Gracell Biotechnologies Inc. (NASDAQ:GRCL) Q3 2022 Results Earnings Conference Call November 14, 2022 8:00 AM ET
Company Participants
Kevin Yili Xie – Chief Financial Officer
William Wei Cao – Founder, Chairman, and Chief Executive Officer
Wendy Li – Chief Medical Officer
Conference Call Participants
Carly Kenselaar – Citigroup
Dev Prasad – Jefferies
Joseph Catanzaro – Piper Sandler
Justin Zelin – BTIG
Suowei Wu – Cantor Fitzgerald
James Shin – Wells Fargo
Operator
Ladies and gentlemen, thank you for standing by. Welcome to Gracell Biotechnologies Third Quarter 2022 Conference Call. At this time, all participants are in a listen-only mode. After the 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
Good morning. And welcome to Gracell’s third quarter 2022 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 innovative technologies and the rich clinical pipeline of CAR-T therapies on today’s call. We also look forward to sharing with you our recent business developments and upcoming objectives for the remainder of 2022. After our formal remarks, we’ll conduct a question-and-answer session.
This morning, Gracell issued a press release announcing unaudited financial results for the quarter ended September 30, 2022. We encourage everyone to read this press release. And 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 future plans of our programs, resource management will be making forward-looking statements. Actual results could differ materially from those stated or implied by those forward-looking statements as a result of various important factors. And please refer to the Risk Factors section of our latest 20-F filings with the SEC for a full disclosure of these risks and factors.
The conference call contains time sensitive information that is accurate only as of the date of this live broadcast, November 14, 2022. Gracell undertakes no obligation to revise or update any forward-looking statements to reflect events or circumstances after the date of this conference call, except as may be required by security laws.
I will now turn the call over to Gracell’s CEO, Dr. William Cao. William?
William Wei Cao
Thank you, Kevin. And again, welcome everyone to our third quarter 2022 corporate update conference call. I will begin today’s call with the key corporate and a pipeline update. I will then turn the call over to our CMO, Dr. Wendy Li, to provide insight on our first clinical data from ongoing IIT evaluating GC012F in newly diagnosed multiple myeloma, which was accepted for an oral session at ASH 2022. Thereafter, our CFO, Dr. Kevin Xie, will discuss our third quarter 2022 financial results. After our prepared remarks, we’ll open the call to questions.
I’m glad to open this call and announced that today Gracell’s FasTCAR-T next-day manufacture of autologous CAR T platform was named the winner of the 2022 Fierce Life Sciences Innovation Awards. FasTCAR was developed with a deep understanding of the challenges faced by conventional CAR T, and we firmly believe this technology as well as the BCMA/CD19 dual targeting CAR T GC012F developed on the FasTCAR platform represent the innovation that could broaden the use and accessibility of CAR T.
The Fierce Life Sciences Innovation Award identify and showcase outstanding innovation that is driving improvements and transforming the industry. And an expert panel of judges reviewed all the submissions and has determined that FasTCAR has the potential to make great impact for biotech and pharma industry. Hence, I hope to thank the recognition by the judges, and also thank the entire GC012F team, especially our scientists for their commitment and hard work.
Currently, Gracell continues to advance our robust clinical pipeline developed in our FasTCAR autologous CAR T platform and the TruUCAR allogeneic CAR T platform based on our lead candidate GC012F, the autologous BCMA/CD19 dual targeting FasTCAR-T therapy.
GC012F is currently being studied in three indications, relapsed refractory multiple myeloma, newly diagnosed multiple myeloma and in relapsed/refractory non-Hodgkin’s lymphoma.
We completed enrollment in the investigator initiated trial, IIT study, evaluating GC012F for RRMM. In 2022, at both ASCO and EHA meetings, we presented updated clinical data that showcase the deep response achieved, favorable safety profile, and a differentiated next stage of manufacturing.
