Q3 2020 Genetron Holdings Ltd Earnings Call
Ladies and gentlemen, thank you put on the board and welcome to the Q3 2020.
Each on tolled on each conference call at this time I called it supports all in on budget.
After the speakers for some patients they will be a question and answer session.
Switching to the <unk> session well he took are still one he told the Cowen. Please note that today's conference call this being recorded.
No like how the confidence or what do you see good today.
Okay. Thank you. Please go ahead.
Hello, everyone and welcome to <unk> third quarter 2020, <unk> earnings Conference call.
Our news release issued earlier today and is available on the Companys I all website.
During this call the company will be making some forward looking statements regarding future events and results. These statements made under the Safe Harbor provisions at the U.S. Private Securities Litigation Reform Act of 995.
Statements other than historical facts, including statements about <unk> beliefs and expectations are forward looking statements.
Forward looking statements involve inherent risk and uncertainty.
For information regarding these and other which includes <unk> filings with the FCC.
All information provided today.
It's up this call.
John does not undertake any obligation to update any forward looking statements, except as required under applicable law.
With respect to any non <unk> measures discussed during today's call. The company's reconciliation information related to those measures can be found in the earnings release issued earlier today.
Allow me to introduce the management team on the call today, She said Wang co founder and CEO Jean trying how we discussed how we said business update I love.
So I'll tell you in school, our Chief Medical Officer will speak about our early screening program and plan for the U.S. in China.
Adnan shoes out Chief Financial Officer will provide financial highlights related to that on August 4th quarter results outlined in today's release.
Following management management's prepared remarks, we will open up the call to questions during.
Turning to feel any session, our co founder and Chief Scientific Officer, Dr. High Yang and Chief Technology Officer Dr., you chose <unk> will also be available to answer questions.
But that said I would like to turn the call over to Mississippi. The wine see all the change will help see then please go ahead.
Thank you hokey.
Good evening everyone.
Before joining I wish a quarter.
2020.
Earning conference call.
Intra quarter despite continued.
Trucks and gene called successfully delivered strong production results.
Recall about Beijing headquarters in key markets.
Dr. <unk> second I'll break that began in late June.
And the negative impacts of things throughout the quarter.
Volumes are recovering too.
About 60% to 70% in September.
Similarly, Dabian anything John also.
We start to see the CIRCOR.
Which had also caused some slowdown.
Despite these for total revenue growth by a strong 37.6% year over year in several quarters.
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Yes.
25.
Moreover, this robust revenue growth was accompanied by from working.
Operational efficiencies.
<unk> expenses.
Operationally over the past quarter I made.
[laughter] across all business.
Not just monitoring already screening as well as BOP on the service.
Development.
With our long term strategy and to further solidify.
Find out position.
All the players in China.
As a reminder, the diagnostic monitoring market has estimate total addressable market.
Close to.
Some of you at all in China.
And we are already one of the top players and continue to expand our capabilities in areas such as minimal residual disease.
[noise] Orange money market, we most advanced etch.
She sees screen in liver cancer at the time.
$7.2 billion in China.
We don't know when we already commercializing this asset in China.
Moreover, we have upcoming clinical data that.
If successful.
It's important that IBT registration trial next year.
Based on our proprietary differentiated and robust mutation capture technology, we certainly have a wise beyond liver cancer as well and I'll pass it along and digest, the Kansas could contribute multi billion dollar market opportunity seemed to help.
You Biopharma service trend for Cdx development and related regulatory initiatives.
Oh, absolutely very positive environment for oncology molecular diagnostic leading players like us.
Oh, we have a build a portfolio that not only address masip market opportunities, but also well balanced with time and cost developments.
Current and future market dynamics soft process and planning.
Finally, turning to the self pay market in which patients pay out of pocket.
We expect up in a few years the market could be gearing towards a more government reimbursement based model and we could see higher volume and lower price.
We have carefully for fearful that deliberately designed all products without any mind to offer a compelling cost proposition to our customers.
Excellent gross margin.
Such us leveraging our one step seek technology in designing our lung cancer eight Jane assay.
So this relatively new product has become a growth driver and we have received very positive feedback from our house.
We view that our R&D a bullet in designing superior products, while offering attractive profitability continues to provide a compelling proposition to our customers in their purchasing decisions.
