Q3 2020 Burning Rock Biotech Ltd Earnings Call
[music].
Thank you for standing by welcome to the 2020 Q3 earnings Conference call.
I'm all parties and.
And on me.
After the speaker's presentation that will be a question and also session. So often.
Question, do and session and need to press star one.
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Before we begin I'd like to.
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So before debt.
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Such statements are based upon management's current expectations and current market and operating conditions and relate to events and no one and on the <unk>.
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With that I would like to turn the call, but to the Companys founder and CEO Mr. views on thank you. Please go ahead.
Thank you isn't that you show on this.
And from there.
Hi, good morning, and good evening.
Oh cool.
So, let's start to and it'll be up and adoption of burning walk.
We are the China like thoughts on not later will persist and Madison.
And.
Truecars GAAP and that's the first one is Turkey lunch and.
And what it means for on my feeling and.
On the market and.
Once it's early detection, which means that you might feel and Kim for.
For China market on that.
And I was just lightly free parts. The first one we got world class acknowledged and.
And is that we have a deep understanding and.
And a good experience about China like motion.
And so one is that we have a very strong and that work for hospitals and doctors.
So food Sarpy selection I'll focus on nowadays Oh.
We're.
Expanding leadership in China markets.
It's on our product performance and quality.
Tissue and liquid bad debt testing.
So we net we net you nibble higher and yet have penetration so kids stay in hospital channel and.
Got his company and complementing to existing Central lab testing.
And put already action we are.
On October.
On slide eight.
Base and cancer every day.
So in house, R&D, and clinical collaboration and what's hot physicians and hospitals and they tried.
And today I'm very pleased.
Pleased to introduce the speakers today, including me and I would feel on Shannon Hi, No CTO So zone I.
I was CFO needle moving.
And then I was a CMO chief Medical officer, and how do I know.
And our topic today well covered sleep.
The first part it for a 30 day option.
Well get a good everyone on the who adopt road map updates.
And hitting.
And our belief that saw how we plan to do the clinical and well I'll put that no matter what the exact.
Uh huh.
<unk> for the nine top on kind of accounts.
And on very exciting too.
Too soon to say.
Say that so we had very good data just released that it must teach out bush and congrats to sub standard.
And we have all the six cancer path validation data and leaves a GAAP.
Brass and well welcome to to find a poster and weighted and so I would see deal so works and that we felt like though and.
The second thing so second thing some other milestones with therapy selection and the.
First one is that we have our lab automation system.
Let me see our and.
And that's cool validation and beat out and that leaves that Oh yeah.
Yeah and Pete.
Well, the called associates and for molecular pathology.
And so a very very good update outboard boats.
Both the feature upgrades and so on the liquid biopsy based and.
Second news is that we just signed and licensing agreement with me right now.
Yeah, My choice I Chardy tab.
My choice and you already have that's a good trend or for carbon and keep it Oh. So we are very excited and stuff and.
So I'm proud to say that that's has and will put and a very meaningful a house for all the patients all for ovarian cancer and potentially application and off of course and prostate cancer.
And that's a part it's all numbers on CF will be on me.
Explain that in detail and including the Q3 operation metrics and also to find enough and actions.
So.
And just for two hours video tilt on foods.
To talk about exciting early detection progress.
So.
Thanks, you said.
So, let's just get started on the slide seven so so as a first let's just recap that also seek which is a the technology behind our early detection burwell. So the L. says he is on target and escalation or deep message and sequencing assay utilizing the highly efficient and library preparation as well.
As the machine learning aid and the classification model to two two performed early detection.
So the massive can encourage methylation status from hundreds or thousands of the low side from the genome.
On the methylation status and from as low as one none of them on the cell free DNA to detect weathers and Ctdna, we call a second the tumor DNA and you do see in the blood on notch and.
Also predict to move or region.
So you have some kind of technology highlights thickness and here, so including I just I mentioned, there's a single share library preparation as low as on compatible with a different kind of conversion and also we select the most informative.
Region from the genome.
For deep sequencing and also we apply the multiple noise reduction and the signal and corruption before on machine learning models.
So the next slide talk about to the only discussion and product development roadmap.
