The National Medical Products Administration updated the medical device registration status on May 25, showing that the registration application for Burning Rock Biotech Limited's circulating tumor DNA multi-gene mutation joint detection kit (reversible terminator sequencing method) has been "terminated." This is not welcome news for the company, whose stock price has been in a downtrend.
Zhitong Finance APP observed that after reaching a near four-year high of $41.72 in January this year, the stock of Burning Rock Biotech entered a prolonged downtrend lasting four months. By the close on May 21, the stock price had fallen to $16.32, a decline of 60.88% from the previous high. Subsequently, on May 22, the stock closed sharply lower by 11.09%, initiating a rapid decline. Over the next four trading sessions, the stock continued to fall for five consecutive days, accumulating a loss of 42.89%. On May 29, the stock closed down 7.72%, with an intraday low of $9.01, erasing all gains since October 21, 2025.
Main funds using negative news for a "shakeout"? Reviewing the stock's movement from January 22 to the present, investors can easily see that the logic behind the decline in Burning Rock Biotech's stock price has not been consistent throughout this period. Extending the timeline, after hitting an intraday high of $41.72 on January 22, the stock entered a period of technical correction. Notably, on January 14, 15, and 22, the stock experienced significant gains, with single-day increases of 18.49%, 16.83%, and 32.20%, respectively. At that time, the stock had been trading along the upper Bollinger Band for nearly half a month, and its corresponding RSI indicator exceeded 80 on both January 15 and 22, forming an M-top pattern above the 80 overbought line, signaling a clear reversal downwards.
Starting from January 23, as the RSI indicator formed a death cross, the stock began a downward technical correction. On January 24, despite a sharp closing decline of 14.59%, the daily trading volume was only 31,000 shares. Over the next half month, the daily volume even fell below 10,000 shares, indicating a decline on low volume. This phase of decline ended around March 13.
Zhitong Finance APP observed that after the release of the Q4 2025 earnings report pre-market on March 13, the stock price of Burning Rock Biotech quickly declined, plunging significantly within half an hour, rapidly falling below the daily average price line with a drop exceeding 10%. Although there were two subsequent rebounds, bullish forces were continuously suppressed. From the latter part of the early session until the close, the market was largely controlled by bearish forces, with the stock price consistently moving away from the daily average price line, ultimately closing down 29.93%.
Subsequently, a clear stabilization emerged in the market for Burning Rock Biotech. On March 23, the intraday K-line formed a long upper shadow, presenting a "Fairy's Finger" pattern. After low-level consolidation from late March to early April, the stock achieved "four consecutive positive closes" from April 13 to 16, pushing the price above the upper Bollinger Band. Although the stock price later fell back near the middle Bollinger Band, combined with changes in trading volume, the decline and consolidation process up to May 21 showed almost no significant "volume accumulation," suggesting that main funds remained in the market but chose to continue driving the price down to shake out weak holders.
The negative news that emerged on May 25 clearly provided main funds with another opportunity to continue this shakeout. From the perspective of chip distribution for Burning Rock Biotech, after the sharp drop on May 22, the distribution showed a double-peak pattern around $15 and $20, both significantly below the average chip cost of $21.44, with the proportion of profitable positions in the market falling to 0%. As the stock price continued to decline, the double-peak chip pattern began to converge into a single peak around $17.20. Simultaneously, bottom-fishing funds started entering below $9, driving the proportion of profitable positions in the market back up to 0.25%. This signal suggests that a unilateral price decline may no longer help main funds further consolidate holdings. Combined with an RSI oversold reading of 7.04, a technical rebound for Burning Rock Biotech's stock price may be imminent.
When will the stock rebound? The nearly 200% cumulative increase in Burning Rock Biotech's stock price in 2025 was essentially positive feedback from the secondary market regarding the company's profit expectations. According to Zhitong Finance APP, while achieving steady revenue growth in 2025, the company significantly improved operational efficiency: annual revenue reached 540 million yuan, a year-on-year increase of 4.6%, including overseas revenue of 101 million yuan. During the reporting period, the net loss was 55.35 million yuan, a substantial narrowing of 84.0% compared to 347 million yuan in 2024. Notably, in Q4 2025, the adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) turned positive for the first time, with a single-quarter profit of 370,000 yuan. Additionally, operating cash flow saw a net inflow of 23.04 million yuan, marking the second consecutive quarter of positive cash flow. As of December 31, 2025, the company held cash, cash equivalents, and restricted cash totaling 481 million yuan.
Although the positive adjusted EBITDA, after excluding non-cash factors such as capital structure, tax rates, depreciation, amortization, and some non-cash items not affecting operational profitability, indicates that the company achieved operational profitability during the period and represents the final milestone before achieving net profit breakeven, Burning Rock Biotech did not achieve book profit in Q4 2025. The quarterly net loss still reached 15.386 million yuan, failing to meet market expectations. This explains the nearly 30% single-day drop in the stock price following the earnings release.
Apart from book profitability, Burning Rock Biotech has two potential catalysts in 2026: the lung cancer NGS blood test certification, which entered the priority review channel at the end of 2024 and was expected to be approved in the first half of this year, and the company's domestically first breast cancer NGS companion diagnostic kit successfully entering the CMDE priority review channel, previously also expected to be approved within this year. Now, with the announcement of "terminated registration" for the lung cancer NGS blood test certification that had entered the priority review channel, the short-term negative impact on Burning Rock Biotech's stock price is significant. Before the release of the 2026 interim report, the approval of the lung cancer NGS blood test certification was a key catalyst for the company's stock price in the first half of the year.
After the outbreak of market panic, investors should note that "terminated registration review" actually refers to the conclusion of a specific project's evaluation stage without obtaining registration certification. This could be due to the company's voluntary withdrawal or the legal termination of the review process and does not involve other NGS certifications already held by Burning Rock. Based on currently available public information, the company's breast cancer NGS companion diagnostic kit in the CMDE priority review channel is still under review. This remains one of the important catalysts for Burning Rock's stock price this year.
However, from a short-term market perspective, Burning Rock is currently in a "vacuum period" of positive catalysts following the setback with the lung cancer NGS blood test certification. It will be difficult to form a consensus among bullish forces in the market in the short term. Perhaps the trend reversal point for the stock price will not emerge until just before the release of the company's 2026 interim report.
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