Gracell Biotechnologies Inc (GRCL) 2023 Q1 法說會逐字稿

Ladies and gentlemen, thank you for standing by, and welcome to the Gracell Biotechnologies First Quarter 2023 Conference Call. (Operator Instructions)

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

Good morning, and welcome to Gracell's First Quarter 2023 Corporate Update Conference Call and Webcast. With me today are Gracell's Founder and Chief Executive Officer, Dr. William Cao; and our Chief Medical Officer, Dr. Wendy Li. We're excited to discuss the progress of our differentiated clinical pipeline of CAR-T therapies on today's call. We also look forward to sharing with you our recent business development and upcoming objectives as we progress through 2023. We will conduct a question-and-answer session following our formal remarks. This morning, Gracell issued a press release announcing unaudited financial results for the first quarter ended March 31, 2023.

We encourage everyone to read this press release, and I 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 the future plans of our program, 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 filing with the SEC for a full disclosure of these risks and factors.

This conference call contains time sensitive information that is accurate only as of the date of this live broadcast March 15, 2023. Gracell undertakes no obligation to revise or update any forward-looking statements reflect events or circumstances at the date of this conference call, except as may be required by applicable securities law.

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

Thank you, Kevin. And again, welcome, everyone, to our first quarter 2023 corporate update conference call. It has been a very productive few months for us. I will begin today's call with key pipeline updates. I'll then turn the call over to our CMO, Dr. Wendy Li, to provide insights into the data presentations from 3 studies that will be showcased at ASCO and EHA in June. Next, our CFO, Dr. Kevin Xie will discuss our first quarter 2023 financial results. After our prepared remarks, we'll open the call to questions.

This 2017, when we began the development of our proprietary FasTCAR next-day manufacturing platform in our lead autologous CAR-T product candidate, the BCMA/CD19 dual-targeting GC012F, we have the amassed scientific knowledge, manufacturing expertise and clinical data to support our growing conviction in the transformation of this technology and in the therapeutic potential that our product candidates can bring to the CAR-T industry. 2023 is shaping up to be a great year as we gather long-term follow-up data from several proof-of-concept studies in 2 hematological indications, launch our IND trials in the U.S. and China and also advance GC012F into a new therapeutic category of autoimmune diseases.

GC012F is currently being evaluated across 3 hematological malignancies, including relapsed refractory multiple myeloma or RRMM in short, newly diagnosed multiple myeloma or NDMM and relapsed/refractory B-cell non-Hodgkin's lymphoma or RR B-NHL. Starting with RRMM, we are on track to provide updated clinical data from the fully enrolled multicenter investigator-initiated trial, or IIT at both ASCO and EHA this June. We hope this long-term follow-up data can offer further validation to GC012F's differentiated profile, including its unique BCMA/CD19 dual-targeting approach that contributes to deep responses and it could potentially help to extend the durability of response.

More details will be provided once the ASCO embargo lifts on May 25. We believe GC012F is the next-generation CAR-T therapy candidate that has the potential to push the boundary of autologous CAR-T on multiple fronts, such as manufacturing speed, safety, cost and durability of efficacy. We are focused on the clinical development of GC012F and are on track to commence our company-sponsored Phase 1B/2 clinical trial in the U.S., evaluating GC012F in RRMM before the end of the second quarter 2023. In addition, we plan to initiate the company-sponsored Phase I/2 clinical trial in China in the third quarter of 2023.

Next week, on May 22 at 9 a.m. Eastern Time, we'll host a key opinion leader webinar with our lead principal investigator, Dr. Saad Usmani, Chief of Myeloma Service at the Memorial Sloan Kettering Cancer Center. The webinar will include a discussion of the unmet needs and the therapeutic landscape for RRMM.

Turning to NDMM, follow-up continued in ongoing IIT evaluating GC012F in a group of newly diagnosed, high-risk transplant-eligible multiple myeloma patients. As you may recall, the first clinical data presented at ASH 2022, demonstrated that one single infusion of GC012F achieved a 100% overall response rate and 100% minimum residue disease negativity in all 16 treated patients across all dose levels. The preliminary safety profile was outstanding with 75% of patients, not experiencing cytokine syndrome and none of the patients had neurotoxicity of any grade. We anticipate sharing updated clinical data in the second half of this year.

