Gracell Biotechnologies - Q4 2021
March 14, 2022
Transcript
Operator (participant)
Ladies and gentlemen, thank you for standing by. Welcome to the Gracell Biotechnologies' fourth quarter and full year 2021 conference call. At this time, all participants are on listen only mode. After opening remarks, we will open the call for your questions. Instructions for queuing up for questions will be given at that time. I will now turn the conference call over to Dr. Kevin Xie, CFO. Please go ahead.
Kevin Xie (CFO)
Good morning, and welcome to Gracell's fourth quarter and full year 2021 earnings conference call and webcast. With me today are Gracell's founder and Chief Executive Officer, Dr. William Cao, and our Chief Medical Officer, Dr. Martina Sersch. We're excited to discuss our innovative technologies and the breakthrough clinical pipeline of CAR T therapies on today's call. We also look forward to share with you our recent business developments and upcoming targets 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 December 31, 2021. 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, future plans of our programs, Gracell's management will be making forward-looking statements. Actual results could differ materially from this stated or implied by this forward-looking statement as a result of various important factors. Please refer to risk factors section of our latest 20-F filing with SEC for full disclosure of this risk and factors.
The conference call contains time-sensitive information that's accurate only as of date of this live broadcast, March 14, 2022. Gracell undertakes no obligation to revise or update any forward-looking statements to reflect events or circumstances after 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?
William Cao (CEO)
Thank you, Kevin, and again, welcome everyone to our fourth quarter and full year 2021 earnings conference call. Gracell has made substantial progress over the last year, and it continues to deliver across corporate, clinical, and operational initiatives. I will elaborate on some of the key achievements and updates.
Following this, I will turn the call over to our Chief Medical Officer, Dr. Martina Sersch, to discuss our pipeline developments and regulatory advancements in the U.S., and then to our Chief Financial Officer, Kevin Xie, to discuss financial results. In the end, I will share our anticipated milestones for the year to come. Since our last corporate update call on August 27, 2021, we have continued to make progress across our innovative portfolio of autologous and allogeneic CAR T-cell therapies.
Built upon our rich cell therapy and gene editing expertise and proprietary FasTCAR, TruUCAR, and SMART CAR-T technology platforms across multiple difficult-to-treat hematological malignancies and solid tumors. We are continuing to advance our FasTCAR autologous CAR T platform, which is designed to overcome challenges of conventional CAR T therapies by significantly shortening cell manufacture time from weeks down to next day. Importantly, this also contributes to enhanced T-cell fitness.
This is supported by the vast data from our preclinical studies. Because our process manages to preserve T-cell fitness, our cells are very potent, and the therapy only needs a small number of cells in comparison to others, eliminating the need of ex vivo expansion, which could result in cell exhaustion. If you compare those to other CAR T therapies, our dose ranges from 1/3 to 1/100 of other dose.
Because our cells are more potent and expansion happens in vivo, the optimal environment for T-cell proliferation. The peak of expansion of our CAR T-cells reaches 3 times that of certain marketed CAR T-cell products. Our AUC, area under curve, is about 2.5 times of others. In November of 2021, our lead FasTCAR candidate, GC012F, was granted Orphan Drug Designation by the U.S. FDA for the treatment of multiple myeloma.
Twelve-F is a novel dual targeting product candidate specific for two different antigens, BCMA and CD19, which we believe has potential to be highly efficacious. Twelve-F has demonstrated fast, deep, and durable responses in patients with relapsed refractory multiple myeloma in an ongoing IIT study in China, with most patients on study being high risk according to mSMART 3.0 criteria. A difficult to treat patient population.
We're very excited about it being granted Orphan Drug Designation for the treatment of multiple myeloma by the U.S. FDA, as it qualifies Gracell as the sponsor of the therapy for certain development incentives. Dr. Sersch will share more about GC012F and expand on its progress shortly. We have extended our timeline for IND submission in the U.S. for GC012F for RRMM to the second half of 2022.
