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Burning Rock Biotech Limited American Depositary Shares (BNR) Q4 2020 Earnings Call Transcript

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BNR earnings call for the period ending December 31, 2020.

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Burning Rock Biotech Limited (BNR 3.09%)
Q4 2020 Earnings Call
Mar 11, 2021, 8:00 a.m. ET


  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:


Ladies and gentlemen, thank you for standing by, and welcome to the Burning Rock's 2020 fourth-quarter and full-year earnings conference call. Before we begin, I'd like to remind you that this conference call contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934 as amended and as defined in the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminologies such as will, expects, anticipates, future, intends, plans, believes, estimates, target, confident and similar statements.

Statements that are not historical facts, including statements about Burning Rock's beliefs and expectations of forward-looking statements. Such statements are based upon management's current expectations and current market and operating conditions and relate to events that involve known or unknown risks, uncertainties and other factors, all of which are difficult to predict and many of which are beyond Burning Rock's control. Forward-looking statements involve risks, uncertainties and other factors that could cause our results to differ materially from those contained in any such statements. Burning Rock does not undertake any obligation to update any forward-looking statements as a result of new information, future events or otherwise, except as required under applicable law.

[Operator instructions] Now, I'd like to hand the conference over to the management team of Burning Rock. Thank you. Please go ahead.

Yusheng Han -- Chief Executive Officer and Founder

Welcome to Burning Rock earnings conference call. This is Yusheng Han, the CEO and founder. Today, you have our team consisting of COO, Shannon Chuai; CTO, Joe Zhang; and our CFO, Leo Li. Please turn to Page 3.

Let's start. Burning Rock is China's molecular diagnostic leader for precision oncology. There are two main parts of our business. The first one is therapy selectionand the second one is early detection.

Let's turn to Page 4. So today, we'll go through our 2020 recap, and also, we'll go through other issues such as 2021 priorities and financials. But what is more exciting is our commercialization plan for our blood-based multi-cancer early detection. Let's turn to Page 5.

Let's look at 2020 recap first. In terms of Therapy Selection, we have accumulated 273k samples in the past 7 years, which means that Burning Rock has one of the biggest genomic data for cancer patients in the world. And the second thing I want to illustrate is that 2020 is really a tough year for the whole industry because of the COVID-19. The first half year is significantly impacted by COVID-19.

But we have seen that in the second half year, we have a strong turn back. So we recorded 33% year-on-year growth in the second half of 2020. In terms of early detection, we all know that we started the early detection R&D effort from 2026. We have already accumulated around 10,000 samples in the past five years, and which is one of the biggest ones in the world as well and the biggest one in China for pan-cancer early detection.

Through our strong product development execution, we have completed a six cancer product development and moved to the clinical trials for nine cancer and the other trials as well. Next page. So yeah, let's turn to Page 7. So this is the highlights of today.

As I said that through the five year R&D efforts, we have finally published our six cancer validation data in ESMO Asia last November with a very high sensitivity and specificity. When we shared this data with our potential partners, they were very excited about the data. And that makes us think that we might start commercialization for the six panel -- six cancer panel before originally planned for the nine cancer. And that means that we need to start early access program first to find out the feasibility and operation key point and also the feedback from the potential collaborators.

And at the same time, we have already designed the prospective validation for the six cancer product. We expect the revenue for early detection started January in the early of 2020, which means that one year before originally planned. Obviously, we have strong advantage for the pan-cancer early detection in China. We have the biggest data accumulated and also we have the strongest clinical execution.

And the third thing is that we're the first mover and the fastest mover. Next page. In the beginning, we think there are two paths for commercialization. The first one is for the commercial insurers and the second one is the pathway to hospitals.

So for commercial insurers, we can -- we have a strong synergy with them and can help them to save a lot of cost by discovering and treating cancer patients early. Nowadays, 80% of their payment was paid by -- paid to late-stage cancers. And also, we can help them to obtain and maintain their customers with a unique multi-cancer early detection product, helping them to set up a strong competitive advantage among their peers. And for hospitals, the advantage -- the benefit for the hospital, first one is health checkup revenue generation.

And then also, we can help them by helping to find more patients. We can help them to generate the downstream revenue for cancer patient detection and treatment as well. At the same time, those big hospitals have high demand for innovative products to build and strengthen their brands in the market. And then I will pass to our COO, Shannon, to talk about the product development roadmap for the pan-cancer early detection.


