Gracell Biotechnologies Inc.

Ladies and gentlemen, thank you for standing by. My name is Bhavesh and I will be your conference operator today. At this time, I would like to welcome everyone to the Greshel Biotechnologies second quarter 2023 earnings conference call. At this time, all lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you'd like to ask a question during this time, simply press the star followed by the one on your telephone. If you'd like to withdraw your question, please press the star followed by the one once again. Thank you. I will now hand the call over to Kevin Shipp. You may begin your conference.

Good morning, and welcome to Griselle's second quarter 2023 corporate update conference call and webcast. With me today are Griselle's founder and the chief executive officer, Dr. William Chow, and our chief medical officer, Dr. Wendy Lee. We're excited to discuss the advancement of the trials underway with our CAR-T candidates on today's call. We also look forward to sharing with you our recent business developments and upcoming objectives as we progress through 2023. We will conduct a question and answer session following our formal remarks. This morning, we issued a press release Announcing unaudited financial results for the second quarter ended June 30, 2023. We encourage everyone to read this press release and would also 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, results 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. Please refer to the risk factor section of our latest 20th signing with SEC for a full disclosure of these risks and the factors. This conference call contains time-sensitive information that is accurate only as of the date of this live broadcast, August 14, 2023. GRISA undertakes no obligation to revise or update any forward-looking statements to reflect events or circumstances after the date of this conference call, except as may be required by applicable securities law. I will now turn the call over to Green Cell CEO, Dr. William Tsao. William.