While we have made significant progress with our tech transfer from our Suzhou GMP manufacturing facility to the U.S. CDMO, this revised timeline reflects the impact to the industry-wide high demand of cell therapy manufacturing capacity. The verification runs are producing quality cells, and we continue to work closely with our CDMO to move forward. For the IND filing in the U.S., we are on track to submit by end of the year.
The IND filings and further clinical developments of GC012F are a priority of Gracell. Our exciting advancement of GC012F candidate is that we have dosed multiple patients in China phase I IIT study evaluating GC012F in a new indication, relapsed and refractory B-cell non-Hodgkin lymphoma, NHL. GC012F is the first BCMA / CD19 dual-targeting CAR-T in human trials for BNHL. We have a strong rationale and preclinical data to support this novel design.
This is consistent with Gracell's goal of innovation and a focus on pioneering best-in-class candidates. Turning to our allogeneic TruUCAR platform, we have an IIT study underway for CD19 / CD7 dual-directed GC502 in adult patients with B-cell malignancies, including B-ALL, and a plan to present early first-in-human data from this study at AACR in April.
We're very excited about this new candidate as it is the first of its kind as a CD19, CD7 dual-directed allogeneic CAR-T, and exemplifies the TruUCAR platform's broad applicability enabled by the novel dual-directed CAR design. As a reminder, we shared data from the preclinical studies of GC502 last year at ASH. GC502 displayed strong antitumor potency and suppression of host versus graft response.
For example, GC502 showed superior CAR T-cell expansion and also cytotoxicity, including in very demanding tumor rechallenge model. It demonstrated robust activity in killing allogeneic T and NK cells to help suppress host versus graft rejection. We also compared it with CD19 CAR T control. The results showed very strong potency in animal models. We look forward to sharing the exciting early first-in-human data next month.
As 2022 unfolds, we will continue to build on our solid progress achieved so far. Towards the end of the prepared remarks, I will share our anticipated milestones for this year. Now I will hand over the call to our Chief Medical Officer, Dr. Martina Sersch, to discuss the pipeline and our clinical programs. Martina, please.
Martina Sersch (Chief Medical Officer)
Thank you, William. Gracell is currently developing a rich pipeline of multiple autologous and allogeneic product candidates for the treatment of different types of cancer. Our lead program is GC012F. In 2021, we applied and were granted Orphan Drug Designation for GC012F by the U.S. FDA for the treatment of multiple myeloma. We continue advancing our lead candidate, GC012F, in relapse and/or refractory multiple myeloma, as well as into earlier lines of therapy.
We have previously reported preliminary clinical data at ASCO 2020, ASCO 2021, and EHA in 2021 in 19 patients, demonstrating fast, deep, and durable responses in all dose levels in a very difficult to treat patient population, 95% being high-risk patients based on mSMART 3.0 criteria.
At data cutoff January 12, 2021, overall response rate among these 19 patients was 94.7%, with all responses being VGPR or better. 84.2% out of the total of 19 treated patients achieved stringent complete response, sCR, the deepest response possible. 100% of MRD-assessable patients achieved MRD negativity.
The safety profile of GC012F was consistent with previous findings and predominantly lower grade cytokine release syndrome, mostly low grade 1 or 2, with a median time to onset of 6 days, ranging from 2-10 days. No grade 4 or 5 CRS was observed. Also importantly, we did not observe any ICANS of any grade. To date, we believe this data is very promising and highly competitive both for efficacy and safety.
In addition to the excellent preliminary outcome, there are several key differentiators that highly distinguish GC012F from the current landscape. The first one being BCMA CD19 dual targeting. The second very important part is the much shortened manufacturing time, 22-36 hours, which may lead to a much faster treatment of patients without the need of bridging therapy and ultimately may lead to reduced healthcare costs.
In addition, we have extended the indication for GC012F to be NHL and are currently enrolling patients into an IIT study in China. GC012F is the first BCMA CD19 dual-targeting CAR-T in human trials for BNHL. Most BNHL cells express CD19 and data also suggests that 39%-97% of clinical NHL cell samples also express BCMA. By simultaneously targeting BCMA and CD19, GC012F is designed to improve efficacy outcome in relapsed refractory B-NHL patients.