Related to the ongoing IIT evaluating GC012F in RR B-NHL we look forward to presenting updated data at the 2023 ASCO and EHA 2023, including as an oral presentation at EHA. More details about data sets will be made available on May 25 in the line with ASCO embargo policy.

As unveiled in the press release issued earlier today, we are very excited to announce our strategic decision to pursue clinical development in the immunology field for GC012F, starting with the systemic lupus erythematosus, SLE. We believe FasTCAR GC012F is well positioned as an ideal product candidate for a wide range of autoimmune diseases. Given the 3 key differentiators, including CD19 BCMA dual-targeting capability, consistently favorable safety profile demonstrated across 3 IITs and our proprietary FasTCAR-T manufacturing process.

This strategic decision is also supported by the robust body of clinical data as well as the clinical development and the manufacturing experience, we have accumulated by studying GC012F in over 50 patients across 3 hematological cancers. SLE is a chronic autoimmune disease in which the auto antibody produced by an immune system attack the patient's own tissues, causing multi-organ damage. SLE affects over 3 million people worldwide, while immunosuppressants are used as a current standard of care. SLE remains a chronic condition that is difficult to manage, significantly impacts quality of life and has no cure. Furthermore, refractory severe SLE could lead to permanent organ damage, resulting serious mobility and even death.

As such, there are urgent high unmet medical needs for more effective and even curative therapies, particularly to help manage refractory SLE. Gracell GC012F represents a novel approach entering human study for refractory SLE and pioneers the use of CD19 BCMA dual-targeting CAR-T in autoimmune disease by targeting both CD19 BCMA. GC012F could potentially result in deeper, wider depletion of disease-causing B-cells and plasma cells, hence enhancing therapeutic outcomes in comparison with CD19 only approaches. Moreover, GC012F is developed on FasTCAR next-day manufacture platform and its technology could offer a handful of distinct advantages, including short-term patient wait time, reduce the cost as well as enhance T-cell [fitness].

As announced, we have commenced an IIT in China to evaluate GC012F in refractory SLE patients. We plan to file IND application for this indication in the U.S. and China in coming quarters.

In addition to meaningful progress related to GC012F, we're concurrently advancing other product candidates in our clinical pipeline. Notably, at EHA 2023, we will present, for the first time, the clinical data from the Phase 1 portion of the ongoing Phase 1/2 clinical trials in China, evaluating GC007g for the treatment of relapsed/refractory B-cell acute lymphoblastic leukemia or BALL. We are currently enrolling patients in the Phase 2 portion.

Now I'll hand the call over to our CMO, Dr. Wendy Li, to highlight the 3 data sets that will be showcased next month at ASCO and EHA in greater detail. Wendy, please go ahead.

Thank you, William. Early next month, at the ASCO and EHA Annual Meeting, we will present data from 3 studies. The first 2 data sets, hopefully will provide further evidence supporting the differentiated efficacy and safety profile for our lead FasTCAR product candidate GC012F. The first presentation will be the longer-term follow-up data from the multicenter IIT evaluating GC012F in heavily pretreated RRMM patients. The data will be presented in the oral presentation session at ASCO on June 3. And in the poster presentation session at EHA on June 9. Recall that at last EHA, we shared that GC012F has achieved 100% MRD negative and 75.9% MRD negative at CR rate in 29 high-risk patients.

These responses were still deepening for the newly enrolled patients. The safety profile was favorable and consistent with previous findings with mostly low-grade CRS and no neurotoxicity of any grade. Now with the first patient enrolled more than 3.5 years ago, we look forward to providing updated data to further showcase GC012F, strong efficacy and safety profiles. The data is subject to ASCO's embargo at this point, and the full abstracts will be posted on the ASCO and EHA website on May 25.