Another example.
We should capture technology fall party screening products.
This technology supports multiple tasks from a single ctdna sample without sacrificing Stephanie.
Again, allowing us to conduct retrospective studies in a time and cost effective manner.
Can somebody could providing space.
It's in its nascent stage of gross.
Beyond organic market grows we believe that in cost per broke her Terry technologies, along with infrastructure and capital spends really differentiate us from other market players in China.
And would allow us to solidify our leading position now and into the future.
So now let's get into the details some of our operational accomplishments in support.
I'll pass it to.
Who will discuss the most institutions announcement related to our blood based and yet.
That's easy screen.
Detection of.
It should be.
Yeah, well cover our updates and the plant in the U.S., followed by our commercialization initiatives in China as well as our expectations for additional clinical data and IB trial update Tom.
Infant. Please go ahead.
Thank you Stan.
In late September we announced it didn't come received the U.S. if the breakthrough device does mission for the H.C.C. screen program.
This designation representing a significant milestone for our plan to expand its two screens the geography reach.
The brick to device because they see the granuflo products that have the potential to offer more effective diagnosis of life's run do you do with the unmet medical need.
In our case the granite to gene Tom based on its just you squeeze superior clinical performance over the current suddenly care, our ultra sound plus yes, Pete Petit.
Prospective clinical study.
It you see she's screen is also intended to be used individuals flood doesn't need to be at high risk <unk>.
Chronic HBV infection, and or do you ever cirrhosis.
The breakthrough device program designed to accelerate development.
Last month and a review process is the.
In order to provide patients with greater access to release product.
Well the rig sued device recipients.
Benefits include problem. If do you see the pack proud you review, a Pompeya me submachine housewares Medicare coverage I panel approval.
All that stuff is what kind of detailed theyll give 'em plant was empty.
<unk> five for a test of evolution and the potential fadi or you risk isn't the device exemption or the pivotal trial.
In conjunction with this.
Currently building a whole lot you used the word Maryland.
Which we intend to pursue CLIA certification.
This slide will be used to facilitate U.S. twilio voice screen.
Well to serve global from sort of the company's R&D any commercialization.
We expect a lab should be ready next few months.
You try though.
Well position to continue to expand our presence in the early screening market.
It's 50 screens has already reached me be commercialized Saturday cheap.
Have five luxuries in China.
18 lab went up a few good mess labs.
Those cat and CLIA certified.
To wrap up our commercialization ever for her.
First this year, we have formed a strategic alliance with iconic EPS care group, a leading medical exams she network in China.
Nick COVID-19 pandemic horizon doubt it caused some delays collaboration and wrote a afterwards.
We expect the partnership could become more productive over the next few quarters.
We are currently rolling out our 60 screens through government procurement contracts.
We viewed that we humans contracts has important strategic value it's let's.
Let's see not only bringing revenues.
But this contracts could also serve as a pellet motto down the road to local government adoption.
And the reimbursement.
In addition.
Were also exploring other potential biopharma for hospital partnerships to flare, but tomorrow or commercialization efforts.
We called that 50 screens and powered by introducing innovative and proprietary tissue capture technology.
Which enables detection motorboat mislead both currencies.
Hurdle was mutations in cell free DNA from preferred gloves Christmas.
Currently.
H.C.C. screen in tested he's ongoing prospective study was.
4500, it's BB pasta individuals.
Two Saudi pitches have already completed study.
We expect to announce data set from this to sell the Piceance <unk> first half of 2021.
And the potential to present, the full data at major medical conferences later date.
US triggers reported.
Preliminary data from 297 pitches at a wife center has a dumb still over 92% sensitivity and by just 3%, especially.
Compared to 67% and the lights and of course that stuck to that Youve ultra sound plots FPR.
And she sees a screen also has achieved.
That's 35% of positive free the few follow you and 99.6% next you pretty good about it.
Furthermore, stratified by tumor size, it's often 12 patients identified with H.C.C. you knew you were to deal with it.
10 patients tumor size less than five centimeters.
Indicates that 50 screens detection ability early stage Ccs.
Following the release of the 2000 patient study data.
We plan to get issued a registration I really you talked in China. The remaining 2500 patients in the first half of 2021.
Yeah on the University of surround it's the screen.
