Genetron Posts 31% Revenue Growth in Breakthrough Year

Shares in the Chinese cancer screening company jumped 4% on Q4 results and optimistic prospects.
CapitalWatch StaffMar 25,2021,16:13

Genetron Holdings Ltd. (Nasdaq: GTH) released fourth quarter and full year 2020 results Thursday, showing revenue growth over 30% for both periods.

The commercial-stage precision oncology platform, based in Beijing, booked revenues of $20.5 million for the three months through December, with gross margin improved to 62.8% from 44.5% at the same time in 2019. Losses narrowed 46% to $11.2 million, or 2 cents per share, according to the report.

The majority of the revenues came from diagnosis and monitoring, which rose 44% year-over-year. Genetron noted that the resurgence of Covid-19 in certain key territories in the fourth quarter offset its sales of LDT diagnostic tests. However, early screenings of HCCscreen grew significantly, and the average selling price of LDTs increased from the same time a year ago. Sales of the company’s IVD products, meanwhile, increased by 30%.

“We are particularly pleased with the commercial uptakes of HCCscreenTM and our IVD products,” commented Sizhen Wang, the co-founder and chief executive officer of Genetron, in a statement.

For the full year 2020, revenues reached $65.1 million, at a 31% increase year-over-year, with gross margin boosted to 61.3%. Losses were $470.4 million, or $1.56 per share, for the year.

Genetron focuses on the early detection of high-incidence cancer types by looking at the multi-omics screening biomarkers: Gene mutation, gene methylation, and protein markers. HCCscreen is Genetron’s liquid biopsy-based non-invasive liver cancer test that is now used in hospitals, city screening projects, and physical examination institutions in China. This technology is now used in a project led by the Ministry of Science and Technology aimed at building a highly sensitive, highly specific, efficient, and economic early diagnosis technology system for nationwide use.

Genetron is also developing technology for early detection of lung and gastrointestinal cancers. Eventually, it plans to create an early screening product for multiple cancer detection.

2020 was a breakthrough year for Genetron. The company completed its initial public offering in June, raising $256 million, selling 16 million American depositary shares at $16 apiece. The destination for the upsized IPO was a strategic move: Genetron saw the U.S. investor as more suited to understand the potential for growth in genomics – a field that is still emerging in China.

In addition, Genetron has been taking strides toward launching U.S. operations after HCCscreen was granted Breakthrough Device designation by the FDA. Led by a team of innovators with international expertise, the company is preparing for trials in its CLIA-certified lab and R&D center in Maryland. In China, the company operates labs in Beijing, Shanghai, Hangzhou, Chongqing and Guangzhou. A new operating center and lab are also being constructed in Wuxi.

On Wednesday, Genetron announced data results from a new study of HCCscreen involving 1,615 patients. The assay demonstrated 88% sensitivity and 93% specificity, compared to 71% and 95%, respectively, for ultrasound plus AFP combined. HCCscreen also achieved 40.9% positive predictive value (PPV) and 99.3% negative predictive value (NPV), the company said.

The next step is registering the product with China’s NMPA, Wang said. “We are encouraged by the further validation of this leading liquid-biopsy early detection assay, and will move forward to initiate an NMPA registrational study in the second quarter of this year.”

For 2021, the company projects sales growth of between 45% and 47% to reach up to 625 million yuan, according to the report.

On earnings week, Genetron saw its stock tumble from trading near $23 per share to $18.82 on Wednesday. On Thursday, driven by the company’s positive financial results, GTH shares jumped to $19.60 apiece in early trading, up 4%.

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Topics:Genetron, cancer screening, Grail, GTH