Form 6-K
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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 2022
Commission File Number:
001-39316
 
 
BURNING ROCK BIOTECH LIMITED
(Registrant’s Name)
 
 
No.5 Xingdao Ring Road North, 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

This current report on Form 6-K, including Exhibits 99.1 and 99.2 to it, shall be incorporated by reference into the Registrant’s registration statement on Form F-3, which became effective on September 30, 2022 (File no. 333-264577), and be a part thereof from the date on which this Report is filed, to the extent not superseded by documents or reports subsequently furnished.

 

Number

  

Description of Document

99.1    Management’s Discussion and Analysis of Financial Condition and Results of Operations and Recent Developments
99.2    Unaudited Condensed Consolidated Financial Statements

 

2


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 7, 2022

 

3

EX-99.1

Exhibit 99.1

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Discussion and analysis below are limited to the operations of Burning Rock Biotech Limited (“we” or “us”).

Summary Consolidated Financial and Operating Data

The summary unaudited interim consolidated financial information for the six months ended June 30, 2021 and 2022 and as of June 30, 2022 has been derived from our unaudited interim condensed consolidated financial statements as of and for the six months ended June 30, 2022 included elsewhere in this current report. Our unaudited interim condensed consolidated financial statements have been prepared on a basis consistent with our audited consolidated financial statements. The summary consolidated balance sheet data as of December 31, 2021 has been derived from our audited consolidated financial statements included in our annual report on Form 20-F for the year ended December 31, 2021 filed with the SEC on April 29, 2022 (our “2021 Form 20-F”). The summary consolidated financial data should be read in conjunction with those financial statements and the accompanying notes and “Item 5. Operating and Financial Review and Prospects” included in our 2021 Form 20-F.

Summary Unaudited Consolidated Statements of Comprehensive Loss Data

 

     Six months ended June 30,  
     2021      2022  
     RMB’000      RMB’000      US$’000  

Revenues:

        

Revenues from services

     164,414        185,581        27,707  

Revenues from sales of products

     69,488        80,789        12,061  
  

 

 

    

 

 

    

 

 

 

Total revenues

     233,902        266,370        39,768  
  

 

 

    

 

 

    

 

 

 

Cost of revenues(1)

        

Cost of services

     (46,731      (66,462      (9,923

Cost of goods

     (20,000      (29,726      (4,438
  

 

 

    

 

 

    

 

 

 

Total cost of revenues

     (66,731      (96,188      (14,361
  

 

 

    

 

 

    

 

 

 

Gross profit

     167,171        170,182        25,407  

Operating expenses:

        

Research and development expenses(1) 

     (185,485      (211,608      (31,592 ) 

Selling and marketing expenses(1)

     (123,188      (194,845      (29,090

General and administrative expenses(1)

     (232,389      (292,049      (43,602
  

 

 

    

 

 

    

 

 

 

Total operating expenses

     (541,062      (698,502      (104,284
  

 

 

    

 

 

    

 

 

 

Loss from operations

     (373,891      (528,320      (78,877

Interest income

     1,468        4,517        674  

Interest expenses

     (1,075      90        13  

Other income, net

     551        425        63  

Foreign exchange loss, net

     (503      (153      (23
  

 

 

    

 

 

    

 

 

 

Loss before income tax

     (373,450      (523,441      (78,150

Income tax expenses

     (1,626      (84      (13
  

 

 

    

 

 

    

 

 

 

Net loss

     (375,076      (523,525      (78,163
  

 

 

    

 

 

    

 

 

 

 

(1)

Share-based compensation expenses were allocated as follows:


     Six months ended June 30,  
     2021      2022  
     RMB’000      RMB’000      US$’000  

Cost of revenues

     745        806        120  

Research and development expenses

     43,230        24,222        3,616  

Selling and marketing expenses

     5,442        3,932        587  

General and administrative expenses

     118,750        128,330        19,159  
  

 

 

    

 

 

    

 

 

 

Total

     168,167        157,290        23,482  
  

 

 

    

 

 

    

 

 

 

Summary Condensed Consolidated Balance Sheets Data

 

     As of December
31, 2021
     As of June 30, 2022  
     RMB’000      RMB’000      US$’000  

Total current assets

     1,820,946        1,463,085        218,436  

Total assets

     2,278,587        1,861,274        277,882  

Total current liabilities

     372,184        359,450        53,664  

Total liabilities

     433,276        429,041        64,054  

Net current assets

     1,448,762        1,103,635        164,772  

Total shareholders’ equity

     1,845,311        1,432,233        213,828  

Total liabilities and shareholders’ equity

     2,278,587        1,861,274        277,882  

Summary Unaudited Statement of Cash Flows Data

 

     Six months ended June 30,  
     2021      2022  
     RMB’000      RMB’000      US$’000  

Net cash used in operating activities

     (232,143      (253,634      (37,871

Net cash generated from investing activities

     220,752        17,718        2,649  

Net cash used in financing activities

     (13,123      (73,493      (10,971

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

     (17,427      23,347        3,485  

Net decrease in cash, cash equivalents and restricted cash

     (41,941      (286,062      (42,708

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

     1,925,206        1,439,112        214,854  

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

     1,883,265        1,153,050        172,146  

Operating Data

 

     As of June 30,  
     2021      2022  

In-hospital Channel:

     

Pipeline partner hospitals(1)

     22        25  

Contracted partner hospitals(2)

     34        43  

Total number of partner hospitals

     56        68  

 

(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 our products.

(2)

Refers to hospitals that have entered into contracts to purchase our products for use on a recurring basis in their respective in-hospital laboratories we helped them establish. Kit revenue is generated from contracted hospitals.

 

2


Results of Operations

Six Months Ended June 30, 2022 Compared to Six Months Ended June 30, 2021

Revenues

Our revenues increased by 13.9% to RMB266.4 million (US$39.8 million) for the six months ended June 30, 2022, from RMB233.9 million for the same period of 2021, primarily attributable to an increase in revenues from sales of products to RMB80.8 million (US$12.1 million) for the six months ended June 30, 2022 from RMB69.5 million for the same period of 2021 and to a lesser extent, revenues generated from services to RMB185.6 million (US$27.7 million) for the six months ended June 30, 2022 from RMB164.4 million for the same period of 2021.

