Gracell Biotechnologies - Q2 2022
August 15, 2022
Transcript
Operator (participant)
Ladies and gentlemen, thank you for standing by. Welcome to Gracell Biotechnologies' second quarter 2022 conference call. At this time, all participants are in a listen-only mode. After opening remarks, we will open the call for your questions. Instructions for queuing up will be given at that time. I will now turn the conference call over to Dr. Kevin Xie, CFO. Please go ahead.
Kevin Yili Xie (CFO)
Good morning, and welcome to Gracell's second 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 our innovative technologies and the rich clinical pipeline of CAR T therapy on today's call. We're also looking forward to sharing with you our recent business developments and upcoming objectives for 2022. After our formal remarks, we'll conduct a question and answer session. This morning, Gracell issued a press release announcing unaudited financial results for the quarter ended June 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 filing with the SEC for a full disclosure of this risk and factors. The conference call contains time-sensitive information that is accurate only as of the date of this live broadcast, August 13, 2022. Gracell undertakes no obligation to revise or update any forward-looking statements to reflect events or circumstances after 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 Wei Cao. William?
William Wei Cao (Founder, Chairman, and CEO)
Welcome everyone to our Q2 2022 corporate update conference call. I'm excited to begin today's call by highlighting our strengthened leadership team and then introducing our new CMO, Dr. Wendy Li, to her first investor call as part of the Gracell leadership team. I will ask her to provide some background and a perspective on her recent move. I will then continue with a clinical development update as we made significant progress across a handful of our programs in recent months. I will hand the call over to our CFO, Dr. Kevin Yili Xie, to discuss the financial updates. After our prepared remarks, we will open the call to the questions. Let me start with our two recent executive appointments. Dr. Samuel Zhang was appointed Chief Business Officer in mid-July and is based in the U.S. He's responsible for strategic leadership of our global business development initiatives.
He brings in Gracell over 20 years of industry experience across drug development stages and has a long history of managing strategic alliances and collaborations at both large pharmaceutical and small biotech companies. Dr. Wendy Li joined Gracell as Chief Medical Officer on August first, and she is based in the U.S. Dr. Li will oversee Gracell's clinical development activities, including the advancement of our rich pipeline of autologous and allogeneic product candidates across the FasTCAR and the TruUCAR technology platforms. Before she joined us, she was a CMO at EXUMA Biotech, where she provided strategic medical and clinical leadership for the advancement of its cell therapy pipeline in the U.S. and Asia. Dr.
Li brings in significant expertise on both clinical development and medical affairs and will be invaluable as we are on track to file the U.S. IND application for GC012F in relapsed refractory multiple myeloma, or RRMM, later this year. I will now turn the line over to Wendy.
Wendy Li (CMO)
Thank you, William. It is a tremendous honor to join Gracell as its chief medical officer as the company continues to advance its pipeline on multiple fronts. I have several years of experience in the CAR T field and also held oncology clinical development roles with increasing responsibilities over the past two decades, including leading early and late-stage clinical trials for several therapeutic candidates for the treatment of hematological malignancy and solid tumors, and overseeing more than 30 successful IND filings, new drug applications, and biologics license applications in both the U.S. and China. I believe a successful oncology therapy needs to bring substantial clinical benefits to patients, especially those with high unmet medical needs. I recognize the significant differentiation and the vast potential of our pipeline based on the FasTCAR and the TruUCAR platforms to fulfill those unmet medical needs.
In the past two weeks, I have been impressed by the caliber of the passionate Gracell team, both in China and in the U.S. I look forward to working closely with the entire clinical team as Gracell is on track to commence company-sponsored trials in relapsed refractory multiple myeloma, or RRMM, for GC012F in both the U.S. and China, pending the outcomes of the regulatory processes that are underway. With that, I will turn the line back over to William. Thanks.
