GlobeNewswire Inc | Nov 20, 2020 06:00AM EST

November 20, 2020

GUANGZHOU, China, Nov. 20, 2020 (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 ended September 30, 2020.

Recent Business Highlights

-- Early Detection. Validated a new version of ELSA-seq to expand from 3 cancer types (lung, liver, and colon/rectum) to 6 cancer types (esophagus, pancreas, and ovary added). This demonstrates Burning Rock's continued progress on its blood-based, pan-cancer early detection R&D.The new version of the ELSA-seq assay was able to detect more cancer types (liver, colon/rectum, esophagus, pancreas, lung, and ovary) at early stages (I-III), demonstrated higher specificity, and was able to predict the tissue of origin with high accuracy.The validation data was presented at ESMO Asia Virtual Congress 2020 ("ESMO Asia") in a mini oral presentation (Company presentation link here). At 99.5% specificity (95% confidence interval [95% CI] 96.7-100), the sensitivity from cross validation was 79.9% (95% CI 74.6-84.4). These results generally held in the pre-allocated independent validation set, which demonstrated 98.3% specificity (95% CI 95.8-99.4) and 80.6% sensitivity (95% CI 76.0-84.6). The results show a significant improvement of specificity compared to the earlier version of the test (presented in January 2020 at AACR Special Conference on Liquid Biopsy, poster link here), which showed 95.1% specificity (95% CI 91.2-97.4) and 80.8% sensitivity (95% CI 77.0-84.1).In terms of identifying the location of the malignancies, the test produced a tissue-of-origin result in 98.6% of cases, and 81.0% (95% CI 77.2-84.3) of these predictions were correct. -- Therapy Selection. Analytical validation data of Magnis BR using a 520-gene tissue-based panel and a 168-gene liquid-based panel was presented at the Association for Molecular Pathology(AMP) Annual Meeting in a platform presentation (abstract number TT04). Magnis BR demonstrated comparable testing accuracy, superior library quality repeatability, and shorter turnaround time compared to manual library preparation approach.Magnis BR, Burning Rocks fully automated NGS library preparation system, is a key component of Burning Rocks strategy of empowering hospitals to run NGS tests in-house with minimized lab space and staff requirement. Its fully automated walk-away 9-hour overnight library preparation procedure enables hospitals to generate NGS reports in as quickly as 3 days.As Chinas first and only capture-based fully automated NGS library preparation system, Magnis BR further strengthens Burning Rocks competitive position in the important in-hospital testing market. -- Licensed-in the Myriad myChoice test into China on an exclusive basis for collaborative drug development studies and clinics.Highly synergistic with Burning Rock's existing testing platforms, leveraging Burning Rock's strengths in oncology NGS testing and commercial access.This test offers significant benefits to Chinese patients with myChoice regarded as the gold-standard for determining HRD status, as PARP inhibitors demonstrate increasing significance in a range of cancer types.

Third Quarter 2020 Financial Results

Revenues were RMB123.9 million (US$18.2 million) for the three months ended September 30, 2020, representing a 19.4% increase from RMB103.7 million for the same period in 2019, or a 28.8% increase compared to the average of 3Q19 and 4Q19. Sequentially, revenues increased by 15.8% from RMB107.0 million for the three months ended June 30, 2020.

-- Revenue generated from central laboratory business was RMB89.9 million (US$13.2 million) for the three months ended September 30, 2020, representing a 29.7% increase from RMB69.3 million for the same period in 2019, or a 20.5% sequential increase from RMB74.6 million for the three months ended June 30, 2020, primarily attributable to resumed volume growth of the Companys central laboratory business. Number of patients tested in the central laboratory channel was 8,644 for the three months ended September 30, 2020, representing a 27.7% increase from 6,769 for the same period in 2019, or a 19.2% increase from 7,252 for three months ended June 30, 2020. -- Revenue generated from in-hospital business was RMB31.7 million (US$4.7 million) for the three months ended September 30, 2020, representing a 3.3% increase from RMB30.7 million for the same period in 2019, or a 41.6% increase compared to the average of 3Q19 and 4Q19. Sequentially, revenue generated from in-hospital business increased by 14.9% from RMB27.6 million for the three months ended June 30, 2020. Number of contracted partner hospitals in the in-hospital channel increased to 25 as of September 30, 2020 from 24 as of June 30, 2020 and 19 as of December 31, 2019. -- Revenue generated from pharma research and development services was RMB2.3 million (US$0.3 million) for the three months ended September 30, 2020, representing a 38.7% decrease from RMB3.7 million for the same period in 2019, due to declined pharma testing volumes.