The tables below set forth a breakdown by business segment of our revenues in absolute amount and as a percentage of our total revenues for the periods indicated:

 

     Six months ended June 30, 2021  
     Central laboratory
business
     In-hospital business      Pharma research
and development
services
     Total revenues  
     RMB      % of
total
revenues
     RMB      % of
total
revenues
     RMB      % of
total
revenues
     RMB      % of
total
revenues
 
     (in thousands, except for%)  

Revenues from services

     154,560        66.1        8        —          9,846        4.2        164,414        70.3  

Revenues from sales of products

     —          —          69,488        29.7        —          —          69,488        29.7  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
     154,560        66.1        69,496        29.7        9,846        4.2        233,902        100.0  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

     Six months ended June 30, 2022  
     Central laboratory business      In-hospital business      Pharma research and
development services
     Total revenues  
     RMB      US$      % of total
revenues
     RMB      US$      % of
total
revenues
     RMB      US$      % of
total
revenues
     RMB      US$      % of
total
revenues
 
     (in thousands, except for %)  

Revenues from services

     152,808        22,814        57.4        2,345        350        0.9        30,428        4,543        11.4        185,581        27,707        69.7  

Revenues from sales of products

     —          —          —          80,789        12,061        30.3        —          —          —          80,789        12,061        30.3  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
     152,808        22,814        57.4        83,134        12,411        31.2        30,428        4,543        11.4        266,370        39,768        100.0  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

The increase in revenues from the six months ended June 30, 2021 to the same period of 2022 was primarily due to an increase in revenues from our in-hospital business and pharma research and development services.

 

   

Central laboratory business. Revenue generated from central laboratory business decreased slightly to RMB152.8 million (US$22.8 million) for the six months ended June 30, 2022 from RMB154.6 million for the same period of 2021, primarily attributable to the decrease in testing volume in Shanghai and Beijing due to COVID-19 related lockdowns and other restrictive measures, offset in part by growth of our newly launched products.

 

   

In-hospital business. Revenue generated from in-hospital business increased by 19.6% to RMB83.1 million (US$12.4 million) for the six months ended June 30, 2022 from RMB69.5 million for the six months ended June 30, 2021, primarily attributable to in-hospital testing volume growth in the first quarter of 2022, offset in part by severe declines in testing volume in the second quarter of 2022 in Shanghai and Beijing due to the adverse impact of COVID-19. The number of our contracted partner hospitals increased from 34 as of June 30, 2021 to 43 as of June 30, 2022.

 

3


   

Pharma research and development services. Revenue generated from pharma research and development services increased substantially to RMB30.4 million (US$4.5 million) for the six months ended June 30, 2022 from RMB9.8 million for the six months ended June 30, 2021, primarily attributable to increased testing performed for our pharma customers under our contracted pharma service projects.

Cost of Revenues

Our cost of revenues increased by 44.1% to RMB96.2 million (US$14.4 million) for the six months ended June 30, 2022 from RMB66.7 million for the same period of 2021. This increase was primarily attributable to an increase in cost of goods sold to RMB29.7 million (US$4.4 million) for the six months ended June 30, 2022 from RMB20.0 million for the same period of 2021, and to a lesser extent, an increase in cost of services to RMB66.5 million (US$9.9 million) for the six months ended June 30, 2022 from RMB46.7 million for the same period of 2021.

The table below sets forth a breakdown of our cost of revenue by business segment for the periods indicated:

 

     Six months ended June 30,  
     2021      2022  
     RMB’000      RMB’000      US$’000  

Cost of Revenues

        

Central laboratory business

     40,667        44,659        6,668  

In-hospital business

     20,000        29,726        4,438  

Pharma research and development services

     6,064        21,803        3,255  
  

 

 

    

 

 

    

 

 

 

Total

     66,731        96,188        14,361  
  

 

 

    

 

 

    

 

 

 

The increase in cost of revenues from the six months ended June 30, 2021 to the same period of 2022 was primarily due to an increase in cost of revenues for our in-hospital business and pharma research and development services.

 

   

Central laboratory business. Cost of revenue for central laboratory business was RMB44.7 million (US$6.7 million) for the six months ended June 30, 2022, representing a 9.8% increase from RMB40.7 million for the same period in 2021, primarily due to (i) rental and renovation depreciation in relation to a new building that we commenced use in January 2022, including for our central laboratory business, and (ii) increased inventory provisions for testing kits that were approaching expiration dates as a result of the decrease in the testing volume due to the adverse impact of COVID-19.

 

   

In-hospital business. Cost of revenue for in-hospital business was RMB29.7 million (US$4.4 million) for the six months ended June 30, 2022, representing a 48.6% increase from RMB20.0 million for the same period in 2021, primarily due to an increase in testing volume as well as rental and renovation depreciation in relation to a new building that we commenced use in January 2022, including for our in-hospital business.

 

   

Pharma research and development services. Cost of revenue for pharma research and development services was RMB21.8 million (US$3.3 million) for the six months ended June 30, 2022, representing a substantial increase from RMB6.1 million for the same period in 2021, primarily attributable to the increased depreciation and staff cost in relation to our U.S. laboratory as it started to conduct testing for pharma research and development projects from December 2021.

 

4


Gross Profit and Gross Margin

Our gross profit increased by 1.8% to RMB170.2 million (US$25.4 million) for the six months ended June 30, 2022 from RMB167.2 million for the same period of 2021, primarily due to the growth of our pharma research and development business. Our gross margin decreased to 63.9% for the six months ended June 30, 2022 from 71.5% for the same period of 2021.

