Q4 2021 Genetron Holdings Ltd Earnings Call
Good day and thank you for standing by welcome to the fourth quarter 2021, Gen trend Health earnings Conference call. At this time, all participants are in a listen only mode. After the speaker's presentation. There will be a question and answer session to ask a question. During the session you will need to press star one on your telephone please be advised.
This conference May be recorded if you require any further assistance. Please press Star then zero I would now like to hand, the conference over to your host Judy Hokey, Luke head of Investor Relations. Please go ahead.
Yeah.
Thank you.
Hello, everyone and welcome to teach them, how fourth quarter and full year of 2021 earnings conference call.
The company's earnings release was issued earlier today and is available on the company's IR website.
During this call the company will be making some forward looking statements regarding future events.
These statements are made under the safe Harbor provisions of the U S. Private Securities Litigation Reform Act of 1995.
Maintenance are not historical facts, including statements about your insurance health beliefs and expectations are forward looking statements.
Forward looking statements involve inherent risks and uncertainties.
Further information regarding these and other risks is included in <unk> filings with the FCC.
All information provided today as of the date of this call and Ginger and helped us not undertake any obligation to update any forward looking statements.
As required under applicable law.
With respect to any non ifr S measures discussed during today's call. The company 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's been Wang co founder Chairman and CEO of Synchrony health will discuss recent business updates and upcoming catalysts.
Evan shoes, our CFO will provide financial highlights related to the all good fourth quarter results outlined in today's release.
So I thought I'll look for 2022 .
Following managements prepared remarks, we will open up the call to questions.
During the Q&A session, our co founder and Chief Scientific Officer, Dr High in.
Chief Technology Officer Duffy.
Ah patients out and Chief Medical Officer will also be available to answer questions.
With that said I would like to turn the call over to Mr. She didn't like.
The founder Chairman and CEO of <unk>.
Please go ahead.
Okay.
Thank you Okay. Good morning, and good evening, everyone and thank you for joining our fourth quarter and full year 2021 earnings conference call.
So first I would like to direct you to the supplemental earnings presentation on our investor relationships website and begin on slide two.
2021 was indeed, a year filled with accomplishments put ginger.
Our total revenue grow over 25% year over year high.
Highlighted by our continued penetration in the cancer diagnosis and monitoring market.
As well as the liver cancer early screaming segment.
We also established several key partnerships with the likes of Astrazeneca put some pharma and recently with <unk>.
Developed new tests.
And expand the commercialization of <unk> existing tests.
While further validating our products and technologies with impactful publications.
In 2022.
We're excited to build on this momentum.
Advancing our pipeline to broaden our precision oncology platform and.
And hence our value proposition.
If you'd turn to slide four.
As a foremost provider of position oncology products and service in China.
Our comprehensive portfolio covers and highest spectrum about cash management spending.
Spanning early screening.
Therapy selection and Marty monitoring and.
In developing CTX with Biopharma companies.
In 2021.
We grow diagnosis monitoring revenue by 28%.
To RMB 492 point for a minute.
A primary driver of this growth was at 64 increase percent increase of IBD you hospital shops.
By greater adoption of our sequencing platforms and assets, including the jingle as five instrument and the aging lung cancer assay.
Some of you may know in China.
As the current regulations that the IV in hospital market is a segment, where there is a clear pathway for potential government reimbursement.
Moving forward, we intend to invest resources to further penetrate the in hospital market with our solutions.
We're very pleased that we have gained good traction in the past few quarters.
Establishing sturdy IBD hospital contracts.
End of year 2021.
On the I L. D. Two sides of the business, we grow revenue by 16% led by sales out of our early screening tests.
Our L D T diagnostic test volume growth of 11%.
This was the first full year that we introduced our early screening tests ODT.
And we are happy with the performance and believe that early screening out this will be a growth driver continuously for.
For 2022, as we continue to rollout our commercialization strategy.
The COVID-19 impact headwinds persisted in the fourth quarter and weighed on top line year over year growth of 10% on revenue of renminbi $146 9 million.
