Gracell Biotechnologies Inc.

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 would now like to turn the call over to Dr. Kevin Shee, CFO. Please go ahead.

Good morning and welcome to Grace Health First Quarter 2022 Corporate Update Conference Call on the webcast. With me today are Green Cell's founder and the chief executive officer, Dr. William Tao, and our chief medical officer, Dr. William Lee. We're excited to discuss the progress of our differentiated 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 as we head into 2023. As our former remarks, we will conduct a question and answer session. This morning, Grayscale issued a press release announcing unaudited financial results for the quarter and full year ended December 34th, 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 the future plans of our program, resale 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-hour filing with SEC for a full disclosure of these risks and the factors. This conference call contains time-sensitive information that's accurate only as of the date of this live broadcast, March 13, 2023. RISA undertakes no obligation to revise or update any forward-looking statement to reflect events or circumstances after the date of this conference call, except as may be required by equitable securities law.

I will now turn the call over to Greece House CEO, Dr. William Chao. William. Thank you, Kevin.

And again, welcome everyone to our fourth quarter 2022 corporate update conference call. It has been a very productive few months for us. I will begin today's call with key pipeline updates. I will then turn the call over to our CMO, Dr. Wendy Lee, to provide insight into the two company-sponsored trials for GC012F in relapse refractory multiple myeloma that we plan to commence in 2023. Thereafter, our CFO, Dr. Kevin Shea, will discuss our fourth quarter and a full year 2022 financial results. After our prepared remarks, we'll open the call to questions. Let me start by emphasizing the high level of conviction that we have in the therapeutics and the commercial potential of our lead autologous CAR T candidate, BC012F, in hematology and potentially in immunology indications. Autologous CAR T therapy has now established itself as the most potent treatment for several hematologic malignancies. But significant unmet needs continue to exist for patients and physicians who are facing supply limits, long wait times, and high costs, as well as calling for improved safety and durable efficacy. These needs have been propelling the car tea industry to move forward and innovate. At Gracel, we believe 12F represents a next generation of autologous CAR T therapy candidates and has the potential to push the boundary of autologous CAR T on many fronts, such as manufacturing speed, safety, cost, and even durability of efficacy. Utilizing our proprietary fast car manufacturing process, GC012F is comprised of younger, more fit T cells that are manufactured within 24 to 36 hours. Fast cut not only helps to shorten patient wait time to weeks from months, but also provides key advantages in advanced cell quality and cost saving. Next, SOFA features novel BCMA and CD19 dual targeting. This is designed to enable the deepest response and durable efficacy. based on the dual mechanism of action. Our clinical data generated from 45 multiple myeloma patients has shown a consistent 100% MID negative rate in all patients treated with GC012F, which represents the deepest level of eliminating malignant cells in bone marrow. And on the durability side, we plan to provide an important data update from our relapse refractory multiple myeloma investigator initiated trial study around mid-year. And hopefully, that it will add to the expanding body of evidence supporting 12F's significant potential. I also hope to point it out that the dual targeting mechanism of action provides GC012F with wide applicability across diseases where either BCMA or and CD19 could be antigen targets, including multiple myeloma, NHL, and beyond, for example, in certain immunology indications. Lastly, but very importantly, GC012F has demonstrated a highly differentiated safety profile in IIT studies. No neurotoxicity was observed in the 48 patients' dose in three studies underway in RRMM, newly diagnosed high-risk multiple myeloma, and in relapsed refractory non-Hodgkin lymphoma. While the cytokine release syndrome, or CIS, observed in the studies has been mostly low-grade, it is also worthwhile highlighting that the median onset of CIS is around six days across our MM studies. These safety features could potentially provide critical differentiation and benefits in earlier lines or outpatient settings. Last month, we have announced that the US FDA and China MMPA cleared our IMD applications, which included our China IAT data. Grace L has reached a very exciting jump in its development lifecycle as two company-sponsored studies evaluating 12F in RMM are on track to commence soon. Advancing our lead BASCAR-T candidate towards a U.S. Phase 1B-2 clinical trial is a major milestone, and we plan to initiate enrollment in the second quarter. The Phase 1-2 clinical trial in China is expected to commence in the third quarter of 2023. Our CMO, Dr. Li, We'll provide additional details shortly. In addition, we remain very excited about the data we have gathered so far in RIT studies. It is underway to evaluate GC012F in newly diagnosed high-risk multiple myeloma patients. The first inpatient data from this trial was presented at an oral session of the ASH annual meeting in December 2022. We were overwhelmed by