BNR - Earnings call transcript Q3 2021 | Burning Rock Biotech Limited

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Operator

Good day and thank you for standing by. Welcome to the Burning Rock's 2021 Third Quarter 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.

want statements. you I call this begin, forward-looking contains we to that remind conference Before constitute statements XXXX, statements the as These forward-looking in Securities XXE of defined Exchange of Section Act U.S. of the as and within amended the meaning Act Private XXXX. Securities of Litigation Reform future, can similar anticipates, statements. plans, These will, forward-looking terminology as target, identified be statements believes, the estimates, by such expects, intends, and confident to make it's and made may or also in written in report periodic it's parties. to Rock forward-looking and in to or employees and Burning statements by releases SEC reports the annual materials directors other shareholders, press oral third it's written officers, statements oral are and Burning that Statements forward-looking including historical Rock's expectations statements beliefs about statements. not facts, are operating or to that which Rock's which many Such statements are are risks, based unknown are upon and Burning management's factors, and and difficult involve events conditions all known current of beyond and market uncertainties other expectations, predict of to relate control. current

to Rock. of of ahead. first update law. CEO as over sir. events required hand uncertainties that speaker any And to this this conference in and as Forward-looking All does Han, new call in any under provided today, you, Yansheng Burning and contained any now, Rock a statements forward-looking the to undertake date information your obligation of statement or Please as other not such conference those result Burning actual involve the could results applicable call differ from factors conference future risks, Mr. statements. information, materially otherwise, except Thank to I'd go of like cause is

Yusheng Han

the QX Rock. of Rock Welcome Han, to Thank conference Founder call. Burning Burning I'm, and you. CEO Yusheng

in have and CFO, we the CTO, Joe; today our Shannon; So meeting. COO, Leo

walk will highlights on will will I some our through through Shannon, product and progress first, the So then CFO our line our Leo COO, you and financials. of our expansion elaborate exciting recent go

turn So X. to Page let's

XXXX and business has started this that market we leader in the grown Burning segment. know therapy the Rock all to in selection So

gave have us early and product And described the laid So our we position on and forward help business, quality has pharmaceutical brandings leading moving MRD that's us which advantage foundation and attract strong collaborations. what technology And last time. to it have we new a talents. good detection,

, the high thousands -- hundreds aim So highlights let's the for then, and on faster built Page to we lowering hospitals therapy MRD have we few studies new us innovation coming selection to oncologists products, us selection across our for X testing in to as and turn therapy tackle in -- and it makes network rapid distribution detection of goes volume possible of and that's The to when on market existing And cost as market. well the years. it progress. why enable parallel R&D continue sorry the the recent some early

preparation So say the last X-cancer of -- the well. got early commercialization the detection. it's to first have that on that one we talk discussed and preparation I about time is is We going the

sign -- six We the the of year. end hospitals end have hospitals this to year this with contract strong by sign confidence six of by

multi-cancer education customer, early choose real since will the plan the run However, doctors. of instead of hospital product doctors, new the market and the a and free in together consumers detection to is with category campaign

going it see how next will we how be goes -- So it year. will

and MRD in matter tests. par very And development promising be already detection, and year and technologies the our been talked the HX lung X-cancer versus readout launched sensitivity demonstrate cancers. Archer's we with called to and expect for esophageal with readout XXXX performance has on trials about also cancer colon BR publications. Natera terms TOO. will in potential time trials have product PROPHET. what shown with X-cancer we to XXXX, No the first shown performance the of Last specificity sensitivity, of In we early It half the improvement has in tumor-informed in a