Our IBD business grow over 66%.
Thanks to the continued uptake of our S five instrument and loan eight mgs assay.
The OTT business was more heavily impacted by China's zero coffee strategy.
As we discussed in the past there are call. It focus of the government has led to large scale testing and other travel restrictions throughout the country as the outbreak areas and resulted in declines in patient traffic to many of our LDC customers.
Operationally, we had an eventful ear focused on further strengthening our position in oncology portfolio and now I will discuss a few of the key developments.
So let me start off with our early screening segment on slide five.
Remember.
We initiated a number of Registrational trial for our early detection nasty.
E S D C y.
By the beginning of the enrollment for the trial all of them installation multi marker PCR based assay H C C scape.
Recall that this was a 5000 patient trial in nine planned clinical sites.
Of which we have started five sites already.
We also intend to select some of these same size for our multi omics N. G. S based H D C screening trial.
The H D. C. It's going trial has been slightly delayed based on copied related disruptions, but we do plan to enroll subjects around the end of the second quarter.
We continue to believe that this structure of both PCR and N. G. S tests would it be a sound strategy.
<unk> has a more established presence and readily available workflows in many hospitals and clinics in China and the trend continues to accelerate based on the look this asset testing needs and associated government led infrastructure built since call. It.
In addition, a few months ago, DNA methylation and other generic genetic testing.
Included in some of Beijing, and the other provincial insurance progress Istar.
Establishing a benchmark pricing of around RMB 804 modulation based based tests and around RMB 1504, and I P. T N D S based testing.
Based on these dynamics, our company sees that adding a high performing PCR based assay would it be a commercially viable while also providing self pay patients in lower tier markets with a cost optimal solution.
So overall, we're confident that we can deploy both in hospital in the Central lab models to increase accessibility and to penetrate that liver cancer screening market more effectively.
As for our FCC split screen plants in the U S.
We have started outcome from <unk> study with two leading medical institutions in the U S and may present data at upcoming conferences later.
So beyond the liver cancer, we have plans to develop a multi cancer product in the future. We have already shared some early retrospective CRC data during our last earning call.
Boeing over 91% a sensitivity of 95% of the specificity.
We continue to expect to CRC data to be published sometime in 2022.
Now turning to slide six.
On solid tumor Marty.
Recall that we have announced a multiyear a co development agreement with Astrazeneca R&D, China for a N G S based personalized and on the R&D test in China.
And Mark the testing may help in the clinical management for patients well.
Well before my task static lesion growth as the gluten size detectable by conventional methods, such as MRI and <unk> scan.
Both AZ and <unk> teams.
Have been working together very diligently since the partnership started.
I'll say optimization is currently ongoing and expect to finish by year end.
Concurrently we are also planning a pilot L. D T launch in the second quarter and expect to expand at all official full launch before.
And.
Recall that with this partnership.
He plans to use the co developed and Marty test for China specific solid tumor clinical trials.
Designed to incorporate the use of a N G S based personalized MRV tests.
The company's May also expand upon a ship later to include IBD registration and the commercial commercialization.
So touching on this specific development plan for this co developed personalized assay. The assay prototype development has been completed based on our proprietary mutation capsule platform.
We have shown great analytical validation results as demonstrated by gastric cancer data.
In the publication on journal of Hematology and oncology in which the personalized assay showed excellent sensitivity to detect 0.00 or 1%.
Tumor DNA from Tony on Lavage fluid samples for precise predictions.
Hey, Tony or dissemination.
In terms of the kind of co validation work data in locally advanced rectal cancer patients were recently published in E. Biomedicine.
Part of the long set discovery science.
So in this study analysis was conducted on different Mardi approaches after Neil Adjuvants therapy.
We're also excited that publication has been accepted for a high impact journal for our <unk> data and it is expected to be available in the next few months.
So these data are highlighted.
<unk> nine and 10.
The chart on slide seven shows the jungle workflow of the tumor informed approach essentially.
