3.3% increase from RMB30.7 million for the same period in 2019, or a 41.6% increase compared to the average of 3Q19 and 4Q19. Sequentially, revenue generated from in-hospital business increased by 14.9% from RMB27.6 million for the three months ended June 30, 2020. Number of contracted partner hospitals in the in-hospital channel increased to 25 as of September 30, 2020 from 24 as of June 30, 2020 and 19 as of December 31, 2019.

•

Revenue generated from pharma research and development services was RMB2.3 million (US$0.3 million) for the three months ended September 30, 2020, representing a 38.7% decrease from RMB3.7 million for the same period in 2019, due to declined pharma testing volumes.

Cost of revenues was RMB32.3 million (US$4.8 million) for the three months ended September 30, 2020, representing a 26.5% increase from RMB25.5 million for the same period in 2019, which was generally in line with the Company’s continued business growth.

Gross profit was RMB91.6 million (US$13.5 million) for the three months ended September 30, 2020, representing a 17.1% increase from RMB78.2 million for the same period in 2019. Gross margin was 73.9% for the three months ended September 30, 2020, compared to 75.4% for the same period in 2019.

Operating expenses were RMB216.2 million (US$31.8 million) for the three months ended September 30, 2020, representing a 93.5% increase from RMB111.8 million for the same period in 2019.

•

Research and development expenses were RMB69.3 million (US$10.2 million) for the three months ended September 30, 2020, representing an 81.1% increase from RMB38.3 million for the same period in 2019, primarily due to (i) an increase in staff cost of research and development personnel, and (ii) an increase in share-based compensation expenses for options granted to research and development personnel.

•

Selling and marketing expenses were RMB44.2 million (US$6.5 million) for the three months ended September 30, 2020, representing a 3.7% increase from RMB42.6 million for the same period in 2019.

•

General and administrative expenses increased significantly to RMB102.7 million (US$15.1 million) for the three months ended September 30, 2020 from RMB30.9 million for the same period in 2019, primarily due to (i) an increase in share-based compensation expenses for options granted to general and administrative personnel, and (ii) an increase in staff cost of general and administrative personnel.

Net loss was RMB127.1 million (US$18.7 million), compared to RMB32.2 million for the same period in 2019.

Cash, cash equivalents, restricted cash and short-term investments were RMB2.4 billion (US$353.8 million) as of September 30, 2020.

2020 Financial Guidance

The Company reiterates its 2020 full-year revenue guidance of approximately RMB420 million (US$61.9 million).

Conference Call Information

Burning Rock will host a conference call to discuss the third quarter 2020 financial results at 8:00 a.m. U.S. Eastern Time (9:00 p.m. Hong Kong time) on November 20, 2020.

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:		5637209

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 185,000 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, 2019		June 30, 2019		September 30, 2019		December 31, 2019		March 31, 2020		June 30, 2020		September 30, 2020
Central Laboratory Channel:
Number of patients tested		5,336		6,047		6,769		7,576		4,680		7,252		8,644
Number of ordering physicians⁽¹⁾		984		1,059		1,155		1,222		810		1,175		1,194
Number of ordering hospitals⁽²⁾		249		265		281		304		232		284		289

⁽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, 2019		June 30, 2019		September 30, 2019		December 31, 2019		March 31, 2020		June 30, 2020		September 30, 2020
In-hospital Channel:
Pipeline partner hospitals⁽¹⁾		17		20		21		21		23		23		22
Contracted partner hospitals⁽²⁾		14		15		19		19		21		24		25
Total number of partner hospitals		31		35		40		40		44		47		47

⁽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, 2019		June 30, 2019		September 30, 2019		December 31, 2019		March 31, 2020		June 30, 2020		September 30, 2020
	(RMB in thousands)
Central laboratory channel		72,807		63,394		69,304		70,749		46,141		74,607		89,899
In-hospital channel		26,557		16,329		30,704		14,088		17,123		27,588		31,704
Pharma research and development channel		5,101		5,090		3,716		3,838		4,065		4,776		2,278
Total revenues		104,465		84,813		103,724		88,675		67,329		106,971		123,881


