AnPac Bio Reports 48.8% Decrease in Net Loss in First Half of 2022
AnPac Bio reported unaudited financial results for the six months ended June 30, 2022. Total revenue decreased by 43.7% to approximately RMB5.2 million (US$778,000), driven by a significant drop in cancer detection test sales. However, gross profit margin increased to 64.9%, up from 61.4%. The net loss shrank to approximately RMB48.8 million (US$7.3 million), a decrease from RMB57.7 million in the prior year. The company also successfully filed 260 patent applications globally. Despite challenges from COVID-19, AnPac continues advancing its cancer diagnostic technology.
- Gross profit margin increased to 64.9% from 61.4%.
- Net loss decreased by 15.4% to approximately RMB48.8 million (US$7.3 million).
- Filed 260 patent applications globally with 155 patents granted.
- Cash and cash equivalents of approximately RMB6.9 million (US$1.0 million).
- Total revenue decreased by 43.7% to approximately RMB5.2 million (US$778,000).
- Average selling price of CDA tests fell by 50.9% to RMB233 (US$36.8).
- Short-term debt decreased but is still significant at approximately RMB5.9 million (US$883,000).
- Company raised concerns over its ability to continue as a going concern.
PHILADELPHIA, Dec. 19, 2022 (GLOBE NEWSWIRE) -- AnPac Bio-Medical Science Co., Ltd. (“AnPac Bio,” the “Company” or “we”) (NASDAQ: ANPC), a biotechnology company with operations in China and the United States, announced today its unaudited financial results for the six months ended June 30, 2022.
Financial highlights for the First Half of 2022
● Total revenue was approximately RMB5.2 million (US
● Gross profit margin was
● The average selling price (“ASP”) of CDA-based tests was RMB233 (US
● Net loss was approximately RMB48.8 million (US
● Non-GAAP net loss¹ was approximately RMB44.4 million (US
● Short-term debt was approximately RMB5.9 million (US
(1) Non-GAAP net loss is defined as net loss excluding change in fair value of convertible debts and share-based compensation. For more information, refer to “Use of Non-GAAP Financial Measures” and “Reconciliations of Non-GAAP Results” at the end of this press release.
Business Highlights for the First Half of 2022
● The Company continued to receive validation on the efficacy of CDA testing through clinical study follow-ups. As of June 30, 2022, AnPac Bio had contacted 29,005 individuals tested using CDA packages in China and received substantive feedback regarding health conditions and disease development from 16,976 individuals.
● As of June 30, 2022, the Company filed 260 patent applications globally, among which 155 patents had been granted, including 22 patents granted in the United States, 68 in greater China (including eight in Taiwan), and 65 in other countries and regions.
● The Company continued to build a cancer risk assessment database, which totaled approximately 270,361 samples as of June 2022, 2022, including approximately 226,065 samples from commercial CDA-based tests and approximately 44,296 samples from research studies.
● The Company delivered an aggregate of 8,074,594 shares reserved for convertible debentures in principal balance of approximately RMB23.5 million (US
● On September 9, 2022, the Company received a Staff determination letter (the “Letter”) from the Listing Qualifications Department of The Nasdaq Stock Market LLC (“Nasdaq”) notifying the Company of the Staff’s determination to delist the Company’s securities from The Nasdaq Capital Market due to its failure to regain compliance with the
Dr. Chris Yu, Co-CEO of AnPac Bio commented: “The first half year of 2022 was challenging due to COVID-19, especially in Shanghai area between early March to early May, 2022, which affected our business and resulted in reduced paid cancer tests and hence revenue. However, we had a very strong June, 2022 in paid cancer tests. We have also made significant efforts in reducing our costs including head counts, which has been effective and resulted in our reduced loss. We continue to advance our CDA technology in a number of areas including our multi-year follow-up study in enrolled individuals who had CDA tests. We reported multi-year clinical trial results in our CDA technology for lung cancer treatment prognosis in April’s American Association for Cancer Research (AACR) conference. In the third quarter, we worked closely with our three selected hospitals for completing remaining paper work for third class medical device clinical trials (assisting in diagnosis for lung cancer utility). We also aggressively pushed marketing and sales in the second half year. The second half year is traditionally our stronger season in paid cancer testing compared with the first half year. Further, overall, we did not lose major customers in the first half year. Instead, those customers postponed the paid cancer tests to the second half year. In addition, due to our strong cost reduction efforts in the first half of year, we expect that our costs will continue to reduce and loss will further narrow.”