Essentially the mutation markers are selected based on a whole exome sequencing of tumor tissues and a personalized Palo isn't designed for subsequent blood based <unk> testing.
The advantage of this approach is that the patent performance is maximized and the false positive.
And negative results can be avoided as much as possible.
The disadvantage is that this message requires tumor tissue sample and it is a costly alone designers.
On slide eight we would discuss the advantage of using mutation capture technology install.
In solid tumor and market development.
The mutation cops really as a metric for detecting mutation and installation of a tumor specific genes and C. T DNA.
And it supports both our early screening tests as well as our two main form the tumor naive assay development.
The platform enables multiple tests analysis based on single CF, DNA sample, thereby reducing panel validation time, and providing head to head comparisons between multiple MRV strategies.
So beyond tumor informed of MRV assay. We are also exploring tumor naive MLD approach based on mutation capsule to evaluate the performance of the different types of biomarkers, including mutation.
Imitation installation et cetera.
We look forward to sharing more updates as these programs proceed.
[noise] mutation capsule also allows more sensitive detection and low yolked CF DNA samples.
With higher conversion efficiency.
F C F DNA molecules.
Just last week.
Kinda national intellectual property on administration granted it in.
The invention patents to genco.
We're very excited this grant further strengthens our competitive position in developing new axis <unk>.
Emerging segments, such as MLD in early spring.
On slide slide nine we present, the analytical validation of our two main forms and Marty accessing in gastric cancer.
In a prospective cohort.
100, therefore gastric cancer patients.
D M D.
Assay to detect all the cases that developed paratonia dissemination with hundred percent sensitivity.
And 85% specificity.
M already positive patients were associated with decreased currency free survival and overall survival.
On slide 10.
We present, our clinical studies comparing personalized assays.
Is fixed panel assay you can see are seeing in liver cancer.
Respectively.
Compare with personalized assay the performance of a marquee profiling based on fixed panels.
Some different tumor types and can even qualification scenarios.
So for second Marty.
Hematology coal cancers shown on slide 11.
Is a validation data from 128 clinical it confirms patient samples.
The positive detection results of traditional flow cytometry, and Sycamore b were highly consistent.
Notably 10 cases were detected at Mardi positive by second Marty, but negative by Fcs.
Suggesting higher sensitivity of a second party in this study. We believe this is the first to validate a N G. S based MRV detection assay in China for Hematology malignancy.
Malignancies.
Commercially.
Our Pi launch pilot launch with fulsome viola.
That started in January is progressing well.
Based upon positive market feedback, we're planning for full launch of second market in the second quarter does this assay is also generating many dialogues with Biopharma partners. We've just signed a partnership with Juno Wuxi the Jws therapeutics.
We anticipate a few more partners and influential partners to sign on in the next few months.
So overall, we're pleased with continued support by the health care authorities.
Testing in.
The hematology cold cancer in China, and believe that our N. G. S. Based second Marty represents an innovative competitive opportunity in the market.
So turning to slide 12.
Moving on to discuss our Biopharma services business in the fourth quarter, we have signed an additional 13.
Biopharma partners, increasing the total now to six.
60 partners, we continue to see a strong pipeline as we have the opportunity to form partnerships throughout key products, including second Marty uncle, a pet scan fusion scan and others.
I'm Pascal <unk>.
See more comprehensive genomic profiling panel.
A few posters Youtube utilizing these large panel product would be presented at the upcoming ACR.
Including its capability, revealing molecular profiles.
Pediatric and adult sarcoma.
<unk> fusions in glioma patients and Germline gene alteration and a mutation in glioma and gastric cancer.
For our Registrational pathway.
I'm, Paul Pascal has passed the typing tests.
We're finishing the site selections and the patient enrollment is planned to begin in late second quarter of this year.
Flight searching.
Recently, we have announced our C. D X ownership was hutch met.
For someone need tenet in non small cell lung cancer.
Using our already marketed aging lung cancer IBD assay.
As mentioned.
