GlobeNewswire Inc | Mar 10, 2021 07:00PM EST

March 11, 2021

GUANGZHOU, China, March 10, 2021 (GLOBE NEWSWIRE) -- 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 and year ended December 31, 2020.

Recent Business Highlights

-- Early Detection Completed product development of the 6-cancer test (training and validation data released in November 2020 at the ESMO Asia Virtual Congress). Capacity ramp-up under way for volume production.Early access programs initiated to gather real-world feedback, with preparation in progress for commercialization (targeted for 2022). -- Therapy Selection Achieved strong performance in the FDA-led SEQC2 (sequencing quality control) consortium study on tissue-based and liquid-based targeted sequencing assays, with full results pending publication (manuscript for liquid-based study accepted by Nature Biotechnology).OncoCompassTM Target (Burning Rock's top selling liquid-based ctDNA assay, 101-gene panel including bMSI) passed typing test in Oct 2020. This places OncoCompassTM Target in a leading position for the multi-gene ctDNA NMPA1 4-stage approval process, which comprises (i) analytical validation, (ii) typing test, (iii) clinical validation, and (iv) review and approval.

Fourth Quarter 2020 Financial Results

Revenues were RMB131.7 million (US$20.2 million) for the three months ended December 31, 2020, representing a 48.5% increase from RMB88.7 million for the same period in 2019, or a 6.3% sequential increase from RMB123.9 million for the three months ended September 30, 2020. The growth in revenues was achievable despite Covid-19 related restrictions, which negatively impacted growth of testing volumes in the fourth quarter, especially in December.

-- Revenue generated from central laboratory business was RMB86.7 million (US$13.3 million) for the three months ended December 31, 2020, representing a 22.5% increase from RMB70.7 million for the same period in 2019, primarily attributable to (i) an increase in average sales price per patient, and (ii) volume growth of the central laboratory business. Number of patients tested in the central laboratory channel was 7,989 for the three months ended December 31, 2020, representing a 5.5% increase from 7,576 for the same period in 2019. -- Revenue generated from in-hospital business was RMB41.5 million (US$6.4 million) for the three months ended December 31, 2020, representing a 194.3% increase from RMB14.1 million for the same period in 2019. Number of contracted partner hospitals in the in-hospital channel increased to 29 as of December 31, 2020 from 25 as of September 30, 2020 and 19 as of December 31, 2019. -- Revenue generated from pharma research and development services was RMB3.6 million (US$0.5 million) for the three months ended December 31, 2020, representing a 7.0% decrease from RMB3.8 million for the same period in 2019, due to declined pharmaceutical testing volumes.

Cost of revenues was RMB32.6 million (US$5.0 million) for the three months ended December 31, 2020, representing a 3.4% decrease from RMB33.7 million for the same period in 2019, primarily due to economies of scale and reduced unit cost of certain reagents.

Gross profit was RMB99.2 million (US$15.2 million) for the three months ended December 31, 2020, representing an 80.4% increase from RMB55.0 million for the same period in 2019. Gross margin was 75.3% for the three months ended December 31, 2020, compared to 62.0% for the same period in 2019.

Operating expenses were RMB254.5 million (US$39.0 million) for the three months ended December 31, 2020, representing a 69.2% increase from RMB150.5 million for the same period in 2019.

-- Research and development expenses were RMB83.4 million (US$12.8 million) for the three months ended December 31, 2020, representing an 59.7% increase from RMB52.2 million for the same period in 2019, primarily due to (i) an increase in staff cost of research and development personnel, and (ii) an increase in share-based compensation expenses for options granted to research and development personnel. -- Selling and marketing expenses were RMB56.6 million (US$8.7 million) for the three months ended December 31, 2020, representing a 15.3% increase from RMB49.1 million for the same period in 2019, primarily due to an increase in staff cost of selling and marketing personnel as we continued the build-out of the sales organization. -- General and administrative expenses increased significantly to RMB114.5 million (US$17.5 million) for the three months ended December 31, 2020 from RMB49.1 million for the same period in 2019, primarily due to (i) an increase in share-based compensation expenses for options granted to general and administrative personnel, and (ii) an increase in staff cost of general and administrative personnel.

Net loss was RMB156.5 million (US$24.0 million) for the three months ended December 31, 2020, compared to RMB95.1 million for the same period in 2019.

Cash, cash equivalents, restricted cash and short-term investments were RMB2.3 billion (US$350.6 million) as of December 31, 2020.

Full Year 2020 Financial Results

Revenues were RMB429.9 million (US$65.9 million) for 2020, representing a 12.6% increase from RMB381.7 million for 2019.

