Gracell Biotechnologies Inc.

Ladies and gentlemen, thank you for standing by. Welcome to the Graysol Biotechnology's 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 Hsieh, CFO. Please go ahead.

Good morning, and welcome to Graysol third quarter 2022 Corporate Update Conference call on the webcast. With me today are Grissel's founder and the Chief Executive Officer, Dr. William Stahl, and our Chief Medical Officer, Dr. Wendy Lee. 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 development and upcoming objectives for the remainder of 2022. After our formal remarks, we will conduct a question and answer session. This morning, Griselle issued a press release announcing an unaudited financial resource for the quarter ended September 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 program, 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 20S filing with the SEC for a full disclosure of these risks and the factors. The conference call contains time-sensitive information that is accurate only as of the date of this live broadcast, November 14, 2022. RISA undertakes no obligation to revise or update any forward-looking statements to reflect events or circumstances after the date of this conference call, except that may be required by security law. I will now turn the call over to Grisel's CEO, Dr. William Tau. William?

Thank you, Kevin. And again, welcome everyone to our third quarter 2022 corporate update conference call. I will begin today's call with a key corporate and pipeline update. I will then turn the call over to our CMO, Dr. Wendley, to provide insight on our first clinical data from ongoing RIT evaluating EC012F in newly diagnosed multiple myeloma, which was accepted for an oral session at ASH 2022. Thereafter, our CFO, Dr. Kevin Shea, we'll 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 announce that today, Grayscale's Fast Car Tee Next Day Manufacture Autologous Car Tee Platform was named the winner of the 2022 Fierce Life Sciences Innovation Awards. Fast Car Tee 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 FIAS Life Sciences Innovation Award identified and showcase outstanding innovation that is driving improvements and transforming the industry. An expert panel of judges reviewed all the submissions and has determined that the fast car has the potential to make great impact for biotech and the pharma industry. Hence, I hope to thank the recognition by the judges, and I also thank the entire Grayscale team, especially our scientists, for their commitment and hard work. Currently, Brace-L continues to advance a robust clinical pipeline developed in our fast CAR autologous CAR-T platform and the true UCAR allogenetic CAR-T platform. First, on our lead candidate, GC012F, the autologous BCMA-CD19 dual-targeting fast CAR-T therapy. GC12F is currently being studied in three indications. relapsed refractory multiple myeloma, newly diagnosed multiple myeloma, and in relapsed refractory non-Hodgkin lymphoma. We completed enrollment in the Investigator Initiative Trial, IIT, study evaluating 12F for RRMM. In 2022, at both ESCO and EHA annual meetings, we presented updated clinical data that showcased the deep response achieved favorable safety profile, and a differentiated next stage of manufacturing. Specifically, as of June 8, 2022, data cutoff, date following enrollment completion of 29 patients, a single infusion of 12F has achieved 100% MRD negative rates in this group of heavily pre-treated patients, of which 90% were classified as high-risk 12F also consistently demonstrated a favorable safety profile. We are continuing to follow up these patients. Furthermore, we are on track to complete the R&D submission of 12F in RRMM in both the U.S. and China before year end. After having submitted a pre-R&D meeting request to the U.S. FDA, we received a written response in October 2022. Their response was encouraging, and we are currently preparing our IND filing in the U.S. Also in September 2022, we received a written response for our pre-IND submission from China and MPA. The IND submission is on track. Turning to the IAT that is underway to evaluate 12F in newly diagnosed high-risk multiple myeloma patients, we are thrilled This data was accepted for oral session and 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 the clinical data. Newly diagnosed high-risk patients usually respond less favorably to standard care and are associated with poor outcomes. and remain at high unmet medical needs, despite of novel agents being approved in recent years. We hope 12F 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 Lee, will provide more details later in this call. At EHA in June 2022, we also unveiled the first data of 12F in relapse refractory NHL from ongoing RIT. This initial data set demonstrate potent and fast activity with 100% CR rate at month one, observing all three patients treated. As of cutoff date of February 22, 2020. To put this into perspective, All three patients have DL-BCL, a fast-growing aggressive form of NHL. We are continuing the enrollment and follow-up of this ongoing study. And we plan to share updated data at the medical conference in 2023. Moving on to the off-the-shelf 2UCAR platform, GC502 is our 2UCAR-enabled CD19-CD7 dual-directed allogenetic CAR-T therapy candidates. As we outlined previously, we presented updated data last June at IHA 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 three of the patients achieved MID-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 registration of Phase II trial evaluating GC007G, an allogenetic CD19-targeted CAR-T cell therapy. GC007G is derived from HLA-matched donor for the treatment of RRBL patients who failed transplant and may not be eligible for autologous CAR T therapy. This is an exciting milestone for GraceL team as it is our first pivotal trial. We have observed highly encouraging safety and efficacy data in the phase one portion, and we hope to share the data in 2023. Last but not the least, I'm happy to report we have those first patients with our smart CAR T candidate. GC503 for the treatment of metastatic positive solid tumors in a China RIT. Smart Car T is a second-generation technology for the treatment of solid tumors, and they utilize a novel construct to take advantage of the suppressive tumor microenvironment and effectively combat solid tumors. We are also preparing to bring the second Smart Car T candidate, GC506, targeting Claudine 18.2 to the clinical trial soon. For the past 10 and a half months in 2022, we have delivered all promised milestones, including starting several IIT studies, opening our first phase two trials, and providing clinical data updates at a major medical conferences. These clinical and operational developments further emphasize Grace Health's commitment to delivering accessible and highly efficacious treatments to the patients across the wide range of malignancies. Now, I'll hand the call over to our CMO, Dr. Wendy Li, to discuss our participation at ASH in December. Wendy, please go ahead.