	For the three months ended
Gross profit	March 31, 2019		June 30, 2019		September 30, 2019		December 31, 2019		March 31, 2020		June 30, 2020		September 30, 2020
	(RMB in thousands)
Central laboratory channel		54,910		46,122		50,113		51,420		32,434		56,556		67,804
In-hospital channel		19,870		12,571		25,412		319		10,126		19,269		22,410
Pharma research and development channel		3,332		3,366		2,662		3,237		2,224		2,573		1,373
Total gross profit		78,112		62,059		78,187		54,976		44,784		78,398		91,587


	For the three months ended
Share-based compensation expenses	March 31, 2019		June 30, 2019		September 30, 2019		December 31, 2019			March 31, 2020		June 30, 2020		September 30, 2020
	(RMB in thousands)
Cost of revenues		143		177		180		178			176		183		160
Research and development expenses		722		708		1,486		6,461			2,072		25,314		10,572
Selling and marketing expenses		364		517		485		(131	)		253		491		341
General and administrative expenses		429		537		1,149		9,387			1,665		1,639		57,805
Total share-based compensation expenses		1,658		1,939		3,300		15,895			4,166		27,627		68,878

Burning Rock Biotech Limited Unaudited Condensed Statements of Comprehensive (Loss) Income

(in thousands, except for number of shares and per share data)


				For the three months ended
	March 31, 2019			June 30, 2019			September 30, 2019			December 31, 2019			March 31, 2020			June 30, 2020			September 30, 2020			September 30, 2020
	RMB			RMB			RMB			RMB			RMB			RMB			RMB			US$
Revenues		104,465			84,813			103,724			88,675			67,329			106,971			123,881			18,246

Cost of revenues		(26,353	)		(22,754	)		(25,537	)		(33,699	)		(22,545	)		(28,573	)		(32,294	)		(4,757	)

Gross profit		78,112			62,059			78,187			54,976			44,784			78,398			91,587			13,489

Operating expenses:
Research and development expenses		(31,427	)		(34,992	)		(38,278	)		(52,238	)		(40,016	)		(71,176	)		(69,330	)		(10,211	)
Selling and marketing expenses		(26,690	)		(34,929	)		(42,606	)		(49,109	)		(29,815	)		(37,992	)		(44,174	)		(6,506	)
General and administrative expenses		(31,565	)		(20,614	)		(30,866	)		(49,112	)		(34,295	)		(42,272	)		(102,731	)		(15,131	)

Total operating expenses		(89,682	)		(90,535	)		(111,750	)		(150,459	)		(104,126	)		(151,440	)		(216,235	)		(31,848	)

Loss from operations		(11,570	)		(28,476	)		(33,563	)		(95,483	)		(59,342	)		(73,042	)		(124,648	)		(18,359	)

Interest income		128			3,806			3,686			3,541			3,985			44			698			103
Interest expense		(4,210	)		(1,826	)		(1,650	)		(1,303	)		(1,178	)		1,939			(776	)		(114	)
Other (expense) income, net		(176	)		(329	)		(37	)		(341	)		(151	)		122			(176	)		(26	)
Foreign exchange (loss) gain, net		(101	)		1,142			800			(355	)		611			(118	)		(2,228	)		(328	)
Change in fair value of warrant liability		64			(347	)		(1,403	)		(1,153	)		3,503			—			—			—

Loss before income tax		(15,865	)		(26,030	)		(32,167	)		(95,094	)		(52,572	)		(71,055	)		(127,130	)		(18,724	)

Income tax expenses		—			—			—			—			—			—			—			—

Net loss		(15,865	)		(26,030	)		(32,167	)		(95,094	)		(52,572	)		(71,055	)		(127,130	)		(18,724	)

Net loss attributable to Burning Rock Biotech Limited’s shareholders		(15,865	)		(26,030	)		(32,167	)		(95,094	)		(52,572	)		(71,055	)		(127,130	)		(18,724	)
Accretion of convertible preferred shares		(50,296	)		(41,770	)		(33,772	)		(39,173	)		(26,288	)		(38,400	)		—			—