The table below sets forth a breakdown of our gross profit and gross profit margin by business segment for the periods indicated:

 

     Six months ended June 30,  
     2021      2022  
     RMB’000      Gross
profit
margin
(%)
     RMB’000      US$’000      Gross
profit
margin
(%)
 

Gross Profit and Gross Margin

              

Central laboratory business

     113,893        73.7        108,149        16,146        70.8  

In-hospital business

     49,496        71.2        53,408        7,974        64.2  

Pharma research and development services

     3,782        38.4        8,625        1,288        28.3  
  

 

 

       

 

 

    

 

 

    

Total

     167,171        71.5        170,182        25,407        63.9  
  

 

 

       

 

 

    

 

 

    

 

   

Central laboratory business. Gross profit for central laboratory business was RMB108.1 million (US$16.1 million) for the six months ended June 30, 2022, representing a 5.0% decrease from RMB113.9 million for the same period of 2021, primarily attributable to the adverse impact of COVID-19. Our gross margin for central laboratory business decreased to 70.8% for the six months ended June 30, 2022 from 73.7% for the same period of 2021, primarily due to increases in cost of revenues as a result of: (i) rental and depreciation in relation to a new building that we commenced use in January 2022, including for our central laboratory business, and (ii) increased inventory provisions for testing kits that were approaching expiration dates as a result of the decrease in the testing volume due to the adverse impact of COVID-19.

 

   

In-hospital business. Gross profit for in-hospital business was RMB53.4 million (US$8.0 million) for the six months ended June 30, 2022, representing a 7.9% increase from RMB49.5 million for the same period of 2021, primarily attributable to the continued business growth of this segment. Our gross margin for in-hospital business decreased to 64.2% for the six months ended June 30, 2022 from 71.2% for the same period of 2021, primarily due to (i) the decreased proportion of testing we provided to certain hospitals that had higher gross profit margins, and (ii) rental and depreciation in relation to a new building that we commenced use in January 2022, including for our in-hospital business.

 

   

Pharma research and development services. Gross profit for pharma research and development services was RMB8.6 million (US$1.3 million) for the six months ended June 30, 2022, representing a 126.3% increase from RMB3.8 million for the same period of 2021, primarily attributable to the growth of this segment, partially offset by increased depreciation and staff cost in relation to our newly established laboratory in the U.S. Our gross margin for pharma research and development services decreased to 28.3% for the six months ended June 30, 2022 from 38.4% for the same period in 2021, primarily due to increased depreciation and staff cost in relation to our newly established laboratory in the U.S.

 

5


Operating Expenses

Research and development expenses

Our research and development expenses increased by 14.1% to RMB211.6 million (US$31.6 million) for the six months ended June 30, 2022 from RMB185.5 million for the same period of 2021, primarily due to an increase in staff cost for our research and development personnel and increased research and development activities for early cancer detection.

Selling and marketing expenses

Our selling and marketing expenses increased by 58.2% to RMB194.8 million (US$29.1 million) for the six months ended June 30, 2022 from RMB123.2 million for the six months ended June 30, 2021, primarily due to (i) an increase in staff cost resulting from an increase in headcount; and (ii) an increase in marketing related expenditures, such as entertainment, conference and marketing expenses.

General and administrative expenses

Our general and administrative expenses increased by 25.7% to RMB292.0 million (US$43.6 million) for the six months ended June 30, 2022 from RMB232.4 million for the six months ended June 30, 2021, primarily due to (i) an increase in staff cost resulting from increased headcount; (ii) an increase in depreciation expenses for new office space; and (iii) an increase in allowance for doubtful account in relation to accounts receivables.

Interest Income, Net

Our interest income, net increased substantially to RMB4.6 million (US$0.7 million) for the six months ended June 30, 2022 from RMB0.4 million for the same period of 2021, primarily due to an increase in average balance of short-term investment and cash and cash equivalent.

Net Loss

Our net loss increased by 39.6% to RMB523.5 million (US$78.2 million) for the six months ended June 30, 2022 from RMB375.1 million for the six months ended June 30, 2021, primarily due to a decrease in gross profit margin and increases in operating expenses discussed above, offset in part by an increase in our total revenues.

Liquidity and Capital Resources

As of June 30, 2022, we had (i) cash and cash equivalents of RMB1,148.6 million (US$171.5 million), consisting of bank deposits, and (ii) restricted cash of RMB4.5 million (US$0.7 million). We believe that our cash and cash equivalents, together with our cash generated from financing activities, our initial public offering and concurrent private placement, will be sufficient to meet our current and anticipated needs for general corporate purposes for at least the next 12 months. We may, however, decide to expand our business through additional equity and debt financing. The issuance and sale of additional equity would result in further dilution to our shareholders. The incurrence of indebtedness would result in increased fixed obligations and could result in operating covenants that would restrict our operations.

 

6


Cash Flows

Net cash used in operating activities for the six months ended June 30, 2022 was RMB253.6 million (US$37.9 million), while our net loss for the same period was RMB523.5 million (US$78.2 million). The difference was primarily due to adjustment for non-cash and non-operating items of RMB262.1 million (US$39.1 million), primarily including share-based compensation of RMB157.3 million (US$23.5 million), depreciation and amortization of RMB60.2 million (US$9.0 million), non-cash lease expense of RMB19.7 million (US$2.9 million), and changes in working capital. The changes in working capital primarily reflected (i) an increase in prepayment and other current assets of RMB25.6 million (US$3.8 million), primarily attributable to the payment of royalty fee and human resources outsourcing service fee and (ii) an increase in deferred revenue of RMB20.2 million (US$3.0 million) primarily as a result of our overall business growth. These factors were partially offset by (i) a decrease in accrued liabilities and other current liabilities of RMB29.5 million (US$4.4 million) primarily attributable to our decreased payroll payables; (ii) a decrease in operating lease liabilities of RMB19.6 million (US$2.9 million) primarily as a result of adoption of ASC842, the new lease accounting principle; and (iii) an increase in accounts receivables of RMB14.4 million (US$2.2 million), primarily attributable to the continued growth of our in-hospital business.

Net cash generated from investing activities for the six months ended June 30, 2022 was RMB17.7 million (US$2.6 million), primarily due to proceeds from maturity of short-term investment of RMB65.6 million (US$9.8 million), partially offset by purchase of property and equipment of RMB35.1 million (US$5.2 million) and prepayment of property and equipment and intangible assets of RMB7.9 million (US$1.2 million).

Net cash used in financing activities for the six months ended June 30, 2022 was RMB73.5 million (US$11.0 million), primarily due to the cash outflow for purchase of equity forwards of RMB66.9 million (US$10.0 million).

