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spk01: Good day, and thank you for standing by. Welcome to the fourth quarter 2021 Gentron Health Earnings Conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during this session, you will need to press star 1 on your telephone. Please be advised that today's conference may be recorded. If you require any further assistance, please press star then 0. I would now like to hand the conference over to your host today, Hokie Luke, Head of Investor Relations. Please go ahead.
spk03: Thank you. Hello, everyone, and welcome to Gintron Health's fourth quarter and full year 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 Ginteron Health's beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. Further information regarding these and other risks is included in Ginteron Health's filing to the FCC. All information provided today is as of the date of this call. and GeneTron Health does not undertake any obligation to update any forward-looking 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 those measures can be found in the earliest release issued earlier today. Allow me to introduce the management team on the call today. She's in Wang, co-founder, chairman and CEO of FinTron Health, will discuss recent business updates and upcoming catalysts. Evan Hsu, our CFO, will provide financial highlights related to the unanswered fourth quarter results outlined in today's release, as well as our outlook for 2022. Following management's prepared remarks, we will open up the call to questions. During the Q&A session, our co-founder and chief scientific officer, Dr. Haiyan, Chief Technology Officer, Dr. Yuchen Zhao, and Chief Medical Officer will also be available to answer questions. With that said, I would like to turn the call over to Mr. Zhijun Wang, Co-Founder, Chairman, and CEO of Jintran Health. Zhijun, please go ahead.
spk06: Thank you, Hokey. Good morning and good evening, everyone, and thank you for joining our fourth quarter and full year 2021 EARLINGS Conference Call. First, I would like to direct you to the supplemental earnings presentation on our investor relationships website and begin on slide two. 2021 was indeed a year filled with accomplishments for Genetron. Our total revenue grew over 25% year over year, highlighted by our continued penetrations in the cancer diagnosis and monitoring market, as well as the liver cancer early screening segment. We also established several key partnerships with the likes of AstraZeneca, Fosun Pharma, and recently with HatchMed to develop new tests and expand the commercialization of existing tests while further validating our products and technologies with impactful publications. In 2022, We're excited to build on this momentum by advancing our pipeline to broaden our precision oncology platform and to enhance our value proposition. If you turn to slide four, as a foremost provider of precision oncology products and service in China, our comprehensive portfolio covers the entire spectrum of cancer management, spanning early screening, therapy selection, MRD monitoring, and developing CDX with biopharma companies. In 2021, we grow diagnosis monitoring revenue by 28% to RMB 492.4 million. The primary driver of this growth was a 64% increase of IVD in hospital cells, driven by greater adoption of our sequencing platforms and assets including the JingChuan S5 instrument and the aging lung cancer assay. As some of you may know, in China, as the current regulations stand, the IVD in-hospital market is a segment where there is a clear pathway for potential government reimbursement. Moving forward, we intend to invest resources to further penetrate the in-hospital market with our solutions. We're very pleased that we have gained good traction in the past few quarters by establishing 30 IVD hospital contracts at the end of the year 2021. On the LDT side of the business, we grow revenue by 16%, led by sales of our early screening tests, in addition to our LDT diagnostic test volume growth of 11%. This was the first full year that we introduced our early screening test as an LDT. And we are happy with the performance and believe that early screening access will be a growth driver continuously for 2022 as we continue to roll out our commercialization strategy. The COVID impact headwinds persisted in the fourth quarter and weighted on top-line year-over-year growth of 10% on revenue of renminbi 146.9 million. Our IVD business grew over 66% thanks to the continued uptake of our S5 instrument and Long 8 NGS assay. The LDT business was more heavily impacted by China's zero-COVID strategy. As we discussed in the past, zero-COVID focus of the government has led to large-scale testing and other travel restrictions throughout the country's outbreak areas and resulted in declines in patient traffic to many of our LDT customers. Operationally, we had an eventful year focused on further strengthening our position on college portfolio, and now I will discuss a few of the key developments. So let me start off with our early screening segment on slide five. In November, We initiated a NAMPA registrational trial for our early detection assay in HCC by beginning the enrollment for the trial of