GTH - Earnings call transcript Q1 2022

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Operator

Good morning, and thank you for standing by. Welcome to the First Quarter 2022 Genetron Health Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. to conference like speaker to now Mr. today, would hand over the your I at Genetron CFO Xu, Evan Health. ahead. go Please

Evan Xu

Hello, everyone, earlier and conference welcome IR to Genetron's first company's available the release website. is call. quarter earnings was and issued today on company's The XXXX earnings

call, Harbor making forward-looking historical During Reform US Securities provision future of the statements made are Act will about These Genetron expectations and statements. statements Statements including Litigation not results. the facts, and statements company that of under regarding be this beliefs some events the are forward-looking XXXX. Safe Private Health's are

catalysts. And related discuss recent business results outlook any Forward-looking the XXXX. does those Genetron will release, can Wang, introduce to statements SEC. of involve Genetron these non-IFRS uncertainties. issued to as information except in reconciliation today. our found on undertake With and for inherent updates included earlier statements forward-looking filings this applicable and call, Health measures the as provide any risks Health's financial respect CEO is Further date be All information today's required to any and today's the in will risks highlights the unaudited in I company's upcoming me is to regarding call provided release as management and the during with outlined and of quarter call today Chairman Genetron earnings first today. Allow other update Co-Founder, well team the under Sizhen measures Health, the to related information discussed law. obligation not as of

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

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

Sizhen Wang

earnings our joining and for on would Thanks Relations Hello on presentation you conference Evan. our Thank supplemental you, earnings slide call. I direct website first Investor to the like XXXX everyone. quarter two. begin to

in early MRD As precision the from and CDx our therapy a leading our screening selection product management entire are of In comprehensive and we covers and with of adoption spectrum the cancer development of increasing each to China, oncology the portfolio companies. monitoring biopharma of penetration products. of segment, provider services

Turning to was first the slide four, productive quarter for rather Genetron.

detection agreement The the strength our ORPATHYS, non-small drug highlights We their our awareness integrated uses and with Receiving HUTCHMED marketed well platform. cancer for lung oncology lung include alteration the hematologic and in Seq-MRD by potential DNA as by Mark In for presentations as precision the and of instrument demonstrate RMBXX.X Genetron cancer diagnostics publication XX% Research Medicine, Capsule’s XX%, Clinical peer-reviewed MRD as continue the A detection. asset Cancer Lung assay. at CDx for and to the of of Mutation American rose of as for cell FusionScan new of the greater Annual Assay. to genetic X-gene sales development and recent XXXX, we hospital clinical for for collaboration of which kit increase driven data Cancer a X-gene revenue the using SX Plus, RNA as CE Translational cancers templates platforms monitoring sequencing million, in including assays, Meeting. quarter Association XX first well grew our in adoption IVD in which

further reimbursed and mentioned, plan to As this market our we penetrate with in-hospital we solutions. prioritize have

at excited the have pharmacists on solid contracts quarter the of We and in-hospital traction are increased and this XX gained here of build number of to the moment. to end

first volume the side On grew quarter. which test XX%, by in diagnostic grew the revenue of of year-over-year we business, LDT about the X%

the declines a to in outbreaks affecting caused speaking, to was the containment policy, of patient opportunities our environment, traffic COVID facilities. by continue zero which portfolio, many customers. our heavily virus COVID operate Relatively business We across LDT within challenging healthcare are in commercial LDT and policies more where impacted

revenue quarter. services development more Our doubled than the in

In sequencing environment, the our challenging expect of drivers revenues, key major growth. was progress line Against are result for ahead assets also with to making addition we will that we to are we be higher biopharma of increasing the partnerships our the backdrop an a each. and growth forging committed a future meaningful top with operating

registration detection our XXXX, let So the based nine November for off by NGS five, slide of was clinical PCR to early sites, sites a initiated trial a based HCCscan. trial our trial. for the methylation multi-omics screening NMPA trial HCC In for beginning in segment. that we assay on me few intend start early with we this our of X,XXX-patient assay, our and these multi-marker select Recall HCCscreen enrollment