William Wei Cao (Founder, Chairman, and CEO)
Thank you, Wendy. We had a successful quarter with multiple readouts from three clinical programs at AACR, ASCO, and EHA, which give us additional confidence in the differentiation and the value of our FasTCAR and TruUCAR platforms. Just a refresher, the FasTCAR platform aims to revolutionize the CAR T manufacturing and enables the next-day manufacturing, which also importantly preserves the youth and the fitness of T-cell. The allogeneic TruUCAR platform leverages a novel proprietary design to optimize the persistence of allogeneic CAR T-cells in patient body, making possible a delicate balance of therapeutic effects and safety. Currently, under these two platforms, we continue to advance multiple clinical trials, including two company-sponsored trials under China INDs and several investigator-initiated trials, or IIT for short.
First, let's focus on our lead candidate, the BCMA/CD19 dual-targeting CAR-T therapy, GC012F, based on our FasTCAR next-day manufacturing platform. We continue to advance the three IITs on two indications for this candidate. We have completed enrollment in the IIT study for RRMM. We presented updated clinical update that showcase the deep response, favorable safety profile, and a differentiated next-day manufacturing in June at both ASCO and EHA. Specifically, the data underscored deep responses achieved, including a 100% MRD negativity rate in all patients treated based on a June 8, 2022 cutoff date following enrollment completion of 29 patients, of which 90% were classified as high risk. It also demonstrated consistency, favorable safety profile, and a promising median duration response of 15.7 months in mostly high risk, heavily pretreated patients. We are continuing to follow up patients with deepening responses.
Encouraged by the consistently positive data, we are on track to complete IND submissions of GC012F in RRMM in both the U.S. and China before year-end. We submitted a pre-IND meeting request to U.S. FDA in June 2022 and received confirmation that FDA intends to provide a written response in October 2022. The tech transfer process with Lonza has been completed, and we are continuing to collaborate closely with Lonza as we anticipate commencing in the U.S. trials next year. In parallel, we submit the pre-IND meeting request to China NMPA in July and anticipate the NMPA will provide a response in October. We are pleased to report the enrollment has been well underway in an IIT evaluating GC012F in newly diagnosed multiple myeloma patients.
We anticipate that data from the single site open label study will demonstrate the potential of GC012F to move into frontline given its favorable safety profile, combined with potential for faster turnaround time, leveraging our next-day manufacturing and attractive efficacy profile given the younger T-cells with enhanced fitness. At EHA in June 2022, we also unveiled first data of GC012F in relapsed/refractory non-Hodgkin lymphoma, NHL, from an ongoing IIT. This initial data set demonstrated potent and fast activity with 100% CR rate at one month observed in all three patients treated as of cutoff date of February 22nd, 2022. To put this into perspective, all three patients have DLBCL, a fast-growing, aggressive form of NHL. This is yet another demonstration of our unwavering commitment in developing innovative cell therapies to patients. Enrollment is continuing in its ongoing study.
Turning to the off-the-shelf TruUCAR platform, GC502 is our TruUCAR-based CD19/CD7 dual-directed allogeneic CAR-T cell therapy candidate for the treatment of relapsed/refractory B-cell acute lymphoblastic leukemia, R/R B-ALL. At EHA 2022, we presented updated data from a single-arm open label IIT with longer follow-up compared to the data shared in April at AACR. As of a cutoff date of February 22, 2022, three out of four patients achieved MRD-negative CR/CRi at their one-month assessment. The EHA data demonstrated a very promising response rate, manageable and reversible adverse event, and a robust expansion of GC502 cells. We are very encouraged by these early results, which show the potential of GC502 and warrant further evaluation. Being the second product candidate from our allogeneic TruUCAR platform, GC502 further validates TruUCAR platform approach and a potential wide applicability.