Our aging lung cancer assay is already getting very good traction in the IBD hospital use market.
We're excited about this partnership as it is our second major pdx. After our first one with system in four of our print tenant which has already entered the nampa prior.
Priority review and approval process.
In China, the trend up C. D X demand is growing stronger resulting from membership increase.
Increasing focus on genomic testing for innovative targeted and immunotherapies.
This together with our clear lab in Maryland.
Abide us with lots of opportunity to work on cross border trials and the CTX departments.
We anticipate continued strong growth in this exciting business segment.
So now let's move on slide 14.
So this shows our proved IBD product as well as those in the in the registration in topline.
We have a strong them hub group product portfolio.
Which gives us a competitive advantage and driving their hospital in hospital model and the IBD revenue growth.
Our registration pipeline represents one of the most comprehensive molecular testing pipeline in the market.
I have touched.
Upon uncle Pascal FCC, Scott S UCC screen.
Lung cancer aging pdx, and PDGF or a kit.
We have in fact, two more products on the development.
Firstly the salary basic.
PCR based kit that was developed as an essential tool for molecular classification and prognosis for salaried cancer.
We're constantly conducting registrational trial for Sarah basic at four clinical sites.
We anticipate the complete the trial in 2022 with potential IBD approval next year.
China has more than.
220000.
Thyroid cancer newest per year.
These assay can leverage the existing and expanding PCR presence in China, providing smaller and mid sized hospital was more auctions.
Secondly, we're launching a new.
Liquid biopsy genomic profiling panel.
In a very exciting new product and we look forward to sharing more updates in the coming months.
So now I will turn over the call to.
Our CFO , Mr. Evan Zhou to provide more details on our fourth quarter financials.
Thank you Susan.
I will provide an update on the financial performance during the reporting quarter. Please note that all numbers provided in RMB terms and that all comparisons are made on year over year basis.
Starting on slide 16.
In the first quarter total revenue increased by.
Approximately 10% to RMB.
$147 million from $134 million in the previous period.
The analysis and the monetary revenue increased by 5% to $130 million in the fourth quarter 2021.
From $124 million in the same period of 2020.
How did she revenue decreased 11%.
$286 million during the fourth quarter.
The OTT diagnostics tests solely in the fourth quarter actually increased by 10% to approximately 5880 units.
Compared to a year ago.
So the reason behind is that in addition to a challenging operating environment due to COVID-19 for all of core L. D tea business.
L D T cells decline during the quarter was also due to two factors.
Firstly.
We launched our Wuxi government partnership for S. UCT screen in the fourth quarter in 2020.
And they recorded a large initial sales order presenting a high base for comparison in this quarter.
Secondly are already screening sells well, it's also impacted by the COVID-19 related related slowdown in the city of Wuxi.
For the full year 2021, we grew about 60% in testing volume for HTC screen.
So we're pleased with our overall early screening sales uptake in the whole year.
In the full year.
As was the growing adoption in the market.
We have continued to support from our collaborate collaborations along with our own initiatives or in hospital sales efforts, which started in Q4 2021 .
Moving to slide 17 I.
<unk> revenue increased by 64, 66% to 40 $44 million in the fourth quarter 2021.
The increase was mainly driven by sales of genome as five instrument as well as the <unk> lung cancer assay.
As over the end of <unk> and.
End of the year, we had a total of 58 hospital contracts, including 30 IBD ones.
Our pipeline continues to be strong and then expanding the installation base is expected to drive our tests I know overall sales in the coming quarters.
Revenue generated from development services increased by 61% to $70 million.
In the first quarter 2021.
This was primarily driven by the growth in revenue generated from biopharmaceutical services.
Moving to slide 18, let's look at the gross gross profit margin.
First quarter 2021 cluster revenue increased by approximately 27%.
And therefore overall gross margin was 57% in the quarter compared to.
63% in the same period of 2020.
In particular gross margin of our <unk> segment was 65% compared to 69% a year ago.
The reason behind this decrease is that in the fourth quarter.
2021.
We have started to introduce HTC skin.