Second, the updated clinical results from an ongoing IIT evaluating GC012F for the treatment of RR B-NHL will be highlighted in the poster presentation at ASCO on June 5 and in an oral presentation at EHA on June 10. While CD19 directed CAR-T has proven effective for the treatment of NHL, there are opportunities for improvement in terms of the response rate, durability and the speed of manufacturing. CD19 and BCMA dual targeting approach is novel for this treatment of NHL and could potentially help address this unmet needs. At last year's EHA, we have shared the initial clinical data from this IIT demonstrating 100% complete response at month 1 and 3 among 3 patients. We hope to provide an update on additional patients and the longer-term follow-up this June. This abstract is also subject to the May 25 ASCO embargo.

Third, the first clinical data for GC007g, a CD19 targeted donor-derived allogeneic CAR T-cell therapy from a Phase 1 trial in patients with RRBALL, who relapse after an allogeneic human stem cell transplant will be showcased in the poster presentation at EHA on June 9 as per the abstract posted to EHA's website on May 11. The data demonstrated encouraging persistence of allogeneic CAR-T cells, durable remission and a favorable safety profile. Between March 2021 and May 2022, nine RR B-ALL patients were enrolled and treated in the Phase 1 portion of the registrational Phase 1 and 2 clinical trial in China, evaluating GC007g at 2 different dose levels.

All patients have relapsed B-ALL following a partially or fully matched prior human stem cell transplant. At day 28 after infusion, 100% patients achieved MRD negative complete remission with or without incomplete count recovery. At the median follow-up of 445 days range from 218 to 649 days,seven of 9 patients remain in CR or CRi, while 2 patients had CD19-negative relapse. The 1-year progression-free survival, PFS and OS were 76.2% and 85.7%, respectively. CRS is presented as Grade 1 to Grade 3 events only and all resolved after treatment, no ICANS was observed.

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

Thank you, Wendy. Turning to our financial results for the first quarter ended March 31, 2023. I'd like to touch on a few financial fronts. As of March 31, 2023, the company had RMB 1,277.3 million or USD186 million in cash and cash equivalents and short-term investments. We expect the cash use for this year to be approximately USD100 million, primarily to fund R&D and the clinical programs in the U.S. and China. We expect our current cash position to be sufficient to cover our operating plan and R&D activities to the end of 2024.

Net loss attributable to ordinary shareholders for the 3 months ended March 31, 2023, was RMB 151.7 million or USD22.1 million compared to RMB 158.6 million for the corresponding prior year period. Research and development expenses for the 3 months ended March 31, 2023, were RMB 137.5 million or USD20 million compared to RMB 121.8 million in the corresponding prior year period. The increase was primarily due to increased spending on research, development and clinical trials, including licensing expenses with Seagen.

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

(Operator Instructions) Our first question comes from the line of Yigal Nochomovitz from Citigroup.

With respect to the decision to pursue SLE for 012F, can you talk a little bit more about what other autoimmune diseases you were considering potentially for future development? How did you decide on SLE as the first opportunity? And could you talk about when we would see the initial data from the China IIT for SLE.

Okay. Thank you for the question. This is William Cao. SLE is probably one of the largest indication in autoimmune arena. And that's -- and more importantly, there is a Nature Medicine paper as everybody knows now that the CD19 CAR T successfully treated 6 patients -- 6 SLE patients. So these are proven concept initial data. And we'll certainly will pursue other autoimmune indications as well. But at this moment, all I can say is this is the plan at SLE as fast as we can. Now the mechanism of action, [we] will have an incoming event, we disclose why we think the dual targeting is a better fit for this SLE indication or other immune disease.

Simply just high level, it's still targeting the CD19 is targeting B cell that we all know and BCMA targeting plasma cell that is also a major part of auto antibody-producing cells, okay? So I hope I -- at a high level answer your questions.

Yes. And then just with regard to the Phase 1b/2 that you're starting in the U.S., can you talk a little bit about more the recruitment strategies for that trial? Obviously, that is a very competitive space in terms of identifying and recruiting patients for the relapsed/refractory multiple myeloma setting given some of the newer therapies, specifically the bispecifics. And also, when you think about the U.S. trial for the Phase 1/2, is it basically the same design as what's going to happen in China? Or are there some differences in terms of the way you're going to recruit the trial in China or design differences.