in delayed, subjects As rolling quarter. HCCscreen the now to and a begin we result project COVID been of trial third has disruptions,

builds rapidly many acid continue to hospitals healthcare the across We since systems of a the and continue COVID, most structure workflows clinics both NGS on PCR for and more in China. is available expand assays. in nucleic Based and testing established the help best that tests the needs believe market with the to PCR associate to government-led increase this addressable PCR and infrastructure China. patients in strategy There infrastructure is capabilities

in these a and other assay be RMBXXX deploy to markets of providing can Based that market. for published price lab few liver for we ago, programs. Additionally, early optimal Overall, a lower-tier reimbursement commercially screening high-performing benchmark tests believe added insurance a genetic DNA and methylation-based cost This in-hospital solution. testing we NGS-based other to RMBX,XXX and efficiently increase patients penetrate cancer provincial a we central are and around while viable, confident self-pay would with both the accessibility testing. also adding a models PCR-based Beijing months on some that dynamics, and around were NIPT methylation

two US and data study the in conference. the medical present an plans have US, upcoming may for our the we As HCCscreen at a institutions in started confirmatory with

liver we have multi-cancer cancer, products beyond future. in to So, develop planned the

calls, data sensitivity and retrospective our CRC showing have last of earning shared some during XX% early We XX% specificity. over already

continue have published to expect to data XXXX. CRC sometime We in

to So Slide X. turning

MRD are an with partnership, MRD recall metastatic R&D that the and incorporate announced the before co-development personalized size MRD has also the the exciting the as detectable China-specific to MRD year-end. LDT test agreement The to use a for by testing this use official NGS-based to ongoing With grow this China. CT in for test we trials second NGS-based assay patients year-end. such end China personalized solid and expand we're planning expect of in have plans solid AstraZeneca launch to in by launch AZ for MRD -- methods, co-development a before that quarter scan. expect to Concurrently, On conventional is test. by finish pilot MRI the help currently tumor optimization management multiyear side, lesion for to well clinical potential the designed clinical tumors and

between samples The in So from single cfDNA sensitive and allows rectal gastric some technology's mutation multiple data data we strategies, published mutation patent such tumor-specific detection XX. assay MRD and in a and The developed methylation development. would test more now X. patients. as The platform cfDNA was X generate The the personalized in non-personalized Slide detecting Genetron's MRD demonstrating to Mutation moving as medicine, on analysis genes enables shown low-yield potential Slide of and early of comparisons liver of be Capsule cancer multiple Mutation a for cfDNA platform, based based the with providing ctDNA. method With in translational conversion liver head-to-head capsule sample, Capsule efficiency in recently clinical on molecules. assay higher also assays

a assay, Currently, approach the based also We MRD platform. forward develop these MRD may naïve exploring programs Beyond as have China capability tumor are on sharing that same a there to handful high of proceed. we're in tumor-informed the technology companies perform assay. to more updates look only MRD

the On hematological partnership in after competitive to seq-MRD exclusive progressing malignancies, market and Fosun particular, tumor XX, AstraZeneca well. China for in MRD in optimistic China about continue is with in We our Slide collaboration. Genetron's solid Pharma position the be

the and This owners in We have on to with next few partners more second months. dialogues also sign many the in our a few generating clinical expanded anticipate biopharma launch is we quarter. assay

with support believe we by and pleased the our based China that of in malignancies we're hematological healthcare represents Although, continued in a authorities seq-MRD MRD differentiated NGS solution. testing and innovative

business. additional four to turning the now increasing slide quarter, the partners, have partners. to biopharma total biopharma So XX moving on XX, now first signed to discuss our we on service In

including others. strong the key We we as continue Onco our partnerships to pipeline, form Seq-MRD, opportunity through to a products, FusionScan and PanScan, maintain have

already in lung marketed partnership with assay. we recently, lung our So IVD CDx cancer, our HUTCHMED non-small savolitinib cell have using cancer for announced X-gene

partnership opportunities trials traction As demand has in with the strong gaining genomic immunotherapies. in to lung cross-border after of business In assays trend excellent second Together growth it use on We're and innovative the avapritinib, are cancer about major NMPA increasing is Maryland, for resulting CStone stronger, already testing continued have this segment. work CDx good the in-hospital approval CDx first IVD mentioned, review one this priority which is as process. entered market. our and our X-gene our very for growing China, developments. anticipate NMPA's on from We we CDx focus lab our targeted in CLIA excited

more over to details Mr. Evan our our first Evan? will quarter to I call So on now Xu, provide turn financials. CFO, the

