Q1 2021 Burning Rock Biotech Ltd Earnings Call
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Good day, and thank you for standing by and welcome to burning Rock 2021 first quarter earnings Conference call.
And this time all participants are in a listen only mode. After the speaker's presentation. There will be a question and answer session to answer questions. During the session you will need to press star 1 on your telephone. Please be advised that today's conference is being recorded before we begin I'd like to remind you.
You that this conference call contains forward looking statements within the meaning of section 21 E. All of the Securities Exchange Act of 19th 30 for its amended and that's defined and U S. Private Securities Litigation Reform Act of 1995.
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Events or otherwise, except as required under applicable law.
And now I'd like to hand, the conference over to the management team of burning rock. Thank you. Please go ahead.
Thank you will come to burning rock, earning.
Hum.
There are plenty of rock and.
We also have.
And and child policy.
Oh, so zone and CFO.
CFO Leland and then.
And it's called.
For burning rock, that's outside of China as molecular diagnostic leader for precision oncology go to close all goodness for the first 1 and it's early detection.
Moving nuclear biopsy for cancer and effect and as for Saturday.
And that would be a collection and MLG.
Oh well.
Turning to page for so today, we're going to recap the reason and the programs for.
Those early detection and therapy selection.
So for early detection.
We are we are very excited to launch day, multi omics 72 cancer.
What kinds of tests.
I would just call it a press.
President and.
And the second thing for us.
And predict try and for non Kansas, and that's going well.
Right.
And so I would feel osha and and fun.
These 2 trials and detail.
And in the meantime.
The the preparation.
And commercially vision of the cancer test and its ongoing.
And so we're continuously building.
And building out commercial and operation operating team and optimizing the S O piece.
But nothing significantly important to report out for it for.
For the 2 cancer. So Paul do you have any.
Question will come to us.
Session.
And of course of therapy.
For the therapy selection, we have great news that finally the result.
And obviously part of I think you'll see 2 as published in nature.
And our technology.
And that's floating around quality.
And at the top tier level and a world now CTO, Joe I would talk about that and detail naphtha and death and I was CFO.
Ill talk about our financial numbers.
So, let's turn to send and first about the early detection park for net.
Alright, thanks, and thanks Lisa.
So if we go to page 6 and this is to recap the product development roadmap for our early detection programs.
And so we started with a proof of concept on lung cancer and that study and the methodology has been actually most recently accepted for publication and the manuscript is pending publication right now and then we'll move on 2 and 3.
And 3 cancer test, which we presented the data and.
And last year in January and the ACR and special conference on liquid biopsy, well and we were able to achieve a 95% specificity and 81% sensitivity and then Mercury's and play I think a lot you are familiar with our 6 cancer test results that we released a luckier.
In November and even though Asia. The 6 cancer types and include our covers and lung cancer, and colorectal cancer and liver ovarian pancreatic and esophageal and and the data showed that we were able to maintain our 81% sensitivity while improve the system.
The T and improving.
Improving the specificity to 80 about 98 per cent and we also were able to achieve a reasonably good accuracy for T. O O analysis P shelf origination and now says 1 this and <unk>.
As high as about 81% accuracy for mistakes cancer passed on and in the ease that we released last year.
And then where does this cancer test after the other Thunder study, which was the case control study to validate the specificity and sensitivity and after off the product and we.
We also or planning to move on to a prospective interventional study on for asymptomatic population and so that study is currently under planning and I'm going to she and overview and later pages and today and we really wanted to focus on.
The the most recent very exciting programs and says that we are making on the 19th or cash and looking forward deep onto the 'twenty 2 cans or cast and you shouldn't have mentioned for the Nike and third task or current status and sad to predict study that we started earlier and ongoing.
Or it's mostly the program is as expected and also for the R..22 cancer task first off over the 22 cancer well and eventually cover about 88 per cent China's cancer incidence altogether and then for that 22.
Cancer tests that we have just kicked off a large clinical development study and a few weeks ago in May 'twenty, 'twenty, 1 and and it's called prescient in the later pages and I'm going to tell you about a little bit about the design and timeline for both the predict study and.
Depression study.
So if we go to page 7 this is a startup and the overview of the clinical programs that or we are we are looking at for our early detection program and so.
And so for each product for each version are each generation of all product there are for roughly 4 phases for the I'm proud that the valves and in Oregon, and they like that.