-- Revenue generated from central laboratory business was RMB297.3 million (US$45.6 million) for 2020, representing a 7.6% increase from RMB276.3 million for 2019. Number of patients tested in the central laboratory channel was 25,262 for 2020, representing a 9.5% increase from 23,075 for 2019. -- Revenue generated from in-hospital business was RMB117.9 million (US$18.1 million) for 2020, representing a 34.4% increase from RMB87.7 million for 2019. Number of contracted partner hospitals in the in-hospital channel increased to 29 as of December 31, 2020 from 19 as of December 31, 2019. -- Revenue generated from pharma research and development services was RMB14.7 million (US$2.2 million) for 2020, representing a 17.2% decrease from RMB17.7 million for 2019, due to declined pharmaceutical testing volumes.

Cost of revenues was RMB116.0 million (US$17.8 million) for 2020, representing a 7.0% increase from RMB108.3 million for 2019, which was in line with the Companys continued business growth.

Gross profit was RMB313.9 million (US$48.1 million) for 2020, representing a 14.8% increase from RMB273.3 million for 2019. Gross margin was 73.0% for 2020, compared to 71.6% for 2019.

Operating expenses were RMB726.3 million (US$111.3 million) for 2020, representing a 64.2% increase from RMB442.4 million for 2019.

-- Research and development expenses were RMB263.9 million (US$40.5 million) for 2020, representing an 68.2% increase from RMB156.9 million for 2019, primarily due to (i) an increase in staff cost of research and development personnel, and (ii) an increase in share-based compensation expenses for options granted to research and development personnel. -- Selling and marketing expenses were RMB168.6 million (US$25.8 million) for 2020, representing a 9.9% increase from RMB153.3 million for 2019, primarily due to an increase in staff cost of selling and marketing personnel. -- General and administrative expenses increased significantly to RMB293.8 million (US$45.0 million) for 2020 from RMB132.2 million for 2019, primarily due to (i) an increase in share-based compensation expenses for options granted to general and administrative personnel, and (ii) an increase in staff cost of general and administrative personnel.

Net loss was RMB407.2 million (US$62.4 million) for 2020, compared to RMB169.2 million for 2019.

2021 Financial Guidance

Assuming there are no additional Covid-19 related restrictions imposed in China, which may negatively affect patient volumes and cancer testing, Burning Rock expects its full year 2021 revenues to be approximately RMB610 million (US$93.5 million), implying a 41.9% growth over full year 2020.

Conference Call Information

Burning Rock will host a conference call to discuss the fourth quarter 2020 financial results at 8:00 a.m. U.S. Eastern Time (9:00 p.m. Hong Kong time) on March 11, 2021.

Details of the conference call are as follows:

International: +65 67135090U.S.: +1 8456750437U.K.: +44 2036214779Hong Kong: +852 30186771China Mobile: 4006208038China Landline: 8008190121Conference ID: 5266945

A replay of the conference call will be available for one week (dial-in number: +61 2 8199 0299; same conference ID as shown above).

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, with the leading market share in China and over 273,000 tissue and liquid-based tests completed cumulatively, 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 Rocks beliefs and expectations, are forward-looking statements. Such statements are based upon managements 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 Rocks 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.

Selected Operating Data

For the three months ended March June September December March June September December 31, 30, 30, 2019 31, 2019 31, 30, 30, 2020 31, 2020 2019 2019 2020 2020CentralLaboratory Channel:Number ofpatients 5,336 6,047 6,769 7,576 4,680 7,252 8,644 7,989testedNumber ofordering 984 1,059 1,155 1,222 810 1,175 1,194 1,114physicians^(1)Number ofordering 249 265 281 304 232 284 289 294hospitals^(2)

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^ Represents physicians who on average order at least one test from us every(1) month during a relevant period in the central laboratory channel.^ Represents hospitals whose residing physicians who on average order at(2) least one test from us every month during a relevant period in the central laboratory channel.

As of March June September December March June September December 31, 30, 30, 2019 31, 2019 31, 30, 30, 2020 31, 2020 2019 2019 2020 2020In-hospital Channel:Pipelinepartner 17 20 21 21 23 23 22 23hospitals^(1)Contractedpartner 14 15 19 19 21 24 25 29hospitals^(2)Total numberof partner 31 35 40 40 44 47 47 52hospitals

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^ Refers to hospitals that are in the process of establishing in-hospital(1) laboratories, laboratory equipment procurement or installation, staff training or pilot testing using the Company?s products. Refers to hospitals that have entered into contracts to purchase the^ Company?s products for use on a recurring basis in their respective(2) in-hospital laboratories the Company helped them establish. Kit revenue is generated from contracted hospitals.