Thank you, Kevin. And again, welcome everyone to our second quarter 2023 corporate update conference call. I will begin today's call with key pipeline updates and details regarding our recent financial transaction. I will then return the call over to our CMO, Dr. Wendy Lee, to provide insights into data presentations from three studies presented at American Society of Clinical Oncology, ESCO, and the European Hematology Association, EHA, in June. Next, our CFO, Dr. Kevin Shear, will discuss our second quarter 2023 financial results. After our prepared remarks, we will open the call to questions. We had a very successful second quarter with multiple data updates from our clinical programs. Notably, our lead product candidate, BCMA-CD19 dual-targeting FAST-CAR-BGC012F, received significant recognition at the ESCO and EHA annual meetings, where our investigator presented two oral sessions with updated data from our studies in multiple myeloma and BNHL. In particular, at ASCO, GC012F showed 93% overall response rate, ORR, 83% stringent complete response, SCR rate, 100% minimum residual disease negativity, and immediate progression-free survival, MPFS, of 38 months. in an investigator-initiated trial, or RIT, with 29 relapsed refractory multiple myeloma RRMM patients. As a reminder, the RIT data shared at ASCO had a cutoff date of April 12, 2023. We believe GT012F represents a next generation of CAR T therapy candidates. It leverages multiple special features, and proprietary fast car next-day manufacture technology. It is specifically designed to enhance therapeutic efficacy, safety, and product availability time. GC012F and its BCMA CD19 dual targeting design were built utilizing our team's deep knowledge in biology, immunology, and molecular biology. They went through years of development and perfection. We believe we have designed and chosen a compound that strikes an optimal balance between safety and efficacy. The dual targeting approach not only broadens GC012F's applicability in indications where either BCMA or CD19 is a primary proven target, but moreover makes GC012F a potent weapon against complex diseases where multiple antigens are involved, which is true for many hematological cancers and autoimmune disease. Based on the clinical data showcased at the medical meetings over the past year, DC012F has demonstrated the benefits of dual targeting in late and early line multiple myeloma, as well as in BNHL, and achieved deep and durable response. Most recently, We are generating data from preclinical studies supporting the strong rationale for utilizing dual-targeting GC012F to treat refractory systematic lupus erythematosus, or RSLE. Moreover, GC012F is produced utilizing our fast-card overnight manufacture process that facilitates shortened patient wait times and enhance cell fitness. thereby giving clinicians more predictability and flexibility in managing the treatment. Currently, GC0 talk-up is being evaluated in company-sponsored clinical trial in relapsed refractory multiple myeloma in the U.S. and in three RITs, in newly diagnosed multiple myeloma, NDMM, BNHL, and SLE. Recently, we have reached a significant milestone as the patient enrollment has commenced in our U.S. Phase 1b flu trial evaluation GC0-12-F4-RR-MM. Patient screening is underway at the first activated site. As a reminder, the Phase 1b portion primarily aims to evaluate the safety and colorability, as well as determine the recommended Phase 2 dose. We anticipate enrolling approximately 12 patients in the Phase 1b portion. We estimate that it might take approximately 9 to 10 months to complete patient enrollment. Thereafter, we plan to share our data with the FDA and proceed into the Phase 2 portion. We are also continuing to augment the compelling clinical data on GC012F across other indications. At an oral session at EHAR Congress, the updated data from the BNHL China IIT showed 100% ORR at three months and 67% CR at six months among nine patients, all with a challenging diffuse large B-cell lymphoma or DL-BCL subtype. The IIT evaluating 12-12 in new diagnosed multiple myeloma patients is also advancing. We plan to provide an update from this study, including data from additional patients and a longer follow-up at an upcoming medical meeting later in September. Moving on to our immunology program, we are excited to report that RIT for GC05F in refractory SLE has been successfully launched in China during the second quarter. Multiple patients have been dosed, and we expect to share the clinical data in the first half of 2024. Simultaneously, we are amassing compelling preclinical data that strongly support the rationale for CD19-BCMA dual targeting in the treatment of SLE. First of all, in our clinical studies, our candidate has demonstrated the effective elimination of CD19-positive B-cells which is, of course, crucial to facilitate an immune reset and a comeback SLE. Secondly, SLE is a B-cell autoimmune disease resulting from a range of autoantibodies attacking the patient's own system. We believe the treatment show also addressed autoantibodies creating plasma cell or ASC. ASC populations are generally BCMA-positive, and a significant portion of them are CD19 negative. So the use of CD19 single-targeting CAR T therapy alone may not be sufficient to eliminate all the disease-causing ASCs in all patients. Therefore, targeting both BCMA and CD19, which aligns with DC012F's dual-targeting design, has the potential to provide a more effective and a long-lasting therapeutic approach for refractory SLE. In our preclinical studies, 12F CAR-T has shown a more effective elimination of ASCs compared to DD19 CAR-T alone. Last but not the least, based on the preclinical data we collected so far, we found no evidence suggesting occurrence of serious adverse events in body. These preclinical data, as well as the consistently favorable safety data we have accumulated in over 50 cancer patients, give us strong level of confidence in the preclinical potential of GC012F in autoimmune disease. We are currently on track to submit investigational new drug IMG filing to the U.S. FDA in 2023 for the planned phase 1 trial. This will be an important milestone as we continue to advance our efforts to provide innovative, effective treatment options for patients with autoimmune disease. During the second quarter, we've completed a strategic review across our clinical programs and have decided to focus on our resources on our most innovative, validated product candidates, such as GC012F, which we believe have the potential to be the best in class and address large unmet medical needs. You can find our reprioritize the pipeline chart in the Grayscale corporate presentation deck available on our website. The decisions made during this strategic review reflects our determination to be at forefront of medical innovation and underscore our dedication to improving the lives of patients through transformative life-changing therapies. In early August, we were delighted to complete a private placement transaction raising $100 million upfront and up to 50 million additional funds if the warrants are fully exercised within 24 months. The financing was led by Vivo Capital and joined by RA Capital, TCGX, Janice Henderson, and other well-known healthcare investors. This additional funding greatly strengthened our financial position, extends our cash runway into the second half of 2026, and is intended to support us through critical upcoming milestones planned for the clinical development of GC012F in multiple myeloma and SLE. We thank our existing investors for their unwavering support and extend a warm welcome to our new investors who took time to thoroughly understand our technology and the pipeline. The trust and the confidence you have shown in us are truly appreciated. The Gray Cell team is committed to our mission to develop innovative and efficacious cell therapy candidates for patients with cancer and autoimmune disease. Thank you for being an essential part of our success story. Now, I'll hand the call over to our CMO, Dr. Wendy Li, to highlight the three datasets that were presented in June at ESCO and EHA.

Wendy, please go ahead.