And the first and see I think see that months and which we.
And do the panel design democracy and action and also the assay chemistry and Finalization and then we do the analytical validation to to validate the performance and I'll, let you call, a including easing reference materials or clinical samples to 2 validates the performance specifications and.
And then we move onto the case control study and for this 1 and you can sort of a thing called the a b C. D E studies from Grill, and it's similar to what we're laying out here as the case control study in these studies they are reoccurring and co and cases and controls for healthy controls and in these studies we will do.
We're able to validate since that day.
And I see specificity and T O accuracy, the key statistical performance and features for the for the early detection product and then after that and eventually moved watch and move onto the Ism Tonight, and population and which we will be able to to validate again and the sensitivity.
And that's the 17th your accuracy in these eventually intended to you intend to use population.
And for this 1 and you can sort.
And sort of compare and out to the Pathfinder trial from grill, and as well and that's and caffeine gallery and the asymptomatic.
Population in a post actively recruited.
Cohort so for our 3 cancer task and we after we finish the I'd say, it's about Manhattan, and and electrical validation and we didn't move on to the clinical development and so we we moved it forward to the 6 cancer tests and for the 6 cancer types, we have and so far and completed the assay development and analytics.
Consolidation as well as the case control study, which was what we mentioned and the last page as the Thunder study for Sunday, We're studying we're able to show in the in a training and a prespecified validation cohort D 881 per cent of sensitivity and 98 per cent of specificity.
And then again on the Oh towards back to intervene.
Interventional study.
Study on the asymptomatic populations when it fits for cancer test is currently and there are plenty and we hope that we will be able to disclose more details about that study once it's its finalized and released or kicked off and that in the near future.
And then we in the Meanwhile, in parallel we are.
So I'm moving on to more cancer to cover more cancer types of course, so for that night cancer task. We have already finished yeah, I said, you've asked them and which means that we have finalized the penetrate and and good market selection and the panel design and Sandra and the analytical validation for that products is currently ongoing.
And in the pet in the Meanwhile, we were able to start the enrollment on the case count showed the predict study in parallel to sort of onshore to shorten the development time over all and the predict study and if you might recall actually contains 2 phases.
And in phase 2 it does contain oh factor off casting or validating among oh, small asymptomatic and cohort or healthy controls and so that's why over here, a weird sort of spanning batch and a little bit bigger.
And that case control study, even though it's not fully powered to task on the AR on the housing or asymptomatic population. So in the later pages, how they'll be able to and give you more details on how the 2 phases of this study well worked out and then for the 22 cancer.
We are actually working on.
Developing.
Our next generation off the product in the Meanwhile, and is currently under it and I say development.
Page however, because we collected on a lot of information all preliminary results from the previous versions of the product and we were able to finalize the al on the design of that trash and study as the case control study that we are planning for the 20th to cans.
Their task and so that's why we have kicked off for enrollment office studies that we will be able to recruit simple its clinical samples for future testing for or a validation for these 22 cancer packed and in parallel with the product development effort.
So if we move on to page 8 and that says there's hotline and see a study designed to predict study again. It covers 9 cancer types, which are listed out and the on the upper right here.
And overall this study contains more than 14000 and participants about 55 per cent of them coming from cancer about 10% and that's and 10% coming from benign on diseases and the rack from healthy healthy can chose and 1 thing we wanted to point out it's got 7.
More than 75 per cent at least 75 per cent of the kings and participants well be from stage 123, and so most of the cases, we will for because.
Primarily on the early stage patients, we want you to know or be.
Be able to assess our sensitivity among the early stage patients because that that's what really matters and then in terms of the study design and as I mentioned, there will be 2 phases for phase 1 will be and open label design, which means that for 1 for phase <unk>.
And we well on D Y B, all phase, 1 and samples into the Prespecified training and testing that's and within the training, we will be able to customized or or to them are or a motto and cut offs and dan to to be able to.
We reported the results.
Norman says on the validation that that sat within the phase 1 cohorts and then after that and the the model growth.
And the model will be locked and now we'll move on to phase 2 simple processing. So in phase 2 we will have a totally independent that off off data to test or to validate the outperformance of the all the locks and model or mass sorry, just 1 thing 1.
And to be able to have a rather accurate and <unk>.
And then off the up the margin performance and for the Knight cancer and the Knight cancer Test and then 1 thing. We also wanted to point out is that for predict predict study participants we are planning for a 12 month follow up especially on the housing can choose which.
