GUANGZHOU, China, Nov. 15, 2022 (GLOBE NEWSWIRE) — 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 ended September 30, 2022. Recent Business Updates Corporate Listed on the Main Market of the London Stock Exchange (the “LSE”) by way of a direct listing on November 1, 2022, while Burning Rock’s ADSs will continue to be listed and traded on the Nasdaq Global Market, with those ADSs being fully fungible with the ADSs listed on the LSE. Therapy Selection and Minimal Residual Disease (MRD) In-hospital strategy continues to drive growth uplift despite negative Covid impact. In-hospital volumes grew 24% year-over-year in the third quarter of 2022.MRD volumes continue to ramp up following commercial launch in March 2022, with approximately 700 tests completed in the third quarter of 2022, more than doubling the volumes in the second quarter of 2022. Early Detection PROMISE study (2,035 participants) for 9-cancer test results presented at European Society for Medical Oncology (ESMO) Congress 2022 in September 2022. Overall sensitivity achieved 83.7% for 9 cancers at specificity of 98.3%, with methylation contributing majority of positive detections compared to protein and mutation. Tissue origin prediction accuracy achieved 90.9% for the top 2 organs.Commercialization of our blood-based, 6-cancer early detection test gaining initial traction, with product onboarding completed at a few hospitals. Pharma Services The total value of new contracts we entered into from January to September 2022 amounted to RMB198 million, representing approximately 38% increase from the same period of 2021.Starting to work with BeiGene on initial clinical studies using our personalized MRD test brPROPHETTM .New companion diagnostics (CDx) development announced with Eli Lilly and Company in China, for the RET inhibitor selpercatinib. Third Quarter 2022 Financial Results Revenues were RMB154.6 million (US$21.7 million) for the three months ended September 30, 2022, representing a 22.1% increase from RMB126.6 million for the same period in 2021. Revenue generated from central laboratory business was RMB90.0 million (US$12.7 million) for the three months ended September 30, 2022, representing a 14.2% increase from RMB78.8 million for the same period in 2021, driven by revenue increase from monitoring packages that consist of multiple tests per package.Revenue generated from in-hospital business was RMB49.6 million (US$7.0 million) for the three months ended September 30, 2022, representing a 13.5% increase from RMB43.7 million for the same period in 2021, primarily attributable to in-hosiptal sales volume growth in Shanghai and Beijing as COVID impact lessened in the third quarter of 2022.Revenue generated from pharma research and development services was RMB15.0 million (US$2.1 million) for the three months ended September 30, 2022, representing a 267.4% increase from RMB4.1 million for the same period in 2021, primarily attributable to increased development and testing services performed for our pharma customers. Cost of revenues was RMB46.0 million (US$6.5 million) for the three months ended September 30, 2022, representing a 31.5% increase from RMB35.0 million for the same period in 2021, primarily due to an increase in testing and selling volume as well as rental expense and renovation depreciation in relation to our new laboratory that commenced use in January 2022. Gross profit was RMB108.6 million (US$15.3 million) for the three months ended September 30, 2022, representing a 18.6% increase from RMB91.6 million for the same period in 2021. Gross margin was 70.2% for the three months ended September 30, 2022, which decreased from 72.3% for the same period in 2021, primarily due to an increased income from monitoring packages, offset by an increased depreciation in relation to our new laboratory. Non-GAAP gross profit, which excludes depreciation and amortization expenses, was RMB117.0 million (US$16.4 million) for the three months ended September 30, 2022, representing a 25.8% increase from RMB93.0 million for the same period in 2021. Non-GAAP gross margin was 75.7% for the three months ended September 30, 2022, compared to 73.4% for the same period in 2021. Operating expenses were RMB343.2 million (US$48.3 million) for the three months ended September 30, 2022, representing a 30.7% increase from RMB262.6 million for the same period in 2021. Research and development expenses were RMB109.4 million (US$15.4 million) for the three months ended September 30, 2022, representing