Our channel partners.
I tried to icon health tech centers for their corporate clients.
We also introduced this product in.
Our own.
The rest of his team for all of our hospital partners.
These new promotional events have impacted our gross margin temporarily quarter.
We believe that the launching of itchy skin.
Would help us strategizing strategizing, our commercialization plans.
Relative to potential approval of this assay.
So IBD segment.
Gross margin can't have quarter over quarter fluctuations due to product mix shifts and in your first quarter 'twenty to 'twenty to 'twenty, one our I V. D. Gross margin was 55% versus 60%, 62% in the power year.
Yeah.
Operating expenses are shown on slide 19.
During 2021 will you must've resources.
You know organizational build up.
This primarily includes.
Firstly R&D expenditure for MRV projects.
Secondly, clinical registration programs of co products such as <unk>.
One called Pet scan.
C T scan.
You see the screen et cetera.
Certainly commercialization for a hospital testing as well as screening business.
So head count related costs were the largest component of <unk>.
Trading expenses.
In Q4, 2021 operating expenses increased by 55%.
To RMB $267 million.
From the previous year.
Take a look at the breakdown of the operating expenses selling expenses increased by about 40% to RMB $100 million in the quarter.
And selling selling expenses as a percentage of revenue increased two 6% to 8%.
It was primarily resulted from increasing head count for.
Our health.
While our sales team for a new hospital IV D team as well as early screening direct sales team, we do not expect significant headcount increase in 2022.
Along with revenue growth, we should start to see operating leverage in selling expenses for four year 2022.
I didn't mean expenses increased by 64.
46%.
In the fourth quarter of 2021, and admin expenses as a percentage of revenue increased to $2, 44% in the same in the fourth quarter of 'twenty 'twenty. One the increase was mainly due to headcount increase in line with our business expansion.
To cover full cycle Kinser management.
As was the higher professional fees, such as the audit and legal services fees.
In terms of outlook I don't mean expenses should also show you should also show improved improved operating efficiency for 2022.
R&D expenses increased by 61% to $85 million in the fourth quarter 2021.
And R&D expenses as a percentage of revenue increased to 58%.
The increase was driven by higher R&D headcount.
And also related expenses.
As well as our continued product development efforts in MRV.
Nickel trial activities for early screening and uncle Thanks, Ken.
In terms of outlook, our R&D head count should have peaked and our R&D spending for year 2022, we'll continue to focus on those core projects.
So the growth rates will slow down compared to that of <unk>.
2020 as anyone.
On slide 20.
Net loss for the period was RMB $165 million.
Compared to 73 million for the previous quarter in 2020.
It's important to note to notice that our organizational buildup is complete.
And we expect the increase of operating expenses will slowdown in 2022, and we do expect improved operating operating leverage.
We'll be able to narrow down the loss for year 2022.
Cash and cash equivalents restricted cash.
In the current financial assets at fair value through profit and loss.
Well close to RMB, 700, and a $90 million.
Our U S dollar of $124 million as I love the end of the year.
Now moving to discuss our outlook for 2022.
Let's go to slide 21.
As you may have heard on the news.
Since the fourth quarter.
And are willing to the first quarter of 2022.
Covid outbreak continues to continued to occur across China.
Officials.
Fisher's have maintained their recovery policy through Lockdowns mass testing and travel restrictions.
More recently rapidly so in Covid cases.
Resulted in shutdowns in the cities of Beijing, Shenzhen, and Shanghai, as well as part of Chengdu and the Chilean provinces.
This week Shanghai has begun its most extensive large scale lockdowns.
In two years.
Highlighting the continued significant challenges posed to the virus post post posted by the virus.
So looking at our first quarter yourself.
We're expecting to grow around 15% year over year.
To approximately RMB $106 million.
The truth. The first two months were actually quite strong with a year over year growth.
Approximately 30% for January and February combined.
Despite the restrictive operating environment.
However, the trend took a turn starting in the starting in the month of March.