Which will have a positive on testing results. So that we will be able to has a positive predictive.
And value assessment, among these healthy control cohorts over to follow up.
And so on the next page and we listed all the objectives and timeline for predict so of course, the primary objective well Beach House T. R. A.
And to try and validate the sensitivity and specificity and T. O analysis of our C. F D N M and isolation based model and for these and I cancer Mitek for cancers, and then and for the secondary objectives. We of course wanted too.
I wanted to learn about the performance among different types of cancers and also non different stages of cancers and also we wanted to know whether other biomarkers, including protein Biomarkers that we are processing and in parallel in these predict simple by there.
They will help and anyway, which we do expect and my day might help and at least some other cancer types and how do they help and how do we combine them once and methylation markers and that's something we will explore and for them to predict data and then last but not least we well have a chance to evaluate the P. T V.
In this and this cohort as well after the 12 month follow up period, and then in terms of the timeline, we expect the phase 1 enrollment to to finish to complete by on 2020.2 and then.
And we will be able to have a readout of the phase 1 data by the end of 2020, 2 and then I B and up 2020.3 we will have the readout for phase 2 data and by 2020 before and we will go to be able to finish the all fall off and have the complete data set for the predict study.
On page 10, we wanted to briefly mention the kind of attention that the pretty steady has attracted and among the Chinese oncology community and this is the picture on the print principal investigator for a doctor doubts and.
And he presented at the keynote speech on the National Oncology conference on standardized the diagnosis and treatment conference and non that without a couple of weeks ago, and Beijing and they predict study design and as the day. The news was announced on during that conference by doctors and so on and.
It has attracted a lot of interest.
And attention from the community so far.
And then moving onto the next page on page 11.
Lays out the study design for depression study, so compared to predict study price and study actually has 2 dimensions all the expansion the first as obviously extending from the Nike and so tied to the 22 cancer types, which are listed.
On the on a per right again.
And also it has similar design, but not see weighted into 2 phases.
And he has another day myself extension is that beyond my solution and protein markers, we well we will profile other omics ophthalmic in depression simple says well, we won't be able to disclose too much detail on what exactly are we testing there, but the AR expansion well be.
And the exploration from the cash and study will be focused not just on the cancer type expenses, but also the Oh makes combination.
And then on page 12 on again the objectives for depression study as to we will be able to validate and Dr methylation and plus protein markers and amount of 22 cancer types and and then we will be able to assess and different.
The performance among different stages and different types of cancer and then very importantly, we will be able to evaluate.
And does the potential combination, including methylation proteins and other genetic epigenetic Biomarkers from depression study and for in terms of the timeline, we expect to complete enrollment for Apache and by 2020.3 and then for depression.
And study, we will divide it again into Christmas, but that's in flight training and validation. That's so by the end of 2020.3 we expect to be able to lock the motto for 'twenty 2 cancer type.
From the training from the training Sac and then in another year and we will have this study will read out for D. A validation and Sac.
So on page 13.
I'm sorry on page 13, and visits again to introduce you to you the principal investigators for predict and price and we are very proud that we have.
Successfully attract at the top tier oncologists and in China to lead the predict and crash and trials and so on top of Doctor Jazz Fang is the.
Leaving P. I for the predict trial. He is the fellow off the a fallow off the Chinese Academy of Sciences, and also the president of the Shanghai Jumpshot and hospital. So for those of you who are not I'm very familiar with the Chinese hospitals, and Shanghai Qingdao hospitals, 1 off the China large.
And comprehensive academic hospital.
And it performs more than 100000 operations each year and serve about serves about and then.
69000, and patients per year and in 2019, and it was ranked top 5 and amount of China's general hospitals and so.
On the on the bottom.
And Doctor Yeah.
He is the leading P I.
Cash and study and he is also a follow up the Chinese Academy of Sciences, and wholesale President The hospital caught cancer Hospital off the Chinese Academy of Medical Sciences. This hockey, though is arguably be top cancer specialized hospital in China.
And so we are very proud and that these top oncologist and are leaving our predict and cash and study and it actually reflects the sharply growing interest and and acknowledgment from the oncology community in China for Kim for early detection.
Factoring in the past euros. So it has to try and it does is it attracts a lot of attention and this and dispute and it.