So this is a basically backing to SUNS. We started this program actually on for years ago, but it's being.
And are the research development mode, and they're right now I mean back to last year and 2019, we presented as a proof of concept on single cancer type, which is on cancer, you and you see our and you meeting and.
And Oh, it's being this isn't the first step and the early this year early trendy trendy we demonstrate a three cancer performance is your address UBI policies special meeting and that we perform we demonstrate and 95% on one specificity and at this.
That's a day, we achieved 80 80, <unk> 81% of sensitivity.
On recent weeks free cancer type.
I don't know about like a couple of hours ago, we actually just to put that in our Oh, six cancer model and I smoke Asia merchant Congress as a means to auto session there and in this interest.
The progress right now and we are about six cancer type, we try and lung cancer and contractor on different cancer ovarian cancer pancreatic cancer and some volume cancer.
Well, we will be able to achieve in the unit validations, Oklahoma, we'd be able to achieve 98.3% specificity and it isn't just about.
Oh, we achieved 80.6% over on sensitivity.
Oh I'm going to talk about you told me and are in and.
Right and we also be able to achieve tomb overreach and without being 90.6% of case among those about like 81% on cracked which means we can predict 81% of the correct on tumor or region.
For the next day like currently we asked you develop and further.
In terms of a further expanded the cancer type and that we'll be able on right now and.
I see still under development and opinion about addition to follow.
And.
In addition to six cancer type, we on a a couple of more equally and gastric and caught on draw and head and neck.
So this is basically the product development roadmap in terms of accounts early detection on pro what happens happening you bring Iraq.
The first of all like the next slide and we just talk about the the latest the ESMO Asia and bulk and Dr. go Chung from the day University and shot and never Institute and presented the latest data on multiple cancer type early detection study. The study includes three stages.
And we called marker discovery and no design and validation and was asking about education. So for marker discovery, we profile cancer and the non cancer tissue sample in house and also survey the TCG and GE all topic database to investigate a key masturbation change on socialism, six pretty soon and specified cancer type and as a result.
We find on select about 160000, and CPG side, two accounts for customized cost capture basis and on a two.
To enable this cancer early detection.
Oh, I see validation stage, and we randomly and divide that about profit must seating is shifting and sample from clinical diagnostics and cancer patient and on non cancer control into a training center and also independent validation sat on.
Doing the training phase.
Machine learning based classifier was viewed to identify the presence of localization accounts a derived to signal so substance and subsequently the model was applied to you about at age.
So Q on to the validation set to evaluate the performance independently and.
And see the the overall walk chart and just any insight.
And in the next slide Oh, we basically Vista the overview on the training about additions that and how many patients king.
And you did you would be tested including the cancer patient and and non cancer control.
The top table listed a clean Nicole Curtis characteristic of the training cohort and bottom gifted though the addition.
Addition, claude on both.
Post the case and the control groups are comparable with respect to age gender and smoking status as we know methylation very its age related a biomarker and that's why.
We didn't really careful about this and make sure age and gender and smoking status on being tracked and a controlled.
And also like 80% of a patient with diagnostic early stage in this call Hollywood and stage 123.
And that the study on time and and study and.
The next slide is a very quick on slide which is slide 11. That's just the list of the summary of the detection accuracy. All we call can we can't quite sensitivity across different cancer type and and clinical stage.
So we put.
Six different Oh.
And how bark rock, you're the training set and labeling.
And the label in Green and the validation legally and Red Orange color.
And as a numbers in bracket and the number on and sample included and for the indicator stage and group.
In general and a performance and Wisconsin in training and the validation and stuff and this is give us and all the confidence and the detection rate increase on longer along with the tumor progression from 61 to fall.
In changing the specificity was being controlled and I plus 5% and does this specificity sensitivity and 79.9 overall and.
Invalidation Koolhaas, Oh, we will be able to achieve the specificity and 98.3% with sensitivity about 80.6%.
The next slide basics and recap and number listed on this.
Slide 12, basically we suffered the number by cancer type and cleaning stage and B do not need to be the grouping on here.
And given specificity, which on 99.5% for training on and <unk> points represents about a vision the categorize a sense to me and this is the in the Bar chart again.