Last but not least, I'd hope to provide update on our donor-derived allogeneic candidate, the CD19-targeted CAR-T cell therapy, GC007g. This is a unique product candidate for the treatment of R/R B-ALL patients who failed transplant and may not be eligible for autologous CAR-T therapy. We are pleased to announce that we have recently completed the phase I portion of the registrational phase I/II clinical trial underway under China IND for the treatment of R/R B-ALL. We are on track to commence phase II portion in the third quarter of 2022. We are very proud of the work we have done to advance our pipeline, and we think we have an even more exciting second half ahead of us.
We are on track to file IND in the U.S. and China for GC012F for the treatment of relapsed refractory multiple myeloma during the second half of 2022. Currently, we have two IND trials and three IIT studies ongoing, and also recently completed enrollment in two IIT studies. We expect to present clinical data updates from a few of IITs at major medical conferences in the second half of 2022. Simultaneously, 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. These clinical and operational developments advance Gracell's objective to deliver accessible and highly efficacious treatments to patients across a wide range of malignancies. Now, I will hand over the call to our CFO, Dr. Kevin , to discuss the second quarter 2022 financial results.
Kevin, please go ahead.
Kevin Yili Xie (CFO)
Thank you, William. Turning to our financials, I'd like to touch on a few trends. As of June 30th, 2022, the company had RMB 1,707.3 million, or $254.9 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 102.3 million, or $15.3 million, and long-term borrowings of RMB 53 million, or $7.9 million. We are very well funded with cash runway into 2024. We expect the cash usage for this year to be approximately $100 million, primarily to fund our R&D and the clinical programs in the US and China, and to support expansion of our GMP manufacturing facilities in Suzhou.
Net loss attributable to ordinary shareholders for this quarter was RMB 146.3 million, or $21.8 million, compared to RMB 96.2 million for the corresponding prior year period. Research and development expenses were RMB 117.1 million, or $17.5 million, compared to RMB 65.3 million in the corresponding prior year period. The increase was primarily due to the increased spending on R&D, as well as higher payroll and the personnel expenses, 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 (participant)
Thank you all speakers. If you would like to ask a question at this time, please press star followed by the number one on your telephone keypad. Again, to ask a question at this time, please press star followed by the number one on your telephone keypad. The first question today comes from the line of Joseph Catanzaro from Piper Sandler. Your line is open.
Joseph Catanzaro (Senior Research Analyst)
Great. Thanks so much for taking my questions. Maybe the first one, great to hear that you filed a pre-IND meeting request with the FDA. Just wondering at this point whether you have any comments or updated thoughts on where potentially the U.S. study for GC zero one two could initiate in terms of dose level relative to the doses you've explored in the China IIT. If not, whether this was a sort of main focus or expected focus of your pre-IND questions. Thanks.
Wendy Li (CMO)
Regarding our US study about the RRMM, actually, yes, we have submitted pre-IND meeting request to FDA in June. Now FDA confirmed that they will provide the written response early, in early October. Based on this, we will submit our pre-IND package in a few weeks.
Joseph Catanzaro (Senior Research Analyst)
Okay. Got it. I guess maybe just a follow-up whether, again.
Wendy Li (CMO)
Mm-hmm.
Joseph Catanzaro (Senior Research Analyst)
Any thoughts on sort of where dosing could initiate relative to the doses you've explored in the China IIT, whether you would expect some degree of dose escalation or whether you could initiate right at a, you know, close to or near recommended phase II dose?
Wendy Li (CMO)
Well, it is premature to discuss the design. Actually, this is a study design on a planned clinical program in the U.S. We're awaiting feedback from the FDA on our pre-IND submission, and they're aligned after we file the IND.
Joseph Catanzaro (Senior Research Analyst)
Okay. Got it. Fair enough. Maybe as a quick follow-up, I think you guided towards some clinical updates on current and new programs in the back half of the year, whether at a meeting or a journal publication. Wondering if you could maybe elaborate.
Wendy Li (CMO)
Mm-hmm.
Joseph Catanzaro (Senior Research Analyst)
On the specific updates you might provide and whether that might include some initial frontline myeloma data? Thanks.
