. The kit is suitable for the initial diagnosis and treatment of patients with non-small cell lung cancer and the diagnosis and treatment at the time of relapse, and can provide patients with guidance on the use of targeted drugs.
The advantage of being the first to obtain a certificate is that related companies can be deployed in the top three hospitals more quickly than their peers, seize the market, and gain a first-mover advantage. Han Yusheng said in an interview in 2018 that 80% of cancer patients in China are concentrated in top three hospitals or cancer specialist hospitals in first-tier cities. There are about 100 such hospitals in China. Because the second-generation sequencer is expensive, each company’s product is bound to the kit, it is difficult for a hospital to have more than two companies’ products. Once doctors form the habit of using the first product to land, they will become a barrier to entry for the latecomers.
In August of the same year, Nuohe Zhiyuan, Shihe Gene Development’s tumor drug gene detection kits were successively approved by the China Food and Drug Administration for three types of medical device registration certificates. These events marked the beginning of the “certified admission” stage in the field of tumor gene sequencing.
With the first approved NGS tumor detection kit, in February 2019, Burning Stone received RMB 850 million in Series C financing from GIC, Jifeng Capital, China Merchants International, Sequoia China, etc. The highest round of financing in the NGS industry.
Prospectus shows that as of the first quarter of 2020, Burning Stone has developed 32 NGS products for different cancer types and clinical scenarios, involving tumor targeting and immunological drug concomitant diagnosis, tumor benign and malignant identification, and detection of small residual lesions , Prediction of tumor recurrence progression and detection of tumor sensitivity, etc. At the same time, the company established OncoDB, one of the largest cancer genome information databases in China.
According to the China Insights Consultancy (CIC) report, in 2019, 26.7% of patients who selected cancer treatment drugs based on NGS testing chose Burning Stone Medicine, of which 31% of lung cancer patients. The prospectus shows that Burning Stone Medical has established contact with 602 domestic hospitals to process tissues and liquid biological samples of cancer patients for the latter and issue monitoring reports.
02Profit Dilemma
As the first echelon player in the domestic NGS tumor detection industry, the revenue of Burning Stone has shown a growing trend in recent years: the prospectus shows that from 2017 to 2019, its revenue is 111 million yuan and 209 million respectively Yuan and 382 million yuan, of which the corresponding increases in 2018 and 2019 are more than 80%. The gross profit margins for these three years were 64.5%, 64.7%, and 71.6%. Revenue in the first quarter of 2020 was 67.33 million yuan.