a 57.2% increase from RMB69.6 million for the same period in 2021, primarily due to (i) an increase in clinical program expenses for early cancer detection; and (ii) an increase in amortized expense on share-based compensation, offset in part by a decrease in staff cost due to organizational restructuring.Selling and marketing expenses were RMB90.3 million (US$12.7 million) for the three months ended September 30, 2022, representing a 17.7% increase from RMB76.7 million for the same period in 2021, primarily due to (i) an increase in staff cost resulted from increase in headcount; (ii) an increase in conference fee and (iii) an increase amortized expense on share-based compensation. Sequentially, selling and marketing expenses in the third quarter decreased by 14.5% compared to the second quarter of 2022, as our sales reorganization and operating efficiency improvement initiative started to generate initial results. We will continue to focus on improving operating efficiency going forward.General and administrative expenses were RMB143.5 million (US$20.2 million) for the three months ended September 30, 2022, representing a 23.4% increase from RMB116.3 million for the same period in 2021, primarily due to (i) an increase in depreciation expenses for a new building; (ii) an increase in allowance for credit loss in relation to accounts receivables; and (iii) an increase amortized expense on share-based compensation. Net loss was RMB231.5 million (US$32.5 million) for the three months ended September 30, 2022, compared to RMB170.5 million for the same period in 2021. Net cash used in operating activities was RMB135.5 million (US$19.0 million) for the three months ended September 30, 2022, compared to RMB133.4 million for the same period in 2021. The balance of cash, cash equivalents, restricted cash and short-term investments was RMB1,014.0 million (US$142.5 million) as of September 30, 2022. Revised 2022 Financial Guidance We believe that we have achieved strong, above-industry growth in the first nine months of 2022, generating revenues of RMB421 million, an increase of 17% compared to the same period of 2021. This is below the implied full-year growth rate of our initial guidance at the beginning of the year, primarily due to an out-sized Covid impact in Shanghai in the second quarter and to a lesser extent, Covid-related disruptions in other regions of China from time to time. We have observed another significant wave of Covid cases sweeping through many large cities in China since the start of October, particularly in Guangzhou, which is one of our key markets and where our central lab is located. We are taking a cautious view now and project a drop in revenues in the fourth quarter compard to the same period last year, which was a strong quarter and relatively free of large Covid impacts. We therefore revise our 2022 full-year revenue guidance to a growth of approxiately 5% compared to 2021. Transition of Chief Operating Officer to Chief Scientific Officer Effective November 2022, Shannon Chuai, our chief operating officer, is taking on a new role of chief scientific officer of Burning Rock. In her new role, Shannon will lead key projects of our pipeline development, provide senior oversight on our early cancer detection clinical programs and our engagement on product registration with the NMPA and other medical regulatory bodies. Shannon continues to serve as a director on our board. The company’s respective business units will report directly to our CEO, Yusheng Han. Conference Call Information Burning Rock will host a conference call to discuss the third quarter 2022 financial results at 8:30 a.m. U.S. Eastern Time (9:30 p.m. Hong Kong time) on November 16, 2022. Please register in advance of the conference using the link provided below and dial in 15 minutes prior to the call, using participant dial-in numbers and unique registrant ID which would be provided upon registering. PRE-REGISTER LINK: https://register.vevent.com/register/BI96c581babaf44021ab6c34af9f7ce42b. Additionally, a live and archived webcast of the conference call will also be available on the company’s investor relations website at http://ir.brbiotech.com or through link https://edge.media-server.com/mmc/p/8fj2edsi. A replay of the webcast will be available for 12 months via the same link above. About Burning Rock Burning Rock Biotech Limited (NASDAQ: BNR; LSE: 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, 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 