Key Items of Financial Results the First Half of 2022
Going concern Uncertainty
The Group’s principal sources of liquidity have been cash generated from financing and operating activities. As of June 30, 2022, the Group had RMB6,890 (US
The Group can make no assurances that required financings will be available for the amounts needed, or on terms commercially acceptable to the Group, if at all. If one or all of these events does not occur or subsequent capital raises are insufficient to bridge financial and liquidity shortfall, there would likely be a material adverse effect on the Group and its financial statements.
Revenues
Total revenues decreased by
Significant decrease in revenue from cancer screening and detection tests was driven by a decrease of
Cost of Revenues
Cost of revenues decreased by
Gross Profit and Gross Margin
Gross margin was
Selling and Marketing Expenses
Selling and marketing expenses decreased by
Research and Development Expenses
Research and development expenses decreased by
General and Administrative Expenses
General and administrative expenses decreased by
Change in fair value of convertible debt
The Company recognized the convertible debt at fair value. For the six months ended June 30 2022 and 2021, the Company recognized an aggregated unrealized gain of approximately RMB139,000 (US
Impairment of intangible assets and goodwill
On August 15, 2021, the Company completed a step acquisition of
Net Loss
Net loss decreased to approximately RMB48.8 million (US
Balance Sheet
As of June 30, 2022, the Company had cash and cash equivalents of approximately RMB6.9 million (US
The Company adopted ASU 2016-02, Leases (Topic 842) on January 1, 2022. The guidance requires the lessee to record operating leases on the balance sheet with a right-of-use asset and corresponding liability for future payment obligations. The Company recognized right of use assets and lease liabilities of approximately RMB8.4 million (US
Subsequent events
On August 2, 2022, the Company’s board passed a preliminary plan to divestiture of Changwei System Technology (Shanghai) Co., Ltd., a subsidiary focusing on research and development. Management determined that this disposition does not represent strategic shift and has no significant effect on the Company’s operations and financial results, there was also no detail plan or potential buyer for the divestiture, therefore, no discontinued operations were presented.
On September 25, 2022, the Company entered into an investment agreement with Shanghai Stonedrop Investment Management center (an existing shareholder of the Company) who agreed to invest a total of
On September 25, 2022, the Company signed an investment agreement with Dr. Chris Chang Yu, who agreed to invest a total of
On September 26, 2022, the Company signed nine investment agreements with nine investors (third parties), the investors agreed to invest approximately
On October 3, 2022, the Company announced changes to its board composition and management team. Mr. Haohan Xu has been appointed as a director of the board of directors (the “Board”), Co-Chairperson of the Board and Co-Chief Executive Officer of the Company. Ms. Xiaoyu Li has been appointed as a director of the Board and as Co-Chief Financial Officer of the Company. Mr. Tianruo (Robert) Pu has been appointed as a director of the Board, chairperson of the audit committee and member of the compensation committee as well as nominating and corporate governance committee. Mr. Zhigang (Frank) Zhao has been appointed as a director of the Board, chairperson of the compensation committee and member of the audit committee as well as nominating and corporate governance committee. Mr. Honggang (Harvey) Tian has been appointed as a director of the Board, chairperson of the nominating and corporate governance committee and member of the audit committee as well as compensation committee. In relation to the above appointments, each of Xing Pu, Ren Luo, Jianhua Shao and Guo Feng will resign as a director and/or officer of the Company.
On October 12, 2022, the Company and Hunan Weitou Scientific Technology Co., Ltd. (“Weitou”) agreed to cancel the investment agreement signed on April 4, 2022, in which Weitou agreed to invest
On October 18, 2022, the Company announced that its Board of Directors authorized it to change the ratio of the Company’s American Depositary Shares (“ADSs”) to its Class A ordinary shares from one (1) ADS representing one (1) Class A ordinary share to one (1) ADS representing twenty (20) Class A ordinary shares. The change in the ADS ratio became effective on November 4, 2022. For the Company’s ADS holders, the change in the ADS ratio will have the same effect as a one-for-twenty reverse ADS split, with all fractional shares being redeemed.
