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spk01: Good day and thank you for standing by. Welcome to the third quarter of 2021 Genetron Health Earnings 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 and the number one on your telephone. And please be advised that today's conference is being recorded. If you require any further assistance, please press star zero. I would now like to hand the conference over to your first speaker for today, Ms. Hokey Luke. Thank you. Please go ahead.
spk03: Hello, everyone, and welcome to GeneTron Health's third quarter 2021 earnings conference call. The company's earnings release was issued earlier today and is available on the company's IR websites. 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 provision of the U.S. Private Securities and Litigations Reform Act of 1995. Statements are not historical facts, including statements about Gene Trump House beliefs and expectations or forward-looking statements. Forward-looking statements involve inherent risks and uncertainty. Further information regarding these and other risks is included in Gintron Health's filing to the SEC. All information provided today is a separate day for this call, and Gintron Health does not undertake any obligation to update any forward-looking statements, 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 these measures can be found in the earnings release issue earlier today. Allow me to introduce the management team on the call today. Mr. Susan Wang, our co-founder and CEO of Gintron, will discuss recent business updates and upcoming catalysts. Our chief medical officer, Dr. Yunfu Hu, will discuss our early screening program. Evan Xu, our CFO, will provide financial highlights related to the unobstructed third quarter results outlined in today's release, as well as our outlook for 2021. Following management's prepared remarks, we'll open up the call to questions. During the Q&A session, our co-founder and chief scientific officer, Dr. Haiyan, and our chief technology officer, Dr. Yuzheng Zhao, 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 Juntron Health. Shizhen, please go ahead.
spk05: Thank you, Hoki. Good morning and good evening, everyone. Thank you for joining our third quarter 2021 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 the third quarter, we continue to expand our foundation as the foremost provider of precision oncology tools, tests, and services in China. Our comprehensive portfolio covers the entire spectrum of cancer management enabling our customers to address patient needs and challenges from early screening, diagnosis monitoring, as well as treatment recommendations. Turning to slide four, in spite of the COVID impact on our business in the sub-quarter, we delivered strong results with 36.2% top-line year-over-year growth on revenue of remaining be 152.5 million. Our IVD business grew over 70% thanks to the continued uptake of our S5 instrument at lung 8 NGS assay. The LDT business also increased over 30%, primarily driven by our liquid biopsy early screening product, HCC screen. We also saw notable margin improvements with gross margin at 69% compared to 62.2% in the third quarter of last year, thanks to improvement in both LDT and IVD business lines. Operationally, we have achieved significant milestones since the sub-quarter to further strengthen our precision oncology portfolio. But let me start off with our early screening segment. We're pleased to share with you that we have now initiated a NAMPA registrational trial for our early detection assay in HCC. Let me also share our update strategy on this key pipeline product. After careful considerations, in addition to the multi-omics NGS-based assay HCC screen, we have decided that the best approach would be to add a PCR-based assay to our registrational strategy. This structure will allow us to more broadly cover the market and potentially accelerate market penetration with a test. Dr. Hu will present more details on this later on the call. Turning to slide five, on the MRD side, our efforts have resulted in a very exciting and major achievement recently. Last night, we have announced a multi-year co-development agreement with AstraZeneca R&D China for the NGS-based personalized MRD test for solid tumors in China. This is a significant milestone for Gen-Chon, as the collaboration highlights the value of the MRD solid tumor data generated by our proprietary mutation capsule platform. More importantly, with AZ's support, we expect the partnership to further accelerate development timeline for this assay. With this partnership, the companies will jointly invest capital and will work together to develop and validate these assets for cancer monitoring and recurrence in China. A joint committee will also be established to oversee the product development. In addition, for solid tumor clinical trials in China that incorporate the use of NGS-based personalized MRD tests, AZ plans to use this co-developed MRD test for all