Gracell Biotechnologies Inc (GRCL) 2022 Q3 法說會逐字稿

Ladies and gentlemen, thank you for standing by. Welcome to the Gracell Biotechnologies Third Quarter 2022 Conference Call. (Operator Instructions)

I will now turn the conference call over to Dr. Kevin Xie, CFO. Please go ahead.

Good morning, and welcome to Gracell's Third Quarter 2022 Corporate Update Conference Call and Webcast. With me today are Gracell's Founder and the Chief Executive Officer, Dr. William Cao; and our Chief Medical Officer, Dr. Wendy Li.

We're excited to discuss the progress of our innovative technologies and the rich clinical pipeline of CAR-T therapies on today's call. We also look forward to sharing with you our recent business developments and upcoming objectives for the remainder of 2022. After our formal remarks, we we'll conduct a question-and-answer session.

This morning, Gracell issued a press release announcing unaudited financial results for the quarter ended September 30, 2022. We encourage everyone to read this press release, and would like to remind you that this call is being recorded for replay.

Please note that for certain information discussed on the call today, including financial data, clinical data and future plans of our programs, Gracell's management will be making forward-looking statements. Actual results could differ materially from those stated or implied by those forward-looking statements as a result of various important factors, and please refer to the Risk Factors section of our latest 20-F filings with the SEC for a full disclosure of these risks and the factors.

The conference call contains time-sensitive information that is accurate only as of the date of this live broadcast, November 14, 2022. Gracell undertakes no obligation to revise or update any forward-looking statements to reflect events or certain statements after the date of this conference call, except that may be required by security laws.

I will now turn the call over to Gracell's CEO, Dr. William Cao. William?

Thank you, Kevin. And again, welcome, everyone, to our third quarter 2022 corporate update conference call.

I will begin today's call with a key corporate and pipeline update. I will then turn the call over to our CMO, Dr. Wendy Li to provide insight on our first clinical data from ongoing IIT evaluating GC012F in newly diagnosed multiple myeloma, which was accepted for an oral session at ASH 2022. Thereafter, our CFO, Dr. Kevin Xie, will discuss our third quarter 2022 financial results. After our prepared remarks, we will open the call to questions.

I'm glad to open this call and announce that today, Gracell's FasTCAR next-day manufacture autologous CAR-T platform was named the winner of the 2022 Fierce Life Sciences Innovation Awards. FasTCAR was developed with a deep understanding of the challenges faced by conventional CAR-T and we firmly believe this technology as well as the BCMA/CD19 dual-targeting CAR-T GC012F developed on the FasTCAR platform represent the innovation that could broaden the use and accessibility of CAR-T.

The Fierce Life Sciences Innovation Award identify and showcase outstanding innovation that is driving improvements and transforming the industry. And an expert panel of judges reviewed all the submissions and has determined that the FasTCAR has the potential to make a great impact for biotech and pharma industry. Hence, I hope to thank the recognition by the judges, and I also thank the entire Gracell team, especially our scientists, for their commitment and hard work.

Currently, Gracell continues to advance a robust clinical pipeline developed in our FasTCAR autologous CAR-T platform and the TruUCAR allogenic CAR-T platform.

First, on our lead candidate, GC012F, the autologous BCMA/CD19 dual-targeting FasTCAR-T therapy. GC012F is currently being studied in 3 indications: relapsed refractory multiple myeloma, newly diagnosed multiple myeloma and in relapsed/refractory non-Hodgkin lymphoma.

We completed enrollment in the investigator initiative trial, IIT, study evaluating 12F for RRMM. In 2022, at both ASCO and EHA annual meetings, we presented updated clinical data that showcased the deep response achieved, favorable safety profile and a differentiated next stage of manufacturing.

Specifically, as of June 8, 2022 data cutoff date, following enrollment completion of 29 patients, a single infusion of 12F has achieved a 100% MRD-negative rates in this group of heavily pretreated patients, of which 90% were classified as high risk.

12F also consistently demonstrated a favorable safety profile. We are continuing to follow up these patients. Furthermore, we are on track to complete the R&D submission of 12F in RRMM in both the U.S. and China before year-end. After having submitted a pre-IND meeting request to the U.S. FDA, we received a written response in October 2022. Their response was encouraging and we are currently preparing our R&D filing in the U.S. Also in September 2022, we received a written response for our pre-IND submission from China NMPA. The IND submission is on track.

Turning to IIT that is underway to evaluate 12F in newly diagnosed, high-risk multiple myeloma patients. We are thrilled that this data was accepted for oral session at ASH Annual Meeting in December 2022. We started this IIT study over a year ago, and this will be the first time that we present the clinical data. Newly diagnosed high-risk patients usually respond less favorably to standard of care and are associated with a poor outcome and remain a high unmet medical needs despite of novel agents being approved in recent years. We hope 12F could demonstrate its potential of providing a new, safe, highly efficacious first-line therapy.

