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spk03: Good day and thank you for standing by. Welcome to the Q1 2021 Genetron Health Earnings Conference call. At this time, all participants are in listen-only mode. After a 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 has been recorded. If you require any further assistance, please press star 0. I would now like to hand the conference over to first speaker today, Ms. Hoki Luke. Please go ahead. Thank you.
spk00: Hello, everyone, and welcome to Genetron Health's first quarter 2021 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 will be making some forward-looking statements regarding future events and results. These statements are made under the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Statements that are not historical facts, including statements about GeneTron'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's filing with the SEC. Our information provided today is as of the date of this call, and Geentron does not undertake any obligation to update any forward-looking statements, except as required on the 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 release issued earlier today. Allow me to introduce the management team on the call today. Zhizhen Wang, co-founder and CEO of GeneTron Health, will discuss recent business updates and outlook. Evan Hsu, our CFO, will provide financial highlights related to the unobstructed first quarter results outlined in today's release. Following management's prepared remarks, we will open up the call to questions. During the Q&A session, our CTO, Dr. Yuting Zhao, and Chief Medical Officer, Dr. Yunfu Hu will also be available to answer questions. With that said, I would now like to turn the call over to Mr. Shizhen Wang, CEO of Genetron Health. Shizhen, please go ahead.
spk06: Thank you, Hokie. Good morning, good evening, everyone. And thank you for joining our first quarter 2021 earning conference call. I would like to direct you to the supplemental earnings presentation on our IR website and begin on slide two. So thus far in 2021, we have continued to solidify our position as a leading physician 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 disease monitoring. If you turn to slide four, in the first quarter, Jinchuan delivered strong financial and operational results with close to 20% top-line year-over-year growth, reaching maybe 92.1 million. However, note that last year in the same period, we recorded significant revenue from our COVID-19 IVD test. So if we exclude that, our on-the-line core oncology business revenue grow 52.9% year-over-year. Our revenue growth was also accompanied by notable margin improvements at 59.3% compared to 55% in the first quarter of last year. So we're pleased with these results, given the backdrop of a challenging operating environment, coupled with this now resulting from the Chinese New Year holiday in February. As we mentioned on our last call, in late December and January, there was notable COVID resurgence in China, particularly in northern parts of the country, including Beijing, our headquarters, and Shijiazhuang City, not too far away from Beijing. The report of northern China is our key market since this resurgence had resulted in major disruptions in hospital and patient traffic, sales and marketing activities, and other restrictions. As such, we were impacted by these issues throughout the first two months of the quarter. Since March, we're starting to see some volume stabilization, and we're optimistic that the trend will be more normalized in the coming few months. Operationally, over the last quarter, we continued to make significant progress across all business lines in diagnostic monitoring, early screening, as well as biopharma service. We've had a few key announcements thus far in 2021, and I would like to highlight some of these developments with you. So first, let's focus on our liver cancer liquid biopsy early screening product, HCC screen. In the first quarter, we reported encouraging new clinical data and announced two key partnerships to commercialize these products. Recorded in March, We shared data from our leading prospective study, namely the HIT study. Based on data on 1,615 patients, HCC screen achieved 88% sensitivity and 93% specificity, and a 40.9% PPV and a 99.3% NPV. These numbers showed better sensitivity and comparable specificity versus ultrasound plus FP combined, which is a standard cure, summarized on slide six and seven for review. Based on these results, we plan to initiate a registrational trial in China very soon. We have had dialogues with NMPA, NAMPA, regarding the design of the study, which will be a head-to-head trial comparing HTC screen versus ultrasound plus FP. And we're currently finalizing clinical sites. We continue to project the trial to complete by the end of 2022 and a potential NAMPA approval of HCC screen in 2023. Turning to page eight, on the commercialization front, in January, we established an exclusive strategic partnership for HCC screen with Zhengda Tianqing a subsidiary of Sinopharm to co-promote the product in the hospital market. In China, Chen Daqianxin 