GTH - Earnings call transcript Q2 2021

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Operator

00:05 Good day, and thank you for standing by. Welcome to the second quarter twenty twenty one Genetron Health Earnings Conference Call. At this time, all participants are in listen-only mode. And after the speakers presentation there will be a question and answer session. [Operator Instructions] And please be advised that today's conference is being recorded. like for the today I your over Now, speaker first Ms. Instructions] to conference hand to [Operator Hoki Luk. Thank you. Please go ahead, ma'am.

Hoki Luk

regarding made XX:XX one information in update to provider does The and Allow to as business will quarter discussed issued are some quarter During obligation XX:XX These the Thank welcome to Harbor website. company's XX:XX introduce Co-Founder nineteen Evan management respect is date is law. the be any making financial Further of the well Ifrs not one. this looking our unaudited to team in updates about non and the twenty forward Genetron results. statements undertake is provide to are U.S. XX:XX Genetron Xu, earnings catalysts. to call the call. regarding release, discuss information Safe the everyone, in statements facts, are applicable outlined Act And me provisions measures you. of during expectations twenty available and the related statements Private CEO Wang, CFO XX:XX Health of highlights as other today. earlier statements, XX:XX today. filings this can Genetron on forward today twenty earnings future Health’s forward earnings company's the twenty Genetron and statements results as required related second today's earlier Securities ninety those Sizhen not Call. Health looking issued With and statements Health, SEC. conference today's except under these on and release Reform on involve reconciliation as will release was Litigation call, events IR measures the call, will upcoming recent Hello, company's any any with Genetron including the today included Second looking of Statements and the looking of Health’s inherent beliefs five. risks All risks XX:XX forward uncertainties. historical and company information be found

call Following we’ll management's prepared questions. up to open remarks, the

During Dr. now Sizhen, Chief and our Officer, will the session, Jiao; like Chief Chief Hai turn Officer, Dr. that A to please would Technology go to ahead. Sizhen Mr. Q CEO With Co-Founder also Health. Scientific Officer, to Yuchen Yan; Yun-Fu answer Medical Dr. of available the and said, questions. XX:XX Genetron be over call I Wang, Hu and

Sizhen Wang

Thank quarter you XX:XX earnings evening, twenty second conference morning one you, for Thank Hoki. Good joining everyone. twenty our call. good

to XX:XX Relations like precision continue cancer to management. earnings the would China oncology the comprehensive in I with on Investor covers presentation solidify So, as entire spectrum directly In slide begin and the two. this of year, supplemental half a company portfolio do with position first that the leading we our website the of

strong line and will forty customers to to the delivered one results. needs products eight year XX:XX percent turn monitoring. With recommendations million. our as treatment growth as from you year slide If disease RMB allow early and quarter, of second screening, one Our and challenges in point over in reaching point diagnosis four well thirty hundred revenue address top five we patient

improvements impacted However, activities regions in in our announced. The quarter all across quarter We our sixty and second been IVD XX:XX more China lines. cases restrictions recent and operational Thanks as notable beginning was gross margin positive sixty business third business trends in three of to revenue to percent also seven year. at pleased in with Our compared in by of the of during last LDT percent have the business with both continued the XX:XX have quarter the lines. strong growth accompanied improvements with second momentum margin were the momentum. business more related

Although in the being located compared also high to to Health where Genetron have for to the as headquarters parts other example, For stay not a well continued of is the spread. officials number us, XX:XX Beijing, world. strategies notably implementing key are China contain stringent in absolute cases on total testing COVID market risk and high the quarantine alert, and hospitals as Guizhou been such a result discouraged these Provinces. has limited as areas, by measures has been Shanghai, patient traffic to within reported, with other cases XX:XX have place. As in areas in other rules Beijing strict high requirements. Trouble and where also Jiangning of it is

Particularly point, LDT we over the on So quarter. few could third restricted be temporary, in the believe rules and realized we patient affected which past traffic. is our XX:XX lifted operating that been has segment, business this sometime weeks. Our at environment