Thank you, William. We're continuing to generate clinical data from the ongoing trials for GC012F, our FOSCAR-enabled BCMA, and CD19 dual targeting autologous CAR T cell therapy. This candidate aims to transform cancer and autoimmune disease treatment by driving fast, deep, and durable responses with an improved safety profile and fast overnight manufacturing. At both ASCO and IHA in June, long-term follow-up data from the Multiple Center IIT in RRMM was presented. Based on a data cutout date of April 12, 2023, the data showed DEEP responses with 100% MRD negativity and 82.8% MRD negative stringent CR in 29 RRMM patients. The median PFS was 38 months at this data cutoff date, suggesting the durable responses achieved by GC012I among this heart trait predominantly high-risk patient population. The safety profile was consistently favorable with no neurotoxicity of any grade. and no second primary malignancy reported with this longer-term follow-up. We are very encouraged by this clinical data and have a convinced patient element in the Phase 1b trial in the U.S. Data evaluating GC012F for treatment of BNHL was also presented at OSCO and EHA. including as an oral session at the later meeting. Based on a data call update of April 12, 2023, the updated data from the ongoing IIT showed an ORR of 100% in all nine patients treated. Notably, all nine enrolled patients had diffuse large B-cell lymphoma patients. which is the most challenging subtype of BNHL. GC012F demonstrated impressive, deep, and durable responses, and the complete response rate was 77.8% at month three and 66.7% at month six, respectively. Five of my patients experienced grade one CRS, and one patient had grade three CRS, which resolved within two days after standard of care treatment. No neurotoxicity or atkins of any grade were observed. This data further supports the clinical potential and the wide applicability of GC012F. Additionally, We presented the first data from the company sponsored this one study in China of GC007G at the IHA Congress. GC007G is a donor-derived allogeneic anti-CD19 CAR-T candidate that has been designed to treat relapsed refractory, mesoacute, lymphoblastic, leukemia patients who may not be eligible for autologous CAR T therapy due to poor cell fitness, infections, or other unsuitable conditions. Among the nine patients enrolled and treated between March 2021 and May 2022, 100% of patients achieved MRD negative CR or CRI at day 28 after infusion of GC007G at a median follow-up of 415 days. Seven of nine patients remained in CR or CRI, where two patients had the CD19 negative relapse. The one-year PFS and OS were 76 and 85.7% respectively. Grid 1 to 3 CRS were reported and all resolved after treatment. No neurotoxicity or ICANs were observed. No chronic DVHD occurred. In closing, I would like to highlight that several clinical studies have initiated over the past few months, including the company-sponsored Phase 1b study of GC012F in RRMM in the U.S., the IIT of GC012F in Reflectory SLE in China, and the IIT of Smart CAR-T GC506 targeting clouding 18.2 in solid tumors. Overall, we are very pleased with the progress of our clinical pipeline, and we're eagerly looking forward to building on this momentum. I will now hand the call over to our CFO, Dr. Kevin Shih. Kevin?

Thank you, Wendy.

Turning to our financial results for the second quarter ended June 30, 2023, I'd like to touch on a few financial trends. As of June 30, 2023, the company had RMB $1,188,000,000 or US dollar $163.8 million in cash and the cash equivalents and short-term investments. We expect the cash use this year to be approximately $100 million primarily to fund our R&D and clinical programs in the U.S. and China. As announced in early August, we completed a private placement financing with $100 million risk upfront and up to additional $50 million in the event that the words are fully exercised within 24 months after the closing of the upfront purchase. With this, we have extended our cash runway by one and a half years, and now expect our current cash position to be sufficient to cover our operational plan and R&D activities into the second half of 2026, if the warrants are fully exercised. For the three months ended June 30, 2023, Net loss attributable to ordinary shareholders were RMB 146.9 million or U.S. dollar 20.3 million, compared to RMB 146.3 million for the corresponding prior year period. Research and development expenses for the second quarter 2023 were RMB 103.8 million or U.S. dollar 14.3 million. compared to RMB 117.1 million in the corresponding prior year period. The decrease was primarily due to the slightly decreased spending on research, development, clinical trials, and the payroll. With that, I'd like to turn it back to the operator to open the session for your questions. Operator?

Thank you. If any participant would like to ask a question, please press the star followed by the one on your telephone keypad. Our first question comes from the line of Kelly Shih from Jefferies. Please go ahead with your question.

Thank you for taking my questions and congrats on the progress. I have a question regarding the GC0 trial for the US Phase 1 trial. Can you talk about patient selection criteria and does the trial allow prior BCMA, BCMA CAR T, and also bispecific treatment targeting both BCMA and the GPRC5D? Thank you. Hello?

Okay, sir. Hello? Yeah.

Just to make sure you can hear me.

Yeah, it's a little bit weak. Yeah. The patient screening is ongoing right now. Yes. And the one response to the charging treatment last week, and hopefully a potential more patients can benefit from TC-012F. So we're not exclude, you know, your patients. You just mentioned about the BCMA and other treatment. But we have the, you know, the washout time. Yeah. And between this therapy and TC-012F infusion.

