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spk04: Good day and thank you for standing by. Welcome to the Genetron Holdings Limited Conference Call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 on your telephone. Please be advised that today's conference call is being recorded. If you require any further assistance, please press star 0. I would now like to hand the conference over to our first speaker today. Hoki, Luke, please take over back.
spk01: Hello, everyone, and welcome to Gintron Health's fourth quarter and full year 2020 earnings conference call. The company's earnings release was issued earlier today and is available on the company's IR website. During this call, the company was making some forward-looking statements regarding future events and results. These statements are made under the safe harbor provisions of the U.S. Private Security Litigation Reform Act of 1995. Statements that are not historical facts, including statements about GeneTron Health's beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. Further information regarding these and other risks is included in GeneTron Health's filing to the FCC. All information provided today is as of the date of this call, and GeneTron Health does not undertake any obligation to update any forward-looking statement, except as required under applicable law. With respect to any non-IFRS measures discussed during today's call, the company's reconciliation information related to those measures can be found in the earnings relief issued earlier today. Allow me to introduce the management team on the call today. Susan Wang, co-founder and CEO of Chinchuan Health. We'll recap some of our recent announcements and discuss upcoming milestones. Dr. Yunfu Hu, our chief medical officer, will speak about our new HCC data and plans for this asset. Dr. Yu Chengzhao, our CTO, will go over our early screening technology and strategy. Kevin Xu, our CFO, will provide financial highlights related to the fourth quarter and full year results outlined in today's release, in addition to 2021 revenue outlook. Following management's prepared remarks, we'll open up the call to questions. Our co-founder and chief scientific officer, Dr. Hai Yang, will also be available to answer questions. With that said, I would now like to turn the call over to Mr. Susan Wang, CEO of Genetron Health. Susan, please go ahead.
spk02: Thank you, Hokie. Hello, everyone. Thank you for joining our fourth quarter and full year 2020 earnings conference call. I would like to direct you to the supplemental earnings presentation on our investor relations website and begin on slide two. In this past year, Jinchuan continued to solidify our position as a leading precision oncology company in China with a comprehensive portfolio that covers the entire spectrum of cancer management. addressing needs and challenges from early screening, diagnosis and treatment recommendations, as well as continuous disease monitoring and care. If you turn into slide five, throughout 2020, despite challenges brought on by the COVID-19 pandemic, Jinchuan delivered strong financial results. We were excited to successfully complete our IPO on NASDAQ while making significant commercial and clinical progress across all of our business lines. Our total revenue grew by 31 percent year-over-year to remain the 425 million in 2020. We were pleased with acceleration in year-over-year growth during the second half of the year, after reporting 28 percent year-over-year growth in the first half of 2020. cells from HCC screen, our most advanced early screening product for hepatocellular carcinoma, which is currently commercialized as LDT service in China, as well as our IVD revenue, notably our S5 instruments and lung eight assay, both grow significantly. Moreover, our robust revenue growth was accompanied by strong margin improvements. improved SG&A operational efficiencies, and the resulting narrow losses compared to year 2019. Given a series of key announcements in the past months in HCC screen, I would like to spend the next few minutes to focus on this exciting asset of ours. So let's move to slide seven. So just yesterday, we announced exciting new data of 1,615 patients from our prospective cohort study of an HTC screen, in which we reported data that has better sensitivity and comparable specificity versus the current standard of care. Yunfu will go into the details in a little bit. Recall that HTC screen is powered by GeneConstant innovative and proprietary mutation capture technology, which enables detection of multiple methylation alterations in parallel with mutations in cell-free DNA from blood samples. HCC screen is the first product out of this platform, and we are pleased to see all the progress we have made. As you may know, liver cancer is endemic in China, accounting for almost half of the global instances, with over 350,000 annual new cases and deaths, respectively, and it's estimated that among that 120 million high-risk liver cancer population in China, around 74 million were HPV carriers. The potential market opportunity of an HCC screen is massive, with an estimated time of over $7 billion, according to Frost and Sullivan Research. We are