Net loss attributable to ordinary shareholders		(66,161	)		(67,800	)		(65,939	)		(134,267	)		(78,860	)		(109,455	)		(127,130	)		(18,724	)
Loss per share:
Ordinary shares - basic and diluted		(2.86	)		(2.93	)		(2.85	)		(5.49	)		(3.15	)		(2.68	)		—			—
Class A ordinary shares - basic and diluted		—			—			—			—			—			—			(1.22	)		(0.18	)
Class B ordinary shares - basic and diluted		—			—			—			—			—			—			(1.22	)		(0.18	)
Weighted average shares outstanding used in loss per share computation:
Ordinary shares - basic and diluted		23,167,232			23,167,232			23,167,232			24,437,444			25,031,575			40,786,167			—			—
Class A ordinary shares - basic and diluted		—			—			—			—			—			—			86,479,686			86,479,686
Class B ordinary shares - basic and diluted		—			—			—			—			—			—			17,324,848			17,324,848
Other comprehensive (loss) income, net of tax of nil:
Foreign currency translation adjustments		(278	)		(14,288	)		45,317			(6,647	)		11,422			(2,336	)		(91,093	)		(13,417	)
Total comprehensive (loss) income		(16,143	)		(40,318	)		13,150			(101,741	)		(41,150	)		(73,391	)		(218,223	)		(32,141	)
Total comprehensive (loss) income attributable to Burning Rock Biotech Limited’s shareholders		(16,143	)		(40,318	)		13,150			(101,741	)		(41,150	)		(73,391	)		(218,223	)		(32,141	)

Burning Rock Biotech Limited

Unaudited Condensed Statements of Comprehensive (Loss) Income

(in thousands, except for number of shares and per share data)


	For the nine months ended
	September 30, 2019			September 30, 2020			September 30, 2020
	RMB			RMB			US$
Revenues		293,002			298,181			43,917

Cost of revenues		(74,644	)		(83,412	)		(12,286	)

Gross profit		218,358			214,769			31,631

Operating expenses:
Research and development expenses		(104,697	)		(180,522	)		(26,588	)
Selling and marketing expenses		(104,225	)		(111,981	)		(16,493	)
General and administrative expenses		(83,045	)		(179,298	)		(26,408	)

Total operating expenses		(291,967	)		(471,801	)		(69,489	)

Loss from operations		(73,609	)		(257,032	)		(37,858	)

Interest income		7,620			4,727			696
Interest expense		(7,686	)		(15	)		(2	)
Other expense, net		(542	)		(205	)		(30	)
Foreign exchange (loss) gain, net		1,841			(1,735	)		(256	)
Change in fair value of warrant liability		(1,686	)		3,503			516

Loss before income tax		(74,062	)		(250,757	)		(36,934	)

Income tax expenses		—			—			—

Net loss		(74,062	)		(250,757	)		(36,934	)

Net loss attributable to Burning Rock Biotech Limited’s shareholders		(74,062	)		(250,757	)		(36,934	)
Accretion of convertible preferred shares		(125,838	)		(64,688	)		(9,528	)

Net loss attributable to ordinary shareholders		(199,900	)		(315,445	)		(46,462	)

Loss per share for class A and class B ordinary shares:
Ordinary shares - basic and diluted		(8.63	)		—			—
Class A ordinary shares - basic and diluted		—			(5.56	)		(0.82	)
Class B ordinary shares - basic and diluted		—			(5.56	)		(0.82	)

Weighted average shares outstanding used in loss per share computation:
Ordinary shares - basic and diluted		23,167,232			—			—
Class A ordinary shares - basic and diluted		—			39,446,747			39,446,747
Class B ordinary shares - basic and diluted		—			17,324,848			17,324,848

Other comprehensive income (loss), net of tax of nil:
Foreign currency translation adjustments		30,751			(82,007	)		(12,078	)

Total comprehensive loss		(43,311	)		(332,764	)		(49,012	)

Total comprehensive loss attributable to Burning Rock Biotech Limited’s shareholders		(43,311	)		(332,764	)		(49,012	)

Burning Rock Biotech Limited

Unaudited Condensed Consolidated Balance Sheets

(In thousands)