our methylation multi-marker PCR-based assay, HCC scan. Recall that this was a 5,000-patient trial in nine planned clinical sites, of which we have started in five sites already. We also intend to select some of these same sites for our multi-omics NGS-based HCC screen trial. The HCC screen trial has been slightly delayed based on COVID-related disruptions, but we do plan to enroll subjects around end of the second quarter. We continue to believe that this structure of both PCR and NGS tests would be a sound strategy. PCR has a more established presence and readily available workflows in many hospitals and clinics in China. and the trend continues to accelerate based on the nucleic acid testing needs and the associated government-led infrastructure built since COVID. In addition, a few months ago, DNA methylation and other genetic testing were included in some of Beijing and other provincial insurance programs, establishing a benchmark pricing of around RMB 800 for methylation-based tests and around RMB 1,500 for NIPT NGS-based testing. Based on these dynamics, our company sees that adding a high-performing PCR-based assay would be commercially viable, while also providing self-paid patients in lower-tier markets with a cost-optimal solution. So overall, we're confident that we can deploy both in-hospital and central lab models to increase accessibility and penetrate the liver cancer early screening market more effectively. As for our HCCC screen plans in the U.S., we have started a confirmatory study with two leading medical institutions in the U.S. and may present data at an upcoming conference later. So beyond liver cancer, we have plans to develop a multi-cancer product in the future. We have already shared some early retrospective CRC data during our last earning call, showing over 91% of sensitivity and 95% of specificity. We continue to expect the CRC data to be published sometime in 2022. So now turning to slide six, on solid tumor MRD, recall that we have announced a multi-year co-development agreement with AstraZeneca R&D China for an NGS-based personalized MRD test in China. MRD testing may help in the clinical management for patients. Well before metastatic lesion growth of the glisten size detectable by conventional methods such as MRI and CT scan, both AZ and JingChang teams have been working together very diligently since the partnership started. Assay optimization is currently ongoing and expect to finish by year end. Concurrently, we are also planning a pilot LDT launch in the second quarter and expect to expand the official full launch before year end. Recall that with this partnership, AZA plans to use the co-developed MRD test for China-specific solid tumor clinical trials. that are designed to incorporate the use of NGS-based personalized MRD tests. The companies may also expand the partnership later to include IVD registration and commercialization. So touching on the specific development plan for this co-developed personalized assay, the assay prototype development has been complete based on our proprietary mutation capsule platform. We have shown great analytical validation results as demonstrated by gastric cancer data in the publication on Journal of Hematology and Oncology in which the personalized assay showed excellent sensitivity to detect .001% tumor DNA from peritoneal lavage fluid samples for precise prediction of peritoneal dissemination. In terms of clinical validation work, Data in locally advanced rectal cancer patients were recently published in eBiomedicine, part of the Lancet Discovery Science. So in the study, analysis was conducted on different MRD approaches after neoadjuvant therapy. We're also excited the publication has been accepted for a high-impact journal for our HCCC MRD data, and it is expected to be available in the next few months. So these data are highlighted in slides 9 and 10. The chart on slide 7 shows the general workflow of the tumor-informed approach. Essentially, mutation markers are selected based on whole exon sequencing of tumor tissues, and a personalized panel is then designed for subsequent blood-based cdDNA testing. The advantage of this approach is that the panel performance is maximized and the false-positive and negative results can be avoided as much as possible. The disadvantage is that this method requires tumor tissue sample and is a costly and long design process. On slide eight, we would discuss the advantage of using mutation capsule technology in solid tumor MRD development. The mutation capsule is a method for detecting mutation and methylation of tumor-specific genes in ctDNA. and it supports both our early screening tests as well as our tumor-informed and tumor-naive assay developments. The platform enables multiple test analysis based on single cfDNA sample, thereby reducing panel validation time and providing head-to-head comparisons between multiple MRD strategies. So beyond tumor-informed MRD assay, we're also exploring tumor-naive MRD approach based on mutation capsule to evaluate the performance of different types of biomarkers, including mutation, fragmentation, methylation, et cetera. We look forward to sharing more updates as these programs proceed. Mutation capsule also