China-specific trials. The companies may also expand the partnership later to include IVD registration and commercialization. Overall, this agreement represents the first step of a long-term exclusive collaboration, and the partners' goal is to develop a world-class tumor-informed MRD product. We are optimistic about MRD solid tumor market in China, and in particular, Jingcheng's competitive position after this collaboration. Currently, there are only a handful of companies in China that may have the capability to develop a high-performing MRD assay. AZ's clinical capability and leading position in oncology will significantly enhance our product development. Also, the use of the co-developed assay in many of their China trials not only will represent revenues for us, but the accumulated clinical experience will be valuable in our product optimization process. Beyond this tumor-informed MRD assay, internally, we are also exploring a tumor-naive MRD approach. We look forward to sharing more updates as these programs proceed. In regards to MRD data release, recently, analysis of personalized MRD assay developed based on our mutation capsule technology has been published in the Journal of Hematology and Oncology. a high impact journal. The study has shown excellent sensitivity to detect 0.001% tumor DNA in precise prediction of peritoneal dissemination in gastric cancer patients through use of the peritoneal lavage fluid. This is an exciting validation of our technology's ability to detect MRV recurrence in the fluids. As for solid tumor blood-based MRD data, we continue to anticipate publications by the first half of 2022. For second MRD in blood cancer, recently we announced an exclusive partnership with Fusum Pharma to co-market and co-promote the assay in hematologic-focused hospitals and clinics across designated regions in China. FUSEN has a robust sales force of roughly 1,500 representatives to sell innovative drugs that target hematologic and lymphoid malignancies, solid tumors, and others. They will be a strong partner for us providing the opportunity to leverage the sizable sales force and the valuable relationships with clinics, hospitals, KOLs, and distributors. Our second MRD assay has been optimized. with our proprietary one-step SEEK technology, which enables the DNA library construction process for gene sequencing to finish with a single PCR reaction. This simple operational feature, together with our fully automated bioinformatics solutions, enable SecMRD to achieve high throughput and accuracy, good uniformity, high cost efficiency, and fast turnaround times. when compared with traditional detection methods. To date, SeqMRD has been tested with thousands of samples of LLL, ALL, MM, and CLL in China. The recently Nampa Center for Drug Evaluation issued guidelines for MRD testing in multiple melanoma clinical trials. We're pleased with continued support of MRD testing in blood cancers in China and believe our NGS-based SecMRD represents an innovative and competitive option in the market. Turning to slide six, moving on to discuss our Balfama service business. In third quarter, we have signed on an additional seven Balfama partners, increasing the total now to 47 partners. We continue to see a strong pipeline as we have the opportunity to form partnerships through our key products, including SecMRD, on Copan scan, fusion scan, and others. In China, the trend of CDX demand is becoming stronger, resulting from NAMPA's increasing focus on genomic testing for innovative targeted immunotherapies. In the U.S., our CLEAR lab in Maryland is up and running, providing us with a solid platform to offer services for cross-border trials and CDX developments. With a booming Chinese biotech sector, we are optimistic about our growth in this business segment. Recently, we announced a strategic partnership with Neogenomics to drive global oncology drug research and development. As outlined in this agreement, the partners will provide select harmonized clinical trials global translational research for pharmaceutical groups and technology platform providers that need a China arm for global or China-focused trials. Additionally, Neogenomics will support our trials in the US, APJ, and the EMEA regions. Combined, the two partners have 15 CAP-accredited and CLEAR-certified laboratories. a collective team of hundreds of scientists and a seasoned clinical drug trial and pharmaceutical service team. These assets will enable business partners to synchronize global clinical drug trials and companion diagnostic development. Lastly, on slide seven, we have achieved a major milestone in November with the receipt of CE mark for our tissue-based large panel on Copanscan. mutation detection kit. In China, we have completed the typing test for our registrational trial, and we plan to initiate enrollment in the first quarter of 2022. I will now turn the call to Dr. Hu to provide more color on our HCCC Early Screening Registrational Trial Details and Strategy. Yunfu.