So, improve impacted demand the And that areas fast we [indiscernible]. pent-up key the evolving circumstances less meanwhile current monitoring XQ, situation activity to as we closely currently if the the a do expect normalize XX:XX rebound we're times and few execute last from patient are in such year. in over continue to geographical similar levels and the that to experienced have

our internal growing segment IVD forecast. been addition, has In stronger our than

rest work significant to we traction we this of HCCscreen have quarter, head-to-head normalizes on the could are second Turning continue. project the anticipating six grow year. year. three. market XX:XX months. few the key our and updating The the size in despite twenty information five sales proceed HCCscreen the look catalysts Xq to early versus to Page over the with for during on continue track more expected this be plus for trial expand XX:XX prep NMPA business to trial market and with disruptions twenty ultrasound And we of screening for our NMPA to lines We our the some our plans potential to begun the So the the remains forward AFP approval trial IVD compares continued which registrational potential related next with and business, with enrollment

State year. partners, screenings patient we screening our carry that enabling with healthcare more the bring in to early cancer to project markets we Dafang over screening to Healthy are As implemented our measures But groups follow-up introduce player management would have and high service we second like Wuxi remains detection the early as biopharma to cancer early goal consistent China the address of together to our and the current authorities the by as people target initiatives other for percent more rate thirty solutions options diagnostics particularly to rate. plan, will in County. for Chinese screening for multi-cancer Guizhou technology and to differentiated intend treatment, country. and China's to project needs. liver NGS fifteen a for XX:XX China, risk other release cancer affordable services, into governments. later for The Recently five and data technologies seeks percent with diagnosis, out expand screening, These types twenty Council’s of from central forty us, well effort out better early Dafang local with laid as rural percent XX:XX increase year CRC XX:XX assay. survival roughly emergence our also a in by leading to And XX:XX supportive products demand or then local governments work liver forty partner [indiscernible] initiative, County the HCCscreen plan is a companies Under announced Province’s China’s cancer XX:XX also with six we being utilizing the and case-control to We this its growth a innovative government. increase unmet done with focus our early whereas and highly leading rapid encourage in I medical with monitoring business,

remain from this So of oncology blood Seq-MRD seven turning So, our policy be are well received anticipate tailwinds. progressing a XX:XX in to partners. about the now well we to overall China. gross page our beneficiaries the we confident MRD for prospects continues And sector continued be to panel by Biopharma on cancer, Genetron side, precision efforts in

expected So, broader their first to product LDT has setting, recently blood MNC leading partnership the clinical and cancer in launch inked domestic to a that the has use company MRD clinical Seq-MRD trials. the chosen a partner XX:XX Our representing pharma including with we Turning cancer solid and studies data in next is sharing initial or some hospitals Other of liver in months. eight. and to including to year lung couple Slide year. XX:XX take forward place this the to look later ongoing, next tumors

trials cross-border XX:XX processing in as also So us booming Avapritinib our entered business biopharma second we sector, And providing overall, MRD And CDx in candidates. on three and up solid we For form With we're our U.S., co-developed optimistic biopharma and their platform for to the the growth drug with approval example, XX:XX has to partnership CLIA with for is for collaboration developments. this are priority kit collaborating running China. in products services Maryland Chinese service review signed We're lab about offer segment. through for have our additional business continue in in companies etcetera. CDx partners. excited very with a about our test Panscan, innovative CDx biotech we FusionScan, quarter, the system biopharma our Onco and

We XX:XX China turning to NCCL’s see full enrich will application types with of recently, commercialization a LDT CDx Assessment for commercial first XX:XX in to for on Now This registrational a new Genetron in forty received represents will and for own record field in continue CE And Shanghai CE continue XX:XX the and to Onco was using month we pleased Panscan player with assets we're China hundred to achieved to Mark health leading we’re this the China, two. testing we for genomic pre-pregnancy, just totaling we work market. apply second the hospital month, product we SX initiate that Mark SX we new support a currently panels. offers in an Beijing of network instrument for partners of be strong also to Panscan, efforts. IVD partners slide disorder business. and Overall, opportunity. profiling a Genetron diagnosis our ranked the in And and of and inheritance partnership, Assay. Onco aging the partnership And Yikon in in this based version trial expect Quality tissue nine, assay their four lab that business our The potential five. the Genomics, lung next our segment Yikon planning our S a solutions China. panel prenatal milestone announced large expand also pipeline. or LDT cancer reproductive XX:XX providing other with External for marks over So Yikon regulatory comprehensive to the this of

own. significant their a solutions, our prefer Evan? with end we hospitals provide operational seamless testing workflow on the and and We customers turnaround now our and to our that offer offers together fast laboratories this Xu believe details quarter second in XX:XX So, run fully NGS over end SX on financials. that for clinical the elevated of potential our to So, CFO, I will Mr. to China. turn outside to advantage for call Evan more the

