Basecare Announces 2021 Annual Results: Overall Increase In Revenue And Gross Profit

Suzhou Basecare Medical Corporation Limited ("Basecare" or the "Company", together with its subsidiaries, the "Group", stock code: 2170), an innovative platform of genetic testing solutions for assisted reproduction in China, announced its audited consolidated results for the year ended 31 December 2021 (the "Year").

In 2021, the Group's revenue increased by 32.3% YOY to RMB107 million. Gross profit was RMB51.15 million, representing an increase of 84.6% YOY. The consolidated gross margin increased from 34.2% to 47.7%, mainly due to the increases of the gross profit margin in the PGT-A kits from 46.0% to 70.0%. Basecare, a leading provider of third-generation IVF clinical solutions for assisted reproduction in China, has extended its reach beyond the pre-implantation stage to the prenatal and postnatal stages, and has self-developed kits in each stage, making it a company with a genetic test kit pipeline that covers the full reproductive cycle.

A leading position in assisted reproductive in China with core technology

Basecare's PGT-A kit is the first third-generation IVF genetic testing kit that has been approved by the National Medical Products Administration of China (NMPA), marking the birth of a regulated third-generation IVF market in China. At the same time, the Group continued to increase its investment on R&D expenses and increase the barriers to entry in the industry. In 2021, the Company's research and development expenses were RMB73.71 million, representing an increase of 114% YOY. The Company is developing two other pre-implantation genetic testing, or PGT, products, namely, PGT-M and PGT-SR kits, which are expected to obtain NMPA registration approval in 2022 and 2024. To date, the Company's PGT-M kit is the first product of its kind that has completed the registration testing in China; PGT-SR kit may become the first standardized commercial product of its kind in China with potential for mass clinical application. Those together with the PGT-A kit will form a complete testing kit lineup to occupy the PGT field, which will further enhance Basecare's leading position in China's third-generation IVF genetic testing kits market.

Leveraging its core strength in PGT, Basecare has positioned itself to become an innovative platform in China's broader reproductive genetics market. It has extended its reach beyond the pre-implantation stage to the prenatal and postnatal stages, and are developing relevant kits in each stage, making it a company in China with a genetic testing kit pipeline that covers the full reproductive cycle. Except for testing kits, the Group has developed a number of innovative devices and instruments that can improve workflow in molecular genetic laboratories using the kits.

Boosts commercialization process and forges sales channel barriers

The Group sold a significant portion of its products directly to hospitals and reproductive clinics. It also sold its genetic testing kits to distributors, who in turn sold our products to hospitals and reproductive clinics. At present, the Group currently has established presence in 55 reproductive centers nationwide and cultivated business relationship with about 70% of the leading customers. The Group maintains a dedicated in-house sales and marketing team with a focus on serving key customers, such as third-generation IVF licensed hospitals and reproductive clinics. The Group's in-house sales and marketing team is also responsible for the promotion of products to hospitals and reproductive clinics through academic marketing activities, to interact with KOLs as well as other industry professionals. In 2021, Basecare held 56 academic exchanges to facilitate market operation and promotion.

With the first NMPA-approved PGT kit in China, the Group believes that it will enjoy the first-mover advantages in building and solidifying sales channels and customer base. It plans to focus the commercialization strategy on key hospitals and reproductive clinics. The Group will leverage the relationships built with these hospitals and clinics for PGT-A to extend the breadth and depth of its coverage. The Group aims to increase the coverage and penetration of hospitals and reproductive clinics licensed to conduct PGT, and develop stronger relationships with them to enhance customer stickiness and lay the foundation to offer other products to them in the future. Basecare plans to work toward full coverage of licensed hospitals and reproductive clinics in China. Moreover, it plans to expand its share of wallet in these hospitals and clinics by offering comprehensive solutions, with new products that target other medical specialties, such as the neonatal and pediatrics units, in these institutions.

Proceeds eco-system construction and builds solid portfolio moat

During the Year, the Group settled the consideration of RMB85 million in relation to the acquisition of Zhejiang Cellpro Biotech Corporation Limited ("Cellpro Biotech"). Cellpro Biotech is a company mainly focusing on the research and development, production, sales and technical services of assisted reproductive technology diagnosis and treatment products. The strong collaboration with Cellpro Biotech will strengthen the synergy for Basecare's business and assist in building its complete product and service system, which is the key measure for Basecare to build the portfolio moat and consolidate its leading competitive position.

Looking forward, Dr. Liang Bo, Founder, Executive Director and General Manager of Suzhou Basecare Medical Corporation Limited, said "Our mission is to develop and launch innovative genetic testing solutions that are specifically designed for the Chinese population and that address unmet clinical needs in China. Our vision is to help more families have healthy babies. To accomplish that vision, we expand our market coverage and continue to capture and solidify sales channels and customer base for PGT-A. At the same time, we enrich our product pipeline and rapidly commercialize the product portfolio to occupy the full reproductive cycle. In addition, we shall promote the upgrading of hardware equipment in reproductive center laboratories, focus on the industrial chain layout of embryo cryopreservation equipment, and provide intelligent and automated integrated solutions for clinical trials to improve the Company's competitiveness, so as to maintain a leading position in technology."

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