Original link: https://kaopubear.top/blog/2022-09-01-tumor-ngs-2022q2-financial-results/
Disclaimer: The professional/industry-related information of all articles on this blog are all sourced from public information, and all contents and opinions are only personal.
write in front
A lot of things, you can’t see anything by looking at one point alone, but similar things can be seen together with patience, which is often more interesting, such as literature, such as financial reports.
On August 31, with the release of Burning Rock’s 2022 Q2 financial report, in addition to the planned privatization of Genetron, several companies of the same type and their own characteristics whose main business includes tumor NGS testing, the 2022 Q2 financial report has been released. .
The nine companies featured in this article include: Natera, Guardant, Exact Sciences, Myriad, Veracyte, Invitae, Oncocyte, GRAIL, and Burning Rock Medicine.
Among them, because GRAIL was acquired by Illumina, its revenue content is displayed in the latter’s financial report. Except Burning Rock is headquartered in China, all of the other eight companies are located in the United States.
If everyone’s financial report has a main theme, it is loss. But each has its own background, each has its own way of loss, and each has its own emphasis. In addition to focusing on key financial metrics, you should also pay attention to what other information these companies mention in their earnings reports.
Due to the limited space, each company mentioned in this article can talk about their core products and the clinical trials and application directions behind the products in detail in the future.
Natera
Founded in 2004, Natera’s core business focused on the field of non-invasive prenatal testing NIPT before the launch of Signatera, which is now most familiar to the industry in 2017.
In the words of founder MATTHEW RABINOWITZ: In 2004, his sister gave birth to a son with Down syndrome, who died just six days after birth. Natera was founded because he believed that all families should have access to technology that can detect genetic diseases early.
However, in recent years, their MRD product Signatera has quickly attracted everyone’s attention. For example, in March 2019, BGI announced that it has cooperated with Natera to complete the commercialization of Signatera in China (Chinese name: Hua Jianwei).
How much did BGI cost this time? The answer is $50 million .
Back to Natera’s Q2 2022 earnings report.
Mainly driven by strong growth in Signatera (particularly in colorectal and immunotherapy), its total revenue increased 40% in the second quarter to $198.2 million, compared with $142 million in the year-ago period.
Net loss in the second quarter was $145.2 million, compared to $116 million in the same period in 2021.
As of June 30, 2022, Natera had approximately $638.7 million in cash, cash equivalents, short-term investments and restricted cash (of which cash and cash equivalents were $91 million).
What’s more interesting is that they also confidently wrote in the financial report: Combined with this year’s development, the company is confident that it will achieve a balance of cash flow by mid-2024. (flag stands here first, we will come back in 2024 Q2)
In Earnings Pre, they specifically highlighted that Signatera Medicare coverage already includes muscle invasive bladder cancer (MIBC). MIBC’s estimated market can reach 400,000 tests per year.
The reimbursement groups currently covered by its products are shown in the figure below.
Regarding the clinical trials of Signatera in pan-cancer species, it can be seen that it has covered colorectal cancer, gastroesophageal cancer, pancreatic cancer, breast cancer, ovarian cancer and melanoma.
Guardant
Guardant is a company that has focused on full-cycle cross-cancer liquid biopsy (blood testing) since its inception. In their own words, Our goal from day one has been to provide blood tests that span all stages of cancer.
How to achieve it is probably in the directions shown in the figure below.
The second-quarter earnings report showed revenue of $109.1 million for the three months ended June 30, 2022, an increase of 19% from $92.1 million in the same period in 2021. Oncology revenue rose 27%, driven by increased clinical testing volumes and biopharmaceutical company sample volumes.
Cash, cash equivalents and marketable securities were $1.2 billion at June 30, 2022, of which cash and cash equivalents were $215 million (end 2021: $492 million). Net loss in the second quarter was $229 million, compared to $97 million in the same period in 2021.
In the specific details, Natera also mentioned medical insurance on the one hand, and emphasized the growth of the cooperation business of pharmaceutical companies on the other hand.
In the globalization strategy, you can see from the picture above that they specifically mentioned Adicon, a Chinese company. Earlier reports showed that Guardant’s Guardant360 and GuardantOMNIO have both completed domestic authorization.