excited about the market potential of an HCC screen, but more importantly, we're also very proud that we're contributing to address the critical unmet need that could benefit hundreds of thousands of patients that save many lives and alleviate societal burdens. The market environment of early screening and detection also continues to be promising. The Chinese government remains supportive around policies and initiatives that focus on early detection and treatment. A few months ago, we announced that HCC screen was selected by the National Cancer Center in China and the Wuxi municipal government for use in its public health initiative, of which Wuxi is committed to administering 150,000 tests over a period of three years for its local residents who are high-risk individuals for HCC. This project has kicked off in the fourth quarter of last year, allowing us to realize some of the test orders in our revenue. This pilot model set us off a good path for future commercialization and reimbursement roadmaps. More importantly, we are generating large-scale real-world data from this collaboration, which offers tremendous strategic value as we continue the progress on expanding our early screening pipeline beyond liver cancer. We are advancing in digestive and lung cancer assay development, and we look forward to sharing some early data in colorectal cancer this year. Also, in early 2021, we established an exclusive strategic partnership for HCC Screen with Shenzhen Tianqing, a subsidiary of Sino-Bao Pharma, to co-promote HCC Screen in the hospital market. In China, Shenzhen Tianqing has an estimated 30%-plus market share in hepatitis antiviral drugs, a sales team of over 7,000 reps. and a network of over 2,000 general and liver disease-focused hospitals. Since the announcement, the teams from both companies have already set up a dedicated group to focus on initial rollout to about 50 to 100 hospitals. We expect this partnership to become more productive and allow us to launch HCC screen effectively into the key hospitals over the next few quarters. With these developments, in addition to our partnership with ICOM. Jingcheng has now covered the major market segments, including hospitals, procurement contracts, and the medical exam centers, which we expect to really help us ramp up our HCC screen revenue this year and beyond. So let me now pass the call to Yunfu, who will discuss our new HCC screen data that we just reported. Yunfu?
spk06: Yunfu Chengyu Thank you. Please turn to slide eight. We complete our prospective HCC screen investigation study, referred to hereafter as the HIT study, in 2,000 HPV-positive patients. We call that study the collaboration between Jintang and Lesnar Health Center that started in 2019. The protocol called for two six-month follow-ups on these patients. We were able to complete follow-up work for a total of 1,615 patients. Results from study show HTC Screen achieved 88% sensitivity and 93% specificity and 40.9% PPV and 99.3% MPV. As evidenced on slide number eight, this slide, HTC Screen reported better sensitivity and comparable specificity versus ultrasound and AFP combined, which is then here. Ultrasound plus AFP shows 71% specificity and 95% specificity. Another important analysis is stratified by tumor size, as shown on slide 10. Here, of the patients that we could obtain tumor size information, 49% of cases identified by HTT screen are in early stage, or less than three centimeters. And these patients are expected to have better prognosis than advanced stage patients. In terms of sensitivity based on tumor sizes, HTT screen showed 85% sensitivity for tumor sizes of less than three centimeters, 96% for three to five centimeters, and 88% for larger than five centimeters. On slide 11, Recall that our previous reported criminal data of 297 patients, which we showed 92% sensitivity and 93% specificity. If we look at the 95% confidence numbers and compare the small and large sets of screen, the band range there was a large patient pool. Furthermore, for sensitivity, the lower bound number improved greatly to 80% from 62%, whereas the specificity also got better, going to 91% from 89%. With this improvement and a bigger sample size, we are more confident about our test performance. Based on this encouraging data, we plan to initiate a registration trial in China in the second quarter of this year. We have dialogue with MPA regarding the design study, which will be a head-to-head comparison, compare HTC screen versus ultrasound and FP. We are currently finalizing clinical sites and APIs. Touching on our U.S. plan for HTC screen post our receipt of the breakthrough device designation. As a result of the pandemic, things have moved a little slower in the U.S. Our next step is to perform a confirmatory study on high-risk corporates in the U.S. population. Our lab in Marana is now CLIA-certified and will be used to facilitate U.S. studies for HTC screens, as well as to serve global pharmaceutical companies on R&D and commercialization. I would now like to pass the call to our CTO, Dr. Yiqin Zhao, who will delve a little deeper on early screening technology namely mutation capsule, and our overall strategy beyond HD screen. Yi Chen.