Validation cohort, especially on the R&D to rock color [noise] attention on that overall.
Sensitivity on from stage 123, we can call earnings sensitivity and 75.
One 8% in Austin, and just the liver cancer show the highest detection sensitivity around that.
That is 3% and the lung cancer with lowest on wrong and 67%.
The next slide basically talking about and predict the tomorrow on tissue of origin with high accuracy, so to to be pay attention on the on the right. Most long which is about a decent Claude so basically we will be able to achieve.
Around 80% interest from the 82% from the validation cohort will be able to predict correct to mobile imaging the tissue of origin and actually if you call and talk to you all in cost, which means that got not only the top one over income would be able to achieve a better actually is a.
87% from the validation cohort.
So for the next slide basically.
And just meshing here are we going to talk about a centerpiece election business. So we will have two topics first let me just give us some update on the amendments VR.
The walk away aka turnkey solution for hybrid solution capture messaging on call it depends on testing.
The instrument to make actually current and library prep and that's a much easier and enable our from getting too enriched and library on.
For ready for sequencing.
Fully automatic automatically fashion. So this year, we actually made a manganese VR and they'll compatible to our most of our.
Many of several most popular and no including the liquid biopsy test, which is a 168 and on as little as a 50 520 genes tissue on based and testing.
On the being listed at the Slide 15, just give you some kind of highlight in terms of Oh, the work flow and how the Magnus VR look like and why it's why it's so useful full and it's kind of Oh, a turnkey solution for the flow of small scale and hospitals.
I'm very.
Very exciting basically as a pass on presentation on selected by the M. P and you meeting.
We we actually prevented the able to present this analytical validation and adult men.
Magnus I see on these most assay, which is we call on screen I O tissue assay and 520 genes assay as on Onco Compass talk and cell free DNA assay, which is higher and 68.
And.
And then we did a assay validation on both handle on.
We presented in the M.P. annual meeting happen earlier this week and on the overall take home message here is basically the Mack and his VR assay showing equivalent on better performance compared to our menu assay and very high concordance being achieved and the and also on the monies GR assay.
And it's actually will be able to fully you know.
Compatible with multiple different biomarker, including the SMB and Dol a huge and.
And that's copy number variation as low as the microsatellite instability status.
Next let me on our Chief operating Officer, Shannon could give you more update on the meter and my choice Prada and licensing activity.
Huh.
Yes.
Joe on.
Prince Albert.
On page number 17 on.
Another exciting and cool blast and.
Last quarter, we sat and finally reached an agreement with net to bring my.
Nytwenty turret and I say, it and to turning on and so I'd say.
It's actually the first and arguably the current gold standard for on genomic and stability on calculation, which has become a very important and significant bio marker essentially for parts and the true net.
On system sorry.
My trips and Turkey.
Income from.
Exports PARP inhibitors.
And on those on and.
Yeah.
And our lives and the exact implications on the table on share.
Sure and Nike.
On the 20 on the second right and.
And then on the next page here, we want to introduce our thoughts behind.
License and.
The preferred offering and that's.
To China on whats.
First she improve our capabilities to collaborate.
Pharmaceutical companies for biomarker, it's actually CBS.
And then PARP inhibitors and in China, because we see.
Hi, the growth rate of growth.
Interest on that.
And secondly, I wanted to make that and say commercially available on <unk>.
Turning to patients and outreach and.
Formats.
So.
Yes.
Just on markets, which would be the first line.
On cancer patients, who will undergo on makes me Eric.
It's around.
And 15000 patients annually.
I want to emphasize.
That estimate and parents and on initially.
Initially.
And concerns for debt for that cash would be around my presents on.
On a year or so and down we anticipate it.
On to grow of course in the long run and the second part first upwards to on to host long.
HM.
And and so cumbersome for these actually because we have a very optimistic view Oh, yes.
He asked about marker for for profit.
Hey, good targets and we are lifting and I think that just complete and that's.
And for the truth and cancer types, which matched with its hard and is currently being used and.
On the companion or exploratory biomarker and clinical study. So you can see that has agreed to terms and should be extended on one ovarian cancers and Oh sorry.
That's.
