Gracell Biotechnologies Inc.

Ladies and gentlemen, thank you for standing by and welcome to the Gray Cell Biotechnology's first quarter 2023 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 would now turn the conference call over to Dr. Kevin Shea, CFO.

Please go ahead.

Good morning, and welcome to GreenCell's fourth quarter 2023 corporate update conference call and webcast. With me today are GreenCell's founder and the Chief Executive Officer, Dr. William Cao, and our Chief Medical Officer, Dr. Wendy Li. 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 development and upcoming objectives as we progress through 2023. We will conduct a question and answer session following our formal remarks. This morning, Grissel issued a press release announcing unaudited financial results for the fourth quarter ended March 31, 2023. 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, resource management will be making forward-looking statements. actual results could differ materially from those stated or implied by those forward-looking statements as a result of various important factors. And please refer to the risk factors section of our latest 20-F filing 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 forecast, March 15, 2023. Bracelet 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 equitable securities law. I will now turn the call over to Greece House CEO, Dr. William Tsao. William?

Thank you, Kevin. And again, welcome everyone to our first quarter 2023 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 insights into the data presentations from three studies that will be showcased at ESCO and IHA in June. Next, our CFO, Dr. Kevin Shea, will discuss our first quarter 2023 financial results. After our prepared remarks, we'll open the call to questions. Since 2017, when we began the development of our proprietary fast car next day manufacturing platform and our lead autologous car key product candidate, the BCMA CD19 dual targeting GC012F, we have immense scientific knowledge, manufacturing expertise, and the clinical data to support our growing conviction in the transformation of this technology and in the therapeutic potential that our product candidates can bring to the CAR-T industry. 2023 is shaping up to be a great year as we gather long-term follow-up data from several proof-of-concept studies in two hematological indications, launch our R&D trials in the U.S. and China, and also advance GC012F into a new therapeutic category of autoimmune disease. EC012F is currently being evaluated across three hematological malignancies, including relapsed refractory multiple myeloma, or RRMM, is short, newly diagnosed multiple myeloma, or NDMM, and relapsed refractory B-cell nalhotricaniforma, or RRBNHR. Starting with RRMM. We are on track to provide updated clinical data from the fully enrolled multi-center investigator-initiated trial, or RIT, at both ASCO and EHAR this June. We hope this long-term follow-up data can offer further validation to GC012F's differentiated profile, including its unique BCMA-CD19 dual-targeting approach that contributes to deep response. and it could potentially help to extend the durability of response. More details will be provided once the ASCO embargo lifts on May 25th. We believe GC012F is a next-generation khaki therapy candidate that has the potential to push the boundary of autologous khaki on multiple fronts, such as manufacturing speed, safety, cost, and durability of efficacy. We are focused on the clinical development of GC012F and are on track to commence our company-sponsored Phase 1B-2 clinical trial in the U.S., evaluating GC012F in RRMM before the end of the second quarter 2023. In addition, we plan to initiate the company-sponsored Phase 1-2 clinical trial in China. in the third quarter of 2023. Next week, on May 22nd at 9 a.m. Eastern Time, we'll host a key opinion leader webinar with our lead principal investigator, Dr. Saad Osmani, Chief of Myeloma Service at Memorial Sloan-Katharine Cancer Center. The webinar will include a discussion of the unmet needs and the therapeutic landscape for RRMM. Turning to NDMM, follow-up continued in the ongoing RIT evaluating GC012F in a group of newly diagnosed high-risk transplant-eligible multiple myeloma patients. As you may recall, the first clinical data presented in ASH 2022 demonstrated that one single infusion of GC012F achieved a 100% overall response rate. and 100% minimum residual disease negativity in all 16 treated patients across all dose levels. The preliminary safety profile was outstanding, with 75% patients not experiencing cytokine release syndrome, and none of the patients had neurotoxicity of any grade. We anticipate sharing updated clinical data in the second half of this year. Related to the ongoing RIT evaluating GC012F in RRB NHL, we look forward to presenting updated data at the 2023 ESCO and EHA 2023, including as an oral presentation at EHA. More details about the data set will be made available on May 25th in line with ESCO Embarkle Policy. As unveiled in the press release issued earlier today, we're very excited to announce our strategic decision to pursue clinical development in the immunology field for GC012M. Starting with systemic lupus erythematosus SLE, we believe FASCAR GC012M is well positioned as an ideal product candidate for a wide range of autoimmune diseases. Given the three key differentiators, including DD19-BCMA dual-targeting capability, consistently favorable safety profile demonstrated across three RITs, and our proprietary FOSCOTI manufacturing process. This strategic decision is also supported by the robust body of clinical data, as well as the clinical development and the manufacturing experience. we have accumulated by studying GC012F in over 50 patients across three hematological cancers. SLE is a chronic autoimmune disease in which the autoantibody produced by the immune system attack the patient's own tissues, causing multi-organ damage. SLE affects over 3 million people worldwide. While immunosuppressants are used as a current care, SLE remains a chronic condition that is difficult to manage, significantly impacts quality of life, and has no cure. Furthermore, refractory severe SLE could lead to permanent organ damage, resulting in serious morbidity and even death. As such, there are urgent high unmet medical needs for more effective and even curative therapies, particularly to help manage refractory SLE. Gray cells GC012F represent a novel approach entering human study for refractory SLE and pioneers the use of CD19-BCMA dual-targeting CAR-T in autoimmune disease. By targeting both CD19-BCMA, GC012F potential resulting deeper wider depletion of disease-causing B-cells and plasma cells, and enhancing therapeutic outcomes in comparison with CD19-only approaches. Moreover, GC012F is developed on fast-car next-gen manufacturer platform, and its technology could offer a handful of distinct advantages, including shortened patient wait time, reduced cost, as well as enhanced T-cell fitness. As announced, we have commenced an IIT in China to evaluate GC012F in refractory SLE patients. We plan to file R&D application for this indication in the U.S. and China in coming quarters. In addition to meaningful progress related to GC012F, we are concurrently advancing other product candidates in our clinical pipeline. Notably, at IHA 2023, we will present for the first time the clinical data from the Phase I portion of the ongoing Phase I-II clinical trials in China, evaluating DC007G for the treatment of relapsed refractory B-cell acute lymphoblastic leukemia, or BALL. We are currently enrolling patients in the phase two portion. Now, I'll hand the call over to our CMO, Dr. Wendy Li, to highlight the three datasets that will be showcased next month at ASCO and EHA in greater detail. Wendy, please go ahead.

