Earnings call transcript Q1 2023

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Operator

Good day, and thank you, for standing by. Welcome to the Burning Rock’s 2023 Q1 Earnings Conference Call.

Before we begin, I’d like to remind you that this conference call contains forward-looking statements within the meaning of Section 21(e) of the Securities Exchange Act of 1934, as amended, and as defined in the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as will, expects, anticipates, future, intends, plans, believes, estimates, targets, confidence, and similar statements.

historical are statements forward-looking not beliefs Burning are expectations, and statements. that facts, about including Rock’s Statements Such statements events Rock’s are factors, and current or market many based risks, all upon management’s operating unknown are difficult and current of conditions of which relate to and which control. to uncertainties that are known and involve other expectations predict and Burning beyond

such uncertainties, actual those as risks, information, involve Difficulty] and Burning any results contained law. except otherwise, differ statements that [Technical cause events required other future not Forward-looking could a does under from to materially in obligation new undertake applicable statements. Rock factors or as result any of statements forward-looking

speakers’ Please will [Operator presentation, question-and-answer session. At recorded. advised is be a there a time, this participants the are be Instructions] all today’s in being conference that call After listen-only mode.

now With your Mr. speaker today, to that, turn you. I go over of Thank would the call first company. Please CEO like Han, to the ahead.

Yusheng Han

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

have CTO, So also Leo our we Joe CFO, Zhang; Li today, online. and

information of say information, before a presentation, not quarter's but lot us making So data, the very although this that, exciting. would I important and new

do. X. investors case, familiar we some hereby let's very turn So to Page are who I what In illustrates, not there are with Rock, Burning

of a detection. including business based early then biopsy, tissue therapy to from liquid So multi-directions started therapy and and our selection, selection liquid-based multi-cancer MRD, expanded

and We doctors, pharmas have to and services products, three units consumers. providing business

the as third And is The growth to R&D and top goal China goal want a outlook is healthy the player is of goal in is profitability to further revenue focus multi-cancer detection. We for investors increase a initial the our the revenue we detection is XX%. profitability, the with And to what on to that XXXX continued we second is at during in XXXX reported R&D of to set number turn So our in goal Page position goals the number X. up XXXX. globally, quarter main excluding is one let's three growth, achieve rate the breakeven months will spend -- ago. -- and early early one player leading our and and set multi-cancer

So break parts. let goals four me in the down

install, we will sales selection, therapy due hospitals productivity model to in in-hospital and top MRD, it in difficulties for the very personalized the install the to So challenging launch to this by of improve personalized continue and is for method strengthening MRD MRD operation hospitals.

and of However, only MRD to since and samples hospitals bring samples, in-hospital the outstanding more can tissue MRD the more volume model top baseline level. needs of controlled next tissue

that and believe it impact QX we early So be in-hospital Rock, for product (ph) strong this MRD launched May, I engine the will start Burning to in year. BU a Onco have and

platform to goal And Pharma, for of are biopharma the continued new international this business. more growth we profitable orders, growth, top a of MRD with optimistic its and is

XX,XXX over subjects, will of readout second year PREVENT MCD in we half is of an study, study which have For prospective interim XXXX.

what and at this selected we commercialization XXXX. goal We Also, regulatory hospitals, of are XX we PRESCIENT. building continue PREDICT in The the will and with pathways study go on cancer cancer will said of nine tests development FDA the especially and top NMPA, that's NMPA.

to effort what's our let's result the X. turn XXXX of in So and see, QX Page

commercial main illustrated, indicator is profitability. we non-GAAP of And minus one this the number the goal SG&A. gross is efficiency profit year As

QX it's in at quite from loss are time. see -- that vision per can bad we $X.X the XXXX. can XXXX plan million And XXXX to (ph) able So minus minus reaches to narrow we the QX We down $XX was we in quarter (ph). that it optimized this million QX initiated number its and bottom time, that that in the at see

are we very achievement. by this So excited

that we So means trend to that are good breakeven. in a

X sorry, to to the see So let's Page other turn X achievement. Page --

is this early year, and to of companies that efficiency. our challenging to in As we sales QX January our for rebound is to loss most reason we due continued pandemic of quite February were The this improve know, narrow the and strong impact. in-hospital able the especially March because