spk07: Thank you, Mr. Deng. Let's go to slide A. As Stan mentioned earlier, we are advancing our early detection liver cancer program with two assays. In addition to the multi-omics NGS-based assay HCC screen that we have discussed in the past, we are introducing a methylation multi-marker PCR-based assay named HCC-SCAN. First, let's discuss HCC-SCAN. A couple major policy developments emerged in the last year. which led us to decide that adding a PCR-based assay to the program would be a wiser approach. The first development was government infrastructure build and spending. In China, PCR has a more established presence and readily available workflows in many hospitals and clinics. After the COVID-19 outbreak, the state council has required hospitals at the county level and above to establish capability for nucleic acid testing, which further accelerated the PCR in hospital testing market. The second development was related to government insurance coverage. A few months ago, DNA methylation under genetic testing was included in some of Beijing and other provisional insurance programs, establishing a benchmark pricing of around $1,800 for methylation-based tests and around RMB 1500 for NIPT NGS-based testing. Based on this development, our company says that adding a high-performing PCR-based assay would potentially expand the coverage of the product. In addition, for the self-paid population, China has a unique fragmented market where affordability could vary significantly across the country. offering a pcr product can also provide selfie patients in lower tier markets with a cost optimal solution as such we have selected nine clinical sites and have just started our patient enrollment in a registration trial for hcc scan in this trial we are evaluate hcc scan alone first it's a skin plus ultrasound versus standard care, which is ultrasound plus AFP, with the target of 5,000 patients, a similar cohort size HCCC screen. The trial is expected to complete by the end of 2022. As far as HCCC screen and GSPACE trial, we continue to be committed to this trial and have further progressed with our preparation work. We have selected our assay platform. and have complete optimization and lockdown of our algorithm of HSC-SCREEN. In addition, with the ongoing PCR trial to be taking place at nine sites, we plan to select and narrow down to four to five of these sites that we believe are more suitable and efficient to run our NGS study. The design of the NGS trial remains unchanged, which would be head-to-head trial of 5,000 patients compared HSC-SCREEN versus ultrasound plus AFP. We expect patient enrollment to start in the next few months and for the trial to be complete by the end of 2022, as we discussed in the past. Overall, with a broad strategy to offer agency scan and agency screen, we are confident that we can deploy both in-hospital and central lab models to increase accessibility and penetrate the market more efficiently. We have communicated our trial design plans with NMPA and continue to project potential NMPA approvals of both HTC Scan and HTC Screen in 2023. As for early screening in other countertypes, we have gathered preliminary case control CRC data. Moving to slide A, that's slide number nine. Based on mutation capture technology, we have developed a blood-based profiling assay profiling bulk LMIX biomarkers, including methylation, mutation, and copy number variations from CFDA. The algorithm was trained in a retrospective cohort of 100 cases and 100 controls and validated in an independent cohort of similar size. The assay provides greater than 90 percent sensitivity with a specific goal of 95 percent. These are encouraging results, and we plan to release full details of this cohort through publication sometime in 2022. Finally, shown on slide 10, I would like to highlight the HCC screen results were recently published in Chinese Journal of Hematology, this peer-reviewed journal, including two articles on HCC screen. First, expert consensus concluded that HIT study data that we reported in March this year from 5,615 patients showed better screening performance than AFP plus ultrasound. And the assay performed diagnostic value for identified early stage HCC. The second expert-reviewed article suggests that multi-omic strategy could offer higher sensitivity and specificity in FP for early HTC screen and monitoring. This journal is a prestigious publication in the liver disease medical community in China and is viewed as having significant influence on clinical practice among physicians. We are excited there are innovative approach and prospective study results were well received by the leading industry experts. I will now turn the call to our CFO, Mr. Evan Shi, to provide more details on our third quarter financials. Evan?