You have more questions? Thank you. And also, would you be able to estimate when are we going to dose the first patients? And in 2023, how many patients will be dosed on this trial? Thanks.

Yeah, we plan to have 12 patients be dosed in two doses. And the patients are still in the screening right now. And so many tests were ongoing. But everything, every patient's screen is on the track. Thank you.

Thank you. Our next question comes online of Joe Catanzaro from Piper Sandler. Please go ahead with your question.

Hi, everybody. Thanks for taking my questions. Maybe first one on the GC012F phase 1 in the U.S. here. William, I know you said that the phase 1B might take 9 to 10 months to complete enrollment of the 12 patients. I guess, is it your expectations to fully complete this portion of the trial before disclosing any data, or is it possible we could see some data once the first dose level clears? Thanks, and I have a follow-up.

Yeah. Thank you, Joe. To report a full set of data, it would take some time. If the question is whether we're going to report a portion of the data, that's not conventional. I think under circumstances, you know, maybe under CDA, it's possible. But I don't think it's conventional to release a portion of the Phase I data.

Okay. Got it. That's helpful. I guess my follow-up, it looks like the Mezzo deal in SmartCar um, was removed from the pipeline with the prioritization. I know it had dosed some patients in, uh, China IIT. So wondering if you could speak to maybe what you saw there that maybe led to this decision and, and whether there's any learnings, um, there with the smart car platform that you could, uh, apply to the Claude and program that you continue on with. Thanks.

Yes. Um, you know, our bar has, we, um, discussed in the previous meetings. Our buy is not just seeing some patients may benefit from SD or partial response. I think currently the program for solid tumor seems there is a term called 50% ORR curse. We think for such a sort of and a complicated autologous cardiac therapy, the efficacy should be higher or the benefits to the patient should be highly differentiated from standard care. And that can continue to be our sort of internal criteria for selecting a potential product to move forward. Now, back to the 503, mesothelioma, and then the corresponding tumors appears very challenging. We do see, you know, the safety. We don't see serious side effects that we need to elaborate. The CIS and the neurotoxin is horrible. But the efficacy is not striking based on our standards. And in the wave of our reprioritization, we focus on the front runners, MM, early line of RM, and autoimmune disease, we decide to slow down some of the early programs.

Okay, got it. Makes sense and helpful. Thanks so much for taking my questions.

Thank you. Our next question comes from the line of Justin Zelen for BTIG. Please go ahead with your question.

Hi, good morning. Thanks for taking my questions and congrats on the progress. Maybe just first on GC012F phase one study, if I heard correctly, I think you opened up in one U.S. clinical site and I think previously you said you expect to open up in five to ten U.S. clinical sites. Just wondering if that's still the case here and just You know, when you might expect the next clinical site to come up online here?

Yes, the first slide is activity, right? Yeah, and the patient's screening is ongoing. And yes, other sites coming. So, right, will be very soon. And actually, some part is working on now. Everything's under control and on tracking now.

Okay, great. Thank you.

And just wanted to see, just checking, I think as far as the prioritization goes, I mean, everything that's reflected on your pipeline, your new pipeline chart here, we should assume that that is still in the company's prioritization, correct?

Correct. Got it. Okay, great. Well, thanks for taking my questions. Thanks, Justin.

Thank you. As a reminder, if you'd like to ask a question, please press the star followed by the number one on your telephone keypad. Our next question comes from the line of Emily Bodnar from Wainwright. Please go ahead with your question.

Hi, good morning. Thanks for taking the questions. First, can you maybe talk about how you think about the market opportunity for SLE in the U.S. specifically? I guess what portion of the population you think could benefit from a CAR-T therapy? And then I just wanted to clarify, I think on the call it said that the newly diagnosed data would be in the fourth quarter, but I think in the press release it was the third quarter. So just could you clarify that, maybe comment on any next steps for that program? Thank you.

Emily, I'll answer your first question first, and then I'm going to ask maybe you need to repeat the second question. The market size, we are targeting refractory SOE. My impression, sorry, I can't give you exact numbers as we have been studying through IITs based on the enrollment criteria and endpoints we are testing and evaluating. So the exact number or the size of markets, I can't give you exact number, It's obvious it's a significant unmet need, and the field or the KOLs are excited about this potential. What was your second question?

Could you just clarify when the newly diagnosed multiple myeloma data is coming and any next steps for that program?