The data in this abstract shows an excellent safety profile and encouraging efficacy. Our CMO, Dr. Wendy Li, will provide more details later in this call.

At EHA in June 2022, we also unveiled the first data of 12F in relapsed/refractory NHL from ongoing IIT. This initial data set demonstrates potent and a fast activity with 100% CR rate at month 1, observing all 3 patients treated as of cutoff date of February 22, 2020. To put this into perspective, all 3 patients have DLBCL, a fast-growing aggressive form of NHL. We are continuing enrollment and a follow-up of this ongoing study, and we plan to share updated data at the medical conference in 2023.

Moving on to the off-the-shelf TruUCAR platform, GC502 is our TruUCAR-enabled CD19/CD7 dual directed allogeneic CAR-T therapy candidate.

As we outlined previously, we presented updated data last June at EHA from a single arm open-label IIT with longer follow-up compared to the data that was shared in April at AACR. The data was encouraging as 75% of all treated patients achieved MRD-negative CR, CRi. The study is ongoing.

Next, moving to our donor-derived CAR-T. In October, we announced the dosing of the first patient in China registrational Phase II trial evaluating GC007g, an allogenetic CD19 targeted CAR-T cell therapy. GC007g is derived from HLA-matched donor for the treatment of R/R B-ALL patients who failed transplant and may not be eligible for autologous CAR-T therapy. This is exciting milestone for Gracell team as it is our first pivotal trial. We have observed highly encouraging safety and efficacy data in the Phase I portion, and we hope to share the data in 2023.

Last, but not the least, I'm happy to report we have dosed first patients with our SMART CART candidate, GC503, for the treatment of mesothelin-positive solid tumors in China IIT. SMART CART is a second-generation technology for the treatment of solid tumors and utilize a novel construct to take advantage of the suppressive tumor microenvironment and effectively combat solutions. We are also preparing to bring the second SMART CART candidate, GC506, targeting CLDN18.2 to the clinical trial soon.

For the past 10.5 months in 2022, we have delivered all promised milestones, including starting several IIT studies, opening our first Phase II trial and providing clinical data updates at major medical conferences. These clinical and operational developments further emphasize Gracell's commitment to delivering accessible and highly efficacious treatments to the patients across the wide range of malignancies.

Now I will hand the call over to our CMO, Dr. Wendy Li, to discuss our participation at ASH in December. Wendy, please go ahead.

Thank you, William. As William mentioned, the abstract for first in human data from ongoing Phase I open-label IIT evaluating GC012F as a newly diagnosed transplant-eligible, high-risk multiple myeloma patients, was accepted for an oral session at ASH 2022. As a reminder, GC012F is an autologous CAR-T therapeutic candidate towards targeting BCMA and the CD19 developed on our FasTCAR next-day manufacturing platform.

As outlined in our accepted abstract that is now available online, a total of 13 newly diagnosed multiple myeloma patients were treated as of the July 25, 2022, abstract data cutoff. The preliminary data shows an excellent safety profile with only 23% of patients experiencing grade 1 to 2 CRS. No high-grade CRS and no neurotoxicity of any grade was observed. Also, the data shows a 100% ORR and a 100% MRD negativity in all treated patients. We are very encouraged by this data and look forward to share more details in December.

Given GC012F clean safety profile, paired with this potential for faster administration time leveraging our next day manufacturing and attractive efficacy profile given the younger T cells with enhanced fitness. We believe that GC012F could potentially provide a safe and effective treatment option to the newly diagnosed multiple melanoma patients. We are very encouraged by this first clinical data and very much look forward to share more details at the ASH Annual Meeting and exposition in December of this year.

I will now hand the call over to our CFO, Dr. Kevin Xie, Kevin?

Thank you, Wendy. Turning to our financials. I'd like to touch on a few financial trends. As of September 30, 2022, the company had RMB 1,629.6 million or USD 229.1 million in cash and cash equivalents and short-term investments. In addition, the company had short-term borrowings and the current portion of long-term borrowings of RMB 125.1 million or USD 17.6 million and long-term borrowings of RMB 48.1 million or USD 6.8 million. We are very well funded with cash runway for the next 24 months. We expect cash use for this year to be approximately USD 100 million, primarily to fund our R&D and the clinical programs in the U.S. and China. .

Net loss attributable to ordinary shareholders for the third quarter was RMB 171.9 million or USD 24.2 million compared to RMB 129.3 million for the third quarter of 2021. Research and development expenses for the past quarter were RMB 133.4 million or USD 18.7 million compared to RMB 88.6 million in the third quarter of 2021. The increase was primarily due to the increase in spending on research, development and clinical trials as well as higher payroll and personnel expenses attributable to the increased headcount and higher facility-related costs.