We are working towards developing screen cuts for a long and they're just of the cancer.
During the third quarter.
In turn has commenced its just been a major national research project for early screening long.
Hi, there just to system cancerous led by China's Ministry of Science and technology.
The project will use we're used to trust you to capture and.
And it is designed to include a multi center will spike people call for study in lung cancer as well.
100, Twentys solved in high risk individuals 20 provinces.
Lastly, cohort study.
Civics system cancers.
More than 100000 patients urban areas in China.
Turning.
<unk> is the only company in China.
It's pretty national key research and development projects for LIBOR long.
Doug just to catch her to screen.
Separately the same.
<unk> has been progressing on the kids can go study internally.
What a rectal cancer and data expected in Twentytwenty one.
Overall.
Overstretch she could have plenty early screening is to find a biomarkers or combination of biomarkers that give us the best performance for each individual cancer types first.
Before proceeding to combine all the data sets to develop the multek cancer test products.
This approach has made it possible, it's our unique discovery platform and beautician capture.
I will now pass it back to student she loves <unk> operational updates sedan.
Thank you and food.
Moving on to discuss other recent updates October we signed an exclusive licensing agreement the wisdom you plot along.
Along with the minority.
Equity investment into the company with this transaction, we accelerated our R&D capabilities MRT testing.
IMMU pod has a diagnostic assay.
NRT that is being developed in select hematologic cancers, including multiple myeloma.
<unk> CLL and non Hodgkin's lymphoma.
In China, the total addressable market is promising for sick MRV with the estimate.
Understood if I saw them newly diagnosed patients with T or be self employed magnets and prevalence numbers are two to four times of that.
Which second Marty could become the standard of MRV test in both new and existing patients.
We plan to advance the validation of SEC, MRT logical or studies to accelerate that clinical adoption yeah.
Yeah.
This product also complements our Biopharma services business line.
Dennis Secor MRT could be using clinical trials for blood cancer docs.
In fact, this new capability has already driving has already given additional discussions now about a partnership.
Other areas Genconn is also working on other MRT projects in solid tumors with an initial focus on liver in the colorectal cancer also.
Outside of NRT you.
<unk> immune profiling platform also bears particular instance market potentially early detection of drug discovery.
And Weve seen comp equity investment active R&D plans these areas I'll kindly underway.
Turning to our Biopharma services like the booming biotech sector in China.
Definitely innovative anti cancer drugs, such as target therapy immunotherapy in the cell therapy is expect to feel with a strong demand for comprehensive genomic genomic profiling related Bob Thomas.
Gene called service scope run just from biomarker discovery genomic profiling for clinical trials.
Commenting diagnostics and real World studies.
Recently, no hi, discussing to formulate regulations in China that are similar to those in the U.S., which co development.
Great and for mesas would be required.
Companion diagnostic tests have already become integral part of assertion Serbian college in the U.S.
Assuming this moves forward in China, we expect is regulation.
To stimulate additional demand Cdx development.
In this regard genconn hours <unk> founder system Pharmaceuticals recently launched a multicenter clinical trials in China for the joint development of a Cdx test full of a pre tenet.
<unk> has been validated by the test in the center of the Nampa and is now being used in this trial in China.
We believe that the Wyman plus cdx in China is poised for significant growth.
And our leading comprehensive genomic profiling capabilities would it make us ideal partner.
Also in the second quarter Gene Carmen de met a next generation foodservice CRL have entered into a partnership agreement at that time, So there's a one stop new drugs.
R&D service offering and registration service in both China, and the U.S. full biopharma companies.
Dms stress he already R&D design clinical capabilities and data analysis will complement our ability to provide more comprehensive and flexible R&D solutions for domestic and global companies in college he dropped development.
We believe that this partnership along with our CLIA lab, finding U.S. could expedite Obama service revenue.
I will now turn the call over to our CFO Mr. Evan shoot to provide more details on <unk>, so quarter noninterest revenue.
Thank you for that.
I'll provide an update on our financial performance during <unk>.
Morning quarter. It snowed, that's all numbers provided RMB terms and that old are all comparisons I made on a year over year basis.
Total revenue increased by 38% to 112 million up from 81 million a year ago diagnosis in a monetary revenue grew 45% to 102 million up from 70 million a year ago theme.