Shannon Chuai -- Chief Technology Officer

Yes. Thanks, Yusheng. So let's go to the next page, Page 9. This lays out our product development roadmap.

I believe some of you might have seen this a few times before. We have shared our clinical development plan before. However, as Yusheng has mentioned, with the recent response we have received after we released the six cancer test results, there have been some additions and also updates on our plan going forward leading to commercialization. So just to recap, we started our clinical -- our product development from the year 2016.

And then we started with the proof of concept on single cancer, which was lung cancer. And as a proof of concept, the feasibility for early detection on both the assay and the bioinformatics methodology or algorithm. And then we expanded the validation from single cancer to three cancer as an additional proof of concept for methylation being able to deliver tissue of origin accuracy as well. And most recently, as Yusheng mentioned, last November, we released our results on ESMO Asia on the six cancer test on the assay, and the algorithm has been significantly improved compared to the previous versions.

And we delivered a 98.3% specificity and 80.6% sensitivity across different cancer types on mostly early stage cancer patients. And originally, our plan was to just use the six cancer test as a prototype and then to move on to the nine cancer test, which would ultimately become our commercialization product and also going for registration. However, as Yusheng mentioned, with the recent response we have received from potential partners or collaborators, we have decided to speed up the commercialization plan, the rollout plan. And because of that, we have added two additional programs on the six cancer tests.

So we didn't stop. We wouldn't stop at the validation that we have presented at ESMO Asia. On the six cancer test, we will first initiate -- we actually have initiated an early access program to gather real-world feasibility and feedback. And in these early access programs, we will also closely monitor the positive rate, which reflects largely on the specificity and to make sure that it helps largely compared to the validation or case-control studies that we have established -- the specificity established in those case-control studies.

And also, we will try to draw back to follow-up on the positive participants and to assess the downstream positive rate, which reflects the sensitivity as well. But in the meanwhile, we will also launch a prospective validation study on the six cancer test. We have finalized the design of the protocol of that prospective validation and are in progress of communicating with the participating sites and investigators. So hopefully, we'll have more details to disclose in the near future.

And then on the nine cancer test, I wanted to emphasize that all the studies that we plan for the nine cancer test, there were a few being carried out in parallel as originally planned. They're making good progress. So what we have added on the six cancer test are moving in parallel with our original plan on the nine cancer test. So it won't cause any delay or any impact -- negative impact on the other planned studies.

And then last but not least, we are also launching some development effort on future products going beyond the nine cancer test, which involves validating the product in more cancer types as well as adding in more dimensions of biomarkers as orthogonal contribution to the assay and the model. So Page 10. On Page 10, we wanted to illustrate or recap a little bit, again, why we targeted on multi-cancer early detection. As you might know, in China, there are some emerging early detection players in the field, but most of them are focusing on single-cancer types.

Here, we just wanted to have a real simple and straightforward illustration to show that by focusing on the multi-cancer early detection products, we are facing a much larger TAM market. The six cancer test of Burning Rock covers 49% of China's urban incidence of all the cancers. And then our nine cancer test would cover about 63% of all the cancers in China. So compared to the most popular single-cancer type early detection products, which focuses mostly on liver or colorectal, the multi-cancer early detection will sort of focus on a different market and the larger markets.

So in light of time, we're going to skip on Page No. 11. And now switch gear a little bit to talk about our position on the therapy selectionmarket. We also have some exciting factors there as well.

So on Page 13, again, to recap the factors for long-term success for the therapy selectionmarket. The first one is the products and the quality or performance on our products, especially the liquid biopsy products. We do have some very exciting news or data to share in a minute to demonstrate again the performance of our liquid biopsy technology and products. And then another key factor to win in China is the NMPA approval, of course.

So we also have some exciting progress on that on our liquid biopsy panel and -- which establishes our leading position in registration pipeline compared to our peers in China. So I'll turn to -- I'll hand to our CTO, Joe, to talk about the data and the progress on registration for our liquid biopsy product. Joe?

Joe Zhang -- Chief Financial Officer

Yeah. Thanks, Shannon. So Page 14. Basically, this is probably a page from the -- a presentation presented by FDA last month in the meeting of 5th Annual Liquid Biopsy for Precision Oncology Summit.

So basically -- this is basically a very introductory slide talking about the FDA-led SEQC study, especially on the ctDNA study. So on the top left panel, this slide is talking about the SEQC study overview. So basically, SEQC is one of the consortium effort participated by a lot of academic and industry members, including Burning Rock. So SEQC2 actually is the first effort of a consortium effort trying to understand the best practice of panel sequencing and whole genome sequencing.