Evan Xu

Thank you, Sizhen.

total that made from same on quarter, in note from In RMBXX our XX.X% units. year-over-year the to million approximately all increased XX% please revenue RMB LDT are RMBXXX revenue provided terms RMBXX by Diagnosis to X% the basis. first in XXXX. in by and in all million, and on first period increased quarter of same slide quarter. to So XXXX. by increased XX. that the a diagnostic comparisons X,XXX RMBXX the million tests period numbers XX.X% LDT sold Starting first increased by revenue are of million million during RMBXXX to a monitoring

all continued key We are pleased early of screening collaborators. support with with uptake sales our from as well, our

IVD in the from million from of from in This same revenue quarter biopharma cancer of well generated by instrument year. Revenue services first Genetron million million driven of the to sequencing the was the both increase increased -- lung quarter as XX% this by by the period million XX. SX quarter XXXX. first in first by slide to as the The mainly RMBXX revenues. year both primarily last RMBX was to in services Moving year development sales XXXX last X-gene increased in RMBXX.X increase assay. the driven and XXX% RMBXX

of revenue year. increased XX. million XX, March the to Moving in ended to million compared of by XX% XXXX, slide last months RMBXX to for three period Cost RMBXX same

Gross year. the to year profit margin this for gross period last increased compared quarter result, this year. million was RMBXX same XX% a million of XX% RMBXX first last As the from period same year, in in profit the first in to of quarter the

a Specifically, XX% gross was compared due LDT related activities margin our promotional XX% for primarily to year ago, to to HCCscan. segment

expect will We temporary and promotional end these impact activities this to in term. near be

the prior around year, million year. first to around same was driven in prior segment, increased Operating a quarter consumable are XX% IVD the revenue for of of RMBXXX sales in quarter XX% increased selling the and our expand headcount expenses RMBXX RMBXX has XX% in this of as XXXX. XX% because early XX% in XX expenses from Operating quarter been expenses thanks this the The percentage from gross our in including for increase as to For increased primarily affected. slide in the year to this XXXX. XX% are this COVID from of to increased in impact, And by on by by million screening year million Selling in and broken to follows; the business, higher versus period -- RMBXXX million the marketing the this out core margin because was expenses growth Genetron's revenue quarter partially team -- efforts. sales.

by The million headcount decreased HCCscan. increased XX% in R&D We same of $XX by higher the in quarters come. as as R&D first increase million this in last of revenue the $XX from percentage RMBXX XX% to headcount, to as efficiency quarter increased to stable in by to million in in from around and year. from year. R&D also XX% of in in revenue expenses improve XX% the XXXX. increased such expect to quarter driven development prior percentage of around as the in year. Admin million quarter around compared the remain product as and quarter trial XX% a a expenses period to to was clinical expenses to investments continued well last activities core this the XXXX Administrative expenses both sales XX% first RMBXX the sales

As RMBXXX $XXX the million the for RMBXXX slide compared period this quarter to first On last million quarter a was operating million for year. for net was of compared result, XXXX. RMBXXX loss loss first XX, to million

other non-IFRS million rights. net change, loss excludes RMBXXX in compensation RMBX.XX and the this million financial period was Non-IFRS to compared quarter net compared quarter losses loss, first loss per was preferred For year. for prior this of this Basic fair for value instruments share-based with same the of XXXX. to ordinary RMBXXX share expenses, $X.XX for

share. ordinary ordinary this year for share equivalent is and $X.XX share was per per basic is loss, loss net per the quarter non-IFRS Diluted prior loss to ordinary For $X.XX.