The increase was driven by growth in both the provisional reality T. services.
These sales I beauty products.
Oh did you revenue rose by 18% to 71 minute.
61 million in Threeq 2019.
L.D.T. diagnostic tests, so during the quarter totaled approximately 5900 units.
Representing an increase of 5% from a year ago.
The average selling price.
<unk> year over year.
It's a beautiful to a shift to higher body part of.
Such as Encore Penske.
Instead of quarter, how did your revenue included some edge Tc screen sales, which contributed to a small portion of total reality t. revenue.
I read you revenue grew 217% to set a minute.
From about 10 million in Threeq 2019, the increase was mainly driven by sequencing platform as well as I say sales.
Notably the gene five instruments and good luck.
Didn't try to sign additional contracts during the quarter.
And now has 38 direct hospital contracts.
Of which 20 I you hospital, I'd say purchase agreements compared to last quarter with 35 and 18.
Excuse me.
Given them in services revenue.
Great slightly by 8% to $10 million from 11 million a year ago.
Hey, resulting from less sequencing services.
Sequencing sequencing services has a lower margin so.
So you know was our deliberate effort to reduce such offering in the quarter.
On the other head we didn't give them in services revenue.
Revenue from Biopharma services increased multiple.
Compared to a year ago, indicating our continued focus on growing this business going forward.
Despite higher revenue.
Cost of revenue decreased 7% to 42 million units a quarter from 45 million a year ago.
[music].
Gross profit increased by 94% to 70 million this quarter up from 36 million a year ago overall gross margin increased to 62% for the quarter compared to 44% in the prior year.
Year over year gross margin improvement was seen across all major business lines.
Mainly attributable to improved scale operational optimization, and a better product mix.
Particular.
Gross profit margin.
How did you think of it was 69% compared to 57% a year ago, reflecting our focus on margin improvement through both.
Mix optimization and crude and price management.
For IBT segment gross margin was much higher 61% versus 29% in Threeq you 2019.
Sure beautiful.
Higher percentage of active sales.
In development services gross margin was significantly improved.
Just last year as well due to our shift shift.
Shifting focus away from sequencing services.
Operating expenses increased slightly by 7%.
129 million for the third quarter up from 120 million a year ago.
Among which Sony expenses decreased by 8% to RMB. So.
61 million.
From 66 million a year ago.
Selling expenses as percentage of revenue.
Monkey the leases decreased to 54%.
This 81% in the same period of 2019.
These decreases were primarily due to increased sales.
Productivity.
Administrative expenses were down slightly by 3% to 32 million compared to a year ago at 33 million I.
I mean, its trading expenses as a percentage of revenue were also down significantly to 29% from 41% a year ago, reflecting the benefits hopefully improved operational scale.
Research and development expenses increased by 86%.
She was sitting one to 39 million from 21 million a year ago. The increase was driven by continued innovation efforts, including new products and technologies, particularly in screening.
And then Marty.
As well as the IB clinical trial activities.
R&D expenses as a percentage of revenue well up to 34% compared to 26% a year ago.
As a result operating loss decreased by 30% to 59 million for the quarter this year versus 84 million a year ago.
Net loss for the period markedly improved to 48 million for the second quarter compared to 274 million a year ago.
We also provide enough I personally love speakers and management believes that these numbers would be helpful to show the trends.
Our underlying business.
Hi, first loss excludes share based compensation expenses.
Fair value change and other loss of financial instruments with preferred right.
No <unk> net loss also improved significantly significantly.
By 42% to 44 million for the second quarter compared to 75 million last year.
Basic loss.
Loss per share was RMB their 0.11.
Compared to RMB 2.15, you had a year ago.
Hi, first basic loss per share was RMB zero point to one.
Compared with RMB 0.59.
Last year.
Diluted net loss per share is equivalent to basic loss per share.
We have a very strong cash position cash.
Cash cash equivalents and the financial assets at fair value.
We'll close to RMB 1.9 billion or U.S. 275 million.
End of September 2020.
This concludes the discussion of our second quarter financial results I will now turn the call back to Susan.
Hi, Thank you had a wall and management is very pleased with our support <unk> rating. The financial results looking ahead, although the economic has largely been stable stable in China in recent weeks.
