GRCL - Gracell Biotechnologies (GRCL) Q1 2023 Earnings Call Transcript
2023-05-15 11:22:10 ET
Gracell Biotechnologies Inc. (GRCL)
Q1 2023 Earnings Conference Call
May 15, 2023 8:00 am ET
Company Participants
William Cao - Chairman, Chief Executive Officer
Wendy Li - Chief Medical Officer
Kevin Xie - Chief Financial Officer
Conference Call Participants
Yigal Nochomovitz - Citi
Emily Bodnar - HC Wainwright
Joe Cantanzaro - Piper Sandler
Dave - Jefferies
Wayne Wu - Cantor Fitzgerald
Yanan Zhu - Wells Fargo
Presentation
Operator
Ladies and gentlemen, thank you for standing by and welcome to the Gracell Biotechnologies 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 Xie, CFO. Please go ahead.
Kevin Xie
Good morning and welcome to Gracell’s first quarter 2023 corporate update conference call and webcast.
With me today are Gracell’s Founder and 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, Gracell 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, we will be making forward-looking statements. Actual results could differ materially from those stated our implied by those forward-looking statements as a result of various important factors. Please refer to the Risk Factors section of our latest 20-F filing with the 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 broadcast, May 15, 2023. Gracell 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 laws.
I will now turn the call over to Gracell’s CEO, Dr. William Cao. William?
William Cao
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’ll then turn the call over to our CMO, Dr. Wendy Li to provide insights into the data presentations from three studies that will be showcased at ASCO and EHA in June. Next, our CFO, Dr. Kevin Xie will discuss our first quarter 2023 financial results. After our prepared remarks, we will open the call to questions.
Since 2017, when we began the development of proprietary FasTCAR next-day manufacturing platform in our lead autologous CAR-T product candidate, the BCMA/CD19 dual targeting GC012F, we have amassed 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 candidate 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 IND trials in the U.S. and China, and also advance GC012F into a new therapeutic category of autoimmune disease. GC012F is currently being evaluated across three hematological malignancies, including relapsed refractory multiple myeloma, or r/rMM for short, newly diagnosed multiple myeloma, or NDMM, and relapsed refractory B-cell non-Hodgkins lymphoma, or r/rBNHL.
Starting with r/rMM, we are on track to provide updated clinical data from the fully enrolled multi-center investigator-initiated trial, or IIT, at both ASCO and EHA 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 could potentially help to extend the durability of response. More details will be provided once ASCO embargo lifts on May 25.
We believe GC012F is a next generation CAR-T therapy candidate that has the potential to push the boundaries of autologous CAR-T 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 Ib/II clinical trial in the U.S. evaluating GC012F in r/rMM before the end of the second quarter 2023. In addition, we plan to initiate the company sponsored Phase I/II clinical trial in China in the third quarter of 2023.
Next week on May 22 at 9:00 am Eastern time, we will host a key opinion leader webinar with our lead principal investigator, Dr. Saad Usmani, Chief of Myeloma Service at Memorial Sloan Kettering Cancer Center. The webinar will include a discussion of the unmet needs and therapeutic landscape for r/rMM.
Turning to NDMM, follow-up continues in ongoing IIT evaluating GC012F in a group of newly diagnosed, high risk transplant eligible multiple myeloma patients. As you may recall, the first clinical data presented at ASH 2022 demonstrated that one single infusion of GC012F achieved 100% overall response rate and 100% minimum residue disease negativity in all 16 treated patients across all dose levels. The preliminary safety profile was outstanding with 75% of 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 IIT evaluating GC012F in r/rBNHL, we look forward to presenting updated data at the 2023 ASCO and EHA 2023, including as an oral presentation at EHA. More details about data sets will be made available on May 25, in line with ASCO embargo policy.
As unveiled in the press release issued earlier today, we are very excited to announce our strategic decision to pursue clinical development in the immunology field for GC012F, starting with systemic lupus erythematosus - SLE. We believe FasTCAR GC012F is well positioned as an ideal product candidate for a wide range of autoimmune diseases given three key differentiators, including CD19/BCMA dual targeting capabilities, consistently favorable safety profile demonstrated across three IITs, and our proprietary FasTCAR-T manufacturing process. This strategic decision is also supported by the robust body of clinical data as well as the clinical development and 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 auto antibodies produced by an 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 standard of 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.