Thank you, William. Early next month, at the ASCO and EHA annual meetings, we will present data from three studies, The first two datasets hopefully will provide further evidence supporting the differentiated efficacy and the safety profile for our lead FOSCAR product candidate GC012F. The first presentation will be the longer-term follow-up data from the multicenter IIT evaluating GC012F in heavily pretreated RRMM patients. The data will be presented in the oral presentation session at OSCO on June 3rd and in the poster presentation session at EHA on June 9th. Recall that at last EHA, we shared that ECC012F has achieved 100% MRD-negative and 75.9% MRD negative SCR rate in 29 high-risk patients. The responses were still deepening for the newly enrolled patients. The safety profile was favorable and consistent with previous findings with mostly low-grade CRS and no neurotoxicity of any grade. Now, With the first patient enrolled more than three and a half years ago, we look forward to providing updated data to further showcase DC012S, strong efficacy, and safety profiles. The data is subject to OSCO's embargo at this point, and the full abstract will be posted on the OSCO and EHA websites on May 25th. Second, the updated clinical results from an ongoing IIT evaluating GC012F for the treatment of RRBNHL will be highlighted in a poster presentation at OSCO on June 5th and in an oral presentation at IHA on June 10th. While CD19 directed CAR-T has proven effective for the treatment of NHL. There are opportunities for improvement in terms of the response rate, durability, and the speed of manufacturing. CD19 and the BCMA dual targeting approach is novel for this treatment of NHL and could potentially help address this unmet need. at last year's IHA. We have shared the initial clinical data from this IIT demonstrating 100% complete response at month one and three among three patients. We hope to provide an update on additional patients and the longer-term follow-up this June. This obstruct is also subject to the May 25th OSCO embargo. Third, The first clinical data for GC007G, a CD19-targeted donor-derived allogeneic RT cell therapy from a Phase I trial in patients with RRBALL who relapse after an allogeneic human stem cell transplant will be showcased in the poster presentation at IHA on June 9th. As per the abstract posted, to EHAS website on May 11th. The data demonstrated encouraging persistence of allogeneic CAR-T cells, durable remission, and favorable safety profile. Between March 2021 and May 2022, nine RRB-ALL patients were enrolled and treated in the phase one portion of the registration phase one and two clinical trial in China, evaluating TC007G at two different dose levels. All patients had relapsed BALL following a partially or fully matched prior human stem cell transplant. At day 28 after infusion, 100% patients achieved MRD negative, complete remission with or without incomplete count recovery. Add to the median follow-up of 445 days, range from 218 to 649 days. Seven of nine patients remain in CR or CRI. while two patients had CD19 negative relapse. The one year progression free survival PFS and OS were 76.2% and 85.7% respectively. CRS is presented as grade one to grade three events only and all resolved after treatment. No ICANN was observed. I will now hand the call over to our CFO, Dr. Kevin Hsieh. Kevin?