allows more sensitive detection in low-yield CFDNA samples with higher conversion efficiency of CFDNA molecules. Just last week, the China National Electrical Property Administration granted an invention patent to Jingcheng. We're very excited this grant further strengthens our competitive position in developing new assets in emerging segments such as MRD and early screening. On slide nine, we present the analytical validation of our tumor-informed MRD assets in gastric cancer. In a prospective cohort, of 104 gastric cancer patients. The MRD assay detect all the cases that developed peritoneal dissemination with 100% sensitivity and 85% specificity. MRD positive patients were associated with decreased recurrency-free survival and overall survival. On slide 10, we present our clinical studies comparing personalized assays with fixed panel assay in CRC and liver cancer, respectively. Compared with personalized assay, the performance of MRD profiling based on fixed panels varies on different tumor types and clinical application scenarios. So for second MRD in hematological cancers shown on slide 11 is a validation data from 128 clinically confirmed patient samples. The positive detection results of traditional flow cytometry and secMRD were highly consistent. Notably, 10 cases were detected MRD-positive by secMRD but negative by FCN. Suggesting higher sensitivity of the secMRD in this study, we believe this is the first validated NGS-based MRD detection assay in China for hematological malignancies. Commercially, our pilot launch with Fusum Pharma that started in January is progressing well. Based upon positive market feedback, we're planning for a full launch of SecumRD in the second quarter. This assay is also generating many dialogues with biopharma partners with just a sign of partnership with Juno WC, the JW Therapeutics. We anticipate a few more partners, influential partners, to sign on in the next few months. So overall, we're pleased with continued support by the healthcare authorities of MRD testing in hematological cancers in China, and believe that our NGS-based SEC MRD represents an innovative, competitive option in the market. So turning to slide 12, moving on to discuss our biopharma service business. In the fourth quarter, we have signed on additional 13 biopharma partners, increasing the total now to 60 partners. We continue to see a strong pipeline as we have the opportunity to form partnerships through our key products, including SeqMRD, OncopanScan, FusionScan, and others. For OncopanScan, CE marked comprehensive genomic profiling panel. A few posters utilizing this large panel product would be presented at the upcoming AACR, including its capability in revealing molecular profiles of pediatric and adult sarcoma, gene fusions in glioma patients, and germline gene alteration and mutation in glioma and gastric cancer. For our registrational pathway, OncoPenscan has passed the typing test. that we're finishing the site selections and the patient enrollment is planned to begin in late second quarter of this year. Slide 13. Recently, we have announced our CDX partnership with HutchMed for salmoneed TNIP in non-small cell lung cancer using our already marketed aging lung cancer IVD assay. As mentioned, Our aging lung cancer assays are already gaining very good traction in the IVD in-hospital use market. We're excited about this partnership as it is our second major CDX after our first one with system for , which has already entered the NAMPA priority review and approval process. In China, the trend of CDX demand is growing stronger, resulting from NAMPA's increasing focus on genomic testing. for innovative targeted immunotherapies. This, together with our CLIR lab in Maryland, provide us with lots of opportunity to work on cross-border trials and CDX developments. We anticipate continued strong growth in this exciting business segment. So now let's move on to slide 14. So this shows our approved IVD products as well as those in the registration pipeline. We have a strong NAMPA-approved product portfolio, which gives us competitive advantage in driving the in-hospital model and IVD revenue growth. Our registration pipeline represents one of the most comprehensive molecular testing pipelines in the market. I have touched upon Oncopan scan, HCC scan, HCC screen, lung cancer aging CDX and PDGFRI kits, We have, in fact, two more products under development. Firstly, the thyroid basic, a PCR-based kit that was developed as an essential tool for molecular classification and prognosis for thyroid cancer. We're currently conducting a registrational trial for thyroid basic at four clinical sites. We anticipate a complete trial in 2022 with potential IVD approval next year. China has more than 220,000 thyroid cancer new incidence per year. These assets can leverage the existing and expanding PCR presence in China, providing smaller and mid-sized hospitals with more options. So secondly, we're launching a new liquid biopsy genomic profiling panel in a very exciting new product, and we look forward to sharing more updates in the coming months. So now I will turn over the call to our CFO, Mr. Evan Chu, to provide more details on our fourth quarter financials. Evan.