And May. a of take time, of platform coming the have more installing in year. data progress terms to this clinical and the AACR the hospital impact in-hospital expect our model to product we revenue we it study, MRD, launched of For since QX start in the And of we ASCO in conference. the in really released the to we will

terms So or MRD matter in trials no (ph). or commercial in of the on chat in going clinical

are For NMPA on to dialogues business that's triple-digit, the continues. a the for grew Biopharma, and Contract grows year-on-year, grow. value trials clinical also track early and the the number. continues XX% revenues while detection, all to FDA good And

will let new if at you any breaking we So news we know, have moment.

to next, in the will So pass please. CFO, detail, about our Leo, to talk I Leo, numbers

Leo Li

Thank you, key have for And two Han. to Yusheng track XXXX. we for metrics our financials,

numbers is first gross X. and as demonstrated us Yusheng our as profitability walked one minus over The regarding non-GAAP breakeven on profit defined SG&A these Page

quarter breakeven slide And to at hit in and we on can metric our XXXX. our track pack. see are you on So during some this track slide them

second growth. we The track metric is line top

and for So to track top two this metrics profitability key growth, year. line

volume trend on let's shown visit first growth, On Page X. our

versus strong had year-over-year. rebounds in growth volumes just to was down share. achieved the basis, previous taking X% that And testing volumes segment, first quarter was in-hospital the channel last and our fourth in March X% the continued a up On in lead down by year-over-year. results led where in our in we Our March. sequential our further that in the taking whole we quarter and double-digit year that rebound market quarter January March strong we strong said were Recall combined a volumes XX% February

on which then, our And is shown X. let's move to Page P&L,

grew February, very had revenues, in year-over-year March. revenues contributor of in Despite good First, in growth revenue continued Yusheng in results the quarter. the projects our rate as very we in we a triple-digit start X% its biggest tough the Pharma with and The by January talked delivery pharma first segment this on about February -- maintaining first was and quarter year.

rate addition we strong the have In current of good growth to into the quarter, growth for in the segment visibility future. Pharma maintained

continues talked and period the to of last mentioned we X, this pharma same signed Yusheng with compared year As the grow our first to backlog during XX% year. Page contracts new up on about quarter

resilience March testing to growth, we quarter the in-hospital a patient our February that taking growth with a our and period X% very year-over-year whole positive business, For showed pleased the start segment. despite for challenging in and in growth are strong January

win in continue to major We April. tenders

on we're strong for So that footing segment a forward going as well.

profit gross amortization growth Gross non-GAAP in leading. then profit our year. year-over-year, gross We strong industry gross quarter and depreciation down line. and the XX% And moving which at is XX.X% profit believe profit grew with margin, excludes to the first this

We for saving have gains initiatives. additional execute visibility our into we gross profit on as the margin cost medium-term

as our that the years have and even in seen So you climbed a past aim climb have that road steadily we to well. the gross margin further over profit bit the down

to The trend and demonstrate operating quarter the expenses our and programs lines. to of middle improving line sequentially operating from marketing efficiency. improvement Total marketing down sales very trended came efficiency expenses largest that expenses moving the and declining XX% operating Yusheng executed line, dropped Now sales this efficiency. down earlier. important that the is as previous and XXXX which gain as we we alluded since This our of on continues

marketing and expenses one industry. of revenues most the at this first XX% the operator in efficient stood making quarter us sales a Importantly, in percentage as our year, of

were XXs and or expenses While a above marketing probably sales even on of in published peers, data. higher our based range

revenues. initiatives with execute in corporate resilience as are XX% So our P&L three, strive strength; breakeven profit and to BioPharma of growth. our this top quarter in-hospital number quarter for points; line we takeaway marketing efficiency maintain three in line two, towards led and and continuous year-over-year our number gross high year; mostly sales by this growth momentum top at above selling and up the first the our of one, goals growth, from XX% strong number We

guidance. top line previous growth our XXXX. We reiterate XX% in XXXX to versus guidance on of Moving