the very positive reception from the medical community on the data. SKOLs are optimistic about our candidates' potential in frontline settings. We continue to follow up this study and anticipate sharing additional data later this year. As a reminder, we also unveiled the first data from an ongoing IIT of GC012 in relapsed refractory NHL at IHA in June 2022. We are continuing the enrollment and the follow-up of these patients in ongoing study and plan to share the updated data at a medical meeting in 2023. Moving on to the off-the-shelf TrueUcar platform, DC502 is our TrueUcar-enabled CD19-CD7 dual-directed allogeneic CAR-T therapy candidate. being evaluated as a treatment for RRB-ALL. At last year's IHA, we presented updated IIT data, which shows three out of four treated patients achieved MID-CR-GRI. This study is ongoing. Next, moving on 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 in allogenetic CD19-targeted CAR-T cell therapy. 007G is derived from HLA-matched donor for the treatment of RRB-ALL patients who failed the transplant and may not be eligible for autolysis CAR-T therapy. We have observed highly encouraging safety and efficacy data in the Phase I portion, and we hope to share the data later 2023. Lastly, Smart CAR T is our second generation technology for the treatment of solid tumors and utilizing a novel construct to take advantage of the suppressive tumor microenvironment and effectively combat solid tumors. Preparations are underway for an IIT trial for the second Smart CAR T candidate. DC506 targeting Claudine 18.2, and enrollment is on track to commence in the coming months. As we're heading to 2023, we're very optimistic about continued advancement of our highly differentiated CAR-T platforms as we are on track to commence two company-sponsored trials and advance enrollment in ongoing studies and push forward other initiatives. We look forward to providing several clinical data updates at upcoming medical meetings throughout 2023. Now, I will 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. In the U.S., we plan to initiate a company-sponsored Phase 1b and 2 clinical trials evaluating GC012F for the treatment of relapsed and refractory multiple myeloma during the second quarter of 2023. We received clearance from the US FDA for IMD application in January 2023. The phase 1b portion of the trial is designed to evaluate the safety and the tolerability of GC012F in two dose levels and to determine the recommended phase two dose. We plan to arrow approximately 12 patients who have received three or more prior lines of therapy in the phase 1B portion at two dose levels. We plan to activate up to five to 10 sites that are very experienced in conducting CAR-T trials. We currently anticipate completing the phase one portion during the first quarter of 2024 and then holding an end of the phase one meeting with FDA shortly thereafter in 2024 to align on the next steps. Attending to the company-sponsored trial in China, we plan to initiate airment in the Phase I and II trials evaluating GC012F in RRMM during the third quarter of 2023. The Phase I portion of the trial is designed to evaluate the safety and tolerability of GC012F across two dose levels and to determine the RPTD. We plan to enroll approximately nine patients at one clinical site in China and anticipate completing enrollment in the phase one portion during the first half of 2024. Last December, An oral presentation on the first clinical data from ongoing IIT evaluating GC012F in newly diagnosed multiple myeloma patients was conducted at the ASH annual meeting. The data demonstrated that GC012F achieved a 100% overall response rate and 100% MRD negativity in all 16 transplant eligible high-risk NDMM patients across all dose levels. The safety profile was excellent as 75% of the treated patients did not experience any cytokine release syndrome. Also, no immune effector cell-associated neurotoxicity syndrome or other neurotoxicity of any grade had been observed. We have received significant enthusiasm from the medical community since the ASH presentation. As the data highlighted an impressive 100% ORR and 100% MRD negative in first line patients that have multiple high risk features and regardless of whether they have responded to the short induction therapy of two rounds of RVD before the infusion of GC012F. In contrast, the current standard of care for newly diagnosed multiple myeloma usually includes as many as four to eight rounds of induction therapy, which can be triplet, such as RVD, or quadruplets, such as the daratumumab, plus RVD, followed by autologous stem cell transplant, and then a few years of maintenance therapy. At the end of the transplant, SCR is typically 30 to 40%, and MRD negative rate could be between 20% to 50%. It's also worthwhile to mention that typically with the standard of care, it can take a year or more between diagnosis and completing the transplant. While with Part T, the median time from diagnosis to infusion of GC012F in the ongoing trial was less than five months. So our data is among the first to demonstrate the material benefits CAR-T can bring to the newly diagnosed multiple myeloma patients, including shortening the diagnosis to treatment time. deepening the response, and maximizing the response rate, all achieved with a good safety profile. We continue to follow the patients in our study to further evaluate the long-term benefits. We are very encouraged by this initial data and currently evaluating the path forward for this indication. I will now hand the call over to our CFO, Dr. Kevin Hsieh. Kevin?