According to Guardant, 20 billion market opportunities are being unlocked for the company’s most important colorectal early screening monitoring.
More product strategies can be seen from the figure below.
One more thing, the two companies we mentioned at the beginning have been against each other in the field of MRD. There is no shortage of things to do with the performance of the product. Since May 2021, there has been a lawsuit, and the peers can only watch their performances quietly.
Exact Sciences
Exact Sciences was founded in 1995 and had an initial public offering in 2001.
Throughout the development of Exact Sciences, Cologuard, which can perform colorectal cancer stool screening, can be said to be its core product. Relying on DeeP-C, a large-scale clinical study involving 10,000 people, the safety and efficacy of Cologuard have been fully confirmed, and in 2014, it was approved by the US FDA for colorectal cancer detection.
In addition, their liquid biopsy product OncotypeDX has been another important business in recent years. OncotypeDX has been used in different directions in prostate cancer, breast cancer and colorectal cancer.
Next, take a look at their 2022 Q2 earnings data.
Unlike several other NGS testing companies, Exact Sciences is involved in the COVID-19 testing business during this wave.
The company’s total revenue for the second quarter was $521.6 million, up 20% from $434.8 million in the same period in 2021. Among the three main businesses, the Screening business reached $354 million, or more than 67%, and the tumor-related business revenue was $154 million, an increase of about 12% year-on-year. COVID-19 testing accounted for a fraction of $14 million.
Exact posted a net loss of $166.1 million for the entire second quarter, compared with a net loss of $176.9 million a year earlier. Cash and cash equivalents at the end of the second quarter were $213.4 million and marketable securities were $514.6 million.
The main content and breakthroughs of concern can be seen at a glance in the following two figures: the basic plate is colorectal cancer screening, as well as multi-cancer early screening and MRD monitoring.
It is worth noting that in this financial report, it was announced that it would abandon the detection of Oncotype DX in the prostate and sell it to MDx Health for up to $100 million.
Myriad
In terms of seniority, Myriad, founded in 1991, is one of the first genomics companies in a long history. In 1994 their scientists published a paper in Science and found that the BRCA1 gene is associated with hereditary breast and ovarian cancer. It was officially listed on NASDAQ in 1995.
Read through the financial report, a few key figures.
Myriad’s Q2 2022 revenue fell 5% year over year. Total revenue for the period was $179.3 million, down from $189.4 million in the second quarter of last year. Net loss for the quarter was $14.1 million, compared with a loss of $4.7 million a year earlier. Ended the second quarter with $105.2 million in cash and cash equivalents.
Watch for details. The commercialized core testing business includes three major parts, namely, the mental health testing business (GeneSight, which covers 64 kinds of mental illness detection capabilities), the women’s health testing business (prenatal testing), and the tumor testing business we are most familiar with.
Its oncology business reported revenue of $76.1 million in the second quarter of 2022, down 3% year over year but up 9% sequentially from the first quarter.
Specific to the oncology business, Myriad provides hereditary tumor tests, such as MyRisk; and also provides products related to tumor diagnosis, such as myChoice CDx (HRD test), Prolaris prostate cancer test and EndoPredict breast cancer prognosis test.
MyChoice CDx’s Q2 2022 U.S. quarterly volume hit an all-time high, up 63% year-over-year and a 10% sequential increase over Q1 2022.
Prolaris, a prognostic test for prostate cancer, also had its highest quarterly sales in the second quarter of 2022, beating the previous quarterly sales record by 6%.
Veracyte
Veracyte, founded in 2008, is a company clearly positioned as tumor diagnosis. Its diagnosis products mainly include 6 as shown in the figure below. Many of these products are primarily used for clinically relevant typing of a single cancer type.
Total revenue for the second quarter of 2022 was $72.9 million, an increase of 32% compared to $55.1 million in 2021, again including three main segments.
Of this, testing revenue was $59.7 million, an increase of 18% compared to $50.8 million in the second quarter of 2021, primarily driven by growth in urology-related products; product revenue was $3.1 million, compared with $50.8 million in the second quarter of 2021 Biopharmaceutical and other revenue was $10 million, an increase of $8.4 million compared to $1.6 million in the second quarter of 2021, primarily driven by contributions from the acquisition of HalioDx.