Rock’s beliefs and expectations, are forward-looking statements. Such statements are based upon management’s 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 Rock’s 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. Non-GAAP Measures In evaluating the business, the company considers and uses non-GAAP measures, such as non-GAAP gross profit and non-GAAP gross margin, as supplemental measures to review and assess operating performance. The presentation of these non-GAAP financial measures is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The company defines non-GAAP gross profit as gross profit excluding depreciation and amortization. The company defines non-GAAP gross margin as gross margin excluding depreciation and amortization. The company presents these non-GAAP financial measures because they are used by management to evaluate operating performance and formulate business plans. The company believe non-GAAP gross profit and non-GAAP gross margin excluding non-cash impact of depreciation and amortization reflect the company’s ongoing business operations in a manner that allows more meaningful period-to-period comparisons. Contact: IR@brbiotech.com Selected Operating Data For the three months ended March 31,2021 June 30,2021 September30, 2021 December31, 2021 March 31,2022 June 30,2022 September30, 2022Central Laboratory Channel: Number of patients tested 7,716 8,155 7,808 8,235 7,743 8,060 7,989Number of ordering physicians(1) 1,082 1,013 920 917 994 767 897Number of ordering hospitals(2) 303 300 287 306 318 264 257(1) Represents physicians who on average order at least one test from us every month during a relevant period in the central laboratory channel.(2) Represents hospitals whose residing physicians who on average order at least one test from us every month during a relevant period in the central laboratory channel. As of March 31,2021 June 30,2021 September30, 2021 December31, 2021 March 31,2022 June 30,2022 September30, 2022In-hospital Channel: Pipeline partner hospitals(1) 22 22 24 23 24 25 22Contracted partner hospitals(2) 32 34 34 41 41 43 47Total number of partnerhospitals 54 56 58 64 65 68 69(1) Refers to hospitals that are in the process of establishing in-hospital laboratories, laboratory equipment procurement or installation, staff training or pilot testing using the Company’s products.(2) Refers to hospitals that have entered into contracts to purchase the 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 31,2021 June 30,2021 September30, 2021 December31, 2021 March 31,2022 June 30,2022 September30, 2022 (RMB in thousands)Central laboratory channel 74,561 79,999 78,817 85,976 74,211 78,597 89,992In-hospital channel 28,994 40,502 43,714 51,906 48,957 34,177 49,636Pharma research and development channel 3,068 6,778 4,084 9,463 12,356 18,072 15,003Total revenues 106,623 127,279 126,615 147,345 135,524 130,846 154,631 For the three months endedGross profit March 31,2021 June 30,2021 September30, 2021 December31,2021 March 31,2022 June 30,2022 September30, 2022 (RMB in thousands)Central laboratory channel 55,212 58,681 58,387 65,985 50,574 57,575 69,991In-hospital channel 20,070 29,426 31,111 34,194 33,396 20,012 31,593Pharma research and development channel 1,658 2,124 2,098 5,200 3,610 5,015 7,010Total gross profit 76,940 90,231 91,596 105,379 87,580 82,602 108,594 For the three months endedShare-based compensation expenses March 31,2021 June 30,2021 September30, 2021 December31,2021 March 31,2022 June 30,2022 September30, 2022 (RMB in thousands)Cost of revenues 339 406 267 492 365 441 481Research and development expenses 22,404 20,825 (9,559) (4,033) 12,299 11,923 13,978Selling and marketing expenses 2,633 2,809 2,044 2,126 1,774 2,158 2,346General and administrative expenses 59,382 59,369 60,803 62,126 65,715 62,615 61,041Total share-based compensation expenses 84,758 83,409 53,555 60,711 80,153 77,137 77,846 Burning Rock Biotech LimitedUnaudited Condensed Statements of Comprehensive Loss(in thousands, except for number of shares and per share data) For the three months ended March 31,2021 June 30,2021 September30, 2021 December31,2021 March 31,2022 June 30,2022 September30, 2022 September30, 2022 RMB RMB RMB RMB RMB RMB RMB US$Revenues 106,623 127,279 126,615 147,345 135,524 130,846 154,631 21,738Cost of revenues (29,683) (37,048) (35,019) (41,966) (47,944) (48,244) (46,037) (6,471)Gross profit 76,940 90,231 91,596 105,379 87,580 82,602 108,594 15,267Operating expenses: Research and development expenses (77,414) (108,071) (69,649) (112,724) (119,496) (92,112) (109,433) (15,384)Selling and marketing expenses (55,130) (68,058) (76,687) (103,221) (89,211) (105,634) (90,275) (12,691)General and administrative expenses (116,259) (116,130) (116,304) (141,563) (141,733) (150,316) (143,530) (20,177)Total operating expenses (248,803) (292,259) (262,640) (357,508) (350,440) (348,062) (343,238) (48,252)Loss from operations (171,863) (202,028) (171,044) (252,129) (262,860) (265,460) (234,644) (32,985)Interest income 787 681 958 1,031 1,832 2,685 2,001 281Interest expenses (510) (565) (367) (94) 119 (29) 12 2Other income (expense), net 118 433 20 (372) 298 127 (189) (27)Foreign exchange gain (loss), net 57 (560) 380 (731) (777) 624 1,337 188Loss before income tax (171,411) (202,039) (170,053) (252,295) (261,388) (262,053) (231,483) (32,541)Income tax (expenses) benefits – (1,626) (424) 1,151 – (84) – -Net loss (171,411) (203,665) (170,477) (251,144) (261,388) (262,137) (231,483) (32,541)Net loss attributable to Burning Rock Biotech Limited’s shareholders (171,411) (203,665) (170,477) (251,144) (261,388) (262,137) (231,483) (32,541)Net loss attributable to ordinary shareholders (171,411) (203,665) (170,477) (251,144) (261,388) (262,137) (231,483) (32,541)Loss per share for class A and class B ordinary shares: Class A ordinary shares – basic and diluted (1.65) (1.96) (1.64) (2.40) (2.50) (2.50) (2.23) (0.31)Class B ordinary shares – basic and diluted (1.65) (1.96) (1.64) (2.40) (2.50) (2.50) (2.23) (0.31)Weighted average shares outstanding used in loss per share computation: Class A ordinary shares – basic and diluted 86,721,263 86,764,260 86,908,975 87,128,297 87,179,752 87,532,539 86,585,322 86,585,322Class B ordinary shares – basic and diluted 17,324,848 17,324,848 17,324,848 17,324,848 17,324,848 17,324,848 17,324,848 17,324,848Other comprehensive income (loss), net of tax of nil: Foreign currency translation adjustments 14,080 (34,980) 6,146 (24,726) (3,065) 29,715 20,646 2,902Total comprehensive loss (157,331) (238,645) (164,331) (275,870) (264,453) (232,422) (210,837) (29,639)Total comprehensive loss attributable to Burning Rock Biotech Limited’s shareholders (157,331) (238,645) (164,331) (275,870) (264,453) (232,422) (210,837) (29,639) Burning Rock Biotech LimitedUnaudited Condensed Statements of Comprehensive Loss(in thousands, except for number of shares and per share data) For the nine months ended September 30,2021 September 30,2022 September 30,2022 RMB RMB US$Revenues 360,517 421,001 59,183Cost of revenues (101,750) (142,225) (19,993)Gross profit 258,767 278,776 39,190Operating expenses: Research and development expenses (255,134) (321,041) (45,131)Selling and marketing expenses (199,875) (285,120) (40,082)General and administrative expenses (348,693) (435,579) (61,233)Total operating expenses (803,702) (1,041,740) (146,446)Loss from operations (544,935) (762,964) (107,256)Interest income 2,426 6,518 916Interest expenses (1,442) 102 14Other income, net 571 236 33Foreign exchange loss, net (123) 1,184 166Loss before income tax (543,503) (754,924) (106,127)Income tax expenses (2,050) (84) (12)Net loss (545,553) (755,008) (106,139)Net loss attributable to Burning Rock Biotech Limited’s shareholders (545,553) (755,008) (106,139)Net loss attributable to ordinary shareholders (545,553) (755,008) (106,139)Loss per share for class A and class B ordinary shares: Class A ordinary shares – basic and diluted (5.24) (7.23) (1.02)Class B ordinary shares – basic and diluted (5.24) (7.23) (1.02)Weighted average shares outstanding used in loss per share computation: Class A ordinary shares – basic and diluted 86,798,854 87,097,027 87,097,027Class B ordinary shares – basic and diluted 17,324,848 17,324,848 17,324,848Other comprehensive income (loss), net of tax of nil: Foreign currency translation adjustments (14,754) 47,296 6,649Total comprehensive loss (560,307) (707,712) (99,490)Total comprehensive loss attributable to Burning Rock Biotech Limited’s shareholders (560,307) (707,712) (99,490) Burning Rock Biotech LimitedUnaudited Condensed Consolidated Balance Sheets(In thousands) As of December 31,2021 September 30,2022 September 30,2022 RMB RMB US$ASSETS Current assets: Cash and cash equivalents 1,431,317 1,009,790 141,954Restricted cash 7,795 4,216 593Short-term investments 63,757 – -Accounts receivable, net 92,197 102,385 14,393Contract assets, net 42,391 46,591 6,550Inventories, net 123,210 150,428 21,147Prepayments and other current assets, net 60,279 41,220 5,794Total