Burning Rock Reports Fourth Quarter and Full Year 2023 Financial Results

Original from: GlobeNewswire

Burning Rock Biotech Limited (NASDAQ: BNR and LSE: 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 and the year ended December 31, 2023.

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2023 Business Overview and Recent Updates 

·    Corporate Updates

    - Completed profitability-driven organizational optimization, execution towards profitability well underway

·    Early Detection

    - Following the Breakthrough Device Designation granted by the US Food and Drug Administration (FDA) for our OverC™ Multi-Cancer Detection Blood Test (MCDBT) in January 2023, our OverC™ MCDBT also received the Breakthrough Device Designation by China’s National Medical Products Administration (NMPA) in October 2023, making it the only test globally that has received Breakthrough Device Designation from both the FDA and the NMPA.

·    Therapy Selection and Minimal Residual Disease (MRD)

    - Precision oncology diagnostics product supports advancement in late-stage breast cancer treatment, with results published in the New England Journal of Medicine in June 2023. The study, CAPItello-291, sponsored by our pharma client AstraZeneca, is a phase 3 trial that assessed the efficacy and safety of Capivasertib–fulvestrant therapy in advanced breast cancer patients with hormone receptor positive (HR+), human epidermal growth factor receptor 2 negative (HER2-) cancer whose disease has progressed during or after aromatase inhibitor therapy. The study demonstrates that Capivasertib–fulvestrant combination therapy results in significantly longer progression-free survival than treatment with fulvestrant alone.

·    Pharma Services

    - New companion diagnostics (CDx) development for breast and prostatic cancer announced with AstraZeneca in China.

    - Entered into a Master Service Agreement in Oncology Companion Diagnostics (CDx) with Boehringer Ingelheim, focusing on advancing the clinical trials related to Boehringer Ingelheim's MDM2-p53 antagonist, brigimadlin (BI 907828), and the development of CDx products in China.

    - Total value of new contracts entered into during 2023 amounted to RMB310 million, representing a 24% increase from 2022.

Fourth Quarter 2023 Financial Results

Revenues were RMB121.1 million (US$17.1 million) for the three months ended December 31, 2023, representing a 14.9% decrease from RMB142.2 million for the same period in 2022.

·    Revenue generated from central laboratory business was RMB51.3 million (US$7.2 million) for the three months ended December 31, 2023, representing a 28.7% decrease from RMB72.0 million for the same period in 2022, primarily attributable to a decrease in the number of tests, as we continued to focus on our in-hospital business.

·    Revenue generated from in-hospital business was RMB28.8 million (US$4.1 million) for the three months ended December 31, 2023, representing a 32.3% decrease from RMB42.5 million for the same period in 2022, primarily attributable to one-off adjustment with two hospitals. Exclude such two, revenue generated from in-hospital business for the three months ended December 31, 2023 would have remained relatively stable (decreasing by 1%) year-over-year.

·    Revenue generated from pharma research and development services was RMB41.0 million (US$5.8 million) for the three months ended December 31, 2023, representing a 47.8% increase from RMB27.7 million for the same period in 2022, primarily attributable to increased development and testing services performed for our pharma customers.

Cost of revenues remained relatively stable at RMB43.0 million (US$6.1 million) for the three months ended December 31, 2023, compared to RMB41.0 million for the same period in 2022.

Gross profit was RMB78.1 million (US$11.0 million) for the three months ended December 31, 2023, representing a 22.9% decrease from RMB101.3 million for the same period in 2022. Gross margin was 64.5% for the three months ended December 31, 2023, compared to 71.2% for the same period in 2022. By channel, gross margin of central laboratory business was 81.7% for the three months ended December 31, 2023, compared to 75.7% during the same period in 2022, primarily due to a decrease in inventory write down; gross margin of in-hospital business was 44.8% for the three months ended December 31, 2023, compared to 63.5% during the same period in 2022, primarily due to a decrease in revenue generated from two hospitals due to one-off adjustment. Exclude such two, gross margin of in-hospital business was 65.0% for the three months ended December 31, 2023, compared to 66.6% during the same period in 2022; gross margin of pharma research and development services was 56.9% for the three months ended December 31, 2023, compared to 71.2% during the same period of 2022, primarily due to a decrease in test volume of higher margin projects.

Non-GAAP gross profit, which excludes depreciation and amortization expenses, was RMB87.1 million (US$12.3 million) for the three months ended December 31, 2023, representing a 21.1% decrease from RMB110.4 million for the same period in 2022. Non-GAAP gross margin was 71.9% for the three months ended December 31, 2023, compared to 77.6% for the same period in 2022.