William Wei Cao (Founder, Chairman, and CEO)
Joe, I'm not sure what's the specific question, Joe. I think in the recording, all these updates were kind of described. Which specific program is this RRMM or it's newly diagnosed that you are diving?
Joseph Catanzaro (Senior Research Analyst)
Yeah, yeah. I guess I'm specifically asking about the newly diagnosed frontline myeloma?
William Wei Cao (Founder, Chairman, and CEO)
Mm-hmm.
Joseph Catanzaro (Senior Research Analyst)
Trial that I think you noted is open and enrolling and whether that's an initial data set we could potentially see sometime later this year.
William Wei Cao (Founder, Chairman, and CEO)
Yeah. I'll leave this to Wendy.
Wendy Li (CMO)
This is a newly diagnosed MM actually is a meaningful step forward, and we're encouraged by the trust placed and by the PI, yes, and the hospital on us. The trial is on the way at a single center in Shanghai, China. This study is actually IIT study focusing on high risk, newly diagnosed patients, and the enrollment is well on the way. We're expected to enter more patients, so like, 20 patients in total. We have enrolled and treated more than half already. We're hoping to provide the first data by the end of this year. I think that's your question asking for.
Joseph Catanzaro (Senior Research Analyst)
Yes, that was.
Wendy Li (CMO)
It's.
Joseph Catanzaro (Senior Research Analyst)
That's helpful.
Wendy Li (CMO)
Sure. Thank you. Mm-hmm.
Joseph Catanzaro (Senior Research Analyst)
Okay.
Wendy Li (CMO)
Thank you.
Joseph Catanzaro (Senior Research Analyst)
Great. Thanks for taking my questions.
Operator (participant)
Thank you. Your next question comes from the line of Justin Zelin from BTIG. Your line is open.
Justin Zelin (Director and Senior Biotechnology Analyst)
Thanks for taking my questions and welcome to Wendy. I wanted to ask-
Wendy Li (CMO)
Thank you.
Justin Zelin (Director and Senior Biotechnology Analyst)
How the tech transfer and manufacturing process for GC012F is going with Lonza and, you know, just the confidence around the IND filing later this year?
Wendy Li (CMO)
The tech transfer has been completed successfully, and Lonza has been manufacturing GC012F. We're continuing to collaborate with Lonza to generate additional data and putting the IND package together.
Justin Zelin (Director and Senior Biotechnology Analyst)
Great. Okay.
Wendy Li (CMO)
Is there a second question?
Justin Zelin (Director and Senior Biotechnology Analyst)
That's helpful.
Wendy Li (CMO)
No.
Justin Zelin (Director and Senior Biotechnology Analyst)
Yeah. Thank you.
Wendy Li (CMO)
Good. Thanks.
Justin Zelin (Director and Senior Biotechnology Analyst)
Wendy, maybe for the newly diagnosed multiple myeloma, the frontline study that you're running, if you could just.
Wendy Li (CMO)
Mm-hmm.
Justin Zelin (Director and Senior Biotechnology Analyst)
Maybe for us, just highlight how the treatment is current standard of care for these patients in China and how that might differ.
Wendy Li (CMO)
Yeah.
Justin Zelin (Director and Senior Biotechnology Analyst)
Versus, United States, that'd be helpful.
Wendy Li (CMO)
This study actually is on the way in China right now. Enrollment is well on the way. I was just talking about that. We're hoping to provide the first data by the end of this year. Also, GC012F is now being studied for three indications RRMM, NDMM, and NHL. That's the current in China conducting this study.
Justin Zelin (Director and Senior Biotechnology Analyst)
Got it. Maybe for these patients, I'm just curious if you have a sense.
Wendy Li (CMO)
Mm-hmm.
Justin Zelin (Director and Senior Biotechnology Analyst)
of what kind of background therapies, so what prior lines they may have received, before, you know, being eligible for GC012F in China.
Wendy Li (CMO)
You mean the NDMM, newly?
William Wei Cao (Founder, Chairman, and CEO)
They are newly diagnosed.
