Gracell Biotechnologies Inc.

Ladies and gentlemen, thank you for standing by. Welcome to the Gray Cell Biotechnologies second quarter and half year 2021 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 Q&Up will be given at that time. I will now turn the conference call over to Dr. Kevin Shiet, CFO. Please go ahead.

Good morning, and welcome to Greasell's second quarter earnings conference call and webcast. This is our second earnings call as a publicly treated company. With me today are Greasell's founder and chief executive officer, Dr. William Tao, and our chief medical officer, Dr. Martina Serge. 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 sharing with you our recent business development and upcoming targets for 2021. After our formal remarks, we will conduct a question and answer session and instruction will follow at that time. This morning, we shall issue a press release announcing an audit financial results for the quarter ended June 30th, 2021. We encourage everyone to read this press release and would like to remind you that this call is being reported to replay. Please note that for certain information discussed on the call today, including financial data, clinical data, and the future plans of our program, resource management will be making forward-looking statements. As a result, may differ materially from those stated or implied by those forward-looking statements as a result of various factors, and please refer to risk factor section of our latest 20F filings with SEC for full disclosure of these risks and factors. This conference call contains time sensitive information that is accurate only as of the date of this live broadcast, August 17, 2021. Bristol undertakes no obligation to revise or update any forward-looking statement to recite events or circumstances after the date of this conference call, except as may be required by security law. I will now turn the call over to Bristol CEO, Dr. William Tung. William?

Thank you, Kevin. And again, welcome everyone to our second quarter earnings call. GraceL has made substantial progress during the first half of this year, and it continues to deliver across corporate, clinical, and operational initiatives. I will elaborate on some of the key achievements so far and expected milestones for the remainder of year 2021. Following this, I will turn the call over to our CMO, Dr. Martina Sush, to discuss our pipeline development and then to our CFO, Dr. Kevin Shea, to discuss financial results. Over the first half of the year, our innovative portfolio of autologous and allogeneic CAR-T cell therapies built upon our rich cell therapy and gene editing expertise and proprietary FASTCAR and TrueUCAR technology platforms continues to meet key milestones and demonstrate encouraging and competitive therapeutic potential across multiple difficult to treat pathological malignancies and solid tumors. We presented exciting longer-term follow-up data for GC012F, our BCMA-CD19 dual-target CAR-T therapy. GC012F is a novel dual-targeting product specific for two different antigens, BCMA and CD19. which we believe has the potential to be highly efficacious. Dr. Sech will expand on this shortly. Our plans for R&D application submission remain on track in both U.S. and China within the first half year 2022. At AACI annual meeting in April, we presented updates on longer-term follow-up for our study in TALL for GC027. our lead true UCAR candidate, an off-the-shelf standalone UCAR-T therapy. Data continues to be very promising, and Dr. Sech will further elaborate. On the leadership team side, we're very happy to announce the timely expansion of our U.S. team. Last spring, we appointed Dr. Jenny Nee as Chief Technology Officer She is seasoned in CAR T-cell therapy CMC development and having successfully led process development at both Pfizer and Allergen Therapeutics. Dr. Ni's focus will be supporting smooth technology transfer to Lonza for our fast CAR-enabled product candidate, DC012F. In addition, we're excited about Dr. Grace Jiang's joining Gracell as our head of U.S. regulatory affairs, reporting to our chief medical officer. Dr. Jiang brings nearly 20 years of experience in biotechnology companies, including at Amgen in regulatory affairs, with filing experience in multiple myeloma. Dr. Ni and Dr. Jiang's contribution will be instrumental as we continue to advance our product development And these key appointments also mark an important step to advance our presence in the United States. As we enter the second half year 2021, we will continue to build on our solid progress achieved so far. In the coming months of this year, we are planning on advancing exciting early pipeline candidates into clinical studies in China. We will enhance our R&D capabilities in the U.S. with our ongoing manufacturing collaboration with Lonza supporting the U.S. R&D submission for the fast car candidate GC012F in the first half of year 2022. We also plan to expand our manufacturing capacity by developing a second, much larger facility in Suzhou, China. in addition to our state-of-the-art 66,000 square feet GMP manufacturing facility designed for fully closed production capabilities to reduce contamination risks and optimize cost efficiency. These clinical and operational developments will bring us closer to delivering accessible and highly efficacious treatments for patients across a wide range of malignancies. Now, I will hand it over the call to our CMO, Dr. Martina Serge, to discuss the pipeline and our clinical programs. Martina, please.

Thank you, William.