For in-hospital despite model August, the stable in And growing XX is case the QC a much model, we business. increase proving last I that therapy also for COVID-XX reliable in recorded collaboration selection, more pharmaceutical time, introduced and fast model. in-hospital volume

of you RMBXXX number of year XXXX. went of by the million. -- million remember a the If contract and number RMBXX by end correctly which the to the last QX, time QX, was is And X.Xx total

in I'll illustrate next detail So page. on

we pharmaceutical why to Page explain think that X, as to I separate to have independent So unit. I need if an turn the collaboration we we to -- remind the business business

business, major in So this been ago. new year a for industry hasn't NGS a not but China business market pharmaceutical half U.S. it's about and until in

some that shift means which So regulating drivers include; together. NMPA the toward needs moving approval targeting paradigm first, the in and is recent drug to therapy tests to targeted go market CDx model trends drugs

innovative biopsy samples that on and driver in and like the opportunities. MNCs NGS domestic need companies the with and liquid other need seeking capability China. country do And China global Japan high-quality that and for registration the FFPE available of in and government both can And is the developed drugs, companies third volume-based U.S. in sometimes Europe. both the CDx is pharmaceutical therapy procurement, driver pharmaceuticals includes targeted product second The pressure expansion more for for

operate However, trial operation Chinese NGS global companies challenging ideal our NGS company China And of choice. Regulation registration for Genome the it Committee. to is their is foreign with due regulation very Human in to

And quality And So let's registration trend, capability to turn are and for thus our unique we registration strong portfolio CAP broad this business. X. high lab up Page global our and seeing team which a advantages now set this and is certificated. and U.S. CLIA a

page our this product go Shannon? COO, our is will let through So and on. progress line this to we that from Shannon,

Shannon Chuai

Yusheng. Thank Okay. you,

and updates. on focus and So let's actually pipeline the we just page I'll X some of overview this our the product so key move last showed have most of to Page on time, skip content

is prediction launching First, benefit which in have actually adjuvant the the timeline BR product And using cancer but launching we well of timeline We in technology QX as of product. Yusheng now first on very commercialization detection start become chemotherapy we available and the MRD for products those will early-stage quarter. X-cancer which and our our important and the products lung year. clear the just these of early-stage PROPHET for our commercialization about tumors next customers as them a the early patients also have clinicians three pharmaceutical DetermaRx more will mentioned for solid as now to also for clarity three our we mentioned

can our years. And cancer now then the the significant coming we development for visibility So we that early program, growth in detection program products expect our make more these to for new to product share. we have contribution X-cancer

risk our most about. XX happens lung will data for half we and see readout then exactly The called on We And cancer program which I'll the that on besides in next a likely first details MEDAL been validation the esophageal has Page of months, have readout study give previously these what some talked MRD year. more released MEDAL validation in cancer is data on solid cohorts. as other also And relapse we types to XXXX early have from have colon few next expect including cetera. year tumors into retrospective shared gastric prediction available in we et on and and and the extended also before past

the for the studies of we quickly that so, China market the And BR positioned also well, increasing therapy because think liquid went driven to products available drug we be development six as in on interest are are most PROPHET pharmaceutical MRD very as collaborate on market with for will in our well there and partners panels. China biopsy

So in the be will terms BR a for innovative very approach. PROPHET technology MRD personalized of panel

where to detection you details, now program. some updates more our let's cancer through So I'd directly for Page move to early walk like XX,

readouts expect having right study the for to XXXX. speed first be for half meanwhile, study of enrolled, We the PREDICT of plan China. And XXXX. readout in the For which a including prospective/interventional We key have at intending half if product -- some participants expect us that early study XX data XXXX. This the than participants. for think you and validation over our X-cancer still PROMISE enrollment. remember, first detection now of X-cancer of our in for remain in the one this with data provide future will the update product, to case we with design approval control study on And it's the X-cancer contributing is product, key study anticipation our PROMISE more registration to to in end for with call study we population study, pivotal validation the around study the first XX,XXX huge PREDICT a the X-cancer inputs pilot the X,XXX of launch release we on centers main recruiting full is then about study the we finished test

validation We product XXX process. also to approval that control subjects the and both PREDICT these through wanted study more than of case from emphasize all with to resources nutrition for gained human the need which in approval have XX-cancer development. studies because China, genetic studies PRESCIENT go their Both is

to multi-cancer on So trials what we PRESCIENT wanted detection only from early tell, are we that can show far in going large-scale China. the such PREDICT and

on. So, wanted that's about all elaborate to I

I'll you our So turn walk Leo? to our to now CFO, financials. Leo, through

Leo Li

Thank you, Shannon.

