Genetron Health Sees New Record of Quarter Revenue; Sales Grow Across All Segments

Notable margin improvements due to improvements in both LDT and IVD business lines
Aug. 25, 2021 17:45
Genetron Health Sees New Record of Quarter Revenue; Sales Grow Across All Segments

Genetron Holdings Ltd. ("Genetron Health"; Nasdaq: GTH) was trading 6% higher Wednesday, marking Day Two of strong gains after posting improved revenue and gross margins for the second quarter. The Chinese precision oncology platform enjoyed a 38% increase in revenue to US$21.8 million, a new quarter revenue record since the company went public last June.

Diagnosis and monitoring revenue increased by 39%, according to the company's second quarter financial results released on Tuesday. Of that, in vitro diagnostics (IVD) sales surged nearly 142% thanks to the sales of Genetron S5 instrument and its CE Mark recognized 8-gene Lung Cancer Assay (Tissue). Lab-developed test (LDT) segment revenue rose 15% year-over-year. Development services increased 22% from the same time last year. Genetron said it achieved gross margin of 67.2% in the three months through June compared with 63.1% in the same period of 2020.

Sizhen Wang, the co-founder and CEO of Genetron Health, highlighted the sales momentum across all business lines. "As we continue to focus on achieving the important milestones for the company, we also remain confident about the overall growth prospects of the precision oncology sector in China, thanks to continued government support and related policy tailwinds that aim at providing broader and better healthcare options for Chinese citizens," Wang said.

A notable collaboration was struck with Guizhou Province's Dafang County to use HCCscreenTM – Genetron's liquid biopsy early screening product for hepatocellular carcinoma – for high-risk liver cancer patients in the rural markets.

Genetron has begun the prep work for the flagship product's NMPA registrational trial during the second quarter, and plan to release the case-control CRC data for early screening later this year. Eventually, Genetron plans to create an early screening product for multiple cancer detection.

With the trend of co-development of therapeutic drugs and companion diagnostics, Genetron is dedicated to strategically collaborating with leading biopharma companies. And the company is well-positioned to meet the partners' needs through their certified labs in China and the US. Genetron's AYVAKIT® companion diagnostic kit, built in partnership with CStone Pharmaceuticals (HKEX: 2616), an immuno-oncology and precision medicine company, has entered the priority review and approval process under China's National Medical Products Administration (NMPA).

Recently, Genetron has also signed on a leading pharmaceutical multinational company to use its Seq-MRD – a diagnostic assay for detecting and monitoring minimal residual disease (MRD) in select hematologic cancers – in its clinical trial.

Wang said Genetron's efforts in MRD are progressing well – with the upcoming launch of Seq-MRD® as LDT in hematological tumor in the clinical settings. Other solid tumor MRD studies are also going well.

To further enrich its LDT pipeline, the company is expecting to initiate the registration trial for its comprehensive genomic profiling test—Onco PanScanTM in the near future. Using Onco PanScanTM, Genetron's Beijing lab achieved full marks and was ranked first in the National Center for Clinical Laboratories' external quality assessment of comprehensive genomic profiling panels.

The company noted its recent partnership with Shanghai Yikon Genomics Technology Co. Ltd. for the exclusive rights to its GENETRON S5 instrument in the area of reproductive health.

Wang also commented on the Covid-19 uncertainty: "Over the past several weeks, the stricter COVID policies in China have impacted our business, which at present we believe is temporary. We are closely monitoring the evolving situation and remain focused on executing our strategy in geographies and segments that are less affected by the restrictions."

Genetron has maintained its revenue guidance for the full year 2021, estimating to generate between 615 million to 625 million yuan, or up to 47% year-over-year growth.

In June 2020, Genetron made a debut in Nasdaq with US$256 million raised. 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.

Year-to-date, shares in Genetron are up 3% - that's significantly better than the majority of Chinese stocks traded in the United States, as well as the Nasdaq Golden Dragon China Index (HXC), which has been under pressure because of regulators' crackdown across industries, continued impact of Covid-19, and the Sino-American uncertainties. Over the past two days, shares in Genetron jumped about 9%, propelled by strong second quarter results, to $14.18 apiece as of midday.

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GTH, Genetron, China, Oncology