So basically, Burning Rock participated in the panel sequencing -- Oncology Panel Sequencing World Group, and on both tissue-based as well as liquid biopsy-based assay. So FDA issued a multiple standard reference material to different kit makers including Burning Rock. And Burning Rock distributed those kind of reference material to the Burning Rock -- our collaboration lab as well as our user and to use Burning Rock's kit to process those samples and get the sequencing data and submit back to the FDA. FDA do a thorough side-by-side comparison against other players and other members, other kits.

So basically, on the bottom left, this is talking about liquid biopsy core study. So the study actually focused on a set of a reference material and different variant allele frequency from down to 0.1% up to 2.5%, which is very similar to mimic in real situation for the ctDNA concentration in cancer patients. Also, study would be input effect as well as extraction effect. So bottom right panel of this slide talking about there are five different companies participated in this study, including Burning Rock.

Burning Rock leads the Lung Plasma v4, which is the OncoCompass Target panel -- the previous version of OncoCompass Target panel, I can talk about that next slide. And with other companies, including IDT, Illumina, Roche, also Thermo Fisher and we -- we participated in this study and presented our data. And if you look at the next slide, basically in the -- in that meeting, FDA, the leading author, presented the sensitivity spec and -- as well as reproducibility study across five different companies. You can see here the four different curves represent the four companies utilizing capture-based assays and look at sensitivity as well as reproducibility.

So each different product represents one company. And in the presentation, the author didn't identify who is who. The reason is this is still confidential until the paper gets published. I think it's going to be very soon since the paper already -- the manuscript is already being accepted by Nature Biotechnology.

As you can see here, along with different -- like variant allele frequency, the lower -- the sensitivity does become lower, but there's still two companies actually showing higher -- relatively higher sensitivity compared to other. Burning Rock is one of them, but I cannot speak too much on this at this moment. Then they also studied reproducibility, which I'm going to skip here basically at the same conclusion that lower variant allele frequency for the ctDNA, the lower reproducibility. So this will just give us a lot of confidence showing that Burning Rock has a very solid kit and the solution, including the biochemistry as well as the bioinformatics pipeline.

Leverage on this technology and the next slide basically very briefly talking about the progress of NMPA, which is Chinese FDA version -- Chinese version of FDA, approval of our liquid biopsy panel. We call it OncoCompass Target kit, which actually is based on the lung plasma panel I just presented early in the SEQC2 study. So as you know, in order to get an NMPA approved kit in China, usually they're the four stages. It's listed at the time line graph showing here, that's including the analytical validation, which is usually done by the company; also a typing test, which is a third-party evaluating analytical validation by the third party, which you call typing test; then the clinical validation, that's inputting a lot of PI in that clinical study and trying to improve the efficacy, increase the utility and the clinical validity of the -- this kit before it's submitted to the NMPA for final review and approval.

So the Burning Rock's OncoCompass Target kit and software both passed the typing test back in 2020. And this is one of a milestone we achieved trying to get a leading position of this type of a kit get approval in China. This is -- so that's why we think we have some advantages, the first-mover advantage. So the kit itself, including we're going to report 101 gene mutation status, including SNV, indel and gene fusion.

And very specifically, we also are going to report the blood-based MSI status in this kit. And there's a multiple companion diagnostics and pharmaceutical collaboration happening. And hopefully, until once the kit got approval, we will get some companion diagnostic label on that. And -- so we plan to do the concordance study, which is part of clinical validation, in second half of this year.

So this is basically the status of the ctDNA liquid biopsy kit approval progress we can update at this moment. So the next slide, I'm going to turn back to our CEO, Yusheng, talking about 2021 priorities. Yusheng?

Yusheng Han -- Chief Executive Officer and Founder

Thanks, Joe. So let's turn to Page 18. So 2021 is a year that we're really looking forward. For Therapy Selection, we're going to continuously increase penetration of NGS-based cancer therapy selection.

And then some key drivers. The first one is to expand our product menu. As we all know that we have the product for FIP and ctDNA for companion diagnostics. And last year, we successfully completed the licensing in of myChoice HRD test from Myriad and also DetermaRx from Oncocyte.

And this year, we will complete the tech transfer and start the commercialization. And the thing I want to mention more is about the DetermaRx. It is target for the early detection of adenoma -- non-small cell lung cancer. It is a big population in China.