So, we think high quality and cohorts and data well ensure timely recruitment and of course successful operation of the study, which will serve as a key and and establishing a leadership position and maintaining our leadership position in the development of our cancer early detection.
Products. So we are I'm.
Excited to share with you. These these tea ice and they are.
Their level in among the oncologist come in to and China.
So with that I think I'll pass to our CTO, Dr. Joe John too and tell you more about our Reeves and results released from the efficacy truth study.
Joe.
Yes.
Thanks, John and so I'm going to cover a little bit of both.
And parks so for the slide 15, which is a highlight.
What's the strength sort of when you rock in terms of a surface election and business. So.
With regards to the superior per box and the world.
And then share approval process for those different IBD kit and the pipeline for the also the commercial penetration, but today I'm going to focus on the first bullet point, which is a superior products, which are 1 other evidence showing is on a paper published last.
And last month and.
Mutual going to college.
And in the slide 16.
Is it basically a leading for non led by consumption Oh commuter effort.
And led by FDA and.
And which they call it and make your sea consortium and focusing on the quality controls and sequencing.
Business.
And whether you can see here so that's okay.
And that's being published we we participate of boats.
The liquid biopsy part as well.
And then cancer, which is tissue based for the liquid biopsy study, that's being published and malls malls.
So on page 17, basically highlights of what's the participating.
And the study design and so there's a 5 different company participates there or could vendor, which means all being capable to produce the liquid biopsy panel and.
And so as a kit format and to let the customer to use them for burning rock is the 1 that's the only Chinese vendor and participants this study and to each other.
And district for kit.
For 2 different labs and also the.
The lab will receive the FDA distributed and referenced material and to perform the assay based on vendors a kid.
She had guidance and trying to generate the library and the sequence and and also using the CAD vendors and buying somebody just pass it on to perform analysis.
And then other result, it will be.
Submitted to FDA and other.
And for the for them.
Principal investigator for this study.
Look at the data and.
On the up here.
<unk> also led by and CQC, 2 effort and trying to know which of the pilot to what's the true grown choose for these data and trying to evaluate sensitivity and.
Specifically, we call it false positive rates as well as a evaluate the reproducibility.
And also the across labs.
But in Iraq, using the non plasma we V for panel, which we've turned and call uncle complex targeted panel for the liquid biopsy study and it.
<unk> hundred and 6 to 8 genes being destroyed and up and to talk and table here.
So for the next slide slide 18 basically highlights.
And we'll keep a foremost comparison across different panel and other product so burning rock has been growing.
Boxing and the.
Green color and as you can see is a top part for.
And taps, which means for them based on the sequencing and resolve how many unique rock them and that we can collect it.
Coverage recovered from 'twenty, 5 nanograms and reference material.
And can see here the data showing the higher the bedroom, which means.
And with limited months gang of input.
And a real struggle and you can collect from them out.
And does the the bottom panel and.
And compared.
It covers uniform and day, which means like a crosses panel.
What's the average coverage and how uniform and this panel will be and as you can see here when you're also showing them.
A good performance compared to other vendors.
So first of all the other coverages are close to them and all similar to each other.
So for the next slide slide 19, which compare for different hybridization capture Kendall and <unk>.
And a different a different sensitivity like say, how what's the calling probability for different kind of burning ideal frequency and being.
And it's just each different panel has a different kind of a true positives as it depends on different for the.
For the for the Ti they basically compare based on their ground truth and they look at different revenue.
Frequency being a weather whether it is panel can be able to call. It and each column represents the 1 simple run replicate zone in 1 such and whatnot.
So for in Iraq.
And 1 basically and it's been colored and which means this variance has been call. It if it's a blank and which means it's rare and speak Miss and we called false negative here.
And I see here.
And basically almost all of the color being filled for them for a bunch of Iraq and even your physical like Paul and 1 percentage point and 2 per cent Burger and and do a frequency and being end up calling percentage is higher than some other panel. So this is just to give out for a lot of the call with a show and like our panel as well on outback and somebody whose pipeline.
Showing pretty top performance compared to.
Oh, the other vendors.
And is this kind of a classic.
Vendors.
Goes out for there.
Roof reduce abilities and.
Next slide the Triple a flight and then David just compare across different kind of pan out and look at a Hollywood producer.
Produce ability it is across panel across lab.
And so as each law process same sample for times also Theres a multiple labs performed as you can see here the day reproducibility and also opening and rock state and showing pretty good performance compared to other other vendors kit.