Selected Financial Data

For the three months ended March June September December March June September DecemberRevenues 31, 30, 30, 2019 31, 2019 31, 30, 30, 2020 31, 2020 2019 2019 2020 2020 (RMB in thousands)Centrallaboratory 72,807 63,394 69,304 70,749 46,141 74,607 89,899 86,695channelIn-hospital 26,557 16,329 30,704 14,088 17,123 27,588 31,704 41,457channelPharmaresearch and 5,101 5,090 3,716 3,838 4,065 4,776 2,278 3,570developmentchannelTotal revenues 104,465 84,813 103,724 88,675 67,329 106,971 123,881 131,722

For the three months endedGross profit March June September December March June September December 31, 30, 30, 2019 31, 2019 31, 30, 30, 2020 31, 2020 2019 2019 2020 2020 (RMB in thousands)Centrallaboratory 54,910 46,122 50,113 51,420 32,434 56,556 67,804 66,588channelIn-hospital 19,870 12,571 25,412 319 10,126 19,269 22,410 30,218channelPharmaresearch and 3,332 3,366 2,662 3,237 2,224 2,573 1,373 2,347developmentchannelTotal gross 78,112 62,059 78,187 54,976 44,784 78,398 91,587 99,153profit

For the three months endedShare-based March June March Junecompensation 31, 30, September December 31, 30, September Decemberexpenses 2019 2019 30, 2019 31, 2019 2020 2020 30, 2020 31, 2020

(RMB in thousands)Cost of revenues 143 177 180 178 176 183 160 277Research anddevelopment 722 708 1,486 6,461 2,072 25,314 10,572 11,843expensesSelling andmarketing 364 517 485 (131) 253 491 341 2,372expensesGeneral andadministrative 429 537 1,149 9,387 1,665 1,639 57,805 58,057expensesTotalshare-based 1,658 1,939 3,300 15,895 4,166 27,627 68,878 72,549compensationexpenses

Burning Rock Biotech Limited Unaudited Condensed Statements of Comprehensive (Loss) Income (in thousands, except for number of shares and per share data)