20% of our cancer patients are lung cancer patients and 85% of the lung cancer patients are non-small cell lung cancers. Among them, around 40% are early stage. So it means a huge market with a unique panel, with a unique product, with strong clinical validation. And the second driver, there are other products as well in the line, and we will talk about that in the -- when it's available in the market.

The second driver is the NMPA registration program execution. We have several panels on the way of registration, including BRCA, ctDNA, and also a big panel for FRP. So that will bring our strong competitive foundation. And the third one is further in-hospital penetration.

You might have already noticed that we have a strong in-hospital model revenue increase in the second half of 2020. We'll continuously grow in 2021. And the second thing is early detection. As we have said that we're going to bring the six cancer test into the reward from lab to commercialization.

And we are really very excited about that. And at the same time, we have started to build out the multichannel commercial team. Another good point -- a good issue for us is that we started a conversation with the NMPA. It seems that the registration for pan-cancer early detection might have its way to be clear in the future.

So before recently, there was no clear way for the registration path, but now we are very positive about that. And also, in this year, we will roll out additional large clinical programs for product development and validation. At the same time, we are adding other dimensions and also more cancer types included in the additional R&D for new version products. We cannot disclose much at this time.

So yes, in 2021, we are really looking forward to that time, no matter in therapy selectionand also for early detection. Now I'll turn to our CFO about the financials.

Leo Li -- Chief Financial Officer

Thanks, Yusheng. Let's turn to our financials. And first, we'd like to recap the recent COVID wave in China. In October and November 2020, the number of COVID cases in China was relatively low.

However, cases started to surge in December, which led to renewed restrictions by hospitals across a number of cities in China. This had a negative impact on our business volumes in December, hammering down the good double-digit revenue growth trends that we saw in October and November. The COVID resurgence worsened in January 2021, and here are a few examples: Beijing and Shanghai closed schools for a period of time; Shijiazhuang, a city with approximately 11 million population, about 200 miles away from Beijing, shut its outbound travel so that no personnel could leave the city. A large oncology hospital in Shanghai had cases and was temporarily closed.

So the COVID headwind was significance in January 2021. With that context in mind, we achieved strong growth in the fourth-quarter 2020, growing our revenues by 49% on a year-over-year basis. By channel, the in-hospital channel growth was notably strong, triple digits year over year in the fourth quarter. We do note that our hospital revenues historically have been lumpy.

And if we look at the third and fourth-quarter 2020 combined to smooth out the lumpy base across the third and fourth quarter in 2019, our in-hospital revenue grew 63% year over year in the second half of 2020. We had four new hospitals coming on board in the fourth-quarter 2020 in terms of having the reagent supply contract completed, which brings the total newly contracted hospitals to 10 for the full year of 2020. This is further progress compared to 7 newly contracted hospitals that we had during 2019. And just to remind everybody, from an accounting standpoint, we only start booking revenues after completing of contracts -- contract with a hospital.

Then turn to our central lab channel year over year -- turning to the central lab channel, year-over-year growth was 23% for the fourth quarter. Sequentially, the fourth quarter was down slightly versus the third quarter, primarily because of the dip that we had in December. And going into our gross profit trend, we improved gross profit margin further in the fourth quarter, with the overall GP margin trending into the mid-70s by channel -- into the mid-70s. And by channel, central lab's GP margin was 76.8% in the fourth-quarter 2020.

It's a new high, driven by our scale and reagent cost reductions. In the in-hospital, GP margin was in the low 70s range in the fourth quarter. Next, turning into our guidance. Let me first recap the COVID-led deceleration in January.

And February was also quiet because of Chinese New Year. January, February combined was down significantly on a sequential basis, though it was still up double digits year over year. Looking forward, when we think about our guidance numbers, there are two factors that we're watching very closely. The first is risk of COVID resurgence and the related restrictions at hospitals, which negatively impact overall testing volume.

The second factor is competition, which has been intense and, in some cases, undisciplined. We remain confident that our strategy of bringing the highest quality product to the market is the right path to win in the Chinese NGS diagnostics industry for the long term, though we do encounter intense competition in the near term. We believe competition should normalize after major NGS products, for example, liquid-based ctDNA panel and large tissue panels have gone through the NMPA approval process. So with these factors in mind, our initial guidance for 2021 full year is RMB 610 million.

This implies a year-over-year growth rate of 42%. So with that, we conclude the management remarks. And operator, we are ready for questions, please.

