GRCL - Gracell Biotechnologies: A CAR-T Company Flying Under Your Radar

2023-09-21 16:52:03 ET

Summary

• Gracell Biotechnologies is a China-based biotech focused on next-generation cell therapies for hematologic malignancies.
• Their CAR T platforms aim to address manufacturing time and T cell exhaustion issues seen in currently approved therapies.
• The company has promising early-stage data, but it is still in the early phases and warrants further observation.

Topline Summary

Gracell Biotechnologies ( GRCL ) is a China-based biotech focused on next-generation cell therapies for hematologic malignancies, with a smattering of other disease targets. Their CAR T platforms are attempting to break up problems of manufacturing time and T cell exhaustion that crop up with currently approved therapies. They're very early stage yet, but they are a compelling story worth following. I say hold for now and watch for signs to jump in.

Pipeline Overview

FasT CAR Platform

In the US, the most advanced project GRCL is developing is GC012F, based on a platform of CAR T-cell therapy that is intended to speed up manufacturing time. The company hopes that they can get "younger" cells to patients who desperately need them. The company touts a manufacturing time of roughly 1 day, compared with the 1 to 6 weeks it can take for currently approved CAR T-cell products to be made.

GC012F is the flagship here, targeting both BCMA and CD19, both of which have currently approved CAR T-cell therapies. The latest clinical data the company presented was at ASCO 2023, with abstracts focusing on phase 1 results for myeloma and B-cell non-Hodgkin's lymphoma .

Patients in the myeloma group were heavily pretreated, with a median 5 prior lines of therapy. Among the 29 evaluable patients, 93.1% achieved a response, with 24 of the patients achieving a stringent complete response. The median progression-free survival was 38.0 months.

In the NHL presentation , the 9 patients enrolled had a median 2 prior lines of therapy. All 9 achieved a response to therapy, with 7 of the patients having a complete response. In both studies, safety was manageable, with expected toxicities like cytokine release syndrome and no serious outcomes like neurotoxicity that has been observed in the past with CAR T-cell therapies for these diseases.

In another recent presentation from ASH 2022, GRCL presented findings in patients with newly diagnosed, transplant-eligible patients with multiple myeloma . Again, the response rate was high, with all 16 patients enrolled in the study responding to therapy. The median duration of response had not been met at the time of data cutoff.

Now, GRCL are conducting a phase 1b/2 trial evaluating GC012F in patients with relapsed/refractory multiple myeloma, the first such ex-China opportunity the company has disclosed. They're also intending to move forward with clinical studies in systemic lupus.

TruUCAR Platform

TruUCAR is the company's take on developing an allogeneic CAR T-cell product, one that would not require removing a patient's T cells and engineering them, which could fail at multiple steps. This is one of the big goals of a lot of cell therapy companies today: make a cell therapy product that can be pulled "off the shelf" and be given to patients without as much delay as the currently approved CAR T-cell therapies.

The only clinical data we've seen so far for this platform were from a small study of 4 patients with acute lymphoblastic leukemia at EHA 2021 . All 4 patients responded to treatment with GC502, a CD19/CD7 dual-targeting CAR T-cell therapy, with no neurotoxicity, no grade 4 or higher cytokine release syndrome, and no graft-versus host disease.

Others

GRCL is working on a number of other cell therapies, most notably in my book a Claudin18.2-directed CAR T-cell product. This is one of the hot targets of interest for immunotherapeutics in gastric cancer, and we are about to see Astellas get an approval in the space, which I covered in a previous article . These are interesting projects as well, but remain preclinical at this time.

Financial Overview

In their Q2 2023 filing, GRCL reported $163 million in cash and equivalents, with another $493 thousand in short-term investments. They had a net loss for the first half of 2023 of $41.4 million.

The company also announced a private placement of shares for up to $150 million, $100 million of which was sold upfront and not represented on the Q2 filing balance sheet.

At this burn rate, and with these assets on hand, GRCL has approximately 12 to 13 quarters of cash left, although that does depend on them keeping their costs under control, and I expect they will have to increase their cash burn to continue funding their projects as aggressively as they want to.

Strengths and Risks

First, let's get it out of the way: GRCL can be considered at best a phase 1 company, as far as an American market is concerned. They have quite a lot of validation to gain before they could possibly have an approved drug, and we're almost certainly talking longer than the 3 years that they might have of cash left.

But their early story here is compelling. The results in relapsed/refractory myeloma are particularly interesting for a phase 1 study, with a decent number of patients achieving a high response rate. This is not a definitive signal, and it's also not being done in the context of an American standard of care, but it's a very loud early signal.

And this is a company that analysts and readers on Seeking Alpha simply aren't paying any attention to. GRCL is currently owned 10% by institutions, 16.5% by insiders, and 45.4% by private equity and venture capital firms. So there is interest here, just not in the public eye. To me, in addition to the fact that this is a Chinese company, these facts suggest flying under the radar.

That said, early-stage companies come with the same heavy bucket of risks. There's a lot of volatility that's possible, but that often ends up working against early adopters in the long run, even if they ever achieve a drug approval. Also, in order to get adoption out of American physicians, we need to see results of studies done in America, as well, and it remains to be seen whether the signal will be as strong there.

Bottom-Line Summary

GRCL has a very interesting tech platform with a lot of promise, assuming they can achieve the lofty manufacturing time cuts that they're touting (their phase 1 studies do not elaborate on the actual time to treatment and manufacturing failure rates). And they have interesting early data. But it's a long road to hoe, and I think there's still plenty of time to take a watch and wait approach here. Put it on your radar, but I wouldn't jump in feet first on this one.

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