With that, I'd like to turn it back to the operator to open the session for your questions. Operator?

(Operator Instructions) And your first question comes from Yigal Nochomovitz from Citi.

This is Carly on for Yigal. We have a couple on the newly diagnosed multiple myeloma ASH abstract. First, are you aware of any other published data for BCMA CAR-T in a similar newly diagnosed population? And then our more general question is if you can just talk about any early feedback you've gotten from KOLs on the abstract data so far?.

Okay. Wendy, I'm going to take this one, and please feel free to chip in. This is William Cao, CEO of the company. We -- I think we heard there are a few trials ongoing for newly diagnosed patients. And I believe you can also find in clinicaltrial.org probably there are 2 registered. But we haven't heard any data. We haven't seen the data, obviously. So this conference probably is the first event. You're going to see serious studies in this field. What was the other question, please?

Yes. The other question was just on any early feedback you've gotten from KOLs. And then we're also curious if you can comment on how much more data we'll see at ASH beyond what's included in the abstract.

Sure. I think Wendy, this is probably -- more probably for you to answer, if you have talked to KOL regarding newly diagnosed patients and any feedback.

Yes. We do have a discussion with the PIs actually from the leading medical centers and the receptions have been very positive, and they're very interesting for our product and the clinical data, right? And since this study is ongoing, so we plan to provide -- update data on the ASH presentation December.

Your next question comes from Kelly Shi from Jefferies.

This is Dave on for Kelly Shi from Jefferies. Congrats on the new data. So I have a couple. First is you mentioned that company received a written response from FDA. Could you provide any colors on the steps that are needed from now until filing the IND and at what steps you are? Also, you mentioned IND will be in RRMM. However, since the data in newly diagnosed is available, any color or any guidance on IND in a newly diagnosed patient?

Let me take this. Good question. The FDA's feedback is encouraging. It's constructive, it's somewhat expected. So it's good. And then we move forward based on the feedback and now being preparing for the package as the last part, so everything moving accordingly. And China as well, we received a response from China CDE and we are in the process for maintaining the package. So that's how it goes. Everything seems smooth.

Now regarding the trial design, I think it's too early to talk about details. But for this R&D, again, we'll be focusing on RRMM. Now newly diagnosed, it is a very interesting area and we're very encouraged by the results -- preliminary results. But again, this is a very new field. How do we navigate forward, what specific indications, I think it remains to be studied, remain to be discussed with the KOL. Although data looks really encouraging, especially safety and efficacy, both are really outstanding. I'm sure you're going to hear more details at the presentation. But we will definitely not in this IND filing, that's for sure, but how much how -- what is the plan, you need to wait and see. We'll keep you updated.

Great. Can I ask one more? So last time you mentioned you were looking for some collaboration. Any color on collaboration to develop GC012F in the U.S.?

Yes, it's ongoing. It just takes longer than we thought it will be. Still dialogue is ongoing they're interesting several products, but 12F is probably the most popular one.

Your next question comes from Joe Catanzaro from Piper Sandler.

Maybe 2 quick ones from me. Maybe updated thoughts around any potential IND filing strategy for GC012F as it relates to B-cell lymphoma. As I know you said you expected to provide some updated data in 2023. And maybe similarly, is the strategy for the SMART CART solid tumor programs to generate some initial clinical data out of those IITs in China before you think about pursuing formal INDs in the U.S. and within China.

Thanks, Joe. For NHL, I don't think we have decided to share the detailed plan with public. But certainly, it's ongoing. I think -- I can't say when we're going to file, but the direction is right because the preliminary IIT data looks really encouraging. Since EHA this year, we have enrolled more patients, and the data continue to look very encouraging. So it's probably straightforward. This will be considered a U.S. program. But again, I can't be firm at this moment. But in a couple of months, we will follow up the plan. The -- what was the other? Newly diagnosed or...

No, no, no. The second question was around the SMART CART strategy and whether that's going to be...

SMART CART is correct.

Generate clinical data and then go from there.

Correct. Thank you. We have dosed SMART CART with -- dosed the 503, mesothelin-positive ovarian cancer. As you know, to evaluate the solid tumor, it probably takes a couple more months to have a reasonable evaluation. So we are right now at the dose escalation, start from very low since we have enhanced or embedded. But we want to make sure safety is well taken care of. The 506, we haven't started those patients yet. Now we haven't decided to file R&D in the United States or North China because we need to see more clinical evidence. And that's how we want to derisk the new products. But so far, I can say it looks good, but it's very early.

Your next question comes from Justin Zelin from BTIG.

Congrats on all the progress. So my first question is with the encouraging newly diagnosed data that you have here, I'm curious how you envision 12F being used eventually in the myeloma treatment algorithm, if you could see it being used ahead of transplant or antibody-based therapies.