Cost of revenues was RMB32.3 million (US$4.8 million) for the three months ended September 30, 2020, representing a 26.5% increase from RMB25.5 million for the same period in 2019, which was generally in line with the Companys continued business growth.

Gross profit was RMB91.6 million (US$13.5 million) for the three months ended September 30, 2020, representing a 17.1% increase from RMB78.2 million for the same period in 2019. Gross margin was 73.9% for the three months ended September 30, 2020, compared to 75.4% for the same period in 2019.

Operating expenses were RMB216.2 million (US$31.8 million) for the three months ended September 30, 2020, representing a 93.5% increase from RMB111.8 million for the same period in 2019.

-- Research and development expenses were RMB69.3 million (US$10.2 million) for the three months ended September 30, 2020, representing an 81.1% increase from RMB38.3 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 RMB44.2 million (US$6.5 million) for the three months ended September 30, 2020, representing a 3.7% increase from RMB42.6 million for the same period in 2019. -- General and administrative expenses increased significantly to RMB102.7 million (US$15.1 million) for the three months ended September 30, 2020 from RMB30.9 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 RMB127.1 million (US$18.7 million), compared to RMB32.2 million for the same period in 2019.

Cash, cash equivalents, restricted cash and short-term investments were RMB2.4 billion (US$353.8 million) as of September 30, 2020.

2020 Financial Guidance

The Company reiterates its 2020 full-year revenue guidance of approximately RMB420 million (US$61.9 million).

Conference Call Information

Burning Rock will host a conference call to discuss the third quarter 2020 financial results at 8:00 a.m. U.S. Eastern Time (9:00 p.m. Hong Kong time) on November 20, 2020.

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: 5637209

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 185,000 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 31, 30, 30, 2019 31, 2019 31, 30, 30, 2020 2019 2019 2020 2020CentralLaboratory Channel:Number ofpatients 5,336 6,047 6,769 7,576 4,680 7,252 8,644testedNumber ofordering 984 1,059 1,155 1,222 810 1,175 1,194physicians^(1)Number ofordering 249 265 281 304 232 284 289hospitals^(2)



________________________ ^(1) Represents physicians who on average order at least one test from us every 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 31, 30, 30, 2019 31, 2019 31, 30, 30, 2020 2019 2019 2020 2020In-hospital Channel:Pipelinepartner 17 20 21 21 23 23 22hospitals^(1)Contractedpartner 14 15 19 19 21 24 25hospitals^(2)Total numberof partner 31 35 40 40 44 47 47hospitals