For the slides 21, and just briefly compare different kind of input of a D and the amount and the comparative sensitivity as we know like the mall DNA putting there.
And within the zone.
Higher sensitivity each panel showing this kind of trend for.
For the for the Green line basically represented burning rock chassis and.
For both sensitivity and reproducibility and showing the burning rock panel.
Pretty good performance and a very stable and that and also you have to variant allele frequency and Paul wanted to point and 5% showing a high performance.
For the slide 22, very briefly there just to compare and the <unk>.
Accurate to say based on the sensitivity and and precision curve.
And the.
And you can this is based on 25.9 and grandmother.
And reference material input and across a comparator for a different panel and the precision and representing the you know for part of the positive predictive value or PPV and the sensitivity here means for recall, which means and how sensitive are you how many the true pollo to read it is so is it closer to the top right.
This graph means for the better performance.
And you can see here the overall and then.
And especially the day when you rock showing the best.
Compare that to other panels.
And all of these information just gave us both.
From the paper published and if this is a basically a relative but like see a fair comparison across different panel and using the same reference material and gave us a lot of confidence and showing that our product and the circus selection zone showing the top performance.
Not only in China, but also compared to that what do you know a lot of them.
And they must kept vendor and we've been doing pretty good on that so here basically and we just.
Conclude.
And the surplus selection park highlight and I'll hand, it over to Neil talking about financial strength.
Thank you Joe our financials are shown on page 25 of our presentation.
And for this call will focus mostly on our top line numbers.
And first we recap that all our revenues are generated from a therapy selection business. So there's no contribution from them.
Early detection, and yet which is still under R&D and clinical development.
And the first quarter, we are happy with the year over year growth that we've been able to achieve we grew our revenues by 58% on a year over year basis. We grew our gross profit by 72% on a year over year basis.
Channel our Central Lab revenue grew 72 grew 62% are in hospital revenues grew 70% and our observation of some anecdotal industry data points. This is above industry growth rate and.
Indicating that we've been able to gain some share and the spirit.
Within the first quarter talking about mammography and the sequential trends January was impacted by Covid resurgence in Beijing, Shanghai and a few other key cities in China.
So that did have a negative impact on testing volumes for some of our key customers.
February was a quiet small due to Chinese new year.
And March was and okay months.
The negative drag from January and February the sequential growth rates. It was negative for the first quarter at -14%.
And Q on Q.
Now looking at the rest of the year, we have a guidance of RMB $610 million for.
For the 'twenty to 'twenty, 1 and full year, which is unchanged from our previous earnings release, we have not hit the monthly run rates, yes to achieve that full year target and so there is certainly more work that we need to do.
And in terms of what we're doing in terms of driving additional and E and G. S. Penetration, we are doing number 1 executing our and hospital strategy, putting in our test available at more hospitals, which we think is important for building and just penetration because this is the most typical format of testing and China.
And secondly will be the continued execution of our multiyear and then P. A registration pipeline process, which will be key in terms of competitive differentiation.
And so we remain focused on these initiatives for driving the long term success of our therapy selection business and.
And with that we conclude our prepared remarks, and we open up for questions. Please.
Thank you, ladies and gentlemen, if you wish to ask a question now please press star 1 on your telephone and wait for your name to be announced if you wish accounts for your request. Please press the pound or harsh Kay.
Your first question comes from the line of Doug Schenkel from Cowen. Please go ahead.
Hi, Good day and thank you for taking my questions starting on the topic of asymptomatic screening.
I appreciate all the detail you provided today.
Regarding the 6 cancer and 9 cancer and 22 cancer asymptomatic screening programs.
3 things that are pretty important remain unclear to me 1 do you believe studies like Thunder project and press and will be sufficient to allow for product launch from a regulatory standpoint and reimbursement.
Second if not how big a study will be required to allow for regulatory approval and reimbursement.
And third what is the acceptable target.
And from this perspective, when it comes to sensitivity and specificity.
I wanted to go back to these questions because you referenced CGA and Pathfinder in your prepared remarks, as good precedence or at least comparable studies.
Neither of these studies are sufficient and the United States to support FDA approval for CMS reimbursement.
Most companies and facts that are based and the west have indicated FDA approval and reimbursement would require large randomized prospective studies and by large I mean over 100000 patients. So I understand your programs are not targeted at the U S for western markets Theyre TARP.
We did at China.
