GlobeNewswire Inc | May 25, 2021 12:19AM EDT

May 25, 2021

GUANGZHOU, China, May 25, 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 ended March 31, 2021.

Recent Business Highlights

-- Early Detection Launched the 11,873-subject PRESCIENT (Pan-canceR Early-Stage deteCtion by lIquid Biopsy tEchNique projecT) study for developing our 22-cancer early detection test. This is in addition to our ongoing PREDICT (Pan-CanceR Early DetectIon ProjeCT)study for the development of our 9-cancer early detection test.Presented at the 10th National Health Check-up Department Directors Summit (April 23 - April 25, 2021), where our early detection technology platform, product performance data and clinical programs were discussed at a keynote presentation. -- Therapy Selection Achieved strong performance in the FDA-led SEQC2 (sequencing quality control) study. Full results of the liquid biopsy study were published in Nature Biotechnology (article link here), and results of the targeted tissue-based panels were also published separately (article link here).Featured in the 2021 Consensus on Colorectal Cancer High-throughput Sequencing Molecular Diagnostics in China,1 in which our NGS-based bioinformatics algorithm for microsatellite instability (MSI) detection was endorsed and recommended. -- Pharma Services Launched with Abbisko Therapeutics the companion diagnostics (CDx) development for ABSK091, which is an innovative small molecule FGFR inhibitor that has obtained National Medical Products Administration (NMPA) investigational new drug (IND) approval for the treatment of patients with urothelial carcinoma.

First Quarter 2021 Financial Results

Revenues were RMB106.6 million (US$16.3 million) for the three months ended March 31, 2021, representing a 58.4% increase from RMB67.3 million for the same period in 2020, or a 19.1% sequential decrease from RMB131.7 million for the three months ended December 31, 2020. The sequential decrease was primarily due to negative impact associated with the COVID-19 pandemic in January 2021 and seasonality during the Chinese New Year holidays in February 2021.

-- Revenue generated from central laboratory business was RMB74.6 million (US$11.4 million) for the three months ended March 31, 2021, representing a 61.6% increase from RMB46.1 million for the same period in 2020, primarily attributable to the year-on-year volume growth of the central laboratory business. Number of patients tested in the central laboratory channel was 7,716 for the three months ended March 31, 2021, representing a 64.9% increase from 4,680 for the same period in 2020. -- Revenue generated from in-hospital business was RMB29.0 million (US$4.4 million) for the three months ended March 31, 2021, representing a 69.3% increase from RMB17.1 million for the same period in 2020. Number of contracted partner hospitals in the in-hospital channel increased to 32 as of March 31, 2021 from 29 as of December 31, 2020 and 21 as of March 31, 2020. -- Revenue generated from pharma research and development services was RMB3.1 million (US$0.5 million) for the three months ended March 31, 2021, representing a 24.5% decrease from RMB4.1 million for the same period in 2020, due to less pharmaceutical testing performed during the quarter, while the pipeline of our pharmaceutical projects has been building over time.

___________________________1 Published in Chinese Clinical Oncology, Mar. 2021, Vol.26, No.3

Cost of revenues was RMB29.7 million (US$4.5 million) for the three months ended March 31, 2021, representing a 31.7% increase from RMB22.5 million for the same period in 2020, which was generally in line with the Companys continued business growth.

Gross profit was RMB76.9 million (US$11.7 million) for the three months ended March 31, 2021, representing an 71.8% increase from RMB44.8 million for the same period in 2020. Gross margin was 72.2% for the three months ended March 31, 2021, compared to 66.5% for the same period in 2020.

Operating expenses were RMB248.8 million (US$38.0 million) for the three months ended March 31, 2021, representing a 138.9% increase from RMB104.1 million for the same period in 2020.

-- Research and development expenses were RMB77.4 million (US$11.8 million) for the three months ended March 31, 2021, representing an 93.5% increase from RMB40.0 million for the same period in 2020, primarily due to an increase in research and development personnels staff cost and share-based compensation expenses. -- Selling and marketing expenses were RMB55.1 million (US$8.4 million) for the three months ended March 31, 2021, representing an 84.9% increase from RMB29.8 million for the same period in 2020, primarily due to an increase in staff cost of sales and marketing personnel. -- General and administrative expenses increased significantly to RMB116.3 million (US$17.7 million) for the three months ended March 31, 2021 from RMB34.3 million for the same period in 2020, primarily due to an increase in general and administrative personnels staff cost and share-based compensation expenses.

Net loss was RMB171.4 million (US$26.2 million) for the three months ended March 31, 2021, compared to RMB52.6 million for the same period in 2020.

Cash, cash equivalents, restricted cash and short-term investments were RMB 2,149.0 million (US$328.0 million) as of March 31, 2021.

2021 Financial Guidance

Burning Rock reiterates its guidance that, assuming there are no additional COVID-19 related restrictions imposed in China, which might negatively affect patient volumes and cancer testing, its full year 2021 revenues is expected to be approximately RMB610 million (US$93.1 million), implying a 41.9% growth over full year 2020.