Specifically, as of June 8, 2022 data cut-off, following enrollment completion of 29 patients, a single infusion of GC012F has achieved 100% MRD negative rates in this group of heavily pretreated patients, of which 90% were classified as high risk.
GC012F also consistently demonstrated a favorable safety profile. We’re continuing to follow up these patients. Furthermore, we’re on track to complete the IND submission of 12F in RRMM in both the US and China beforehand. After having submitted a pre-IND meeting request to the US FDA, we received a written response in October 2022. Their response was encouraging and we are currently preparing our IND filing in the US.
Also in September 2022, we received a written response for our pre-IND submission from China NMPA. The IND submission is on track.
Turning to the IIT that is underway to validate GC012F in newly diagnosed, high risk multiple myeloma patients. We are thrilled that this data was accepted for oral session at ASH Annual Meeting in December 2022. We started this IIT study over a year ago. And this will be the first time that we present a clinical data. Newly diagnosed high risk patients usually respond less favorably to standard of care and are associated with a poor outcome and remain a high unmet medical need despite of novel agents being approved in recent years. We hope GC012F could demonstrate its potential of providing a new safe, highly efficacious first-line therapy. The data in this abstract shows an excellent safety profile and encouraging efficacy. Our CMO, Dr. Wendy Li will provide more details later in this call.
At EHA in June 2022, we also unveiled the first data of GC012F in relapsed/refractory NHL from ongoing IIT. This initial data set demonstrates a potent and a fast activity with 100% CRH at month one, observing all three patients treated as cut-off date of February 22, 2020.
To put this into perspective, all three patients have DLBCL, a fast growing aggressive form of NHL. We are continuing enrollment and follow-up of this ongoing study. And we plan to share updated data at a medical conference in 2023.
Moving on to the off-the-shelf TruUCAR platform, GC502 is our TruUCAR-enabled CD19/CD7 dual-directed allogeneic CAR T therapy candidate. As we outlined previously, we presented updated data last year at EHA from a single arm, open labeled IIT with longer follow-up compared to the data that was shared in April at AACR. The data was encouraging as 75% of all treated patients achieved MRD negative CR/CRi. The study is ongoing.
Next moving to our donor-derived CAR T. In October, we announced the dosing of the first patient in China registrational Phase 2 trial evaluating GC007g, an allogeneic CD19 targeted CAR T therapy. GC007g is derived from HLA-matched donor for the treatment of r/r B-ALL patients who failed transplant and may not be eligible for autologous CAR T therapy. This is an exciting milestone for Gracell team as it is our first pivotal trial. We have observed highly encouraging safety and efficacy data in the Phase 1 portion. And we hope to share the data in 2023.
Last, but not least, I’m happy to report we have dosed the first patients with our SMART CAR T candidate, GC503 for the treatment of mesothelin-positive solid tumors in a China IIT. SMART CAR T is a second generation technology for the treatment of solid tumors and utilizes a novel construct to take advantage of this suppressive tumor microenvironment and effectively combat solid tumors.
We’re also preparing to bring the second SMART CAR T candidate, GC506, targeting CLDN18.2 to the clinical trial soon.
For the past ten-and-a-half months in 2022, we have delivered all promised milestones, including starting several IIT studies, opening our first Phase 2 trials and providing clinical data updates at major medical conferences. These clinical and operational developments further emphasize Gracell’s commitment to delivering accessible and highly efficacious treatments to the patients across the wide range of malignancies.
Now I will hand the call over to our CMO, Dr. Wendy Li, to discuss our participation at ASH disk in December. Wendy, please go ahead.
Wendy Li
Thank you, William. As William mentioned, the abstract for first-in-human data from ongoing Phase 1 open label IIT evaluating GC012F in newly diagnosed, transplant eligible, high risk multiple myeloma patients was selected for an oral session at ASH 2022.
As a reminder, GC012F is an autologous CAR T therapeutic candidate, dual targeting BCMA and CD19, developed on our FasTCAR next day manufacturing platform, as outlined in our accepted abstract that is now available online.