Questions & Answers:


[Operator instructions] Your first question comes from Doug Schenkel from Cowen. Please, ask your question.

Doug Schenkel -- Cowen and Company -- Analyst

Good afternoon and good morning, everybody. And thank you for taking my questions. I want to start on guidance. How should we model quarterly revenue? Essentially, I just would like to get your thoughts on pacing.

And then how much do you plan on investing in R&D this year? It would seem like that should increase pretty notably given all the exciting efforts pursuant to new product development and additional study initiation. So just from a modeling standpoint, how should we think about that?

Leo Li -- Chief Financial Officer

Thanks, Doug for the questions. Let me speak qualitatively on these points. In terms of quantitative guidance, the guidance we have is for the full-year top line. We don't have quarterly revenue guidance.

So first, on the quarterly trends, Q1 is going to be soft because of the January hits, which worsened compared to December and a quiet February because of the Chinese New Year. And it's still relatively early in March. Year over year, it is still going to be up, likely double digits. If we watch the first three weeks of January and compare that to the first three weeks of 2020, which we didn't have COVID restrictions back in China, we grew about teens.

So that's one data point. Then February, March was quiet last year because of Chinese New Year and COVID restrictions. So that's the first quarter. Beyond the first quarter, I would still watch out for the two factors that we mentioned.

Then overall, we are working hard on the in-hospital channel with the Magnis BR making further progress, having placed high teens, number of Magnis BR platforms into our hospital partners. And we would like to execute our strategy of further in-hospital penetration throughout the year, although we don't have any quantitative guidance for each quarter. So that's for the top line. Then for R&D, if you look at 2020, we have seen notable personnel-based increases, in terms of head count, salary and share-based compensation, as we expanded our team, which we do benefit from an enlarged team in terms of expanding the R&D and the clinical capabilities.

In addition, there is a commercial organization for early detection, which would lead to increased sales and marketing expenses. So that's on early detection. And also, as you mentioned, for additional clinical programs, which we have a few under the plans, which we will announce the specifics throughout this year. As we roll out those programs, we will expect additional spend on additional R&D programs.

These will be large programs, over 10,000 subjects. Although we do note for China, the overall program expense is still likely to be lower than U.S. programs. So we will roll these out and announce those as we go throughout the year.

We don't have any quantitative guidance on the R&D line. But qualitatively, it is going to increase, as you mentioned, versus the same period last year.

Doug Schenkel -- Cowen and Company -- Analyst

And Leo, thank you for all that. One very quick follow-up. As I'm sure you appreciate, you had a very strong -- I mean the fourth quarter was strong in general, but what really jumped out to me was the in-hospital revenue. That's where most of the upside was relative to our forecast.

I'm guessing some of that is seasonality, but I guess, as we just think about momentum heading into 2021, should we be thinking that Q4 is emblematic of continued progress in the in-hospital channel and then by extension, contemplate a continued change in revenue mix that essentially shifts a little more revenue toward in-hospital versus the central lab?

Leo Li -- Chief Financial Officer

Yes. Overall, we would expect in-hospital to grow stronger and faster compared to central lab as that is a more -- that is a channel that we believe we compete better in terms of our product performance and the Magnis BR differentiated product solution. If you look at the fourth-quarter 2020, there are two things that's driving the in-hospital revenue growth. First is sort of same-store sales growth like metric.

And that metric is tracking similarly compared to the central lab channel, not a surprise there. So that was a much smaller factor in terms of contributing to growth versus the second factor which is newly contracted hospitals. And we made good progress, adding four hospitals in the fourth quarter. And it's hard to pin down, for each exact quarter, how many hospitals we are going to contract because it is more driven by hospital's own process and contracting and internal approval processes.

So it's hard to speak to each quarter going forward. And it's probably more reasonable to look at a few quarters, for example, rolling two or rolling four quarters. And if you look at rolling four quarters, we added 10 for 2020, and we certainly like to keep it up for 2021.

Doug Schenkel -- Cowen and Company -- Analyst

OK. And I know I'm probably overstaying my welcome, but I want to just make sure I get a couple of questions in the -- on the multi-cancer test program. It's really encouraging to hear that you are launching the six cancer product in the near term. On the other hand, it's maybe a bit surprising that this is being launched so quickly with -- in the grand scheme of things, a relatively small data set and no prospective data.