spk05: Thank you, Sujun. Now, I will provide an update on the 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 16, in the fourth quarter, total revenue increased by approximately 10% to RMB $147 million from $134 million in the previous period. Diagnosis and monitoring revenue increased by 5% to $130 million in the fourth quarter 2021 from $124 million in the same period of 2020. LDT revenue decreased by 11% to $86 million during the fourth quarter LDT diagnostic tests sold in the fourth quarter actually increased by 10% to approximately 5,880 units compared to a year ago. So the reason behind is that in addition to a challenging operating environment due to COVID for our core LDT business, LDT sales declined during the quarter was also due to two factors. Firstly, We launched our Wuxi government partnership for HCC screen in the fourth quarter in 2020, and it recorded a large initial sales order, presenting a high base for comparison in this quarter. Secondly, our early screening sales was also impacted by the COVID-related slowdown in the city of Wuxi. For the full year 2021, we grew about 60% in testing volume for HCC screen. So we are pleased with our overall early screening sales uptake in the full year, as well as the growing adoption in the market. We have continued support from our collaborations, along with our own initiatives for in-hospital sales efforts, which started in Q4 2021. Moving to slide 17, IVD revenue increased by 66%. to 44 million in the fourth quarter of 2021. The increase was mainly driven by cells of GenTron S5 instrument, as well as the HG in lung cancer assay. As of the end of the year, we had a total of 58 hospital contracts, including 30 IVD ones. Our pipeline continues to be strong. An expanding installation base is expected to drive our tests and overall sales in the coming quarters. Revenue generated from development services increased by 61% to $17 million in the first quarter of 2021. This was primarily driven by the growth in revenue generated from biopharmaceutical services. Moving to slide 18, let's look at the gross profit margin. In the first quarter of 2021, cost of revenue increased by approximately 27%, and therefore overall gross margin was 57% in the quarter compared to 63% in the same period of 2020. In particular, gross margin of our LDT segment was 65% compared to 69% a year ago. The reason behind this decrease is that in the fourth quarter 2021, We have started to introduce HCC Scan to our China partners, such as ICOM Health Check Centers, for their corporate clients. We also introduced this product in our own direct sales team for our hospital partners. These new promotional events have impacted our gross margin temporarily in a quarter. We believe that the launching of HCC Scan would help us strategizing strategizing our commercialization plans prior to potential approval of this asset. For IVD segment, gross margin can have quarter-over-quarter fluctuations due to product mix shifts. And in first quarter 2021, our IVD gross margin was 55% versus 62% in the prior year. Operating expenses as shown on slide 19, during 2021, We invested resources in organizational buildup. This primarily includes, firstly, R&D expenditure for MRD projects. Secondly, clinical registration programs of core products, such as on-call pen scan, HCC scan, HCC screen, et cetera. Thirdly, commercialization for in-hospital testing, as well as early screening business. So headcount related costs were the largest component of operating expenses. In Q4 2021, operating expenses increased by 55% to RMB 267 million from the previous year. Take a look at the breakdown of the operating expenses. Selling expenses increased by about 40% to RMB 100 million in a quarter. and selling expenses as a percentage of revenue increased to 68%. The increase was primarily resulted from increasing headcount for our sales team, for in-hospital IVD team, as well as early screening direct sales team. We do not expect significant headcount increase in 2022. Along with revenue growth, we should start to see operating leverage in selling expenses for year 2022. Item expenses increased by 46% in the fourth quarter of 2021, and item expenses as a percentage of revenue increased to 44% in the fourth quarter of 2021. The increase was mainly due to headcount increase in line with our business expansion to cover full-cycle cancer management. as well as higher professional fees, such as audit and legal services fees. Now, in terms of outlook, other main expenses should also show improved operating efficiency for 2022. R&D expenses increased by 61% to 85 million in the fourth quarter 2021, and R&D expenses as percentage of revenue increased to 58%. The increase was driven by higher R&D headcount, and also related expenses, as well as our continued product development efforts in MRD, clinical trial activities for early screening and on-call pan scan. In terms of outlook, our R&D headcount should have peaked, and our R&D spending for year 2022 will continue to focus on those core projects. So the growth rate should slow down compared to that of On slide 20, net loss for the period was RMB $165 million compared to $73 million for the previous quarter in 2020. It's important to note that our organizational buildup is complete, and we expect the increase of operating expenses will slow down in 2022. and we do expect improved operating leverage, we'll be able to narrow down the loss for year 2022. Cash and cash equivalents restricted cash and current financial assets at a fair value through profit and loss were close to RMB 790 million or US dollar 124 million as of the end of the year. Now moving to discuss our outlook for 2022, let's go to slide 21. As you may have heard on the news, since the fourth quarter and well into the first quarter of 2022, COVID outbreak continued to occur across China. Officials have maintained a zero COVID policy through lockdowns, mass testing, and travel restrictions. More recently, Rapidly showing COVID cases had resulted in shutdowns in the cities of Beijing, Shenzhen, and Shanghai, as well as part of Shandong and Jilin provinces. This week, Shanghai has began its most extensive large-scale lockdowns in two years, highlighting the continued significant challenges posed by the virus. So looking at our first quarter sales, We are expecting to grow around 15% year-over-year to approximately RMB 106 million. The first two months were actually quite strong, with year-over-year growth of approximately 30% for January and February combined, despite the restrictive operating environment. However, the trend took a turn starting in the month of March. In light of the significant spread of COVID cases due to Omicron, we anticipate that the challenging business environment would persist in the near term. Based on the current assessment, we are projecting our 2022 revenue to be around RMB 585 to 638 million, or around 10% to 20% growth compared to 2021. We will closely monitor the COVID-19 situation and evaluate its impact to our business and provide timely updates. This concludes the discussion of our first quarter financial results. I will now turn the call back to Sujit. Thank you, Evan.
spk06: In closing, we are very pleased with the success we have achieved both financially and operationally in the face of adversity related to COVID. and I would like to emphasize the strong underlying long-term fundamentals of our business. Shown on slide 23. In the past few years, we have established significant capabilities in all three business lines in therapy selection, early screening, and MRB. We have proven R&D capabilities with innovative technology platforms such as One Step Seq to bring fast and simple IVD solutions to the hospital, and the mutation capsule technology to power our early screening and MRD product development. We have also built a high caliber product development clinical team who are able to execute multiple clinical registration trials in parallel. We have also set up comprehensive commercialization models, working with numerous top tier hospitals, pharma companies, health check network, digital health platforms, and local government bodies. Our investment and capability buildup have positioned us very well as a leading player in this market and created a lot of long-term strategic value. For IVD in-hospital model, in addition to the expanding hospital partner base, we have also made good progress on the inclusion of the approved IVD kits into procurement system and all price lists in more than 20 provinces. For example, our aging lung cancer assay, which represents as one of the most clinically needed tests for non-small cell lung cancer, we believe that the government reimbursement inclusion could kick in for certain regions in the coming 12 to 24 months. We anticipate that to greatly help us increase the penetration and market share. In addition, as shown on slide 24, we have a catalyst-rich pipeline in the next couple of years that we spent some time on discussing earlier. Last but not least, we also continue to see favorable micro-environment for our business. Under China's 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 that rapid emergence of targeted immunotherapies 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 companies with differentiated technology like us are highly encouraged to introduce innovative solutions to address unmet medical needs. Overall, We remain confident about the gross prospects of the precision oncology sector in China, and we anticipate Jingchang to be a continued beneficiary from policy tailwinds. So this concludes the prepared remarks portion of today's call. Operator, we're now ready for questions.
spk01: Thank you. If you have a question at this time, please press star, then 1 on your touchtone telephone. If your question has been answered or you wish to remove yourself from the queue, please press the pound key. And our first question comes from the line of Sungji Nam with BTIG. Your line is open. Please go ahead.
spk00: Hi. Thanks for taking the questions. The colorectal cancer screening assay, I understand that you're expected to publish the data this year on that. I was wondering what are the next steps in terms of clinical studies For example, when do you anticipate the registrational study for that to potentially commence?
