GRCL - Gracell Biotechnologies Inc. (GRCL) Q2 2023 Earnings Call Transcript
2023-08-14 11:40:24 ET
Gracell Biotechnologies Inc. (GRCL)
Q2 2023 Earnings Conference Call
August 14, 2023, 08:00 AM ET
Company Participants
William Cao - Chairman, Chief Executive Officer
Wendy Li - Chief Medical Officer
Kevin Xie - Chief Financial Officer
Conference Call Participants
Kelly Shi - Jefferies
Joe Cantanzaro - Piper Sadler
Justin Zelin - BTIG
Emily Bodnar - Wainwright
Yigal Nochomovitz - Citigroup
Presentation
Operator
Ladies and gentlemen, thank you for standing by. My name is Bhavesh, and I’ll be your conference operator today. At this time I would like to welcome everyone to the Gracell Biotechnologies Second Quarter 2023 Earnings Conference Call. At this time, all lines have been placed on mute to prevent any background noise. [Operator Instructions]
Thank you. I will now hand the call over to Kevin Xie. You may begin your conference.
Kevin Xie
Good morning and welcome to Gracell’s second quarter 2023 corporate update conference call on the webcast. With me today are Gracell’s founder and the Chief Executive Officer, Dr. William Cao, and our chief medical officer, Dr. Wendy Li. 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 ending 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, Gracell’s 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 factors section of our latest 20-F filing with SEC for a 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, August 14, 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 law.
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 second quarter of 2023 corporate update conference call. I will begin today's call with key pipeline updates and details regarding our recent financial transactions.
I will then return the call over to our CMO, Dr. Wendy Li, to provide insights into data presentations from three studies presented at American Society of Clinical Oncology, ASCO, and the European Hematology Association, EHA, in June.
Next, our CFO, Dr. Kevin Xie, will discuss our second quarter of 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 FasTCAR, GC012F received significant recognition at the ASCO and EHA annual meetings, where our investigator presented two oral sessions with updated data from our studies in multiple myeloma and a B-NHL.
In particular, at ASCO, GC012F showed 93% overall response rate, ORR, 83% stringent contingent response, sCR rate, 100% minimal residue disease negativity, and immediate progression-free survival, mPFS, of 38 months in an investigator-initiated trial, or IIT, with 29 relapsed refractory multiple myeloma, RRMM, patients.
As a reminder, the IIT data shared at ASCO and a cut-off date of April 12, 2023. We believe GC012F represents a next generation of CAR-T therapy candidate. It leverages multiple special features and a proprietary FasTCAR next-day manufacturing 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 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 haematological cancers and autoimmune disease.
Based on the clinical data showcased at the medical meetings over the past year, GC012F has demonstrated the benefits of dual targeting in late and early line multiple myeloma, as well as in B-NHL, and achieved a deep and a durable response. Most recently, we are generating the 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-clot [Ph] overnight manufacturing process that facilitates shortened patient wait times and enhanced cell fitness, thereby giving clinicians more predictability and flexibility in managing the treatment.
Currently, GC012F is being evaluated in company-sponsored clinical trial in relapsed/refractory multiple myeloma in the U.S. and in 3 IITs, in newly diagnosed multiple myeloma, NDMM, B-NHL, and SLE.
Recently, we have reached a significant milestone as the patient enrollment has commenced in our U.S. Phase 1b/2 trial evaluation GC012F for RRMM. Patient screening is underway at the first activated site. As a reminder, the Phase 1b portion primarily aims to evaluate the safety and tolerability, as well as determine the recommended Phase II dose. We anticipate enrolling approximately 12 patients in the Phase 1b portion. We estimate that it might take approximately 9 months to 10 months to complete patient enrollment. Thereafter, we plan to share our data with the FDA and proceed into the Phase II portion.
We are also continuing to augment the compelling clinical data on GC012F across other indications. At an oral session at EHA Congress, we updated data from the B-NHL China IIT showed 100% ORR at three months and 67% CR at 6 months among 9 patients all with the challenging diffuse large B-cell lymphoma or DLBCL subtype. The IIT evaluating 12F immune 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 IIT for GC012F 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 candidates have demonstrated the effective elimination of CD19 positive B-cells, which is, of course, crucial to facilitate immune reset and combat 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 GC012F 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 CD19 CAR-T alone.
Last, but not least, based on the preclinical data we collected so far, we found no evidence suggesting occurrence of serious adverse events in the body. These preclinical data, as well as the consistently favorable safety data we have accumulated in over 50 cancer patients, give us a 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 automate 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 reprioritized the pipeline chart in the Gracell corporate presentation deck available on our website. The decisions made during this strategic review reflect our determination to be at the 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 up front 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, Janus 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 Gracell 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 data sets that were presented in June at ESCO and EHR. Wendy, please go ahead.