spk07: Thank you. I will discuss our mutation capsule early screening technology on slide 13. Mutation capsule was developed in-house by Gendron and has two distinctive features that are very beneficial in the development of . First, this technology offers the detection of methylation operations and mutations in one reaction. Most technology platforms tend to focus on either mutation or methylation, seldomly both. Traditional methylation methods such as cytotic sequencing is known to damage the mutation signals, and almost all mutation-providing technologies require PCR amplification, which removes other methylation signals. Mutation capture can detect the two types of markers in one reaction without having to split the CFD sample for separate mutation and methylation analysis. As such, it requires less blood while achieving high detection sensitivity. The combined detection of mutation and methylation each shows significant synergy in the detection of HDC. which is consistent with previous reports in the screening of colon cancer from stool samples. The second feature of musician capsule is that the CFDA sample's genetic and epigenetic information is preserved and amplified in the musician capsule library, which can be used for up to 10 analyses without sacrificing sensitivity than if it were to split the CFDA into chain reactions. In addition to the profiling of different panels of mutation and methylation markers, mutation capsule library can also be used for low-def whole genome sequencing to profile genome-wide parameters. Lastly, mutation capsule library has the function of de novo discovery of methylation size that could have diagnostic value. The limited yield of CFDNA from one blood draw is always the bottleneck in the development and application of liquid biopsy products. The multiplex feature of mutation capsule enables comprehensive profiling of almost all types of CFDNA-based biomarkers from one CFDNA sample so that we can compare the performance of the markers and select the best ones for the final product. Furthermore, the mutation test libraries collected for the R&D of one tumor test can always be used to profile new markers for other tumor tests. Panels for single cancer tests can be easily combined for a multi-cancer panel. This brings notable time and cost savings given less samples and patient tracking are required. HCC3 represents the first product out of our technology platform. Jinchuan has advantages of both its unique technology and the access to large real-world cohorts. Our strategy is to find the best performing biomarkers in each single cancer assay and conduct prospective studies. With the long-term goal of efficiently combining these assays and cohort data to create a panel for multi-cancer screening. To learn more details about our technology and applications, I'd like to mention that we will be hosting a webinar with Science Magazine next week on the 31st. I will be discussing our technology and other liquidology topics together with Dr. Annie Marie Lennon Director and Professor of Division of Gastroenterology and Hepatology at the Johns Hopkins University School of Medicine. I look forward to speaking at this event and hope some of you can join us as well. I will now turn the call over to our CFO, Mr. Ivan Xu, to provide more details on our first quarter and full year financials. Ivan.
spk03: Thank you, Yuchen. I will provide an update on our financial performance. Please note that all numbers provided are in RMB terms, and that all comparisons are made on year-over-year basis. Starting on slide 15, in the fourth quarter, total revenue increased by 30% to $134 million, up from $103 million a year ago. Diagnosis and monitoring revenue grew 44% to $124 million. up from 86 million in 2019. The increase was driven by the growth in the revenues generated from both the provision of LDT services, particularly in early screening, and the sale of IVD products. LDT revenue rose by 49% to 97 million versus 65 in 2019. LDT diagnostic tests sold in the fourth quarter totaled approximately 5,340 units, representing a decrease of 16% from a year ago, primarily due to the resurgence of COVID in our key sales territories in the fourth quarter. In late December and January, there was notable COVID resurgence in China, particularly in the northern parts of the country, including Beijing, our headquarters, and Shijiazhuang, a city next to Beijing. Record that Northern China is our key market, and this resurgence had resulted in major disruptions in hospital and patient traffic, sales and marketing activities, and also other limitations and restrictions. As such, we were negatively impacted by these issues, particularly in our LDT business. This negative impact sustained throughout the first two months of this quarter. coupled with typical slowdown during Chinese New Year. In March, we are starting to see volume recovery, and we are optimistic that the trends will be more normalized in the coming few quarters. In addition, a few days ago, the Chinese government updated the regulations on supervision and administration of medical devices, which included language to formalize the regulatory framework