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. Thanks to the announcement, the teams from both companies have already set up a that could group to folks on the initial rollout to about 50 hospitals. So we expect this partnership to become more productive and allow us to launch HTC Spring effectively into the key hospital over the next few quarters. And just a few days ago, we have announced a strategic partnership with JD Health, a subsidiary of JD.com, the largest online healthcare platform in China. This partnership includes HCC screen as well as our NAMPA-approved non-cancer aging products. For HCC screen, this represents a forced commercialization pathway in addition to our existing channels through medical examination centers, public health projects, and hospitals. There are already a series of upcoming marketing educational activities planned for high-risk liver cancer patient populations. And for long eight, the plans are also on the way for this product to be offered through JD's network of online hospitals and the retail pharmacies soon. The JD Health has massive online users, along with the network of doctors and pharmacies. We're very excited to be working with this top-notch technology-driven domestic healthcare company by combining Jinchuan's precision oncology capabilities with their online platform and other resources, We see this collaboration as an innovative commercialization strategy for molecular diagnostic products in ecology. And we expect this to become a more prominent channel over time. So touching on our U.S. plan for HCC screen post our receipt of the breakthrough device designation. Our next step is to perform complementary studies on high-risk cohort in the U.S. population with some U.S. medical institutions. Now a lab in Maryland is clear certified and will be used to facilitate the U.S. studies for HCC screen, as well as to serve global pharma companies on R&D and commercialization. So moving on to slide 10, the recorded HCC screen is powered by GenCon's innovative and proprietary mutation capture technology, which enables detection of multiple methylation alterations in parallel with mutations in cell-free DNA from block samples. HCC screen is the first product out of this platform, and we're pleased to see all the progress we have made. Our next cancer indication will be in CRC, of which we expect to report case-control data this year. Now our strategy is to find the best-performing biomarkers in each single cancer assay and conduct prospective studies with a long-term goal of efficiently combining these assays and cohort data to create a panel multi-cancer screen. In addition to its application in early screening product development, we have also leveraged mutation capsule technology to develop our MRD products. Based on early encouraging results observed, we're planning to start larger multicenter studies for our MRD liver and CRC panels. We continue to expect to report case-control liver MRD data you know, later this year or first half of next year. Turning to slide 12, on the IVD side, we have recently formed a strategic partnership with HealthNear that was announced just a few weeks ago at the China Medical Equipment Fair. This partnership aims to promote S5 platform and lung cancer aging IVD assay in Chinese hospitals. in order to provide a non-small cell lung cancer patient with efficient and accurate personalized diagnosis treatment guidance. And based on our one-step seek technology, the lung cancer aging IVD assay can detect many mutations in the fusion across eight different genes at once for target therapy selections in non-small cell lung cancer. Combined with SYNTRANS5, it offers advantage in detection efficiency, ease of use, economic value and can achieve a two-day turnaround time. It's suitable for independent clinical molecular testing in Chinese hospitals on all levels. Another product that we leveraged off of our one-step seek technology is our second MRD product for block cancer. We plan to launch our second MRD product shortly. As a global leading IVD and diagnostic imaging player with extensive distribution and self-network in China, Siemens is a desirable IVD partner for Jincheng. As of the end of the first quarter, we have 23 in-hospital purchase agreements. Overall, we anticipate the partnership with Siemens to help us continue to expand our distribution reach of our S5 and lung cancer aging IVD assays. Looking at our other IVD products in the portfolio, the trials are blood-based and lung EGFR IVD assay, as well as tissue-based thyroid cancer IVD assay are both progressing accordingly. Also, we recently participated in funding rounds for startup Telbio, which focuses on developing its TelDx circulating tumor cell, or CDC, technology and complimentary TelRx therapeutics platform. So as part of the strategic agreement, we will license and distribute TelDx within China and collaborate with TelBio to improve the platform. We remain keen on exploring new tech and leveraging our capabilities to bring them to China. So now I will turn the call over to our CFO, Mr. Evan Chu, to provide more details on our first quarter financials.
