Gracell Biotechnologies Inc.

Ladies and gentlemen, thank you for standing by. Welcome to Gray Cell Biotechnology's 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 Scheer, CFO. Please go ahead.

Good morning. and welcome to GreenCell's second quarter 2022 corporate update conference call and webcast. With me today are GreenCell's founder and the chief executive officer, Dr. William Chow, and our chief medical officer, Dr. Wundi Li. We're excited to discuss our innovative technologies and the rich clinical pipeline of CAR T therapies on today's call. We're also looking forward to sharing with you our recent business development and upcoming objectives for 2022. After our formal remarks, we'll conduct a question and answer session. This morning, Grisel 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, 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 factor section of our latest 20-year filing with SEC for a full disclosure of this risk and the factors. The conference call contains time-sensitive information that is accurate only as of the date of this live broadcast, August 13, 2022. The result undertakes no obligation to revise or update any forward-looking statements to reflect events or circumstances of the date of this conference call, except as may be required by unpeopled security law. I will now turn the call over to Grisa CEO, Dr. William Tsang. William. Welcome everyone to our second quarter of 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 Lee, to her first investor call as part of the Gray Cell 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. Then I will hand the call over to our CFO, Dr. Kevin Shea. to discuss 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 is 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 Lee joined Gracell as a chief medical officer on August 1st, and she is based in the U.S. Dr. Lee will oversee Gracell's clinical development activities, including the advancement of our rich pipeline of autologous and allogeneic product candidates across the fast car and the 2U car 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. Lee brings in significant expertise on both clinical development and medical affairs and will be invaluable as we are on track to file the USR&D application for GC012F in relapsed refractory multiple myeloma, or RRMM, later this year. I will now turn the line over to Wendy.

Thank you, William. It is a tremendous honor to join Greenfield 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 the solid tumors. And overseeing more than 30 successful IMD findings, new drug applications and the biologics lessons applications in both the US 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 fast car and the two-year car platforms to fulfill those unmet medical needs. In past two weeks, I have been impressed by the caliber of the passionate Griselle team, both in China and in the U.S. I look forward to working closely with the entire clinical team as Griselle is on track to commence company-sponsored trials in relapse refractory multiple myeloma, or RRMM. For GC012F, in both the U.S. and China, pending the outcomes of the regulatory processes that are on the way. With that, I will turn the line back over to William. Thanks.

Thank you, Wendy. We had a successful quarter with multiple readouts from three clinical programs at AACR, ESCO, and EHOP. which give us additional confidence in the differentiation and the value of our FastCar and TrueU Car platforms. Just a refresher, the FastCar platform aims to revolutionize the car team manufacturing and enables the next-day manufacturing, which also importantly preserves the youth and the fitness of T-cells. The allogenetic TrueU Car platform leverages 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 IND and several investigator-initiated trials, or IIT for short. First, Let's focus on our lead candidate, the BCMA-CG19 dual-targeting CAR-T therapy, GC012F, based on our Fast CAR Next Day manufacturing platform. We continue to advance the three RITs on two indications for this candidate. We have completed enrollment in the RIT study for RRMM. We presented updated clinical update that showcased the deep response, favorable safety profile, and differentiated next-day manufacturing in June at both ESCO 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 R&D submissions of 12F in RRMM in both the U.S. and China before year-end. We submitted a pre-R&D 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 12F 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 DC025 in relapsed refractory non-Hodgkin lymphoma NHL from an ongoing IIT. This initial data demonstrated potent and fast activity with 100% CR rate at one month observed in all three patients treated. It's a cutoff date of February 22, 2022. To put this into perspective, all three patients have DL-BCL, 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 2UCAP platform, GC502 is our 2UCAP-based CD19-CD7 dual-directed allogeneic CAR T-cell therapy candidate for the treatment of relapsed refractory B-cell acute lymphoblastic leukemia, RRBLL. At EHA 2022, we presented updated data from a single-arm open-label RIT 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 CRI at their one-month assessment. The EHAR data demonstrated a very promising response rate, manageable and reversible adverse events, 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 true UCAP platform, GC502 further validates true UCAP platform approach and the potential wide applicability. Last but not the least, I'd hope to provide update on our donor-derived allogeneic candidate. the CE19-targeted CAR T cell therapy, GC007G. This is a unique product candidate for the treatment of RRBL patients who failed transplants 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 registration of Phase I-II clinical trial underway under a China IMD for the treatment of RRBLL. We are on track to commence Phase 2 portion in the third quarter 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 IMD in the U.S. and China for 12F for the treatment of relapse refractory multiple myeloma during the second half of 2022. Currently, we have two R&D trials and three RIT studies ongoing, and also recently completed enrollment in two RIT studies. We expect to present clinical data updates from a few of RITs at a major medical conference 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 in Venice are itself objective to deliver accessible and highly efficacious treatments to patients across a wide range of malignancies.