For the three months ended March 31, June 30, September December March 31, June 30, September December December 2019 2019 30, 2019 31, 2019 2020 2020 30, 2020 31, 2020 31, 2020 RMB RMB RMB RMB RMB RMB RMB RMB US$Revenues 104,465 84,813 103,724 88,675 67,329 106,971 123,881 131,722 20,187 Cost of revenues (26,353 ) (22,754 ) (25,537 ) (33,699 ) (22,545 ) (28,573 ) (32,294 ) (32,569 ) (4,991 )Gross profit 78,112 62,059 78,187 54,976 44,784 78,398 91,587 99,153 15,196 Operating expenses: Research and (31,427 ) (34,992 ) (38,278 ) (52,238 ) (40,016 ) (71,176 ) (69,330 ) (83,418 ) (12,784 )development expensesSelling and marketing (26,690 ) (34,929 ) (42,606 ) (49,109 ) (29,815 ) (37,992 ) (44,174 ) (56,606 ) (8,675 )expensesGeneral andadministrative (31,565 ) (20,614 ) (30,866 ) (49,112 ) (34,295 ) (42,272 ) (102,731 ) (114,502 ) (17,548 )expensesTotal operating (89,682 ) (90,535 ) (111,750 ) (150,459 ) (104,126 ) (151,440 ) (216,235 ) (254,526 ) (39,007 )expensesLoss from operations (11,570 ) (28,476 ) (33,563 ) (95,483 ) (59,342 ) (73,042 ) (124,648 ) (155,373 ) (23,811 )Interest income 128 3,806 3,686 3,541 3,985 44 698 1,341 206 Interest expense (4,210 ) (1,826 ) (1,650 ) (1,303 ) (1,178 ) 1,939 (776 ) (652 ) (100 )Other (expense) (176 ) (329 ) (37 ) (341 ) (151 ) 122 (176 ) (682 ) (105 )income, netForeign exchange (101 ) 1,142 800 (355 ) 611 (118 ) (2,228 ) (1,112 ) (170 )(loss) gain, netChange in fair value 64 (347 ) (1,403 ) (1,153 ) 3,503 - - - - of warrant liabilityLoss before income tax (15,865 ) (26,030 ) (32,167 ) (95,094 ) (52,572 ) (71,055 ) (127,130 ) (156,478 ) (23,980 )Income tax expenses - - - - - - - - - Net loss (15,865 ) (26,030 ) (32,167 ) (95,094 ) (52,572 ) (71,055 ) (127,130 ) (156,478 ) (23,980 )Net loss attributableto Burning Rock (15,865 ) (26,030 ) (32,167 ) (95,094 ) (52,572 ) (71,055 ) (127,130 ) (156,478 ) (23,980 )Biotech Limited?sshareholdersAccretion ofconvertible preferred (50,296 ) (41,770 ) (33,772 ) (39,173 ) (26,288 ) (38,400 ) - - - sharesNet loss attributableto ordinary (66,161 ) (67,800 ) (65,939 ) (134,267 ) (78,860 ) (109,455 ) (127,130 ) (156,478 ) (23,980 )shareholdersLoss per share: Ordinary shares - (2.86 ) (2.93 ) (2.85 ) (5.49 ) (3.15 ) (2.68 ) - - - basic and dilutedClass A ordinaryshares - basic and - - - - - - (1.22 ) (1.51 ) (0.23 )dilutedClass B ordinaryshares - basic and - - - - - - (1.22 ) (1.51 ) (0.23 )dilutedWeighted averageshares outstanding used in loss per sharecomputation:Ordinary shares - 23,167,232 23,167,232 23,167,232 24,437,444 25,031,575 40,786,167 - - - basic and dilutedClass A ordinaryshares - basic and - - - - - - 86,479,686 86,511,799 86,511,799 dilutedClass B ordinaryshares - basic and - - - - - - 17,324,848 17,324,848 17,324,848 dilutedOther comprehensive(loss) income, net of tax of nil:Foreign currencytranslation (278 ) (14,288 ) 45,317 (6,647 ) 11,422 (2,336 ) (91,093 ) (94,881 ) (14,541 )adjustmentsTotal comprehensive (16,143 ) (40,318 ) 13,150 (101,741 ) (41,150 ) (73,391 ) (218,223 ) (251,359 ) (38,521 )(loss) incomeTotal comprehensive(loss) incomeattributable to (16,143 ) (40,318 ) 13,150 (101,741 ) (41,150 ) (73,391 ) (218,223 ) (251,359 ) (38,521 )Burning Rock BiotechLimited?s shareholders

Burning Rock Biotech Limited

Unaudited Condensed Statements of Comprehensive (Loss) Income

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

For the year ended December 31, December 31, December 31, 2019 2020 2020 RMB RMB US$Revenues 381,677 429,903 65,885 Cost of revenues (108,343 ) (115,981 ) (17,775 )Gross profit 273,334 313,922 48,110 Operating expenses: Research and development expenses (156,935 ) (263,940 ) (40,451 )Selling and marketing expenses (153,334 ) (168,587 ) (25,837 )General and administrative expenses (132,157 ) (293,800 ) (45,027 )Total operating expenses (442,426 ) (726,327 ) (111,315 )Loss from operations (169,092 ) (412,405 ) (63,205 )Interest income 11,161 6,068 930 Interest expense (8,989 ) (667 ) (102 )Other expense, net (883 ) (887 ) (136 )Foreign exchange gain (loss), net 1,486 (2,847 ) (436 )Change in fair value of warrant (2,839 ) 3,503 537 liabilityLoss before income tax (169,156 ) (407,235 ) (62,412 )Income tax expenses - - - Net loss (169,156 ) (407,235 ) (62,412 )Net loss attributable to Burning (169,156 ) (407,235 ) (62,412 )Rock Biotech Limited?s shareholdersAccretion of convertible preferred (165,011 ) (64,688 ) (9,914 )sharesNet loss attributable to ordinary (334,167 ) (471,923 ) (72,326 )shareholders Loss per share for class A and classB ordinary shares: (14.23 ) - - Ordinary shares - basic and dilutedClass A ordinary shares - basic and - (6.88 ) (1.05 )dilutedClass B ordinary shares - basic and - (6.88 ) (1.05 )diluted Weighted average shares outstandingused in loss per share computation: 23,483,915 - - Ordinary shares - basic and dilutedClass A ordinary shares - basic and - 51,309,631 51,309,631 dilutedClass B ordinary shares - basic and - 17,324,848 17,324,848 diluted Other comprehensive income (loss), net of tax of nil:Foreign currency translation 24,104 (176,888 ) (27,109 )adjustmentsTotal comprehensive loss (145,052 ) (584,123 ) (89,521 )Total comprehensive loss attributable to Burning Rock Biotech (145,052 ) (584,123 ) (89,521 )Limited?s shareholders