of LDT services. Specifically, the guidelines stated that self-developed diagnostic assays will be allowed based on clinical needs subject to certain standards and that there is no marketed products available. More detailed rules and guidelines are expected to come from the NAMPA and the National Health Commission in the next few months. As a leading LDT provider, Genetron welcomes tighter and clearer regulations to set a higher bar for the industry and believes that this will be beneficial for us in the long run. Additionally, offsetting some of the COVID headwinds was the fact that our average selling prices increased compared to the same period in 2019, which was attributable to a shift to higher value products such as OncoPenscan. and also better pricing management. In the fourth quarter, our early screening test, HTC Screen, was sold in the form of LDT services, contributed to a growing portion of the LDT revenue. As Sijun touched on earlier, our expanded collaboration with Wuxi in November has resulted in strong HTC Screen sales, coupled with contribution from ICOM. We expect HTC Screen sales to ramp up further based on our three commercialization channels, the for the hospital market, government procurement contracts, and expansion of the ICOM medical examination network. IVD revenue grew 30% to $27 million, up from about $21 million in 2019. The increase was driven by both assay and sequencing platforms. Notably, November 2020 marked one year since the NAMPA approval of GeneTron S5 instrument. Our long-age assay was approved a few months after. Together, these products formed a highly efficient in-hospital NGS solution with a two-day turnaround time from sample to report. Per slide 16, GeneTron has signed additional contracts during the quarter and now has 40 direct in-hospital contracts, of which 22 are in-hospital assay or sequencer purchase agreements compared to last quarter with 38 and 20, respectively. Development services revenue decreased by 39% to 10 million from 17 million a year ago, mainly resulting from less sequencing services. Sequencing services has a low margin, so we deliberately reduced that. Within development services, revenue from biopharma services increased strongly compared to a year ago. We are optimistic on biopharma services trends. Despite higher revenue, cost of revenue decreased 13% to $50 million in the first quarter from $57 million a year ago. The decrease was primarily due to better scale and the lower cost of certain reagents. This brings us to slide 17, gross profit increased by 84% to $84 million in the fourth quarter, up from $46 million in 2019. Overall gross margin increased to 63% for this quarter, compared to 45% in the prior year. In particular, gross margin for LDT segment was 69% compared to 61% a year ago thanks to better scale and also our focus on margin improvements through both product mix optimization and better prudent price management. For our IVD segment, gross margin improved significantly to 62% versus 36% in 2019, attributable to a better mix of instrument analysis. In biopharma services, our margin also improved due to our shifted focus to biopharma services. Operating expenses increased by 33% to $173 million, up from $131 million a year ago. Operating expenses are broken out on slide 18, among which selling expenses increased by 4% slightly to RMB $72 million. in a quarter from 69 million a year ago. However, selling expenses as a percentage of revenue markedly decreased to 54% versus 67% in 2019. These decreases were primarily due to beta scale and also different revenue mix. Administrative expenses increased by 55% to 44 million compared to $29 million in 2019. As a percentage of revenue, the ratio increased to 33% from 28% a year ago. The increase was mainly due to more headcount for administrative staff and also share-based compensation, as well as higher professional fees. Research and development expenses increased by 64% to $53 million, From $32 million in 2019, the increase was driven by continued innovation efforts, including product development, clinical trial activities, higher R&D headcount, and also share-based compensation. As a percentage of revenue, the ratio increased from 31% in 2019 to 40%. As a result of these expenses, operating loss was $89 million for 4Q versus $85 million a year ago. Net loss for the period markedly improved to $73 million compared to $135 million a year ago. We are also providing non-IFRS net loss figures as management believes these numbers would be helpful to show the trends of the underlying business. Non-effortless net loss excludes share-based compensation, fair value change for financial instruments with preferred rights. So non-effortless net loss also improved significantly to $63 million for the fourth quarter compared to $86 million a year ago. Basic net loss per share was RMB 16 cents compared to 1.06 yuan a year ago. Non-EFRA's basic net loss for this quarter was RMB 14 cents compared to 68 cents in 2019. Diluted net loss per share is equivalent to basic net loss per share. Now, briefly discuss our full year results covered on slide 19. Total revenue for year 2020 increased by 31% to $425 