spk05: I will provide an update on our financial performance during the reporting quarter. Please note that all numbers provided are in RMB terms and that all comparisons are made on year-over-year basis. Starting on slide 14, in the first quarter, total revenue increased by 19.8 percent to RMB 92.1 million from RMB 76.8 million in the same period of 2020. As mentioned, excluding revenue from GeneTrans COVID-19 IVD test revenue in the first quarter of 2020, total revenue grew 52.9% year-over-year. Diagnosis and monitoring revenue increased by 30.4% to RMB 87.1 million in the first quarter of 2021, from RMB 66.8 million in the same period of 2020. The increase was driven by growth in revenues generated from the provision of LGT services in both diagnosis and early screening. Note, revenue in the first quarter was impacted by COVID-19 resurgence in some of our key sales territories, which Susan discussed earlier, as well as the Chinese New Year holiday. LGT revenue increased by 51% to RMB 71.8 million during the first quarter 2021 from RMB 47.6 million in the same period of 2020. This was driven by HTC screen cells as well as the LDT diagnostic tests. LDT diagnostic tests sold in the first quarter 2021 totaled approximately 5,100 units representing an increase of 29.6 percent compared to the number of LGT diagnostic tests sold in the same period of 2020. IVD revenue decreased by 20.5% to RMB 15.3 million in the first quarter 2021, from RMB 19.2 million in the first quarter 2020. The decrease was due to RMB 16.6 million of COVID-19 test revenue that was booked in the first quarter of 2020. So excluding that revenue, sales of IBD products grew 490%, driven primarily by sales of S5 instruments. We continue to expect our expanding installation base, propelled by Jincheng's IBD sales team, along with our collaboration with Siemens, to drive our reagent and overall sales in the coming quarters. Revenue generated from development services decreased by 50.6% to RMB 5 million in the first quarter 2021, from RMB 10.1 million in the same period of 2020. The change mainly resulted from the decrease in sequencing services, reflecting our continued adjustment of business strategy towards more high-value biopharma services. Biopharmaceutical revenue continued to increase by several folds compared to a year ago, and we are optimistic on overall biopharma services trend. Cost of revenue increased by 8.4% to RMB 37.5 million for the three months ended March 31st, 2021, compared to RMB 34.6 million in the same period of 2020. Moving to slide 15, Gross profit increased by 29.1% to RMB 54.5 million in the first quarter of 2021, from RMB 42.2 million in the same period of 2020. Gross margin increased to 59.3% for the first quarter of 2021, compared to 55% in the same period of last year. In particular, gross margin for our LGT segment was 68%, 60.2% a year ago, thanks to better scale in the product optimization. For our IVD segment, gross margin was 34.2% versus 79.9% last year. Note that IVD gross margin in 2020 first quarter was abnormally high due to the oversized revenue from the COVID-19 test. We saw a mixed shift in the first quarter of 2021 to substantial instrument sales as compared to prior quarter which resulted in lower IBD gross margin. IBD kit sales were lower primarily due to seasonality although we expect this to normalize going forward. Operating expenses increased by 49.5% to RMB 163.5 million for the first quarter from RMB 109.4 million in the same period of last year. Operating expenses are broken out on slide 16 and are as follows. Selling expenses increased by 10.9% to RMB 59.7 million in the first quarter 2021 from RMB 53.8 million in the same period last year. Selling expenses as a percentage of revenue decreased to 64.8% in this quarter from 70% last year. The decrease was primarily due to beta scale and different revenue mix. Administrative expenses increased by 106.3% to RMB 44.6 million in the first quarter 2021 from RMB 21.6 million in the same period of 2020. Administrative expenses as a percentage of revenue increased to 48.4% in the first quarter of 2021 from 28.1% in the first quarter of 2020. The increase was primarily due to more headcount as well as higher professional fees after IPO. Research and development expenses increased by 80.9% to RMB 15 million in the first quarter of 2021 from RMB 27.6 million in the same period of 2020. R&D expenses as a percentage of revenue increased to 54.3% in the first quarter of 2021, from 36% in the same period of 2020. The increases were driven by higher R&D headcount and related expenses, as well as continued innovation efforts, including product development and clinical trial initiatives. As a result, operating loss was RMB 109 million, in the first quarter compared to 67.2 million last year on slide 17. Net loss for the period was RMB 150 million for the first quarter compared to RMB 115.5 million for the first quarter of 2020. We are also providing now IFRS net loss figures as management believes these numbers would be helpful to show the trends of the underlying business Non-IFRS net loss excludes share-based compensation expenses, fair value change, and other loss of financial instruments with preferred rights. Non-IFRS net loss was RMB 105.8 million for the first quarter of 2021 compared to 65.6 million for the prior year. Basic loss per ordinary share attributable to ordinary shareholders of the company was 0.25 for the first quarter of 2021 compared to RMB 0.92 for the same period of last year. Now IFRS basic loss per ordinary share attributable to ordinary shareholders of the company was RMB 0.23 for the first quarter of 2021 compared to RMB 0.52 for the same period of 2020. Diluted loss per ordinary share is equivalent to basic loss per ordinary share. We have a very strong cash position. Cash and cash equivalents and financial assets at a fair value were close to RMB 1.4 billion or U.S. 212.7 million as of March 31st, 2021. Our cash and cash equivalents decreased compared to the end of last quarter. due to net cash used in operating and investing activities, primarily attributable to the net loss of RMB 115 million incurred and the purchase of cash in the currency management products of RMB 197.1 million. Now, moving to discuss our revenue outlook for 2021 on slide 18, based on the current environment and providing no further major COVID-related disruptions in our key markets, we remain confident in delivering revenue growth to be in the range of 45% to 47%, which represents 2021 revenue in the range of $615 to $625 million. This concludes the discussion of our first quarter financial results. I will now turn the call back to Sijun Thank you, Evan.