Burning Rock Biotech Limited

Unaudited Condensed Consolidated Balance Sheets

(In thousands)

As of December December 31, December 31, 2020 31, 2019 2020 RMB RMB US$ASSETS Current assets: Cash and cash equivalents 94,235 1,895,308 290,469 Restricted cash 4,009 29,898 4,582 Short-term investment 313,988 362,132 55,499 Accounts receivable 88,822 88,218 13,520 Contract assets 909 22,534 3,453 Amounts due from related parties 74,368 212 32 Inventories 58,116 68,021 10,425 Prepayments and other current 72,340 57,329 8,789 assetsTotal current assets 706,787 2,523,652 386,769 Non-current assets: Equity method investment 1,790 1,417 217 Long-term investment 38,369 - - Property and equipment, net 89,314 111,481 17,085 Intangible assets, net 343 3,457 530 Other non-current assets 10,954 23,021 3,528 Total non-current assets 140,770 139,376 21,360 TOTAL ASSETS 847,557 2,663,028 408,129

Burning Rock Biotech Limited

Unaudited Condensed Consolidated Balance Sheets (Continued)

(in thousands)

As of December December 31, December 31, 2020 31, 2019 2020 RMB RMB US$LIABILITIES, MEZZANINE EQUITY AND SHAREHOLDERS? (DEFICIT) EQUITYCurrent liabilities: Accounts payable 12,348 35,482 5,438 Deferred revenue 49,539 74,402 11,403 Capital lease obligations, current 4,893 4,816 738 Accrued liabilities and other current 54,059 83,648 12,820 liabilitiesCustomer deposits 4,104 1,120 172 Short-term borrowing 2,370 7,370 1,130 Current portion of long-term borrowings 37,129 34,695 5,317 Total current liabilities 164,442 241,533 37,018 Non-current liabilities: Deferred government grants 991 263 40 Capital lease obligations 4,816 - - Long-term borrowings 18,266 - - Warrant liability 23,503 - - Other non-current liabilities - 228 35 Total non-current liabilities 47,576 491 75 TOTAL LIABILITIES 212,018 242,024 37,093 Mezzanine equity: Series A convertible preferred shares 186,991 - - Series B convertible preferred shares 466,983 - - Series C convertible preferred shares 873,059 - - Total mezzanine equity 1,527,033 - - Shareholders? (deficit) equity: Ordinary shares 31 - - Class A ordinary shares - 116 18 Class B ordinary shares - 21 3 Additional paid-in capital 45,640 4,006,616 614,041 Accumulated deficits (946,464 ) (1,418,160 ) (217,343 )Accumulated other comprehensive income 9,299 (167,589 ) (25,683 )(loss)Total shareholders? (deficit) equity (891,494 ) 2,421,004 371,036 TOTAL LIABILITIES, MEZZANIE EQUITY AND 847,557 2,663,028 408,129 SHAREHOLDERS? (DEFICIT) EQUITY

Burning Rock Biotech Limited

Unaudited Condensed Statements of Cash Flows

(in thousands)

For the three months ended December December 31, December 31, 2020 31, 2019 2020 RMB RMB US$Net cash used in operating activities (50,136 ) (90,659 ) (13,890 )Net cash generated from (used in) 22,262 (36,428 ) (5,583 )investing activitiesNet cash generated from financing 1,092 68,477 10,494 activitiesEffect of exchange rate on cash, cash (258 ) (78,013 ) (11,959 )equivalents and restricted cashNet decrease cash, cash equivalents (27,040 ) (136,623 ) (20,938 )and restricted cashCash, cash equivalents and restricted 125,284 2,061,829 315,989 cash at the beginning of periodCash, cash equivalents and restricted 98,244 1,925,206 295,051 cash at the end of period

For the year ended December December 31, December 31, 2020 31, 2019 2020 RMB RMB US$Net cash used in operating activities (228,041 ) (73,543 ) (11,271 )Net cash used in investing activities (346,660 ) (109,312 ) (16,752 )Net cash generated from financing 571,735 2,165,719 331,910 activitiesEffect of exchange rate on cash, cash 5,876 (155,902 ) (23,893 )equivalents and restricted cashNet increase cash, cash equivalents 2,910 1,826,962 279,994 and restricted cashCash, cash equivalents and restricted 95,334 98,244 15,057 cash at the beginning of periodCash, cash equivalents and restricted 98,244 1,925,206 295,051 cash at the end of period

_____________________________1 National Medical Products Administration of China