and in XXXX. RMBXXX loss and We equivalents cash assets through of have March XXst, the fair at financial profit as million at current cash value

our Now discuss moving to XXXX. for outlook

XX. our actually nearly In LDT revenue a to rather year-over-year Let's of grew go January, growth with XX%. Slide strongly

trend in decline, country. about the In X, even gradually were LDT of in our March, turn negative you a until end April, basically open began revenue more we for took Shanghai, ago, very In even may parts single-digit following deeper Shanghai, June only in day months. rising COVID saw in several the that up. Many March severe as year-over-year a double-digit one COVID-related the measures experienced cases actually have However, particular, of to recently, Shanghai heard of the decrease -- Shenzhen at starts LDT until and revenue. year-over-year the

and difficult and has conduct the city, this negative it a impact us has particular on any been particular, spread to in in has been mass our extremely for Beijing had result, continues. businesses, testing other in Ongoing a activities As revenues. which cities LDT happening

In in based our headquarter programs. fact, our government-led participating COVID is lab testing in also Beijing is where

step – core against together is and COVID government situation volumes, our authorities. it business with relevant our negatively are that could impacted up the has business very take While glad action we for operations, challenging our Genetron fighting

we In regards addition These continue precautions, to zero of in our markets anticipated be of assumption. baked when some rigorous our year. which the But compared hope our XX% in XXXX at RMB a million challenging ability XXX had provided relatively to this some seeing in XX% point, We weigh financial flareups projection, to we to losses drive the of catch the growth. growth are to on would outbreaks may Shanghai and around In are up signs and year conservative Further, in guidance, maintaining have our XXX the we we May, revenue revenue in of through half or fresh Beijing, XXXX. key business March, that some our persist are guidance to in recovery. around environment positive to RMB million to addressed COVID emerge. we can second of

first to financial concludes will of We call Sizhen. our quarter its course. will discussion now to impact back and provide due our in turn updates COVID-XX business the closely monitor evaluate This the the trend I and results.

Sizhen Wang

MRD across solutions Shown particularly liquid clinical XX, the continuing our the to commercial, we're In of emphasize to efforts on in and achieved adversity like pleased core have grow early up strong or XX position execution. very commercialization development operationally business of through Evan. and our to in on while the we underlying to biopsy-based related focused the remain with development the substantial success continued management, fundamentals closing, cancer business. and face and you, ramp of long-term both the we that I COVID. Slides our pipeline CDx, Thank full-cycle us financially growth well drive would screening,

also procurement list IVD hospital partner of addition more the made expanding model, progress provinces. inclusion XX we good price base, kits have the and/or to the IVD approved our systems on into in For in-hospital than in

inclusion penetration -- market with in one to next share. certain clinically cancer example, XX represents the for for government important cell the believe our meaningful cancer, the X-gene as for would established and months. For to XX we reimbursement lung regions non-small increased lung driver represent would be a assay, which be most that This of could test continue

we couple substantial over In can to addition, on as years opportunities of our pipeline catalyst-rich organization. create slide we a next the XX, have for see

years, Over and as expanding a value. player our in leading few long-term created have this us investments the past capabilities positioned and strategic significant market

largely organizational of forward. improve completed, one order is and and to build-out Our also priorities our improve to excellence in margins going is operational losses

So for so ready Operator, questions. of this prepared remarks call. concludes now today's the portion we're

Operator

We have question from Yang Huang Instructions] with you. Thank [Operator Credit a Suisse.

line open. Your is

Yang Huang

Thanks, management, to ask opportunity for question. giving me

quickly have I So questions. two

seeing would also for situations? I first April, going to performance, so lockdown you is the are our some understand to question. and given mentioned in in my quarter, I what to think impacted and That's revenue First on second we XQ other impact. be like March margin

Sizhen Wang

the You impact mean the or… magnitude of

Yang Huang

Yes, yes. yes. Margin,

Evan Xu

Okay.