Recent Developments

In June 2022, our board of directors (the “Board”) authorized a share repurchase plan under which we may repurchase our Class A ordinary shares in the form of American depositary shares (“ADSs”) with an aggregate value of up to US$10 million during a 12-month period (the “Share Repurchase Program”). We have completed the Share Repurchase Program in full by repurchasing a total of 3,023,138 Class A ordinary shares in the form of ADSs.

In June 2022, Mr. Jing Rong resigned as a director from the Board, and we appointed Dr. Licen Lisa Xu as an independent director to the Board.

In July 2022, Ms. Yunxia Yang resigned as a director from the Board and a member of the compensation committee of the Board. Mr. Feng Deng, an existing director of the Board, has been appointed as a new member to the compensation committee to fill the vacancy created by Ms. Yang’s resignation.

In October 2022, we applied for admission of the ADSs to the standard listing segment of the Official List of the Financial Conduct Authority (the “FCA”) and to trading on the Main Market of the London Stock Exchange (the “LSE”) by way of a direct listing (the “Direct Listing”). The registration document and prospectus that were prepared in connection with the Direct Listing were approved by the FCA on October 21, 2022 and October 27, 2022, respectively. Trading of our ADSs on the LSE commenced on November 1, 2022, under the symbol “BNR.” The ADSs listed on the LSE are fully fungible with the ADSs listed on NASDAQ. Custodial and depositary links have been established between Euroclear, Clearstream and The Depository Trust Company to facilitate the cross-market transfers of the ADSs associated with secondary market trading.

 

7


2022 Long-Term Equity Incentive Plan

In July 2022, our board of directors approved the 2022 Long-term Equity Incentive Plan, or the 2022 Plan, which was subsequently approved by the shareholders of our company at the annual general meeting in September 2022. The 2022 Plan replaces our 2021 Long-term Equity Incentive Plan and the share incentive awards granted thereunder. The 2022 Plan will grant options to senior management and employees. The maximum number of shares that may be issued pursuant to all awards under the 2022 Plan is 11,775,525 Class A ordinary shares (the “Awards”), which represents approximately 9% of our current total outstanding shares on a converted and fully diluted basis.

The following paragraphs describe the principal terms of the 2022 Plan:

Type of awards. The 2022 Plan permits the awards of options.

Allocation and Plan administration. The Awards consist of three tranches of options (the “Pool I Awards,” “Pool II Awards” and “Pool III Awards”). The Pool I Awards, which represent options to purchase 1.65% of our total outstanding number of shares on an as converted and fully diluted basis, or 2,158,846 Class A ordinary shares, will be granted to our officers and employees. Mr. Yusheng Han, our chairman and CEO, will not be granted any awards of options under the Pool I Awards. The Pool II Awards represent options to purchase 4.35% of our total outstanding number of shares on an as converted and fully diluted basis, or 5,691,504 Class A ordinary shares, 62.07% (or option to purchase 3,532,658 Class A ordinary shares) of which will be granted to Mr. Yusheng Han, and the rest to other officers and employees. The Pool III Awards represent options to purchase 3% of our total outstanding number of shares on an as converted and fully diluted basis, or 3,925,175 Class A ordinary shares, 45% (or option to purchase 3,532,658 Class A ordinary shares) of which will be granted to Mr. Yusheng Han, and the rest to other officers and employees.

Award agreement. Awards granted under the 2022 Plan are evidenced by an award agreement that sets forth terms, conditions and limitations for each award, which may include the term of the award, the provisions applicable in the event of the grantee’s employment or service terminates, and our authority to unilaterally or bilaterally amend, modify, suspend, cancel or rescind the award.

Eligibility. We may grant awards to senior management and employees of our company under the 2022 Plan.

Vesting schedule.

Pool I Awards

The Pool I Awards will vest once (a) our valuation (based on the 60-day average closing share price of our publicly traded shares) reaches US$2 billion by the fifth anniversary of the grant date the Pool I valuation target is achieved, and the remaining 60% of the Pool I Awards will vest once (a) the Pool I valuation target has been achieved, (b) the grantee remains employed by us at the time when the Pool I valuation target is achieved, and (c) the grantee has been employed by us for five (5) years after the date of grant.

Pool II Awards

40% of the Pool II Awards will vest once (a) our valuation (based on the 60-day average closing share price of our publicly traded shares) reaches US$4 billion by the seventh anniversary of the grant date (the “Pool II valuation target”), and (b) the grantee remains employed by us at the time when the Pool II valuation target is achieved, and the remaining 60% of the Pool II Awards will vest once (a) the Pool II valuation target has been achieved, (b) the grantee remains employed by us at the time when the Pool II valuation target is achieved, and (c) the grantee has been employed by us for five (5) years after the date of grant.

 

8


Pool III Awards

40% of the Pool III Awards will vest once (a) our valuation (based on the 60-day average closing share price of our publicly traded shares) reaches US$10 billion by the seventh anniversary of the grant date (the “Pool III valuation target”), and (b) the grantee remains employed by us at the time when the Pool III valuation target is achieved, and the remaining 60% of the Pool III Awards will vest once (a) the Pool III valuation target has been achieved, (b) the grantee remains employed by us at the time when the Pool III valuation target is achieved, and (c) the grantee has been employed by us for five (5) years after the date of grant.

Exercise of options. The grantee can exercise the vested portion of options granted under the 2022 Plan at any time but no more than ten years after the grant date. The exercise price of the Awards shall be US$3.33 per share, which is equivalent to our 60-day average closing share price immediately prior to September 8, 2022, the date of shareholder approval.

Transfer Restrictions. Awards may not be transferred in any manner by the participant other than in accordance with the exceptions provided in the 2022 Plan or the relevant award agreement or otherwise determined by the Compensation Committee, such as transfers by will or the laws of descent and distribution.

Termination and Amendment. Our board of directors has the authority to amend or terminate the 2022 Plan, but no amendments, alternation or discontinuation shall be made by the board of director, (a) without the approval (but only to extent such approval is required by the principal national securities exchange on which our shares are listed or admitted to trading, and subject to certain other exceptions) of the shareholders of our company, if such action would increase the total number of shares reserved for the purposes of our 2022 Plan or change the maximum number of shares for which awards may be granted to any participant under the 2022 Plan, or (b) if such action may diminish any of the rights of the participant under any award pursuant to the 2022 Plan unless agreed by the participant. In addition, the Awards that have already been allocated can only be amended at a shareholders’ general meeting, at which meeting our C-level officers and/or entities they beneficially own shall abstain from voting.