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

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

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

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

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 June September December March June September September 31, 2019 30, 2019 30, 2019 31, 2019 31, 2020 30, 2020 30, 2020 30, 2020 RMB RMB RMB RMB RMB RMB RMB US$Revenues 104,465 84,813 103,724 88,675 67,329 106,971 123,881 18,246 Cost of revenues (26,353 ) (22,754 ) (25,537 ) (33,699 ) (22,545 ) (28,573 ) (32,294 ) (4,757 )Gross profit 78,112 62,059 78,187 54,976 44,784 78,398 91,587 13,489 Operating expenses: Research and (31,427 ) (34,992 ) (38,278 ) (52,238 ) (40,016 ) (71,176 ) (69,330 ) (10,211 ) development expensesSelling and (26,690 ) (34,929 ) (42,606 ) (49,109 ) (29,815 ) (37,992 ) (44,174 ) (6,506 ) marketing expensesGeneral and administrative (31,565 ) (20,614 ) (30,866 ) (49,112 ) (34,295 ) (42,272 ) (102,731 ) (15,131 )expensesTotal operating (89,682 ) (90,535 ) (111,750 ) (150,459 ) (104,126 ) (151,440 ) (216,235 ) (31,848 )expensesLoss from operations (11,570 ) (28,476 ) (33,563 ) (95,483 ) (59,342 ) (73,042 ) (124,648 ) (18,359 )Interest income 128 3,806 3,686 3,541 3,985 44 698 103 Interest expense (4,210 ) (1,826 ) (1,650 ) (1,303 ) (1,178 ) 1,939 (776 ) (114 )Other (expense) income, (176 ) (329 ) (37 ) (341 ) (151 ) 122 (176 ) (26 )netForeign exchange (101 ) 1,142 800 (355 ) 611 (118 ) (2,228 ) (328 ) (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 ) (18,724 )Income tax expenses - - - - - - - - Net loss (15,865 ) (26,030 ) (32,167 ) (95,094 ) (52,572 ) (71,055 ) (127,130 ) (18,724 )Net loss attributableto Burning Rock Biotech (15,865 ) (26,030 ) (32,167 ) (95,094 ) (52,572 ) (71,055 ) (127,130 ) (18,724 ) Limited?sshareholdersAccretion ofconvertible (50,296 ) (41,770 ) (33,772 ) (39,173 ) (26,288 ) (38,400 ) - - preferred sharesNet loss attributable to ordinary shareholders (66,161 ) (67,800 ) (65,939 ) (134,267 ) (78,860 ) (109,455 ) (127,130 ) (18,724 )Loss per share: Ordinary shares - basic (2.86 ) (2.93 ) (2.85 ) (5.49 ) (3.15 ) (2.68 ) - - and dilutedClass A ordinary shares- - - - - - - (1.22 ) (0.18 ) basic and dilutedClass B ordinary shares- - - - - - - (1.22 ) (0.18 ) basic and dilutedWeighted average shares outstanding used inloss per sharecomputation:Ordinary shares - basic 23,167,232 23,167,232 23,167,232 24,437,444 25,031,575 40,786,167 - - and dilutedClass A ordinary shares- - - - - - - 86,479,686 86,479,686 basic and dilutedClass B ordinary shares- - - - - - - 17,324,848 17,324,848 basic and dilutedOther comprehensive (loss) income, net of tax of nil:Foreign currency translation (278 ) (14,288 ) 45,317 (6,647 ) 11,422 (2,336 ) (91,093 ) (13,417 )adjustmentsTotal comprehensive (16,143 ) (40,318 ) 13,150 (101,741 ) (41,150 ) (73,391 ) (218,223 ) (32,141 ) (loss) incomeTotal comprehensive(loss) income attributableto (16,143 ) (40,318 ) 13,150 (101,741 ) (41,150 ) (73,391 ) (218,223 ) (32,141 ) Burning Rock Biotech Limited?sshareholders

Burning Rock Biotech Limited

Unaudited Condensed Statements of Comprehensive (Loss) Income

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

For the nine months ended September30, September30, September30, 2019 2020 2020 RMB RMB US$Revenues 293,002 298,181 43,917 Cost of revenues (74,644 ) (83,412 ) (12,286 )Gross profit 218,358 214,769 31,631 Operating expenses: Research and development expenses (104,697 ) (180,522 ) (26,588 )Selling and marketing expenses (104,225 ) (111,981 ) (16,493 )General and administrative (83,045 ) (179,298 ) (26,408 )expensesTotal operating expenses (291,967 ) (471,801 ) (69,489 )Loss from operations (73,609 ) (257,032 ) (37,858 )Interest income 7,620 4,727 696 Interest expense (7,686 ) (15 ) (2 )Other expense, net (542 ) (205 ) (30 )Foreign exchange (loss) gain, net 1,841 (1,735 ) (256 )Change in fair value of warrant (1,686 ) 3,503 516 liabilityLoss before income tax (74,062 ) (250,757 ) (36,934 )Income tax expenses - - - Net loss (74,062 ) (250,757 ) (36,934 )Net loss attributable to BurningRock Biotech Limited?s (74,062 ) (250,757 ) (36,934 )shareholdersAccretion of convertible (125,838 ) (64,688 ) (9,528 )preferred sharesNet loss attributable to ordinary (199,900 ) (315,445 ) (46,462 )shareholders Loss per share for class A andclass B ordinary shares: (8.63 ) - - Ordinary shares - basic anddilutedClass A ordinary shares - basic - (5.56 ) (0.82 )and dilutedClass B ordinary shares - basic - (5.56 ) (0.82 )and diluted Weighted average sharesoutstanding used in loss pershare computation: 23,167,232 - - Ordinary shares - basic anddilutedClass A ordinary shares - basic - 39,446,747 39,446,747 and dilutedClass B ordinary shares - basic - 17,324,848 17,324,848 and diluted Other comprehensive income (loss), net of tax of nil:Foreign currency translation 30,751 (82,007 ) (12,078 )adjustmentsTotal comprehensive loss (43,311 ) (332,764 ) (49,012 )Total comprehensive loss attributable to Burning Rock (43,311 ) (332,764 ) (49,012 )Biotech Limited?s shareholders