million from $323 million in 2019. Diagnostics and monitoring revenue grew 43% to $386 million, up from $270 million in 2019. Revenue generated from LDT services increased by 24% to $292 million compared to $235 million a year ago. Revenue from IBD products increased by 169 percent to $94 million from $35 million in 2019. Revenue from development services decreased by 28 percent to $39 million in 2020. Gross profit increased by 80 percent to $260 million in 2020 from $145 million in 2019. This resulted in an increase of gross margin to 61% for the full year 2020, compared to 45% in 2019. Operating expenses increased by 17%. Loss for the period was $3.1 billion for year 2020 compared to 676 million in 2019. Non-effortless loss improved during year 2020, and it was 260 million compared to 280 million in 2019. Basic loss per ordinary share was RMB 10.18 for 2020, as compared with basic loss per share of RMB 5.41 in 2019. Now IFRS basic loss per share was RMB 0.72 for 2020 compared with 2.24 for 2019. We have a very strong cash position. Cash equivalents and financial assets at fair value were close to RMB 1.5 billion or US $232 million as of December 31, 2020. Now, moving on to discuss our revenue outlook for 2021 on slide 20. Based on current environment and providing no further major COVID-related disruptions in our key markets, we are forecasting revenue growth to be in the range of 45% to 47%, which represents 2021 revenue in the range of RMB $615 to $625 million. This concludes the discussion of our financial results. I will now turn the call back to Sujin.
spk02: Thank you, Evan. Moving on to discuss other updates and upcoming milestones on slide 22. On the early screening side, we view that reported HGCC screen new data as quite encouraging, especially considering these are prospective data from a large patient pool. As Winfu shared earlier, we're on track to initiate our registrational trial for HGCC screening in the second quarter. I also mentioned in the beginning of the call that later this year, we plan to provide case control data from our colorectal cancer early screening study. On the diagnosis and monitoring side, We plan to initiate a recreational trial of a large panel on Copenscan in the second quarter. We also expect our CDX test for our pre-TNEP to gain NAMPA approval this year. Regarding MRDs, we are advancing the validation of SEC MRD in larger cohort studies for select hematology cancers and expect commercialization to start in the first half. was exclusively licensed from ImmuQuant late last year. In addition, this product also complements our biopharma service business line, since secMRD could be used in clinical trials for hematology cancer drugs. We continue to generate many productive discussions in our biopharma partnership pipeline as a result. Additionally, we are working on MRD projects in solid tumors with an initial focus on liver and colorectal cancer. We project that we could have MRD data in liver cancer in the second half this year or first half of next year. In closing, we had a very strong year in 2020 and a good start to 2021 so far. Shown on slide 23, our strategic focus going forward will be to accelerate the development of the liquid biopsy-based solutions across the full cycle cancer management. particularly in early screening and MRD, while continuing to ramp up our commercialization efforts and grow our base business. I'm also pleased that we took this opportunity today to tap into more discussion of our proprietary early screening technology, which enables strong product performance while delivering significant time and cost-saving benefits. This technology, along with our access to sizable real-world cohorts will be instrumental as we expand from HCC screen, our single cancer assay, to a multi-cancer product. Overall, we remain confident that we are well positioned in the fast-growing precision oncology sector, and we are excited about our growth prospects. And last but not least, we remain highly committed to focusing on innovation to develop high-quality products that would benefit more cancer patients. So this concludes the prepared remarks portion of today's call. Operator, we're now ready for questions.
spk04: Ladies and gentlemen, we will now begin the question and answer session. If you wish to ask a question, please press star followed by the number one on your telephone keypad and wait for your name to be announced. To withdraw your question, please press the pound or hash key. We have a question coming from the line of Songji Nam from BTIG. Please go ahead.
spk00: Hi, thanks for taking the questions. First of all, congratulations on the quarter as well as the year. And also really appreciate 2021 guidance and also the color for the first quarter thus far. I was wondering if you might be able to comment on kind of how you're thinking about revenue cadence from 4Q to 2021. first quarter, do you anticipate kind of flattish or, you know, could there be potential for an increased sequential growth or, you know, given just the COVID further pandemic impact and also the holidays, do you anticipate revenue, there could be revenue step down in the first quarter?