Gracell’s GC012F represents 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 could potentially result in deeper, wider depletion of disease-causing B cells and plasma cells, hence enhancing therapeutic outcomes in comparison with CD19-only approaches. Moreover, GC012F is developed on our FasTCAR next-day manufacturing platform and the technology could offer [indiscernible] distinct advantages, including shortened patient wait times, 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 an IND 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 EHA 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 GC007g for the treatment of relapsed refractory B-cell acute lymphoblastic leukemia, or BALL. We are currently enrolling patients in the Phase II portion.
Now I will hand the call over to our CMO, Dr. Wendy Li to highlight the three data sets that will be showcased next month at ASCO and EHA in greater detail. Wendy, please go ahead.
Wendy Li
Thank you William. Early next month at the ASCO and EHA annual meetings, we will present data from three studies. The first two data sets hopefully will provide further evidence supporting the differentiated efficacy and safety profile for our lead FasTCAR product candidate, GC012F. The first presentation will be the longer term follow-up data from the multi-center IIT evaluating GC012F in heavily pre-treated r/rMM patients. The data will be presented in an oral presentation session at ASCO on June 3 and in the poster presentation session at EHA on June 9.
Recall that at last EHA, we shared that GC012F has achieved 100% MRD inactive and 75.9% MRD inactive 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 patients enrolled more than 3.5 years ago, we look forward to providing updated data to further showcase GC012F’s strong efficacy and safety profile.
The data is subject to ASCO’s embargo at this point and the full abstract will be posted on the ASCO and EHA websites on May 25.
Second, the updated clinical results from an ongoing IIT evaluating GC012F for the treatment of r/rBNHL will be highlighted in a poster presentation at ASCO on June 5 and in an oral presentation at EHA on June 10. 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 BCMA dual targeting approach is novel for this treatment of NHL and could potentially help address this unmet need.
At last year’s EHA, we shared the initial clinical data from this IIT demonstrating 100% complete response at months one and three among three patients. We hope to provide an update on additional patients and the longer term follow-up this June. This abstract is also subject to the May 25 ASCO embargo.
Third, the first clinical data for GC007g, a CD19-targeted donor derived allogeneic CAR-T cell therapy from a Phase I trial in patients with r/rB-ALL who relapse after an allogeneic human stem cell transplant will be showcased in the poster presentation at EHA on June 9. As per the abstract posted to EHA’s website on May 11, the data by month treated encouraging persistence of allogeneic CAR-T cells durable remission and favorable safety profile.
Between March 2021 and May 2022, [indiscernible] r/rB-ALL patients were enrolled and treated in the Phase I portion of the registrational Phase I/II clinical trial in China evaluating GC007g at two different dose levels. All patients had relapsed B-ALL following a partially or fully matched prior human stem cell transplant. At day 28 after infusion, 100% of patients achieved MRD negative complete remission with four resulting in complete count recovery at the median follow-up after 445 days, ranging from 218 to 649 days. Seven of nine patients remain in CR or CRi while two patients had CD19 inactive relapse. The one-year progression free survival - PFS, and OS were 76.2% and 85.7% respectively. CRS presented as a grade one to grade three events only and all resolved after treatment. No ICANS was observed.
I will now hand the call over to our CFO, Dr. Kevin Xie. Kevin?
Kevin Xie
Thank you Wendy.
Turning to our financial results, for the first quarter ended March 31, 2023, I’d like to touch on a few financial trends. As of March 31, 2023, the company had RMB 1,277.3 billion or US $186 million in cash and cash equivalents and short term investments. We expect [indiscernible] for this year to be approximately US $100 million primarily to fund both R&D and the clinical programs in the U.S. and China. We expect our current cash position to be sufficient to cover our operating plan and R&D activities through the end of 2024.
Net loss attributable to ordinary shareholders for the three months ended March 31, 2023 was RMB 151.7 million or US $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 were RMB 137.5 million or US $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 the clinical trials, including licensing expenses with Seagen.
With that, I’d like to turn it back to the Operator to open the session for your questions. Operator?
Question-and-Answer Session
Operator
The floor is now open for your questions. [Operator instructions]
Our first question comes from the line of Yigal Nochomovitz from Citigroup. Your line is open. Please go ahead.
Yigal Nochomovitz
Yes, 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.
William Cao
Okay, thank you for the question. This is William Cao.