On September 2, 2022, three investors (the “Plaintiffs") in the Company’s May 2022 private placements filed an action against the Company in the State of Delaware Court of Chancery, Chen Wenge, et al. v. AnPac Bio-Medical Science Co., Ltd., C.A. No. 2022-0779-PAF (the “Action”). The Plaintiffs sued the Company for breaches of the investment agreements of May 2022. The Plaintiffs claimed that the entry into certain investment agreements and a merger agreement breached or would breach the terms of the plaintiffs’ (and several other investors’) securities purchase agreements, including a right of first refusal and a prohibition against certain acquisitions and changes of business. The Court issued a temporary restraining order concerning enforcement of the private placements on September 3, 2022, amended the temporary restraining order on September 9, 2022, and further amended the temporary restraining order on September 23, 2022 (“TRO”). In order to settle the Action, on October 15, 2022, the Company entered into Stock Repurchase Agreement with the Plaintiffs and all other investors in the May 2022 private placements with the original investment of
About AnPac Bio
AnPac Bio is a biotechnology company focused on early cancer screening and detection, with 155 issued patents as of June 30, 2022. With two certified clinical laboratories in China and one CLIA and CAP accredited clinical laboratory in the United States, AnPac Bio performs a suite of cancer screening and detection tests, including CDA (Cancer Differentiation Analysis), bio-chemical, immunological, and genomics tests. According to a report by Frost & Sullivan, AnPac Bio ranked first globally in multi-cancer screening and detection test sample volume (accumulative to January 2021). AnPac Bio’s CDA technology platform has been shown in retrospective validation studies to be able to detect the risk of over 20 different cancer types with high sensitivity and specificity.
For more information, please visit: https://www.Anpacbio.com.
For investor and media inquiries, please contact:
Company:
Phil Case, Marketing and Investor Relations
Phone: +1-267-810-6776 (US)
Email: phil_case@AnPacbio.com
Investor Relations:
Ascent Investor Relations LLC
Tina Xiao, President
Phone: +1-917-609-0333 (US)
Email: tina.xiao@ascent-ir.com
Safe Harbor Statement
This announcement contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements are made under the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995 and are relating to the Company’s future financial and operating performance. The Company has attempted to identify forward-looking statements by terminologies including “believes,” “estimates,” “anticipates,” “expects,” “plans,” “projects,” “intends,” “potential,” “target,” “aim,” “predict,” “outlook,” “seek,” “goal” “objective,” “assume,” “contemplate,” “continue,” “positioned,” “forecast,” “likely,” “may,” “could,” “might,” “will,” “should,” “approximately” or other words that convey uncertainty of future events or outcomes to identify these forward-looking statements. These statements are based on current expectations, assumptions and uncertainties involving judgments about, among other things, future economic, competitive and market conditions and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond the Company’s control. These statements also involve known and unknown risks, uncertainties and other factors that may cause the Company’s actual results to be materially different from those expressed or implied by any forward-looking statement. Known and unknown risks, uncertainties and other factors include, but are not limited to, the implementation of our business model and growth strategies; trends and competition in the cancer screening and detection market; our expectations regarding demand for and market acceptance of our cancer screening and detection tests and our ability to expand our customer base; our ability to obtain and maintain intellectual property protections for our CDA technology and our continued research and development to keep pace with technology developments; our ability to obtain and maintain regulatory approvals from the NMPA, the FDA and the relevant U.S. states and have our laboratories certified or accredited by authorities including the CLIA; our future business development, financial condition and results of operations and our ability to obtain financing cost-effectively; potential changes of government regulations; general economic and business conditions in China and elsewhere; our ability to hire and maintain key personnel; our relationship with our major business partners and customers; and the duration of the coronavirus outbreaks and their potential adverse impact on the economic conditions and financial markets and our business and financial performance, such as resulting from reduced commercial activities due to quarantines and travel restrictions instituted by China, the U.S. and many other countries around the world to contain the spread of the virus. Additionally, all forward-looking statements are subject to the “Risk Factors” detailed from time to time in the Company’s most recent Annual Report on Form 20-F and other filings with the U.S. Securities and Exchange Commission. Because of these and other risks, uncertainties and assumptions, undue reliance should not be placed on these forward-looking statements. In addition, these statements speak only as of the date of this press release and, except as may be required by law, the Company undertakes no obligation to revise or update publicly any forward-looking statements for any reason.