spk06: In closing, we've had a good start to 2021, financially and operationally, highlighted by our new strategic collaborations and encouraging HTC screen data. Shown on slides 20 and 21, our strategic focus going forward will be to accelerate the development of a 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. We remain on track to initiate registrational trials of HGCC screen and on-call pan scan shortly, as well as launching SEC MRD for our biopharma customers in their clinical trials for hematologic cancers. And we look forward to sharing CRC case control early screening data and the MRD liver cancer data with you in the near future. 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.
spk03: Certainly. As a reminder, to ask a question, you will need to press star 1 on your telephone. To reply a question, press pound or hash key. Please stand by while we compile the Q&A roster. Let's start, followed by one to ask a question. Thank you. We have the first question from the line of Sungji Nam from BTIG. Please go ahead.
spk07: Hi, thanks for taking the questions. Maybe starting out with your biopharma business, could you talk about the trend there? You know, obviously, with also impacted by the pandemic and just kind of curious, You saw growth year over year again this quarter. Are you seeing that business normalizing, you know, anticipating more projects that biopharma or clinical trials, you know, will continue to normalize going forward?
spk06: Right. So, yeah, definitely you are looking at a very fast growth phase of the income business. In fact, our CMO just got back from a very busy meeting in Suzhou over the weekend, a DIA meeting in China. And there's so much biopharma activities going on in China. With the environment stabilizing, in fact, we see the biopharma activities are picking up and generally coming back to a normal pace starting in the second half of last year. And although we had disruption in the first quarter this year, especially in December, essentially December last year and January this year, But with, you know, the environment back to normal in March, like I said, the bar farmers activities are really picking up speed. And Jingcheng, again, is very well positioned to serve the surging demand from this bar farmer sector, given that we are the very few players in the market that possess the well-rounded capability to help them in their drug development. the full cycle of their drug development. Given that, we have a strong R&D capability, and we have probably the world-class regulatory capability, as well as we already build up a nice coverage in terms of the testing market. So we basically have everything that the farm farmers are looking for. So that's why we see a strong demand in this line of business of Jingcheng. So remember, we had a very slow start last year, but now we have over 40. I think we have 40 biopharma partners now, including the big MNCs, as well as really the cutting-edge, the leading local startups. And they're covering the full range from the small molecule companies you know, to CDG, to cell, you know, cell gene, so CGT sector, you know, cell gene therapy sector. And we are leveraging fully our proprietary technologies such as one-step technology, the fusion scan, as well as the mutation capsule.
spk07: Yeah, could I follow up with a couple more questions? So thank you so much for that. That was very helpful.
spk06: Yeah, sure.
spk07: Maybe one on Siemens, obviously Siemens Healthineers, exciting partnership there. Could you talk about, based on my knowledge, they have not done a lot of partnerships in terms of on the genomic diagnostic side, so this is pretty unique from that standpoint. So we'd love to hear kind of what they might be thinking as well in the future. if there are opportunities for them to further expand into this area. And also from you guys' standpoint, are there opportunities to also partner with other multinational large IDD players, such as Roche and others, Abbott and others?