spk03: Yeah. Hi, Sunny. So, first of all, the first quarter usually marks the lowest due to seasonality among four quarters throughout the year, given the Chinese New Year. Normally, this Q1 will be, in a normalized environment, Q1 will be the lowest quarter among the four, right? Now, this year, as you correctly mentioned, Q1, we still continue to see the COVID impact in our key markets, especially in January, prior to Chinese New Year, people are encouraged not to go home for the spring festival. So these two factors combined, we do expect that Q1 will be, for this year, will be as a percentage of the full year will be still the lowest season. Having said that, we saw, as mentioned earlier, after Chinese New Year with better control of the COVID environment, we do see volume rebounding, especially in our LDT and the core markets.
spk00: Gotcha. That's very helpful. And then just in terms of gross margins, obviously you're continuing to improve on your gross margins. And as we look out to 2021, and beyond, do you anticipate to continue to improve upon your growth margins and kind of what are the key drivers, I guess, other than your top line growth?
spk03: Yes, we expect to see continued margin improvements for 2021 for all of our three segments, LDT, IVD, as well as biopharma services. Obviously, due to continued volume advantage in terms of scale, and also continued product mix optimization, and we'll continue to install prudent price management on all of our businesses. Also, in IBD, we do expect to see a mix shift to more asset sales, which will also drive gross margin as well.
spk00: Great, and then lastly from me, just on the HIT study, thank you so much for the data there. Just curious, in terms of on the sensitivity, the step down for greater than five millimeter, is that just a function of the sample size or is there, you know, other scientific explanation behind that?
spk06: I think you are correct. It's just simply sample size issue. Such small sample size. Okay, got it. Thank you.
spk00: Thank you so much.
spk04: Thanks, Sanjeev. We have the next question. This is coming from the line of Yang Huang from Credit Suisse. Please go ahead.
spk05: Thanks for the opportunity to ask the questions. My first question is about HIT study. So you provide the sensitivity regarding tumor size, but do you have a sensitivity data regarding liver cancer stage, stage one. Let's say what is sensitivity of stage one, stage two, et cetera. Thank you.
spk06: As of now, we don't have it.
spk05: Sorry. But were you announced later? I guess you were planning to publish. Not at all.
spk06: We were trying to get more information and we were to publish results there.
spk05: Okay. Okay. Yeah. So my next question is about HCC's green commercialization efforts in China. So I wonder can you provide us more color about HCC's green sales in 4Q last year and how much HCC screen sales you factor in when you make your 2021 sales guidance. Thank you.
spk03: Thanks. So in the first quarter we do, because we started the, we started the HCC commercialization from both Wuxi project as well as the ramp up of volume from icon channel. However, this is the beginning of our commercialization for HDC screen. Therefore, we are not separately reporting the revenue number. For this year, we do anticipate HDC screen test. We'll continue to gain traction from all of our three commercialization channels, including Wuxi project, the ICOM channel, as well as the Zhengda Tianjin collaboration, which is just ramping up in the first quarter. For this year, we do think that we will see significant volume and revenue pickup for HTC screen, given that all these three channels will generate strong momentum from last year's low base. We do expect that, although it's been the first year, The HCC sales will contribute to between 10% to 15% of this year, 2021's revenue.
spk05: Okay, so that means about 60 to 70 million RMB?
spk07: That's right. Hello, this is Yuchen, and I'd like to add my information. Because we are working on a prospective cohort and doing the screening, we do not have all the pathology information of the patient so that we cannot get the stage. We know the size of the tumors, but it is difficult to get the stage of all the tumors. So that's why we don't have the sensitivity based on the stage. Thank you.
spk05: I see. Just a lot of When we look at the competitor's data, they often report sensitivity based on the stage. That's why I wonder if we have similar data.
spk07: That's because they are working on a retrospective cohort, and they are comparing patients, cancer patients, which have been diagnosed to have cancer, to have actually been in the hospital with the healthy individuals or high-risk individuals. But we are doing the screening. We are working on those who look healthy and do not have any symptoms, and we get the positive results, and they got the confirmation by dynamic CT. Then they go to cancer hospitals. They do get the treatment in the screening center. why we cannot get the pathology information of those cases. That's the nature of the prospective cohort.
