Burning Rock Biotech Limited 6K Burning Rock Reports Third Quarter 2024 Financial Results | BNR 4 Dec 24

Exhibit 99.1

Burning Rock Reports Third Quarter 2024 Financial Results

GUANGZHOU, China, December 4, 2024—Burning Rock Biotech Limited (NASDAQ: BNR, the “Company” or “Burning Rock”), a company focused on the application of next generation sequencing (NGS) technology in the field of precision oncology, today reported financial results for the three months ended September 30, 2024.

Recent Business Updates

•

Therapy Selection

•

Presented study results at the 2024 World Conference on Lung Cancer in September 2024. “Neoadjuvant sintilimab plus chemotherapy could be an optional treatment modality in selected EGFR-mutant NSCLC” and “Distinct Genomic and Immune Microenvironment Features of Solid or Micropapillary Predominant Subtype in Stage I Lung Adenocarcinomas”.

•

Signed a strategic cooperation agreement with MGI Tech Co., Ltd in October 2024, aiming to fully complement each other’s platform and technological advantages to further promote the clinical application progress and global business of precision oncology.

•

Pharma Services

•

The companion diagnostic (CDx) for EGFR exon 20 insertion mutation (exon20ins) for sunvozertinib, developed through the collaboration of Burning Rock and Dizal, has been approved by the National Medical Products Administration (NMPA) of China, which marks the first co-developed NGS-based CDx for lung cancer approved by NMPA since the release of the CDx guideline in China.

Third Quarter 2024 Financial Results

Total revenues were RMB128.6 million (US$18.3 million) for the three months ended September 30, 2024, representing a 0.8% increase from RMB127.6 million for the same period in 2023, the increased revenue of in-hospital business was offset by the decrease of central-lab business, as we transition from central-lab to more in-hospital based testing.

•

Revenue generated from in-hospital business was RMB63.8 million (US$9.1 million) for the three months ended September 30, 2024, representing a 17.0% increase from RMB54.5 million for the same period in 2023, driven by an increase in sales volume.

•

Revenue generated from central laboratory business was RMB40.0 million (US$5.7 million) for the three months ended September 30, 2024, representing a 25.2% decrease from RMB53.5 million for the same period in 2023, primarily attributable to a decrease in the number of tests, as we continued our transition towards in-hospital testing.

•

Revenue generated from pharma research and development services was RMB24.9 million (US$3.5 million) for the three months ended September 30, 2024, representing a 27.1% increase from RMB19.6 million for the same period in 2023, primarily attributable to an increased development and testing services performed for our pharma customers.

Cost of revenues was RMB36.8 million (US$5.2 million) for the three months ended September 30, 2024, representing an 11.6% decrease from RMB41.6 million for the same period in 2023, primarily due to (i) a decrease in cost of central laboratory business, which was in line with the decrease in revenue generated from this business; (ii) a decrease in amortization expense for all kinds of business; and (iii) the receipt of a government grant for Guangzhou headquarters building.

Gross profit was RMB91.8 million (US$13.1 million) for the three months ended September 30, 2024, representing a 6.9% increase from RMB85.9 million for the same period in 2023. Gross margin was 71.4% for the three months ended September 30, 2024, compared to 67.4% for the same period in 2023. By channel, gross margin of central laboratory business was 83.2% for the three months ended September 30, 2024, compared to 77.6% during the same period in 2023, primarily due to the decreased depreciation and rental cost in relation to our laboratory of Guangzhou headquarters; gross margin of in-hospital business was 73.0% for the three months ended September 30, 2024, compared to 65.1% during the same period in 2023, primarily due to the same reason; gross margin of pharma research and development services was 48.2% for the three months ended September 30, 2024, compared to 45.8% during the same period of 2023.

Non-GAAP gross profit, which excludes depreciation and amortization expenses, was RMB97.8 million (US$13.9million) for the three months ended September 30, 2024, representing a 2.8% increase from RMB95.1 million for the same period in 2023. Non-GAAP gross margin was 76.0% for the three months ended September 30, 2024, compared to 74.5% for the same period in 2023.

Operating expenses were RMB130.4 million (US$18.6 million) for the three months ended September 30, 2024, representing a 50.7% decrease from RMB264.7 million for the same period in 2023. The decrease was primarily driven by decreases in amortized expense on share-based compensation, budget control measures and headcount reduction to improve the Company’s operating efficiency.