Page XX please. go to Let's

which non-therapeutic defense restrictions. happened and COVID curve it Difficulty] [Technical [Technical is or means the against to of travel on or China's QX, off-phase, are saw in containment what volume We'll a we in August in into sign a recovered terms measures of cities October but This for I'd a through cases the and for right And and heading impacted tightened business financials, resumed another we wave if we spreading, scale significant into In impacted a in we our it's trend, spread significant like that and of little Before large growth we free to market saw just recap quickly go August, by Beijing the primarily recap through Difficulty] our current see our multiple later China. us. volumes movement there testing movements the COVID, the now is for would September back but August. for that middle then key November. in wave impact exact in numbers is

average year we XX% believe industry is year-over-year. also PCR which in-hospital -- of both our to can volume segments. aggregate, year-over-year nine our trends. -- Now which come page on during see central some the XX% third believe that the grew the lab China. in and And for we numbers higher you this from even numbers XX Page saw volumes by -- quarter, shows that of months combines NGS in the or than back specifically the that we're players growth grew Please on and tracking And volumes Page XX is our than our first our turning higher

quarter, to the saw growth COVID hit in recovered Within of by growing year-over-year October. at high August was XX%, XX% growth wave volume then then July September restrictions. good single-digits and We about in accelerated year-over-year,

good we see COVID digits in that growth is period had So double during China. we've volume where quiet the

is the and the being remains testing half case quarter we In-hospital growth this by volume Now It hospital. stepping us third back of our year second of year also the is in-hospital this a allowed our of half the from more key since for dominant our has to industry -- volumes at than NGS quarter. test annoyance, strategy. believe share COVID's the to supplier results above take that hospital the the the already

proportion We to grow forward. expect further this going even

is for and we we which segment grew blended ASP doing X% we quarters think lab We revenues supply in-hospital volumes that charge as forward. in-hospital as segment. XX. quarter. and we quality price should think sticky, the numbers Page out-of-pocket -- by Page our central which However, the this third And segment is a transition versus out across the in we patients that lab a lower even towards This segments the in will on ASP a on more at this going our more drag down better fundamentally XX year-over-year we is then directly be the we central that to mean go get worthwhile hospitals our few because testing laid repeat dragged in-hospital into execute we will does more

that we that Within and the quarter, August better. trends previously it's was a and was the similar volume July explained September hit to

in-hospital down just than because more growth segments, rate year-over-year central growth that lower believe of is industry We was lab the revenue instrumental are recurring the through growth maintained small volume growth, and quarter. segments coming third off kit the kit a overall we segments strategy the by achieving The was the share our majority revenues third good drag Our rates, quarter. In-hospital above the ASP and gains revenues. is explained. pharma primarily the is segment And impacted growing base. year-over-year XX% our revenues, during during for and in-hospital for vast market these not key is

rapidly pipeline projects. showed typically pharma been on this And X. has Page Our multiyear year building we are these as

will Then guidance. But on we now down the us period. our pipeline year today, were our October, which our we If RMBXXX COVID up convert hitting the moving today to on current back quarter. having feel and normal would wave were if to run impact So over wave confident onto feel guidance. latest rate the our to is at to around full the which is And based about fourth an is die to guidance go for XXXX. million multi-year our confident of achieving revenues a we would or of

However, see how will launches impact risk this guess see have of impact multiple And of drag year. on for of look out happening on. as commercial how we'll the flag and an beyond qualitatively long what's this XXXX, given XXXX products we will current ground, we I much and the to an wave moving

mentioned early have live we of been year. go preparing launch the of test will for at call, which the the our X-cancer next As Yusheng start detection

we for and of Page early-stage new will on In X, as XXXX. patients products in the launch through addition commercial cancer new, walked Shannon see two

incentive future our meeting providing earnings we we'll on lastly incentive the company's nonlinear initiatives is meeting. basis. forward not dates we our nature it's but collective incentive growth of commercial agenda our that the a our shareholders long-term forward XXXX share and At vision looking will for Board And an on So in annual be a achieve is today, pushing is and long-term to plan share to talent shareholder's year a award calls. managements important in and The senior those be and announced votes. breakthroughs linear on updates our keep

half the reaching to of years. outstanding total plan cap billion available reaches tab. invest market reaching X% conclude target US$XX Annual cap The the within IR outstanding opening which the cap within Further our this under Shareholders the share the incentive -- details News Events of billion. market call if our shares that, our options shareholder will will for market we and timeframe under questions. timeframe X% about our US$XX is is Specifically, of and market our seven US$XX reaches is on shares are meeting The amounting opening the remarks and after we and billion, for the US$XX total if section of meeting invest five we'll years website cap And with another lapse. the to billion