BraceL is currently developing a rich pipeline of multiple autologous and allogeneic product candidates for the treatment of different types of cancer. Our most advanced program is GC007G. In March, we announced enrollment of the first patient in our pivotal Phase I-II IND study of GC007G in China, an allogeneic donor-derived anti-CD19 CAR T-cell therapy for the treatment of relapsed refractory BALL And we are now pleased to announce completion of the first dosing cohort for GC007G. 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 in allogeneic CAR-T and is manufactured using healthy donor-derived HLA-matched T-cells, offering a higher quality T-cell advantage over a patient's own T-cell. Updated longer-term follow-up data for GC012F, our dual-targeting CAR-T, manufactured on the FastCar platform, and designed for the treatment of patients with multiple myeloma, was presented at the ESCO 2021 Annual Meeting and the IHA 2021 Congress in June. GC012F is currently being studied in an ongoing Phase I investigator-initiated trial in China for the treatment of relapsed and or refractory multiple myeloma. At the data cutoff January 12, 2021, with the median time to follow up of 13.8 months. 19 relapsed refractory multiple myeloma patients were enrolled and have been treated in three different dose levels from one 10 to the fifth to three 10 to the fifth cells per kilogram with a single infusion of GC012F after a standard lymphodepletion regimen over three days with Flucide, in our single-arm open-label multicenter IIT study in China. Primary endpoint of the study is safety. Secondary endpoints are efficacy, including but not limited to overall response rate, MRD negativity rate, duration of response, and PK, amongst other. Patients enrolled on study were primarily high-risk patients, 95%, as defined by MSMART3 criteria. Among those patients, 16% were double hits and had received a median of five prior lines of therapy. 79% of patients were refractory to last therapy. 95% were triple exposed to PI, IMID, and other treatment modalities. And 95% of patients were refractory to PI. Four patients had received and were refractory to anti-CD38 therapy. The safety... Profile of GC012F, which we reported during the first presentation of data at ASH 2020, showed TEAE of mostly cytopenias, and those were reversible. Cytokine release syndrome, or CRS, a common safety finding in CAR-T therapy, occurred mostly lower grade 1 or 2, with a median time to onset of 6 days, ranging from 2 to 10 days. Median duration of CRS was four days, ranging from one to eight days. No grade four or grade five CRS were observed. CRS was treated with standard of care, including tocilizumab, steroids, and vasopressors, and resolved in all patients within one week. We did not observe any icons of any grades. With a longer follow-up, no new safety findings were observed, and overall the safety profile remains favorable. Overall response rate at time of data cutoff 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. In dose level 3, our recommended phase 2 dose 100% of patients achieved stringent CR. Median duration of response is not yet reached. Time to earliest response was 28 days. Patients on study were assessed for MRD at fixed time points. At month one, out of 16 available patients, 81.3% had achieved MRD negativity by flow cytometry. At month six, 100% of all available patients had achieved MRD negativity in all dose levels. All patients on study received a reduction in power protein, with 95% of the patients achieved a 100% reduction. In summary, as previously reported, GC012F dual-targeting BCMA CD19 CAR-T continues to show a very promising activity in relapsed refractory multiple myeloma patients with an impressive high overall response rate of 100% MRD-negative stringent CR rate in the highest dose level, dose level 3, the recommended phase 2 dose, with mostly high-risk patients, 94.7% heavily pretreated patients, including anti-CD38 antibodies, PIs and IMIDs, with a median of five prior lines of therapy. We are continuing to develop additional candidates on the FastCar platform, enabling next-day manufacturing and faster speed to patients. In the coming months, we expect to move our dual-targeting product candidate for BNHL into the clinical setting. Moving on to the TrueUcar platform, we reported data updates on GC027, an allogeneic CD7-targeted CAR T-cell therapy. With the novel design targeting CD7, GC027 is an off-the-shelf therapy and may have the potential as standalone therapy. It is currently being studied in the multicenter Phase I investigator-initiated trial, IIT in China, for the treatment of adults with relapsed refractory T-cell acute lymphoblastic leukemia. T-ALL is highly aggressive, with most patients relapsing within two years after first diagnosis and survival rates at less than 25% after the first relapse. We used the design of a dual-function CD7 car to target both the malignant cells as well as the patient's own T and NK cells in order to allow the CAR T cells to expand, reduce the risk of graft versus host and fratricide, as well as to deliver anti-tumor efficacy as standalone therapy. Data updates presented at this year's AACR meeting continue to show encouraging efficacy of GC027 in TALL. Patients who had received a median of six prior lines of therapy received a single infusion of Truuca GC027 in one of three dose levels. Patients showed remission with the longest ongoing duration of response at 16.8 months in one patient. At six months post-treatment, three out of five patients, 60%, had maintained MRD-negative CR. One patient maintained MRD-CR until nine months, and one patient with primary refractory disease, no response to VDP regimen, maintained his MRD-CR status until month seven. One additional patient treated presented initially with a high tumor burden and extensive extramedullary EM disease. After treatment with GC027, and as confirmed by PET-CT scan, All EM lesions resolved. The patient achieved MRD-CR at day 28. All six patients tolerated a single infusion of Truuca GC027. No ICANS or acute graft-versus-host disease were observed to date. DRS occurred in all patients and was managed with standard of care, including tocilizumab. Overall safety findings were consistent with previous observations. At the current point in time, we are planning to expand the indication to include patients with CD7-positive AML. Beyond the lead programs discussed today, we have a rich, exciting early-stage pipeline of product candidates based on our FASTCAR and through UCAR technology platforms for several indications in solid tumors and hematological malignancies that we continue to evaluate to move forward into the clinic. I'm also very happy to announce the expansion of my team in the U.S. by Dr. Grace Zhang, who joins us from Amgen with ample experience in leadership roles, and in particular, regulatory experience in multiple myeloma. With the expansion of the team, we are well-positioned to meet important milestones for GC012F, including our expected filing for R&D in the first half of 2022. We continue to expand and hire talent, joining our high-performing teams in China and in the U.S. I will now pass it over to Kevin to discuss our R&D and manufacturing facilities and our financial results.