In the preclinical studies, GC012F has demonstrated very encouraging capabilities, including specific and dose-dependent killing of CD19 and/or BCMA-positive tumor cell lines. Moving on to the TruUCAR platform, our allogeneic UCAR T derived from T-cells from healthy donors as an off-the-shelf CAR T therapy. This novel design of a dual-directed CAR utilizes one CAR to be a CD7 CAR intended to suppress host versus graft. This CAR has been optimized for induction of appropriate immunosuppression.
With this construct, TruUCAR is designed to be administered without the need of additional immunosuppressive therapies after standard lymphodepletion and offers further benefits in cost savings potentially, and potentially safety. The second CAR is intended to target cancer cells. The second CAR can be switched to target different cancer antigens, and this potentially gives the TruUCAR platform a broader applicability.
GC027 is our TruUCAR-enabled 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 many more patients to the study. Currently, we are targeting regulatory interactions globally and in China during the next 12 months.
As William mentioned, we are very excited about the new and second candidate on the TruUCAR platform, GC502, which is a CD19, CD7 dual-directed allogeneic CAR T therapy for B-cell malignancies. While we have been very encouraged by the profile of GC027, GC502 is our first product candidate to truly demonstrate the potential and wide applicability of the TruUCAR platform to different types of cancers.
We believe GC502 is a promising off-the-shelf product platform enabling the CD7 CAR to suppress host versus graft rejection response, while we added the second CAR, a CD19 CAR, to target cancer cells. CD7 CAR will help create the environment for the CAR T-cells to expand without additional immunosuppressive drugs. We shared preclinical data of GC502 at ASH 2021, which showed robust expansion and efficacy in patients. We will be presenting the first-in-human clinical data at AACR in April. Our most advanced program is GC007g.
Currently, a registrational phase I/II clinical trial under a China IND is ongoing for the treatment of relapsed/refractory B-ALL patients. We anticipate to soon be commencing the phase II part of the study. 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 is manufactured 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 a rich, exciting early-stage pipeline of product candidates based on our FasTCAR, TruUCAR, and SMART CAR technology platforms 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 and mesothelin-positive solid tumors, including ovarian cancer in 2022. With these additional indications, we are striving to complete our platform to include not only hematological malignancies, but also solid tumors, a hard-to-achieve goal for the industry today. In addition, we are expanding our teams, including regulatory and clinical operations in the United States to meet our demands.
William Cao (CEO)
I will now pass it over to Kevin to discuss our R&D and manufacturing facilities and our financial results. Kevin?
Kevin Xie (CFO)
Thank you, Martina. Our U.S. expansion is currently underway, with ongoing appointments being made to grow our research, clinical operations, regulatory, and operations teams. In China, we're expanding our manufacturing capability by building a new facility in Suzhou, in addition to our state-of-the-art 66,000 sq ft GMP manufacturing facility, designed for fully closed production capabilities to reduce contamination risk and optimize cost efficiency.
Our manufacturing and operational capabilities are designed to improve both the speed and availability of our cell therapies so that our treatment can be available widely and rapidly to the cancer patients who need them. Turning to our financials, I'd like to touch on a few financial trends. As of December 31, 2021, we had RMB 1.829 billion, or $287 million in cash and cash equivalents and short-term investments.
We're very well funded with cash runway into 2024. We expect the cash use for this year to be approximately $100 million-$120 million, primarily to fund our R&D and the clinical programs in the U.S. and China to support our R&D filings and to support expansion of our GMP manufacturer facilities in Suzhou. Net loss attributable to ordinary shareholders for the three months ended December 31, 2021, was RMB 128.6 million, or $20.2 million, compared to RMB 99.9 million for the same period in 2020.
Net loss attributable to ordinary shareholders for the full year 2021 was RMB 453.7 million, or $71.2 million, compared to RMB 274.6 million for the same period in 2020. Research and development expenses for the fourth quarter were RMB 107.6 million, or $16.9 million, as compared to RMB 60.7 million for the same period in 2020. For the full year ended December 31, 2021, research and development expenses were RMB 326.9 million, or $51.3 million, compared to RMB 168.8 million for the same period in 2020.