And would be helpful to understand again.
What the answers are to my 3 questions as it relates to asymptomatic screening and given the market is different.
Okay, Hi, Scott and thanks for your question.
It take and take your question I would try.
First and first of all a very straightforward answer for your first question no. We don't think the predict or impressions and well be enough for testing the asymptomatic and.
Population because they are apparently not powered enough 2 to have a precise enough assessment on the sensitivity.
And especially the sensitivity and for the asymptomatic population and also the recruitment strategy actually naturally complex with a productive asset is symptomatic validation study because in this study the participants the other.
Troll arm actually.
We we define them as healthy quote unquote, because they need to go through our house checkup or physical examination. When you add the other recruiter out point, but actually for a purely asymptomatic study they don't necessarily have to go through that and it's just income free and.
And relying on whatever health checkup habits, they are they're going through and theyre in their real life, So predict and crash and are not designed they're not designed to give us answers for the asymptomatic population performances.
They are on the other hand powered or designed to give us answers for the keys control cohorts, which well help us to be flat or to design, the future asymptomatic plus active or even an interventional.
Study however for the 6 cancer test the study that we.
And just mentioned that.
And there are plenty that 1 and well be designed and powered to to give us a definitely to answer them for the asymptomatic population for the 6 cancer task. So that 1 we do think or we are these.
And for the per pairs potentially down the road for registration and of course, the registration pathway for early detection product in China, it's not crystal clear or anywhere near a crystal clear at this point, we're having a conversation with them and M. P. E. So we don't have.
100 per cent answer that it's going to be enough, but at least it's powered to answer the question about and individual level, whether the benefits would be enough to to 2 paths.
Through the registration and Atlas as a pay out of pocket product.
And for reimbursement and I I agree with you that it's a completely different story because for reimbursement and you don't have you not only have to establish and individual level benefit and have to establish a population and I wont benefit. So in order to do that there are a lot more.
You need to evaluate beyond just sensitivity and specificity on that individual level.
And for different cancer types et cetera.
And you also have to establish you know benefits in terms of health economics et cetera. So.
China and I think we also talked about this a few times before and kind of the the market is and ought to pay out of our out of pocket market. So we do think that in China, it's possible to to have the registration and reimbursement.
And.
And then there's sort of 2 things and.
We will be able to have to read the registration and.
And by just showing the individual level of benefit but of course again.
Again this is preliminary thoughts and you know things might change and we might have more information as time goes on.
Thanks, so much for that channel and that was really helpful.
And my my other topics are probably more for Leo.
So Leo just in terms of the quarter and.
Specific to the central lab.
Volume dropped relative to Q for.
Maybe that wouldn't have been shocking regardless of how January and March went and given the lunar new year was in the quarter and wasn't in Q4 that being said volume was also lower than Q3. Additionally revenue dropped back to levels not seen since the second quarter of last year and this channel.
And that was largely a function of both the volume dynamics and maybe just as if not more importantly, asp's dropping a bit.
So on and on the topic of Asp's.
Because it sounds like you don't think there's any competitive pressure on volume. It sounds like you think that's just the market. So when it comes to Asp's were their market pricing pressures and the quarter or was that a function of product mix.
And then kind of building off of that how are you thinking about volume and pricing and the central lab channel over the balance of the year, you know essentially what's built into guidance.
Yeah, so for the Central Lab channel.
We did see Asps fluctuations.
Quarter over quarter.
And that was more to do with product mix. So we have not made any pricing changes for.
For that channel during the first quarter, so pretty much driven by product mix.
Shifts and some seasonality.
Was for the first quarter for.
For the remainder of the year for the Central Lab. We think there are structural challenges that will we do need to work through.
And if we look at as we mentioned earlier, if we look at spirit and NGL and penetration.
We are putting efforts into the in hospital channel. We think this will be very important for the future growth.
And she is penetration and that's the most typical formats of testing.
The Central Lab channel is it more.
Is it more fragmented channel with lower entry barriers, whereas the and hospital channel is a more institutionalized channel where our products for a while.
Be able to compete and that's how we believe.
Versus other non products.
And so some aggressive.
Commercial factors.
In the Central Lab channel So we think.
And looking for the rest of the year and hospital channel will be importance and in terms of driving growth.
For the and hospital for the Central Lab channel, we have been building our sales team.
And head counts so we have seen.
Sales and marketing expenses.