A total of 13 newly diagnosed multiple myeloma patients were treated as of July 25, 2022 abstract data cut-off. The preliminary data shows an excellent safety profile, with only 23% of patients experiencing grade 1 to 2 CRS and no neurotoxicity of any grade was observed.
Also, the data shows a 100% ORR and 100% MRD negativity in all treated patients. We are very encouraged by this data and look forward to share more details in December.
Given GC012F’s clean safety profile, paired with this potential for faster administration time, leveraging our next-day manufacturing and attractive efficacy profile, given the younger T cells with enhanced fitness. We believe that GC012F could potentially provide a safe and effective treatment option to the newly diagnosed multiple myeloma patients. We’re very encouraged by this first clinical data and very much look forward to sharing more details at the ASH annual meeting and exposition in December of this year.
I will now hand the call over to our CFO, Dr. Kevin Xie. Kevin?
Kevin Yili Xie
Thank you, Wendy. Returning to our financials. I’d like to touch on a few financial trends. As of September 30, 2022, the company had RMB 1.6296 billion or US$229.1 million in cash and cash equivalents and short-term investments.
In addition, the company had short-term borrowings and the current portion of long term borrowings of RMB 125.1 million or US$17.6 million and long term borrowings of RMB 48.1 million or US$6.8 million. We’re very well-funded with cash runway for the next 24 months. We expect cash use for this year to be approximately US$100 million, primarily to fund our R&D and the clinical programs in the US and China.
Net loss attributable to ordinary shareholders for third quarter was RMB 171.9 million or US$24.2 million compared to RMB 129.3 million for the third quarter of 2021.
Research and development expenses for the past quarter were RMB 133.4 million or US$18.7 million compared to RMB 88..6 million in the third quarter of 2021. The increase was primarily due to the increased spending on research, development, and the clinical trials, as well as higher payroll and personnel expenses attributable to the increased headcount and higher facility related costs.
With that, I’d like to turn it back to the operator to open the session for your question. Operator?
Question-and-Answer Session
Operator
[Operator Instructions]. And your first question comes from Yigal Nochomovitz from Citi.
Carly Kenselaar
This is Carly on for Yigal. We have a couple on the newly diagnosed multiple myeloma ASH abstract. First, are you aware of any other published data for BCMA CAR T in a similar newly diagnosed population?
Then, our more general question is, if you can just talk about any early feedback you’ve gotten from KOLs on the abstract data so far?
William Wei Cao
Wendy, I want to make this one. Please feel free to chip in. This is William Cao, CEO of the company. I think we heard there are a few trials ongoing for newly diagnosed patients. And I believe you can also find in clinicaltrials.org. Probably there are two registered. But we haven’t heard any data. We haven’t seen a data obviously. So, this conference probably is the first event you’re going to see serious studies in the field.
Carly Kenselaar
The other question was just on any early feedback you’ve gotten from KOLs. And then, we’re also curious if you can comment on how much more data we’ll see at ASH beyond what’s included in the abstract.
William Wei Cao
I think, Wendy, this is probably more appropriate for you to answer, if you have talked to KOL regarding newly diagnosed patients and any feedback.
Wendy Li
Yes, we do have the discussion with the PIs actually from the leading medical centers and the receptions have been very positive. And they’re very interesting for our product and the clinical data. And since this study is ongoing, so we plan to provide updated data on the ASH presentation in December.
Operator
Your next question comes from Kelly Shi from Jefferies.
Dev Prasad
This is Dev on for Kelly Shi from Jefferies. Congrats on the new data. I have a couple. First is, you mentioned that company received a written response from FDA. Could you provide any colors on the steps that are needed from now to filing the IND? And at what steps you are. Also, you mentioned IND will be in RRMM. However, since the data in newly diagnosed is available, any color or any guidance on IND in newly diagnosed patient?