Wendy Li (CMO)
They are newly diagnosed.
William Wei Cao (Founder, Chairman, and CEO)
Yes.
Justin Zelin (Director and Senior Biotechnology Analyst)
Okay.
Wendy Li (CMO)
Also we're focusing on the high risk also.
William Wei Cao (Founder, Chairman, and CEO)
They are naive almost, right? Correct me if I'm wrong.
Wendy Li (CMO)
Yes, you're right.
William Wei Cao (Founder, Chairman, and CEO)
Naive.
Justin Zelin (Director and Senior Biotechnology Analyst)
Right. This is a frontline study. Okay, that's perfect.
William Wei Cao (Founder, Chairman, and CEO)
Mm-hmm.
Wendy Li (CMO)
Mm-hmm.
Justin Zelin (Director and Senior Biotechnology Analyst)
That's great. Thank you so much for taking my questions.
William Wei Cao (Founder, Chairman, and CEO)
Sure.
Wendy Li (CMO)
Sure. Thanks.
William Wei Cao (Founder, Chairman, and CEO)
Good question. Thank you.
Operator (participant)
Thank you. Your next question comes from the line of Louise Chen from Cantor Fitzgerald. Your line is open.
Wayne Wu (Equity Research Associate)
Hi, team. This is Wayne Ang for Louise Chen. Thank you for taking our questions. Two from us. The first one is what's your latest thinking on the potential partner in the U.S. for GC012, and what type of partner would be ideal? Second is the China COVID lockdown impact over now in second half 2022, or could there still be some headwinds here? Thank you.
William Wei Cao (Founder, Chairman, and CEO)
Yeah. You know, partnership is one of our major goals of this year. We are looking for partners, potential partners with complementary strength. Of course, they need to be experienced in the cell therapy space, and they're interested in multiple myeloma. This is what we, you know, this, if you call it criteria, that's what we're looking for. Have to, you know, to have both interest and the capability in this field. That's critical. As you know, you have been seeing or we have been hearing and seeing that, you know, every step, including commercial capacity, is very critical for success of the product. You can pretty much imagine who would be suitable candidates, but that's where we are.
Wayne Wu (Equity Research Associate)
Got it. How about the COVID lockdown impact?
William Wei Cao (Founder, Chairman, and CEO)
Yeah. It does impact. I wouldn't say there's no impact, but the impact is pretty much on the follow-up evaluation of certain patients, because significant number of patients who are from outside of Shanghai, and it's difficult for them to travel to Shanghai because of lockdown. You know, some of the patients who should have been evaluated at a certain time point, however, due to lockdown, they couldn't, you know, travel to Shanghai. Now they're all evaluated. After the lift up in early June, the patients were pretty much all evaluated. Yeah.
Wayne Wu (Equity Research Associate)
Got it. Thank you.
William Wei Cao (Founder, Chairman, and CEO)
You're welcome.
Operator (participant)
Thank you. Just as a reminder, if you would like to ask a question, please press star then the number one on your telephone keypad, and we will continue on with question and answer. Our next question comes from the line of Kelly Shi from Jefferies. Your line is open.
Kelly Shi (Senior Research Analyst)
Thank you for taking my questions. I have a couple on GC012F, and apologize if you have already addressed these questions, since I got on call late. So for the IR profile, I just want to confirm this is all for RRMM only, or also including NHL. If not, are you planning to get IND for NHL? Secondly, BeiGene recently reported a positive top-line data in earlier line settings from second line to fourth line. Does this have any impact on your trial design for the U.S. phase I trial? Thank you.
Wendy Li (CMO)
Currently, we're working on RRMM for U.S. right now for IND submission. Right now we're in the pre-IND submission with the meeting with the FDA, and we have the request, and then FDA confirmed that we'll provide the written response in early October. That's for RRMM right now. The details of the design, I think that's premature to discuss. For the planned clinical program in the US, even others, yeah, we're awaiting feedback from FDA on our pre-IND submission and their alignment after we file the IND. For NHL, NDMM and others, we're still ongoing in the IIT study and yeah, this encouraging initial clinical data. We're looking forward to see the follow-up data. Thank you.