SLE is probably one of the largest indications in the autoimmune arena, and more importantly there is a major medicine paper, as everybody knows now, that the CD19 CAR-T successfully treated six SLE patients, so these are proof of concept initial data and--but we’re still trying to pursue other autoimmune indications as well. But at this moment, all I can say is this is the plan with SLE as fast as we can.
Now, the mechanism of action, we have an incoming event to disclose why we think the dual targeting is a better fit for the SLE indication or other immune disease. Simply just high level, it’s dual targeting--the CD19 is targeting B-cell, that we all know, and BCMA targeting plasma cell that is also a major part of auto antibody producing cells.
I hope I at a high level answered your questions.
Yigal Nochomovitz
Yes, thank you. Then just with regard to the Phase Ib/II 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 I/II, 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.
William Cao
I think this question is for Wendy, please.
Wendy Li
Okay, yes. We are on track to initiate the U.S. IND trial in this quarter, and then the next quarter in China. The current [indiscernible] has been activitied in the U.S. Our study will be conducted in the top medical center and they are well experienced in cell therapy studies, so we’re very excited to work with the PIs.
Yigal Nochomovitz
Okay, thanks. Then last question--oh, sorry?
William Cao
It’s okay.
Yigal Nochomovitz
Yes, 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.
William Cao
Wendy, do you want me to take that one?
Wendy Li
Yes, please.
William Cao
Okay. 007g has been in R&D trial for a while, so it was much earlier than the 502. We haven’t even filed 502’s IND application yet, just due to logistics. For TruUCAR-T, which includes 502, are still developing, in the early stage of development. We have gathered a lot of clinical evidence for the T modifications and hopefully this year we’ll have something to share with [indiscernible].
Yigal Nochomovitz
Okay, thank you very much.
Operator
Our next question comes from the line of Emily Bodnar from HC Wainwright. Please go ahead.
Emily Bodnar
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, next year? I know you just mentioned the SLE study, so maybe if you could give a bit more of a timeline on that, and then also can you discuss your strategy for newly diagnosed multiple myeloma? Is that an indication that you think you would move forward in the U.S. eventually, and how do you kind of think about use of a CAR-T in that study? Thank you.
William Cao
Wendy, me or you?
Wendy Li
I think that’s two questions regarding the U.S. trials, right? Currently, we have GC012F r/rMM trial is going to be conducted in the U.S. as a Phase Ib/II, and more studies will be considered and planned, because your question is for this year and next year, right, in the plan. NDMM, actually we had the presentation last year at ASH, and that was [indiscernible] around our presentation last year at ASH, and yes, we’re--the conducted studies in U.S. [indiscernible].
Operator
Our next question comes from the line of Joe Cantanzaro from Piper Sandler. Please go ahead.
Joe Cantanzaro
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 CARTITUDE-4 data for Carvykti, what it means for the space and, maybe more importantly, how you think about the development strategy for GC012F in light of these data. 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.
William Cao
Let me take--. The data we presented at ASH provides a good proof of concept for 012F, and I don’t think it’s easy for us to compare head-to-head comparison with Carvykti [indiscernible] as we will be updating some new follow-up data, longer follow-up data at ASCO for r/rMM. We are very pleased to see our very competitive efficacy and safety and other features.
Regarding the SLE dosing, it’s too early, Joe, to talk about it, but I think it’s--yes, it’s too early to decide, but we’re moving to get more information. Obviously there’s IIT study verification and then the reference others, but I don’t think it will be very far on the dose for oncology.
Joe Cantanzaro
Okay, great. Thanks so much for taking my questions.
Operator
Our next question comes from the line of Kelly Shi from Jefferies. Please go ahead.
Dave
Hi everyone, thanks for taking my question. This is Dave in for Kelly Shi. I have a couple of questions.
First one is on GC012F. Now you have initiated the manufacturing set-up in the U.S., just wondering if there’s scope to increase manufacturing capacity or it’s just site manufacturing that you will be doing at the CMO.
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.
William Cao
Wendy, please.
Wendy Li
Yes, the first question is Lonza is our U.S. CDMO, so right now it is supplying for our U.C. clinical trial currently. The second question for 007g, is [indiscernible] allogeneic CAR-T that derived from the HLA match the donors for B-ALL patients that relapse from allogeneic stem cell transplant. They usually have an HLA matched donor readily available. Some of those patients are not suitable for autologous CAR-T therapy due to the cell quality or other issues, so using T-cells donated by HLA matched to donor is one strategy to help [indiscernible] patient to get access to CAR-T while also addressing the GVHD risk for allogeneic CAR-T.