And the future. So we are very optimistic and.
And so.
Once he.
That's good.
Good position to to host to such service that's worked on.
So come from companies and I was just on hospitals and the future in China.
Your next on and then she turning to Leo.
So for <unk>.
Operating metrics.
Thank you Shannon.
And turning to our numbers on page 22 and.
Well, let me recap that overall, we have had a good quarter during Q on 2020 and senior.
Free all sequential recovery growing and both the central lab, adding hospital channels on a sequential basis.
And this is unfortunately this is under the contacts on increasing competition and our industry in China.
GAAP or which mute since there's a sense overall revenue growth on our topline on a sequential quarter over quarter basis and this.
It's higher than the numbers, we have seen some other public and private companies in our industry in China.
Looking specifically at our operating on based on slides 19 first on the Central Lab channel.
We continued the sequential recovery right and volume and my two cents quarter over quarter on.
On a year over year basis on a central lab volume grew 28% EPS.
Although there's no published industry wide day. So we believe we are gaining market share based on anecdotal observations for example on one.
One company in our industry reported a 5% year over year L.D.T. volume growth in the second quarter, which is lower than our 28% volume growth rate.
Looking at the in hospital channel and the third quarter has been made low cost, though in terms of new contracts at hospitals, but on the other have existing contract and hospitals continue their recovery and growth at skirts on double digit rate.
And let me discuss a little bit on the magnets BR and recap that this was launched at the China and your pathology conference back in November last year.
Demand for magnets yacht has been strong however, we encountered some external supply issues in the previous couple of quarters.
This has been gradually resolved, but it didn't mean that we'll have missed.
Some day bonds, and we were not able to supply.
Them as for a couple of quarters.
At the end of the third quarter, we have placed Magnus BR into more than 10 hospitals in the low teens.
Because of the delay in getting supply and the delays and procurement process as a result.
We expect to complete sales contracts and afterwards book revenues.
Instruments and extensive sense and one for the majority of the low.
No teens magnets beyond that we have a place so far.
And I know, it's a spilling into 2020 to do two hospitals procurement cycles, but the amounts format, which is strong and we expect additional placements into translates into one and.
Magnus YOD as the only fully automated library prep system in China that can be large tissue and liquid panels is very important for us in terms of differentiate us from competition and continue our leadership in beat and hospital markets.
Moving on to our revenue on page 20, overall, our revenue growth by 10% year over year, and the Central Lab channel, which is more diversified geographically across China growth.
30, percents and this is an improvement versus the 18% year over year growth rates and the second quarter EBITDA.
And the trend is in line with the volume trends that we just discussed but were displayed on page 19.
The hospital revenue grew only 3% year over year.
And we like to explain the reasons behind that so first we note that we had lumpiness in our quarterly in hospital revenue spec influence and my team.
And this happens when we have a large huston large hospital getting contracts. It's in a given cost and the Lumpiness comes from one off revenues get and books in that quarter. The cost of getting the contract signed four kits that was ships and power courses before contract signing.
So the third quarter 2019, with such a quarter EPS wireless that expense the first quarter net income since 19, too and so you could see two clear.
Lumpiness in those two quarters across trench and 19.
We believe it's more representative to look at the trends across a number of quarters operating hospital channel due to the Lumpiness in this channel.
America early if we were to take the average of free Q My team and focus on lighting as the base.
Our three to 20 year over year and hospital revenue growth rate would have been and 41.6%.
And sequentially. We should also note that the third quarter this year and hospital revenue improved versus the second quarter.
And grow 15% sequentially.
We had fewer number of newly contracted hospitals and the third quarter compared to the set on compared to the second quarter and.
This is an offsetting factor dragging the growth rates low.
Income plus to the continued recovery on the existing contracted hospitals.
And we'd like to make and those that in the second quarter and full quarter at Twentytwenty. All the in hospital revenues were reagents revenues, we booked revenue for one back and SBR back in January of this year.
Because of the supply issues, we just discussed on.
We were not able to supply or book revenues for additional madness and since then we expect.
Two converts the Tommy placed magnets instruments and to revenues thoughts insurance expense are one and.
And the demand format and this has been strong.