As of September 30, 2022, there were 9,184,923 ordinary shares underlying outstanding options granted to our executive officers and employees under the 2022 Plan.

Currency Convenience Translation

The conversion of Renminbi into U.S. dollars herein, made solely for the convenience of the readers, is based on the noon buying rate in the city of New York for cable transfers of Renminbi as certified for customs purposes by the Federal Reserve Bank of New York as of June 30, 2022, which was RMB6.6981 to US$1.00. No representation is intended to imply that the Renminbi amounts could have been, or could be, converted, realized, or settled into U.S. dollars at that rate or any other rate. The percentages stated herein are calculated based on Renminbi.

 

9

EX-99.2
Exhibit 99.2
BURNING ROCK BIOTECH LIMITED
INDEX TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 
    
PAGES
 
     F-2  
     F-5  
     F-7  
     F-9  
     F-11  
 
F-1

BURNING ROCK BIOTECH LIMITED
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”),
except for number of shares and per share data)
 
 
  
 
  
As of
 
 
  
Notes
  
December 31,
2021
 
  
June 30, 2022
 
 
  
 
  
RMB
 
  
RMB
 
  
US$
 
 
  
 
  
 
 
  
(unaudited)
 
ASSETS
  
 
  
     
  
     
  
     
         
Current assets:
  
 
  
     
  
     
  
     
Cash and cash equivalents
          1,431,317        1,148,597        171,481  
Restricted cash
          7,795        4,453        665  
Short-term investments
          63,757       
 
      
 
 
Accounts receivable (net of allowances of RMB39,166 and RMB44,823 (US$6,692) as of December 31, 2021 and June 30, 2022, respectively
.
)
   5      92,197        100,960        15,073  
Contract assets
   6      42,391        44,593        6,657  
Inventories
, net
  
7
     123,210        129,637        19,355  
Prepayments and other current assets
  
8
     60,279        34,845        5,205  
         
 
 
    
 
 
    
 
 
 
Total current assets
       
 
1,820,946
 
  
 
1,463,085
 
  
 
218,436
 
         
 
 
    
 
 
    
 
 
 
Non-current
assets:
                               
Equity method investment
          910        733        109  
Convertible note receivable
 
 
 
 
  
 
 
 
5,000
 
 
 
746

 
Property and equipment, net
  
9
     325,438        301,249        44,975  
Operating right-of-use-assets
 
 
 
 
81,007
 
 
 
66,655
 
 
 
9,951
 
Intangible assets, net
          5,150        3,354        500  
Other
non-current
assets
          45,136        21,198        3,165  
         
 
 
    
 
 
    
 
 
 
Total
non-current
assets
       
 
457,641
 
  
 
398,189
 
  
 
59,446
 
         
 
 
    
 
 
    
 
 
 
TOTAL ASSETS
       
 
2,278,587
 
  
 
1,861,274
 
  
 
277,882
 
         
 
 
    
 
 
    
 
 
 
 
F
-
2

BURNING ROCK BIOTECH LIMITED
CONDENSED CONSOLIDATED BALANCE SHEETS (CONTINUED)
(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”),
except for number of shares and per share data)
 
                                 
 
  
 
 
  
As of
 
 
  
Notes
 
  
December 31,
2021
 
  
June 30, 2022
 
 
  
 
 
  
RMB
 
  
RMB
 
  
US$
 
 
  
 
 
  
 
 
  
(unaudited)
 
LIABILITIES, MEZZANINE EQUITY AND SHAREHOLDERS’ EQUITY
  
  
  
  
Current liabilities
(including amounts of the consolidated VIE and its subsidiaries without recourse to the primary beneficiary of RMB
279,601
and RMB
275,112
(US$
41,072
) as of December 31, 2021 and June 30, 2022, respectively):
                                   
Accounts payable
             
63,080
      
56,495
      
8,434
 
Deferred revenue
             
142,871
      
163,093
      
24,349
 
Accrued liabilities and other current liabilities
             
127,892
      
98,435
      
14,696
 
Customer deposits
             
972
      
1,052
      
157
 
Short-term borrowings
    
      
2,370
      
2,370
      
354
 
Current portion of operating lease liabilities
    
      
34,999
      
38,005
      
5,674
 
             
 
 
    
 
 
    
 
 
 
Total current liabilities
           
 
372,184
 
  
 
359,450
 
  
 
53,664
 
             
 
 
    
 
 
    
 
 
 
Non-current
liabilities
(including amounts of the consolidated VIE and its subsidiaries without recourse to the primary beneficiary of RMB
38,232
and RMB
41,896
(US$
6,255
) as of December 31, 2021 and June 30, 2022, respectively):
                                   
Other
non-current
liabilities
             
11,776
      
37,242
      
4,830
 
Operating lease liabilities
    
      
49,316
      
32,349
      
5,560
 
             
 
 
    
 
 
    
 
 
 
Total
non-current
liabilities
           
 
61,092
 
  
 
69,591
 
  
 
10,390
 
             
 
 
    
 
 
    
 
 
 
TOTAL LIABILITIES
           
 
433,276
 
  
 
429,041
 
  
 
64,054
 
             
 
 
    
 
 
    
 
 
 
 
F-
3

BURNING ROCK BIOTECH LIMITED
CONDENSED CONSOLIDATED BALANCE SHEETS (CONTINUED)
(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”),
except for number of shares and per share data)
 
 
  
 
 
  
As of
 
 
  
Notes
 
  
December 31,
2021
 
 
June 30, 2022
 
 
  
 
 
  
RMB
 
 
RMB
 
 
US$
 
 
  
 
 
  
 
 
 
(unaudited)
 
Commitments and contingencies
     1
5
            
         
Shareholders’ equity:
                                 
Class A ordinary shares (par value of US$0.0002 per share; 230,000,000 shares authorized; 87,784,001 shares and 88,116,172 shares issued and outstanding as of December 31, 2021 and June 30, 2022)
              116       116       18  
         
Class B ordinary shares (par value of US$0.0002 per share; 20,000,000 shares authorized; 17,324,848 shares issued and outstanding as of December 31, 2021 and June 30, 2022)
              21       21       3  
Equity forward
    
10
                (66,850     (9,980
         
Additional
paid-in
capital
              4,280,956       4,431,603       661,621  
Accumulated deficits
              (2,228,713     (2,752,238     (410,898
Accumulated other comprehensive loss
              (207,069     (180,419     (26,936
             
 
 
   
 
 
   
 
 
 
Total shareholders’ equity
           
 
1,845,311
 
 
 
1,432,233
 
 
 
213,828
 
             
 
 
   
 
 
   
 
 
 
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
           
 
2,278,587
 
 
 
1,861,274
 
 
 
277,882
 
             
 
 
   
 
 
   
 
 
 
The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.
 