Thank you, Wendy. Turning to our financial results for the fourth quarter ended March 31, 2023. I'd like to touch on a few financial trends. As of March 34, 2023, the company had RMB $1,277.3 million, or US$186 million in cash and cash equivalents and short-term investments. We expect the cash use for this year to be approximately US$100 million, primarily to fund our R&D and clinical programs in the US and China. We expect our current cash position to be sufficient to cover our operating plan and R&D activities to the end of 2024. Net loss attributable to ordinary shareholders for the three months ended March 31, 2023 was RMB 151.7 million or USD 22.1 million, compared to RMB 158.6 million for the corresponding prior year period. Research and development expenses for the three months ended March 31, 2023. or RMB 137.5 million, or U.S. dollar 20 million, compared to RMB 121.8 million in the corresponding prior year period. The increase was primarily due to increased spending on research, development, and clinical trials, including licensing expenses with CJIN. 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 this time, please press star 1 on your telephone keypad. If at any point you'd like to withdraw from the queue, please press star 1 again. We'll now take a moment to compile our roster. Our first question comes from the line of Yigal Noshumovitz from Citigroup. Your line is open. Please go ahead.

Hi. Thank you for taking the questions. With respect to the decision to pursue SLE for 012F, can you talk a little bit more about what other autoimmune diseases you are considering potentially for future development? How did you decide on SLE as the first opportunity? And could you talk about when we would see the initial data from the China IIT for SLE? Thank you.

Okay. Thank you for the question. This is William Chao.

SLE is probably one of the largest indication in autoimmune arena. And that's, and more importantly, there is a Nature Medicine paper as everybody knows now, that the CD19 CAR-T successfully treated six patients, six SLE patients. So these are proven concept, initial data, and we're still trying to pursue other autoimmune indications as well. But at this moment, all I can say is, and this is the plan, get SLE as fast as we can, Now, the mechanism of action will have an incoming event that will disclose why we think the dual targeting is a better fit for this SL indication or other immune disease. Simply, just high level, it's dual targeting. The CD19 is targeting B cell that we all know, and the BCMA targeting plasma cell that is also a major part of autoantibody producing cells.

Okay, so I hope I get a high level answer to your questions.

Yeah, yeah, thank you. And then just with regard to the phase 1B2 that you're starting in the U.S., can you talk a little bit about more the recruitment strategies for that trial? Obviously, that is a very competitive space in terms of identifying and recruiting patients for the relapsed refractory multiple myeloma setting given some of the newer therapies, specifically the bispecifics. And also, when you think about the U.S. trial for the phase 1-2, is it basically the same design as what's going to happen in China, or are there some differences in terms of the way you're going to recruit the trial in China or design differences?

Thanks. I think this question is for Wendy, please.

Okay. Yeah. We're on track to initiate the US MD trial in this quarter and then the next quarter in China. The current study site has been activated in the US. Our study will be conducted in the top medical center and they're well experienced in cell therapy study. So we're very excited to work with the PIs.