Pharma revenue drops in the third quarter and this is due to reduced testing volume of pharma projects in this quarter.
Looking further ahead, we observed that total that is still going to routes in China or Lingling allows.
With.
Meny outbreaks and from time to time and across a number of places for example, and we saw a few incidence of cold and cases, particularly in northern China and in a couple of those cases moving outbreaks, that's true population wise testing and for the entire city and.
And in one case that led to the resignation of the head of day since the public health administrators, and so overall, the public health systems, and hospitals, and China, austere and putting a lot of emphasis on kovats.
And it's and in this context, and it's hard for us to make a on this.
Hi, its prediction on how or when and where you will be backs and normal. So we'll just have to continue to observe and we will provide an update on on faults forward Twentytwenty one at the time of our fourth quarter results and.
Lastly on Opex, we expect increasing spend on early detection R&D going forward.
And we are excited to continue to pursue this significant opportunity and increase on investments there. So.
So with that we're happy to open up for questions.
Thank you, ladies and gentlemen, we would not be kinda question and also session to ask a question on the phone. Please press star one trend name to be and on the.
Ken Sill request, you kind of suppressed the pound heskey.
The first questions comes from July on Docs, and Cold cough Cold and please go ahead.
Hey, good and good morning, and good afternoon, everyone on and thank you for taking my questions on.
Start with a few questions on the asymptomatic cancer data presentation that you share.
First just to start I I'm, a little bit surprised that the way you cut the data it seems like you toggled to higher specificity that and what we talked about earlier this year.
At that point, you know at least and our discussions and going back to the HCR liquid biopsy meeting in Miami and you talked about the restructuring the OS data has.
Higher sensitivity on at the expense of specificity on the normal toggle decision that one has to make it and.
Deciding and I say, you know it and and.
On a going that way in a way that was really different than maybe what we see typically from companies focused on developing liquid biopsy assays for asymptomatic biotic cancer screens and western markets.
And I think you said that you were positioned to get that way largely because of the differences and on.
Screening test availability and China relative to western markets I'm, just wondering why why why this change and the way it's into over the last several months.
Yes, this is Dan and I can.
And.
And then maybe bill how are you.
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So first off on <unk>.
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Perfect. So.
I think the thing if we could.
And five.
Income from my on.
I think it's two games largely on sensitive victory on that would be.
Hey.
And moving from.
Free cash to six cancer, I think actually we did interest and on the kids attacks on there it was.
And she.
On the markets and action.
She and I said the algorithms and so this.
Non.
Good and keep it at the same census and specific.
Her purse of course and business again looking at.
This I'd say day.
Separately and find a bath.
Its day that we think it's the on the growth.
On Citrus Institute and.
Okay.
That's helpful and and maybe building off of that.
The performance is impressive, especially when you look at it on a blended basis across all stages of cancers on.
That said you know.
Where do you peg the results at a high specificity and then look at the sensitivity specifically for stage, one lung cancer, which was 37 and a half or size.
I think it was 33% and stage, one ovarian and it gets a bit better and a softer deal and ovarian and where do you get the 54% and 64% on.
And then of course liver and pancreatic is quite good and the Eightys that said for the first four cancers I mentioned.
I'm just wondering if you think thats good enough for your target market and and you know I guess by extension I'm wondering if you're thinking is that given the absence of standard screening and China.
At least in terms of availability right relative to western markets.
Net performance at that level would be good enough given on the alternative is effectively finding no cancers on.
I'm just wondering how you're thinking about this because it does seem like the early stage detection for those cancers could be better while keeping in mind that typically these metrics actually deteriorate when you move the assays mortgage and real World studies.
Yes, I think you're absolutely right.
And this is not of course this is not ideal this is not like I.
Yes.
A final outcome.
We want to see on.
Early detection.
Try that.
I actually think that's it.
A very good performance.
On top.
Texas market, especially.
Given that its and pan cancer or amounts and cancer.
And keep in mind.
If you can't have too.
Our lives and to balance between on sensitivities on <unk>.
She's on the performance among different tax and no sales for just such a sense it's fresh it's.
Highly correlated between different cancer types. So it's not like you can't just adjusted adjusted the cut off.
