Burning Rock Biotech Ltd. Q3 FY2022 earnings call

• Q3 was a strong rebound from Q2 due to Shanghai reopening, but economy not fully recovering in Q4, adjusting guidance to 5% growth. - Listed on London Stock Exchange. - Q3 revenue 22% year-on-year growth, 36% quarter-on-quarter. - Selling expenses lowered by 15% quarter-on-quarter. - MRD product launched in March, volume doubled in Q3. - Biopharma revenue triple digit year-on-year, backlog increased. - OverC launched, volume 264 tests in Q3. - Management change: Shannon Chuai moving from COO to CSO. - PROMISE study for cancer early detection completed, showing 83.7% sensitivity and 98.3% specificity. - PREVENT study for 6-cancer test recruiting, interim data expected in H2 2023. - Financials: Q3 revenue grew 19% year-on-year, selling expenses dropped 15% quarter-on-quarter, G&A expenses down 9% quarter-on-quarter excluding non-cash items, R&D up 14% quarter-on-quarter.

Therapy selection: In hospital model volume back to growth with 24% year-on-year growth in Q3. MRD: Volume more than doubled in Q3 versus Q2 to 700 tests. Biopharma: Revenue grew triple digit year-on-year to RMB 15 million, and backlog increased 38% year-on-year to RMB 198 million during the nine months of 2022. OverC: Volume in Q3 was 264 tests.

• Revised 2022 guidance to 5% growth due to COVID disruptions in Q4. - China's COVID response adjusted but near term case numbers likely to persist, leading to projected fourth quarter year-over-year drop, bringing full year guidance to ~5% growth.

• COVID disruptions impacting business volumes, especially in key cities like Guangzhou, Beijing, and Chongqing.

Q: On the revised guidance for 4Q and full year, how have other segments like in hospital, pharma, R&D been trending in Q4, and what are the key readouts or catalysts ahead after PROMISE study?

A: Guangzhou impacts total volume including in hospital and live model, pharma less impacted, Chongqing impacts multi cancer early detection. PROMISE study was proof of concept for 9-cancer test, next steps involve intensive internal discussions on product development strategy with PREDICT and PRESCIENT studies progressing as planned. For 6-cancer test, PREVENT study recruiting with interim data expected in H2 2023.

Q: Should we expect strong sequential growth in MRD monitoring volumes throughout fiscal 2023? What percentage of MRD volumes are for lung cancer vs colorectal, etc.? And about BeiGene collaboration and biopharma contract drivers?

A: MRD expected to continue growing, with aim to have test available in hospital model for bigger growth. ~60% of current MRD tests from lung cancer, ~30% from colon cancer. BeiGene collaboration is strategic, MRD used in observational trials in current studies. Biopharma contract wins driven mainly by Companion Diagnostics, with trend of multinational companies focusing on MRD, but capital market impact on small biotech affecting biopharma revenue/backlog in future.