Page from our to unchanged talks projection about results. on previous X, moving which cash Then our remains runway cash balance our and

while Our burn product registration results that previous in the framework of the within development, and The investments call. commercial breakeven, early first MRD, detection, operations NMPA. quarter future the our in out rapidly is on majority our with is towards vast China's approaching we and the product from is multi-cancer our dropping losses burn set

towards and operations next the we how sufficient to discretion our we fund development. as is commercial retain given on to for balance approach cash product that Our want invest three on breakeven years, we us

to with this We and rush are our runway, raise happy any cash capital in are at stage. we not

So this financial let me update. section. to pass pipeline Joe talk our concludes to about call the the Then

Joe Zhang

Thanks, Leo.

So let's XX. to move Page

development multi-cancer in So published major QX. in this technology basically, in Annals early in -- past Engineering paper (ph) and the early well in we published as year recap clinical the itself the including detection Biomedical study milestone this early years, business a as the X-cancer achieved detection is regards several Oncology of Nature to

the detection basically, FDA as Designation also for granted product early breakthrough multi-cancer got So Device we the product.

like right as we PRESCIENT, a road map we of different basically (ph) upgraded multiple XX-cancer, trials early product published So of detection. actively named now, XX-cancer, multi-cancer there, is so early as develop mentioned lay the just PREDICT And actually already Han a version There's Oncology multi-cancer which XX Yusheng kind by earlier. and detection well the MCD in which Page X-cancer in Annals of PREVENT, far. the out the is product, development

I'm skip XX-cancer. talk XX, difference the the Page and about one the this On to X-cancer basically between going just

-- MRD Page move to let's business.

which on cancer MRD time recap play role talking curable MRD throughout the journey, early -- basically for for for multiple important Page the test MRD has a cancer So XX here, is a points very patient. of treatment as about basically,

MRD has used have. different actionable including at deescalate status. has listed here, of therapies escalate is nice treatment. also, based prognosis And for see here to guidance, a of lot stages lot utilizing it on other been it as be has a can or utility potential which MRD of can you a As Also,

MRD solution. So Page for this we XX, Burning as launched brPROPHET our basically product Rock, we called -- on

tumor the ultra-deep tumor [indiscernible] based fraction is we on the sequencing, XXX,XXXx the assay Depth and MRD XX this to and UMI estimate And solution observation and utilizing the whole error do sequencing a which tracked the this utilizing trying individual this is patient. exome construct mutation to to perform up So the based getting panel each panel and trying to personalized we're trackable for to MRD then leveraging XX as estimate brPROPHET correction ctDNA, also profiling on MRD Raw personalized status status. of

now, So different basically kind right multiple in of this cancer, XX, trial we call kind different brPROPHET. technology, on of have Page we utilizing

published cancer more As data you can will -- being in there's last as have from see till we this more different this such meetings data here, it and year's poster ASCO has different Also, will ESMO as a year year, later. AACR. -- multiple in data AACR be either

about So last we agnostic basically, meeting AACR the Page is Orlando. the utilizing there's XX, in is brPROPHET which methodology fixed patients, in positive or cancer rate. methodology tumor standard [indiscernible] this MEDAL several updates We we I just at the update XXX the listed enrolled tumor non-small compare lung study. of And the panel month look updated cell -- in here. basically versus and just presented

the operation, at on On in the which the the cancer post-operative the we look days the prognostic left middle patient, four look and orange sensitivity the at which -- highest performance showing value we at the is MRD pre-operated detection And best on the landmark showing after to we the or has sensitivity. look three bar panel, then weeks basically regards brPROPHET status. basically, timepoint, panel,

So is red which ratio a as the line. the MRD-negative, as here, is it's positive, as can if is blue is which you which shown DFS MRD shown significantly see line, from different

confidence give ratio us high see can This lot you about of as here, showing the a on reach as this data. hazard As can XX.X.

