Burning Rock Biotech Limited (BNR) 31 Aug 222022 Q2 Earnings call transcript

Good day and thank you for standing by. Welcome to the Burning Rock 2022 Q2 earnings conference call and webcast. At this time, all participants are in listen-only mode. After the speakers’ presentation, there will be a question and answer session. To ask a question during the session, you will need to slowly press star, one and then one on your telephone.

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historical of in and remind to events similar Litigation of operating are are Before that These call confident, by Such beyond risks, and difficult XXXX, about XXXX. to including the relate of as this statements statements which beliefs within Reform the of defined current control. you Section conditions we amended, Burning and intends, statements other like will, upon and known XX(e) can of forward-looking the Securities forward-looking which plans, involve statements conference Securities statements. be uncertainties not all Burning I’d current are target, management’s such market and meaning begin, statements. Statements factors, estimates, many terminology based Act U.S. that and Rock’s expectations expects, facts, unknown to or and are Private contains and future, that Exchange anticipates, forward-looking Rock’s as expectations, believes, Act predict are identified as of

a undertake uncertainties your Mr. information, Han. note not that is of recorded. like sir. being any or from ahead, over to now results future new to obligation except call first those conference Yusheng Forward-looking Please that I today’s update events speaker, and differ result other otherwise, go law. to under statements required does could to Please as would involve forward-looking materially Burning statements. contained risks, factors cause as statements Rock actual in any such applicable hand

in Founder of for Rock’s Burning CFO and QX you, the COO, XXXX meeting. in China and with QX was hard Today Yusheng hard lockdown Shanghai I’m conference time We in most revenue. joining completely a locked recorded Han, Despite really CTO that in-hospital Rock. of we the Beijing, year-on-year and products, and Shanghai new CEO contributed lines the our know down difficulties, these Burning call. such have terms in of we of for product Thank companies QX in April May. outside was growth growth in pharma Beijing strong May by The of a the revenue and business. and as still MRD of and increase thanks

through through Let’s business review and that the of our COO, the product and and our our the go financials. Shannon progress, go will outline Leo our lines, after will development CFO,

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strategy strongly Now we are in-hospital to leaning model. our

registration the business growth and as pharma with like selection. therapy capabilities. its replicated strong quality and profitable of trials lung, such institution the highly has technology strong call set have and [Indiscernible] initiated demands in and we panels, and We new development XXXX. strength will The both This the clear easy and needs The variable to and be business and selection of on profitable personalized clinical evidence our other a CRC cancers. continues. [indiscernible] utility therapy not making [indiscernible] MRD [indiscernible] product depends therefore be been in mature values

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to growing This pass Shannon achievement green The just Let’s is Burning of May, basically like biopharmas, in page, about that to and achieved of would is a and situation April this I about as many that columns note and was illustrate our and contribution the great. of months talk versus Shanghai pharma of Shanghai that see outline locked think are are to blue we to On XXXX I will the the strongly. Rock, value That’s in Page to to seven turn graph first contribution XXXX. value this is [indiscernible]. down really contract and we XXXX want you for the of business headquarters the totally of XXXX, contract that the the X. columns is

you thank Okay, Yusheng.

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the identify a and great patients is high ITP that population from MRD shows corner, to show control a evidence, compared corner only whole give here, that did this the the positive top group strong the the the treatment that the at XX% the benefited right, on risk utility this so from arm. not top in, we to landmark any more very zoom atezo, therapy. the On them efficacy MRD Then is see can if show left we it trial, in example this to