So I just want to make sure that I'm understanding how you think we should think about this. So my first question related to that is, if you didn't need prospective data to launch the six cancers, why was that not the case with the nine cancers? Is it simply because the data was stronger on the first six and you were asked to do more work to support, with confidence, the other three cancers? So that's the first question. The second is again, it's great that you can launch, but given you are going to be generating more data, and there is a lack of prospective data of substance at this point, how are you thinking that's going to impact adoption over the first few quarters of launch? And then my third question on this is, if you are now essentially establishing that companies can launch multi-cancer screening tests with this type of data, which is good, but again, it's a relatively small data set and it's not prospective, is a possible conclusion that the barrier to entry associated with data generation for assays like this is actually lower than previously thought? And on one hand, that would be good because you can get to market quicker. But on the other hand, this structure doesn't just apply to Burning Rocks -- Burning Rock.

So I guess my concern would be in this new world and this new paradigm, that your ability to differentiate, from a regulatory standpoint, on your established scientific rigor might actually be a bit diminished. So it would be great to get your thoughts on those three topics. Thank you.

Shannon Chuai -- Chief Technology Officer

Yes, Doug. This is Shannon. I'll try to tap on your questions to address it. Those are really excellent questions.

I mean exactly, those are what we debated over and over within the team over these past few weeks, about our commercialization decisions or strategy. So first of all, we don't believe that the multi-cancer detection products barrier to enter will be any lower than previously expected. And we do believe that prospective validation study is still a must have, let along the registration, of course, will need prospective validation data. And that is exactly why when we started thinking about this rollout plan, we also added on a prospective validation study for the six cancer test to run in parallel.

However, we did receive very encouraging response from potential channel collaborators for the six cancer test product and which encouraged us to sort of think about, while we generate more prospective validation data, maybe to have some real-world experience will also help us assessing for, one, whether the prospective validation population really matches our future customers because this -- when you start thinking about commercialization, this actually gets very tricky, whether your targeted population are those that go on annual checkup already or not, actually, will hugely influence your expected sensitivity. And then also, other operational metrics, when we start to think about them, these are questions that probably won't be answered in the prospective validation clinical trial because they're in a trial setup. So we wanted to accumulate those knowledge and data as well during our early access program to sort of -- to know what we didn't know, to gather such knowledge. And also, in terms of the commercialization channel, we also wanted to assess like for individual -- for -- on an individual level, we know exactly like what are the harms and what are the potential benefits, but we wanted to assess for potential institutional collaborators like hospitals or insurance companies, what exact kind of value can we bring for them? So those are the things we wanted to answer sort of from these exploratory commercialization effort.

And then, again, as I mentioned before, in the early access program, actually, we've done some of them -- we tried some of them already. And during these programs, we are closely monitoring the positive rates, which actually reflect the specificity. So when you think about a prospective validation cohort, the specificity part is actually much easier to assess because those -- the top of your false positive rate, it is your positive percentage. So it's easy to assess immediately whether your specificity holds out in this real-world population.

So we are closely monitoring that. We are making sure that it doesn't drop any significantly compared to what we would expect from the center study. And then is the sensitivity part that actually takes the follow-up time to have an accurate estimate from the prospective validation cohort, which may be very different from what you have observed from the case control studies because those are symptomatic patients. So for that part, we are also putting a lot of effort to follow-up these real-world positive findings and to assess for, one, the possible estimate on the sensitivity.

And then for, two, the path to diagnosis for these positive participants. I'm not sure whether I answered your questions, but those are the thoughts that we went through when we discussed about this commercialization plan.

Yusheng Han -- Chief Executive Officer and Founder

And this is Yusheng. I have additional comment for that. I think that for early detection, it's not only just sensitivity and specificity. We think that in the operation part and also in the consumer education also how to -- even by how to have a perfect report to make the consumers easily to accept the result and how to explain that in the service perspective.

I think there are all these issues, all new topics we need to face. That's why we started the early access program. I think this product is not just a science product. It's a product that we need to consider psychology of each consumer as well.

Doug Schenkel -- Cowen and Company -- Analyst

Super helpful team. I really appreciate all the additional color. Really, really helpful as always. Thank you for all the time.

Yusheng Han -- Chief Executive Officer and Founder

Thank you.


Thank you. Our next question comes from the line of David Li from Bank of America Merrill Lynch. Please, ask your question.

David Li -- Bank of America Merrill Lynch -- Analyst

Right. Thank you management team for giving me a chance to ask a question. So basically, I would like to ask about your in-licensed product. So previously, you mentioned that in this year, the top line is going to be RMB 610 million.