Operator

question. from Masucci comes Company. [Operator Max Instructions] line question of & Yes, first ask from Please your the Cowen

Max Masucci

Hi, thanks for taking the questions.

shifting with us to cities any that volumes from resurgence testing So, factors launches. all impact customers lab understand would there help to more COVID just or QX about hear look lab be thinking patient if and during where we along volumes you be the in-hospital in should these by key of with the mind new return in how to growth XXXX? in great the or growth regions your and were geographic COVID if central product impacted you at strongest is impact was can the central and the

Leo Li

the on China major and and impacts, Tier markets market. represents X a large the COVID that the of Shanghai for Beijing in So key share us cities

on were visit So cannot locations. when in these are for get impacted and COVID the impacted movements those hospitals typically the cities goes and that patients

mechanism what's channel the allowed say zero for that I this impact period different is to looking industry COVID current gain has be impacts year, beside to primarily -- we us we the seeing key will that year. markets, strategy ability the out time would on China's the either for we're believe will China. the and strategy is our COVID the we what so COVID had a So through And still of this share think defense And next which is COVID and in-hospital against and for for that's think having for an year. I this be outgrow impacts, we while case us

So would we some will accurate at that on we will predict think will some expect that that but back points I go these but go point can't at China normal. to

will adding So have we that the will launch some via the revenue the will launches forward. impacts which seeing alleviate of help we're in-house growth on And in product that addition, the initially the going we affected. that central add to been central lab channel lab that new

in-licensed a next products Chinese the cohorts launching year cancer in we lung stratification at for had launched are validation products We as mentioned. Shannon that data early-stage that risk QX

So for will as lab revenue that the well. forward going central revenue incremental providing help us

back a providing next qualitative year XXXX. for quarter as thoughts and So results, that's will our for for next come guidance we year fourth we be our

Yusheng Han

I question. -- is comments Yusheng I some And this for one your additional have additional have comment

just in of winter. laying impact out is So the COVID-XX bigger

not growing I team suitable So it's the rely indications just add product product new the be but new is slowly can the will the more can the products. in, according stop think model they growing, the sales that central-lab -- the but we can the more with because hospital central with this to situation year. significantly see on lab And really lab central down for revenue after the better is really go new model situation our second that that spring, model although thing

Max Masucci

to So Looks implies to QX would just customers like or remains and it it sense. other XX% be in to to ASPs it your sequential and any the hear embedded to determine just revenues implied QX? curious your year changes full been keeping just in same. guidance about in grow there's quarter-over-quarter compared halfway guidance growth the as largely great access then volume on? eye And implied if makes the the if November guidance an factors the that through about be QX Great, we will your QX related relates should to to revenues that in in growth ability assumptions any

Yusheng Han

strong we growth October, the of good the that Yes, we hits month August. middle that the spread followed the month a after recovery in we COVID November as volume saw closed in are back for

of how we middle within Beijing as going long So bit week. but impact on of an large another the and tightened in that a was how all uncertainty is wave well there this sit further

and So much it's current predict on. further the hard how will to how wave much impact drag

we're we going December. what but just and regarding So the it's were that to to mind did risk October, we wave have bear back for in about happy November in unknown current

we will million be the uncertainty So believe the the with the RMBXXX for full year around COVID around guidance impact.