I think this question is for Wendy, please.

Okay. Yes. We are on track to initiate the U.S. IND trial in this quarter and then the next quarter in China. The current study site has been activated in the U.S. Our study will be conducted in the top medical center and they're well experienced in cell therapy study. So we're very excited to work with the PIs.

Okay. And the last question, sorry. Yes. And then just one other question with regard to the decision between GC007g and GC502, can you just comment there, it seems like you're moving forward with GC007g instead of GC502. But if you could just clarify.

Wendy, do you want me to take that one?

Yes, please.

Okay. 007g had been in IND trial for a while. So it was much earlier than the 502. We haven't even filed our 502 IND application yet. So that's just due to logistics. For TruUCAR-T, which include 502, are still developing in early stage of development. We have gathered a lot of clinical evidence for the gene modifications. And hopefully, this year, we'll have something to share with you. 7g's now in Phase 2.

Our next question comes from the line of Emily Bodnar from H.C. Wainwright.

Are there any other Phase 1/2 studies that you might plan to initiate in the U.S. this year, next year? I know you just mentioned the SLE study. So maybe if you could give a bit more of a time line on that. And then also, can you discuss your strategy for newly diagnosed multiple myeloma. Is that an indication that you think you would move forward in the U.S. eventually? And how do you kind of think about use of a CAR-T in that study.

Wendy me or you?

I think I'll answer 2 questions regarding the U.S. trials, right. Currently, we have GC012F RRMM trial is going to be conducted in the U.S. as a Phase 1b and 2. And more studies will be considered and in plan because your questions this year next year, right, in the plan. And NDMM, actually, we had the presentation last year, ASH. And there was so much excitement around our presentation last year at ASH. And yes, the conducted studies in the U.S. were in plan.

Our next question comes from the line of Joe Catanzaro from Piper Sandler.

Maybe just 2 quick ones for me. First, I just want to see if you had any thoughts on the top line CARTITUDE-4 data for CARVYKTI, what it means for the space? And maybe more importantly, how you think about the development strategy for GC0112F in light of these data? And then with regards to SLE, just wondering if there's any dosing work that needs to be done there? Or can the dose levels that you've been using in the setting of oncology translate directly into the autoimmune setting?

Let me take, Wendy. The data we presented at ASH provides a good proof of concept for the 12F. And it's -- I don't think it's easy for us to compare head-to-head comparison with CARVYKTI under different lines, as we will be updating the new follow-up data, longer follow-up data at ASCO for RRMM. We are very pleased to see a very competitive efficacy and again, safety and other features. Regarding the SLE dosing, it's too early, Joe, to talk about it. But I think it's -- yes, it's too early. And we could decide, but we need to get more information, obviously, the IIT study verification and then reference others. But I don't think it will be very far on the dose for oncology.

Our next question comes from the line of Kelly Shi from Jefferies.

This is Dev in for Kelly Shi. I have a couple of questions. First one is on GC012F. So now you have initiated the manufacturing setup in the U.S. Just wondering, is there a scope to increase the manufacturing capacity? Or it's just a manufacturer that you will be doing at CMO? And next question is on 007g. Can you highlight a little bit about the treatment landscape in China? And what is the market opportunity and whether it will be for adult ALL or pediatric ALL?

The first question I'll answer is our U.S. CDMO. So right now, it is supplying for our U.S. clinical trial currently. And the second question for 007g. As one type of allogeneic CAR-T that derived from the HLA matched donors for B-ALL patient that relapsed from allogeneic stem cell transplant. They usually have HLA matched donor really available -- readily available. Some of these patients are not suitable for autologous CAR-T therapy due to the cell quality or other issues. Yes. So using T-cell donated by HLA matched donor is one strategy to help this side of the patient to get access to CAR-T while also addressing the GVHD risk for allogeneic CAR-T.