Thank you, Wendy. Turning to our financials, I'd like to touch on a few financial trends. As of December 31, 2022, the company had RMB $1,458.2 million for U.S. dollar $211.4 million in cash and the cash equivalents and short-term investments. We expect the cash yields for this year to be approximately $100 million. Primarily to fund our R&D and technical programs in the U.S. and China. We expect our current cash position to be sufficient to cover our operation plan and R&D activities towards the end of 2024. That loss attributable to ordinary shareholders for the three months ended December 31st, 2022 was RMB 130.7 million where US dollar 18.9 million compared to RMB 128.6 million for the same period in 2021. Net loss attributable to ordinary shareholders for the full year ended December 31st, 2022 was RMB 607.5 million, or U.S. dollar 88.1 million, compared to RMB 453.7 million for the same period in 2021. Research on the development expenses for the three months ended December 31, 2022, where RMB 113.1 million, or U.S. dollar 16.4 million, as compared to RMB $107.6 million for the same period in 2021. The full year ended December 31, 2022. Research and the development expenses were RMB $485.4 million or U.S. dollar $70.4 million, compared to RMB $326.9 million for the same period in 2021. increases was primarily due to the increased spending on research development and the clinical trial, as well as higher payroll and the personnel expenses attributable to increased headcount. And the higher facility related cost is supported of continued expansion of research and development activities. With that, I'd like to turn it back to the operator to open the session for your questions. Operator?

The floor is now open for your questions. To ask a question at this time, please press star one on your telephone keypad. If at any point you'd like to withdraw from the queue, please press star one again. You will be provided the opportunity to ask one question and one further follow-up question. We'll now take a moment to render our roster. Our first question comes from the line of Yigal Nishibuts, from Citi. Please proceed.

Hi, team. This is Carly on Courier Gall. Thanks so much for taking our questions. First, can you comment on the vein-to-vein time you are anticipating for GC012F in the U.S. Phase I with the current process and quality control procedures that you have in place? And then, I guess, how much further do you believe that can be optimized as you move later stage development and eventually the commercial setting.

Hi, Carly.

Very good question. The first part is very good. The second part is better. And let me sort of put together pieces so that he understands, you know, because each of we, we probably using different definitions. So let's say at the delivery time, meaning we receive the sample and return the cells to the hospital. That's about, that's supposed to be seven days. However, you add on logistics and then QC everything. It's about 12 days. Now, before I get to lymphodepletion, okay, the releasing tests in our hand is, five days, seven days. However, in the US, the test is being done by third party laboratory. So that will add on a few more days. So it's not gonna be seven days really to test, it's been probably nine days, 10 days, and perhaps even longer. So that part, I can't give you definitive answer yet, So basically, it's three days manufactured from receiving and by having the cells ready, plus a week to seven or some days to 10 days of testing days. Now, vein-to-vein time, including lymphodepletion, so that will add on three days plus. So total together, I would say about probably up to three weeks. Yeah, and the second part of the question is, is there any possibility to optimize? Yes, of course. Moving forward, we will establish in-house, quote, quote, the tests can be done within CDMO. Then it will shorten the time of logistics

shipping in and out.

Okay, great. That's super helpful. And then we just had one follow-up. I guess we've heard from some companies that is rolling. Oh, yeah.

That is one minor point I would like to add on here. Now, if we could further optimize the releasing test, let's say shorten from seven days to five days, for example, then it is some area we can optimize as well.

Okay, perfect. And then our follow-up was just on enrollment. I guess we've heard from some companies that enrolling late-line myeloma patients in the U.S. is becoming increasingly difficult given the availability of the BCMA bispecifics. So just curious, any feedback you're hearing from KOLs around this and what steps you could take to facilitate enrollment in the phase one, two. Thank you so much.