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of many brPROPHET have I study, a fixed the period to landmark patients doesn’t identify on point. and and of as brPROPHET. patients, of MRD in whether that was Then pretty patients the longitudinally actually negative different compared of actually panel this results Stage can top, about the brPROPHET the XXX see on key the want MR when are graph for couple in brPROPHET blue about accurately near the is you’re which is stays longitudinal in can defined briefly MEDAL who years some have sensitivity X, the brPROPHET prognosis middle Stage we this approach. the positive the repeatedly, Here study the the MRD matter then the applied personalized the true MEDAL as of patients is a across at to perfect assay graph, that on detecting. it shows minutes observed the we take panel from here, between accuracy high-risk strong separation same. so line or negative brPROPHET stage, which landmark graph power at prediction terms indicating very X We the times to cohort. prognosis are MRD practically approach identified here time think show tests, almost the In the and by contained three can as fixed you sensitivity This What validation that right cured, and see left three in the participants, that MRD follow-up, a

Page is we have talked Now early cancer, go because the directly I’ll through just part. On map about and two very MRD the road major our topic it early detection last attention skip on your let’s we XX, data already development which today program, time, XX, here. times be Page Page to this gone bring colorectal our detection Since multiple I’ll and are brief to for on XX. there updates

completed. cancer study, First, ESMO released already In we nine-cancer for to has as the nine Yusheng our is mentioned, the coming study at promising we been successfully six model expanded PROMISE short, which the cancers, cancers will and be of pilot on case showed different assay, the [indiscernible] high control Results type nine from [indiscernible]. cancers improvement Also contribution version [indiscernible] geo-accuracy. equally on data types. [indiscernible] some maintaining the compared the have sensitivity to interestingly, in of methylation, to and specificity the combine including DNA we to previous protein show tried while markers data,

in our this PROMISE next on details study to the be you to will of read [indiscernible]. the We welcome the course ESMO of performance call, share in but details the are in able

and assays cohort so can accrual It’s their QX pretty individuals. from later than progress. six-cancer which enrollment is this started synthesized here population. the China the update cancer XX,XXX me. in of also be on seeing have first participants. PREVENT is for We other PREVENT for patient a on That’s It’s that studies early Unlike prospective performance and detection before, good are other study. designed The we kind study symptom-free study our of study tested done a conducted in nine-cancer the both in all all greater this

our financials. to through turn our walk Leo? I’ll Leo CFO, to you Now

Great, thanks Shannon.

the start XX. Let’s move Page onto we’ll and with financials,

and what Yusheng For the the our other factors are underlying second look in We as two go volume we our to we question that address we the two, quarter, going on to so clarity COVID In things tried two is trends following had, better underlying mentioned in on. impacts, the separate impact volume number to earlier, had words, assume eventually two our growth China, if COVID provide would to like. one, trends. momentum, away that trends, pages, number going trying we

supported a for brief wreaked quarter. havoc locked in than in It China two data, indicated If heavily a metropolitans look months, and held all, that was lockdowns. China year-over-year was down the was with [indiscernible] quarter granularity over recap had channel. COVID the this down okay, volume and second products, our that in-hospital across by Shanghai in-hospital of second other time was we more - closures is volumes. provide Shanghai generally varying at large Page further had and their been up we First generally MRD. or impacts. had on shut peer of in anecdotal XX, multiple for Central were industry on peers Then during down there the Beijing and new data the trends school particularly lockdowns, frontline and regions so channel our partial as the our large different impacted lab on COVID

by we up-trend and to our it MRD launch we lab March, quarter, a left, that our the second in central channel through this China. volumes for good continued see [indiscernible] central momentum see the to lab in the on On as physician very generate industry for better supported market MRD started pick-up

markets side, and For us, in-hospital, and as were shown impacted. for these Shanghai heavily on represent Beijing the large right-hand

we regions for very Beijing July are second the quarter. digits Our small, was COVID apart but the to where here very Shanghai in-hospital shows regions out that channel, by try show to to We that breaking regions partial the double those and grow good and strong and normal. in grew from we throughout impact not other latest print for was back month there recovery, manage we did