Kevin?

Thank you, Martina. We have significantly advanced our manufacturing capabilities in both the U.S. and in China. In March, we announced our MSA agreement with the CDMO Lanza to support clinical manufacturing of GC012F in the U.S. We have made concrete progress towards the manufacturing GC012F for planning and these studies with ongoing tech transfer. Moving forward, we plan to leverage Lanza's integrated services in CAR-T manufacturing to establish a state-of-the-art PGMP process, which will be a critical component of our IMD project. We remain on target to file an IMD application for the GZ012S in the U.S. and China in the first half 2022. Our U.S. expansion is currently on the way, with ongoing appointments being made to grow our clinical development, regulatory, operations, and research teams. In China, we're also expanding our manufacturing capabilities by building a new facility in Cebu. In addition to our state-of-the-art 66,000 square feet GMT manufacturer facilities 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 therapy so that our treatment can be available widely and rapidly to the cancer patients who need it. Turning to our financials, I would like to touch on a few financial trends for the second quarter. Research and the development expenses for the three months ended June 30, 2021, were 65.3 million RMBs, or 10.1 million US dollars, as compared to 40.8 million RMBs in the corresponding four-year period. This increase was primarily driven by increases in labor costs, depreciation expenses of research and the development facilities, costs incurred to advance preclinical and clinical pipelines, professional services expenses, and share-based compensation expenses upon the completion of initial public offerings. Net loss attributable to ordinary shareholders for the quarter were 96.2 million RMB, or 14.9 million U.S. dollars, compared to 63.1 million RMB for the second quarter in 2020. As of June 30, 2021, we had 2,063.6 million RMB or $318.1 million in cash and cash equivalent and short-term investment. With that, I'd like to turn it back to the operator to open the session for your question. Operator?

Thank you. At this time, we'll be conducting a question and answer session. If you'd like to ask a question, please press star 1 on your telephone keypad. A confirmation will indicate your line is in the question queue. You may press star 2 if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.

One moment please while we poll for questions. Your first question comes from the line of Joe Catanzaro with Piper Sandler.

Please proceed with your question.

Hey, guys. Thanks so much for taking my questions here, and congrats on all the progress. I was wondering if you had any sense around the timing of a pre-IND meeting with the FDA for GCO12 and what you would look to discuss at that meeting. And then maybe relatedly, I was wondering if you could provide any updates on plans to move GCO12 into earlier lines of multiple myeloma and when we could potentially see initial data there. Thanks.

I think this question is for Dr. Martina Sersch.

Thank you, William.

So we are planning on conducting multiple regulatory interactions over the next eight months before we finally planning on filing our IND. And we are on track with those meeting requests and what will follow. We, at this point in time, though, will not disclose any details of the content of the questions. I hope you understand. And for multiple myeloma, as we had mentioned also in previous meetings, we are planning on moving into earlier lines of therapy based on the data we have generated in relapsed refractory multiple myeloma.

So that is currently the plan where we are working on.

Okay, thanks. If I could just squeeze in a follow-up question. Could you elaborate a bit more on the FutureGen collaboration and how many potential targets the deal covers? And relatedly, could you provide a bit more detail on the first-generation enhanced CAR-T platform and how that could address what you see as maybe some of the challenges in solid tumors? Thanks.