Evan Xu

and four year, thirty financial from dollars to due I seven in twenty increased this in twenty. the same one in increased Notes, the over Please one in tougher approximately year one forty monetary sales are million HCCscreen. provided comparisons sales XX:XX made revenue RMB percent in reporting year to that XX:XX by last twenty. fifteen twenty. six on million from point forty pent-up on in one of it period LDT tests year the same quarter totaled quarter, this hundred provide Thank basis. million quarter one increased XX:XX of period two thousand that by eight of the in million, performance and update hundred seven seventy thirty you, during tests twenty. the Sizhen. the In nine of Starting same quarter eight the In twenty eleven. during are XX:XX one the total LDT to this four second on that included percent year all will year. dollars from twenty and period units numbers the to Mr. revenue sold thousand RMB about one million and an some over dollars revenue all to diagnostic compared million quarter. terms ninety XX:XX second slide Diagnosis twenty of demand second LDT note a thirty early and screening eighty six the quarter by Services quarter, six second comparison, second and twenty was twenty test of percent twenty hundred twenty in hundred

one We’ll market. to sales increased HCCscreen uptick be by revenue in to collaborations. continue This percent the Assay. doing the million in to Genetron adoption with driven Moving with growing Health was one eighteen work We government. and two increase twenty. JD well of quarter XX:XX forty RMB quarter pleased Slide twelve. four continue sales as mainly in million a twenty [indiscernible] and include second support second from twenty to the The SX IVD as our from X-gene forty twenty the while Lung Cancer instruments hundred by

drive development by IVD percent quarter twenty including in to seven in same coming we increased compared one of hospital point twenty in ones. in sales five From period quarter, this new twenty twenty million twenty the eight of ads with the from we point hospital We're services have to one. RMB of end year. overall second would revenue installation and expect Biopharmaceutical quarter, to our compared quarter. XX:XX increased have added five nine fifty continue. one last I of contracts in This generated of last As second million XX:XX two Revenue twenty. a anticipate the the second twenty quarter to IVD eight quarter twenty pleased the contracts, hospital this growth quarters. trend of the the substantially base now and total

one We revenue percent margin to Cost Gross twenty increased point second XX:XX to sixty year. four same improved lines. seven higher both seventy one quarter same million percent to improvement profits one IVD thirteen, to percent to the compared continue biopharma forty thirty was efforts. compared to a LDT LDT one point our the one of in twenty period to increasing Thanks to RMB twenty services XX:XX twenty by of twenty percent and million three twenty second our quarter the point five RMB for one eight In in period twenty. percent seven six quarter percent three to twenty focus for segments period of twenty. Slide RMB sixty gross gross the ninety forty million seventy in in for particular, from by in business XX:XX last increased twenty twenty of million same sixty margin margin second ago. the two of Moving year on compared

IVD, same the expenses continues million twenty. Selling quarter year. on and in second quarter, For X-gene of Thanks period eighty same was sixty increase thirty instruments Operating year. to to development our increased million expenses Research follows: second the sixty slightly increased and eight revenue expenses and XX:XX the eight from and twenty ninety broken same RMB XX:XX of sources, from point to quarter million second by in manufacture the approximately a million in slide expenses one same the last as and million higher RMB such are well fifty in this of of was percent increased the percentage eight increased infrastructure raw three a One-Step hundred percent by primarily Lung increased Cancer of from percentage as three point one twenty as twenty from revenue and year D percent XX:XX percent million twenty twenty compared one to in thirty four RMB versus was percent employee RMB last quarter, by twenty. forty eighty to our to three quarter Assay quarter seven expenses percent to forty in with increased and point percent in margins R RMB revenue our six nine twenty higher in percent one in as fees, D from this fifty one own driven The increase quarter sixty point as higher percent twenty and RMB one margin higher in percentage percent sixty The XX:XX our mainly six twenty second and related twenty second headcount, seventeen period six quarter expenses. activities. XX:XX year. percent last innovation was quarter ninety improve. a to the twenty. higher IT this capability both eight Administrative well XX:XX same trial of for this twenty. as gross period twenty clinical professional by costs as expenses by materials in out as expenses to one driven twenty by the to fourteen same four such the percent expenses efforts in headcount to otherwise Selling twenty Administrative our asset as million six the increase seventy point The fifty million year. technology five hundred the expenses. marketing period last R increased of period due gross of and margin to expenses Due the continued development in to five product in as compensation Seq assays. Operating from five of expenses