Increasing over time, and that's mostly due to head.
Head count increases so we are.
Putting more.
Manpower on the grouse speaking to more physicians to build up this channel, but when you think that this will take time.
So Leo also keeping in mind that in and hospital revenue dropped below levels generated and both the third and fourth quarter of last year would you attribute the performance in Q1, largely normal to normal seasonality and thus you feel pretty confident about a more pronounced ramp.
Hospital channel versus the central lab over the coming quarters.
The first acute drop off the and hospital channel was expected as we were expecting Chinese new year and tip.
And there was.
Not a lot of ordering during that month.
And then the January Covid resurgence was unexpected and so that did hit us.
Without that we would've been better looking at volume trends, we were happy about being hospital volumes for the month of March which grew double digits and.
And we are we are keeping and watch on the second quarter as we have not closed the second quarter, yes.
Okay, and that's a perfect segue to my last question, which again is on guidance.
Obviously, you knew lunar new year was in Q1 as it always is.
It sounds like what surprised you was the.
Covid impact on January and.
And probably more of the Central lab performance and March versus the and hospital performance and March.
What is it that you saw coming out of the quarter and over the early part of Q2, which made you confident in reaffirming guidance in spite of the fact that it does seem like there were more headwinds and the first quarter than you might have anticipated.
Yes, as we were building the.
Guidance, we were expecting a second half heavy.
Versus the first half lives all for you.
And it played out that way and we did leave some buffer for Covid fluctuations and we did get hit by that in January so so.
And so not a lot of surprises in terms of looking at our guidance looking forward for the rest of the year we're doing.
Ramp up of our monthly revenue run rates, which we haven't hit the run rate yet to be able to achieve that full year guidance. So we need to we need to go back and and what caught us.
And we look forward to update you guys.
And the next earnings call.
Okay. Thanks to all of you and I appreciate all the details.
Thanks, Doug.
Thank you our next question cats, and shrimp, even Cherry for Bank of America. Please ask your question.
Thank you for taking my question I may send some phone calls for maritime and I'll ask 2 questions on behalf of all of our analyst day really the first day is that kind.
Kind of help Ah some updates inflammation and about how.
It takes cancer test is there any changes for the timetable guidance.
And then for early detection and commercialization.
But yes, and the approval and the like of discussion and at least and N P and M. P. A is there any update.
You know.
And last time, we're talking about.
And they're doing that and also the cause.
Prospective clinical trial.
And and terms of the commercialization timeline now.
<unk>, putting our team for a commercial installation and operation.
So we think that the key point for for the early.
And that's hanging out for early detection.
And for our consumers lives. So we recently have recruiting.
And the team for.
Consumer.
Consumer industrial and and also the Internet and industry and we believe that that will have already found the right way to commodity commercial laptops and.
And but at the same time.
Totally new thing in the market, so how to how to do that but that's O P and as time and when the day when your time.
And to optimize that.
Courthouse, so sofa.
And that's the other thing on a ride share.
Absolutely.
With that too.
For the commercial like this 1 for Scott already next year.
And it turns off the.
Our clinical trial, we will send them talk about that.
Right.
And I think we ever gave any guidance on the registration because we honestly are ongoing and having an ongoing conversation and M. P. A so as I said, there's nothing unsure at this point and so we are and of course for the whole for you to see early detection products and the registration.
Possibly for that it's and it's not clear yet so I think it's a it is a dynamic process or discussion with the and N. P. E. So we don't have up and.
And specific timetable that we could give out yes, but asking some sad for O. The the progresses or afterwards.
And getting everything is honestly going as what we plan to our expected and including the the the.
The study that we are.
Planning for an amount and the asymptomatic population that do that's still ongoing as expenses and Oh sorry.
What we have released for lifetime.
Thank you very clear and the second question and it's about the participant and seeing our per day tend to push and study those things that are for the predict Saudi is there around 14000 per se and so while for the question since they are around 12000.
And kind of help us illustrate more about how this number has been confirmed and why is there a difference and why suppression has for a number of participants. Thank you.
Oh, Thanks, and it's a it's a very good question and thank you for her and noticing that actually for predict it because we have quite a rich preliminary results for for those.
<unk> cancer.
And at least 6 out of the night cancers, and there's a little bit data on the other 3 cancer types.
We were able to design the study and planning for the simple side and a stage specific estimate for the sensitivity our sensitivity and accuracy and so that's why for predict and even with fewer cancer types and we will.