William Wei Cao
Let me take this. The FDA feedback is encouraging, is constructive and it is somewhat expected. So it’s good and we move forward based on the feedback. And now being preparing for the package is the last part. So, everything moving accordingly. And China as well, we received response from China CDE. And we are in the process of submitting the package. And that’s how it goes. Everything seems smooth.
Now, regarding the trial design, I think it’s too early to talk about details. But for this IND, again, we’ll be focusing on RRMM.
Now, newly diagnosed, it is a very interesting area and we’re very encouraged by the results, preliminary results. But, again, this is a very new field. How do we navigate forward with specific indications. I think it remains to be studied, remains to be discussed with the KOL, although the data looks really encouraging, especially safety and efficacy, both are really outstanding. I’m sure you’re going to hear more details at the presentation. But we will definitely not in this IND filing, that’s for sure. What is the plan? You need to wait and see. So, we’ll keep you updated.
Dev Prasad
Can I ask one more? So, last time, you mentioned you’re looking for some collaboration to develop GC012F in the US?
William Wei Cao
Yes, it’s ongoing. It just takes longer than we thought it would be. Yes, still dialogues ongoing. There are interesting several products, but GC012F is probably the most popular one.
Operator
Your next question comes from Joe Catanzaro from Piper Sandler.
Joseph Catanzaro
Maybe two quick ones from me. Maybe updated thoughts around any potential IND filing strategy for GC012F as it relates to B cell lymphomas? I know you said you expected to provide some updated data in 2023. And maybe similarly, is the strategy for the SMART CAR solid tumor programs to generate some initial clinical data out of those IITs in China before you think about pursuing formal INDs in the US and within China?
William Wei Cao
For NHL, I don’t think we have decided to share the detailed plan with public. But, certainly, it’s ongoing. I can’t say when we’re going to file, but the direction is right. Because the preliminary IIT data looks really encouraging. Since EHA this year, we have enrolled more patients, and the data continues to look very encouraging. So, it’s probably straightforward. This will be considered a US program. But, again, I can’t be firm at this moment. But give a couple of months and we’ll firm up the plan.
Joseph Catanzaro
The second question was around the SMART CAR strategy and whether that’s going to be [Multiple Speakers] and then go from there.
William Wei Cao
We have dosed SMART CAR. We have dosed 503, mesothelin-positive ovarian cancer. As you know, to evaluate solid tumor, it probably takes a couple more months to have a reasonable evaluation. So, we’re, right now, at dose escalation, start from very low. Since we have enhanced, embedded, we want to make sure safety is well taken care of.
The 506, we haven’t started those patients yet. Now, we haven’t decided to file IND in the United States nor China. Because we need to see more clinical evidence. That’s how we want to derisk the new product. But so far, I can say, it looks good, but it’s very early.
Operator
Your next question comes from Justin Zelin from BTIG.
Justin Zelin
Congrats on all the progress. So, my first question is, with the encouraging newly diagnosed data that you have here, I’m curious how you envision 12F being used eventually in the myeloma treatment algorithm, if you could see it being used ahead of transplant or antibody-based therapies.
William Wei Cao
Wendy, let me crack this first. Okay? Justin, newly diagnosed is a new arena. I’m sure everybody understands this is a very big pie. Now, to our understanding, safety is more important than anything for newly diagnosed patients as these patients are relatively healthy and the tolerance level to safety will be much lower. So, again, we are very encouraged by the confirmation of the safety profile of 12F. We will continue to generate more evidence, especially durability of the response and the responses deepening. So, we definitely take time to collect all these evidence. And I know we need to definitely talk to medical community, see how they feel. As you’re aware, for this IIT study, the design – it was pretty, I would say, bold, encouraging where we have enrolled. Almost all the patients, high risk and transplant eligible patients, which is show support from the hospital, the authority that these transplant eligible patients become our first target group. So, this – about whether we’re going to put future extended study or we’re going to continue to target transplant eligible or ineligible, high risk or normal refractory, we just need to see more data evidence to further stratify the groups.