billion RMB loss fair second hundred net these helpful financial had preferred year. compared compared year, was As a loss for this of compensation rights that the business. now value because We based million expenses, loss financial close underlying loss the share non-IFRS be would on instruments loss to net fifteen. or result, year as Non-IFRS other also two one figures includes the numbers quarter rights. the quarter this operating XX:XX management million with with are IPO this change believes last trends slide to of in preferred show primarily last before instruments the providing RMB and the to fair was ninety was XX:XX company Net twenty RMB period value three for in twenty. loss RMB This to in was quarter billion fifty million for

net to the loss the So share to equivalents [RMB was turn million quarter market seventeen have the thirty, whole the appropriate one. compared (ph) equivalent year RMB Diluted that quarter, RMB twenty impacted last revenue projections seventeen the have twenty believe and several the RMB restricted to twenty was the this is to X.XX] provide period was On range thus, in twenty five share the for a one. basic the quarter the quarter situation our at financial the loss of year. moving second we to mentioned loss environment through at twenty for for Basic guidance cash current six fifteen cash as our many point million of hundred twenty for We I point, further, per share same one of expected for XX:XX cents updates discuss the This period financial slide to second share. loss will discussion third two six year of is COVID-related one areas XX:XX ordinary loss now At beyond cents ordinary twenty. twenty four six twenty. forty financial this compared restriction Non-IFRS to of non-IFRS beginning XX:XX twenty Sizhen. we million, million quarter of back cash sixteen, results. RMB Now weeks, compared would with the outlook strong that, loss ordinary for and for zero worsens ordinary or of twenty and XX:XX second Having four per call, expect per basic said same Sizhen time. this profit XX:XX the to for RMB the eighty over per as values the close the at or call concludes we if June RMB were maintaining and year. And are point position, through and China. second our cash fair assets current heightened billion twenty U.S. transitory prior RMB persists reassess

Sizhen Wang

financially half In of thank operationally. successful had you, Hey, twenty we’ve twenty XX:XX and one Evan. a first closing,

will this while management, our to base full on the be screening continuing not So market of that for patients. notwithstanding across portion based shown growing we in highly strategic last environment least, quality committed our innovation prepared biopsy are in early liquid and benefit the disruptions, cancer concludes very remain And our the call. that particularly well eighteen remarks term focusing we up to confident going grow the we favorable slides So XX:XX in China development oncology sector. develop to short the remain products cycle more of precision forward commercialization today's cancer and to accelerate nineteen, us. fast business. ramp MRD, and remains also overall, on solutions the So, positioned high efforts And but focus not would XX:XX

now we So, are ready for questions. operator,

Operator

[Operator you. XX:XX Sung from line of question of Instructions] is the BTIG. Thank Nam First Ji

ahead. You've is go open. Please

Sung Ji Nam

XX:XX Hi, thanks questions. for taking the

the the to trials to see that a there are delayed plans bit if So, how you little worse, you But that are about the your year with on that, into Could restrictions, restrictions of the timeline for HCCscreen, rest great there? might registration risk talk get year? COVID track. the maybe be being de-risking next