We are planning for a larger sample size because for sympathizers calculated so that each stage each cancer type each stage, we will have a precise enough estimate for the sensitivity.
While we are planning for depression study, because it's longer down the road and knows it because apparently we don't have as much and preliminary data for knowledge about the other 13 cancer types as for the these 9 and too. So that's why when we when we design depression study as more and cancer.
Specific asked and age for the sensitivity is that all cancer and stage specific estimate. So that's why for question for each cancer type, we actually have a.
A smaller sample size and Oh, so even among predict and crush and each cancer type actually has different.
And different simple sides.
Plant.
And in terms of or depending on our estimate that sensitivity that we will be able to reach or achieve and so.
It's especially for depression study, we actually have fewer samples and planned for the Knight cancer types that we're already covered and to predict and we allocated more simple for the other 13 cancer type, but all in all the design the simple as that calculation was based on different.
Our objective and that's why you see different and simplified this for for each cancer type.
Okay. Thank you, Okay, and that's all my questions.
Thank you. Our next question comes from Sean <unk> from Morgan Stanley. Please ask your question.
Okay. Thank you for taking my question and I actually.
And also quite a cure for all that for them for us for this call you have exactly 42, 6 for 6 and 11870 and Hi, Tom.
All those kind of numbers.
That's a well for.
For my curiosity.
For 1 day.
And I and cause a 5 for the other and a tube and sometimes the weapons and just combine them together.
For those who supposedly.
Perfect.
For 9 months.
We expect a and you will get the Balkans, let's say resolve problems and 9.1 compared to what other tool.
And also you'll conducted and some of them.
Awesome.
And they were designed.
And our product and for Us 1.
Hi, Paul.
Okay.
And then for.
Prostate cancer.
What's the difference is that for vantage on both sides with respect to simple 1.
And our liver cancer clearly for people drink lots of interest.
Hi.
And there's 1 type of basis, and Pennsylvania and had to for them.
And then finally I think that you have filed for some radical.
And I apologize.
And hospitals.
And as far as at all.
Okay perfect.
Getting so much somebody kind of key and.
And if I can and that's.
Yeah.
Sure.
Thank you very much.
Okay well.
Well first of all for the study sample size as I just for 3 explained and predict and questions are designed based on different objectives for predict and we are aiming to estimate stage and cancer type specific sensitivity and so for each cancer type.
And we allocated more simple size and but for pressure and because we didn't have as much previous knowledge to support states and cancer types of Pacific design, That's why we actually well only a saucy all cancer types and art cancer, yeah cause for specific.
And sensitivity so roughly that's why for precious and we have a little bit for your simple sites planned for for Depression study and also for your question why don't we just combine the 2 because they are for 2 different products because for them for the predict study where you.
And Sir.
<unk> test product and now for a depression study, we will use our next generation off 22 cancer tests product, there and not just its and audience at Ang a relationship between the 2 products actually the chemistry and also the marker selection and the model well all change.
And you know hopefully well improve and between the 2 generations and that's why for the new generation and we will have to retest its performance to see whether it holds or even improve on the.
And I can start concerns that were already passed it in and protect and for your last question about the principal investigators and thank you for comments and we are also very proud and as I said, it reflects actually and the strong interest and attention and that early detection has drawn.
Amount of oncologists community and I would say about 3 years ago, none of them really beloved and you know the new technology, and it's getting close to real and clinical application or to make real contributions to cancer early detection, but nowadays a lot of them and they live and that's M.
They they day, they think day, new technology, especially after genetic based Biomarkers plus machine learning and next generation sequencing and it.
Finally, as bringing them into reality that early detection can be can be realized in our and our large scale, especially on a multi cancer application and that's that's for 1 and for 2 there are actually very few hospitals in China that has the capability and capacity.
Be able to host studies like predict or price in earlier studies like like these and it actually requires a lot of organization power and also the.
Impacts from the principal investigators so that's why actually only that's the and the.
Top clinicians are oncologists, and China and have the capability and impact to be able to operate piece and they really large cohort studies and I think that that's also why they have the passion and the ambition and I somehow 2 to fulfill these very innovative.
Study.
Okay.
Sure.
Alright, Thank you, Sir ladies and gentlemen, we have reached the end up for question and answer session. So with that we conclude our conference for today. Thank you for participating you may all disconnect.
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