Genetron Holdings Limited

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.

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.

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.