F-
4

BURNING ROCK BIOTECH LIMITED
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”),
except for number of shares and per share data)
 
 
  
 
 
  
For the six months ended June 30
 
 
  
Notes
 
  
2021
 
 
2022
 
 
  
 
 
  
RMB
 
 
RMB
 
 
US$
 
 
  
 
 
  
(unaudited)
 
 
(unaudited)
 
Revenues:
  
  
 
 
Revenues from services
      
 
     164,414       185,581       27,707  
Revenues from sales of products
      
 
     69,488       80,789       12,061  
        
 
    
 
   
 
 
   
 
 
 
Total revenues
     3
 
    
233,902
 
   
266,370
     
39,768
 
        
 
    
 
   
 
 
   
 
 
 
Cost of revenues:
      
 
                        
Cost of services
      
 
     (46,731     (66,462     (9,923
Cost of goods sold
      
 
     (20,000     (29,726     (4,438
        
 
    
 
   
 
 
   
 
 
 
Total cost of revenues
      
 
    
(66,731
   
(96,188
)
 
   
(14,361
)
 
        
 
    
 
   
 
 
   
 
 
 
Gross profit
      
 
    
167,171
 
   
170,182
     
25,407
 
        
 
    
 
   
 
 
   
 
 
 
Operating expenses:
      
 
                        
Research and development expenses
      
 
     (185,485     (211,608     (31,592
Selling and marketing expenses
      
 
     (123,188     (194,845     (29,090
General and administrative expenses (including related party amounts of
 RMB475 and RMB94
 
(US$14)
for the six months ended June 30,
2021 and 
2022, respectively.)
    
14
 
     (232,389     (292,049     (43,602
        
 
    
 
   
 
 
   
 
 
 
Total operating expenses
      
 
    
(541,062
 
 
(698,502
 
 
(104,284
        
 
    
 
   
 
 
   
 
 
 
Loss from operations
      
 
    
(373,891
 
 
(528,320
 
 
(78,877
        
 
    
 
   
 
 
   
 
 
 
Interest income
      
 
     1,468       4,517       674  
Interest expenses
      
 
     (1,075     90       13  
Other expense, net (net off by related party income of
 RMB334 and nil
for the six months ended June 30,
2021 and 2022, respectively.)
      
 
     551       425       63  
Foreign exchange (loss) gain, net
      
 
     (503     (153     (23
        
 
    
 
   
 
 
   
 
 
 
Loss before income tax
      
 
    
(373,450
 
 
(523,441
 
 
(78,150
        
 
    
 
   
 
 
   
 
 
 
 
F-
5

BURNING ROCK BIOTECH LIMITED
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (CONTINUED)
(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”), except for number of shares and per share data)
 
 
 
  
 
  
For the six months ended June 30
 
 
  
Notes
  
2021
 
 
2022
 
 
  
 
  
RMB
 
 
RMB
 
 
US$
 
 
  
 
  
(unaudited)
 
 
(unaudited)
 
Income tax expenses
   1
2
     (1,626     (84     (13
         
 
 
   
 
 
   
 
 
 
Net loss
       
 
(375,076
)
 
 
(523,525
)
 
 
(78,163
)
         
 
 
   
 
 
   
 
 
 
Net loss attributable to Burning Rock Biotech Limited’s shareholders
       
 
(375,076
)     (523,525 )     (78,163 )
Loss per share for class A and class B ordinary shares:
   1
3
                        
Class A ordinary shares - basic and diluted
        (3.60     (4.98     (0.74
Class B ordinary shares - basic and diluted
        (3.60     (4.98     (0.74
         
Weighted average shares outstanding used in loss per share computation:
   1
3
                        
Class A ordinary shares - basic and diluted
          86,742,880       87,357,120       87,357,120  
Class B ordinary shares - basic and diluted
          17,324,848       17,324,848       17,324,848  
         
Other comprehensive (loss) income, net of tax of nil:
                             
Foreign currency translation adjustments
          (20,900 )     26,650       3,979  
         
 
 
   
 
 
   
 
 
 
Total comprehensive loss
       
 
(395,976
)
 
 
(496,875
)
 
 
(74,184
)
         
 
 
 
 
 
 
 
 
 
 
 
Total comprehensive loss attributable to Burning Rock Biotech Limited’s shareholders
       
 
(395,976
)
 
 
(496,875
)
 
 
(74,184
)
         
 
 
   
 
 
   
 
 
 
The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.
 
F-
6

BURNING ROCK BIOTECH LIMITED
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”), except for number of shares and per share data)
 
 
 
Ordinary shares
 
 
Treasury stock
 
 
Additional paid-

in capital
 
 
Accumulated

deficit
 
 
Accumulated other

comprehensive (loss)

income
 
 
Total shareholders’

equity
 
 
 
Number of
shares
 
 
Amount
 
 
 
 
 
 
RMB
 
 
RMB
 
 
RMB
 
 
RMB
 
 
RMB
 
 
RMB
 
Balance as of January 1, 2021
 
 
104,781,929
 
 
 
137
 
 
 
—  
 
 
 
4,006,616
 
 
 
(1,418,160
 
 
(167,589
 
 
2,421,004
 
Net loss
    —         —      
 
—  
 
    —         (375,076     —         (375,076
Other comprehensive income
    —         —      
 