Veracyte’s second-quarter net loss was $9.5 million, compared with $9.0 million in the same quarter last year.
Ended the quarter with cash, cash equivalents and short-term investments of $164.0 million. Total revenue for the full year 2022 is expected to reach $272 million to $280 million, an increase of 24% to 28% year over year.
The company’s four main mid- to long-term growth strategies.
Product placement in different cancer types.
Invitae
Founded in 2010, Invitae reported Q2 revenue of $136.6 million, up 17.5% from $116.3 million in the second quarter of 2021, according to its latest earnings report. As of June 30, 2022, there were $303 million in cash and cash equivalents.
The Q2 net loss was $2.5 billion, which was specifically stated in the financial report. The reason why it was able to lose so much was mainly because the net loss included a $2.3 billion impairment of goodwill, which was due to the continued sharp decline in stock prices and related market values. As well as the results of lower-than-expected financial results.
In the financial report, Invitae highlighted three points, corresponding to medical institutions, cooperation with pharmaceutical companies and the number of patients.
Specifically, nearly 62% of the total patient population of more than 3.1 million is available for data sharing . The focus on data sharing is because Invitae sees real-world data management of patients as an important growth direction in the future.
Regarding the speed of burning money, Invitae also gave a more optimistic expectation.
It is expected to drop from US$600 million to less than US$300 million in 2023, and it is also specially emphasized that it will not be a problem to burn the current cash reserves until the end of 2024. (Another flag, let’s see)
Oncocyte
Oncocyte was established in 2009, and its main product is DetermaRx, a product related to lung cancer diagnosis.
Oncocyte reported total revenue of $2.1 million in the second quarter and $2 million in the second quarter of 2021. Net loss of $8.3 million. There was an additional $44.8 million in cash and cash equivalents as of June 30, 2022.
Details about the product are disclosed. DetermaRx’s sample size increased by 66% compared to Q2 2021. Another immunotherapy-related product, DetermaIO, whose clinical partners submitted five abstracts at ASCO and AACR, expanded the evidence of DetermaIO’s clinical relevance for decision-making in six different cancer types. One of the independent prospective randomized clinical trials showed that DetermaIO can identify and expand patients with colorectal cancer on immune checkpoint inhibitors.
Also, they highlighted two interesting points.
One is layoffs. Knowing that they don’t have much money left, they said the organizational restructuring is expected to reduce labor costs by more than $4.5 million per year, and other cost reductions are combined, and annual operating costs in 2023 are expected to be reduced by about $12 million compared to 2022. .
The second is the special mention of domestic burning stone. Oncocyte also received a landmark $1 million payment this year for Burning Rock’s introduction of Oncocyte’s DetermaRx Lung Cancer Assay (Chinese name: Lang Di Rui).
GRAIL
As a company focused on early tumor detection, after GRAIL was acquired by Illumina in August 2021, its core operating data was also included in the parent company’s financial report. The latter’s 2022 Q2 financial report is divided into two parts, one of which is Core Illumina and the other is GRAIL.
About Core Illumina aside, we just picked out the GRAIL part to see. Let’s start with the conclusion, a quarterly loss of $187 million.
On the PPT pre, Illumina showed some big moves after GRAIL was acquired.
for example:
- 140,000 participants enrolled in NHS-Galleri trial, largest study in multi-cancer early detection cohort
- Strategic cooperation with AstraZeneca to develop related diagnostic products
- Partnerships with Mercy Health and Ochsner Health to expand Galleri’s services nationwide
- High-profile PATHFINDER study, final findings to be released at the upcoming ESMO Congress in 2022
In addition, it is not written in the PPT, but mentioned in the financial report. Partnering with Fountain Health Insurance to provide Galleri as an annual benefit; on the other hand, partnering with the US Department of Veterans Affairs and the Veterans Health Foundation to provide Galleri to 10,000 veterans across the United States over the next 3 years.
So many big moves, how much money is directly reflected in the money?
Illumina then showed GRAIL revenue of $12 million and expenses of $156 million . Burning money is still mainly in manpower and clinical trials, and even this number is less than expected due to their G&A cost control.
It can be said that Illumina is now ambitious and iron-clad.