<unk> and <unk>.
Impacts and the other one so this is.
On our research team has so far on seeking.
Yeah, so the basket balance.
On close but of course on their score.
Score improvement possible in the future, especially if it's still a relatively small.
Small cohorts and we're still learning a lot about these things one seems too because actually you know.
Even getting stage one thing too.
A lot of friends.
Cowen and co.
Oh.
He'd heard between you know even within stage one.
There are different clinical features and date and its can have different performance so in the future when being half.
Larger cohort, we might be able to tweak kids on little bit more precisely.
Precisely to see where the gang and without losing too much on the other kids and tight I know it's on one.
I want to point out that this on.
Surprisingly, we find that's not.
Nice.
On such and such and such.
We actually do you have.
Saturday.
And since he or she nurses and said that list on the grill and its selling so we're okay.
Instead on to to watch.
How people per day.
On the upside that outperformance on on gross and products.
And we we are also affords talking closely with Chinese clinicians and see what their two cats on the us and they there. We also have that's true to shape.
And the balance.
Probably when we do commercialization.
Okay, and then maybe.
Okay.
Okay and sorry.
WMS all right and I was just kind of one point yeah.
Okay. Thank you reported abrupt.
So you mentioned, China, and just that one point on that if we look across other Chinese innovators in this space.
This day, if it does look very strong and I mean, we've seen more on day for a while global cash boats in China on and its past the past results and that strong even compared to others to blot blazed simple cash for pets political channel.
Yeah, absolutely that day that did look good yeah, but that that's a good point on just last on on the study what what comes next in terms of.
I guess, what should we look for I guess could you provide an update on forgot predict study.
Study enrollment and timelines or plans for any other large studies.
Well Unfortunately, we can't.
I'm free.
Well as we have.
I think that we can really just we will share with you guys, but not at this point.
All right.
Okay.
That's okay. That's okay I can't blame me for trying.
Leo maybe just a couple for you and then I'll get back on the Q on it was a better than expected revenue quarter on.
That said, we had expected the number of ordering physicians and number of hospitals ordering and the central lab to maybe increase a bit.
More than they did on the quarter. It did seem like you lost a little momentum there relative to what we saw on.
In Q2, and it also seems like on a net basis at least that there were no additions to the in hospital pipeline I know you talked about some inherent lumpiness and some of these things and your prepared remarks, but I just want to make sure that these metrics work drastically different than what you expected and and if there was the divergence from expectation.
Just hoping you could provide a little more detail.
Neil.
On this issue up rates and the freight and deal has just got disconnected not me to call him back and we will receive decor. Shortly please standby. Thank you.
[music].
Thank you for your patience view is now back on maybe.
I don't.
A question for Ken please.
Okay, how about the helio to others.
Okay, Great I, Frederick and on the software and the numbers on it.
For the second issue.
So first on the Central lab operating metrics and I wouldn't know that we are still on the covance in China. So we were not able to get back to the peak.
Breadth of Leach ore attachments that we achieved back in the fourth COVID-19.
So that's I think that's still gets akovaz speed and allows China. We are I think doing well in terms of the number of patients tested.
Her physician.
So we are making progress there, but in terms of the breadth and is.
Off our coverage and that's with the cobot backdrop.
In mind.
And the hospitals I mean, this is one quarter.
And the hospitals the wrong annual cycles. So I think we should keep observing and rather than on drawing too much of a conclusion not every single quarter.
Okay.
That's great Leo and and and very last one and thank you for giving me. This much airtime just in terms of competitive dynamics and pricing I'm, just wondering how impactful on pricing changes from alumina and China have bad and in terms of your positioning relative to others and the and hospital market.
We've heard from a little bit as public remarks, and just other Chuck that there were some notable on price cuts made on <unk>.
And the Chinese market as well as and some other geographies with certain products, but specific to China have those help you at all as you look ahead on and think about your positioning and the and hospital channel.
Oh yeah.
Yeah.
And.
The GAAP.
Go ahead Jim.
I I'm checking out and preference.
I see.
Hi, Peter model.
Yeah, really just alumina and reducing the cost that youre as your partner on.
