Gracell Biotechnologies Inc (GRCL) 2022 Q1 法說會逐字稿

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

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

Good morning, and welcome to Gracell's First 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. Martina Sersch. We're excited to discuss our innovative technologies and reach clinical pipeline of CAR-T therapy on today's call. We also look forward to sharing with you our recent business developments and upcoming objectives for 2022. After our formal remarks, we will conduct a question-and-answer session.

This morning, Gracell issued a press release announcing unaudited financial results for the quarter ended March 31, 2022. We encourage everyone to read this press release, and we would like to remind you that this call is being recorded for replay. Please note that 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 filing with 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 forecast, May 16, 2022. Gracell undertakes no obligation to revise or update any forward-looking statements to reflect events and circumstances at the date of this conference call, except as may be required by 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 2022 Corporate Update Conference Call. Gracell has made substantial progress over the past quarter and continues to deliver across corporate, clinical and operational initiatives. I will elaborate on some of the key achievements so far and anticipated milestones over the next few quarters. Following this, I will turn the call over to our CMO, Dr. Martina Sersch, to discuss our clinical development and then turn to our CFO, Dr. Kevin Xie, to discuss financial results.

We are dedicated to developing our rich clinical pipeline with multiple clinical trials underway, including 2 IND-approved trials and several investigator-initiated trials or IIT for short. We continue to advance the IITs for GC012F, our autologous CAR-T therapy, therapeutic candidates based on our FasTCAR next-day manufacturing platform.

As announced, we will be providing updates from 2 out of the IIT studies at the medical meetings in June. Concurrently, we plan to file INDs in the U.S. and China for GC012F for the treatment of relapsed/refractory multiple myeloma or RRMM for short, during the second half of 2022. We are pleased to that updated data from ongoing IIT evaluating GC012F for the treatment of RRMM were selected as oral presentations next month and both conference ASCO 2022 and EHA 2022.

We look forward to sharing more details when the abstracts were posted on ASCO's and EHA's websites on May 26. At EHA 2022, we also plan to present initial data from an ongoing IIT evaluating GC012F for the treatment of relapsed/refractory B-cell non-Hodgkin's lymphoma, r/r B-NHL. We are very excited about this data as it is the first time that I will be disclosing data for NHL. This is yet another demonstration of our unwavering commitment in developing breakthrough cell therapies.

Turning to the off-the-shelf TruUCAR platform. GC502 is our TruUCAR enabled CD19/CD7 dual-directed allogeneic CAR-T cell therapy candidate. Mid-April, at AACR Annual Meeting, we presented early results of a first-in-human clinical study of GC502 for the treatment of relapsed/refractory B-cell acute lymphoblastic leukemia, r/r B-ALL. Dr. Sersch will expand upon GC502's progress shortly.

In addition, we will be presenting updated data from its IIT study in a poster presentation at EHA 2022 on June 10. In the beginning of the year, I mentioned this will be an active an exciting year for Gracell as we expect multiple advancements across our pipeline. Our lead asset, [12F] on the FasTCAR platform has expanded into second indication, B-NHL. The second candidate utilizing our allogeneic TruUCAR platform, GC502, which is also our first dual-CAR allogeneic candidate, has presented promising early data at AACR. We are very pleased with the progress so far and look forward to presenting these 3 data sets at ASCO and EHA in June.

It is worth highlighting that we plan to host an investor update call shortly after ASCO and EHA to share these data. On corporate side, we continue to invest in our R&D and manufacturing capabilities. In the first quarter, we expanded our U.S. presence with the opening of our San Diego innovation center. We are also continuing to actively expand our U.S. team. Next, I will provide a few updates regarding our operations in China given the recent COVID-19 pandemic outbreak, starting in late February 2022 due to the spread of the highly contagious Omicron variant in China, the Chinese government imposed stricter restrictions, including lockdowns in certain cities and districts which includes Shanghai. As a result, we are experiencing disruptions to our operations in certain cities. For example, short-term logistic issues as well as impacts on patient follow-up and treatment. We believe that the continued lockdown may temporarily impact our business. But at this point, our clinical development targets and the time lines remain unchanged for the full year.

However, I would like to take a moment and sincerely thank our team and our primary investigators who continue to work relentlessly and help minimize the impact on patients. During the first 5 months of 2022, we demonstrated the continued advancement of our clinical programs as we head into the spring, we are focused on following initiatives. We plan to file our IND in the U.S. and China for GC012F for the treatment of relapsed/refractory multiple myeloma during the second half 2022. We are seeking to establish a partnership for one or more programs. This is a key priority for 2022. Currently, we have 2 IND trials and the 3 IIT studies ongoing and also 2 recently completed IIT studies. We expect to present clinical data updates from IITs for 2 of our product candidates in 3 indications at both ASCO and EHA in June. We anticipate additional updates at the major medical conferences in the second half of 2022.