Thank you, William. As William mentioned, the abstract for first in human data from ongoing Phase I open-label IIT evaluating GC012F in newly diagnosed transplant-eligible high-risk multiple myeloma patients was accepted for an oral session at ASH 2022. As a reminder, GC012F is an autologous CAR-T therapeutic candidate, doer, targeting BCMA and CD90. Developed on our fast car 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 the July 25th, 2022 abstract data cutoff. The preliminary data shows an excellent safety profile with only 23% of patients experiencing grade 1 to 2 CRS. No high-grade CRS and no neurotoxicity of any grade was observed. Also, the data shows 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 GC012S clean safety profile paired with its 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 are very encouraged by this first clinical data and very much look forward to sharing more details at the OSH Annual Meeting and Exposition in December of this year. I will now hand the call over to our CFO, Dr. Kevin Hsieh. Kevin?

Thank you, Wendy. Turning to our financial. I'd like to touch on a few financial trends. As of September 30, 2022, the company had RMB $1,629.6 million or US dollar $229.1 million in cash and the cash equivalent 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 dollar 17.6 million and long-term borrowings of RMB 48.1 million or US dollar 6.8 million. We're very well funded with cash runway for the next 24 months. We expect cash yields 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. That loss attributable to ordinary shareholders for third quarter was RMB 171.9 million for US dollar 24.2 million compared to RMB 129.3 million for third quarter of 2021. Research and development expenses for the past quarter were RMB $133.4 million, or $18.7 million, compared to RMB $88.6 million in the third quarter of 2021. The increase was primarily due to the increase in spending on research, development, and 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 questions. Operator?

At this time, I would like to remind everyone in order to ask a question, please press star then the number one on your telephone keypad. We'll pause for just a moment to compile the Q&A roster.

And your first question comes from Yigal Nocho-Movitz from Citi. Please go ahead.

Hi, this is Carly on for Yigal. Thanks so much for taking our questions. We have a couple on the newly diagnosed multiple myeloma ASH abstract. First, are you aware of any other published data for a BCMA CAR T in a similar newly diagnosed population? And 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. Thank you.