ANPAC BIO-MEDICAL SCIENCE CO., LTD.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands of Renminbi (“RMB”) and U.S. dollars (“US$”), except for number of shares and per share data)
| December 31, 2021 | June 30, 2022 | June 30, 2022 | ||||||||||
| RMB | RMB | US$ | ||||||||||
| ASSETS | ||||||||||||
| Current assets: | ||||||||||||
| Cash and cash equivalents | 9,251 | 6,890 | 1,029 | |||||||||
| Prepaid expenses | 4,704 | 15,136 | 2,260 | |||||||||
| Accounts receivable, net | 5,554 | 5,044 | 753 | |||||||||
| Amounts due from related parties, net | 200 | 868 | 130 | |||||||||
| Inventories, net | 490 | 432 | 64 | |||||||||
| Other current assets, net | 3,350 | 3,164 | 472 | |||||||||
| Total current assets | 23,549 | 31,534 | 4,708 | |||||||||
| Property and equipment, net | 20,264 | 19,142 | 2,858 | |||||||||
| Land use rights, net | 1,138 | 1,125 | 168 | |||||||||
| Intangible assets, net | 8,857 | 113 | 17 | |||||||||
| Goodwill | 12,758 | - | - | |||||||||
| Right-of-use assets | - | 8,396 | 1,253 | |||||||||
| Long-term investments | 923 | 836 | 125 | |||||||||
| TOTAL ASSETS. | 67,489 | 61,146 | 9,129 | |||||||||
| LIABILITIES AND SHAREHOLDERS’ DEFICIT | ||||||||||||
| Current liabilities: | ||||||||||||
| Short-term debts | 33,759 | 5,915 | 883 | |||||||||
| Accounts payable | 2,732 | 3,305 | 494 | |||||||||
| Advance from customers | 4,174 | 4,563 | 681 | |||||||||
| Amounts due to related parties | 2,471 | 1,474 | 220 | |||||||||
| Lease liability-current | - | 1,029 | 154 | |||||||||
| Accrued expenses and other current liabilities | 19,770 | 20,639 | 3,081 | |||||||||
| Total current liabilities | 62,906 | 36,925 | 5,513 | |||||||||
| Deferred tax liabilities | 2,158 | - | - | |||||||||
| Lease liability-non-current | - | 7,530 | 1,124 | |||||||||
| Other long-term liabilities | 1,107 | 1,094 | 163 | |||||||||
| TOTAL LIABILITIES. | 66,171 | 45,549 | 6,800 | |||||||||
| Commitments and contingencies | ||||||||||||
| Shareholders’ deficit: | ||||||||||||
| Class A Ordinary shares (US | 1,096 | 2,478 | 370 | |||||||||
| Class B Ordinary shares (US | 185 | 185 | 28 | |||||||||
| Additional paid-in capital | 465,334 | 527,208 | 78,710 | |||||||||
| Accumulated deficit | (475,646 | ) | (523,721 | ) | (78,189 | ) | ||||||
| Accumulated other comprehensive income | 4,532 | 4,370 | 652 | |||||||||
| Total AnPac Bio-Medical Science Co., Ltd. shareholders’ equity (deficit) | (4,499 | ) | 10,520 | 1,571 | ||||||||
| Non-controlling interests | 5,817 | 5,077 | 758 | |||||||||
| Total shareholders’ equity | 1,318 | 15,597 | 2,329 | |||||||||
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | 67,489 | 61,146 | 9,129 | |||||||||
ANPAC BIO-MEDICAL SCIENCE CO., LTD.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(Amounts in thousands of Renminbi (“RMB”) and U.S. dollars (“US$”), except for number of shares and per share data)
| Six Months Ended June30, | ||||||||||||
| 2021 | 2022 | 2022 | ||||||||||
| RMB | RMB | US$ | ||||||||||
| Revenues: | ||||||||||||
| Cancer screening and detection tests | 9,240 | 3,736 | 558 | |||||||||
| Physical checkup packages | 16 | 31 | 5 | |||||||||
| Technology service | - | 1,239 | 185 | |||||||||
| Retail revenue | - | 207 | 31 | |||||||||
| Total revenues | 9,256 | 5,213 | 779 | |||||||||
| Cost of revenues | (3,574 | ) | (1,832 | ) | (274 | ) | ||||||
| Gross Profit | 5,682 | 3,381 | 505 | |||||||||
| Operating expenses: | ||||||||||||
| Selling and marketing expenses | (10,812 | ) | (5,357 | ) | (800 | ) | ||||||