On the sequencing side in the answer and and hospital market I'm wondering if there are price cuts have led to any improvement and your competitive positioning and China.
Well I mean, no doubt that most all the competitors.
Using them on this platform they did kind of price.
And the good thing for us. So we are we don't wear them outside.
So I think that's on the long run.
You mean and Thats all we have we'll have a.
A better margin, but since you and no doubt, but most of that you know how to model secrecy and cost it's not a significant part for the.
But overall costs.
And so we don't expect significant on it we are lower.
But will it will be on legal improvement.
Okay. Thank you again.
Thank you for the questions next question comes on line off definitely on Bang on primary anchor. Please go ahead.
Right, Thanks management and thanks for taking share.
My question, So basically Oh congratulations for your.
Good third quarter result, especially stories of hands on approach.
And just you register or risk on gross all basically I've two questions number one is on.
Recently, we observed the Prescott and centralized split children's policy on spread to not only on the medical not only on the drops photos on on the medical devices and it seems like there's a 10 day.
And here that shows that the PCL past is also going to have the potential to bidding and lifted and two is that a central.
Centralized procurement do you think.
That is going to hop on future.
Future and if that is going to help and how.
Does this impact our business loan growth.
Oh, My God and other question is I've told all channel.
Sure.
Share with us and Joel Oh understanding or debt.
A better understanding to the company or two youre asking.
And so it starts to be and just specifically the data because oh.
Sensitivity and specificity is very strong, it's very high forwards and for the cancer phase three and phase four stage, but it comes through a phase one and the phase two it seems like your.
Some of the number is not good.
The previous and at least on a boat show your views on marriage. So this time I want to ask you know theater and other way is that.
How does this day, especially the only cancer early stage cancer data compared with GAAP, yes, and.
John How does your house Saunders smoothed out the thing is that the.
Which one is on the voting.
High quality.
Good day <unk> specific its sea foods a food.
Cancers at a early stage and we expect serious numbers to improve sometimes.
Sometimes later on so this is my second question free.
<unk>.
Okay. So for for the first question and I would like and stuff.
We think that it will be quite.
But too early to talk about the price or price caused sort of got a from the government debt for Oh, I B D, especially for for cancer companion diagnostic products.
Reason and stuff so you know.
We're on.
The product I, usually on them at the hospitals take the sick and since the significant margin because they have a complicated and the operation and a hospital.
So its quite hard to like be higher.
The reason to not just for a relatively oh for the price and the second thing and says that happening.
The test and cost for outboard treatment for cancer.
Yeah, obviously, it's not a major part.
If there's something happened a similar thing happen for the IBT and means that after we get the price.
Pricing, a three year target pricing on.
We will we will see the potential a price cuts and what were procurement from the government.
So I would say that so who are on pacman.
It will be.
And we will be a long way and that we do not expect any change in upcoming.
And it's himself the sensitivity and specificity on early detection.
Now I will turn policy deal and so to explain about we debate on Joe.
Yeah, just to try to comment on in terms of a different stage and different cancer types and different sensitivity as you can see here and just mention there I see three and four will be showing hiring gyro and sensitivity.
Just just trying to be aware, it's a if you compare to our pure data for example, grill and we currently have a very similar to assess and specificity and that we will be able to achieve in terms of over on a $75 over and over 75%. Since you. These low stage 123.
Which is recyclable all we call.
Compared to their publication messing and we are doing on this but a higher since 2000 and.
Cost is due with dean.
You know ever and were ranch and we do we are currently a very you know.
We're optimistic but we've been very conservative.
During two of misconduct and though we current say from R&D program perspective, we are currently on further refined our pipeline and the methodology and the.
Hopefully by by applying additional and.
Data filtering as well as and lot of beauty and try and do further improved and sensitivity, especially if on the earlier stage for cert on cancer types for example, on non cancer and ovarian cancer and.
And right now, it's still under development and small, but I would just say, we hope we will improve days.
Early stage sensitivity, but I cannot tell on X actual going on how much we can prove improving and at this moment.
Right got your work flow that's helpful.
Can I ask a follow on question.
Sure. So now a days ago, you announced a day.
Cooperation with SMI rate can you share with us from the P. and out perspective, how does this cooperation impact your potential revenue potential profit and what's your pricing.