spk04: Thank you, Yunfu. 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 a year-over-year basis. Starting on slide 12, in the third quarter, total revenue increased by 36 percent to a RMB 153 million from 112 million in the same period of 2020. Diagnosis and monitoring revenue increased by 42% to RMB 144 million in the third quarter this year from 102 million in the prior year. LDT revenue increased by 30% to 93 million during this quarter from 71 million in the last year. LDT diagnostic tests sold in this quarter totaled approximately 5,900 units, similar to a year ago. In the third quarter, sales of LDT services included sales of our early screening tests. We continue to be pleased with our liver cancer early screening and sales uptake, and a growing adoption in the market. with continued support from our collaborations. These include work we are doing with JD Health, ICON, Wuxi government, et cetera. Moving to slide 13, IVD revenue increased by 71% to RMB 51 million in the third quarter of 2021 from 30 million in the prior year. The increase was mainly driven by sales of the sequencer as well as IVD kits. As of the end of the third quarter, we had a total of 54 hospital contracts, including 29 IVD ones. Our pipeline continues to be strong as we signed on several additional IVD contracts since October. An expanding installation base is expected to drive our reagent and overall sales in the coming quarters. Revenue generated from the development services decreased to $8 million in this quarter from $10 million in the prior year. This was mainly driven by the decline in sequencing services as we continue to focus on higher margin biopharma services. Biopharma services revenue in this quarter continued to grow compared to a prior year. Moving to slide 14, cost of revenue increased by 12% to RMB $47 million for this quarter compared to $42 million in the prior year. Gross profit increased by 51% to RMB $105 million in the third quarter of 2021 from $70 million in the prior year. Gross margin improved to 69% compared to 62% in the prior year thanks to higher gross margins for both the LDT and IVD business lines. In particular, gross margin for our LDT segment was 70% in this quarter compared to 69% a year ago. For our IBD segment, gross margin was 76% versus 61% in the prior year. Thanks to our one-step seek technology and our capability to manufacture the HG in lung cancer assay with our own raw material sources, we are able to enjoy healthy margins. Operating expenses increased by 79% to RMB 230 million for this quarter, compared to 122 million in the prior year. Operating expenses are broken out on slide 15 and are as follows. Selling expenses increased by 56% to RMB 95 million in this quarter, from 61 million in the same period of 2020. Selling expenses ratio decreased to 62% from 54% in the prior year. The increase was primarily resulted from increasing headcount to expand our core businesses as well as early screening sales teams. Administrative expenses increased by 94% to 63 million in this quarter from 32 million in the prior year. Admin expenses ratio increased to 41% in this quarter from 29% in the prior year. The increases were mainly due to more headcounts, higher professional fees, and IT expenses. Research and development expenses increased by 62% to RMB $62 million in this quarter from $39 million in the same period of 2020. R&D expenses ratio increased to 41% in this quarter from 34% in the prior year. The increases were driven by higher R&D headcount and related expenses, as well as continued innovation efforts, including key product development and clinical trial activities. As a result, operating loss was 125 million for the third quarter, compared to 59 million last year on slide 16. Net loss for the period was RMB 130 million compared to $48 million for the third quarter of 2020. We are also providing non-EFERS net loss figures as management believes these figures would be helpful to show the trends of our underlying business. Non-EFERS net loss excludes share-based compensation expenses, fair value change, and other loss of financial instruments with preferred rights. Non-EFERS net loss was RMB $110 million for this quarter compared to $44 million for the prior year. Basic loss per ordinary share was RMB 0.28 for the third quarter of 2021 compared to RMB 0.11 for the same period of 2020. Now, IFRS basic loss per ordinary share was RMB 0.24 for the third quarter of 2021 compared with RMB 0.1 for the same period of 2020. Diluted loss per ordinary share is equivalent to basic loss per share. We have a very strong cash position. Cash and cash equivalents, restricted cash, and current financial assets at fair value through profit and loss were close to RMB $1 billion or US dollar $156 million as of September 30, 2021. Now