Increases were primarily due to increased spending to advance our early and the clinical pipelines, higher headcounts, and increased expenses in share-based compensation. Administrative expenses for the fourth quarter were RMB 32 million, or $5 million, compared to RMB 24.8 million for the same period in 2020.
For the full year, administrative expenses were RMB 137 million, or $21.5 million, as compared to RMB 45.6 million in 2020. Increases were primarily driven by increase in recognition of share-based compensation expenses as well as expansion of an administrative function. With that, I'll turn the call back to William.
William Cao (CEO)
Thank you, Kevin. Again, we are very pleased with our progress across our pipeline. Looking forward this year, we expect to build on our record of achievements. We have an active year of milestones ahead. Key areas of focus this year encompass the following. Our priority is continue advancing the tech transfer process for GC012F with our U.S. CDMO, and now we expect to file an IND in the U.S. and China for relapsed refractory multiple myeloma in the second half 2022.
Concurrently, we are continuing to enroll patients in the phase I IIT studies in China for GC012F in RRMM and BNHL, and also are extending to early line multiple myeloma. We plan to submit clinical updates on these studies to major medical conferences this year.
For the TruUCAR platform, we plan to present early first-in-human data from an IIT study underway for GC502 in adult patients with B-ALL at AACR in April. We are nearing the completion of enrollment in the study for GC027 in patients with T-cell leukemia. We are also on track to commence the phase II portion in 2022 of the registration phase I/II clinical trial for GC007g that is underway in China. Finally, under the SMART CAR platform, we also anticipate to commence enrolling in the China IIT study for GC503 in mesothelin-positive solid tumors, including ovarian cancer in 2022.
In addition, we also plan to provide clinical data updates on current and new programs at the major medical conferences and/or published in leading journals. With that, I'd like to turn it back to the operator to open a session for your questions. Operator?
Operator (participant)
Our first question comes from Joe Catanzaro with Piper Sandler. Your line is open.
Joe Catanzaro (Senior Research Analyst)
Hey, guys. Thanks so much for taking my questions here. Maybe the first one from me, I understand that your CDMO has had some capacity constraints, and William, I think you may have alluded to this, but wondering if there have been any GMP runs and whether there's anything you could say around comparability at this point between the product being manufactured at the CDMO versus what was manufactured for the China IIT. Thanks, and I have a follow-up.
William Cao (CEO)
I'm gonna take that question, and Martina feel free to jump in. Well, the manufacturing capacity right now is in the whole industry is in high demand, right? Adjustments were needed based on kind of competitive situation. So there is nothing to do with the technical aspect. The technical part, including, you know, the tech transfer, the trial runs, you know, the SOP and the trainings is all good, all smooth. So it's simply a logistic small issue. Yeah, that's all I can say. Martina, do you have anything to add, or it's good?
Martina Sersch (Chief Medical Officer)
No. Complete picture. Thank you, William.
Joe Catanzaro (Senior Research Analyst)
Okay. Got it.
William Cao (CEO)
Thanks.
Joe Catanzaro (Senior Research Analyst)
That is helpful. Another question, maybe something as well that William, you may have mentioned. For GC012F's ongoing China IIT study, can you remind us of the myeloma cohorts that are currently enrolling in terms of line of therapy, and whether there are any expectations to report updated clinical data from that trial sometime this year? Thanks.
William Cao (CEO)
Sure. That certainly, Martina's question.
Martina Sersch (Chief Medical Officer)
Yeah, sure. Thank you. Great question. Yeah, we have been continuing enrolling patients in our relapsed refractory multiple myeloma study, and we certainly planning on showing the data this year. Once acceptance is clear at the conferences, we will also issue a press release for acceptance. So you can, you know, look forward to that data. For lines of therapy, we already talked about that we are moving into earlier lines of therapies, and we also planning on submitting that data once available to one of the major conferences this year.