Operating expenses were RMB244.4 million (US$34.4 million) for the three months ended December 31, 2023, representing a 23.3% decrease from RMB318.7 million for the same period in 2022. The decrease was primarily driven by budget control measures, including headcount reduction, to improve our operating efficiency.

·    Research and development expenses were RMB73.1 million (US$10.3 million) for the three months ended December 31, 2023, representing an 27.5% decrease from RMB100.8 million for the same period in 2022, primarily due to (i) a decrease in the expenditure for detection research, and (ii) a decrease in staff cost resulted from the reorganization of our research and development department to improve operating efficiency.

·    Selling and marketing expenses were RMB49.8 million (US$7.0 million) for the three months ended December 31, 2023, representing a 41.5% decrease from RMB85.2 million for the same period in 2022, primarily due to (i) a decrease in staff cost resulted from the reorganization of our sales department to improve operating efficiency, and (ii) a decrease in marketing and conference fee.

·    General and administrative expenses were RMB121.5 million (US$17.1 million) for the three months ended December 31, 2023, representing a 8.4% decrease from RMB132.7 million for the same period in 2022, primarily due to a decrease in professional service fee.

Net loss was RMB162.2 million (US$22.8 million) for the three months ended December 31, 2023, compared to RMB216.2 million for the same period in 2022.

Cash, cash equivalents, restricted cash were RMB615.2 million (US$86.7 million) as of December 31, 2023.

Full Year 2023 Financial Results

Revenues were RMB537.4 million (US$75.7 million) for 2023, representing a 4.6% decrease from RMB563.2 million for 2022.

·    Revenue generated from central laboratory business was RMB232.8 million (US$32.8 million) for 2023, representing a 26.0% decrease from RMB314.8 million for 2022, primarily attributable to a decrease in the number of tests, as we continued to focus on our in-hospital business.

·    Revenue generated from in-hospital business was RMB188.7 million (US$26.6 million) for 2023, representing a 7.6% increase from RMB175.3 million for 2022, primarily due to demand from ten new contracted partner hospitals added to the Company’s in-hospital channel in 2023.

·    Revenue generated from pharma research and development services was RMB115.9 million (US$16.3 million) for 2023, representing a 58.4% increase from RMB73.2 million for 2022, primarily attributable to increased development and testing services performed for our pharma customers.

Cost of revenues was RMB174.2 million (US$24.5 million) for 2023, representing a 4.9% decrease from RMB183.2 million for 2022, primarily due to a decrease in cost of revenues for our central lab business, as we continued to focus on our in-hospital business.

Gross profit was RMB363.2 million (US$51.2 million) for 2023, representing a 4.4% decrease from RMB380.0 million for 2022. Gross margin increased to 67.6% for 2023 from 67.5% for 2022.

Non-GAAP gross profit, which excludes depreciation and amortization expenses, was RMB399.4 million (US$56.3 million) for 2023, representing a 2.8% decrease from RMB411.0 million for 2022. Non-GAAP gross margin was 74.3% for 2023, compared to 73.0% for 2022.

Operating expenses were RMB1,032.5 million (US$145.4 million) for 2023, representing a 24.1% decrease from RMB1,360.4 million for 2022.

·    Research and development expenses were RMB347.0 million (US$48.9 million) for 2023, representing a 17.7% decrease from RMB421.9 million for 2022, primarily due to (i) a decrease in the expenditure for detection research, (ii) a decrease in royalty and license fee, and (iii) a decrease in staff cost resulted from the reorganization of our research and development department to improve operating efficiency.

·    Selling and marketing expenses were RMB247.7 million (US$34.9 million) for 2023, representing a 33.1% decrease from RMB370.3 million for 2022, primarily due to (i) a decrease in staff cost resulted from the reorganization of our sales department to improve operating efficiency, (ii) a decrease in marketing and conference fee; and (iii) a decrease in entertainment fee.

·    General and administrative expenses were RMB437.8 million (US$61.7 million) for 2023, representing a 23.0% decrease from RMB568.3 million for 2022, primarily due to (i) a decrease in professional service fee; (ii) a decrease in allowance for doubtful accounts resulting from accelerated settlement with customers with long aging accounts receivable; and (iii) a decrease in staff cost resulted from the reorganization of our general and administrative department to improve operating efficiency.

Net loss was RMB653.7 million (US$92.1 million) for 2023, compared to RMB971.2 million for 2022.

2024 Financial Guidance

We currently expect to achieve breakeven (measured by non-GAAP gross profit minus non-GAAP SG&A) in the first half of 2024.

Non-GAAP gross profit refers to gross profit excluding depreciation and amortization. Non-GAAP SG&A refers to selling and marketing expenses and general and administrative expenses, both excluding their respective share-based compensation and depreciation and amortization.

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Source: Burning Rock Reports Fourth Quarter and Full Year 2023 Financial Results