moving to discuss our outlook for 2021. Let's go to slide 17. While we were pleased with the resilience of our business in the third quarter, the COVID situation has worsened since October as the Delta variant continued to take hold in China. Although the absolute total number of COVID cases remains small compared to the other parts of the world, health officials in China continue to maintain a zero COVID policy. More than 20 provinces and regions in China have reported new cases since October. And the control measures in the form of lockdowns, mass testing, travel restrictions have been implemented diligently across many places to contain the spread of the virus. In many of our key markets, including Beijing, Shanghai, Liaoning, and Jiangsu, patient traffic to hospitals has been limited which significantly impacted our LGT segment, since it is highly reliant on patient visits. In Beijing, in anticipation of the Winter Olympics and the National People's Congress in 2022, restrictions have been particularly severe, and this level of high alert is likely to persist. Moving to slide 18, in the second quarter, we communicated that if the COVID situation sustained or worsened, we would update our revenue outlook for the year. At this point, we believe this new COVID wave and the related restrictions to be more persistent than originally anticipated. As such, we are now revising our 2021 expected revenue to be around RMB 530 million, representing approximately 25% of growth compared to 2020. This concludes the discussion of our third quarter financial results. I will now turn the call back to Sujin.
spk05: Thank you, Evan. In closing, we're very pleased with the success we've achieved both financially and operationally in the face of adversity related to COVID. I would like to emphasize the strong underlying long-term fundamentals of our business, and we remain very well positioned to drive substantial growth through continued commercial, clinical, and pipeline development execution. Shown on slides 20 and 21, we remain focused on the development of 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. Last but not least, we also continue to see favorable market environment for our business under China State Council's Healthy China 2030 plan. The goal is to increase five-year cancer survival rate from the current approximately 40% to over 46%. As a leading precision oncology player in China, we expect the rapid emergence of target and immunosupplies will increase demand for our diagnosis and monitoring business, as well as our biopharma services. While early detection, particularly liver cancer, also remains a focus for the government, and the companies with differentiated technologies like us are highly encouraged to introduce innovative solutions to address unmet medical needs. Recently, the National Health Commission also issued a Oncology Diagnosis and Treatment Quality Improvement Action Plan as its key task from 2021 to 2024. Under this action plan, one of the key initiatives is to improve cancer diagnosis capabilities and standardize the management of medical testing laboratories. Jingcheng welcomes these policies that target to raise industry standards. For example, for our Guangzhou lab, we have recently passed a final review of our oncopan scan as that LDT test by Guangdong Center for Clinical Laboratories. Overall, we remain confident about the growth prospects of the precision oncology sector in China, and we anticipate Jingchang to be a continued beneficiary from the policy tailwind. This concludes the prepared remarks portion of today's call. Operator, we are now ready for questions.
spk01: Yes, thank you. As a reminder, to ask a question, you will need to press the star and the number 1 on your telephone. To withdraw your question, please press the pound or hash key. And please stand by while we compile the Q&A roster. Once again, please press star 1 on your telephone. Our first question is from the line. of Soonji Nam of VTIG. Your line is open. Please go ahead.
spk00: Hi. Thanks for taking the questions, and congratulations on all the progress that you're making. So my first question is on the PCR versus the NGS-based HCC scan versus HCC screen. Are there any kind of comparisons in terms of performance characteristics at this point? Or is the point of the PCR-based trials to see if the performance characteristics are comparable to the NGS? And what's kind of your expectation there from the performance characteristic standpoint between the two assays?
spk05: Yes, Sanjeev, this is a very important question. Thanks for raising it. So obviously, we've done our homework before we decided to go forward with the registration or trial for HCC scan. So maybe we'll have our CTO, Dr. Yuchen Zhao, to address the performance data question.