Yeah, I'll take that one. First of all, the first-generation enhanced CAR-T technology, it's a The first publication shows, I think, in greater details, this enhancement is really a gene-edited knockout of PD-1 molecule on the CAR T cells. We have started clinical IIT three and a half years ago. I think that was the first CAR T cell gene-edited, autologous CAR T cell gene-edited entering clinical IIT trials. And the data was presented at conferences in Australia and the US. So now, finally, it's published. Now, PD-1 drugs or checkpoint drugs combination with CAR-T has been studied throughout solid tumor as well as heme cancer. result was not very impressive. Now, our gene-edited autologous CAR T through the trials, although the number of patients is very limited, it's only seven patients, we do see clinical response. We do see a few patients achieved PR and SD. And you would think this is probably the best in class considering metastatic positive pancreatic cancer and cholangiocarcinoma very, among the very, very difficult to treat solid tumors. But as we think, as a company's one of funding philosophy, you know, we need to consider what is the best product for patients, not just the best science, best data, kind of in comparison with other CAR-Ts. And the PR or 30% PR for solid tumor, personally, we don't think that's good enough. So that's why we put that program in back burner and we have been developing second generation of enhanced CAR. Now, I'm not gonna disclose the detail too early. It's additional gene editing on the molecules that will be important for tumor microenvironment. And based on the science that we understand, there are certain molecules in the tumor microenvironment are important in addition to PD-L1. Now the licensing agreement with Futuregene on the Claudium 18.2 is exclusive, and that molecule has been well tested by Futuregene. in their preclinical development settings, including all these model studies and, of course, in vitro in vivo studies. So we have talked to several potential suppliers or companies who are developing antibody drugs targeting Claudine 18.2, and that's the selection we had based on the science. So we're very truly excited. about the selection and about the solid science that field teaching has presented to us.

Okay, great. That's helpful. Thanks so much for taking my questions. Thank you.

As a reminder, if you'd like to ask a question, please press star 1 on your telephone keypad. As a reminder, if you'd like to ask a question, please press star 1 on your telephone keypad now.

One moment, please, while we poll for more questions. Your next question comes from the line of Kelly Shi with Jefferies.

Please proceed with your question.

Thank you for taking my questions. My first question is regarding GC012. We have seen some positive developments in the BCMA CAR-T space recently. in both China and the US. And also by the end of the year, we're gonna have a two BCMA CAR T potential in the market. I wonder whether this landscape change actually have some impact on your development plan regarding which patient population you want to focus on moving forward. And the second question is for GC027. I wonder, could you elaborate on what's the next step and what's the next data? And also, based on the CD7 targeting strategy, are you going to also expand to additional targeting in same-car to treat beyond the T cell lymphoma and the leukemia? Thank you.

Okay, I'm going to take the first half of the questions regarding 12F, and I'll invite Martina to chip in the second half and the question around GC027. This is a common question that many people care about, obviously for the reason that there are two products ahead of us. It looks like it's going to be approved. The second one also getting closer. We're coming with different angles, as you're aware, not just biospecific costs and also targeting primarily on different patient population. And on top of that, without moving to frontline as we propose planning, the response is just superior. And the fast delivery from the time of acquisition of PBMC to product delivery, now it's being really frequently talked about in the industry. Fast delivery to the patients, that's extremely important, in addition to extremely high efficacy. Now, the safety profile it is as important as efficacy. As you're aware, the data has continued to be very consistent in that regard as well. Now, the persistence of the T cells, the CAR T cell in the body has been very supportive to our theory of fast CAR that improve T cell fitness. Yeah, so I think the product is going to be very competitive in both the standard sort of targeted population as well as the population they were proposing, the front line, as you mentioned. So I'm going to invite Dr. Martina Sush to address the next questions and the second half of the question call there.

Yeah, Kelly, thank you. Great question. don't have any plans to change our regulatory strategy even though as one BCMA has been approved and we are expecting the other one to be approved at some point in time as William already mentioned we are dual targeting and we have many factors of differentiation so at the current point in time our regulatory strategy remains as is and for the second part of the question GC027 We are planning on extending the indication to AML, so we are planning on enrolling additional patients into a CD7 positive AML patient.

Thank you very much. Thank you, Kelly.

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One moment, please, while we poll for questions.

Ladies and gentlemen, we have reached the end of the question and answer session, and I would like to turn the call back to Dr. William Chow for closing remarks.

Okay. Well, thank you again to everyone for joining us on the call. The Grayscale team is very proud of what we have accomplished in the four years since our founding. We have rapidly expanded our teams in China and the U.S. with exceptional talent. We have advanced our many clinical programs and de-risked others through clinical investigative initial 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, Gray Cell is well-positioned to deliver breakthrough CAR-T cell therapies capable of overcoming major industrial challenges by leveraging our proprietary fast car and true UCAR technology platforms. 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.