spk06: Yeah, so next step is essentially we will validate the assay in a larger size of samples, and potentially we'll start a prospective study sometime this year. And at this point, we don't have a set timeline for the registrational trial. but we'll sure keep you closely updated on the progress.
spk00: Gotcha. And then for HCC, it looks like you're still expecting IVD approvals for both HCC scan and HCC screen sometime next year. Could you kind of talk about how do you see the market splitting overall between the PCR-based and NGS? Should that be essentially reflective of the install basis, if you will, of the PCR versus NGS platforms throughout the country? Is that how we should think about how the market will potentially split when that's IVD approved?
spk06: Yeah, so I guess it's premature to give any specific number about the market splits. But the overall idea is that combining these two products, we will be able to actually penetrate the market quicker, given that the two assets will actually be positioned differently and priced differently as well. And we strongly believe that with the SGC scan being approved sometime next year, there is a significant chance for us to be included in the national reimbursement. for this product shortly after the approval. We had some dialogue with the local governments with different regions, and we do believe that the incentive there is pretty strong. And then for the high-performing SUCC screen panel, we believe that this will be well-positioned you know, that the self-paid population are willing to pay more for a better performance in terms of the early screening. So, all in all, you can see that these two products will be positioned differently, and it will be marketed with different focus for you know, the tiered spending level population and will be positioned differently in potential collaboration on a large scale with the governments.
spk00: Gotcha. And then lastly for me, for the thyroid assay, you, I think, mentioned 200,000 cases of thyroid cancer annually. What's the addressable market, though? Like, what's the screening population for that or the... testing population, the target population for this particular assay? Is it 200,000? I'm expecting it should be greater than that, right?
spk05: Yeah, sure. So that's the new cases for thyroid cancer, right? So actually they're, I can't recall, but I think there are data says that there are about 200 to 300 million. Yeah, 200 to 300 million people who have thyroid nodules. So there's always a problem of over-diagnosis or over-treatment, actually an over-treatment of those people, high-risk people. So as you can see, the potential application market for this test is pretty huge. And also because this design is thyroid basic using a PCR technology. So as it can be easily distributed, leveraging on the broad PCR infrastructure in China for lower tier cities.
spk00: Fantastic. Thank you so much.
spk01: Thank you. And our next question comes from the line of Yang Haolong with Credit Suisse. Your line is open. Please go ahead.
spk04: Thanks. So I have two questions. The first one is on NGS. reimbursement pricing in Beijing. I think management mentioned the NGS-based test, the reimbursement price is about 1,500 RMB. And if that's so, I wonder if this reimbursement price below or higher than our early expectation, and if our eight-gene panel is already included in Beijing's reimbursement plan, and what kind of pricing we are getting, or is it the exact same, $1,500 we are getting, or if not, are we planning to get into Beijing's public medical insurance reimbursement plan? Thanks.
spk06: Yeah, so maybe let me take this one, Yang. So first of all, I want to clarify, right? So the 1,500 pricing point that we mentioned in the earning call is in fact for the NIPT screening test, right? It's in fact a pretty simple product with a low-cost structure here, and it's quite mature now with the widely, you know, the usage. for the target population. And we believe this can be used as a benchmark for our NGS-based HCC screen, the liver cancer early screen assay. And we believe that there is a chance when the HCC screen is approved and covered by the reimbursement coverage, by the government reimbursement, we could achieve similar level. But remember, recall from our earlier discussion, I think the goal from us is to get a coverage somewhere around $150 to $200, which is actually, in fact, below the current level that we've seen in the recent Beijing government policy. So we're happy to see that room, you know, that these reimbursement coverage indicate for us. And, you know, most to the diagnostic assay, the aging lung cancer panel, right, which we are marketing quite heavily in the market and getting more and more traction in the in-hospital testing segment. So this, I think, should be benchmarked with the qPCR test. which, in fact, you know, there are several regions already or governments already giving the coverage now. But, you know, you would have to combine several QPCR assays in order to achieve the same gene coverage that we can do without aging lung cancer assay. And we believe that it's reasonable to anticipate the reimbursement culture pricing level at somewhere around like $2,000 to $3,000, $3,000 maybe. So that's I guess, you know, it was discussed before as well. I think that's achievable reimbursement price level.