spk02: Thank you for the question. We have already visited the PCR-based IC, the HCC scan, in three different cohorts, and it shows 85 to 90 percent sensitivity in this retrospective case control cohorts with the specificity of 90 to 95 percent. We do not have the data on the direct comparison of both HCC-SCAN, the PCR-IC, and the HCC-SCRIN, the NDRI-SIC, because you know, we get limited DNA from one blood draw and we don't want to split them to the PCRIs and the NGS. Thank you.
spk00: Okay, gotcha. That's very helpful. And then was curious about what are your next steps for the early CRC screening test? I realize you'll be publishing the initial data, but curious what are the next steps from a development timeline standpoint?
spk05: Oh, the question is about the CRC update, right? So you want to, the question is on the CRC update, right? Okay. Yeah. Okay.
spk02: Yeah. Yeah. We are planning to submit and try to publish the retrospective cohort data early next year. Meanwhile, we are going to start the prospective cohort validation, which is very important for the early screening, as you know. Thank you.
spk05: We're, in fact, very encouraged by the retrospective study data we have shown. so far, and we believe that with the infrastructure that we have built through the prospective cohort study on HHCC screen, as well as the real world cohort that we established through the HHCC screen commercialization, we will have a much better infrastructure to launch the prospective cohort study for this new assay, the CRC assay. And we anticipate we will actually complete the prospective cohort study in the next year or so. And we will be able to move this product into potentially a registrational trial. And also we can launch as a, we can start a pilot launch for the access commercialization.
spk00: Gotcha. And then just lastly for me, just to clarify on the MRD solid tumor partnership with AstraZeneca, does that include, you mentioned that you were also looking at the tumor naive approach down the road. Is that the tumor naive approach included in this current partnership? And also if you could talk about which of the cancer indications do you think are kind of, you know, maybe on your priority list at this point, given the Chinese market for cancer?
spk05: Yeah, so the collaboration with AZ is based on our tumor-informed product, right? And it is a multi-cancer study. But obviously, you know, the lung cancer will be the number one goal. And I think in the joint together with, you know, AZ, we will have a very good combination of clinical resources and experience to expedite the product development. And, you know, in the past research that the GeneTrans conducted, we have accumulated, you know, good data on other cancer types as well, such as liver cancer and CRC. And, you know, as we mentioned in the conference call, we do expect to published the study's results in the first half of next year, 2022. In terms of tumor-naive, I think probably Yuchen can share some details here.
spk02: Yeah, as Zijie mentioned, we have collected the samples in clinical trials and the data, in addition to the gastric cancer, which has been published, we also have liver cancer, CRC, and some ovarian cancer data. That's based on the personalized assay tumor-informed. But according to the feature of our technology mutation capsule, we can test one sample for multiple times with different assays. This means we are testing the tumor-naive assay. We can test the tumor-naive assay in all these samples so that we can have the information or the performance of the tumor-naive universal panel immediately without having to collect the new cohorts, collect new clinical information to get the association. We can compare the tumor-naive assay with our already very solid personalized method to optimize the algorithm and to see, to check how they can predict the prognosis. Thank you.
spk00: Great. Thank you so much.
spk01: Thank you. Once again, for those who wish to ask a question, please press star and the number one and wait for your name to be announced. Our next question is from the line of Yang Huang of Credit Suisse. Please go ahead.
spk06: Thank you. My first question is also about HTT scan. a new strategy for our screen portfolio. So I want to understand the HCC scan is testing methylation sites. Are those methylation sites also being tested in our HCC screen or just using kind of different approach or kind of what I mean is the difference between the two tests? besides the approach, why the NGS, why the PCR?
spk02: Yes, thank you for the question. The HDC scan has the methylation size basically included in the panel of the HDC screen. So when we are setting up this QP-SAR-based IC, we start from the methylation size in the panel of HTC screen which we use to apply for the FDA breakthrough device designation. We also add a few methylation slides that are not included in that panel because those slides cannot be detected by the method with the NDRIAS, but can be detected by our QPSR-IC. In this case, we have the training panel, and after the training and setting up the We've got a panel of six methylation sites, and most of them are from the HCC screen. Thank you.