current assets 1,820,946 1,354,630 190,431Non-current assets: Equity method investment 910 644 91Convertible note receivable – 5,000 703Property and equipment, net 325,438 288,499 40,556Operating right-of-use assets 81,007 58,379 8,207Intangible assets, net 5,150 2,774 390Other non-current assets 45,136 21,369 3,004Total non-current assets 457,641 376,665 52,951TOTAL ASSETS 2,278,587 1,731,295 243,382 Burning Rock Biotech LimitedUnaudited Condensed Consolidated Balance Sheets (Continued)(in thousands) As of December 31,2021 September 30,2022 September 30,2022 RMB RMB US$LIABILITIES AND SHAREHOLDERS’ EQUITY Current liabilities: Accounts payable 63,080 71,045 9,988Deferred revenue 142,871 168,260 23,654Accrued liabilities and other current liabilities 127,892 82,512 11,600Customer deposits 972 403 57Short-term borrowing 2,370 – -Current portion of operating lease liabilities 34,999 38,632 5,431Other current liabilities – 2,557 359Total current liabilities 372,184 363,409 51,089Non-current liabilities: Non-current portion of operating lease liabilities 49,316 22,865 3,214Other non-current liabilities 11,776 46,079 6,478Total non-current liabilities 61,092 68,944 9,692TOTAL LIABILITIES 433,276 432,353 60,781 Shareholders’ equity: Class A ordinary shares 116 117 16Class B ordinary shares 21 21 3Additional paid-in capital 4,280,956 4,499,491 632,528Treasury stock – (57,193) (8,040)Accumulated deficits (2,228,713) (2,983,721) (419,445)Accumulated other comprehensive loss (207,069) (159,773) (22,461)Total shareholders’ equity 1,845,311 1,298,942 182,601TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY 2,278,587 1,731,295 243,382 Burning Rock Biotech LimitedUnaudited Condensed Statements of Cash Flows(in thousands) For the three months ended September 30,2021 September 30,2022 September 30,2022 RMB RMB US$Net cash used in operating activities (133,394) (135,467) (19,042)Net cash used in investing activities (72,085) (20,148) (2,832)Net cash used in financing activities (32,995) (2,671) (375)Effect of exchange rate on cash, cash equivalents and restricted cash 4,919 19,242 2,703Net decrease in cash, cash equivalents and restricted cash (233,555) (139,044) (19,546)Cash, cash equivalents and restricted cash at the beginning of period 1,883,265 1,153,050 162,093Cash, cash equivalents and restricted cash at the end of period 1,649,710 1,014,006 142,547 For the nine months ended September 30,2021 September 30,2022 September 30,2022 RMB RMB US$Net cash used in operating activities (365,537) (389,101) (54,700)Net cash generated from (used in) investing activities 148,667 (2,430) (339)Net cash used in financing activities (46,118) (76,164) (10,707)Effect of exchange rate on cash, cash equivalents and restricted cash (12,508) 42,589 5,986Net decrease in cash, cash equivalents and restricted cash (275,496) (425,106) (59,760)Cash, cash equivalents and restricted cash at the beginning of period 1,925,206 1,439,112 202,307Cash, cash equivalents and restricted cash at the end of period 1,649,710 1,014,006 142,547 Burning Rock Biotech LimitedReconciliations of GAAP and Non-GAAP Results For the three months ended March 31,2021 June 30,2021 September30, 2021 December31,2021 March 31,2022 June 30,2022 September30, 2022 (RMB in thousands)Gross profit: Central laboratory channel 55,212 58,681 58,387 65,985 50,574 57,575 69,991In-hospital channel 20,070 29,426 31,111 34,194 33,396 20,012 31,593Pharma research and development channel 1,658 2,124 2,098 5,200 3,610 5,015 7,010Total gross profit 76,940 90,231 91,596 105,379 87,580 82,602 108,594Add: depreciation and amortization: Central laboratory channel 117 284 1,254 995 2,553 2,545 3,138In-hospital channel 79 113 109 130 93 1,428 2,479Pharma research and development channel 10 40 19 856 2,493 4,327 2,805Total depreciation and amortization included in cost of revenues 206 437 1,382 1,981 5,139 8,300 8,422Non-GAAP gross profit： Central laboratory channel 55,329 58,965 59,641 66,980 53,127 60,120 73,129In-hospital channel 20,149 29,539 31,220 34,324 33,489 21,440 34,072Pharma research and development channel 1,668 2,164 2,117 6,056 6,103 9,342 9,815Total non-GAAP gross profit 77,146 90,668 92,978 107,360 92,719 90,902 117,016Non-GAAP gross margin： Central laboratory channel 74.2% 73.7% 75.7% 77.9% 71.6% 76.5% 81.3%In-hospital channel 69.5% 72.9% 71.4% 66.1% 68.4% 62.7% 68.6%Pharma research and development channel 54.4% 31.9% 51.8% 64.0% 49.4% 51.7% 65.4%Total non-GAAP gross margin 72.4% 71.2% 73.4% 72.9% 68.4% 69.5% 75.7%