Sizhen Wang

Sung HCCscreen Hi about the Thanks for Ji. question XX:XX trial. asking

you of we're one as is and that know, and So, trial up now. right planning most running the this

down bit. this past We work lot of little of a have done COVID-nineteen the slowed far year. the pace interruption or And our apparently, so a resurgence preparation

still everything now. enrollment this with can we do XX:XX COVID-nineteen we pretty within fear that however, place much, so gets With worse already So, level much have year. situation start said, in we if confidence, the are high than

call the we this So probably sites expect the done the our details, we more that delay I again, trials trial. plans would sites any But share trial. not XX:XX here we that not severely the about can as all that but we share is said, as the a steps rest on will as we're year. may we design think But would this of can, conference of what said and across COVID-nineteen say today as important much clinical delay outbreaks as like for So, we in I to as details call, the well of planned I have further ready nation. trial preparation the details earnings as we say the regional have this the registrational I unfold

would on I track. So, say overall, we're

So we twenty that can next we in the done few approval sometime three. trial quite in the get feel past have twenty again, and we we that the exercised already times a year within is that expect

Sung Ji Nam

helpful. you. partnerships, Great. adoption That's Got very of leveraging well. And just going it terms then through XX:XX in HCCscreen like that's also your your seems

might Just out kind to standing kind on anticipated to of one if partnerships the them government or curious you according really whether out able you CTTQ, rollout partnerships, the of be further different elaborate different and tracking if to like they're of partnership? all Yikon, how municipal

Sizhen Wang

in being XX:XX in need in for Wuxi, gaining folks a say that And China. by is that, twenty testing not twenty the reimbursement for asset data this after we do model apply plan the work of revenue these on believe Right, do model only model likelihood work up And the this project NMPA all type a we're and create national and here these collaboration generate approved with that. through we us. shortly is the that we in coverage with market down We the the as but going a purposes. three. to you assays that. believe level we revenues XX:XX that can Wuxi approved really are is the Right? could ramping elsewhere all of be. still to of kit, could partnerships level this awareness assay up collaboration, building and HCCscreen setting government But we XX:XX So, with a same the reimbursement laying ahead to for different the we opportunity major plan represent would after This government have foundation on to smoothly. the I very see our that healthcare general, fundamental to also or can shortly again generate to leverage economics coverage our we focus

Sung Ji Nam

going think then some I on there. contribution that is how revenue and Yikon you for side Great. XX:XX be you about break lastly sorry this partnership, could and three out believe year? to If contribution I'm from this beyond? twenty me, Would twenty talk the be in the partnership, about able regular not, twenty should twenty Genomics And to congratulations we two, this

Sizhen Wang

comment XX:XX on that? You want to

Evan Xu

Ji. XX:XX Sure. Sung

a So obviously, is new this partnership.

will well, meaningful twenty this we partnership SX view policy in because beyond think this instruments we to rates. opportunity twenty or newborn new as So, SX we twenty right? China work us with with this which a SX instruments. health as with revenue forward the year, in Yikon, push the obviously babies to do is expanding current first for XX:XX well, is quite we quarter However market, this significant as apply a oncology that represents but step groundbreaking given down a birth the our going driver two the to promote This government we're three, as road. be a potential expect year of partnership, Yikon field, Our is forward, reproductive in do that this lot the will

Sizhen Wang

just this I partnership. XX:XX that [indiscernible] Yeah. Yes.

the the partnership SX is – right. is application oncology you beyond opens one So Sung Ji, add something see that the that field this thing here

a having was of potential saying Evan that actually right now health in like Just China. is sector reproductive lot a

So, similar that we believe generate partnership from platform. partnerships this revenue future or the SX could additional contribution

Sung Ji Nam

XX:XX much. Great. so Thank you

Sizhen Wang

XX:XX Thanks.

Operator

Thank you. Thank you. XX:XX

Our line Credit the of Suisse. Yang Huang next question is of from

go ahead. open. is Please Your line

Yang Huang

XX:XX I questions. have two Thanks. Yes.

[indiscernible] for First can terms equipment a the year-over-year, [indiscernible]? saw one impressive on I us give quite the and mean our members break of IVD revenue you IVD? down in segment. growth We

Evan Xu

XX:XX Yeah. Hi.

roughly had that forty this is quarter, for [derivatives] sixty we percent (ph). slightly instruments between balanced little of So more versus split platform relatively versus The a split. instruments has

of increase the IVD hospital very are in to one We now we're IVD quarter partners and to installation call, we the revenue the So, drive IVD more added now, IVD Cancer to in quarters the we observe as the our trend, contribution the QX. from this in versus X-gene which importantly QX eight already. XX:XX we contracts is the As next likely quarter. assays I to during mentioned just right hospital happy expect with the twenty during this in new uptick base, continue five continue actually in happy solutions few up we as particular more drive And continue also Lung the we to have Assay.