This EHA will be the first time we discuss the Phase I clinical data for 007g. We have observed encouraging persistence of allogeneic CAR-T cells durable remission and favorable safety profile. The Phase I includes nine B-ALL patients that relapsed following partial or fully matched prior human stem cell transplants. At day 28 after infusion, one of the patients achieved MRD negative CRM/CRi at median follow-up of 445 days. Seven out of nine patients remain in CR or CRi, while two patients had a CD19 negative relapse. The one-year PFS and OS were 76.2% and 85.7% respectively. The CRS presented as Grade 1 to Grade 2 events only, and all resolved after treatment. No ICANS was observed, so right now the Phase II is ongoing.
Dave
Thank you.
Operator
Our final question comes from the line of Louise Chen from Cantor Fitzgerald. Please go ahead.
Wayne Wu
Hi team, this is Wayne Wu on for Louise. Congrats on the progress this quarter, and thanks for taking our questions.
Our first one is on SLE. What is the current standard of care, and what is the efficacy for that? Then what data from the GC012 have you seen so far that gives you the confidence it could be a potential treatment option?
Then from a modeling perspective, with a lot of initiations to come this year, how should we think about the operating expense for the year? Thank you.
Wendy Li
On the first--maybe you can do it, William?
William Cao
Okay, regarding how the details of the evidence of the dual targeting for SLE mechanism of actions, I think we will find an appropriate event to present our evidence, but at this moment I think it’d be 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. That’s all I can comment. We do have a foundation-based position for getting into this field.
Now it’s a good question regarding resources, how do we handle marketable projects in the coming years. First of all, we reprioritized some of our early programs and this SLE filing and Phase I study is not going to be a major costly program, so I think we are in good shape to manage that.
Wayne Wu
Got it, thank you very much, William.
William Cao
You’re welcome.
Operator
Okay, and it does appear we do have one more question from the line of Yanan Zhu from Wells Fargo. Please go ahead.
Yanan Zhu
Hi, thanks for fitting me in. I have a couple 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 targeting B-cells alone might have already had good efficacy, so just wondering the incremental benefit from targeting BCMA.
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.
William Cao
Yes Yanan, these are good questions. I think it’s similar to--part of the question is similar to the previous questions, that is MOA for GC012F for SLE or other autoimmune diseases. Maybe I could explain a little bit by referencing one of the publications by [indiscernible] that is a subgroup of auto antibody producing cells, the expression of BCMA is high, or CD19 is low, and these are very long lasting antibody--auto antibody producing cells. The paper discussed that there will be certain patients remain refractory to CD19 targeting because of expression of CD19 is diminished when the cell develops into plasma cell stage. As we all know, plasma cell is the major antibody producing cells.
We do have preliminary data to support the direction, but we will discuss that in an appropriate event.
Did I answer all your questions, Yanan?
Yanan Zhu
Thanks William. The role of lymphodepletion in autoimmune diseases, or how it might affect uptake?
William Cao
Low lymphodepletion--
Yanan Zhu
Sorry, lymphodepletion.
William Cao
Yes, lymphodepletion in autoimmune disease is lower, or--I think I missed that?
Yanan Zhu
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.
William Cao
Right. It is not an issue, as being sort of evidenced by this Nature Medicine group, and then also the clinical studies that we intend to conduct as an IIT in China have been all approved. It’s not a concern. Lymphodepletion for these autoimmune disease patients is tolerable and those chemicals are used for--or was used for autoimmune disease treatment, so they are safe. Patient acceptance, I’m not aware that could be an issue. I don’t think so. It’s a debilitating disease, and for the patient it’s relatively lighter treatment.
Yanan Zhu
Very helpful, thank you William.
William Cao
You’re welcome.
Operator
I will now turn the conference over to Dr. William Cao.
William Cao
Thank you again to everyone for joining us on the call. We are proud of the progress the Gracell team has made over the past year. 2023 will be an exciting year for us as we are on track to initiate our r/rMM IND studies in both the U.S. and China and expanding GC012F into the autoimmune field. We believe Gracell is well positioned to deliver CAR-T 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.
Operator
Ladies and gentlemen, this concludes today’s presentation. Thank you once again for your participation. You may now disconnect.
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Gracell Biotechnologies (GRCL) Q1 2023 Earnings Call Transcript