—  
 
    —         —         (20,900 )     (20,900 )
Issuance of restricted shares
    2,424       —         —         —         —         —         —    
Refund for prepaid subscription for forfeited restricted shares
    (16,233     —         —         (1,629     —         —         (1,629
Purchase of treasury stock
    (61,026     —         (4,270     —         —         —         (4,270
Exercise of options (note 1
1
)
    85,903       —         —         —         —         —         —    
Adoption of ASC 326
    —         —         —         —         (13,856     —         (13,856
Share-based compensation
 
(note 11)
    —         —         —         168,167       —         —         168,167  
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
Balance as of June 30, 2021 (unaudited)
 
 
104,792,997
 
 
 
137
 
 
 
(4,270
 
 
4,173,154
 
 
 
(1,807,092
 
 
(188,489
 
 
2,173,440
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
 
F-
7

BURNING ROCK BIOTECH LIMITED
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (CONTINUED)
(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”), except for number of shares and per share data)
 
 
 
Ordinary shares
 
 
Treasury
stock
 
 
Additional

paid-in capital
 
 
Accumulated

deficit
 
 
 
 
 
Accumulated other
comprehensive

(loss) income
 
 
Total

shareholders’
equity
 
 
 
Number of
shares
 
 
Amount
 
 
Equity forward
 
 
 
 
 
 
RMB
 
 
RMB
 
 
RMB
 
 
RMB
 
 
RMB
 
 
RMB
 
 
RMB
 
Balance as of January 1, 2022
 
 
105,108,849
 
 
 
137
 
 
 
—  
 
 
 
4,280,956
 
 
 
(2,228,713
 
 
—  
 
 
 
(207,069
 
 
1,845,311
 
Net loss
    —         —         —         —         (523,525     —         —         (523,525
Other comprehensive income
    —         —         —         —         —         —         26,650       26,650  
Refund of consideration for Employee Share Incentive Program
    (73,489     —         —         (3,385     —         —         —         (3,385
Purchase of treasury stock
    —         —         (3,258     —         —         —         —         (3,258
Equity forward contract (note 10)
    —         —         —         —         —         (66,850     —         (66,850
Exercise of options (note 1
1
)
    405,661       —         3,258       (3,258     —         —         —         —    
Share-based compensation
 
(note 11)
    —         —         —         157,290       —         —         —         157,290  
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
Balance as of June 30, 2022 (unaudited)
 
 
105,441,021
 
 
 
137
 
 
 
  
 
 
 
4,431,603
 
 
 
(2,752,238
 
 
(66,850
 
 
(180,419
 
 
1,432,233
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
Balance as of June 30, 2022 (US$) (unaudited)
 
 
105,441,021
 
 
 
21
 
 
 
  
 
 
 
661,621
 
 
 
(410,898
 
 
(9,980
 
 
(26,936
 
 
213,828
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.
 
F-
8

BURNING ROCK BIOTECH LIMITED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”),
except for number of shares and per share data)
 
 
  
For the six months ended June 30
 
 
  
2021
 
 
2022
 
 
  
RMB
 
 
RMB
 
 
US$
 
 
  
(unaudited)
 
 
(unaudited)
 
Cash flows from operating activities:
  
 
 
Net loss
     (375,076     (523,525     (78,163
Adjustments to reconcile net loss to net cash used in operating activities:
                        
Depreciation and amortization
     21,652       60,154       8,981  
Allowance for credit losses
     3,054       16,677       2,490  
Inventory write down
     1,697       7,007       1,046  
Loss on disposal of equipment
     13       1,113       166  
Share of loss from equity method investee
     143       217       32  
Share-based compensation
     168,167       157,290       23,483  
Non-cash
operating lease expenses
     12,756       19,739       2,947  
Derecognition of right of use assets and lease liability
              (137     (20
    
 
 
   
 
 
   
 
 
 
Changes in operating assets and liabilities:
                        
Inventories
     (55,299     (10,948     (1,634
Accounts receivable
     (344     (14,420     (2,153
Contract assets
     (12,282     (13,317     (1,988
Prepayments and other current assets
     (22,461     25,554       3,815  
Amounts due from related parties
     (416                  
Other
non-current
assets
              24,187       3,611  
Accounts payable
     9,315       3,877       579  
Deferred revenue
     27,115       20,222       3,019  
Accrued liabilities and other current liabilities
     (1,305     (29,457     (4,399
Customer deposits
     (78     80       12  
Deferred government grants
     (263                  
Operating lease liabilities
     (8,531     (19,584     (2,924
Other
non-current
liabilities
    
      21,637       3,230  
    
 
 
   
 
 
   
 
 
 
Net cash
u
sed in operating activities
  
 
(232,143
 
 
(253,634
 
 
(37,870
    
 
 
   
 
 
   
 
 
 
Cash flows from investing activities:
                        
Proceeds from maturity of short-term investments
     323,335       65,598       9,794  
Proceeds from disposal of equipment
     2,559       352       53  
Prepayment for property and equipment
              (7,901     (1,180
Purchase of property and equipment
     (104,822     (35,137     (5,243
Purchase of intangible assets
     (320     (194     (29
Investment in convertible loan
              (5,000     (746
    
 
 
   
 
 
   
 
 
 
Net cash
generated
from investing activities
  
 
220,752
 
 
 
17,718
 
 
 
2,649
 
    
 
 
   
 
 
   
 
 
 
 
F-
9

BURNING ROCK BIOTECH LIMITED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”),
except for number of shares and per share data)
 
 
  
For the six months ended June 30
 
 
  
2021
 
 
2022
 
 
  
RMB
 
 
RMB
 
 
US$
 
 
  
(unaudited)
 
 
(unaudited)
 
Cash flows from financing activities:
  
 
 
Purchase of equity forward
              (66,850     (9,980
Purchase of
treasury
shares
     (4,270 )     (3,258     (486
Refund of consideration for Employee Share Incentive Program
     (1,629 )     (3,385 )     (505 )
Finance lease payments
     (2,647                  
Repayment of long-term borrowings
     (4,577              —    
    
 
 
   
 
 
   
 
 
 
Net cash used in financing activities
  
 
(13,123
 
 
(73,493
 
 
(10,971
    
 
 
   
 
 
   
 
 
 
Effect of exchange rate on cash, cash equivalents and restricted cash
     (17,427     23,347       3,484  
    