Burning Rock Biotech Limited

Unaudited Condensed Consolidated Balance Sheets

(In thousands)

As of December31, September30, September30, 2019 2020 2020 RMB RMB US$ASSETS Current assets: Cash and cash equivalents 94,235 2,061,566 303,636Restricted cash 4,009 263 39Short-term investment 313,988 340,505 50,151Accounts receivable 88,822 93,839 13,821Contract assets 909 20,257 2,984Amounts due from related 74,368 - -partiesInventories 58,116 69,805 10,281Prepayments and other current 72,340 60,970 8,980assetsTotal current assets 706,787 2,647,205 389,892Non-current assets: Equity method investment 1,790 1,527 225Long-term investment 38,369 37,456 5,517Property and equipment, net 89,314 96,688 14,241Intangible assets, net 343 3,455 509Other non-current assets 10,954 16,162 2,380Total non-current assets 140,770 155,288 22,872TOTAL ASSETS 847,557 2,802,493 412,764

Burning Rock Biotech Limited

Unaudited Condensed Consolidated Balance Sheets (Continued)

(in thousands)

As of December31, September30, September 2019 2020 30, 2020 RMB RMB US$LIABILITIES, MEZZANINE EQUITY AND SHAREHOLDERS? (DEFICIT) EQUITYCurrent liabilities: Accounts payable 12,348 30,284 4,460 Deferred revenue 49,539 67,109 9,884 Capital lease obligations, current 4,893 5,300 781 Accrued liabilities and other current 54,059 110,545 16,282 liabilitiesCustomer deposits 4,104 16,076 2,368 Short-term borrowing 2,370 2,370 349 Current portion of long-term 37,129 37,208 5,480 borrowingsTotal current liabilities 164,442 268,892 39,604 Non-current liabilities: Deferred government grants 991 263 39 Capital lease obligations 4,816 787 116 Long-term borrowings 18,266 - - Warrant liability 23,503 - - Total non-current liabilities 47,576 1,050 155 TOTAL LIABILITIES 212,018 269,942 39,759 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 - 114 17 Class B ordinary shares - 21 3 Additional paid-in capital 45,640 3,866,806 569,519 Accumulated deficits (946,464 ) (1,261,682 ) (185,826 )Accumulated other comprehensive 9,299 (72,708 ) (10,708 )income (loss)Total shareholders? (deficit) equity (891,494 ) 2,532,551 373,005 TOTAL LIABILITIES, MEZZANIE EQUITY 847,557 2,802,493 412,764 AND SHAREHOLDERS? (DEFICIT) EQUITY

Burning Rock Biotech Limited

Unaudited Condensed Statements of Cash Flows

(in thousands)

For the three months ended September30, September September 2019 30, 30, 2020 2020 RMB RMB US$Net cash used in operating (17,395 ) (37,052 ) (5,457 )activitiesNet cash used in investing (25,684 ) (365,373 ) (53,814 )activitiesNet cash used in financing (22,878 ) (20,939 ) (3,084 )activitiesEffect of exchange rate on cash,cash equivalents and restricted 5,501 (81,043 ) (11,936 )cashNet decrease cash, cash (60,456 ) (504,407 ) (74,291 )equivalents and restricted cashCash, cash equivalents andrestricted cash at the beginning 185,740 2,566,236 377,966 of periodCash, cash equivalents andrestricted cash at the end of 125,284 2,061,829 303,675 period

For the nine months ended September September September30, 30, 30, 2020 2019 2020 RMB RMB US$

Net cash (used in) generated from (177,905 ) 17,116 2,519 operating activitiesNet cash used in investing (368,922 ) (72,884 ) (10,734 )activitiesNet cash generated from financing 570,643 2,097,242 308,891 activitiesEffect of exchange rate on cash,cash equivalents and restricted 6,134 (77,889 ) (11,471 )cashNet increase cash, cash 29,950 1,963,585 289,205 equivalents and restricted cashCash, cash equivalents andrestricted cash at the beginning 95,334 98,244 14,470 of periodCash, cash equivalents andrestricted cash at the end of 125,284 2,061,829 303,675 period

Contact: minying.cheng@brbiotech.com