spk06: Yeah, so you're right, Sanjeev. So we're pleased that we established a partnership with Siemens HealthMirror. You know that they do have a sizable IVD business portfolio in China, and they are, I think, the fourth largest player among all the big international players, such as Roche, Diagnostics, or Boots. And they do have extensive outreach to the in-hospital testing market in China with a special, you know, a strong presence in the, in certain areas. And they, right now, in their offering, they do see the molecular profiling or molecular diagnostics offering is a relatively weakness. So that's why they do have, you know, strong motivation to collaborate with a, you know, full-range molecular diagnosis, oncology molecular diagnostic players like JingChuan. And so, you know, JingChuan have one of the leading molecular diagnostic solutions for oncology in China. We have, you know, with the combination of the S5 medium-strength sequencer with our one-step seek technology-based lung cancer aging assay. we have the sought-after, we have the solution that the hospitals need for their more effective treatment on the lung cancer patients. So we do believe that partnership between our innovative product solutions with their extensive distribution network will yield good results in this fast-growing in-hospital testing market in China. And, you know, for your second part of the question, yeah, so we are definitely open. And I can't share, you know, what exactly or, you know, other partnerships we might be making, but I can tell you that Jingcheng is an innovative company focusing on developing, you know, the first-class molecular bacteriostatic solutions, right? And we will be always looking for the right partner in order to, you know, to educate and penetrate the market together more effectively.
spk07: Great. Super helpful. And then lastly from me, just a clarification. You mentioned the timeline for the CRC screening test tape control study data readout. What about the MRD for CRC? Did you guys talk about the timeline there in terms of when the data readout might be available? Thank you.
spk06: Yeah, I think we mentioned over the call that we're making significant progress in our, you know, already quite rich pipeline. So leveraging the same addition capture technology, we are not only pushing our HHCC screen into the radiation trial as planned, but also we have already started our work or study on the, you know, CRC. and we do expect to release the preliminary case control data sometime this year on CRC. And again, by leveraging the advantages of the mutation capsule, right, so basically we can profile mutation in parallel with methylation changes. So we are developing our MRD product platform as well, and we do expect to release our preliminary liver cancer, you know, MRD study data sometime this year. And we also see some encouraging early data on CRC as well. And as I mentioned, Nicole, we will be launching a larger multicenter study for liver cancer MRD as well as CRC MRD sometime this year.
spk07: Great. Thank you so much.
spk06: Thank you, Shanji.
spk03: The line from Credit Suisse is open. You can ask your question now. Thank you. Yang Huang from Credit Suisse, your line is open. You can ask your question now.
spk04: Okay, thank you. Yes, this is Yang from Credit Suisse, and congrats for the nice quarter. My first question is about HCC commercialization progress in the first quarter. So can you provide maybe more color HCC screen sales in the first quarter? What is the percentage in our LDD sales? And secondly, can you provide more details on the On the traditional trial, we are going to launch later this quarter for our HCT screen. I suppose we now have a complete trial design detail, and also we probably have a number of clinical trial sites in mind as well.
spk06: Yeah, sure, Yang. Yeah, to answer your first question about the update on the commercialization progress of HCCC screen. So remember, we previously guided revenue from HCCC screen will be roughly about 10 to 15% of our annual revenue of 2021. In the first quarter, I mean, at this point, we have not broken out our HCCC screen quarterly sales yet, but I can tell you that early screening revenue in Q1. You know, it's part of the reason that now IoT sales growth is quite strong in Q1. And I can also share here is that, you know, with the development of all these channels we have set up since, you know, since the Q4 of last year, we do see that the HDC screen as a new service, as a new product, has already exhibited the ability to generate sustainable growth. So we do expect the revenue from this product will continue to grow for the rest of this year. So, you know, for the channels, right, and you see that we have started the work the rollout with ICON last year. And, you know, starting beginning this year, we're in this Q1 this year, we're pretty much in all of their major health track exam centers. And we do observe the trend of the same source cells, you know, is actually growing month by month. So this is a very good trend that we observed as this reflected with the proper education or proper, you know, outreach to the customer via the effective channel, we will, we are starting to generate essentially the awareness among the high-risk population and the buying interest from these people is going strong. So this reflects our belief that, you know, at this stage, we want to work with the best of partners to invest heavily into the market education. We need to, you know, tell the people who need the early screening and where and what product to get. And that area will continue to invest along with our partners, and we believe that it will translate eventually to a high – product revenue growth. And, you know, Yang, you also, I'm pretty sure you also noticed that the recent announcement of our partnership with, sorry? So, okay. So you probably have also noticed that the recent announcement about our partnership with the JD Health. Yeah, so that's essentially another very good channel, we believe, that we will be able to effectively educate the market and will be effectively build up the brand, build up the awareness, and again, like I said, it will eventually translate to the sustainable revenue growth.
spk04: Yes, thanks. So, by the way, are you going to consider to increase your guidance for HTC Screen for this year or not yet?