 
 
   
 
 
   
 
 
 
Net decrease in cash, cash equivalents and restricted cash
  
 
(41,941
 
 
(286,062
 
 
(42,708
    
 
 
   
 
 
   
 
 
 
Cash, cash equivalents and restricted cash at the beginning of period
     1,925,206       1,439,112       214,854  
    
 
 
   
 
 
   
 
 
 
Cash, cash equivalents and restricted cash at the end of period
  
 
1,883,265
 
 
 
1,153,050
 
 
 
172,146
 
    
 
 
   
 
 
   
 
 
 
Supplemental disclosures of
non-cash
information:
  
  
   
  
   
  
 
Purchase of property and equipment included in accounts payable
     3,186       10,462       1,562  
Purchase of property and equipment included in other
non-current
assets
     (4,170     7,794       1,164  
Derecognition of
right-of-use
asset and lease liability
              137       20  
Reconciliation of cash, cash equivalents and restricted cash:
  
 
 
 
 
 
  
 
 
 
  
 
Cash and cash equivalents
     1,852,927       1,148,597       171,481  
Restricted cash
     30,338       4,453       665  
    
 
 
   
 
 
   
 
 
 
Total cash, cash equivalents and restricted cash shown in the
condensed consolidated balance sheets
  
 
1,883,265
 
 
 
1,153,050
 
 
 
172,146
 
    
 
 
   
 
 
   
 
 
 
The accompanying notes are an integral part of these unaudited interim condensed consolidated financial statements.
 
F-1
0

BURNING ROCK BIOTECH LIMITED
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”),
except for number of shares and per share data)
 
1.
ORGANIZATION
Burning Rock Biotech Limited (the “Company”) is a limited liability company incorporated in the Cayman Islands on March 10, 2014. The Company does not conduct any substantive operations on its own but instead conducts its business operations through its subsidiaries, the variable interest entity (“VIE”) and subsidiaries of the VIE. The Company, together with its subsidiaries, the VIE and the VIE’s subsidiaries (collectively, the “Group”) are principally engaged in developing and providing cancer therapy selection tests in the People’s Republic of China (the “PRC” or “China”).
There was no change to the Company’s principal subsidiaries, the VIE and the VIE’s subsidiaries since December 31,
2021
.
To comply with PRC laws and regulations which prohibit and restrict foreign ownership of business involving the development and application of genomic diagnosis and treatment technology, the Group conducts its business in the PRC principally through the VIE and the VIE’s subsidiaries. The equity interests of the VIE are legally held by PRC shareholders (the “Nominee Shareholders”).
Despite the lack of majority ownership, the Company through the wholly foreign owned entity (“the WFOE”) has effective control of the VIE through a series of contractual arrangements (the “VIE agreements”) and a parent-subsidiary relationship exists between the Company and the VIE. Through the VIE agreements, the Nominee Shareholders of the VIE effectively assigned all of their voting rights underlying their equity interests in the VIE to the Company, and therefore, the Company has the power to direct the activities of the VIE that most significantly impact its economic performance. The Company also has the right to receive economic benefits that potentially could be significant to the VIE. The WFOE was the primary beneficiary of the VIE through October 2019 and the Company has replaced the WFOE as the primary beneficiary of the VIE since October 2019. Based on the above, the Company consolidates the VIE in accordance with SEC Regulation
S-X-3A-02
and Accounting Standards Codification (“ASC”) Topic
810-10
(“ASC
810-10”),
Consolidation: Overall
.
 
F-1
1

BURNING ROCK BIOTECH LIMITED
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”),
except for number of shares and per share data)
 
1
ORGANIZATION (CONTINUED)
 
The following table sets forth the assets and liabilities of the VIE and subsidiaries of the VIE included in the Group’s unaudited interim condensed consolidated balance sheet:

 
 
  
As of
 
 
  
December 31,
2021
 
  
June 30, 2022
 
 
  
RMB
 
  
RMB
 
  
US$
 
 
  
 
 
  
(unaudited)
 
Cash and cash equivalents
     185,850        332,367        49,621  
Restricted cash
               2,892        432  
Accounts receivable (net of allowances of RMB38,922 and RMB44,566 (US$6,654) as of December 31, 2021 and June 30, 2022, respectively)
     92,197        100,960        15,072  
Contract assets
     42,391        44,593        6,657  
Inter-company receivables*
     75,560        214,874        32,080  
Inventories
     119,257        120,952        18,058  
Prepayments and other current assets
     40,957        17,388        2,596  
    
 
 
    
 
 
    
 
 
 
Total current assets
  
 
556,212
 
  
 
834,026
 
  
 
124,516
 
    
 
 
    
 
 
    
 
 
 
Property and equipment, net
     42,623        58,285        8,702  
Intangible assets, net
     633        375        56  
Other
non-current
assets
     8,346        10,227        1,527  
Operating
right-of-use
assets
     51,630        41,875        6,252  
    
 
 
    
 
 
    
 
 
 
Total
non-current
assets
  
 
103,232
 
  
 
110,762
 
  
 
16,537
 
    
 
 
    
 
 
    
 
 
 
TOTAL ASSETS
  
 
659,444
 
  
 
944,788
 
  
 
141,053
 
    
 
 
    
 
 
    
 
 
 
Accounts payable
     27,102        19,925        2,975  
Deferred revenue
     133,489        163,095        24,349  
Inter-company payables*
     897,633        1,397,180        208,593  
Accrued liabilities and other current liabilities
     89,976        62,557        9,339  
Customer deposits
     972        484        72  
Short-term borrowing
     2,370        2,370        354  
Current portion of operating lease liabilities
     25,692        26,681        3,983  
    
 
 
    
 
 
    
 
 
 
Total current liabilities
  
 
1,177,234
 
  
 
1,672,292
 
  
 
249,665
 
    
 
 
    
 
 
    
 
 
 
Deferred government grant
                             
Other
non-current
liabilities
     8,563        24,034        3,588  
Non-current
portion of operating lease liabilities
     29,669        17,862        2,667  
    
 
 
    
 
 
    
 
 
 
Total
non-current
liabilities
  
 
38,232
 
  
 
41,896
 
  
 
6,255