In light of the significant spread of Covid cases, due to Amin Carl we anticipate is that to the challenging business environment would persist in the near term.
Based on our current assessment we.
We are projecting our 2022 revenue to be around RMB 585, she was $638 million.
Or 10.
Around 10% to 20% of growth compared to 2021 well.
We will closely monitor the COVID-19 situation and evaluate its impact to our business and provide timely update.
This concludes the discussion of our fourth quarter financial results I will now turn the call back to suggest.
Thank you Evan.
In closing, we're very pleased with the success, we have achieved both financially operationally in the face of adversity related covet.
And I would like to emphasize the strong underlying long term fundamentals of our business.
As shown on slide 23.
The past few years, we have established significant capabilities in all three business lines in therapy selection early screening and MRV.
We have proven R&D capabilities with innovative technology platforms, such as one step seek to bring faster single IV solutions with a hospital and a mutation capture technology to power our early screening and MRV profit developed.
We have also built a high caliber product development and clinical team, who are able to execute multiple clinical registration trial.
Clinton clinical registration trials in parallel we.
We have also set up a comprehensive commercialization models.
Working with numerous top tier hospitals Biopharma companies health check network digital house platforms, and the local government bodies.
Our investment in the capability buildup have positioned us well.
Very well as a leading player in this market and created a lot of long term strategic value.
So IBD and hospital model. In addition to the expanding hospital partner base. We have also made good progress on the inclusion of the approved IBD kits into procurement system.
And oil price list in more than 20 provinces. For example, our aging lung cancer assay, which represents as one of the most clinically needed test for non small.
Non small cell lung cancer, we believe that the government reimbursement inclusion could kick in for certain regions.
In the coming 12 to 24 months.
We anticipate that to greatly help us increase the penetration and market share.
In addition.
As shown on slide 24, we have our catalyst rich pipeline in the next couple of years that we spent some time on discussing earlier.
Last but not least we also continue to see favorable macro environment for our business on the China's State Council healthy China 2030 plan. The goal is to increase five year cancer survival rate from the current approximately 40% to over 46%.
As a leading position in oncology player in China.
We expect that rabbit that rapid emergence of target the middle salaries will increase demand for our diagnostics and monitoring business as well as our Biopharma services.
While early detection, particularly liver cancer also remains a focus for the government.
And the companies with differentiated technology like us are highly encouraged to introduce innovative solutions to address unmet medical needs.
Overall, we remain confident about the gross prospects of the precision oncology sector in China.
And we anticipate the Jean Jacques to be a continued beneficiary from policy tailwind.
So this concludes the prepared remarks portion of today's call operator, we're now ready for questions.
Thank you if you have a question at this time. Please press Star then one on your Touchtone telephone. If your question has been answered or you wish to remove yourself from the queue. Please press the pound key.
And our first question comes from the line of sung <unk> Nam with B T. H Lee. Your line is open. Please go ahead.
Yeah.
Hi, Thanks for taking the questions.
The the colorectal cancer screening assay.
I you know.
I understand that you're expected to publish the data this year on that.
Was wondering what are the next steps in terms of clinical studies for example, when do you anticipate the Registrational study for that to potentially commence.
Yeah. So next step essentially we will validate the assay and the larger size of samples.
Potentially war started a prospective study sometime this year and at this point, we don't have a set timeline for the Registrational trial, but.
But we will show keep keep you closely updated on the progress.
Gotcha, and then for a T C. It looks like you're still expecting IGT approvals for both HCP, Dan and HCP screen sometime next year could you kind of talk about what how do you see the market splitting overall between the PC.
And yes, I mean should that be essentially with vector.
You know the the installed basis, if you will of the TCR versus NDS platform throughout throughout the country is that how we should think about.
How do you know the market will potentially split.
When that.
IBD approved.
Yeah. So I guess, it's a it's just premature to give any you know, especially number about the market split but the overall idea is that combining these two products.
We will be able to actually penetrate the market quicker given that the.
The two assets will actually be positioned differently and price differently as well.