depressed could a have testing we COVID oncology at cliff revenues quarter, line, Page worry total there financials the our first on top line. revenues, were our seen for example basis. in and XX, COVID revenues sequential related forward. recognized up lab X% second as in and studies, it’s of disproportionately the don’t project in-hospital heavily on from impact studies the our the but large The onto to An we other build down testing make in March to weighed revenues, on pharma of pharma continues peers, basis progress overall top to were clinical in actually we revenue it year-over-year starting sequential revenues don’t executed it or that lumpiness across X% the so strong our backlog launched customers so line X% pharma that quarter. year-over-year, drove continued on be revenues in-hospital, up those the quarter, about Because be we could aside, second up in revenues fruit we on there cities despite impacts MRD nicely, COVID of Shanghai, COVID on on our was so bear have various of from any quarter central or pharma the as XXX% so sequential pharma to growth Page XX% going second quarter, since growth. compared Other represented down over so a over our which revenues quarter China. our in are lumpiness slightly and to some to than shown moving Now go studies precision The a overall impacts to was U.S. top all able decline the revenues X, in have we as is or as time, contributions and backlog been have previously the the is build, first of are meaningful pharma dependent generally a client our

our depreciation the excludes margins, XX% margin, first in We profit our GP non-GAAP and our margin at stable. gross amortization, on GP non-GAAP is Looking second a generally on basis which quarter. margin did

and first early due brought efficiency, focused operating the more expenses, core detection. are our reduced or expenses. on R&D on operating projects we our maintenance higher we also clinical quarter becoming our slowdowns spend focus our non-core continuing to Separately, have line, are to as moving i.e. put study-related enrolment in on on R&D COVID second we Now down

component headcount line, marketing moving the sales here. Now onto our biggest the is and

the out have starting As in The remarks, we program of higher was an in to achieve the the efficiency optimization this headcount second strived was organization we and as be testing one-off involved organization Yusheng mentioned year previous sequential called both year-over-year of we as lumpy, patient a our oncology of out improve the his result business, however, sales as we for sales and that quarter. quarters, forward. appeared efficiency trending June carried numbers quarter, the the costs down for during and and but so in on or were should there down should restructuring basis, the direction move travel second

a underlying mentioned and G&A G&A strategy; converting on strong of just on so from, Now operating also two, therefore the recently The generally COVID place, COVID the announced the lockdowns, trend is headcount, ramp; Then component, we our in-hospital does number there are still significantly which through couple remains projects or if momentum line, the items gains efficiencies--or focus this out market to on we trend the operating pharma guidance operating large-scale however, COVID has well, to biggest lockdowns very in current lingering three, few our over as our will in as strong China a about policy COVID, revenue, retain our MRD before, our and fluid that volume the have were situation that and year us the one, expect moving incurred to we risk. our down is number share started cities Zero point over we expenses full quarter. days. our forecast higher backlog one-off call we in as onto guidance, so the component do biggest number COVID putting our so past not that and down we coming If a to for business the and believe for on second on we is talking sequential impact of we make the we have time. basis that’s that. not revenues; do We negative the to try will see worsen a efficiency

on balance to our the page with will longest for Lastly, our cash or mention the so strength supports We well, open largest our investments healthy to second questions. runway the billion happy I Question-and-Answer this here development have cash the this outflow of end as show us our cash of is as the and balance. want so we early $XXX us in quarter, which cash operating RMB Session the we’re balance and beyond million. the US our balance happy cash making we in and believe We long we also remarks, of concludes prepared detection, a industry, efforts X.XX are into product cash industry. provide believe That next two term into years,

coming open. the phone have [Operator Please Please the question your of a from your ask Max from question from is Cowen. is line instructions] stand We line line. The by. question, Masucci

keep maintaining Stephanie taking Max. gives the start you for and the in confidence speak in baked there upside are second for full questions. What any year Thanks and Hi, revenue drivers half XXXX year? Leo, guidance, any this of mind? in key this to off, to you for the is To can some sources on of potential assumptions my