Meanwhile, we are advancing our early pipeline candidates and are on track to bring our first SMART CAR candidate for solid tumors into clinical stage this year. We also plan to expand our manufactured capacity by developing a second facility in Suzhou, China in addition to our [state-of-art] 66,000 square feet GMP manufacturing facility. The second facility will feature for full-closed production capabilities to reduce contamination risks and optimize cost efficiency. These clinical and operational developments will bring Gracell closer to delivering accessible and highly efficacious treatments for patients across a wide range of malignancies.

Now I will hand over the call to our CMO, Dr. Martina Sersch to discuss the pipeline and our clinical programs. Martina, please go ahead.

Thank you, William. Gracell is currently developing a highly differentiated pipeline of multiple autologous and allogeneic product candidates for the treatment of different types of cancer. As William mentioned, we were able to expand clinical development of our lead candidate, GC012F, a dual-targeting BCMA/CD19 autologous CAR-T into a second indication, B-NHL. Moreover, GC012F is the first BCMA/CD19 dual-targeting CAR-T in the clinic for this indication.

GC012F is manufactured on our FasTCAR platform, which enables overnight manufacturing. We had applied for and received U.S. FDA Orphan Drug Designation for relapsed and/or refractory multiple myeloma in 2021 and previously reported interim clinical data from the IIT in relapsed/refractory multiple myeloma at conferences in previous years, including ASH, ASCO and EHA.

We are very excited that the updated data on our multicenter IIT study in RRMM was accepted as oral abstract presentation for both ASCO and EHA 2022. This data is subject to embargo, and we will be able to provide more details on May 26 after the embargo is lifted, and the abstracts go online as well as after the presentation take place on June 5 at ASCO and on June 12 at EHA. As William mentioned, we are also planning to hold update calls shortly thereafter to discuss the data. We believe the preliminary data was high promise and remains very competitive, both from an efficacy and safety standpoint in the landscape of autologous CAR-T therapies, as well as the key differentiator of next-day manufacturing, which may lead to a faster availability of treatment to patients while also potentially avoiding or shortening the need and duration for bridging therapy.

We are also currently enrolling patients into an IIT study in China to evaluate GC012F for the treatment of B-NHL. Early data from this trial will be presented at EHA next month. Most B-NHL cells express CD19, and there are several CD19 targeted CAR-T therapies already approved in the United States and currently moving into earlier lines of therapy.

Literature suggests that 39% to 97% of NHL cell samples also expressed BCMA in addition to CD19. By simultaneously targeting BCMA and CD19, GC012F is designed to improve efficacy outcome in relapsed/refractory B-NHL patients while maintaining an acceptable and manageable safety profile.

Moving on to the allogeneic TruUCAR platform, our CD19/CD7 dual-directed allogeneic CAR-T candidate, GC502 is the second candidate in clinical stage on our TruUCAR platform, and the first candidate was the dual-directed (inaudible). We presented early results of the first-in-human clinical study of GC502 for the treatment of relapsed/refractory B-ALL on April 12 at AACR 2022. The early results demonstrated the potential of our allogeneic off-the-shelf CAR-T therapy for patients in B-ALL, including those who have previously received autologous CAR-T treatment.

Our novel design of (inaudible) utilizes one CAR, a CD7 CAR, to suppress host-versus-graft rejection. This CAR has been optimized for induction of appropriate immunosuppression. And we are utilizing a second CAR to target a specific cancer antigen, which can be adjusted for different types of cancers. TruUCAR is designed to reduce risk of rejection of allogeneic CAR-T cells by patients' immune system without the need of additional immunosuppressive therapies after the lymphodepletion.

In the preliminary data set presented at AACR last month for relapsed/refractory B-ALL patients were enrolled and treated in an open-label non-randomized prospective IIT study in China include different dose levels between September 2021 and January 2022. All patients were heavily pretreated and have previously received either autologous or donor-derived CD19 or a CD19/CD22 targeted CAR-T therapy. As of January 28 (inaudible) 4 patients had received a single dose of GC502 including one patient at a dose level 1x10^7 cells per kilogram and 3 patients at dose level 2, 1.5x10^7 cells per kilogram, patients received (inaudible) lymphodepletion prior to treatment with GC502.