Sure. Wendy, do you want me to try first and then you can?

Yeah, go ahead.

Okay.

Yeah, go ahead. Yeah. My signal is not very good. Okay.

Yeah. That's why we, what we hear is slightly different. the PIs, the carriers we have been working with are very enthusiastic. And it seems to us that Phase 1B, 12 patients enrollment, is not going to be an issue. Now, hopefully, our sites we select are very experienced. That we know. And hopefully, the patients They're enrolling in their site and also looking for fast delivery products like GC012F. Anyhow, so far, we don't have any special concern about the speed of enrollment.

Does that answer your question? Wendy, do you have anything to add on? Yeah, you're right.

Your answer is perfect.

Thanks, Connie. Did we answer your question?

Our next question comes from the line of James Shin from Wells Fargo. Please proceed.

Good morning, guys. Thanks for taking my question. Just wanted to touch base on comments regarding a partnership and It didn't seem mentioned in press release, and then I have a follow-up.

Yeah, you haven't seen it in press release. You're right. We wish it come to material. Since our ASH presentation of newly diagnosed multiple myeloma study and the immediate need news about IND filing, we do receive positive response and interest. But I can't reveal more details in that direction. But please be assured that's on top of our priority. This is the right way to go.

So we'll continue to pursue that. Got it, okay.

And then for the quadrin program, what sort of, would you expect to see responses this early, or is this sort of like a proof of concept? Can you say anything on your expectations for solid tumors for cell therapy?

Quadrin program, you mean SMARCA for solid tumors? Yes. GC506. Okay. Yeah. The target is

Claudium 18.2. We will initiate clinical IIT first, which will commence very soon. I believe, yeah, very soon. So we'll have reasonable time to assess solid tumor response.

But this will take, I don't know, six months to evaluate the new product. Okay.

All right.

Thank you.

Yeah. We haven't published any data, including clinical data, mechanism of study, so I can't really comment on the details, but the purpose of this whole program or the objective of the new design on Claudio 18.2 plus the smart device is to enhance the efficacy. And we believe for solid tumor, you do need a strong push of the CAR T-cell into tumor tissue to combat the suppressive environment. So hopefully with the additional smart design plus this, you know, widely recognized target 18.2, we're going to see some signal. But we just have to wait for that. Thank you, Paul.

Our next question comes from the line of Justin Zelen from BTIG. Please proceed.

Hi. Good morning, guys. Thanks for taking the question, and congrats on the progress here. I had a question just on the IIT durability data that we're expecting later this year. You know, are you targeting a medical meeting for disclosure of that data, or could that come as kind of a company event here? And I have a follow-up.

Yeah, Wendy, I think that's for you.

Yeah, that's right. Yeah, we're going to have, yeah, explore the data in the later this year for the meetings or the managed craft. So, yeah, we're looking forward to public those information later, but within this year.

Okay, great.

You know, may I add on? May I add on? You know, you hear from Dr. Lee that both paper and presentation conference are planned, so whichever come out first. You know, it's possible at the end of the year if, you know, ask on a year high if these, we can get in on time. And if the paper published earlier than that. So it's all ballpark. It's in ballpark within this year.

Got it. Okay. That makes sense to me. And then for the 29 patients, I think the last update we got last year, the median duration of follow-up was approaching a year. You know, for this next update, do you think we could potentially see like a two-year median duration of follow-up or or a year and a half, like in that kind of range?

Yes, that's true.

Okay, excellent. All right, thanks for taking my question. Thank you, Justin.

Our next question comes from the line of Kelly Shee from Jefferies. Please proceed.

Hi, thank you for taking my question. This is Dave for Kelly Shee. Actually, I have a question on GC007G in BALL in China. So you said data will be in 2023. Can you add some color on when the submission to an MPA is planned and maybe some color on market opportunity of GC007 in BALL in China?

Thank you. Thanks. Do you want to take that one?

Yeah, the double double double seven, right? Yeah, right. The fish to a portion is ongoing right now the clinical trial. We have observed very increased data in the first one. So we're going to share the data. Again, the later this year. We have more at home with him.

I think that's about it.

That's good. Thanks, everyone.

All right, thank you. Our next question comes from Emily Bodner from HC Wainwright. Please proceed.