a just and guidance much would COVID, second did when was we remains for back, If those say gains our normal I pent-up Shanghai and full confident from and in buffer MRD if and aside, for our we still the factor the in year. are no impact, but quarter, from guidance, the year, underlying will we the underlying the we were from I are when to additional other so made leave COVID growth with. have Apart the of to some we if from have this towards there. is don’t pretty we we start in one think based we number COVID get COVID, are that on that pharma conservative up so from going of strong guidance take COVID the hospital that confident getting there start forward, drop the saw back demand used we trends so we Yes, come any about large buffer outbreaks

color Got You more color what Shanghai can you tested, as That’s like? sharing lockdowns, revenue? on you mind much your it, give mentioned could that return make Beijing some you on understood. demand patients give can of share--do if currently and and the some up Any pent-up look following to us and helpful. Beijing get Shanghai there. you Then then total more how

Yes, they they half mean, up make up--I for the volumes. than more share, make lion’s in-hospital the in-hospital, our of

there volume back return, the will volume, we if is to patients of lot outside going reads and and keep yet quarter provide we have continue go further impact, that’s can and expect to that come in normal watch. But clarity a to Shanghai travel provide is forward. Beijing, For so catch something We so do about latest yet. July from presentation and the the able to they been Shanghai not Beijing a represent patients that of as trends with, significant and we a to if roughly there possible have up portion, in try to overall no into they’re speaking, as we seen improving back, over to regions much full but time

consensus could in catalysts near further MRD following great its any hear launch well thanks If your to to it, expect we of in physicians. and view When uptick that consensus as for Chinese adoption? cancer, keep in test squeeze there I the for to could drive a among MRD it’s MRD cancer one more, the as in lung similar that colorectal Got are for the should March, mind color. midterm view of

prognosis but we of I on the the actively happen, so the that are the have can cancer, the consensus community, the reached. been discussion should when MRD among has going itself in how optimistic is that for in pretty going think clinician of brought I future, colorectal precisely to--they are to awareness and people CIRCULATE-Japan, predict studies the consensus fully being there from can have--going the it’s are conferences comment now so all so-what to exact right results now the be up Yes, for they the lot focused been DYNAMIC, terms the MRD in the community MRD question. I interventional multiple catch among clinicians very ultimate that discussed these we attention of have I are the say can’t aren’t the cancer that usage. waiting just the consensus people of the a colorectal about is and the waiting studies, prediction whether lung anticipating upcoming near think their to to community see the convinced terms part resolve Then example with because MRD, but can of

MRD CIRCULATE-Japan answer to pretty has I studies and designed so results think those the exciting. the and and are DYNAMIC far promising very very from the [indiscernible] questions, the showing well DYNAMIC viewed as study been

the of MRD potential in the results, factor years, readouts have into is continue they will push example be MERMAID-X would study it to community. Also, for drug a studies strong positive think embed AstraZeneca. their another these studies, their couple investment if I pharmaceutical of companies’ next adoption for MRD and to the from the show very MERMAID-X,

MRD view utility would those [indiscernible]. think the critical so of very and be in from those embedded design, terms I had results the on their in MRD trials people’s

it. Thanks that much, so for Got color. Shannon,

this quick pharma does guidance when contemplate your the first guidance on year, the uptick range? in you revenues the one guide, that in set Just half of one

strong previously been has I this industry, our has about but and going us progress our Yes, that as that pharma outperformance of factor so on the say to been build, far internal well. provide in the runway happy think that beating been track the that or and I peers there. so would It forward backlog, visibility we’re across has further built already should year, continues on with so a slightly the forecasts

my it, understood. so Thanks Got all taking much for questions.

Stephanie. you Thank

further Thank End have Leo. to back please I to Q&A questions ahead. conference hand We no time. you, this the of go at

please questions, your if earnings do and to come back call our you everybody very any Thanks us. for today, Thanks have much time. attending for

participating. today’s gentlemen, conference Thank for Ladies concludes call. and this you

now Thank may lines. disconnect You your you.