Joe Catanzaro (Senior Research Analyst)
Okay. Got it. I guess maybe if I could just squeeze one last one in, sort of more technical. For GC503, maybe can you elaborate a little bit on the approach and construct design that will allow you to take a tumor-suppressive signal and translate that into a positive signal for T-cell proliferation and persistence? Thanks.
William Cao (CEO)
I think you might have mixed up with the SMART CAR-T and the TruUCAR platforms. In the TruUCAR platforms, we don't have a mechanism that can turn a suppressor molecule into positive. Now let me just elaborate how this GC502, if you're referring, is based on TruUCAR platform. TruUCAR typically would have two CARs, one targeting CD7, which is a pan T/NK marker. So the purpose of this CAR is to suppress allogeneic T and NK cell.
Allogeneic means from the patient to reject the CAR-T cells. So allo rejection from patient T and NK could be detrimental to the CAR-T cells' persistence and proliferation. So the CD7 CAR is designed to prevent that.
The second CAR is really the tumor engine, targeting CAR. In this case, the CD19. The GC502 is the best example to illustrate how this TruUCAR platform works. The two CAR work in the way that I just described. Now, this 502 is targeting CD19. This example really demonstrates the wide applicability by switching CD19 to other tumor antigens. For example, BCMA, you know, any that are known CAR T tumor targets. There is also enhancer embedded in this TruUCAR platform to facilitate the TruUCAR to proliferate and persist in the hostile environment. I hope I explained it well.
Joe Catanzaro (Senior Research Analyst)
Yeah, no, that's helpful. I guess I was asking about GC503. Apologies if I missed both, but we could maybe follow up.
William Cao (CEO)
Oh, okay.
Joe Catanzaro (Senior Research Analyst)
We can follow up on that offline.
William Cao (CEO)
Oh, okay. All right. Thank you.
Operator (participant)
Our next question comes from Kelly Shi with Jefferies. Your line is open.
Speaker 7
Hi, good morning. This is Dave on for Kelly Shi. I just have a few questions. One is regarding GC012F in BNHL. Should we expect any data this year?
William Cao (CEO)
Tina, you want to take that one?
Martina Sersch (Chief Medical Officer)
Yes, you should.
Speaker 7
Okay. Another one is for your upcoming presentation at AACR. Any color on, like, number of patients, data at AACR?
Martina Sersch (Chief Medical Officer)
Should I, William?
William Cao (CEO)
Yes. Yes, please.
Martina Sersch (Chief Medical Officer)
Yeah. Yeah.
William Cao (CEO)
If you want to explain it for questions, please take it. Yeah. Thank you.
Martina Sersch (Chief Medical Officer)
Sounds good. Yeah. AACR, as you know, the abstract is still not out yet, so we can't give you any hint here, but it's not gonna be very long, you know, April, beginning of April, AACR. Please hold on tight, and you will see the data.
Speaker 7
All right. Sounds good. Thank you.
William Cao (CEO)
Thank you.
Operator (participant)
Our next question comes from Nick Abbott with Wells Fargo. Your line is open.
Nick Abbott (Analyst)
Terrific. Thanks. Good morning. In the prepared remarks, William, you indicated that, you know, BCMA expression on B cells ranges widely. I think the lower end was 39%. So my first question is, you know, can you talk about, you know, where in the B cell developmental lineage BCMA is expressed or controls it? And, you know, are you able to modulate that? Would you be able to, for example, you know, pre-treat the patient with something that increases BCMA expression prior to CAR T treatment?
William Cao (CEO)
Yeah. That's an interesting approach. I haven't thought about this to induce BCMA expression on NHL. I, you know, this is our kind of philosophy. We want to utilize the power of a cell, not to give additional quote, help to complicate the matter. You know, as a representative of the company on the team, we strongly believe the T-cell has enough power. All you need to do is, you know, to unleash the power without causing trouble. N
ow, the TruUCAR design is exactly one of the key design or the feature is to not include combination therapy. So preconditioning, it's easy and the drug is safe. It, you know, can be PK wise, can really help expression of BCMA on NHL. That might be, you know, practical.