Wendy Li
Thank you, William. We're continuing to generate clinical data from the on-going trials for GC012F. Our FasTCAR-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 ESCO and EHR in June, long-term follow-up data from the Multiple Center IIT in RRMM was presented. Based on a data cut-off 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 cut-off date, suggesting the durable responses achieved by GC012F among this, CAR-T 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 commenced patient element in the Phase 1b trial in the U.S. Data evaluating GC012F for treatment of B-NHL was also presented at ASCO and EHA, including as an oral session at the later meeting. Based on a data cut-off date of April 12, 2023, the updated data from the on-going IIT showed an ORR of 100% in all nine patients treated.
Notably, all nine enrolled patients are diffuse large B-cell lymphoma patients, which is the most challenging subtype of B-NHL. GC012F demonstrated impressive, deep, and durable responses, and the complete response rate was 77.8% at month 3 and 66.7% at month 6, respectively.
Five of nine patients experienced Grade 1 CRS, and one patient had Grade 3 CRS, which resolved within two days after standard of care treatment. No neurotoxicity or icons of any grade were observed. This data further supports the clinical potential and wide applicability of GC012F.
Additionally, we presented the first data from the company-sponsored Phase 1 study in China of GC007g at the EHA Congress. GC007g is a donor-derived allogeneic anti-CD19 CAR-T candidate that has been designed to treat relapsed refractory B-cell acute 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 76.2% and 85.7% respectively. Grades 1 to 3 CRS were reported and all resolved after treatment. No neurotoxicity or ICANS were observed. No chronic GvHD 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 reflractory SLE in China, and the IIT of Smart CAR-T GC506 targeting Claudin 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 Xie. Kevin?
Kevin Xie
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 RMB1,188 million or US$163.8 million in cash and cash equivalents and short-term investments. We expect the cash use this year to be approximately US$100 million primarily to fund our RMB and clinical programs in the U.S. and China.
As announced in early August, we completed a private placement financing with $100 million U.S. upfront and up to an additional $50 million in the event that the warrants 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 expected our current cash position to be sufficient to cover our operational plan and RMB 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 RMB146.9 million or US$20.3 million, compared to RMB146.3 million for the corresponding prior year period.
Research and the development expenses for the second quarter 2023 were RMB103.8 million or US$14.3 million, compared to RMB117.1 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?
Question-and-Answer Session
Operator
Thank you. [Operator Instructions] Our first question comes from the line of Kelly Shi from Jefferies. Please go ahead with your question.
Kelly Shi
Thank you for taking my questions and congrats on the progress. I have a question regarding the GC012F, it's a U.S. phase 1 trial. Can you talk about patient selection criteria and does the trial allow prior BCMA CAR-T and also bi-specific treatment targeting both BCMA and the GPRC5D? Thank you.
Wendy Li
The patient screening is on-going right now, yes. And we're in response to the changing treatment landscape and hopefully a potential more patients can benefit from the GC012F. So we're not exclude -- your patients, you just mentioned about the BCMA and other treatment, but we have the, like the washout time, and between this therapy and the GC012F infusion. You have more questions?
Kelly Shi
Thank you. Yes. Thank you. And also, would you be able to estimate, one, are we going to dose the first patient and in 2023, how many patients will be dosed on this trial? Thanks.
Wendy Li
Yes. We plan to have 12 patients be dosed in two doses, yes, and the patients are still in the screening right now, and so many tests were on-going, but everything, every patient's screening is on the track.
Kelly Shi
Thank you.
Operator
Thank you. Our next question comes from the line of Joe Cantanzaro from Piper Sadler.
Please go ahead with your question.
Joe Cantanzaro
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.
William Cao
Yes. Thank you, Joe. To report a full set of data, it will 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, maybe in the CDA, it's possible, but I don't think it's conventional to release a portion of the phase 1 data.
Joe Cantanzaro
Okay. Got it. That's helpful. I guess my follow-up it looks like the [Indiscernible] in SMART CAR was removed from the pipeline with the prioritization. I know it had dosed some patients in China IIT, so wondering if you could speak to maybe what you saw there that maybe led to this decision, and whether there's any learnings there with the SMART CAR platform that you could apply to the Claudin program that you continue on with?
Thanks.
William Cao
Yes. R/R B ALL [Ph], as we discussed in the previous meetings, R/R B ALL [Ph] is not just patients 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 across. We think for such a sort of pricey and a complicated autologous CAR-T therapy, the efficacy should be higher, or the benefits to the patient should be highly differentiated from standard of care. And that continues to be our sort of internal criteria for selecting a potential product to move forward.
Now back to the 503, and then the correspondent tumors appears very challenging. We do see the safety. We don't see serious side effects that we need to elaborate. The CIS and neurotoxins horrible. But the efficacy is not striking based on our standards. So -- and in the way of our reprioritization, we focus on the front runners are MM, early line and autoimmune disease, we decided to slow down some of the early programs.
Joe Cantanzaro
Okay. Got it. Makes sense and helpful. Thanks so much for taking my questions.