•

Research and development expenses were RMB49.2 million (US$7.0 million) for the three months ended September 30, 2024, representing a 41.3% decrease from RMB83.7 million for the same period in 2023, primarily due to (i) a decrease in staff cost resulted from the reorganization of our research and development department to improve operating efficiency; (ii) a decrease in the expenditure for research projects; (iii) a decrease in amortized expense on share-based compensation; and (iv) a decrease in amortized expenses for office building decoration.

•

Selling and marketing expenses were RMB48.4 million (US$6.9 million) for the three months ended September 30, 2024, representing a 22.3% decrease from RMB62.3 million for the same period in 2023, primarily due to (i) a decrease in staff cost resulted from the reorganization of the sales department and improvement in operating efficiency; (ii) a decrease in conference fee; and (iii) a decrease in entertainment expense.

•

General and administrative expenses were RMB32.9 million (US$4.7 million) for the three months ended September 30, 2024, representing a 72.3% decrease from RMB118.7 million for the same period in 2023, primarily due to (i) a decrease in amortized expense on share-based compensation; (ii) a decrease in amortized expenses for office building decoration; (iii) a decrease in operating lease; and (iv) a decrease in general and administrative personnel’s staff cost.

Net loss was RMB35.7 million (US$5.10 million) for the three months ended September 30, 2024, compared to RMB175.0 million for the same period in 2023.

Cash, cash equivalents, restricted cash and short-term investments were RMB498.2 million (US$71.0 million) as of September 30, 2024.

About Burning Rock

Burning Rock Biotech Limited (NASDAQ: BNR), whose mission is to guard life via science, focuses on the application of next generation sequencing (NGS) technology in the field of precision oncology. Its business consists of i) NGS-based therapy selection testing for late-stage cancer patients, and ii) cancer early detection, which has moved beyond proof-of-concept R&D into the clinical validation stage.

For more information about Burning Rock, please visit: ir.brbiotech.com.

Safe Harbor Statement

This press release contains forward-looking statements. These statements constitute “forward-looking” statements within the meaning of Section 21E 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,” “target,” “confident” and similar statements. Burning Rock may also make written or oral forward-looking statements in its periodic reports to the SEC, in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including statements about Burning Rock’s beliefs and expectations, are forward-looking statements. Such statements are based upon management’s current expectations and current market and operating conditions, and relate to events that involve known or unknown risks, uncertainties and other factors, all of which are difficult to predict and many of which are beyond Burning Rock’s control. Forward-looking statements involve risks, uncertainties and other factors that could cause actual results to differ materially from those contained in any such statements. All information provided in this press release is as of the date of this press release, and Burning Rock does not undertake any obligation to update any forward-looking statement as a result of new information, future events or otherwise, except as required under applicable law.

Non-GAAP Measures

In evaluating the business, the Company considers and uses non-GAAP measures, such as non-GAAP gross profit and non-GAAP gross margin, as supplemental measures to review and assess operating performance. The presentation of these non-GAAP financial measures is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The company defines non-GAAP gross profit as gross profit excluding depreciation and amortization. The company defines non-GAAP gross margin as gross margin excluding depreciation and amortization.

The company presents these non-GAAP financial measures because they are used by management to evaluate operating performance and formulate business plans. The company believe non-GAAP gross profit and non-GAAP gross margin excluding non-cash impact of depreciation and amortization reflect the company’s ongoing business operations in a manner that allows more meaningful period-to-period comparisons.

Contact: IR@brbiotech.com

Selected Operating Data


	As of
	September 30, 2023		December 31, 2023		March 31, 2024		June 30, 2024		September 30, 2024
In-hospital Channel:
Pipeline partner hospitals⁽¹⁾		29		28		28		29		30
Contracted partner hospitals⁽²⁾		55		59		59		59		61
Total number of partner hospitals		84		87		87		88		91

⁽¹⁾	Refers to hospitals that are in the process of establishing in-hospital laboratories, laboratory equipment procurement or installation, staff training or pilot testing using the Company’s products.