	As of
	December 31, 2019		September 30, 2020		September 30, 2020
	RMB		RMB		US$
ASSETS
Current assets:
Cash and cash equivalents		94,235		2,061,566		303,636
Restricted cash		4,009		263		39
Short-term investment		313,988		340,505		50,151
Accounts receivable		88,822		93,839		13,821
Contract assets		909		20,257		2,984
Amounts due from related parties		74,368		—		—
Inventories		58,116		69,805		10,281
Prepayments and other current assets		72,340		60,970		8,980

Total current assets		706,787		2,647,205		389,892

Non-current assets:
Equity method investment		1,790		1,527		225
Long-term investment		38,369		37,456		5,517
Property and equipment, net		89,314		96,688		14,241
Intangible assets, net		343		3,455		509
Other non-current assets		10,954		16,162		2,380

Total non-current assets		140,770		155,288		22,872

TOTAL ASSETS		847,557		2,802,493		412,764

Burning Rock Biotech Limited

Unaudited Condensed Consolidated Balance Sheets (Continued)

(in thousands)


	As of
	December 31, 2019			September 30, 2020			September 30, 2020
	RMB			RMB			US$
LIABILITIES, MEZZANINE EQUITY AND SHAREHOLDERS’ (DEFICIT) EQUITY
Current liabilities:
Accounts payable		12,348			30,284			4,460
Deferred revenue		49,539			67,109			9,884
Capital lease obligations, current		4,893			5,300			781
Accrued liabilities and other current liabilities		54,059			110,545			16,282
Customer deposits		4,104			16,076			2,368
Short-term borrowing		2,370			2,370			349
Current portion of long-term borrowings		37,129			37,208			5,480

Total current liabilities		164,442			268,892			39,604

Non-current liabilities:
Deferred government grants		991			263			39
Capital lease obligations		4,816			787			116
Long-term borrowings		18,266			—			—
Warrant liability		23,503			—			—

Total non-current liabilities		47,576			1,050			155

TOTAL LIABILITIES		212,018			269,942			39,759

Mezzanine equity:
Series A convertible preferred shares		186,991			—			—
Series B convertible preferred shares		466,983			—			—
Series C convertible preferred shares		873,059			—			—

Total mezzanine equity		1,527,033			—			—

Shareholders’ (deficit) equity:
Ordinary shares		31			—			—
Class A ordinary shares		—			114			17
Class B ordinary shares		—			21			3
Additional paid-in capital		45,640			3,866,806			569,519
Accumulated deficits		(946,464	)		(1,261,682	)		(185,826	)
Accumulated other comprehensive income (loss)		9,299			(72,708	)		(10,708	)

Total shareholders’ (deficit) equity		(891,494	)		2,532,551			373,005

TOTAL LIABILITIES, MEZZANIE EQUITY AND SHAREHOLDERS’ (DEFICIT) EQUITY		847,557			2,802,493			412,764

Burning Rock Biotech Limited

Unaudited Condensed Statements of Cash Flows

(in thousands)


	For the three months ended
	September 30, 2019			September 30, 2020			September 30, 2020
	RMB			RMB			US$
Net cash used in operating activities		(17,395	)		(37,052	)		(5,457	)
Net cash used in investing activities		(25,684	)		(365,373	)		(53,814	)
Net cash used in financing activities		(22,878	)		(20,939	)		(3,084	)
Effect of exchange rate on cash, cash equivalents and restricted cash		5,501			(81,043	)		(11,936	)
Net decrease cash, cash equivalents and restricted cash		(60,456	)		(504,407	)		(74,291	)
Cash, cash equivalents and restricted cash at the beginning of period		185,740			2,566,236			377,966
Cash, cash equivalents and restricted cash at the end of period		125,284			2,061,829			303,675

For the nine months ended

September 30,
2019

September 30,
2020

RMB

US$

Net cash (used in) generated from operating activities

(177,905

)

17,116

2,519

Net cash used in investing activities

(368,922

)

(72,884

)

(10,734

)

Net cash generated from financing activities

570,643

2,097,242

308,891

Effect of exchange rate on cash, cash equivalents and restricted cash

6,134

(77,889

)

(11,471

)

Net increase cash, cash equivalents and restricted cash

29,950

1,963,585

289,205

Cash, cash equivalents and restricted cash at the beginning of period

95,334

98,244

14,470

Cash, cash equivalents and restricted cash at the end of period

125,284

2,061,829

303,675