Full Press Release Details
AnPac Bio Reports 48.8% Decrease in Net Loss
in First Half of 2022
PHILADELPHIA, December 16, 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
(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
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
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$1,029) of cash
and cash equivalents and a working capital deficit of RMB5,391 (US$805). For the six months ended June 30, 2021 and 2022, the Group
incurred continuous losses of RMB57,689 and RMB48,815 (US$7,289), respectively. The recent resurgence of COVID-19 and lockdown policies
in Shanghai, China also has negative impact on the Group's operation. The above-mentioned facts raise substantial doubt about the
Group's ability to continue as a going concern. In assessing its liquidity, management monitors and analyzes the Group's cash
on-hand, its ability to generate sufficient revenue sources in the future, and its operating and capital expenditure commitments. With
respect to capital funding requirements, the Group budgeted capital spending based on ongoing assessments of needs to maintain adequate
cash. The Group intends to finance its future working capital requirements and capital expenditures from financing activities until the
Group's operating activities generate positive cash flows, if ever. Management expects continuous capital financing through debt
or equity issuances to support its working capital requirements
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.
Total revenues decreased by 43.7% or approximately
RMB 4.0 million to approximately RMB5.2 million (US$779,000) for the six months ended June 30, 2022 from approximately RMB9.3 million
for the same period of 2021, primarily due to a significant decrease of approximately RMB5.5 million in our revenue from cancer screening
and detection tests, offset by an increase of approximately RMB1.2 million in revenue from technology service we started from the second
half fiscal year of 2021.
Significant decrease in revenue from cancer screening
and detection tests was driven by a decrease of 50.9% in the average selling price year over year, primarily due to focusing on more conventional
cancer detection tests at lower prices and a decrease of 17.9% in volume of cancer screening and detection tests compared to the same
period of 2021, caused by COVID-19 lockdown in Shanghai from late March 2022 to end of May 2022.
Cost of revenues decreased by 48.7% to approximately
RMB1.8 million (US$274,000) for the six months ended June 30, 2022 from approximately RMB3.6 million for the same period of 2021,
primarily due to the decrease of approximately RMB2.2 million cost of revenue from cancer screening and detection test, which was in line
with the decrease in our revenue from sales of cancer screening and detection tests. Offset by the increased cost of revenues from technology
services and retail products was approximately RMB441,000, no such cost incurred for the same period of 2021.
Gross Profit and Gross Margin
Gross margin was 64.9% for the six months ended
June 30, 2022, representing an increase from 61.4% for the same period of 2021, primarily due to higher gross margin in technology
service. The gross margin is 72.5% for the technology service, which is higher than the average gross margin for other revenue streams.
Technology service is a new revenue stream since the second half year of fiscal year 2021, which led to the increase of the total gross
margin for the six months ended June 30, 2022 compared with the six months ended June 30, 2021.
Selling and Marketing Expenses
Selling and marketing expenses decreased by 50.5%
to approximately RMB5.4 million (US$800,000) for the six months ended June 30, 2022 from approximately RMB10.8 million for the same
period of 2021, primarily due to less marketing activities caused by COVID-19 in Shanghai.
Research and Development Expenses
Research and development expenses decreased by
22.9% to approximately RMB4.3 million (US$646,000) for the six months ended June 30, 2022 from approximately RMB5.6 million for the
same period of 2021, primarily due to a decrease of RMB 583,000 in share base compensation and a decrease of RMB 580,000 in testing materials
expense due to less research and development activities for the six months ended June 30, 2022 compared to the same period of 2021.
General and Administrative Expenses
General and administrative expenses decreased
by 42.8% to approximately RMB23.8 million (US$3.6 million) for the six months ended June 30, 2022 from approximately RMB41.6 million
for the same period of 2021, primarily due to a decrease of RMB 10.5 million in share-based compensation and a decrease of RMB3.4 in professional
consulting expenses.
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$21,000) and an aggregated unrealized loss of approximately RMB4.3 million, respectively, due to changes in fair value of
Impairment of intangible assets and goodwill
On August 15, 2021, the Company completed
a step acquisition of 60% equity interest in Anpai Shanghai, consisting of an acquisition of 40% equity interest of Anpai Shanghai acquired
from Dr. Chang Yu. Due to the slow development of Anpai Shanghai, the Company evaluated the recoverability of long-lived assets by
comparing the carrying amount of the assets to the future undiscounted cash flows expected to result from the use of the assets and their
eventual disposition and determined that the fair value of intangible assets of Anpai Shanghai. was nil. Therefore, the Company impaired
the intangible assets acquired from the acquisition of Anpai Shanghai of RMB7.9 million (US$1.2 million) and goodwill of RMB12.8 million
Net loss decreased to approximately RMB48.8 million
(US$7.3 million) for the six months ended June 30, compared to approximately RMB57.7 million for the same period of 2021. Basic and
diluted loss per share was RMB2.04 (US$0.30) for the six months ended June 30, 2022 compared to that of RMB4.58 for the same period
As of June 30, 2022, the Company had cash
and cash equivalents of approximately RMB6.9 million (US$1.0 million), compared to approximately RMB9.3 million as of December 31,
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$1.3 million) and RMB8.6 million (US$1.3 million) as of June 30, 2022.
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
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 $15 million in the Company in five installments: $3 million in the fourth quarter of 2022, $3 million in the second