| Research and development expenses | (5,616 | ) | (4,330 | ) | (646 | ) | ||||||
| General and administrative expenses | (41,570 | ) | (23,796 | ) | (3,553 | ) | ||||||
| Impairment intangible assets | - | (7,911 | ) | (1,181 | ) | |||||||
| Impairment of goodwill | - | (12,758 | ) | (1,905 | ) | |||||||
| Loss from operations | (52,316 | ) | (50,771 | ) | (7,580 | ) | ||||||
| Non-operating income and expenses: | ||||||||||||
| Interest expense, net | (2,220 | ) | (192 | ) | (29 | ) | ||||||
| Foreign exchange loss, net | (173 | ) | (506 | ) | (76 | ) | ||||||
| Share of net loss in equity method investments | (120 | ) | (87 | ) | (13 | ) | ||||||
| Other income, net | 1,442 | 472 | 70 | |||||||||
| Change in fair value of convertible debt | (4,346 | ) | 139 | 21 | ||||||||
| Loss before income taxes | (57,733 | ) | (50,945 | ) | (7,607 | ) | ||||||
| Income tax benefit | 44 | 2,130 | 318 | |||||||||
| Net loss | (57,689 | ) | (48,815 | ) | (7,289 | ) | ||||||
| Net loss attributable to non-controlling interests | (653 | ) | (740 | ) | (110 | ) | ||||||
| Net loss attributable to ordinary shareholders | (57,036 | ) | (48,075 | ) | (7,179 | ) | ||||||
| Loss per share: | ||||||||||||
| Class A and B Ordinary shares - basic and diluted | (4.58 | ) | (2.04 | ) | (0.30 | ) | ||||||
| Weighted average shares outstanding used in calculating basic and diluted loss per share | ||||||||||||
| Ordinary shares - basic and diluted | 12,453,065 | 23,603,709 | 23,603,709 | |||||||||
| Other comprehensive income, net of tax: | ||||||||||||
| Foreign currency translation adjustments | (536 | ) | (162 | ) | (24 | ) | ||||||
| Total comprehensive loss | (58,225 | ) | (48,977 | ) | (7,313 | ) | ||||||
| Total comprehensive loss attributable to non-controlling interests | (653 | ) | (740 | ) | (110 | ) | ||||||
| Total comprehensive loss attributable to ordinary shareholders | (57,572 | ) | (48,237 | ) | (7,203 | ) | ||||||
Use of Non-GAAP Financial Measures
Non-GAAP net loss is calculated as net income adjusted for change in fair value of convertible debts and share-based compensation expense. The non-GAAP financial measures are presented to enhance investors’ overall understanding of the Company’s financial performance and should not be considered a substitute for, or superior to, the financial information prepared and presented in accordance with U.S. GAAP. Investors are encouraged to review the reconciliation of the historical non-GAAP financial measures to its most directly comparable GAAP financial measures. As non-GAAP financial measures have material limitations as analytical metrics and may not be calculated in the same manner by all companies, they may not be comparable to other similarly titled measures used by other companies. In light of the foregoing limitations, you should not consider non-GAAP financial measures as a substitute for, or superior to, such metrics in accordance with US GAAP.
Reconciliations of Non-GAAP Results
Reconciliations of Non-GAAP net loss
(All amounts in thousands, except share and per share data or otherwise stated)
| Six Months Ended June 30, | ||||||||||||
| 2021 | 2022 | 2022 | ||||||||||
| RMB | RMB | US$ | ||||||||||
| Net loss | (57,689 | ) | (48,815 | ) | (7,289 | ) | ||||||
| Less: | ||||||||||||
| Change in fair value of convertible debts | 4,346 | (139 | ) | (21 | ) | |||||||
| Share-based compensation expense | 15,897 | 4,528 | 676 | |||||||||
| Non-GAAP net loss | (37,446 | ) | (44,426 | ) | (6,634 | ) | ||||||
FAQ
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