Okay. Wendy, I'm going to take this one. Go ahead. And please feel free to chip in. This is William Tao, CEO of the company. We, I think we heard there are a few, trials ongoing for newly diagnosed patients. And I believe you can also find in clinicaltrial.org. Probably there are two registered, but we haven't heard any data. We haven't seen the data, obviously. So this conference probably is the first event you're gonna see. you know, serious studies in this field.

What were the other questions? Please.

Yeah, the other question was just on the any, you know, 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.

I think, Wendy, this is probably more product for you to answer. If you have talked to KOL regarding newly diagnosed patients and any feedback.

Yes. We do have a discussion with the PIs actually from the leading medical centers and the receptions have been very positive. positive and they're very interesting for our product and the clinical data, right? And since this study is ongoing, so we plan to provide update data on the ASH presentation December. Thank you.

Okay, great. Thanks very much.

Your next question comes from Kelly Chai from Jeffrey. Please go ahead.

Hi, this is Dave on for Kelly, she from Jeffrey. Thank you for taking our question and congrats on the new data. So I have couple, first is, you mentioned that company received written response from FDA. Could you provide any colors on the steps that are needed from now till 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?

Let me take this. Good question. The FDA's feedback is encouraging. It's constructive. It's somewhat expected. So it's good. And then we move forward based on the feedback. and now being preparing for the package as the last part, so everything moving accordingly. And China as well, we received a response from China CDE, and we are in the process of submitting the package. So 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 R&D, again, we'll be focusing on RMM. 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, you know, navigate forward What specific indications? I think it remains to be studied, remain to be discussed with KOL. All those data looks really encouraging, especially safety and efficacy, both really outstanding. I'm sure you're going to hear more details at the presentation. But we will definitely not in this R&D filing. That's for sure about how much. you know, how, what is the plan? I think you need to wait to see or keep you updated.

Great. Thank you. Can I ask one more? Um, so last time you mentioned you were looking for some collaboration, any collab, uh, any color on, uh, collaboration to develop DC zero to LS in the U S. Yes.

Uh, it's ongoing. Uh, it just takes longer than we, we, you know, we, we, we thought will be, um, and yet still dialogue is ongoing. And they're interesting several products, but 12Fab is probably the most popular one.

All right. Okay. Thank you. Thanks.

Your next question comes from Joe Catanzaro from Piper Sandler. Please go ahead.

Hey, guys. Thanks for taking my question. Maybe two quick ones from me. Maybe updated thoughts around any potential you know, IND filing strategy for GC12F 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 U.S. and within China? Thanks.

Thanks, Joe.

For NHL, I don't think we have decided to, you know, to share the detail of the plan with public, but certainly it's ongoing. I think, you know, I can't say when we're going to file, but the direction is right because the preliminary IT data looks really encouraging. You know, since IHA this year, We're having enrolled more patients, and the data continue to look very encouraging. So it's probably straightforward. This would be considered a US program. But again, I can't be firm at this moment. But to give up a couple months, then we'll firm up the plan. What was the other? Newly diagnosed? No, no, no.

The second question was around the smart car strategy and whether that's going to be generating data and then go from there.

Correct. Thank you. We have dosed the smart car. We've dosed the 503, metastatic positive ovarian cancer, as you know, to evaluate The solid tumor, it probably takes a couple more months to have a reasonable evaluation. So we are right now at the dose escalation, start from very low. Since we have an enhancer 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 R&D in the United States or North China because we need to see the more clinical evidence. And that's how we want to de-risk the new products. But so far, you know, I can say it looks good, but it's very early.

Okay, great. Thanks for taking my question.

Your next question comes from Justin Zelen from BTIG. Please go ahead.

Hi. Thanks for taking the questions, and 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 a myeloma treatment algorithm, if you could see it being used ahead of transplant or antibody-based therapies.