Recent Developments

Mr. Hao Liu has resigned as the Companys chief medical officer for personal reasons, effective May 31, 2021. Mr. Liu will continue to serve as a senior advisor to the Company.

Hao has always been our prominent partner and close friend, said Mr. Yusheng Han, chairman and chief executive officer of Burning Rock, for the past six years, he has devoted himself to Burning Rocks rapid growth with his deep knowledge of precision oncology. I am grateful to have worked alongside Hao and would like to thank him for his commitment and dedication to Burning Rock. We wish him the best of luck with his new endeavors.

Mr. Liu said There is no doubt that my years at Burning Rock have been the most extraordinary experience of my career. I am deeply honored to have worked alongside a group of people with passion, faith and dreams. These moments will remain vivid to me for years to come. Through our collective efforts, we have built Burning Rock from a startup into a global pioneer of its field. I am grateful to Yusheng and the management team for the trust and support, and I have a tremendous belief in the future of Burning Rock.

Conference Call Information

Burning Rock will host a conference call to discuss the first quarter 2021 financial results at 8:00 a.m. U.S. Eastern Time (8:00 p.m. Hong Kong time) on May 25, 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: 6193891

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 31, 30, 30, 31, 31, 2020 2020 2020 2020 2021Central Laboratory Channel:Number of patients tested 4,680 7,252 8,644 7,989 7,716Number of ordering 810 1,175 1,194 1,114 1,082physicians^(1)Number of ordering 232 284 289 294 303hospitals^(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 31, 30, 30, 2020 31, 2020 31, 2020 2020 2021In-hospital Channel: Pipeline partner hospitals^ 23 23 22 23 22(1)Contracted partner 21 24 25 29 32hospitals^(2)Total number of partner 44 47 47 52 54hospitals

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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 endedRevenues March June September December March 31, 30, 30, 31, 31, 2020 2020 2020 2020 2021

(RMB in thousands) Central laboratory 46,141 74,607 89,899 86,695 74,561channelIn-hospital channel 17,123 27,588 31,704 41,457 28,994Pharma research and 4,065 4,776 2,278 3,570 3,068development channelTotal revenues 67,329 106,971 123,881 131,722 106,623

For the three months endedGross profit March June September December March 31, 30, 30, 31, 31, 2020 2020 2020 2020 2021

(RMB in thousands) Central laboratory channel 32,434 56,556 67,804 66,588 55,212In-hospital channel 10,126 19,269 22,410 30,218 20,070Pharma research and 2,224 2,573 1,373 2,347 1,658development channelTotal gross profit 44,784 78,398 91,587 99,153 76,940

For the three months endedShare-based compensationexpenses March June September December March 31, 30, 30, 31, 31, 2020 2020 2020 2020 2021

(RMB in thousands) Cost of revenues 176 183 160 277 339Research and development 2,072 25,314 10,572 11,843 22,404expensesSelling and marketing 253 491 341 2,372 2,633expensesGeneral and 1,665 1,639 57,805 58,057 59,382administrative expensesTotal share-basedcompensation 4,166 27,627 68,878 72,549 84,758 expenses

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, March 31, 2020 2020 30, 2020 31, 2020 2021 2021 RMB RMB RMB RMB RMB US$ Revenues 67,329 106,971 123,881 131,722 106,623 16,274 Cost of revenues (22,545 ) (28,573 ) (32,294 ) (32,569 ) (29,683 ) (4,530 )Gross profit 44,784 78,398 91,587 99,153 76,940 11,744 Operating expenses:Research anddevelopment (40,016 ) (71,176 ) (69,330 ) (83,418 ) (77,414 ) (11,816 )expensesSelling andmarketing (29,815 ) (37,992 ) (44,174 ) (56,606 ) (55,130 ) (8,414 )expensesGeneral andadministrative (34,295 ) (42,272 ) (102,731 ) (114,502 ) (116,259 ) (17,745 )expensesTotal operating (104,126 ) (151,440 ) (216,235 ) (254,526 ) (248,803 ) (37,975 )expensesLoss from (59,342 ) (73,042 ) (124,648 ) (155,373 ) (171,863 ) (26,231 )operationsInterest income 3,985 44 698 1,341 787 120 Interest expense (1,178 ) 1,939 (776 ) (652 ) (510 ) (78 )Other (expense) (151 ) 122 (176 ) (682 ) 118 18 income, netForeign exchange 611 (118 ) (2,228 ) (1,112 ) 57 9 (loss) gain, netChange in fairvalue of warrant 3,503 - - - - - liabilityLoss before (52,572 ) (71,055 ) (127,130 ) (156,478 ) (171,411 ) (26,162 )income taxIncome tax - - - - - - expensesNet loss (52,572 ) (71,055 ) (127,130 ) (156,478 ) (171,411 ) (26,162 )Net lossattributable toBurning Rock (52,572 ) (71,055 ) (127,130 ) (156,478 ) (171,411 ) (26,162 )BiotechLimited?sshareholdersAccretion ofconvertible (26,288 ) (38,400 ) - - - - preferred sharesNet lossattributable to (78,860 ) (109,455 ) (127,130 ) (156,478 ) (171,411 ) (26,162 )ordinaryshareholdersLoss per share: Ordinary shares- basic and (3.15 ) (2.68 ) - - - - dilutedClass A ordinaryshares - basic - - (1.22 ) (1.51 ) (1.65 ) (0.25 )and dilutedClass B ordinaryshares - basic - - (1.22 ) (1.51 ) (1.65 ) (0.25 )and dilutedWeighted averagesharesoutstanding used in loss persharecomputation:Ordinary shares- basic and 25,031,575 40,786,167 - - - - dilutedClass A ordinaryshares - basic - - 86,479,686 86,511,799 86,721,263 86,721,263 and dilutedClass B ordinaryshares - basic - - 17,324,848 17,324,848 17,324,848 17,324,848 and dilutedOthercomprehensive(loss) income, net of tax ofnil:Foreign currencytranslation 11,422 (2,336 ) (91,093 ) (94,881 ) 14,080 2,149 adjustmentsTotalcomprehensive (41,150 ) (73,391 ) (218,223 ) (251,359 ) (157,331 ) (24,013 )lossTotalcomprehensivelossattributable to (41,150 ) (73,391 ) (218,223 ) (251,359 ) (157,331 ) (24,013 )Burning RockBiotechLimited?sshareholders