Does it include the potential revenue contribution from the in-licensed product? This is number one. Number two, we know that you are now -- maybe you are dealing with tech transfer. So besides the tech transfer, is there any barrier on regulation before on these two product launch, their commercialization plan in China? I mean these are also sort of kind of early detection product. So is there any regulation typically on this? And financial, in terms of your fourth-quarter results, your administration expense is over RMB 100 million.

Can you give us more color on this administration expense? That's my questions. Thank you.

Yusheng Han -- Chief Executive Officer and Founder

Thanks, David for the questions. So first on the two licensed in products which are to Myriad HRD and Shannon talked about this during our third-quarter results what are the indications. And the initial approved indication is not a big market, and this is to serve pharmaceutical partners as well. So this is a smaller element compared to the second licensed in product, which is looking at early stage adenocarcinomas.

And this product has had a Chinese cohort over the 1,000 subjects that have gone through and published validation data on the Lancet. So this is known by some Chinese physicians already as well. So these are two different products. And we will be doing tech transfer at least for the first half of the year to be followed by validations as well to make sure that the products perform as they have in their original and the transferred labs as well.

So these will take a period of time. So if any revenue contribution, these are going -- likely to be late for this year. So in terms of the guidance, we don't break out old versus new products, but this has had a little bit of the new products, although we'll have more visibility after we complete the tech transfer and validations. And to note that there will be more products that we're going to roll out, subject to our R&D process, so these are not the only two new products.

So that's for the first question. On the second question, we will be offering these two products in the LDT format, similar to many of the other NGS-based products that we currently offer as well. The Myriad HRD score products, myChoice, that has been approved by the FDA for a couple of indications. So that has its own back end in terms of marketing and acceptance and awareness among physicians.

And we spoke a little bit about the DetermaRx validation data previously already. So these are going to be offered LDT, and there will be -- after launch, they will be driven by our existing sales teams, particularly for lung cancer, which is our largest indication. So that's for the second question. The third for G&A, the main two elements for that line are: one, increased personnel and staff as we expand our head count.

Our overall head count has gone past 1,000 personnel, which is a significant increase as we build out across a number of functions from both front end to mid and back office. We have been expanding our team pretty significantly over time. And the second element is increased physical space. We recently had a new building next to our current lab.

The new building will be housing the early detection labs, and we have been building capacity for that so we can run large clinical studies. And at the same time, offering early access programs. So we were capacity restrained for a period of time, and we are glad that we have solved that issue. So these are the main drivers for the overall G&A line.

David Li -- Bank of America Merrill Lynch -- Analyst

Great. Thank you. That's helpful. I have no more question.


[Operator instructions] Our next question comes from Tian Chen from HSBC. Please, ask your question.

Tian Chen -- HSBC -- Analyst

Hello. Thank you for taking my question. I think in your opening remarks, you're talking about in discussion with Chinese regulators, also FDA, talking about the approval process. I think you make some progress on alternative routes for getting the liquid biopsy approval.

Can you spend some time, give us a bit more detail?

Shannon Chuai -- Chief Technology Officer

OK. Do you want to? OK, I'll try to address this question. So I think there might be a misunderstanding. I think what Yusheng meant on the opening remark is that for the early detection, which used to be very -- it's completely new in the class product.

We had no dialogue previously with the NMPA. But most recently, we started the dialogue, and we see very positive feedback. And so we're very hopeful that in the near or midterm future, the early detection -- the liquid-based multi-cancer early detection kind of products will have the regulatory path cleared or at least the path to registration being more -- much more clear than the current situation. For the liquid-based product, the regulatory has always been -- the structure to registration is always there.

It's similar to the other NGS tissue-based products. Other than the concordance study -- except for the concordance study, which we will have to do a tissue versus liquid concordance, which is different than the tissue-based panel. But overall, the -- largely, the structure is very similar between the two. However, the liquid-based products, will, of course, also be the first in class.

So there will be some unpredictability down the road. But as Joe has mentioned on Page 16 with the typing test passed, we are now entering the clinical validation starting the concordance study and also establishing companion diagnostic collaboration on it. So we're having very positive progress on that as well. Hopefully, we will see the first liquid based -- liquid biopsy-based NGS panel being approved in China in the next couple of years.

Tian Chen -- HSBC -- Analyst

Yeah. OK, that's clear now. So I guess your discussion -- what under discussion is mainly those multi-cancer early detections for the approval process?

