Burning Rock Biotech Limited

The conference will begin shortly. Good day and thank you for standing by.

Welcome to the Burning Rock 2022 Third Quarter Earning Conference Call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be the question and answer session. To ask a question during the session, you will need to press star 1 1 on your telephone keypad. You will then hear an automated message advising your hand is raised. please be advised that today's conference is being recorded. Before we begin, I would like to remind you that this conference call contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended and as defined in the US Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as will, expects, anticipates, future, intents, plans, beliefs, estimates, targets, confidence, and similar statements. 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 risk. 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. Burning Rock does not undertake any obligation to update any forward-looking statement as a result of new information, future events, or otherwise expect as required under applicable law. And now I would like to hand the conference over to our main speaker today, Yusheng, CEO. Please go ahead.

Thank you. Welcome to Burning Rock's 2022 Q3 conference call. I'm Yusheng Han, the CEO and founder of Burning Rock. And our team today has Shannon Chai, Leo, and Joe. So Q3 was a strong rebound from Q2 for Burning Rock. mainly because of the reopen of Shanghai. And though we have seen some signals of software regulation of COVID, we don't think that the economy can fully recover in Q4. And therefore, the first thing I want to say that we will adjust the guideline this year to 5% growth despite of the Q3 rebound. Then let's turn to page three about the highlights of our recent progress. So we listed in London Stock Exchange recently in order to have a better position in capital market. And in terms of performance, we recorded 22% year-on-year revenue growth in Q3, and it is a strong rebound of 36% Q on Q this time. And for therapy selection, The in-hospital model volume is back to growth in Q3 with 24% year-on-year growth in a situation that we successfully lowered the selling expense of 15% in Q3 versus Q2. And it's a good trend to profitability of OncoBU, which is a relatively mature business. Since we launched the MRD product in March this year, the growth trend is great, and volume more than doubled in Q3 versus Q2 to 700 tests. The revenue of BioPharma grew triple-digit year-on-year to RMB 15 million, and backlog continues to build with newly contracted project value increase of 38% year-on-year to RMB 198 million during the nine months of 2022. And Oversea is the name of our mild cancer early detection product. We launched that this year and the volume of Oversea in Q3 with 264 tests. Though it was not a big number, we are still very excited because we are gradually finding the way to convince doctors and consumers in Class 3A hospitals. Let me elicit some background information. Chinese people are used to do health checkups annually, and 80% of the high-end health checkup population concentrates in Class 3A hospitals in China. And it is challenging and time-consuming to sign contracts with those hospitals. And after signing the contract, it usually takes three months to educate the doctors about how to prescribe the test to the consumers because it's a new type of product. So finding a way to sell overseas is very meaningful for us. And I want to emphasize here that operating efficiency will be our number one focus going forward for both commercial and pipeline assets. So we expect the cash outflow to drop significantly next year compared to that in 2022. Let's turn to page four and this page shows what we do and many friends might be very familiar with it. We just want to remind our investors that Burning Rock started the therapy selection business in 2014 and has grown to the market leader in this segment. In the past eight years, we have expanded our technology and business to early detection MRD and pharma collaborations. And let's turn to page five. And this page shows the business object of Burning Rock. And we have been talking about that several times. And by comparing with the recent progress, I talked in page three, we can easily see that we are heading in the right direction in all the key objectives, such as the severity selection, cost effective saving, MRD pipeline developing and commercialization, biopharma business development, and also the clinical development and commercialization of multi-cancer early detection. And then I will turn to the pipeline development to Shannon. And before I hand over to Shannon, I would like to go management change that we announced recently. Shannon, our chief operating officer, is going to take up a new role of chief science officer, relinquishing her COO role starting November. And Shannon has been with us since 2014, and as a member of our board since 2016. She has played two important roles. One is the product side, including managing our therapy selection product, MRD, and early detection, leading scientific collaboration with medical KOLs, developing communication strategy with regulatory bodies, and driving the expansion of our product pipeline. And the other role she has played is on the operations side, managing cross-department collaboration And given the amount of complexity that has taken place in our business scope, especially the expansion on new products, we believe that her time is best focused on the product development and regulatory side. And on the operating side, we believe that we have a strong team of leaders in place leading the respective business unit. And this unit will report to me directly. We believe that the team of unit leaders we have in place is the right one to execute on this objective. And there's no change at our board, and Shannon will continue to serve as board director. Yeah, Shannon.