Hi, thanks for taking the questions. I guess since you said you expect to finish the Phase 1b portion of the US study in the first quarter of 24, should we not expect any data updates from the Phase 1 this year? I guess kind of a follow-up on the durability questions. Maybe just tell us how you're thinking about what would be considered positive. I know previously you said 15.7 months was an estimate, but are you looking to see something around that range or could we potentially see something higher? And maybe now that you're advancing 12F into later stage studies, how are you kind of thinking about prioritizing the rest of your pipeline for development? And is there any other indications besides ALL that we could see data this year?

Thanks. There are about three questions.

First one, will we have any data release for Phase 1B of 12F prior to first quarter of next year? The second question is, your ability of the 29 patients IT study. What's the third part?

Just prioritization of the rest of the pipeline for the year.

Right. That's right. That's right. Wendy, do you want to take the first one, the 12F1B study?

Actually, I think it's like you just mentioned about the completion will be the first one, phase 1B element will be like 2024, first quarter. And then I think the data, we're just looking for that timing, time frame. So now it's early and premature yet. So the second question.

The 12F durability.

The durability, actually, we're very confident from our 29, you know, yeah, patients from the IIT already. We got a very good, you know, data, right? And also durability, so we're going to explore the data. I think we just mentioned about a couple people asking for in this year, later on, right? Either one, the meeting or manuscript, right?

Yeah. Yeah, you know, we can. provide more details about the durability, but you can hear from us. We're very encouraged, very confident. So let's look forward. Now, the third part, which is prioritization, the 12F has been demonstrated such safe, very outstanding safety profile, as well as advocacy across about now total, what, 50 patients and across three indications, RMM, NDMM, NHL, we believe this dual targeting compound has very unique applicability. In addition to hematological cancers, there will be a possibility to cross the line to immunology indication. because of BCMA CD19 or CD19 or end CD19. So we prioritize our resources, and we like to focus on expansion of application of this product.

Okay. Thank you very much.

You're welcome.

With that, our final question comes from the line of Louis Chen from Cantor Fitzgerald. Please proceed.

Hi, this is Wayne. I'm for Louis. Congrats on all the progress and thanks for squeezing. So my first question is, do you think the phase two portion of the US study for the GC012 that could serve as a basis for accelerated approval? And then I also wanted to ask, you have a lot of going on this year, very, very busy. So what are your key, most important readouts that you're looking forward to this year?

Thank you. Yeah, two questions. Wendy, do you want me to take that one?

Yeah, go ahead.

Okay.

The phase two, after the phase two, 50 patients enrollment, are we looking at a breakthrough? It's very possible, of course. But let's see from phase one B data, and we'll certainly look for that, look forward to apply for that. Now, we do have lots going on this year. particularly this year. Lots going on. R&D study in the U.S. and new programs entering clinical IIT. And we are moving on filing some of these new products, R&D filing in the U.S. as well as in China. But it's all being laid out nicely. They all stack out with all the resources aligned. And of course, the focus is continue to be without hesitation pushing forward with the 12F on RMM because that's going to demonstrate a lot of features of this product and then additional application of this compound is sort of being laid out newly diagnosed NHL and potentially immunology indication so these are sort of key focus but then We're also very excited about a solid tumor program. We're coordinating point two is sort of proven target. Now our logic is very simple. If we add on smart car device, would the efficacy be better? Which is so much needed for solid tumor, right? Now for the true UCAR platform, we're continuing refinement of the UCAR-T products, technology as well as to the product and with the goal of extending the persistence, which is the key to off-the-shelf CAR-T product. And we do see very encouraging preclinical data in both solid tumor program as well as the UCAR-T program. And then we'll see now what's going to happen in preclinical model and we would like to see in human models, in human studies. So it's a very exciting year. We're looking forward to see data coming out in the middle of the year and end of the year.

Got it. Thank you very much. Thank you. You're welcome, Louis. I would now like to turn the call back to Dr. William Chow.

Thank you again to everyone for joining us on the call. We are proud of the progress the Gray Cell team made over the past year. 2023 will be a critical year for us as we are on track to initiate our RRMM IND studies in the U.S. and China. We believe Gray Cell is well positioned to deliver CAR T-cell therapy that can potentially transform the treatment landscape. We look forward to providing clinical data updates and sharing key pipeline and technology updates throughout the year.

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