We remain vigilant regarding the situation.
Any large scale outbreak in one or more regional markets in China expect potentially have adverse impact on our business without that we are confident that genie is stronger than ever and we are very well positioned to adapt quickly to the changes in the market.
In particular, we are encouraged by our IBT, an early screening sales momentum.
<unk> expenses those to be the gross driver heading into next year.
We're also making good progress with our edge. He sees me I said.
In China, we are on track to report on where 2000 patients data in the first half of 2021 means.
Meanwhile, we're wrapping up our commercialization efforts in China and preparing for the IBT registration trial hosted data readout.
In the U.S.. We're also preparing next steps to commence clinical trials.
Our strategic focus going forward.
Well be to accelerate the development of a liquid biopsy based solutions across.
Across the full cycle tends to management.
Particularly in early screening and NRT.
We're confident that we would have become a prominent player in the liquid biopsy space and we're committed to bringing these innovative products to patients.
This concludes the prepared remarks portion of today's call operator, we're now ready for questions.
Certainly ladies.
Gentlemen to ask a question you May press star one on the telephone keypad and wait for any <unk>.
Catching the next lets you may press the pound of hash key.
Once again, it's not one if you wish to watch the question.
See how fast the question from the line of young from Credit Suisse.
Please go ahead.
Thanks management's will give me the opportunity is ask questions.
And no.
So onto come glass management's a full.
Knives, three kids data so I have two questions.
This was a small dollars operation.
Oh.
Commencements.
Yes.
Thoughtful allergies.
And I read the revenue by bringing it on me.
<unk>.
How about how much revenue from and jazz Hamas from <unk> and then maybe just some further bird size.
So we've got a nice revenue.
From.
Liquid stuff.
Now see and the philosophy the breakdown congrats.
Revenue from Hollowell sales and then revenue.
As you know itself. So that's my first question.
Yeah.
Sure.
I'll take this question.
For this quarter.
You know reality T. services revenue.
I would say over 95%.
But do you have a higher comes from Ngs sales.
We didn't say L.D. T cells.
I I.
I would need to come back later, but I would expect approximately 30% to 40% probably 30% comes from liquid biopsy.
Yes.
And Oh, I B D well this quarter we have.
Over 50% so I mean, the revenue comes from instrument sales.
Okay I see.
And.
So what are the odds of PCR or PCR revenue units or the quarter.
Is there at all.
He Saar is minimal.
L.D.T. wise Mboes LT T.N. IBT PCR is.
Just a very small portion of our revenue right now.
Oh I.
And then my second question is more related to our to scream problem programs. So.
Fire that's on correct.
The company I want to start a registrational trial.
Sure.
Paul.
The two saw than the participant.
First half next year, which hosts are going to have a size of about 2000 participants.
Yes, so the current design there will be a 2500 patients.
And we do expect okay. The cloud be be started in the first half next year.
Most likely it will be off girl, where 2000 patients data read out.
Right right.
But so what we are going to have the kind of food did I says all for the full sales on the 500.
Participants, which you are they finish the enrollment before you all cards so prosper.
Perspectives Todd.
Yes, So let me actually clarify right. The current prospective study that we're doing is on the 2000 patients I'll.
Out of the the 4500 patient cohort that we have.
And we have done that testing on the 2000 patient and we are pulling a lot some of that.
Actually these these patients as you can see that we disclosed data in the first batch as you can complete the wizard pull up as only one center.
Which is about 297 people right, but the rest of them were still.
To collect that a patient data and we do expect that it will complete the.
The follow up.
Time user as early as the end of this year most likely some.
Beginning of next year.
So at that time, we will be able to compile data in the scheme of foods that are with that.
And then the rest of the EUR 200, and that that the 2500 patients out of these 4500 patient cohorts will be reserved for our clinical trial. So that's the kind of.
Oh I see I see successful clarification, if I may follow up so what's that going to be the.
I mean primary end point in this for the Registrational trial is it going to some stress, though that we've gotten it hits full sensitivity and specificity, maybe you can help us and there's some that are about the same.
Incoming registrational trial design. Thanks.
Right. So I mean food do you want to take that question.