Kelly Shi (Senior Research Analyst)
Thanks.
William Wei Cao (Founder, Chairman, and CEO)
You know, I think, Kelly, eventually we're, you know, we'll come to the point to evaluate and make decision whether we're gonna file IND for both.
Kelly Shi (Senior Research Analyst)
Right.
William Wei Cao (Founder, Chairman, and CEO)
Particularly NHL. Right now, the number of patients are too small, although we are very excited by the data. We have more data now. By end of the year, we're gonna have more data to make decision.
Wendy Li (CMO)
Great. Thanks.
Operator (participant)
Thank you. Your next question comes from the line of James Shin from Wells Fargo. Your line is open.
James Shin (VP Equity Research)
Hey, good morning, guys. Can you hear me?
William Wei Cao (Founder, Chairman, and CEO)
Yes.
James Shin (VP Equity Research)
Great. Thanks for taking the question. For GC012F, can you update us on how you're thinking about MRD negativity as an endpoint, maybe possibly, I mean, looking at just going back to the BCMA KarMMa study, they use PFS still. Just any updates on MRD negativity status. Then I'll have a second one on allogeneic, on the allogeneic side.
William Wei Cao (Founder, Chairman, and CEO)
All right.
Wendy Li (CMO)
Okay.
William Wei Cao (Founder, Chairman, and CEO)
Wendy, do you wanna take this one, or you want me to take this one?
Wendy Li (CMO)
Yeah, go ahead. You can do that, or I can do that. Yeah.
William Wei Cao (Founder, Chairman, and CEO)
Okay.
Wendy Li (CMO)
Yeah, you just mentioned about MRD. I think that's very interesting and critical standard. Yeah. We have the striking 100% MRD negative rate in all the patients that we treated. Yeah. Most of our patients were assessed with a EuroFlow, with a very highly sensitive level, you know, the MRD negative into the 10 minutes. The community all agrees that MRD will be a key future decision-maker for treatment choices. Achieving MRD negative and maintain MRD negative will be a very critical part of success and even providing potentially functional cure in multiple myeloma. Sustaining MRD negative over 12 months and even longer is the predictor of a preferential outcome in regards to PFS and OS. Thank you.
James Shin (VP Equity Research)
Okay. For the allogeneic side, is there gonna be an update later this year for any of the allogeneic assets?
William Wei Cao (Founder, Chairman, and CEO)
Yes. We'll have update.
James Shin (VP Equity Research)
There will be an update.
William Wei Cao (Founder, Chairman, and CEO)
later this year. Mm-hmm. Yeah.
James Shin (VP Equity Research)
Thank you, William Wei Cao. That's it from my end.
William Wei Cao (Founder, Chairman, and CEO)
You're welcome, James.
Operator (participant)
Thank you. This now concludes today's Q&A session. I would like to turn the call back over to Dr. William Wei Cao.
William Wei Cao (Founder, Chairman, and CEO)
Thank you again to everyone for joining us on the call. Gracell has strengthened its leadership team, and it's committed to advancing its clinical development pipeline. We are continuing to engage with regulatory agencies in the U.S. and China as we aim to file the IND submissions for GC012F in RRMM by the end of the year 2022. Concurrently, we have submitted multiple datasets to upcoming medical conferences later this year. We continue to develop the partnership for one of our programs. In conclusion, Gracell is well-positioned to deliver breakthrough CAR-T cell therapies capable of overcoming major industrial challenges by leveraging our proprietary FasTCAR and TruUCAR technology platform. We look forward to further advancing our clinical programs, and we'll keep everyone updated along the way.
Operator (participant)
Ladies and gentlemen, this concludes today's presentation. Thank you once again for your participation. You may now disconnect.