⁽²⁾	Refers to hospitals that have entered into contracts to purchase the Company’s products for use on a recurring basis in their respective in-hospital laboratories the Company helped them establish. Kit revenue is generated from contracted hospitals.

Selected Financial Data


	For the three months ended
Revenues	September 30, 2023		December 31, 2023		March 31, 2024		June 30, 2024		September 30, 2024
	(RMB in thousands)
Central laboratory channel		53,481		51,288		47,614		48,773		39,984
In-hospital channel		54,496		28,809		57,387		59,872		63,769
Pharma research and development channel		19,589		40,988		20,622		26,888		24,891
Total revenues		127,566		121,085		125,623		135,533		128,644

	For the three months ended
Gross profit	September 30, 2023		December 31, 2023		March 31, 2024		June 30, 2024		September 30, 2024
	(RMB in thousands)
Central laboratory channel		41,487		41,886		37,002		38,424		33,262
In-hospital channel		35,459		12,910		39,192		44,058		46,580
Pharma research and development channel		8,974		23,317		9,500		12,956		12,004
Total gross profit		85,920		78,113		85,694		95,438		91,846

	For the three months ended
Share-based compensation expenses	September 30, 2023		December 31, 2023		March 31, 2024		June 30, 2024		September 30, 2024
	(RMB in thousands)
Cost of revenues		680		654		596		464		289
Research and development expenses		12,161		12,401		12,287		12,008		3,180
Selling and marketing expenses		2,848		1,816		508		1,232		1,917
General and administrative expenses		57,704		56,472		55,990		54,407		4,732
Total share-based compensation expenses		73,393		71,343		69,381		68,111		10,118

Burning Rock Biotech Limited

Unaudited Condensed Statements of Comprehensive Loss

(in thousands, except for number of shares and per share data)


	For the three months ended
	September 30, 2023			December 31, 2023			March 31, 2024			June 30, 2024			September 30, 2024			September 30, 2024
	RMB			RMB			RMB			RMB			RMB			US$
Revenues		127,566			121,085			125,623			135,533			128,644			18,331
Cost of revenues		(41,646	)		(42,972	)		(39,929	)		(40,095	)		(36,798	)		(5,243	)

Gross profit		85,920			78,113			85,694			95,438			91,846			13,088
Operating expenses:
Research and development expenses		(83,701	)		(73,119	)		(65,985	)		(64,952	)		(49,150	)		(7,004	)
Selling and marketing expenses		(62,310	)		(49,785	)		(46,856	)		(48,907	)		(48,411	)		(6,899	)
General and administrative expenses		(118,724	)		(121,533	)		(98,681	)		(92,794	)		(32,874	)		(4,685	)

Total operating expenses		(264,735	)		(244,437	)		(211,522	)		(206,653	)		(130,435	)		(18,588	)

Loss from operations		(178,815	)		(166,324	)		(125,828	)		(111,215	)		(38,589	)		(5,500	)
Interest income		4,018			5,539			4,038			3,187			3,173			452
Other income (expense), net		(157	)		160			434			(82	)		1			—
Foreign exchange (loss) gain, net		423			(517	)		(13	)		262			(129	)		(18	)

Loss before income tax		(174,531	)		(161,142	)		(121,369	)		(107,848	)		(35,544	)		(5,066	)
Income tax expenses		(450	)		(1,071	)		(180	)		(190	)		(201	)		(29	)

Net loss		(174,981	)		(162,213	)		(121,549	)		(108,038	)		(35,745	)		(5,095	)

Net loss attributable to Burning Rock Biotech Limited’s shareholders		(174,981	)		(162,213	)		(121,549	)		(108,038	)		(35,745	)		(5,095	)
Net loss attributable to ordinary shareholders		(174,981	)		(162,213	)		(121,549	)		(108,038	)		(35,745	)		(5,095	)
Loss per share for class A and class B ordinary shares:
Class A ordinary shares - basic and diluted		(1.71	)		(1.58	)		(1.19	)		(1.05	)		(0.35	)		(0.05	)
Class B ordinary shares - basic and diluted		(1.71	)		(1.58	)		(1.19	)		(1.05	)		(0.35	)		(0.05	)
Weighted average shares outstanding used in loss per share computation:
Class A ordinary shares - basic and diluted		85,000,869			85,071,360			85,219,188			85,271,858			85,902,670			85,902,670
Class B ordinary shares - basic and diluted		17,324,848			17,324,848			17,324,848			17,324,848			17,324,848			17,324,848
Other comprehensive income (loss), net of tax of nil:
Foreign currency translation adjustments		(1,955	)		(3,026	)		590			940			(4,054	)		(578	)
Total comprehensive loss		(176,936	)		(165,239	)		(120,959	)		(107,098	)		(39,799	)		(5,673	)
Total comprehensive loss attributable to Burning Rock Biotech Limited’s shareholders		(176,936	)		(165,239	)		(120,959	)		(107,098	)		(39,799	)		(5,673	)