Max Masucci

that versus approach? to ready and updates And the only to in question adopt be you tumor they're are to seem seen panel the tests oncologists in. one Would approach MRD final when MRD for mean hear broadly with could not whether one that reimbursement And excited some be oncologists using you very launch receptive comfortable a China application. tests sneak monitoring curious blood MRD test monitoring oncologists whether this I fixed are feel if of in informed recent more equally in China a feel U.S. or We've I about launched. commercially

Yusheng Han

that. maybe take after I'll think Shannon question I the Well,

Shannon Chuai

core all, the few have Yes, rather strong applications. the some very But clinicians year to a we long time, was take according in this or that very try. past first seen products clinicians, to MRD like way. the related the their okay. months. around I dramatic acceptance in in interest any clinicians can start -- show also doctors, in Last Well especially market in the of change most actual feel recently in concept product MRD of interest I'll their oncologists and didn't we MRD in ready among day-to-day question

the related the that's very interest, of in we the more be utility, course far whether we course drug a research of so will realm. interest. see on very, remain and is are utility However, going still some -- study the But development really already biomarker most related of of clinical which in to looking shown think application or strong

that stage few the pretty well months, cancer in over the the that that but also that can it's applications. MRD we that It's the important are is will MRD adoption we specificity for it's significant, more also want fine. each their the they tumor-informed we most they have and product high that clinicians. Chinese yes this, actually is on important" using play So very are utility XXX% sure to have really scientifically frankly terms panel the the we we for not think patients have most negative early this And most launched terms right means relapse we do market important rate of how is for that are they and promising and I more what eventually the MRD six hope now the which among the early-stage make monitoring very believe than the will or out. clearly because -- negative But sure -- seeing say utility to predictive pros cons clinicians at observed the or past NPV all monitoring reason in sensitivity patients I have from fast surveillance the but be speaking, solid risk becoming in value as these in of which because the thing was patients "more think China for all

of cons patients So, secondary and time [indiscernible] second compared for turnaround tumor primary in the approaches, now, with also concerning is the tumor-informed very about some primary panel XX% said, does have commercial. approach to have tumor-informed methodology an who it six clearly the that to situation approaches. including have compared the that the But advantage six to panel for XX% right

that will -- So when their they product. does start again see that I we response to experience will hope beyond answer... the

Max Masucci

you. thank Great, That's thank you. great,

Shannon Chuai

Okay.

Operator

Thank you.

ask your question. Stanley. Sean of line the from comes Wu Please from question Morgan Next

Sean Wu

my towards on screening early and Thank progress also taking questions very MRD. for your you congratulations much

the, So one quick on couple client. from question of I the question have a

few see So color like selling can business? about maybe and the looking of growth give you back you mix but down over pretty picking bit of I revenue kind the know revenue last a ASPs slowing ratio type would us a of expense quarters, for of the situation up would the lab a our that think two How central and is from business be the the -- ratios break question. selling in-hospital the first of between Leo. expenses for of and differ types businesses that's This I time those

But Another part question the half the of moved for readout for end for first have have color and the the of the in has year do Shannon, the for it's next type early XXXX are you from that's readout any kind screening behind up would that? of course cancer been your first of And X-cancer also early of great. XXXX. what screening, we that to XXXX reasons

from a that's question do important client. questions two with then pay milestone that to we Before have to attention the critical my follow-up any the comparable

Leo Li

question me let on expense talk first, question future and about Shannon then will the the So readouts come on milestones. selling back the

that factor bear mind year. our expenses So organization I have started detection commercial the this in think for the first selling is, early to building we

had some breakthroughs health sales into of this explained the So functions. there A gone includes that the expenses as products call. few and Yusheng they've side is department, double-digits already on that for hospitals the marketing in team team has at and so getting a the that a into line checkup personnel sales

service also tests sales time booked products under built after and this are the line, In some customer related as been services require cases. a over other that functions pre-sales has this would at year these in for team all addition, customer example,

early And expenses that so factor. so at meaningful first the the commercial organization. up that moment the matching a on the is to So, have that's, I ratio think would, had impact I and related the revenues selling build think not has detection that would first

that business already is testing revenue patients the generating. Within

And in-hospital We have building also for team for sales are products penetration. early going that we our look product launches have previously will coverage our we out year, year this next stage more as also explained at as been we we patients. after expanding have

coverage have few in been across up regions we So, as a ramping well. sales China

margin head qualitatively the counts. central don't channel. productive across terms We efficiency added And that is channels. in-hospital the in-hospital versus related despite of profile towards having is overall lab lab selling breakdown differentiate. an we that's believe expenses Then in and quantitatively the So the lower than us but level, provide better to it's a institutionalized more actually that selling central ASP importantly, margin is operating and at allow to channel this

is meaning build-out is that the sales within looking at think think this organization forward, largely commercial going year. forward. channel And we So, oncology I That's done the the complete, business. important headcount primarily testing for patient

be if this see I shouldn't progress So see to early next headcounts. commercial adding -- But will year, huge more making good compared we should progress changes we year. we're more we detection think that's dependent our on

outlook the that's qualitative next for So year.