Okay, thanks. And then last question. Oh, sorry. OK.

Yeah. And then just one other question with regard to the decision between GC007G and GC502. Can you just comment there? It seems like you're moving forward with GC007G instead of GC502.

But if you could just clarify. Thank you. Wendy, do you want me to take that one? Yes, please. Okay.

007G has been in R&D trial for a while. So it was much earlier than the 502. We haven't even filed R&D application yet. So that, you know, just due to logistics. True UCAR-T, which include the 502, are still developing in an early stage of development. We have gathered a lot of clinical evidence for the gene modifications. And hopefully this year, we'll have something to share with .

Now it's in phase two. Okay, thank you very much.

Our next question comes from the line of Emily Bodner from HC Wainwright. Please go ahead.

Hi, good morning, and thanks for taking the questions. Are there any other Phase I-II studies that you might plan to initiate in the U.S. this year or next year? I know you just mentioned the SLE study, so maybe if you could give a bit more of a timeline on that. Also, can you discuss your strategy for newly diagnosed multiple myeloma? Is that an indication that you think you would move forward in the US eventually? And how do you kind of think about use of a CAR T in that setting?

Thank you. Wendy, me or you?

I think that's the two questions we got in the U.S. trial. Currently, we have a GC012FRMM trial is going to be conducted in U.S. as the 1B, base 1B, and the 2. And more studies will be considered and in plan because your question is this year, next year, right, in the plan. And NDMM, Actually, we have the presentation last year, ASH. And that was so much examined around our presentation last year at ASH.

And yes, the conducted studies in US were in plan.

Our next question comes from the line of Joe Cantazzaro from Piper Sandler. Please go ahead.

Hey, guys. Thanks so much for taking my questions. Maybe just two quick ones from me. First, I just want to see if you had any thoughts on the top line CARTITUDE4 data for CARVICTI, what it means for the space, and maybe more importantly, how you think about the development strategy for GC012F in light of these data. And then with regards to SLE, just wondering if there's any dosing work that needs to be done there, or can the dose levels that you've been using in the setting of oncology translate directly into the autoimmune setting? Thanks.

Let me take Randy.

The data we presented at ASH

provides a good proof of concept for the 12F.

And it's, you know, I don't think it's easy for us to compare head to head comparison with CalVICT under different lines, as we will be updating the new follow-up data, longer follow-up data, at the ESCO for RMM. We are very pleased to see our very competitive efficacy and, again, safety and other features. Regarding the SLE dosing, it's too early, Joe, to talk about it. But I think it's, yeah, it's too early. We could decide, but we need to get more information, obviously the IIT study verification, and then the reference others. But I don't think we'll be very far on the dose oncology.

Okay, great. Thanks so much for taking my questions.

You're welcome.

Next question comes from the line of Kelly Shee from Jefferies. Please go ahead.

Hi, everyone. Thanks for taking my question. This is Dave for Kelly Shee. I have a couple of questions. First one is on GC012F. So now you have initiated the manufacturing setup in the U.S. Just wondering, is there a scope to increase the manufacturing capacity or it's just a that you will be doing at CMO. And the next question is on 007G. Can you highlight a little bit about the treatment landscape in China and what is the market opportunity and whether it will be for adult ALL or pediatric ALL? Thank you.

And the first question.

Yeah, please.

Yeah. The first question says Lonza is our U.S. CDMO. So right now it is supplying for our U.S. clinical trial currently. And the second question for 007G is one type of the allergenic CAR-T that derived from the HLA-matched donors. for BALL patients that relapse from allogeneic stem cell transplant. They usually have HLA matched donor readily available. Some of these patients are not suitable for autologous heart-t therapy due to the cell quality or other issues. Yeah, so using T-cell donated by HLA match the donor as one strategy to help this side of the patient to get access to CAR-T while also addressing the GVHD risk for allogeneic CAR-T. So this eHA will be the first time we disclose the phase one clinical data for GGG. We have observed encouraging persistence of allogeneic CAR T-cells, durable remission, and favorable safety profile. The first one includes nine BALL patients that relapsed following partially or fully matched prior human stem cell transplant. At day 28 after infusion, 100 patients achieved MRD negative CR and CRI at a medium follow-up of 445 days. Seven of nine patients remain in CRR or CRI, while two patients had the CD19 negative relapse. The one-year PFS and OS were 76.2% and 85.7%, respectively. The CRS is present at a grade 1 to grade 2 events only, and all resolved after treatment. No ICANS was observed.