Burning Rock Biotech Limited

Unaudited Condensed Statements of Comprehensive Loss

(in thousands, except for number of shares and per share data)


	For the nine months ended
	September 30, 2023			September 30, 2024			September 30, 2024
	RMB			RMB			US$
Revenues		416,350			389,800			55,546
Cost of revenues		(131,236	)		(116,822	)		(16,648	)

Gross profit		285,114			272,978			38,898
Operating expenses:
Research and development expenses		(273,897	)		(180,087	)		(25,662	)
Selling and marketing expenses		(197,926	)		(144,174	)		(20,545	)
General and administrative expenses		(316,288	)		(224,349	)		(31,969	)

Total operating expenses		(788,111	)		(548,610	)		(78,176	)

Loss from operations		(502,997	)		(275,632	)		(39,278	)
Interest income		12,417			10,398			1,482
Other income, net		324			353			50
Foreign exchange gain, net		97			120			17

Loss before income tax		(490,159	)		(264,761	)		(37,729	)
Income tax expenses		(1,317	)		(571	)		(81	)

Net loss		(491,476	)		(265,332	)		(37,810	)

Net loss attributable to Burning Rock Biotech Limited’s shareholders		(491,476	)		(265,332	)		(37,810	)
Net loss attributable to ordinary shareholders		(491,476	)		(265,332	)		(37,810	)
Loss per share for class A and class B ordinary shares:
Class A ordinary shares - basic and diluted		(4.80	)		(2.58	)		(0.37	)
Class B ordinary shares - basic and diluted		(4.80	)		(2.58	)		(0.37	)
Weighted average shares outstanding used in loss per share computation:
Class A ordinary shares - basic and diluted		85,070,921			85,467,131			85,467,131
Class B ordinary shares - basic and diluted		17,324,848			17,324,848			17,324,848
Other comprehensive income (loss), net of tax of nil:
Foreign currency translation adjustments		7,215			(2,524	)		(360	)
Total comprehensive loss		(484,261	)		(267,856	)		(38,170	)
Total comprehensive loss attributable to Burning Rock Biotech Limited’s shareholders		(484,261	)		(267,856	)		(38,170	)

Burning Rock Biotech Limited

Unaudited Condensed Consolidated Balance Sheets

(In thousands)


	As of
	December 31, 2023		September 30, 2024		September 30, 2024
	RMB		RMB		US$
ASSETS
Current assets:
Cash and cash equivalents		615,096		497,969		70,960
Restricted cash		120		278		40
Accounts receivable, net		126,858		166,491		23,725
Contract assets, net		22,748		17,750		2,529
Inventories, net		69,020		66,444		9,468
Prepayments and other current assets, net		50,254		30,623		4,364
Convertible note receivable		—		5,320		758

Total current assets		884,096		784,875		111,844

Non-current assets:
Equity method investment		337		243		35
Convertible note receivable		5,320		—		—
Property and equipment, net		131,912		90,139		12,845
Operating right-of-use assets		12,284		99,301		14,150
Intangible assets, net		964		525		75
Other non-current assets		5,088		9,722		1,385

Total non-current assets		155,905		199,930		28,490

TOTAL ASSETS		1,040,001		984,805		140,334

Burning Rock Biotech Limited

Unaudited Condensed Consolidated Balance Sheets (Continued)

(in thousands)


	As of
	December 31, 2023			September 30, 2024			September 30, 2024
	RMB			RMB			US$
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable		18,061			25,213			3,593
Deferred revenue		130,537			110,748			15,781
Accrued liabilities and other current liabilities		104,935			94,110			13,411
Customer deposits		1,197			567			81
Current portion of operating lease liabilities		8,634			27,842			3,967