Now,

I will hand it over the call to our CFO, Dr. Kevin Sher, to discuss the second quarter of 2022 financial results. Kevin, please go ahead. Thank you, William. Turning to our financials, I'd like to touch on a few trends. As of June 30, 2022, the company had RMB $1,707.3 million, or US dollar $254.9 million, in cash and the 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 US dollar 15.3 million, and long-term borrowings of RMB 53 million, or US dollar 7.9 million. We are very well-funded with Cash Runway into We expect the cash usage for this year to be approximately US dollar 100 million. Primarily to fund our R&D and the clinical programs in the US and China and to support expansion of our GMP manufacturer facilities in Suzhou. Net loss attributable to ordinary shareholders for this quarter was RMB 146.3 million or US dollar 21.8 million compared to RMB 96.2 million for the corresponding per year period. Research and development expenses were RMB 117.1 million or US dollar 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 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?

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. And the first question today comes from the line of Joe Catanzaro from Piper Sandler. Your line is open.

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 GC012 could initiate in terms of dose level relative to the doses you've explored in the in the China IIT, and if not, whether this was a sort of main focus or expected focus of your pre-IND questions. Thanks.

Regarding our U.S. study about the RRMM, actually, yes, we have submitted a pre-IND meeting request to FDA in June, and now FDA confirmed that. They were provided a written response early in early October. Based on this, we were submitting our pre-MD package in a few weeks.

Okay, got it.

I guess maybe just a follow-up whether, again, any thoughts on sort of where dosing could initiate relative to the doses you just explored in the China IAT, whether you would expect some degree of dose escalation or whether you could initiate right at a, you know, close to or near a recommended phase two dose?

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-NB submission, and they're aligned after we file the NB.

Okay, got it. Fair enough. And then maybe as a quick follow-up, I think you've guided towards some clinical updates on current and new programs in the back half of the year, whether at a meeting or journal publication. So wondering if you can maybe elaborate on the specific updates you might provide and whether that might include some initial frontline myeloma data.

Thanks. 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 dive in?

Yeah, yeah. I guess I'm specifically asking about the newly diagnosed frontline myeloma trial that I think you noted is open and enrolling and whether that's in An initial data set we could potentially see sometime later this year.

Yeah, I'll leave this to Andy.

Yeah, this is a newly diagnosed. The MM actually is a meaningful step forward and we're encouraged by the trust place and by the PIS and the hospital on us. The trial is on the way at a single century in Shanghai, China.

Yeah.

And this study is actually an IT study focusing on high-risk, newly diagnosed patients. Yeah, and the enrollment is well underway. So we expect to enter more patients, like 20 patients in total. And we have enrolled and treated more than half already. Yeah, we're hoping to provide the first data by the end of this year. I think that's your question asking for.

Yeah. That's helpful.

Sure.

Thank you. Thank you.

Thanks for taking my questions.

Thank you. Your next question comes from the line of Justin Zelen from BTIG. Your line is open.

Thanks for taking my questions, and welcome to Wendy. I wanted to ask how the tech transfer and manufacturing process for GC012F is going with Lonza and just the confidence around IND filing later this year.

The TAC transfer has been completed, successful, and the LHONSA has been manufacturing GC012F. We're continuing to collaborate with LHONSA to generate additional data and putting the INB package together.

Great. Okay, that's helpful.

Yeah, thank you. And Wendy, maybe? For the newly diagnosed multiple myeloma, the frontline study that you're running, if you could just maybe for us just highlight how the treatment is current standard of care for these patients in China and how that might differ versus the United States, that would be helpful.

Yeah, this study actually is on the way.

in China right now. Yeah. So, right, with enrollment is well on the way. I just talking about that. Yes. And we're hoping to provide the first data by the end of this year.

Yeah.

And also, GC012F is now being studied for three indications, RRMM, NDMM, and NHL. Yeah. So that's the current in China conducting this study.

