Genetron Holdings Limited

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.

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.

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.