Yeah. Wendy, you can take that one.

Sorry, no question again?

Yeah, the update, let me take this. The updates of newly diagnosed longer follow-up will be in September.

Oh, yeah. Okay, yes, we're looking for, yes, we're going to share. Yeah, we're going to share the updating clinical data from the IIT in MDMM later September. Yes, right.

All right, any, I guess, next steps? Mm-hmm.

The next step will be, yes, to keep the IND submission in later to 23 this year.

All right, thank you.

Thank you. Our next question comes from the line of Yanan Zhu from Wells Fargo. Please go ahead with your question.

Hello.

Hi. Thanks for taking our question. This is for Yanan. So my first question is on RRMM. So for the US Phase 1B2 study, can you discuss the company's internal bar moving the program into Phase 2? And my second question is for SLE. So for the US study, what the company's plan on the dose level? Is it similar to the China IIT? Thank you.

The first question, yes, we're going to finish this 1B first, and then we're going to have the meeting with FDA, and we'll be more clear for next step. And the second question, you mean to compare with China, right? Yes. Depends on the CVE and FDA requirements, they're slightly different from the dose level and the element frequency. Dose level in China will be star, you know, the two dose, right, 1.5 and 3E5, yeah. And in US will be one and three, the two doses. Yeah, and the frequencies in China, they can, you know, come with three patients together. But in U.S., based on FDA requirement, have to one-by-one for months. That's a little bit different, but the timing will be similar.

Thank you. Diana, the dose for SLE is, yes, it's going to be similar, but we haven't decided yet. So we... For this IIT study in China for SLE, we start from low dose, which is very similar to the low dose of RMM IIT trials.

It looks like it's going to be the same dose for SLE. But, you know, we're escalating those. Thank you. Thank you for all the colors. You're welcome.

Thank you. Our final question for the day comes from Igal Nofo Moet from Citigroup. Please go ahead with your question.

Hi, thank you for taking the questions. On GC007, you indicated that you're going to start a, you have started a registrational phase two in China. Can you talk about your thoughts for bringing that product to the United States for clinical development? Thanks.

Randy, I'll take this one. Okay. The 7G, 007G, is a very unique product. And the unmet need compared to other indications are relatively small. So our plan has been limit this product development in China.

But we don't have intention to add on another one on our pipeline to U.S.

Okay. And then regarding the SLE trials, can you just talk a little bit more about how the design of the US SLE trial will be structured in terms of the patient enrollment characteristics relative to the IIT in China? Are they relatively similar?

It will be too early to elaborate the designs of SLE trial in U.S. The purpose of the IIT is exactly to test out what will be the dose, what will be the endpoints, enrollment criteria, and all these will be evaluated through the trials, IIT trials, while we are preparing for and defiling the U.S. But, you know, I'm happy to share with you, we have gained a lot of insight. So the first few patients, But at this moment, it's too early to, you know, have a review. But we do see a lot of, you know, we have obtained valuable information, including the dose, the safety profile, again, preliminary, and the response.

Okay. And then the last question I had was you mentioned the 9 to 12 month timeframe for enrolling. RRM study in the United States. Can you just comment a little more in terms of the assumptions supporting that timeframe? Is it a function of the competing therapies in the spaces and the enrollment criteria and any additional details you can provide on that timeline? Thank you.

Oh, we still keep that. Yeah, we still keep that, you know, like you just mentioned about, right? about 10 months, then we have to finish the phase 1B. Yeah. And then we're going to have the EOP1 meeting with FDA. And then we'll be more clear with next step.

Regarding the competing therapies, so far we don't see that happening. And given the enthusiasm from all those PIs of the centers, obviously the unmet need is clear. The features of this potential product, potential compound, means a lot to the patients and the doctors. The fast turnaround, the safety profile, these are still very attractive.

So far, we see everything as planned. Okay, thank you. You're welcome.

There are no further questions at this time. Kevin Shipp, I'll turn the call back over to you.

Thank you again to everyone for joining us on the call. With the strategic reprioritization of our pipeline, we are focused on advancing our highly differentiated and the most competitive candidates, including the fast car GC012M. The USID trial in RRMM is now underway and we look forward to submitting the R&D filing in SLE later this year. We remain committed to pushing the boundaries of medical innovation and improving patient outcomes through our transformative therapies.

Thank you. This does conclude today's conference call. Thank you for participating. You may now disconnect.