So this EHA will be the first time we disclose the first clinical data for 007g. We have observed encouraging persistence of allogeneic CAR T cells, durable remission and favorable safety profile. The Phase 1 includes 9 B-ALL patients that relapsed following partially or fully matched prior human stem cell transplant. At day 28 after infusion, 100% patients achieved MRD negative CR and CRi. At a median follow-up of 445 days, 7 of 9 patients remained in CR or CRi. Well, 2 patients had the CD19 negative relapse. The 1-year PFS and OS were 76.2% and 85.7% respectively. The CRS is presented at a Grade 1 to Grade [3] (corrected by company after the call) events only and all resolved after treatment, no ICANS was observed. So right now, the Phase 2 is ongoing.

Our final question comes from the line of Louise Chen from Cantor Fitzgerald.

This is (inaudible) on for Louise. Congrats on the progress this quarter. So our first one is on SLE. What is the current standard of care? And what is the efficacy for that? And then what data from the GC012 you have seen so far that gives you the confidence it could be a potential treatment option. And then from a modeling perspective, with a lot of initiation to commence this year, how should we think about the operating expense for the year.

Okay. Regarding all the details of the evidence of dual targeting for SLE mechanism and actions, I think we'll find appropriate event to present our evidence. At this moment, I think the good evidence coming from not just preclinical studies published by other groups, but primarily from this Nature Medicine paper that the CD19 CAR-T is very effective against SLE or CD19 autoimmune disease potentially. So that's all I can comment. We do have a foundation, but based decision for getting to the field. Now it's a good question regarding resources, how do we handle multiple projects in the coming years. First of all, we reprioritized some of our early programs. And this SLE filing and Phase 1 studies is not going to be a major costly program. So I think we are in good shape to manage that.

And it does appear, we do have one more question from the line of Yanan Zhu from Wells Fargo.

I have a couple of questions on the lupus program. Do we know the relative contribution of plasma cells and B cells to the auto immunity. It does appear from the nature paper that targeting B cells alone might have already had good efficacy. So just wondering the incremental benefit from targeting BCMA? And then also a question on the acceptance of lymphodepletion in lupus as well as in additional broader autoimmune diseases. How do you look at that requirement and what it means for uptake in those diseases.

Yes. Yanan, these are good questions. I think it's similar to, part of the question similar to the previous questions that is MOA of GC012F or other autoimmune disease. Maybe I could sort of extend a little bit by referencing one of the publications by UPenn's Group, but in a subgroup of autoantibody producing cells expression of BCMA is high. However, CD19 is low. And these are very long-lasting antibody -- autoantibody producing cells. And the paper discussed that there will be certain patients remain refractory to CD19 targeting because of the expression of CD19 is diminished when the cell develop into plasma cell state. And we all know plasma cell is the major antibody producing cells. And we do have preliminary data to support the direction, but we will discuss that in a proper event. Did I answer all your questions, Yanan?

Thanks, William. The role of lymphodepletion in autoimmune diseases or how it might affect uptake?

Low lymphodepletion?

Lymphodepletion, sorry.

Yes, lymphodepletion in lymphodepletion in autoimmune disease is lower or I think I missed that.

Sorry, I meant to say for CAR T to be used to treat autoimmune disease, lymphodepletion is required. So I was just wondering how that might fit in an autoimmune disease treatment situation especially how patients would be willing to undergo treatment.

Right. It is not an issue, has been sort of evidenced by this Nature Medicine group and then also the clinical studies that we intend to conduct an IIT in China as being all approved. It's not a concern. Lymphodepletion for these autoimmune disease patients is tolerable. And those chemicals are used or was used for autoimmune disease treatment. So they are safe. And patient acceptance, I'm not aware that could be an issue, it's an deliberating disease. So lymphodepletion is relatively lighter treatment.

I will now turn the conference over to Dr. William Cao.

Thank you again to everyone for joining us on the call. We are proud of the progress the Gracell team has made over the past year. 2023 will be an exciting year for us as we are on track to initiate our RRMM IND studies in both the U.S. and China and expanding GC012F into the autoimmune field. We believe Gracell is well positioned to deliver CAR-T cell therapies that can potentially transform the treatment landscape. We look forward to providing clinical data updates and sharing key pipeline and technology updates throughout the year.

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