Got it. And then maybe for these patients, I'm just curious if you have a sense of what kind of background therapies, so what prior lines they may have received before being eligible for GC012F in China.

You mean the NDMM newly? They are newly diagnosed.

They're newly diagnosed and also we're focusing on the high risk also.

They are naive almost. Correct me if I'm wrong.

This is a frontline study. Okay, that's perfect. That's great. Thank you so much for taking my questions.

Sure, thanks. Thank you. Your next question comes from the line of Louise Chen from Cantor Fitzgerald. Your line is open.

Hi, Tim. This is Wayne for Louise. Thank you for taking our questions. Two from the 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? And then second is, is the China COVID lockdown impact over now in second half 2022, or could there still be some helpings here? Thank you.

Yeah.

You know, this is a partnership is one of our major goals of this year. We are

looking for potential partners with complementary strengths.

Of course, they need to be experienced in the cell therapy space, and they're interested in multiple myeloma. So this is what we, if you call it a criteria, that's what we're looking for, to have both. interested in the capability in this field. And that's critical. As you have been seeing, we have been hearing and seeing that every step, including commercial capacity, is very critical for a successful product. So you can pretty much imagine who would be suitable candidates.

That's where we are. Got it. And how about the COVID lockdown impact?

Yeah, it does impact. I wouldn't say there is no impact, but the impact is pretty much on the follow-up evaluation of certain patients because a significant number of patients were from outside of Shanghai. And it's difficult for them to travel to Shanghai because of lockdown. And, 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. But now they are all evaluated. After the lift up in early June, the patients were pretty much all evaluated.

Yeah. Got it. Thank you. You're welcome. 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 Shee from Jefferies. Your line is open.

Thank you for taking my question. So I have a couple, GC012F. And I apologize if you have already addressed these questions since I got on call late. So for the file, I just want to confirm this is all for RMM only, also including NHL. And if not, are you planning to get IMB for NHL? Abakma recently reported 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. baseline trial? Thank you.

So, currently, we're working on RRMM for U.S. right now for IMD submission. Right now, we're in the pre-IMD submission with the meeting with the FDA, and we have the request, and then FDA confirmed that we'll provide the right-hand response in early October. That's for RRMM right now, and the details of the design, I think that's premature to discuss and for the planned clinical program in the U.S., Even others, yeah, we're awaiting feedback from FDA on our pre-IND submission and their alignment after we file the IND. And for NIHL, NDML, and others, NIHL, so we're still ongoing in the IIT study. And, yeah, this encourages the clinical initial data. So we're looking forward to see the follow-up of the data.

Thank you. Thanks.

You know, I think Carrie, eventually we'll come to the point to evaluate and make decisions whether we're going to file IND for both, particularly NHL. But right now, you know, the number of patients are too small, although we are very excited by the data. We have more data now where we'll

By end of the year, we're gonna have more data to make decisions. Great, thanks. Thank you.

Your next question comes from the line of James Sheen from Wells Fargo. Your line is open.

Hey, good morning, guys. Can you hear me?

Yes.

Great, great. Thanks for taking the question. For GC012S, 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 Beckman's CARMA study, they use PFS still. Just any updates on MRD negativity status? And then I'll have a second one on the allogeneic side.

All right. Okay. Wendy, do you want to take this one, or do you want me to take this one? Yeah, go ahead.

You can do that, or I can do that. Yeah, you just mentioned about MRD. I think that's very interesting and critical standard for those like standard, yeah. So we have the striking 100% MRD negative rate in all the patients that we treated, yeah. Most of our patients were assist with the uroflow with a very high sensitive level, you know, the MRD negative into the 10, 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. Okay.

And then for the allogeneic side, is there going to be an update later this year for any of the allogeneic acids?

Yes, we'll have an update later this year. Yeah. Thank you, William. That's it from my end. You're welcome, James.

Thank you. This now concludes today's Q&A session.

I would like to turn the call back over to Dr. William Cowell. Thank you again to everyone for joining us on the call.

Grayscale 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 US and China as we aim to file on the submissions for GC012F in RRMM by the end of the year 2022. Concurrently, we have submitted multiple datasets upcoming medical conferences later this year. We continue to developing the partnership for one of our programs. In conclusion, Grace Cell is well positioned to deliver breakthrough CAR-T cell therapies capable of overcoming major industrial challenges by leveraging our proprietary fast CAR-T and true UCAR technology platform. We look forward to further advancing our clinical programs, and we'll keep everyone updated along the way.

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