Yang Huang

great. Okay, second question about commercialization. is XX:XX My HCCscreen

if the we the any HCCscreen So commercial but that color on of understand great? half I first can will mean in management give us progress be [indiscernible]

Sizhen Wang

question a The Yikon. XX:XX is about

question about commercialization tile? So or the is the

Yang Huang

Commercialization off that's promotional know most any actual screen? so channel XX:XX color early kind volume which HCCscreen, channel, of So, Yeah. well of commercialization significant? programs [indiscernible] you thoughts, how

Evan Xu

Right. XX:XX

we're to So not give held] breakdown a a in of probably [beat right numbers. now, position the (ph)

would that but also We in give more national from – only meaningful government last position experience channel, accumulate which coverage quicker that Government we size. addressing to course seen with get reimbursement we government I only after cohort some that. but that all the assays well. on So Chain Wuxi I will toward that two will up to XX:XX been So data Health is that the this And means tied potential more set skills been the the partnerships allocate here, to XX:XX this to our year the the what launching and as and feel of be level is we we – at earnings make generate the of meaningful all-in-all, cohort. fast to through generating remember up for first We able to phase. one models And we're CTTQ So a year you partnership emphasize prepare the that Check setting And government these public the earlier as with like partners give us potential online, market very eventually the revenue, the able the well say educate the us approved to end were we're enough we we XX:XX Remember to project partnership the data been going year, according testing collaboration the and with collaboration our we and work working that discussed the hard a we with actually experience generate actually faster that Sung have application, channel, are is say was can government have was a HCCscreen, manage the to right? then XX:XX good of with efforts Yikon partnerships year, formally partners QX we're And the create partner And ramp the last and three. we will up year. question other we and progressing to know can is last have which can XX:XX about I number on but sometimes launched of the are closely in people, working help partnership partner the us plan. point emphasize with HCCscreen. last and we again progress thousand want believe as provincial revenue diligently the can to to stream the twenty of Genetron this fifty are for tests the this have as I color that Not show you we said, the us that stream So into meaningful trying. then a trial. right? hundred regional just we or like and not the governments. benefits will with have cohort Ji’s the the a XX:XX local call, And intend Collaboration we the initial also we the going twenty I the be eventually we the awareness, one significant work important

parallel, us enough other get just launched with stream data is when get platform and trial I revenue important to also next quite accumulate ramp for fully the end through the to in these well commercialization ready. different work in completed accumulate the trial the to get very we're all of on the track everything and think twenty by to up year is anticipated And on three. to we're XX:XX track sometimes approval twenty experience

now. So that's on working where we're

very early we're we and huge progress I here. China first liquid about have to biopsy and it's about potentially of think approved the generally be screening the excited made as commercial in assay HCCscreen the potential very speaking, prospect excited

Yang Huang

Thanks great. lot. Okay, XX:XX a

Evan Xu

Yang hospital that of XX:XX highest And few that add of first probably past are in the the one among actually the right, is the towards the new here you want hospital partnerships the could partnerships, to think QX question, quarters, especially IVD, number see thing I in your the so last I quarter quarters. last

solutions is trend molecular do well. aging not actually continue that diagnostic our good we And cancer commercializing evidence panel is plus expect will if lung SX working focus that this this a So, accelerating. our on

Yang Huang

Got it the it. Got for XX:XX comment. Thanks

Operator

Instructions] moment. Please as continue. [Operator you. No question Thank of XX:XX the

Hoki Luk

second update XX:XX Well again for us thank your joining for support. call. ongoing and earnings you We quarter appreciate business

have do Have hesitate the team. to good evening. a and to IR not you questions, any out morning If please reach

Operator

XX:XX you. concludes the Ladies for you for and thank gentlemen, conference Thank and today, participating. that

may all You disconnect. now

Sizhen Wang

you. Thank XX:XX

Evan Xu

Thanks. XX:XX

Genetron (GTH) 24 Aug 212021 Q2 Earnings call transcript