Shannon Chuai -- Chief Technology Officer


Tian Chen -- HSBC -- Analyst

OK. So my understanding was why there's no clear approval path because the regulator has been insisting at looking at each individual indicator, right? That's a problem in terms of design and also how the population recruitment? That will be the main barrier given you are targeting the multi-cancer type. So any progress has been made in the -- how to testing out the individual indicator? Would they go for -- on the kind of multi-indicator level? Or they still insist on each individual indicator's efficacy? That's the first one. Second one is talk about the populations, given you will be multiple types, will the regulators still insist the population has to be sufficiently or was sufficiently enough to control for each type of the cancers?

Shannon Chuai -- Chief Technology Officer

Well, for the first question, yes, I think the major -- one major progress we are seeing is that now the regulatory at least embraces the idea of having a multi-cancer early detection product being applied on multi-cancer simultaneously instead of testing it on -- sort of the intended to use population for each single-cancer type, the high-risk population individually. So it's going to be on a general population application. So that's one major progress. However, it's not just -- it's far more than that.

Actually, for early detection products, how do you justify your benefit? How do you control your -- measure your harm? And how do you justify that the benefit is greater than the harm? That's sort of the key to the regulatory path. And I think with the most recent progresses from our own data and also from our global peers like GRAIL and Thrive, such justification rules or philosophies are becoming much and much clearer over the time. And that's one of the reasons why we are -- we could start the dialogue right now with the NMPA.

Tian Chen -- HSBC -- Analyst

Got you. Good. So you think the cost of the benefit for the multi-cancer early screening can be conducted on the pool level rather on the individual cancer-type levels?

Shannon Chuai -- Chief Technology Officer

Of course, because your intent-to-use population would be the general population. You wouldn't be able to differentiate those just for one cancer type. That would be a huge waste on designing the study. So you would measure the performance on multi-cancer simultaneously, yes.

Tian Chen -- HSBC -- Analyst

So NMPA now has recognized this and agreed to go in these directions?

Shannon Chuai -- Chief Technology Officer

No. We're not saying any agreements being reached. We're just saying that we started the conversation, and we see a positive trend toward having an active dialogue.

Tian Chen -- HSBC -- Analyst

Got you. Can I just as a last question on your early access program because in the earlier -- your answer to the earlier questions, I can see why you go for that. But just from the PMA point of view, can I say this kind of early access program probably will be loss making? Or you can do it on the cash breakeven levels, if the main point is for you to get validated in the real-world and to collect more data points?

Yusheng Han -- Chief Executive Officer and Founder

I don't think that's about the cash. If you look at the financial record, we still have a lot of cash on account. So the main purpose for early access program is find out the -- any potential issues in the real-world and crack feedback. For example, how enrichment will be a certain cohort, like the annually checkup -- population doing annual checkup.

Without annual checkup, the sensitivity and the specificity might be different. And also there will be operation issues, for example, how to educate the customer about NPV and -- sorry PPV and NPV, how to educate the sensitivity and specificity? These terms are quite familiar with professional people, but to common consumer, they're totally new. So we are -- for example, we know that PPV is like -- any task for pan-cancer can rich to 40 to 50 PPV, that would be great for that in terms of PPV. But a consumer may think that it'll give me a positive result, and I only have half of the odds to be real positive.

That might be a problem. So we need an early access program to find out all these things and also need to test issues such as pricing, and how do they think about the negative or positive results? I think that the issues we need to find out in the operation is no less than those in the clinical trial.

Tian Chen -- HSBC -- Analyst

Got you. Got you. But I guess, in your P&L structure, if you do any early access program, this will be through your central lab segment, is that it?

Yusheng Han -- Chief Executive Officer and Founder

Exactly. This will be expenses as this is -- we're not charging for the early access. So it's going to hit our expenses line.

Tian Chen -- HSBC -- Analyst

Got you. OK, that's all for me. Thank you very much.


[Operator signoff]

Duration: 66 minutes

Call participants:

Yusheng Han -- Chief Executive Officer and Founder

Shannon Chuai -- Chief Technology Officer

Joe Zhang -- Chief Financial Officer

Leo Li -- Chief Financial Officer

Doug Schenkel -- Cowen and Company -- Analyst

David Li -- Bank of America Merrill Lynch -- Analyst

Tian Chen -- HSBC -- Analyst

All earnings call transcripts

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