quarter, in probably far, was first some So, as mode, provinces. yes, of Shanghai all, second the really key lockdown deeply April was -- month our given of markets that Northeast hope in that particular, was in the the some I worst so and mentioned

So decrease some April. around that, digit, year-over-year actually, see good for XX% sign recovery, in double in saw markets. of a May Northeast we we especially The is

still in all May. right, although for lockdown Shanghai a the was -- So entire in mode, all

May, situation all April, better it's for to was compared digit. in still all, but the negative So double

the to and from we starting try in pent-up of Xst now and opportunities business So we'll Shanghai CT. -- do is some June, will our best gradually capture recovering, demands

June, terms revenue. to end we should So, have in LDT which last hopefully, means catch-up of by of compared second quarter, year

pretty second all-in-all, COVID volume -- revenue. of terms hit we and by think the in quarter I

be significant will as accordingly that fixed I cost impacted of a terms In of the given have unchanged. portion margin LDT, for remains think will well,

on this. say but to eye precise hard have we'll with a it's close number, So

Yang Huang

Okay.

And so…

Sizhen Wang

that thing up over in this have that, on is we Beijing. one To add COVID outbreaks Yes.

We we we in in have participating government-led that the the mentioned COVID earnings programs. started -- call have testing

lab impact due that of QX the to the have some essentially contribute will that as the to COVID our the has testing, part costs which in mentioned. COVID costs of the leveraged of therefore, that revenues as So fixed provide some that, just to Evan -- means the essentially capacity unused share some been well

serve for factors financial of So a overall stabilizing will metrics as in QX. terms that

Yang Huang

Yes. about our collaboration Thanks. MRD AZ with is My question on the second program.

let's cancer are Thanks. on, going side, cost of profit also give more can kind in some AZ? kind the at future? we what of us on of in we you first? target want costs or So And the revenue share details of kind AZ say, to with going share to development to we with type Are terms

Sizhen Wang

Yes.

is important we biopharma with a this collaboration AZ. especially So developed that right, with obviously very have partners,

And discussed in this partnership both a is these validation before the co-development assays. the as the which invest here, and that sides completion of So, we will the fact, upon previous in development of validation of into means conversations, to China-specific MRD assays is used platform a a And intended the assay assay. essentially MRD pan-cancer to personalized these the trials. the personalized in on exclusively this AZ under for that test be multi-cancer technology use their is committed

Yang Huang

But and or owned the see. join IP I by own AZ? us ourselves also by going we are going to are IP to

Sizhen Wang

Yes.

So, the cases. it's itself IP kind the certain is right? ownership the of product, essentially, of like us, joint technology of So, by a platform in terms owned in

and the mentioned, So, completion development so validation upon two-folds, the of assay, kind this commercialization be upon I as – right. of the will of the

this to all related and committed pay the trials. the service, assay on their is use testing for AZ China-specific all, the assay exclusively and essentially again, of for service, First

the of arrangement that's made. first So, layer we commercialization have the

partnership clinical clinical other to is say assay commercial when this arrangement So, layer setting. I I the setting, serve in we of patients. that mean, mean the a a I form to likely promote the will

the sides, the we trials is assay both collaboration and the both as see plus from the market -- discussed co-develop And it's clinical in technology be to excited we the from and this to be and sides finalized. essentially to to to in in the well potential from are broader both and with AZ this a samples assay commercial that setting. Genetron that collaboration actually be commercialize quite patients investment -- as as the be data we'll this essentially able So, first details incorporate well the this But clinical likely bright or a future. future expanding serve to more incorporate will

Yang Huang

Got it. Thanks.

Operator

like for Instructions] call turn I'd the I'm no any management [Operator And showing queue. questions back Thank the other in you. to closing to remarks.

Evan Xu

for Thank operator earnings you, your you everyone. quarter you, and Thank update appreciate us ongoing business and Okay. the support. thank again first We joining call. for

you. please not to Thank out us. If reach you hesitate do any have questions, to

Operator

This conference Thank for call. today's concludes participating. you

disconnect. now Everyone, may have a day. You great

Genetron (GTH) 3 Jun 222022 Q1 Earnings call transcript