Total current liabilities		263,364			258,480			36,833

Non-current liabilities:
Non-current portion of operating lease liabilities		3,690			73,055			10,410
Other non-current liabilities		4,537			5,104			728

Total non-current liabilities		8,227			78,159			11,138

TOTAL LIABILITIES		271,591			336,639			47,971

Shareholders’ equity:
Class A ordinary shares		116			118			17
Class B ordinary shares		21			21			3
Additional paid-in capital		4,849,337			4,996,947			712,059
Treasury stock		(65,896	)		(65,896	)		(9,390	)
Accumulated deficits		(3,853,635	)		(4,118,967	)		(586,948	)
Accumulated other comprehensive loss		(161,533	)		(164,057	)		(23,378	)

Total shareholders’ equity		768,410			648,166			92,363

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY		1,040,001			984,805			140,334

Burning Rock Biotech Limited

Unaudited Condensed Statements of Cash Flows

(in thousands)


	For the three months ended
	September 30, 2023			September 30, 2024			September 30, 2024
	RMB			RMB			US$
Net cash used in operating activities		(47,417	)		(30,278	)		(4,315	)
Net cash used in investing activities		(1,985	)		(987	)		(141	)
Net cash (used in)/generated from financing activities		(45,888	)		2			—
Effect of exchange rate on cash, cash equivalents and restricted cash		(1,239	)		(3,537	)		(503	)
Net decrease in cash, cash equivalents and restricted cash		(96,529	)		(34,800	)		(4,959	)
Cash, cash equivalents and restricted cash at the beginning of period		733,278			533,047			75,959
Cash, cash equivalents and restricted cash at the end of period		636,749			498,247			71,000

	For the nine months ended
	September 30, 2023			September 30, 2024			September 30, 2024
	RMB			RMB			US$
Net cash used in operating activities		(239,764	)		(111,323	)		(15,863	)
Net cash used in investing activities		(8,972	)		(3,600	)		(513	)
Net cash (used in)/generated from financing activities		(46,923	)		2			—
Effect of exchange rate on cash, cash equivalents and restricted cash		7,140			(2,048	)		(292	)
Net decrease in cash, cash equivalents and restricted cash		(288,519	)		(116,969	)		(16,668	)
Cash, cash equivalents and restricted cash at the beginning of period		925,268			615,216			87,668
Cash, cash equivalents and restricted cash at the end of period		636,749			498,247			71,000

Burning Rock Biotech Limited

Reconciliations of GAAP and Non-GAAP Results


	For the three months ended
	September 30, 2023			December 31, 2023			March 31, 2024			June 30, 2024			September 30, 2024
	(RMB in thousands)
Gross profit:
Central laboratory channel		41,487			41,886			37,002			38,424			33,262
In-hospital channel		35,459			12,910			39,192			44,058			46,580
Pharma research and development channel		8,974			23,317			9,500			12,956			12,004
Total gross profit		85,920			78,113			85,694			95,438			91,846
Add: depreciation and amortization:
Central laboratory channel		2,550			2,414			1,919			1,226			1,277
In-hospital channel		2,751			2,728			1,524			824			798
Pharma research and development channel		3,863			3,808			3,856			4,417			3,846
Total depreciation and amortization included in cost of revenues		9,164			8,950			7,299			6,467			5,921
Non-GAAP gross profit:
Central laboratory channel		44,037			44,300			38,921			39,650			34,539
In-hospital channel		38,210			15,638			40,716			44,882			47,378
Pharma research and development channel		12,837			27,125			13,356			17,373			15,850
Total non-GAAP gross profit		95,084			87,063			92,993			101,905			97,767
Non-GAAP gross margin:
Central laboratory channel		82.3	%		86.4	%		81.7	%		81.3	%		86.4	%
In-hospital channel		70.1	%		54.3	%		70.9	%		75.0	%		74.3	%
Pharma research and development channel		65.5	%		66.2	%		64.8	%		64.6	%		63.7	%
Total non-GAAP gross margin		74.5	%		71.9	%		74.0	%		75.2	%		76.0	%

Burning Rock Biotech Limited (BNR) 6-KBurning Rock Reports Third Quarter 2024 Financial Results