So right now, the phase two is ongoing. Thank you.

Our final question comes from the line of Luis Chen from Canter Garta. Please go ahead.

Hi. Hi, team. This is Wayne Wu for Luis. Congrats on the progress this quarter, and thanks for taking our questions. So our first one is on SLE. What is the current standard of care and what is the efficacy for that? And then what data from the GC012 you have seen so far that gives you the confidence it could be a potential treatment option? And then from a modeling perspective, with a lot of initiations to commence this year, how should we think about the operating expense for the year?

Thank you. Maybe you can do it.

Okay. Regarding all the details of the evidence of a dual targeting for SLE mechanism of actions, I think we'll find an appropriate event to present our evidence. At this moment, I think the the good evidence coming from not just preclinical studies published by other groups, but primarily from this Nature Medicine paper that the CD19 CAR-T is very effective against SLE or CD19 autoimmune disease potentially. So that's all I could comment. We do have foundation-based decision for getting to this field. Now, it's a good question regarding resources. How do we handle multiple projects in the coming years? First of all, we reprioritized some of our early programs, and this SRE filing and phase one studies is not going to be a major cost of programs.

So I think we are in good shape to manage that. Got it. Thank you very much, William. You're welcome.

Okay, and it does appear we do have one more question from the line of Yanan Zhu from Wells Fargo. Please go ahead.

Hi, thanks for fitting me in. I have a couple of questions on the lupus program. Do we know the relative contribution of plasma cells and B cells to the autoimmunity? It does appear from the Nature paper that that targeting B cells alone might have already had a good efficacy. So just wondering the incremental benefit from targeting BCMA. And then also a question on the acceptance of lymphodepletion in lupus as well as in additional broader autoimmune diseases. How do you look at that requirement and what it means for uptake in those diseases? Thank you.

Yeah, Yanen, these are good questions. I think it's similar to part of the question, similar to the previous questions. that is MOA of the TC012F or other autoimmune disease. Maybe I could sort of extend a little bit by referencing one of the publications by UPenn's group that in subgroup of autoantibody producing cells, the expression of BCMA is high. However, CD19 is low. And these are very long-lasting antibody, autoantibody producing cells. And the paper discussed that there will be certain patients remain refractory to CD19 targeting because of the expression of CD19 that's diminished when the cell develops into plasma cell stage. And we all know plasma cell is the major antibody producing cells. And we do have preliminary data to support the direction, but we will discuss about in a proper event.

Did I answer all your questions, Yuen?

Thanks, William. the role of lymphodepletion in autoimmune diseases or how it might affect uptake?

Low lymphodepletion.

Sorry, lymphodepletion.

Yeah, lymphodepletion in, what do you mean? Lymphodepletion in autoimmune disease is lower or I think I missed that.

Sorry, I meant to say for CAR T to be used to treat autoimmune disease, lymphodepletion is required. So I was just wondering how that might fit in an autoimmune disease treatment situation, especially how patients would be willing to undergo treatment.

Right. It is not an issue as being sort of evidenced by this Nature Medicine group and also the clinical studies that we intend to conduct as an IT in China as it being all approved. It's not a concern. Lympho depletion for these autoimmune disease patients is tolerable.

And those chemicals are used or was used for autoimmune disease treatment. So they are safe.

And patient acceptance, I'm not aware of that could be an issue. I don't think so. It's a deliberating disease.

So lymphocytic patient, it's relatively lighter treatment. Very helpful. Thank you, William. You're welcome. I will now turn the conference over to Dr. William Chow.

Thank you again to everyone for joining us on the call. We are proud of the progress the GraceL team has made over the past year. 2023 will be an exciting year for us as we are on track to initiate our RRMM IND studies in both the U.S. and China and expanding GC012F into the autoimmune field. We believe gray cell is well-positioned to deliver clot G cell therapies 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.