So, for now, I think this group is approved by the hospital. Further justification, “these patients are high risk.” Whether they transplant plus quadruplets or triplets, the prognosis is not very bright. So this is a good start. We’re very excited about the data.
Justin Zelin
Just on the IND filing, I was just wondering if you had any thoughts on when the first patient might be dosed in the US, if that could take place sometime next year if you get the go ahead as expected.
Wendy Li
For US, right now, it’s premature to discuss this. And we plan to wait until we have received IND acceptance. So, we’re looking forward to providing the updates along the way.
Operator
Your next question comes from Louise Chen from Cantor Fitzgerald. Please go ahead.
Suowei Wu
This is Wayne on for Louise. Congrats on the new data. The first question is the GC012F. So, I think the safety data is so much better on the newly diagnosed multiple myeloma patients compared to the relapsed patients. So can you maybe give us more colors on why you think it’s much better?
The second question is, if there’s any updates you can share with us on the partnership discussion as well as the Suzhou GMP facility expansion.
William Wei Cao
The safety profile appears better in newly diagnosed patients. This is not a big surprise. We kind of expect because these patients might be healthier. However, the CRS rate is so low. It’s about 23% with grade 2 CRS and the 77% with no CRS. That is kind of a surprise. I can’t comment too much without much of evidence. It is a new field. We hope that continues that way. And I hope other teams’ studies, when they come out with data, will be interesting to compare. Yeah, that’s all I could comment.
Now regarding the manufacture capacity, we have sort of made a justification. We made an internal sort of a redesign, adjust our space. So, the capacity for the pipelines that we want to develop into clinical, even the first phase of commercial, it’s all set. So, in Suzhou, given the circumstances, we will not aggressively expand capacity for commercialization since we have, I think – for up to year 2025, 2026, we have sufficient capacity.
Operator
Our next question comes from James Shin from Wells Fargo.
James Shin
For William or Wendy, can you say if or how many of 12F newly diagnosed patients achieved molecular remission after induction?
Secondly, this was on transplant. There were two trials, the FORTE trial and the IFM trials. They both seem to suggest that MRD negative patients receiving transplant had improved PFS and sustained MRD negativity. That said, can you say how many of the newly diagnosed patients have gone on to receive transplant?
William Wei Cao
Can you repeat the second question?
James Shin
William, the second question was, there’s two trials. I think FORTE and IFM. The data there seems to suggest that, patients with MRD negative status that go on to receive transplant, the PFS and MRD negativity improves. So, do you know how many, or if any, of the newly diagnosed patients in 12F trial have gone on to receive transplant?
William Wei Cao
Let me crack the first, Wendy. I’m not aware about these studies. But we can only comment on our study, although this study is still under embargo for ASH. So, we can’t really elaborate details.
For your second part of question, how many patients, in our study, gone to transplant. No, we don’t have that detail at this moment. So, hopefully, just in a couple of weeks, we’ll have more details.
The first question, Wendy, maybe you can do it.
Wendy Li
Actually, yes. For all the details that we have, I think, respect the ASH embargo policy. So, I think we cannot share too much details beyond the abstract at this point. But we welcome you to join our ASH presentation in December and we’re looking forward to discussing more at that time.
Operator
There are no further questions at this time. I would like to turn the call back over to Dr. William Cao.
William Wei Cao
Thank you again to everyone for joining us on the call. Gracell is well positioned to deliver breakthrough CAR T therapies capable of overcoming major industrial challenges, by leveraging our proprietary FasTCAR and TruUCAR technology platforms. We are proud of the progress Gracell has made over the third quarter of year 2022.
We’re focused on preparing the IND applications for the US and China agencies, and look forward to presenting the first clinical data from the newly diagnosed multiple myeloma IIT at ASH next month.
Operator
Ladies and gentlemen, this concludes today’s presentation. Thank you once again for your participation. You may now disconnect.
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