spk05: Yeah, maybe a quick follow-up. I understand some of the companies are doing case control study and get data, and actually some companies are already submitting case control liver cancer detection data to China regulators for approval. but we are working on to initiate a prospective study. So I wonder if we have two kind of test kits, you know, one got approval through case control, one got approval through prospective study. Is there going to be any difference in term of regulatory approval process and in term of commercialization? Thank you. I will get back to the queue.
spk06: As of now, I don't think we know for sure what kind of claim we'll be getting with the case control study. So for cancer screening, I believe the NMPA will follow FDA will require the prospective study.
spk05: Thanks.
spk04: Pardon me, shall we move to the next question, sir? Sure. The next question comes from the line of Max Masucci from Canaccord Genuity. Please go ahead.
spk08: Hi, thanks for taking the questions and congrats on a great year. Nice to see the expanded data readout for HCC screen and the strong performance. Now that this expanded data is available, do you expect to see rising interest for new government procurement contracts or additional partnerships that target hospitals or health check centers?
spk02: Yeah, so obviously this is very encouraging results we're getting from this perspective study that we've been working on for almost two years now, right? And our commercialization efforts, as we stated in our reading call, have started since last year when we have built essentially three different channels to educate the market and to commercialize our HCCC screen product. And I believe that the latest perspective data, as well as our upcoming efforts to get into the registrational trial, will allow us to work more closely with our partners to essentially dig deeper into all these three different ways of a commercialization. As you can see, we've been working with ICOM, the health check center, for about a year now. And I believe that this year we're getting into more of a rollout phase where we are almost ready to roll out all these ICOM health check centers throughout China. We've been very busy in training their staff in last year over the difficult COVID-19 situation. But we were able to... achieved a lot, so this year, so again, with the validation from the prospective data, prospective studies data, we will be accelerating the commercialization efforts through the ICON channel. And with the Tendai TN team, we have just started this year, right, and the team has been working together to identify the first group of rollout, and again, I have to exercise, you know, I cannot exercise more that the importance of completing this perspective data that will give us the confidence that our product is at a stage where we can start to apply in a clinical market setting and start to save lives.
spk08: Great. And then under your program with WUSHI, you're establishing a centralized lab in the region. How is that lab build-out coming along? Is it still the expectation that that lab will be functional around mid-year?
spk02: We are right now running our SGC-seeking screen test in our Chongqing lab, as we introduced before. And we will start building the Wuxi lab actually the second half of this year. And we do expect the lab will be more or less ready and essentially could be chartered into use by the end of this year. So that's the current timeline we're looking at.
spk08: Okay, great. And then just one final question. During Q4, what sort of trends, bigger picture, were you seeing in your IVD segment just in terms of hospitals' willingness to bring in new instruments and also to go live with IVD testing?
spk02: Yeah, right. So you can see that we got our lung cancer, the aging assay approved. about a year ago. It was back in last February. And a lot of activities of promoting it was essentially delayed by the pandemic in China. But I want to say that starting the second half last year, our efforts started to accelerate. And in Q4, we added about two hospitals. But we bring in many more hospitals into the pipeline. So essentially, all the activities for the in-hospitals, testing market penetration, it's really accelerating at Jinkang. When we start to gain recognition among the pathologists, among the pathology labs in big hospitals in China, they started to realize that the combination of S5 as well as our one-step sequencing methodology-based long-age assay is one of the best solutions that fits the needs in the Chinese market. So therefore, we do expect this year that our in-hospital penetration will accelerate compared to last year. And just like Evan mentioned earlier in the call, that we do expect that we start to see higher finished IVD cells to be essentially the acid cells, which will not only help our cells grow, the IVD cells grow, but also will help the margin of our IVD segment to improve further.
spk08: Great. Thanks for taking the questions.
spk02: Thanks, Max.
spk04: Thank you. I would now like to hand the conference over to our host. Hoki, please take over.
spk01: Thank you again for joining us for our fourth quarter earnings and business update call. We appreciate everyone's ongoing support. If you have any questions, please do not hesitate to reach out to the IR team. Thank you very much.
spk04: Thank you. Ladies and gentlemen, that concludes our conference call for the day. Thank you all for your participation. You may disconnect now.
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