Burning Rock Biotech Limited

Unaudited Condensed Consolidated Balance Sheets

(In thousands)

As of December 31, March 31, March 31, 2020 2021 2021 RMB RMB US$ASSETS Current assets: Cash and cash equivalents 1,895,308 2,085,170 318,259Restricted cash 29,898 27,716 4,230Short-term investment 362,132 36,142 5,516Accounts receivable 88,218 76,159 11,625Contract assets 22,534 24,636 3,760Amounts due from related parties 212 515 79Inventories 68,021 97,752 14,920Prepayments and other current assets 57,329 62,111 9,481Total current assets 2,523,652 2,410,201 367,870Non-current assets: Equity method investment 1,417 1,489 227Property and equipment, net 111,481 145,438 22,197Right-of-use assets - 99,167 15,136Intangible assets, net 3,457 3,374 515Other non-current assets 23,021 22,777 3,476Total non-current assets 139,376 272,245 41,551TOTAL ASSETS 2,663,028 2,682,446 409,421

Burning Rock Biotech Limited

Unaudited Condensed Consolidated Balance Sheets (Continued)

(in thousands)

As of December March 31, March 31, 2021 31, 2020 2021 RMB RMB US$ LIABILITIES, MEZZANINE EQUITY AND SHAREHOLDERS? (DEFICIT) EQUITYCurrent liabilities: Accounts payable 35,482 49,861 7,610 Deferred revenue 74,402 91,091 13,903 Capital lease obligations, current 4,816 - - Accrued liabilities and other current 83,648 60,454 9,228 liabilitiesCustomer deposits 1,120 1,042 159 Short-term borrowing 7,370 7,370 1,125 Current portion of long-term 34,695 32,714 4,993 borrowingsCurrent portion of operating lease - 29,039 4,432 liabilitiesCurrent portion of financing lease - 3,510 536 liabilitiesTotal current liabilities 241,533 275,081 41,986 Non-current liabilities: Deferred government grants 263 - - Operating lease liabilities - 73,435 11,208 Other non-current liabilities 228 230 35 Total non-current liabilities 491 73,665 11,243 TOTAL LIABILITIES 242,024 348,746 53,229

Shareholders? equity:Class A ordinary shares 116 116 18 Class B ordinary shares 21 21 3 Additional paid-in capital 4,006,616 4,090,499 624,332 Accumulated deficits (1,418,160 ) (1,603,427 ) (244,731 )Accumulated other comprehensive loss (167,589 ) (153,509 ) (23,430 )Total shareholders? equity 2,421,004 2,333,700 356,192 TOTAL LIABILITIES AND SHAREHOLDERS? 2,663,028 2,682,446 409,421 EQUITY

Burning Rock Biotech Limited

Unaudited Condensed Statements of Cash Flows

(in thousands)

For the three months ended March 31, March 31, March 31, 2020 2021 2021 RMB RMB US$ Net cash used in operating (6,956 ) (113,145 ) (17,268 ) activitiesNet cash (used in) generated from (3,613 ) 288,329 44,005 investing activitiesNet cash generated from (used in) 272,228 (4,162 ) (635 ) financing activitiesEffect of exchange rate on cash,cash equivalents and restricted 4,641 16,658 2,543 cashNet increase cash, cash equivalents 266,300 187,680 28,645 and restricted cashCash, cash equivalents andrestricted cash at the beginning of 98,244 1,925,206 293,844 periodCash, cash equivalents andrestricted cash at the end of 364,544 2,112,886 322,489 period