spk06: Well, I think, you know, as you can imagine, all of these channels have, you know, really great potential, right? And these channels, these partnerships will position us well for future revenue growth. We have no doubt about that. But again, you know, all these partnership building and then, like I said, the market education, the penetration will take time, right? We will take our steps. We, as a company, not only, you know, focusing on commercializing the HHCC screen as LDT service, but also we're investing heavily into pushing this into a restricting trial and turning it into eventually an IVD product. And we do believe that the big, big potential, that potentially a billion-dollar revenue product like HCC screen, its full potential will be hit when you you know, get the regulatory approval. And when you are working your way over these partnerships to build, again, build up the awareness among your target population. And we do have a, you know, high expectation that we're going to complete the trial and get approval timely, you know, in a very near future. We expect now, we just restated in the earning call, that, you know, we expect to have the trial done in next year and have the assay approved in 2023. And we're also quite optimistic that we can eventually drive down the cost structure and drive down the cost and thus drive down the price and eventually obtain the national reimbursement coverage. And then that's when you will see this product reach a, hyper-growth period, and then we'll see that this product will, you know, the large-scale application of this product will eventually serve our purpose. I mean, our ultimate goal of, you know, driving down the death rate of a liver cancer. And we have, you know, we are all working very hard on that, you know, from R&D team to regular team to sales marketing team.
spk04: Okay, great. And maybe on my second question, can you provide maybe more details on the situational study for the HCV screen?
spk06: Yeah, so the registration, you know, as we stated, will start very soon and we're just finalizing the final list of the clinical site. And the trial design, Our CMO, Yunfu, mentioned in the last, you know, a couple months ago, in the last running call, we pretty much finalized that with NAMPA. And the trial design will call for a head-to-head comparison between IFT and ultrasound with our product, HCC screen, right? And, you know, it will be in the size of several thousands of patients' enrollment. And, again, like I said, you know, we do expect the trial will be completed sometime next year. So we're, you know, fully on track for that.
spk04: And, okay, I remember last time we said the trial is going to kind of do the test only at the baseline, and there will be no follow-up or very short follow-up. Is that still the thinking?
spk02: Yes, so there will be additional tests done at the same time just to get the clinical truth, so it's not just our test. As Susan mentioned, there will be comparison of our test against the AFP ultrasound, but the endpoint is the clinical truth determined by CT or MRI. And our statistical hypothesis is our test will be superior to the standard care AFP plus ultrasound in terms of sensitivity, but not inferior for the specificity. And we expect to have no fewer than maybe 4,500 patients in this new study.
spk04: Okay, just want to make sure. So we're going to have our HCC screen test as a baseline, and they are And some people will get the comparison test, the AFP and ultrasound test. And for the clinical truth test, the test will be done at the baseline or will be done after some follow-up time. Okay.
spk02: So all the patients enrolled in our study will have HCT screen test, AFP plus ultrasound, and the clinical twos turned by CT or MRI at the same time or approximately the same time.
spk04: Okay, at the baseline. Yes.
spk02: So there will be no follow-up.
spk04: Okay. Okay, okay, okay. And do we know how many sites we're going to open?
spk02: You mean the clinical sites? Yeah, the clinical sites, yes. Yeah, we're looking at both sides, probably somewhere five to eight sides.
spk04: Five to eight, okay. Number of patients is about 4,500. Okay, got it, thank you.
spk03: Thank you. Yeah, thanks again. Once again. Thank you. Once again, as a reminder, to ask a question, please press star 1 on your telephone to ask a question. To cancel your request, please press the pound or hash key. Thank you. Now hold on.
spk04: Hmm.
spk02: No more questions?
spk03: Certainly. So we have our next question from the line of Kirstie from HSBC. Please go ahead.
spk01: Hi, management. Thank you for your presentation and congratulations on your results. So I have a quick question on the COVID-19 test kit because I think for this quarter, it's quite a significant part of the IBD revenue. So I'm just wondering... So including that, first of all, for this year, what do you expect the IBD growth to be compared to last year? And overall, how much does this COVID-19 test take as a percentage in terms of the overall IBD revenue from last year? Thank you.
spk05: Right. So regarding your second question, most of the COVID tests last year was concentrated in Q1. Throughout the year, there was a small revenue in Q4 as well, but in terms of scale, Q1 was the majority part of the whole year for last year. Can you repeat the first question? Sorry, can you repeat that?