And we strongly believe that with the S. C scan being approved sometime next year there is a.
Singleton chance for us to be included in the national reimbursement.
For this product.
No.
So E U.
Masters.
You know shortly after the approval.
We have had some dialogue.
With the local governments was different region and we do believe that the incentive there is pretty strong.
And then for the high performing.
You know as you see C screening panel.
We believe that this will be well positioned for.
You know that the self pay population that are.
Willing to pay more for a better performance in terms of the Oh. The early screen. So I didn't know you could see that these two products will be positioned differently and it will be market with different focus for you know that cheered spending level population and will be possess.
[noise] differently in a potential collaboration.
Large scale with our with the governments.
Gotcha, and then lastly for me for the thyroid assay you I think mentioned 200000.
The thyroid cancer annually, what's the addressable market, though like what's the screening population for that or that the.
Testing population the target population for this particular assay.
Is it 200000, I'm expecting it to be greater than that right.
Yeah sure. So the that's the new cases was that related cancer right. So they actually there.
I can't recall, but I think there are.
The data says that there are about 203 300 minutes, Yeah, 200 to 300 million people, who have us I really noodles, notably modulus. So there's always a problem of <unk>.
Diagnosis or treatment I shouldnt over treatment of those people hiring people.
So as you can see the potential application market for this test is pretty huge.
Because this with designers.
So really basic using a PCR technology, so that they can be easily distribute it leveraging on the broad TCR infrastructure in China.
For lower tier cities.
Yes.
Fantastic. Thank you so much.
Thank you and our next question comes from the line of Yang along with Credit Suisse. Your line is open. Please go ahead.
Oh, Thanks, So I have two questions. The first one is hum and yes reimbursement comprising a G I.
Think of management mesh and then Jesper passed a reimbursed price is about a 1500 RMB.
And if that's so I wonder if there's reimbursement price.
Below are higher than our early expectation.
And if our.
Gene panel alrighty.
<unk>.
Beijing reimbursement plan and what's what are the kind of uprising. Wildcatting are is that exact same 1500, while getting all if not all while planning to getting into.
Beijing.
And Beijing Popper co medically insurers reimburse cloud fax.
Yeah. So maybe let me take this one yeah.
So first of all I want to clarify right. So the.
1500 pricing point, we mentioned it in the company and in the earnings call is the impact for the anti P. T screening test right, it's the city impact pretty soon.
Simple product with a low cost structure here and its quite mature now with our widely.
Usage.
For the target population.
And we believe this can be used to benchmark for our N. G. S based H C C screen.
Cancer early screening assay.
And we believe that Theres a chance when the screen is approved then covered Ivy and reimbursement coverage.
But the government reimbursement, we could achieve similar level right.
Remember recall from our earlier discussion I think it would be.
The goal from Us is.
To get a coverage somewhere around $150 $200, So which is actually in fact below the current level that we see.
Hmm in the recent.
Government policy, So we were happy to see that through.
Yeah.
You know that these.
Reimbursement coverage indicate for us.
And you know most to the diagnostic assay.
The aging lung cancer panel.
Which we are marketing quite heavily in the market and they're getting more and more traction any that any hospital testing segment. So this I think should be benchmarked with the Q Pcr tests.
Which in fact.
There are several regions already or governments already giving the coverage now.
But you know you would have to combine several cubist two PCR assays in order to achieve the same gene coverage that we can do with our ageing lung cancer assay and we believe that it is reasonable to anticipate the reimbursement cut your pricing level at somewhere around 2000 to $3000. That's a serious out there maybe.
I guess you know that he was discussed before as well I think that's achievable.
Reimbursement price it up.
Right. So yeah, maybe just to add to sit at this point right now for engineers based assays in China. There are very little price points to referred to given this is a kind of a new type of molecular testing.
It's new newly introduced to the market.
Actually based on our experience our.
Our market access team has been working with several.
Provincial.
Government bodies, such as the Greenberg reimbursement Bureau, two.
<unk> design I shouldn't design the methodology.