Sure. So let me just clarify a little bit about this than just mentioned rent. So it's all the targets. The endpoint words detection since you see see so you hit the right or be sincere, specifically, Florida car sales and we won't have the fallout paired up to one year to make sure that next year, but I remain active.
Why do we have a pure one year at the target Suzuki was supposed to be we hope it's what we have achieved already somewhere around 9% since the TV and learn to three person specific and that would be much better than whats itself shoot for with the current standard of care for example, what ultrasonic p. somewhere 67% the best.
So, but that's what we're shooting for and we hope that performance were been pin Adele level and if so we're definitely would give us the green light for the registration.
Okay. Thank you have a clever 'cause huh.
Mm.
<unk>.
Thank you.
We have next question from the line.
Sung Ji Nam from P.T.I.G.
Oh. Please go ahead.
Hi, Thanks for taking the questions and congratulations on the quarter, maybe <unk> could you remind us.
How tight the collaboration with China's Ministry of Science, and technology came about without a competitive process and could you also talk about what was the pricing about.
Gene trying to be selected as sales to be the partner I think it's early cancer screening development program.
Yeah. So basically we were selected by on its prime.
Primarily for two reasons one is that we had a very successful collaboration starting early next year.
Last year right. So we.
How to punish of developing the ER.
Sure swing.
We did a a perspective.
The second study together, which is still on the going by the way.
Oh, it's essentially the why don't we just talked about this.
So 2000 patient.
I study.
And the other is that.
The excellent performance that the alimentation cops are technology.
Uh huh.
The first calibration. So we had obviously very very strong performance.
Yeah, the H.C.C. screen the study.
So that's why we were actually.
Oh, and then let the by a panel of experts and it was approved by the most for these.
The major R&D projects partnering with again the National Center.
What was that number but leading hospitals Oh, yes.
Yes.
[laughter].
Great and then in terms of your development plan for additional MRV path for solid tumors going forward do you have plans to also partner with others in terms of the development process.
Or do you anticipate developing a lot of it on your own as well.
Yes, So NRT wise, you know, we talk about our second already and.
And they ran out waxy are forming a coalition to to do more of the validation on the second already product and the MRT plus all the tumor is a program that Oh we.
We are going to put a lot of resources and to and what I can tell you now is that a we are you know that we threw out some pretty funny.
The research project, we were had in the past.
A year or so we've got some good you know the good preliminary data for the liver cancer MIT.
And we will be spending that you have bigger cohorts.
With several.
Institutions use.
Yes, I mean, China potentially U.S. I mean these are.
The discussions are underway and we also mention that we got to put some efforts in developing our.
Colorectal cancer and Marty that research.
These research plan will be kind of jointly developed with our CRC.
He screening EPS as well.
Great. Thank you and then lastly from me I'm could you talk about obviously you performed well in the quarter despite depends on it because they did headwinds and some outbreak.
Different regions around China, we're hearing kind of mixed feedback in terms of you know recovery rates, you know with exposure to for companies with exposure to the hospital and markets. So you know as we look out to the fourth quarter and even early next year, how should we think about.
You know the pandemic.
Intact for your business and.
Just kind of curious you know what should be watch out for and you know in terms of.
Thank you kind of forecast.
You know how sustainable the current the coverage et cetera.
Right. So sometimes you can see that he served quarter, we recorded the seventies.
37.6 year over year gross right, that's that's actually acceleration from the first half.
Showed about 28% year over year.
Yes.
So as you could see that could be still remains a wildcard right, even though the things has being a stabilized quite a bit in recent weeks, but still come <unk> and he is not completely normal or you know come here was a pre hobby.
Pre pre announcement base.
For example that most recently we had a 10 dollar had a outbreak.
You know $18.
You know Fortunately is I think it is on the control now given the government again launched a massive testing.
The close to about 10 million people that test.
Seven to 10 days, there was a massive efforts and help to keep the outbreak in check.
So you know overall you know we are.
You know we feel that you know your absence of any new major cavatt outbreaks were optimistic and Oh celleration in gross could continue into this quarter.
And that we do believe that you know when things are stabilizing further we are very well positioned to achieve and it's actually a higher growth rate next year.
Great. Thank you so much.
Yeah, and then maybe just give you a bit more color on that is that are you know in the in the second quarter I think we talked touched upon it a bit before you know Q2 posters.
Post earning call.
