Global Healthcare Analyst

Tina Banerjee

Equity Bottom-Up

<ul>
<li>
<a href="https://www.smartkarma.com/entities/burning-rock-biotech-ltd" target="_blank" data-smartkarma-citation="entities:28970:1" rel="noopener">Burning Rock Biotech (BNR US)</a> has announced Q2 results. Despite the negative impact from COVID-related restrictions in China, revenue increased 3% y/y to RMB130.8 million, driven by pharma R&amp;D service.</li>
<li>Gross margin deteriorated due to unfavorable revenue mix and inventory write down. Even upon this, operating expenses grew 19%, thereby widening net loss to RMB262.1 million.</li>
<li>Encouraged by ongoing business volume recovery, management has reiterated full-year 2022 revenue guidance of approximately RMB620 million, indicating H2 2022 revenue of RMB354 million, which represents 29% y/y growth.    </li>
</ul>



Burning Rock Biotech (BNR US) has announced Q2 results. Despite the negative impact from COVID-related restrictions in China, revenue increased 3% y/y to RMB130.8 million, driven by pharma R&amp;D service.
Gross margin deteriorated due to unfavorable revenue mix and inventory write down. Even upon this, operating expenses grew 19%, thereby widening net loss to RMB262.1 million.
Encouraged by ongoing business volume recovery, management has reiterated full-year 2022 revenue guidance of approximately RMB620 million, indicating H2 2022 revenue of RMB354 million, which represents 29% y/y growth.    


Burning Rock Biotech (BNR US): Despite Q2 Results Missing Consensus Management Reiterated Guidance

HK/China Healthcare Analyst (ex-Fosun Pharma)

Xinyao (Criss) Wang

Thematic (Sector/Industry)

<ul>
<li>PCR dominates the hospital market, but as targeted drug prices fall, PCR cannot have high pricing,indicating compressing market space. The whole logic goes from "To C " to "To B”.</li>
<li>NGS has advantages in new demand of individualized diagnosis and treatment of difficult diseases and drug efficacy prediction in response to complex mechanisms. It will seize market share from PCR.</li>
<li>A “good story” for related companies should not just focus on PCR (current fundamental), but NGS (long term potential) and may also cover early screening products (multidimensional growth).  </li>
</ul>


PCR dominates the hospital market, but as targeted drug prices fall, PCR cannot have high pricing,indicating compressing market space. The whole logic goes from "To C " to "To B”.
NGS has advantages in new demand of individualized diagnosis and treatment of difficult diseases and drug efficacy prediction in response to complex mechanisms. It will seize market share from PCR.
A “good story” for related companies should not just focus on PCR (current fundamental), but NGS (long term potential) and may also cover early screening products (multidimensional growth).  


Industry Report - Insights on China Companion Diagnostics Market (Business Logic and Outlook)

<ul>
<li>
<a href="https://www.smartkarma.com/entities/burning-rock-biotech-ltd" target="_blank" data-smartkarma-citation="entities:28970:1" rel="noopener">Burning Rock Biotech (BNR US)</a> reported strong Q1 2022 results, with accelerated double-digit revenue growth of 27% y/y, higher than full year 2022 revenue growth guidance of 22%.</li>
<li>Operating loss widened due to 41% y/y surge in opex, primarily attributed to higher staff cost, which resulted from an increase in headcount.</li>
<li>Management reiterated 2022 revenue growth guidance of 22% y/y. With Shanghai re-opening, this seems to be achievable.</li>
</ul>



Burning Rock Biotech (BNR US) reported strong Q1 2022 results, with accelerated double-digit revenue growth of 27% y/y, higher than full year 2022 revenue growth guidance of 22%.
Operating loss widened due to 41% y/y surge in opex, primarily attributed to higher staff cost, which resulted from an increase in headcount.
Management reiterated 2022 revenue growth guidance of 22% y/y. With Shanghai re-opening, this seems to be achievable.


Burning Rock Biotech (BNR US) 1Q22: Double-Digit Revenue Growth; China Re-Opening to Boost Recovery

<ul>
<li>
<a href="https://www.smartkarma.com/entities/burning-rock-biotech-ltd" target="_blank" data-smartkarma-citation="entities:28970:1" rel="noopener">Burning Rock Biotech (BNR US)</a> shares plunged 35% since I published bearish insight on the company in November. Weak Q3 results, slower recovery, and the U.S.-China conflict remained major overhangs.</li>
<li>However, the shares are now trading at two-week high, as the company received approval for its second NGS kit in China and reported slightly better-than-expected Q4 results.</li>
<li>Investors should continue to avoid Burning Rock shares for near-term and wait for COVID cases to subside in China and resolution of the U.S.-China conflict.</li>
</ul>



Burning Rock Biotech (BNR US) shares plunged 35% since I published bearish insight on the company in November. Weak Q3 results, slower recovery, and the U.S.-China conflict remained major overhangs.
However, the shares are now trading at two-week high, as the company received approval for its second NGS kit in China and reported slightly better-than-expected Q4 results.
Investors should continue to avoid Burning Rock shares for near-term and wait for COVID cases to subside in China and resolution of the U.S.-China conflict.


Burning Rock Biotech (BNR US): Attractive Growth Story Outshined by Surging COVID Cases in China

<ul>
<li>
<a href="https://www.smartkarma.com/entities/burning-rock-biotech-ltd" target="_blank" data-smartkarma-citation="entities:28970:1" rel="noopener">Burning Rock Biotech (BNR US) </a>is China’s leading NGS-based therapy selection testing company for late-stage cancer patients. Thus far, the company has completed more than 300,000 tissue and liquid-based tests.</li>
<li>The company is in a structural transition towards in-hospital business model, which is negatively impacting the blended ASP and profitability. Due to upcoming new product launch in next year and ongoing clinical studies, opex is now accounting for more than 230% of revenue, which is expected to continue.</li>
<li>Amid the recent spread of delta variant in China, this insight has analyzed near-term growth prospect of Burning Rock ahead of its Q3 results announcement on November 16.  </li>
</ul>



Burning Rock Biotech (BNR US) is China’s leading NGS-based therapy selection testing company for late-stage cancer patients. Thus far, the company has completed more than 300,000 tissue and liquid-based tests.
The company is in a structural transition towards in-hospital business model, which is negatively impacting the blended ASP and profitability. Due to upcoming new product launch in next year and ongoing clinical studies, opex is now accounting for more than 230% of revenue, which is expected to continue.
Amid the recent spread of delta variant in China, this insight has analyzed near-term growth prospect of Burning Rock ahead of its Q3 results announcement on November 16.  


Burning Rock Biotech (BNR US): Muted Near-Term Outlook on Resurgence of COVID-19 in China

China

Burning Rock Biotech Limited operates as a biotech company. The Company discovers and develops diagnositcs solutions for precision medicine in oncology. Burning Rock Biotech serves customers in China.

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Burning Rock Biotech (BNR US)