In our case, it's like any other, you know, potential tumor markers. The expression level doesn't have to be very high as long as it's there. Now the data shows 39%-90%, but, you know, the methodology behind this data might be classical, you know, IHC or flow cytometry, which all based on antibody bindings. We know the antibody binding assays are not as sensitive as CAR T. CAR T is 1,000 times higher.
We suspect in those patients with lower BCMA expression, it doesn't mean they are not there, but they're just very faintly expressed. It's like CD19 on multiple myeloma. They are there, but they are weakly expressed, but a CAR T can pick it up.
We don't have this exclusion criteria saying, you know, if the NHL patient has no BCMA expression, we'll exclude them. No, we don't do that. At this moment, the dual targeting is gonna help to, for the CAR T to pick it up the NHL cells.
Nick Abbott (Analyst)
Terrific. Thanks.
William Cao (CEO)
I hope that answers.
Nick Abbott (Analyst)
That makes a lot of sense. You know, as you think about going forward with the BCMA franchise, you know, how do you think about adding a third CAR, so a CD7 CAR, sort of combining the FasTCAR and TruUCAR platforms? What are the considerations about, you know, expressing three CARs?
William Cao (CEO)
That's a very deep question, Nick. You know, this is actually a very intriguing question. I have to say we are, it's kind of in our consideration, but I cannot reveal any more. It is, you know, one of the interesting idea. But I think the key question here is really the CMC. We have ample experience with dual CAR and dual CAR expressions and, especially the CMC. So, I can't give a, you know, clear answer at the moment, but I think that's an interesting thought.
Nick Abbott (Analyst)
Okay. Thanks. Just last one for me. You have a claudin SMART CART listed. Is that expected to go into the clinic in China, or is the goal to get it in the clinic in China this year as well?
William Cao (CEO)
Yes. It's going to clinical in China this year. It's our, you know, de-risk strategy.
Nick Abbott (Analyst)
Great. Look forward to seeing you at AACR, hopefully. Thank you.
William Cao (CEO)
Yep. Thank you. Looking forward.
Operator (participant)
Our next question comes from Justin Zillo with BTIG. Your line is open.
Justin Zillo (Analyst)
Hi. Thanks for taking the question, team. Just a quick one. We recently saw approval for Legend J&J's Carvykti cilta-cel. I believe it was the first FDA-approved China-developed CAR T. Just wondering if you see any read-throughs to Gracell in your pipeline, your strategy. Thank you.
William Cao (CEO)
Yeah, Martina, I think it's a good question for you.
Martina Sersch (Chief Medical Officer)
Sure. It was expected that Carvykti is gonna get approval. We already consider that this is a part of a huge amount of BCMA-only targeted products. There are many out there, so we differentiate not only by being dual targeting, but also the fast manufacturing. At this point in time, this is our strategy, and there is no need to adjust.
Justin Zillo (Analyst)
Great. Thank you for taking the question.
Martina Sersch (Chief Medical Officer)
Sure. You're welcome.
Operator (participant)
There are no further questions. I'd like to turn the call back over to Dr. William Cao for closing remarks.
William Cao (CEO)
Thank you again to everyone for joining us on the call. The Gracell team is very proud of what we have accomplished over the last five years since our founding. We have rapidly expanded our teams in China and the U.S. with exceptional talents. We have advanced many clinical programs and de-risked others through clinical investigator-initiated trials in China, while also expanding our manufacturing facilities to support our extensive pipeline.
To support our R&D efforts, we continue to form new external partnerships and expand our internal manufacturing capabilities. In conclusion, Gracell is well-positioned to advance clinical developments of breakthrough CAR T-cell therapies that have the potential to overcome key challenges by leveraging our proprietary FasTCAR, TruUCAR, and SMART CAR technology platforms. We look forward to further advancing our clinical programs, and I will keep everyone updated along the way. Thank you.
Operator (participant)
Ladies and gentlemen, this concludes today's presentation. Thank you once again for your participation. You may now disconnect.