For such Ngf's tests.
For example in one Don.
Shandong Loaning I think I'll wait at least a few provinces that has more theyre more pioneering these studies and our team are working with them too.
Participating in these studies.
So so you know.
Thank you.
Final point, the one who may change that.
We have you must have quite a bit of resources.
The government.
Procurement.
Platforms, basically accessing getting our kits long had kicked into the procurement list and also adding our test into the.
Clinical testing menu in different provinces.
We have achieved quite a quite a quite a one to one in 10 provinces already and also we are working with.
Several provinces on designing the basically how to charge right in the clinical study so with all that efforts and also with the clip increasing clinical adoption of our assay.
Do feel that we have a good chance in the next 12 to 24 months.
Some regions are allowing it has a good chance to be eventually reimbursed.
Okay. That's clear. Thanks, My my second question is about our hour.
Our cash runway. So you mentioned at the end of last year, why wouldn't have cash and Oh.
The restricted cash I know some other financial vehicle values that are early.
On the 800 million and then can you provide us some you know it looks looking forward, what's going to be our cash burn rate for this year and maybe next havas and less time. So what is our cash runway before we kind of achieved our profitability.
Sure So I've talked about.
Our organization with good up that's pretty much completed and it peaked.
By the end of last year.
We expect our loss to narrow and we expect our cash should be sufficient for the next at least 18 months.
Ray should also be a.
Slower than compared to the last 12 months.
So we do not have immediate financing needs.
Okay, and so yeah for work or let's say after anything malls, you will need some kind of financing well, we'd go to public market all that.
That's all what what Howard basically kind of thoughts there.
Yeah.
Yeah, well I guess, we have many options right and it has to be explored in it.
In the future.
The good thing is that I guess with these cash runway and we're flexible.
In monitoring the market environment and to find exactly the right opportunity just like even emphasized we.
Have in fact different spending reason.
The overall business development right.
Number of factors affecting the cash burn.
The operating loss as well as the working capital needs and be the reason and the the pages.
The overall operating expenses as we mentioned in the conference call.
Well pretty much you know a level picking up or pick up and we will be able to effectively control the cash burn.
And the same time effectively support the gross AR.
Our business and our R&D pipeline.
The market situation involves I believe that will well positioned to capture any opportunity that we see.
<unk> raised additional capital to support the long term for us.
Got it that's a quick falloff was so weak.
A kind of a year, we kind of expect to breakeven.
Okay.
Yeah, Yeah, So I think from today's presentation.
Notice that.
We are actually adding to our existing portfolio with very exciting new products in particular in MRV and early screening right.
Right now we are.
Crystal focused on these products and we're very excited about is for us. So there's ample today I think we have a shunt.
Solid clinical data, we have published and it to be published in the near future flowers solid MRV.
Products. So we believe that the key for US is to focus on creating this long term value and continue investing but of course with.
Very focused.
The investment.
Investing areas.
So I think with that focus.
As long as we continue to generate positive long term value.
You know I think that's the most important.
And and you know to address your question I think I look at this business is that for our more mature and baseline business such as diagnosis.
Goal is to continue to drive revenue and high quality revenues, such as the New hospital business model and are continuing to improve the operational metrics financial metrics to drive up the margin and.
Achieve breakeven Nicky.
In the next 12 to 24.
In the next 12 months or so.
Andy.
New business lives that will create long term value such as early screening and I'm already which is even.
Newer to our business portfolio will continue investing in the Butte.
Success successful model.
And I think that's that's my answer to your question. Thanks.
Okay. Yeah. Thanks, a lot that's all my questions.
Yeah.
Thank you and I'm showing no further questions at this time and I would like to turn the conference back to how can we look for any further remarks.
Thank you again for joining us on our fourth quarter earnings and business update call. We appreciate your ongoing support if you have any questions Christian I hesitate to reach out to the Investor Relations team. Thank you and have a good day.
This concludes today's conference call. Thank you for participating you may now disconnect.
Okay.
Yeah.
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