prognostic more us to gives Our which interventional further value, trying its pursue study. has technology confidence

XX is Page cancer. small cohort So another that perform basically we under gastric

in data month. this presented last also meeting We AACR

out X, this XX XX detection. with in brPROPHET for panel this enrolled Stage study, we personalized enrolled of X. gastric with actually we So XX, But about finally cancer X, patients

patients XX remaining, tumor-informed fixed the using we utilizing to all status. For the call the panel just MRD the [indiscernible] panel fixed genotyping to

you whole limited showing can methodology As a see, individualized utilizing the table, detection tumor-inform of can here exon fixed you (ph) as see brPROPHET the call-in mutation a amount reached cancer in of panel middle ctDNA with much detection the a XX they're compared it sequencing-based [indiscernible], higher sample preoperative to sensitivity is detected.

see RFS the brPROPHET. the landmark, measurement we is operation, for the after X tested patients, X on in as Kaplan-Meier XX by there on curve can And right, is here, you weeks got sample the to which this a

As there's patient actually MRD-negative of early you relapse. about can none see out -- for of negative the four relapsed. here, And recurred the and basically positive, three they're for like them

a So this basically, the lot product our which MRD brPROPHET given has of as our confidence is us of foundation technology, showing a value. MRD

multiple of Page in already listed XX, a kind mentioned being So there. trials different there's I

development-related you introduction to the So I update. regards my think product that's in concluded Thank

Yusheng Han

And please. operator, let's questions, open up for

Operator

Morgan Yan begin [Operator Please We now Instructions] question session. ahead. question-and-answer from Certainly, Alexis the a have go we from of line Stanley. will

Alexis Yan

the taking just I the the for commercialization question. on of Yusheng you, have MRD question products. a Thank

that commercialization channel via well. You as products in-hospital MRD the mentioned the started May, since early

you So of roughly wondering could also, far? I'm its that revenue hospital for of from growth, And so XX% much full color share look MRD could come how the coverage just current, example, if year the at guidance portfolio? that on more we

this for housekeeping and question. our to also like coverage, has has years, That's could either so May target, of management impacted a just performance waves probably COVID et commercialization recent far hospital many at second, any been business? And April the cetera? and How that trending share, of me. it market target five in in in And three sales terms share -- stage

Yusheng Han

question, can I to to ask first take line -- Leo. the Leo The

R&D So for easy. the is in MRD, of that terms [indiscernible] not

May, we So in that that's that. launched of proud why I'm very

MRD tenders said, large of although, hospitals. start a of I because model, the QX in-hospital We are personalized to world. base model negotiate impact have think need will only And the different I the probably that as to hospitals. we in-hospital attending one that, the in of provide still we in of revenue, in

the that year. into know go you we can half this the to So fastest a chance that hospital at win period

impact So start the will this in that's why I say QX probably that year.

main that available at If years I least think two one you our make least on of hospitals. need from wanted in-hospital at fully see MRD we the now to to in model, wave to [indiscernible]

less very than but covers years, at not -- and most targeting will drugs it in limited probably force, it can So believe chemotherapy and three cancers selection the you five therapy MRD important if with to be it combine we not to targeting look that important drugs because immunotherapy. of also

second that what’s question? So

Leo Li

Yeah.

that. Let me address

conclude haven't So it's May. our to QX out as closed recent trends, think we even premature I for about

For April, year-over-year a on compared benefit low to And there do base was no last from we surprise. year. comparisons

so track, But say, keep So we'll on then I far, April for surprises. no would is QX. monitoring

Alexis Yan

Okay. That’s clear. Thank you.

Leo Li

Alexis. you, Thank

Operator

participating. at like questions With call. would call. that, time. the there are conclude the I further no you to Thank for this conclude does That

your you, lines. disconnect You may now Thank management.

Burning Rock Biotech Limited (BNR) 30 May 232023 Q1 Earnings call transcript