Three out of 4 patients achieved minimal residual disease negative complete response or complete response with incomplete count recovery, one patient achieved a partial response month 1 and subsequently received allogeneic HSCT on day 39. Cytokine released syndrome, CRS presented as Grade 2 and Grade 3 and no Grade 4 or Grade 5 events were observed. CRS in all patients was manageable and resolved after treatment with ruxolitinib, standard of care and supportive care. No immune effector cell-associated neurotoxicity syndrome cans, ICANS or acute graft-versus-host disease, aGvHD were observed. We are very encouraged by these early results, which shows the potential of GC502 and warrant further evaluation in the clinic.

Being the second product candidate from our allogeneic TruUCAR platform, GC502 further validates through TruUCAR's platform approach and potentially wide applicability. The other candidate from the TruUCAR platform is GC027, a CD7-targeted CAR-T cell therapy for the treatment of T-cell acute lymphoblastic leukemia, T-ALL. We have previously reported the promising efficacy and safety data at AACR 2021 and have since added more patients to the study. Currently, we are targeting regulatory interactions globally and in China during the next 12-month period.

In addition to our IIT program in multiple indications, we have 2 IND studies open and enrolling patients in China, including GC019F, which is also manufactured on the FasTCAR platform. Our most advanced program is GC007g. Currently, a registrational Phase I/II clinical trial under a China IND is ongoing for the treatment of r/r B-ALL patients. We anticipate commencing the Phase II part of the study soon. GC007g is a novel treatment option for patients that have relapsed after transplant and may not be eligible for autologous CAR-T therapy. GC007g represents a new approach and its manufacturers using healthy donor-derived HLA-matched T cells, offering an advantage over a patient's own T cells.

Beyond the programs discussed today, we have an exciting early-stage pipeline of product candidates based on our FasTCAR and TruUCAR technology platforms and SMART CART technology module for several indications, including solid tumors and hematological malignancies that we continue to evaluate to move forward into the clinic. We are on track to commence enrolling in a China IIT study for GC503 in mesothelin-positive solid tumors in 2022 and plan to commence a China IIT for GC506 in Claudin 18.2-positive solid tumors. To support our pipeline development, we are actively expanding our team, including regulatory and clinical operations teams in the United States.

Thank you, Martina. Turning to our financials. I'd like to touch on a few financial trends. As of March 31, 2022, the company had RMB 1,694.7 million or USD 267.3 million in cash and cash equivalents and short-term investments. We are very well funded with cash run rate into 2024. We expect the cash use for this year to be approximately USD 100 million to USD 120 million, primarily to fund our R&D and the clinical programs in the U.S. and China and to support expansion of our GMP manufacturing facilities in Suzhou.

Net loss attributable to ordinary shareholders for the 3 months ended March 31, 2022, was RMB 158.6 million or USD 25.0 million compared to RMB 99.7 million for the corresponding period in the prior year.

Research and development expenses for the 3 months ended March 31, 2022, were RMB 121.8 million or USD 19.2 million compared to RMB 65.4 million in the corresponding period in prior year. Increase was primarily due to the increase in spending on R&D and the clinical trials as well as higher payroll and personnel expenses attributable to increase headcount and higher facility-related costs.

Administrative expenses for the 3 months ended March 31, 2022, were RMB 37.9 million or USD 19.2 million compared to RMB 31.8 million for the corresponding period in the prior year.

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 Joe Catanzaro with Piper Sandler.

Maybe one first on the GC012F planned U.S. IND and whether you've had any recent discussions with the FDA and what would be the appropriate starting dose? And maybe along those lines, where you stand at potentially tying back the U.S. generated product back to the data you've generated in the China IIT. And I have a follow-up or 2.

Martina, maybe you should take this question.

Yes. I'm not sure. Can you clarify what you mean by that question? I'm not sure if I understand it correctly.

Sure, sure. The intention was not, correct me if I'm wrong, to be able to tie back the product manufactured out of Lonza and the U.S. site back to the China IIT data and then maybe build off of that, what the appropriate starting dose would be within the planned U.S. study. Hopefully, that clarifies a little bit.

So I'm not 100% certain what you're asking, but let me give you a little bit of detail. Our strategy is based off of the data we have generated in China. And the tech transfer and the manufacturing process from China is being transferred to the United States. So yes, we are intending on using the data generated in China.

Okay. And I guess I'm just wondering sort of where the process stands along those lines in terms of Lonza's sort of manufacturing runs and being able to demonstrate, I guess, comparability to the product you generated out of China?