So Wendy, let me crack this first, okay? Sure. You know, just say this is a newly diagnosed is new arena. I'm sure, you know, everybody understand this is a very big pie. You know, to our understanding, safety is more important than anything for newly diagnosed patients. And 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 response is deepening, so it definitely takes 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 was pretty, I would say, bold, encouraging. We have enrolled almost all the patients high risk and the transplant eligible patients, which shows support from you know, the hospital, the authority, that these transplant-eligible patients, you know, become our first targeted group. So this is this, but whether we're gonna, for future expanded study, are we gonna continue to target transplant-eligible or ineligible high-risk patients? or normal refractory. We just need to see more data evidence to further stratify the groups. So for now, I think that this group is approved by the hospital for the justification, quote, quote, these patients are high risk. Whether they transplant plus quadrilates or triplets, prognosis is not very bright. So this is a good start. We're very excited about the data.

Got it. That's helpful. And just on the IND filing, I was just wondering if you had any thoughts on when the first patient might be dosed in the U.S., if that could take place sometime next year, if you get the go-ahead as expected.

Wendy, do you want to take this?

Yeah, for USMD, actually, right now, it's premature to discuss this. Yeah, and we plan to wait until we have received the acceptance. So we're looking forward to providing the update along the way.

Great, got it. Thanks so much for taking the questions.

Your next question comes from Louise Chen from Kantar Fitzgerald. Please go ahead.

Hi, this is Wayne Ong for Louise. Congrats on the new data and thanks for taking our question. So the first question is on the GC012F. So I think the safety data is so much better on the newly diagnosed multiple myeloma patients compared to the to the relapse patients. So can you maybe give us more colors on why you think it's much better? And then 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. Thank you.

Thanks, Justin.

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 response, I mean, the CIS rate is so low. It's about 23% with gradient 2 CIS and the 77% has no CIS. That is kind of surprise. I can't comment too much without much of evidence. It is new field. We hope that continue that way. And I hope other team studies when they come out data will be interesting to compare. Yeah, that's all I could comment. Now regarding the manufactured capacity, we have sort of made a justification. We made an internal sort of 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 Shuzhou, given the circumstances, we will not aggressively expand capacity for commercialization since we have up to year 2025, 26, we have sufficient capacity.

Got it. Thank you so much.

You're welcome.

Your next question comes from James Chin from Wells Fargo. Please go ahead.

Hi, good morning. Thanks for taking my question. For William or Wendy, can you say if or how many of 12S newly diagnosed patients achieved molecular remission after induction? And then secondly, this one's on transplant. There were two trials, the FORTE trial and the ISM 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?

Can you repeat the second question? The second question.

Sure, sure, sorry. 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?

Let me crack this first, Wendy. I'm not aware about these studies, but you know, we can only comment our study, all those, you know, the study is still under embargo for ASH. So we can't really elaborate details. Um, so for your second part of question, how many patients gone in our study gone to, um, transplant? Uh, no, we don't have that detail at this moment. Um, uh, so hopefully, you know, just in a couple of weeks, we'll have more details. Um, the, um, First question, Wendy, maybe you can do it.

Actually, yes, for all the details, we have to, I think, respect the OSH embargo policy. So I think we cannot share too much details beyond the abstract at this point. But we're welcome. Yeah, you to join our ASH presentation in December, and we're looking forward to discussing more at that time. Thank you.

Thanks for waiting, Wendy. Appreciate it.

There are no further questions at this time. I would like to turn the call back over to Dr. William Tsao.

Thank you again to everyone for joining us on the call. Brace-L is well-positioned to deliver breakthrough CAR-T therapies. capable of overcoming major industrial challenges by leveraging our proprietary fast car and a 2U car technology platforms. We are proud of the progress GraceL has made over the third quarter of year 2022. We are focused on preparing the R&D applications for the U.S. and China agencies and look forward to presenting this first clinical data from the newly diagnosed multiple myeloma IIT at ASH next month.

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