Grail was acquired a year ago, and the case itself did not pass U.S. and EU scrutiny. Everyone in this industry understands that you are an upstream company that sells instruments and acquires a downstream company that uses instruments. This approach, the more you look at it, the more it looks like the other side of the ocean…
A year after the acquisition, Illumina said a while ago that the company had set aside a budget of close to $500 million to prepare for a potentially hefty fine by the European Union.
Burning Rock Medicine
After reading the 8 companies upstairs, finally look at the only domestic company Burning Stone.
Burning Rock was founded in 2014, a little later than several other U.S. companies. However, relying on continuous R&D investment now also brings a return on product capabilities.
Taking early screening as an example, since 2016, Burning Rock’s early screening products based on methylation strategies have been iteratively upgraded many times, completing monitoring and traceability from 6 cancer types to 9 cancer types to 22 cancer types.
In the latest earnings report, Burning Stone highlighted three parts:
- In-hospital diagnostics and MRD drive growth, new products account for 7% of central lab revenue
- Early screening PROMISE China’s first prospective, multi-cancer liquid biopsy multi-omics confirmatory study results, like GRAIL, will also announce results at ESMO next month; PREVENT 10,000 prospective intervention study has been launched in 2022 Q2
- The revenue from cooperation with pharmaceutical companies continued to grow. In the first half of 2022, revenue increased by 166.6% year-on-year, and the value of new contracts was 158 million yuan, which also increased by 49% in the same period.
By emphasizing these three points, something can be seen to some extent.
For example, hospital admissions and MRD products are two trends that are currently highly concerned; two studies on early screening reflect strong expectations for related businesses in the next few years; pharmaceutical company services, amid the continued uncertainty of the epidemic, will affect central laboratories and hospitals. In the past few years, the main core business of the terminal seems to have become an increasingly important business revenue growth point.
Of course, these specific contents can also be seen in detail in Earnings Pre.
Regarding specific revenue.
For the entire second quarter ended June 30, revenue was 130.8 million yuan ($19.5 million), with gross profit of 82.6 million yuan. Among the three core segments, the central laboratory business revenue was RMB 78.6 million ($11.7 million), the in-hospital business revenue was RMB 34.2 million ($5.1 million), and the pharmaceutical enterprise service revenue was RMB 18.07 million ($2.7 million).
The number of inspections sent to the central laboratory in the past year and a half is shown in the figure below.
Let’s look at the admissions situation. Compared with Q1, the number of cooperative hospitals has increased by 3.
At the same time, Burning Stone also specifically reminded the impact of COVID-19 on business in Earnings Pre.
In the hospital, the strong growth of 60% nationwide excluding Shanghai and Beijing was offset by a 49% decrease in sales in Shanghai and Beijing. Sales in Shanghai and Beijing are really important.
Where did the money go?
According to the financial report, research and development expenses were RMB 92.11 million ($13.8 million), sales and marketing expenses were RMB 105.6 million ($15.8 million), and general and administrative expenses (G&A) were RMB 150 million ($22.4 million).
Net loss for the three months ended June 30 was 262.1 million yuan ($39.1 million), compared with 203.7 million yuan for the same period in 2021. There were also 1.148 billion yuan ($171.4 million) in cash and cash equivalents. There is no shortage of money, which is similar to the Invitae we mentioned above.
In addition, the emphasis on MRD and early screening can be seen throughout Earnings Pre.
In the content of early screening, they specially introduced their early screening technology, the advantages of early screening of multiple cancer types, and the big brothers who cooperated deeply.
In the direction of MRD, it showed its own development strategy and clinical trial progress in detail.
write on the back
The advantage of a listed company (for industry practitioners) is that the quarterly earnings report gives me and other migrant workers a small window to understand the industry and the company more comprehensively.
Written here, we have read the overall situation of these 9 companies in Q2 and some future development focus.
Affected by the economic environment cycle and COVID-19 as a whole, everyone is losing and losing together. In the face of such a reality, those with good money and backers continue to move forward. Most companies need to rethink and start the inevitable adjustment of personnel structure and R&D investment.
Finally, let’s take a look at the current market value of these companies. See you next time.
The author of this article : Bear who thinks about problems
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