Strategy can you give us some color on this.
Thank you so much and I bet.
<unk>.
David This is the old and appreciate the question and we are excited about commencing the partnership and hopefully this will not be the only licensing partnership that we're going to have.
So we are excited about leveraging our commercial infrastructure and bringing more tests.
On to China on the benefit of Chinese patients at this moment, we cannot comment specifically on.
Pricing on revenues, we will need to go to a technology transfer initially.
Before we can commence on the test in China, So that will take a period of time and we expect.
To launch this product some pointing 2021.
And it will be at that time that we will be talking about the commercial aspects of this task. So appreciate the patience there.
I thought you were very clear. Thank you essentially so much no question.
Thank you for the question David.
Next question is comes on to laugh and thing.
<unk>.
And Stan Lee. Please go ahead.
So the first one and it is still on the data I'll pull and a follow up on <unk> on the debt on Davids questions earlier, so I think that compared with your previous.
Previous three cash 'em, although a youre sick fathers day dosing you know some somewhat higher and some are low or maybe just give up basically in line with.
Cancer model.
My first question and.
My second question is that.
So this is.
Oh, sorry, so and this years and negotiation for the nest and national reimbursement or less.
More targeted cancer therapy may be included.
And maybe.
And in and then the next couple of years and more will be included as well so other things that could drive that over.
Overall cancer channel tucking, low kits, especially and yes.
Given that and yes, it's not a reimbursable at this point that's.
And then maybe you can go ahead.
Yes.
Interest and over three cancer type interest month, and I think we.
And.
Optimistic about the channel.
And well be able to maintain.
That.
Performance, while we expand and she Nike free type margins and times, because we do have weather.
Do you have for their.
Yes.
Sure.
On <unk> activity.
Our chemistry and on average loans once we move into the night and so tight and I'd say.
So there will be a non technical improvement on which the radically.
A better performance on it.
Absolutely.
Yes yourself again accuracy and I think they are you will definitely see some for interest I need a future afford the on early stage and there's an opportunity we are.
I'm not sure I would have to say and.
Once once and.
Come on.
And one day that's between on model as you know this is a highly on.
And.
Great and on SAP learning.
I think with more data coming here and we well for sure.
A more robust.
So the short answer is yes, we are confident that we will be able to okay.
Okay, and significantly improved and some nice and making Uh huh.
On the okay.
He wants to second.
Yeah on the second question would do knows increase and progress on volume based procurements in therapeutics.
And we believe we agree that it is helpful and in terms of on driving demands and increasing availability or affordability.
On targeted treatments.
For the benefit of Chinese patients, which will.
Leads to increasing demands for patients with a.
Affordability issue. So it is a positive for the market overall.
For us it's less of a impacts as we focus primarily on the.
Top hospitals consensus, which have less of an issue on affordability.
But overall, we think this is this is a good trend on.
And we look to compliments on the increasing affordability with increased sand and accessibility through our in hospital model by placing more tests.
Tests and into the pathology labs, and hospitals, which is day typical way.
Bats patients are used to getting tested in China. So I think was the combination of increasing affordability and accessibility on these these are helpful for increasing ngs penetration.
And at some.
Some additional come and for that stuff.
And for the top 200 health field.
The and jazz goes into reverse, but it's not a key issue.
If you have on the investigation.
Profit with and jazz has installed in the hospital he got to see that yes, and that was the pay day taking on maturity.
For the task of kinds of patients and so we can see that PCR test is still increasing on the.
The thing is that they are penetration.
Penetration and lower too.
More hospitals and that's a good thing so first port and debt happening and stuff like that penetration is still on the party and wait and see that you see on.
Well and the debt.
Non dairy all.
Okay and overboard.
Jin passing folks and the pitching it and cuisine.
So we don't see any increase.
It's a good question and put a whole bucket and then coming on several years okay.
Excuse me Mr. thing any follow up questions each and no.
Thank you.
Once again, if youd like to ask question. Please press star, one and we try and name to be and now.
And no more question at this time with debt, ladies and gentlemen that does conclude the conference for today. Thank you for your participation you may now disconnect your lines.
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