Shannon Chuai

time, to product the The of for our phase detection thanks So early is talked of referring we PREDICT. that, PREDICT -- we the difference about first terms question. X-cancer in the readout here when for the originally readout were

the to the it's PRESCIENT able and cohort on proof-of-concept types for to PREDICT designed stage. added participants more for a trial since specificity bit for of ideally statistical X-cancer enough each and of sort actually precise have type enough -- cancer each to little PREDICT and all And be than XXXX power for give estimate PROMISE because participants. a XXXX which has that's if you more However, remember an we about additional top than a XX,XXX actually have has

the the interesting. very RTOO it's for clarity the bit us early what performance, we be like the a we we from we how However, that actually and shared the data X-cancer have give the And on potential looks well as now worthwhile as little have before could -- detection readout it's comments PREDICT with to seen, specificity, achieve additional pilot cohorts to specificity feel product. performance

So have the we plan. that's on bit why ahead moved a readout little

for the timeline which our Predict. Phase PREDICT the So remained close same actually that's I has readout - timelines is for to readout and on that

then, as milestone release the have as in end additional actually in development laid lines X-cancer, or the products. of second product different terms detection will three And Page the terms and We will as of question X-cancer programs data out on and XXXX. early product for we the of XX-cancer early XX,

which then a study. have robust means will XXXX case cover quite milestone have which but on X-cancer cancer trial, in that mentioned cover study the it's registrational we major cancer participants cohort year to be estimate off will then be the to the our that the the close we with performance. So which precise. be first next next in second interventional/prospective of study And I more phase blinded China. have collectively the year in and will what that the kick just the have for readout be we to the the from will PREDICT milestone tags we this has expect study blinded the pivotal be the milestone but important will able by early results And really visibility we on about which XX,XXX which single multicenter by XX% will patients half control design study a are we of terms next PRESCIENT the of on XX enter the X-cancer, the And to prospectively product be that X-cancer study will XX-cancer think will then. with case next anticipating also also control on will it to again of that And

accurate feel forward So the like registrational we the at point timeline. XX-cancer and share don't for X-cancer moving to of path, visibility this have enough terms in more we

be get in not other So pen we the registration path in -- PREDICT also to we from China but accurate able then to will and a will we'll out there PRESCIENT just and more from what see countries. probably

answer that does Okay, your question?

Sean Wu

have my he question given testing I quarters volume four if volume the is Okay. is for not final from you client, can your central you saying lab grown in XXXX, grow he have now. wondering that

testing give growth something course situation the the quarters to has with next kind coming maybe year? can some some suppose of just lab to volume I also So year, but guidance also as do down last this of person of COVID-XX that

Leo Li

on that's forward COVID year. think of saw I China. we for look with something bear we out of the that I we trends So in mind end to But October, think in vacuum would next the talked at

always I next be And is us in to to of centers launching. that's believe for addition for beyond channel cover new to factor the additional do think some part I COVID, additional there that a will central the lab So products be potential year. in and going lingering oncologists

growth time, I channel hard come back although in normal it exactly of so. it's that when should a to predict to period think So,

precise a something point give can look out this can't we at we for. that but estimate qualitative So,

Sean Wu

all Great. Thank you That's -- are questions. those very much. all my

Leo Li

Thank you, Sean.

Operator

conference Great, today. There this question thank further you Thank you. for that, at time. our are we for conclude With no participating.

You disconnect. may all

Yusheng Han	Chief Executive Officer
Shannon Chuai	Chief Operating Officer
Leo Li	Chief Financial Officer
Max Masucci	Cowen & Company
Sean Wu	Morgan Stanley

Burning Rock Biotech Limited (BNR) 16 Nov 212021 Q3 Earnings call transcript