spk05: Right. So, yeah, maybe just to add to Sujin's point. Right now, for NGS-based assays in China, there are very little price points to refer to, given this is, you know, a kind of new type of molecular testing kits newly introduced to the market. So actually, based on our experience, our market access team have been working with several provincial government bodies, such as the reimbursement bureau, to design, actually design the methodology for such NGS tests. For example, in Guangdong, Shandong, Liaoning, and I think Anhui, These are few provinces that are more pioneering these studies, and our team are working with them to participate in these studies. I think the final point I want to mention is that we have invested quite a bit of resources in the government procurement platforms, basically accessing getting our lung aid kit into the procurement list, and also adding our test into the clinical testing menu in different provinces. And we have achieved more than 10 provinces already. And also we are working with several provinces on designing basically how to charge in the clinical setting. So with all that effort, and also with the increasing clinical adoption of our assay, we do feel that we have a good chance in the next 12 to 24 months. In some regions, our line has a good chance to be eventually reimbursed.
spk04: Okay. That's clear. Thanks. My second question is about our cash runway. You mentioned at the end of last year, we have cash and restrict cash and some other financial vehicle value that nearly is on the $800 million. And can you provide us some, you know, looking forward, what's going to be our cash burn rate for this year and maybe next? Help us understand what is our cash runway before we can achieve profitability.
spk05: Sure. So I talked about our organizational buildup has pretty much completed and peaked by end of last year. So we expect our loss to narrow, and we expect our cash should be sufficient for the next at least 18 months. And the payment rate should also be slower than compared to the last 12 months. So we do not have immediate financing needs.
spk04: Okay. And so if we are good, let's say after 18 months, if we need some kind of financing, will we go to public market or debt? Or what's our basic kind of thoughts there?
spk06: Yeah, well, I guess we have many options, right? And is to be explored in the future. And the good thing is that, I guess, with this cash runway, we're flexible in monitoring the market involvement and then find exactly the right opportunity. Just like Evan emphasized, we have, in fact, different spending rhythm in the overall business development. There are a number of factors affecting the cash burn, the operating loss, as well as the working capital needs, and the rhythm and the pace of the overall operating expenses, as we mentioned in the conference call. will pretty much pick up and we will be able to effectively control the cash burn and at the same time effectively support the growth of our business and our R&D pipeline. As the market situation evolves, I believe that we're well positioned to capture any opportunity as we see fit for Jincha to raise additional capital to support the long-term growth.
spk04: Got it. Just a quick follow-up. So is there a kind of year we can expect to break even?
spk05: Yeah. So I think from today's presentation, you will notice that we are actually adding to our existing portfolio with very exciting new products, in particular in MRD and early screening. Right now we are crystal focused on these products and we are very excited about these products. For example, today I think we have shown that solid clinical data we have published and to be published in the near future for our solid MRD products. We believe that the key for us is to focus on creating this long-term value and continue investing, but of course with very focused investing areas. I think with that focus, as long as we continue to generate positive long-term value, I think that's the most important. And to address your question, I think how I look at this business is that for our more mature and baseline business, such as diagnosis, our goal is to continue to drive revenue and high-quality revenue, such as the in-hospital business model, and continue to improve the operational metrics, financial metrics, to drive up the margin and achieve break-even in the next 12 to 24 years. in the next 12 months or so. And only new business lines that will create long-term value, such as early screening and MRD, which is even newer to our business portfolio, will continue investing and build a successful model. And I think that's my answer to your question. Thanks.
spk04: Okay. Yeah, thanks a lot. That's all my questions.
spk01: Thank you, and I'm showing no further questions at this time, and I would like to turn the conference back to Hokie Luke for any further remarks.
spk02: Thank you again for joining us for our Fourth 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 Investor Relations team. Thank you, and have a good day.
spk01: This concludes today's conference call. Thank you for participating. You may now disconnect.
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