Genetron(GTH) - 2022 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Total revenue increased by 19.8% to RMB110 million from RMB92 million in the same period of 2021 [17] - Diagnostics and monitoring revenue increased by 14% to RMB100 million from RMB87 million in the same period of 2021 [17] - LDT revenue increased by 13.5% to RMB22 million, with diagnostic test volume growing about 9% year-over-year [17][7] - Gross profit increased to RMB62 million from RMB55 million in the same period of last year, with a gross profit margin of 56% compared to 59% [18][19] - Operating loss was RMB180 million compared to RMB109 million last year, with a net loss of RMB175 million compared to RMB115 million [21][22] Business Line Data and Key Metrics Changes - Diagnostics and monitoring revenue grew by 14% to RMB99.5 million, with IVD in hospital sales rising 18% [7] - Development services revenue more than doubled to RMB10.8 million, driven by increased sequencing and biopharma services revenues [18] - LDT segment gross margin decreased to 64% from 68% due to promotional activities related to HCCscan [19] Market Data and Key Metrics Changes - The company is experiencing challenges in the LDT business due to COVID containment policies affecting patient traffic [8] - The early screening segment is expected to expand with the initiation of NMPA registration trials for HCC early detection assays [9][10] Company Strategy and Development Direction - The company aims to increase adoption of its precision oncology products and expand its market share in the reimbursed in-hospital market [6][7] - Focus on developing liquid biopsy-based solutions across cancer management, particularly in early screening, MRD, and CDx [26] - Plans to leverage collaborations with biopharma partners to enhance product offerings and market reach [15][12] Management Comments on Operating Environment and Future Outlook - Management acknowledged the impact of COVID-19 on operations, particularly in key markets like Shanghai and Beijing [24] - The company maintains a conservative revenue guidance of RMB585 million to RMB638 million for 2022, anticipating a challenging business environment [25] - Positive signs of recovery were noted in May, with hopes to capture lost revenue in the second half of the year [25] Other Important Information - The company has signed additional biopharma partners, increasing the total to 64, and is optimistic about the MRD solid tumor market in China [15][14] - The company is participating in government-led COVID testing programs, which may help stabilize revenues in Q2 [34] Q&A Session Summary Question: Impact on Q2 performance and margins due to lockdowns - Management indicated that April saw a significant revenue decrease of around 30% year-over-year due to lockdowns, but May showed signs of recovery [32][33] Question: Details on collaboration with AstraZeneca on MRD program - The collaboration is a co-development partnership where both parties will invest in the development and validation of assays, targeting a pan-cancer personalized MRD assay [36][37] Question: Ownership of IP in the collaboration with AstraZeneca - The technology platform's IP is owned by the company, while product commercialization will involve joint ownership arrangements [39][40]