Yes. This is moving slowly (sic) [smoothly] as we had mentioned during the call. So the tech transfer is going as planned.

Okay. Got it. And then maybe on the 012F myeloma update you guys expect in June. Maybe you could just help frame up what we should expect to see there? Is it just going to be longer follow-up from the cohort of patients we've seen? Or will there be new patients more dose levels, anything along those lines?

So this data is the confidential as it is embargo through ASCO. We unfortunately at this point in time cannot speak to any of the details. We will be able to as soon as the abstract has lifted the embargo, which will be on the ASCO website.

Okay. And then maybe last one for me. I think we've recently seen some CAR-T data targeting Claudin 18.2. So wondering what you see as the biggest takeaway from those data and where you see the clear opportunity for your program?

Martina, maybe I give a crack on this. It is always our -- [Gracell's] designing goal, if you will, and a philosophy. Cell therapy is not a simple product, and it's a pretty pricey product. So what we hope to see is for any big indication, particularly for solid tumor, the response has to be deeper than temporarily shrinking down the tumor and 40%, 50% PR (sic) [response rate] as trying to where patients choose, they after going through a long process and pay very expensive not just the CAR-T, also expensive related to health care. The response has to be good enough to convince the patients and doctors. So we hope our design can bring up the response in a way that are deeper and then a higher percentage. And so I can't describe what kind of detail of the response that we are designed for because (inaudible) right? It's from preclinical to clinical is a big leap. At least that is our philosophy and long-term goal.

Our next question comes from Kelly Shi with Jefferies.

So for the U.S. IND filing of GC012F in the second half, (inaudible) also potentially including NHL or the NHL will just come later. And secondly, as Gracell continues growing pipeline, I'm wondering for which programs we will be focused on for the clinical development in the U.S. beyond the GC012F. For example, the SMART CART tech-enabled (inaudible) and Claudin 18.2 targeted programs. Are you planning for tech transfer in the U.S. IND filing in the near term?

Yes, Martina, I think better for you to take that first.

Sure. So again, I'm not 100% certain, Kelly, what you are asking here? Are you asking if we submit B-NHL separately? Is that your question?

Yes, let me clarify my first question. You are planning U.S. IND filing for GC012F in the second half for relapsed and refractory multiple myeloma. I'm just wondering for the NHL indication, are you planning to do it at the same time or later. That's my first question. I hope it helps. I'll clarify...

Yes. That's -- yes. Thank you. Thank you. Very helpful. So we are not discussing the B-NHL strategy at the moment, but we are definitely actively looking into all available options to shorten our development time lines for the totality of the program.

Our next question comes from...

I think Kelly has a second question about SMART CART, are we going to file tech transfer in the U.S. soon. I guess that's the question.

Yes.

Yes, Martina, I think there is a lag. Yes, let me just that one because we are -- it's still early Kelly for the SMART CART. We haven't presented any data yet. We don't have data yet. Traditionally, we do IITs to derisk the product development. So we have not reached that decision point yet. As soon as we have a certain clarity, then we can address your question in more detail.

Our next question comes from Nick Abbott with Wells Fargo.

Just a question on 502, given that we saw data, the initial data at the AACR last month. I'm just wondering what we should expect the update perhaps in terms of follow-up on those original patients, but also new patients, different doses?

Yes. That definitely Martina's question.

Yes. Thank you. So Nick, AACR deadline and ASCO EHA deadlines are unfortunately very close together. So the data is what was submitted basically at a time point possible for data cut to have it submitted to the conferences. And what you see online for EHA is what would be that data that we are going to be presenting at EHA.

And I'm showing no further questions at this time. I'd like to turn the call back to Dr. William Cao for any closing remarks.

Thank you, everyone, again, for joining us on the call. Our clinical trials are progressing, and we look forward to presenting data from 3 ongoing IIT trials at ASCO and EHA in early June. Our R&D and clinical teams in China continue to timelessly advance our trials and treat patients given the backdrop of the lockdown restrictions that has been in place in Shanghai since late March. Over the next few quarters, we are focused on securing, developing partnership as one of our key goals of this year and preparing the U.S. and China R&D filings anticipated later this year.

In conclusion, Gracell is well positioned to deliver breakthrough CAR-T cell therapies capable of overcoming major industry challenges by leveraging our proprietary FasTCAR and TruUCAR technology platform. And we look forward to further advancing our clinical programs, and we'll keep everyone updated along the way. Thank you.

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