Did that obviously in July August the Beijing was very heavily impact.
The second outbreak Beijing is the capital City always you know well went through a very strong restriction wouldn't any sign of outbreak or when you know any outbreak is on the way.
So you know us as we are.
Probably the players with the highest market share in each market, we were actually quite happy.
But to see that towards the end of the September Beijing are recovering on.
On and we're hoping that you know this key market will continue to recover to a more normal status and also Donnie machine John was impacted by.
I'll break and so important to again all these outbreak are pretty much.
Now so you know when we look at the underlying 10, we do believe that.
Without any further outbreaks, we will we will actually head into a stronger gross computer was before.
Yes.
Great. That's very helpful. Thank you so much.
Thank you next one.
Once again, ladies and gentlemen to ask a question. Please.
So one of the telephone keypad.
Once again to ask a question it's Paul one on the telephone please.
Our next question from the line of Max Muszynski from Canaccord Genuity.
Please go ahead.
Hi, Thanks for taking the questions and congratulations on a great quarter.
So just starting in an Ivy. Thank you for breaking out the IBT revenues, that's really helpful or we are we seeing the early effects of your IBT focused testing strategy and an increased willingness to perform on site testing in Chinese hospitals, how should we expect.
Got good trends to play out as we enter 2021 and then any comment on the early traction you're seeing with the gene lung cancer I video show it would be great. Thanks.
Yeah, Matt So as you could see that us discussing the.
In the Oh, the earning call earlier on we do see that hour.
You know aging cancer based on the ones that seek.
Search is getting is getting a pretty.
Two quarters seem that right it won't become obviously won't become a.
A revenue driver for for this quarter and going into next year as well.
Just want to remind that you know.
Remind to you.
The audience on the on the coal is that.
We have our medium throughput a sequencer as five approved last November.
And then we got our aging lung cancer panel based on Oh patterning technology wants to see approved early this year.
Barry.
And with these two combined together, obviously, we have the best in class Mcgregor, providing solutions that we can push into the hospitals in China now as we are ramping up our essentially the the solution provider we call it solution provider okay.
We'll see actually the adoption.
Hi, the big public hospitals, our Onestop solution was centering into the coming quarters.
Great and then sales sales of your H.C.C. screen liver cancer test contributed to revenues in Q3 after some disruption in the first half of the year.
Can you just give us a sense for how this program is ramping up and it's the the reopening of several Ikang medical centers is making a difference.
Yeah. So you know as you can see the gross rate Ah I mean, if we compare with last years, it's pretty.
Well quite a bit in terms of revenue off of the itch screen, but the absolute terms is still a relatively.
Relatively small portion of our.
Revenue.
And you know however, you know was things sterilizing.
We will see a more is actually a better execution on the rollout of the icon testing center as well as some of the government procurement contracts, we have been working on.
As we mentioned earlier in the conference call and we do believe lease commercialization efforts will become a.
A bigger and bigger revenue drivers.
For 14.
Especially heading into next year.
Great and then one final question just on gross margins could you just speak to the strength that we saw in the quarter and just how your product mix affected the gross margins in Q3 and and so are we seeing just some of the early positive impact of one step she.
On your on the Cogs line.
[noise], yeah, so Max right now the impact or the benefit of was the uptick is primarily reflecting the asset sales, though the Ivy D. A sales revenue.
The the Super majority of our L.D.T. revenue currently it is not.
Not the aging tests rise.
Oh.
Most of the big panel and various types of Oh.
LG TV services tailored to different cancer types, but.
But youre absolutely right as we continue to drive a ibds sales volume going forward.
For example in this quarter, we added two new contracts to new IBT contracts with hospitals.
But the momentum will continue into the fourth quarter.
And that was the cost benefit of what steps do you will continue to come into play, especially for the asset sales obviously revenue.
Great. Thanks for taking the question.
Thank you.
I would know like Kinda talk friends, Oh, let's first speaker Ms. hockey notes for any closing remarks. Thank you.
Thanks to everyone for joining asphalt third quarter earnings and business update call. We appreciate your ongoing support and you have any questions. Please do not hesitate to reach out to our Investor Relations team.
Yeah.
Thank you.
That concludes our conference for today. Thank you for your participation you may all this come at your lines now thank you.
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