Yes. So Wendy, let me crack the first, okay?

Sure.

Justin, this is newly diagnosed is new arena. I'm sure everybody understands this is a very big pie. To our understanding, safety is more important than anything for newly diagnosed patients. As these patients are relatively healthy and the tolerance level to safety will be much lower. So we -- again, we are very encouraged by the confirmation of the safety profile of 12F. We will continue to generate more evidence, especially durability of the response, and the response is deepening so we definitely takes time to collect all these evidence. And I know we need to definitely talk to medical community, see how they feel.

As you're aware, for this IIT study, design was pretty, I would say, bold, encouraging. We have enrolled almost all the patients high-risk and the transplant-eligible patients, which shows support from the hospital, the authority that these transplant-eligible patients become our first-targeted group. So this is about whether we're going to -- for future expanded study, we're going to continue to target transplant-eligible or ineligible, high-risk or normal refractory. We just need to see more data evidence to further stratify the groups. So for now, I think that this group is approved by the hospital for the "justification," these patients are high risk, whether they transplant, plus quadruplets or triplets the prognosis is not very right. So this is a good start. So we're very excited about the data.

Got it. That's helpful. And just on the IND filing, I was just wondering if you had any thoughts on when the first patient might be dosed in the U.S. if that could take place some time next year if you get the go ahead as expected?

Wendy, want to take this?

Yes. For U.S., actually right now, it's premature to discuss this and we plan to wait until we have received IND acceptance. So we're looking forward to providing the updates along the way.

Your next question comes from Louise Chen from Cantor Fitzgerald.

This is Suowei on for Louise. Congrats on the new data. So the first question is on the GC012F. So I think the safety data is so much better on the newly diagnosed multiple myeloma patients compared to the relapsed patients. So can you maybe give us more colors on why you think it's much better? And then the second question is if there is any update you can share with us on the partnership discussion as well as the Suzhou GMP facility expansion.

Thanks [Justin], The safety profile appears better in newly diagnosed patients. This is not a big surprise. We kind of expect because these patients might be healthier. However, the response -- I mean, the CRS rate is so low, it's about 23% with Grade 2 CRS and the 77% of no CRS. That is kind of a surprise. I can't comment too much without much of evidence. It is a new field. We hope continue that way, and I hope other team studies, when they come out with data, will be interesting to compare. Yes, that's all I could comment.

Now regarding the manufacturing capacity, we have sort of made a justification and we made internal sort of redesign, adjust our space. So the capacity for the pipeline that we want to develop into clinical, even the first phase of commercial, it's all set. So in Suzhou, we will -- given the circumstances, we will not aggressively expand capacity for commercialization since we have in for up to year 2025, '26 we have sufficient capacity.

Your next question comes from James Shin from Wells Fargo.

For William or Wendy, can you say if or how many of 12F's newly diagnosed patients achieved molecular remission after induction? And then secondly, this was on transplant. There were 2 trials, the FORTE trial and the ISM trials. They both seem that suggest that MRD-negative patients receiving transplant had improved PFS and sustained MRD negativity. That said, can you say how many of the newly diagnosed patients have gone on to receive transplant.

Sorry. Can you repeat the second question? The second question.

Sure, sure. Sorry. William, The second question was there's 2 trials, I think FORTE and ISM. The data there seems to suggest that like patients with MRD-negative status that go on to receive transplant. The PFS and MRD negativity improves. So do you know how many or if any of the newly diagnosed patients in 12F trial have gone on to receive transplant?

Let me crack the first, Wendy.

Sure, Go ahead.

I'm not aware about these studies. So -- but we can only comment on our study, although the study is still under embargo for ASH so we can't really elaborate details. So for your second part of the question, how many patients gone in our study gone to transplant. No, we don't have that detail at this moment. So hopefully, just in a couple of weeks, we'll have more details. The first question, Wendy, maybe you can do it.

So actually, yes, for all the details, we have, I think, respect to the ASH embargo policy. So I think we cannot share too much details beyond the abstract at this point. But we welcome, yes, you to join our ASH presentation in December, and we're looking forward to discussing more at that time.

There are no further questions at this time. I would like to turn the call back over to Dr. William Cao.

Thank you again to everyone for joining us on the call. Gracell is well positioned to deliver breakthrough CAR-T therapies capable of overcoming major industrial challenges by leveraging our proprietary FasTCAR and TruUCAR technology platforms.

We are proud of the progress Gracell has made over the third quarter of year 2022. We are focused on preparing the R&D applications for the U.S. and China agencies and look forward to presenting the first clinical data from the newly diagnosed multiple myeloma IIT at ASH next month.

Ladies and gentlemen, this concludes today's presentation. Thank you once again for your participation. You may now disconnect.