(CapitalWatch, Nov. 30, New York) Third quarter results of Genetron Holdings Ltd. (Nasdaq: GTH) boosted its stock 14% early on Tuesday before sliding by midday as worries of inflation and the omicron variant of Covid-19 sank the markets.
In a statement today, the Chinese oncology platform focusing on early cancer screening products posted revenue growth of 36% in the third quarter, at $23.7 million. While both sectors improved year-over-year, Genetron's in-hospital in-vitro diagnostic (IVD) product sales especially surged during the quarter, booking 71% revenue growth, according to the report.
Gross margin improved to 69% from 62.2% in the same period of 2020. Losses widened to $20.2 million; or $17.1 million if excluding share-based compensation expenses, fair value change, and other loss of financial instruments with preferred rights.
"Operationally, we've had many positive updates, which included the initiation of our first registrational trial for HCC early screening, new MRD partnerships, and recognition in multiple influential publications," noted the co-founder and CEO of Genetron Health, Sizhen Wang, in the statement today.
The company has initiated enrollment in its liver early screening program and continues to project potential NMPA approvals in 2023. Genetron also showed retrospective colorectal cancer data for the first time. The blood-based colorectal cancer early screening assay showed robust data of over 91% sensitivity and 95% specificity. A prospective study is being planned.
Just the day before, Genetron announced its partnership with multinational biotech company AstraZeneca (Nasdaq: AZN). According to the statement, Genetron and AstraZeneca R&D China have teamed up on the development of next-generation sequencing (NGS)-based personalized minimal residual disease (MRD) tests for various solid tumor types. Both companies will invest into the venture and potentially with IVD registration and commercialization to follow, subject to further agreement. AstraZeneca also plans to incorporate the co-developed assay to their China-specific clinical trials, and this represents a multi-year, exclusive collaboration between the parties.
For Genetron, the partnership highlighted the value of the solid tumor MRD data it has generated from its in-house Mutation Capsule platform, said CEO Wang. "The agreement represents the first step of a long-term collaboration," he said in the statement. "Our goal is to develop a world-class MRD product, by combining AstraZeneca's global leading position in oncology drug development and their invaluable insights, along with our diagnostic platform and lab expertise."
Earlier this month, Genetron released the results of two research studies of its Seq-MRD and FusionScan Plus. The former, Seq-MRD, detects minimal residual disease in B-lymphoid malignancies, while FusionScan Plus can simultaneously detect a wide range of gene mutations and fusions. In the announcement, Genetron said both products showed high sensitivity and high specificity, "providing important insights for clinical diagnosis, medication guidance and monitoring of cancer relapses."
In another recent development, Genetron Health formed an exclusive partnership with pharmaceutical company Jiangsu Fosun Pharma (HKEX: 2196) in aim to boost the commercialization of Seq-MRD. Under the agreement, Genetron gets the advantage of Fosun's vast sales force for promotion of Seq-MRD in hospitals and clinics.
Thanks to Genetron's fully automated bioinformatics solutions and its One-step Seq technology, Seq-MRD achieves "high throughput and accuracy, good uniformity, high cost-efficiency, and fast turnaround times, when compared with traditional detection methods." According to Genetron, to date, Seq-MRD has been tested with thousands of samples of ALL, MM, and CLL in China.
Citing China's continued restrictions in the markets in order to prevent the spread of Covid-19 strains, Genetron Health has revised its full-year guidance, forecasting 25% revenue growth for 2021, to reach about 530 million yuan.
Wang said, "Despite this short-term challenge, we remain laser focused on driving our clinically differentiated pipeline of comprehensive precision oncology diagnostics. Our long-term outlook remains unchanged as we continue to execute on our strategies, and we anticipate multiple data and trial updates from our key programs in the coming months."
The CEO also said the macro environment remains favorable for Genetron thanks to the government initiatives.
As China sees a rising number of cancer patients, Beijing has supported innovative biotech companies, implemented fast-track approvals in healthcare, and promoted early diagnosis. In addition, China is increasingly opening up to collaboration with foreign nations on healthcare: This month was marked by the Bloomberg New Economy International Cancer Coalition in Singapore, through which China and the United States are uniting on cancer research in aim to battle cancer together.
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