spk06: I see. And you're saying that we are trying to accelerate the HCC scan, right? Because we are targeting nine molecular sites for HCC scan trial, but we are only... using 425 clinical slides for HCC screen, right? So it seems like the HCC scan will be a faster trial. So does that mean kind of our strategy is kind of shift to focus on PCR first and then then NGS next?
spk05: Yeah, so maybe let me address this question first and then Yunfu, you can feel free to add on more details. So first, let me clarify, right? So we emphasize in earning call, we still anticipate to complete both trials, HCC scan, HCC screen, by end of next year, and we anticipate to get approval from NAMPAD on both assets. We also mentioned that we will start with nine sites for HCC scan, and we will select four to five sites for HCC screen. The reason that we're limited in numbers of the clinical trial sites for HCC screen is because we have selected the NGS platform for the NGS assay. It's a lot more preparation work in terms of the instrument installation, in terms of the patient enrollment, essentially the testing after the patient enrollment for a NGS assay, so we believe it'll be good to choose the bigger size or the size more suitable for NGS operation. So all in all, we anticipate that for a long period or for a large portion of next year, we will have these two trials moving forward in parallel. So again, the value of launching or implementing a PCR-based methylation detection kit for liver cancer screening is we believe that with all the infrastructure that the PCR machine has been installed up to the county-level hospital due to the China policy to fight COVID-19 across the nation, we feel that to having a a methylation or PCR-based assay will greatly broaden the coverage our product offering and will greatly help the speed of the market penetration when we launch both products. So, you know, the combination of these products will enable Jinchang to solidify, you know, our leading position in this, you know, huge liver cancer early screening market in China.
spk06: Okay, got it. And my last question is about our number. For LDT, I believe, LDT, we said the number of tests is more or less similar in 3Q compared to last year's 3Q, but revenue increase. Does that mean pricing increase or there's a significant change or mix of the tests?
spk04: Sure, so as you have followed us, our LDT services include both LDT diagnosis as well as the LDT early screening revenue. As you know, we started to commercialize our early screen liver test primarily this year. So this is also because as of the first year, contribution from this is still not significant, right? So the LDT revenue does include both. And you noticed the number of tests. As mentioned in the call earlier, you know, we looked at the COVID outbreak, and especially starting from Q3, since October, the widespread to over 20 provinces has had a direct, you know, hit. on the hospitals. That is more correlated to the LGT diagnosis service revenue. Q1 and Q2 were relatively okay, but Q3 and Q4, we are seeing a worsening, given that the wider region of our business are now in the COVID region. For early screening, For early screening, all in all, this year represents a strong growth from last year as we started to work with our collaborators to commercialize. Looking ahead to Q4, we do see that there are some softening, given that originally we were hoping that Q4 would be a very strong quarter for us this year. given that towards the end of the year, the government spending, first of all, it's usually a peak season. Secondly, there are the opportunities for government increased spending. However, given the current environment, we do see that there are, you know, some suction into the early screening business as well entering into Q4. So that's how we look at the numbers, and that's why, you know, made an adjustment to the overall outlook for this year.
spk06: Okay, thanks a lot.
spk01: Thank you. Once again, for those who wish to ask a question, please press star and the number one and wait for your name to be announced. For your questions, please press star and the number one. For your questions, please press card number one and wait for your name to be announced. No question as of this moment, and I would like to hand the conference back to Ms. Hokey Luke for closing remarks.
spk03: Thank you again for joining us on third quarter earnings and business update call. We appreciate your ongoing support. If you have any questions, please do not hesitate to reach out to the IRT. Thank you, and have a good day.
spk01: Thank you, and this concludes today's conference call. Thank you for participating. You may now disconnect.
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