spk01: Yeah, so the first question is more on the guidance for this year in terms of IBD revenue growth.
spk05: Oh, okay. We don't provide guidance on individual revenue segment. However, as we do, we give, we reiterate our full guidance of 615 to 625 million for this year, driven by growth in all business segments from LDT to IVD and also early screening and biopharma services. And out of these, obviously, we do believe that IVD and early screening revenue will be strong growth drivers among the business segments. And this year, we continue to focus on getting more IVD solutions into the hospitals, given that last year the impact from the pandemic was still quite severe throughout the whole year, right? And this year, assuming that COVID is within good control, our diagnosis business, the key strategic focus is to target the top 100 plus hospitals and to, you know, to work with the hospitals and penetrate those hospitals with our IVD solution, the Jinchuan S5 plus Long-AIDS solution, which provides a lot of competitive advantages compared to other solutions offered by other players in this sector, given our solution provides a simpler solution as well as a faster turnaround time from sample to report only requires two days. And this has been well received by public hospitals in China. So this year, this will continue to be our focus in terms of IVD commercialization. And we intend to accelerate the number of in-hospital IVD partnerships.
spk01: Okay, thank you. And I have another question on the development services. So I understand that development service has been under pressure because it's shifting away from shifting towards biopharma services. So I'm just wondering when can we expect to see a turnaround in terms of revenue contribution from this? Thank you.
spk05: Yeah, so as with each quarter, share with the investors that within development services, our focus is really the high-value biopharma partnerships, biopharma services. And although in terms of absolute dollar amount, this is still a relatively small percentage of the total revenue. However, we do see significant 3G value from these partnerships, as Sijun introduced in the beginning. We are quickly establishing GeneTron's reputation and brand name in this community thanks to our CMO, Dr. Hu. And I think by now we can be proudly saying that we are a leading player and we have earned quite a bit of good trust from the Power Farmer community. approximately 40 partnerships already established. Many of these partnerships and contracts take time to execute, given that they are usually tied to our partners' research timeline, especially for clinical trials. We have to collaborate with them and sync up with their schedule. However, all these backlog partnerships, they will help us to established our solid foundation in this community, and we believe that this is really a good start, and we'll continue to build on top of this. And with more partnerships and word of mouth, we're confident that biopharma's revenues soon will become the prominent part of the development services, and eventually will be the major part of the development services segment.
spk01: Thank you. And in terms of dollar terms, actually, in terms of percentage terms, when do you expect the growth territory to be back to positive for development services overall?
spk05: I can't have, you know, I'm not providing a guidance on exact timeline, but I guess, you know, My estimate is that in the next few quarters, we should be able to see the development services revenue to return to positive growth trend.
spk06: Yeah, in addition to that, and then we'll start to see an even higher percentage coming from the high-value, high-margin biopharma service sector. And one more thing I want to emphasize on this one, since Sunzee's first question was about this sector as well. So we all know that the partnership or the business with these biopharma companies is not only going to generate revenue immediately for us, but also you will, I mean, in most of these partnerships will lead to a co-developer product. Or in many cases, it's a company diagnostics kit. I can tell you that one of our first partnerships, one of our first early partnerships with seasonal, right? With our new drug approved in China, we have already completed our company diagnosis kit clinical trial. It's a PDGFRA testing kit, and we do expect the approval in the near future. That will welcome our first completed company diagnosis kit project. And these kits will lead to sustainable product lending in the future, which means that some of these development services sectors, this development will lead to future IBD business growth. So we're very excited to see that the growth in this sector will, and we believe it will translate to more growth in the future in the IBD businesses.
spk01: And in terms of the higher margin that you mentioned earlier, is there like a rough range or guidance that you're looking at?
spk06: Yeah, so like Evan said, right, we cannot provide a detailed breakdown of the different business segments post-margin at this point, especially for the young business segment like the background services. So going through, it's far from being mature, right? At this stage, I guess any projection of gross margin would not be too meaningful.
spk01: Okay, no problem. Thank you so much.
spk06: Thanks.
spk03: Thank you. Thank you. If there are no further questions, I would like to hand the call back to Cookie Luke for any closing remarks. Over to you, Matt. Thank you.
spk00: Thank you again for joining us for our first 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 investor relations team. Have a good day and evening. Thank you.
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