Operator
Thank you. Our next question comes from the line of Justin Zelin from BTIG. Please go ahead with your question.
Justin Zelin
Hi, good morning. Thanks for taking my questions and congrats on the progress. Maybe just first on GC012F Phase I study. If I heard correctly, I think you opened up in 1 U.S. clinical site. And I think previously you said you expect to open up in 5 to 10 U.S. clinical sites. Just wondering if that's still the case here? And just when you might expect the next clinical site to come up online here?
Wendy Li
Yes. The first site is activity, right? Yes and the patients are screenings are on-going. And yes, others site coming. So right will be very soon. And actually, some part is working on now everything is on the control and on tracking now.
Justin Zelin
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?
William Cao
Correct.
Justin Zelin
Okay, great. Well thanks for taking my questions.
William Cao
Thanks Justin.
Operator
Thank you. [Operator Instructions] Our next question comes from the line of Emily Bodnar from Wainwright. Please go ahead with your question.
Emily Bodnar
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 said that the newly diagnosed data would be in the fourth quarter, but I think in the press release of the third quarter. So -- just could you clarify that, maybe comment on any next ups for that program? Thank you.
William Cao
Emily, I'll answer your first question first, then I'm going to ask maybe Li to repeat the second question. On the market side, we are targeting refractory SLE. 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 market, it's -- I can't give you an exact number, but it's obviously it's a significant unmet need. And the it's the field of the [indiscernible] are excited about this potential. What was your second question?
Emily Bodnar
Could you just clarify when the newly diagnosed multiple myeloma data is coming and any next steps for that program?
William Cao
Yes. Wendy, you can take that one?
Wendy Li
Sorry, your question again.
William Cao
Yes, the update -- let me take this. The update of newly diagnosed longer follow-up will be a in September.
Wendy Li
Okay. Yes, we're looking for -- yes, yes, we're going to share the clinical data from the IIT in NDMM later September. Yes, right. The next step will be, yes, the IND submission in later to 2023 this year.
Emily Bodnar
Okay, thank you.
Operator
Thank you. Our next question comes from the line of Yanan Zhu from Wells Fargo. Please go ahead with your question.
Unidentified Analyst
Hi, thanks for taking our question. This is [indiscernible] for Yanan. So my first question is on RRMM. So for the U.S. Phase Ib/II study, can you discuss the company's internal bar moving the program into Phase II? And my second question is for SLE. So for the U.S. study, what this companies plan on the dose level? Is it similar to the China IIT? Thank you.
Wendy Li
On the first question, yes, we have -- we're going to finish the Phase 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, it depends on the and FDA requirements, there slightly different from the dose level and element frequency, dose in China will be start the 2-dose around 1.5 and 3 and in the U.S. will be 1 and 3 to 2 doses. Yes. And the frequencies in China, they can and come 3 patients together. But in U.S., based on the FDA requirement have to 1 by 1 a month, that's a little bit different, but the timing will be similar.
William Cao
The dose for SLE is -- yes, it's going to be similar, but we haven't decided yet. So we -- for this IIT studies in China or SLE, we start from low dose which is very similar to the low dose of RRMM IIT trials. It looked like it's going to be the same dose for SLE dose.
Unidentified Analyst
That helped. Thank you for all the colors.
William Cao
You’re welcome.
Operator
Thank you. Our final question for the day comes from Yigal Nochomovitz from Citigroup. Please go ahead with your question.
Yigal Nochomovitz
Hi, thank you for taking the questions. On GC007, you indicated that you're going to start -- you have started a registrational Phase II in China. Can you talk about your thoughts for bringing that product to the United States for clinical development? Thanks.
William Cao
Wendy, I'll take this one. The 7G-007g is a very unique product. And the unmet need compared to other indications are relatively small. So our plan has been limited this product development in China. So we don't have intention to head on another one on our pipeline to U.S.
Yigal Nochomovitz
Okay. And then regarding the SLE trials, can you just talk a little bit more about how the design of the U.S. SLE trial will be structured in terms of the patient enrollment characteristics relative to the IIT in China? Are they relatively similar?
William Cao
It will be too early. It will be too early to elaborate the designs of SLE trial in the U.S. It's early. The purpose of the IIT is exactly to test out what will be the dose, what would be the endpoints enrollment criteria and all these will be evaluated through the trials IIT, trial, while we are preparing for R&D filing in the U.S. but happy to certainly we have gained a lot of insight so the first few patients. But at this moment, it's too early to have a review, but we do see a lot of -- we have obtained valuable information, including the dose, the safety profile, again, preliminary and the response.
Yigal Nochomovitz
Okay. And then the last question I had was you mentioned the 9 month to 12 month time frame for enrolling the RRMM study in the United States. Can you just comment a little more in terms of the assumptions supporting that time frame? Is it a function of the competing therapies in the space and the enrollment criteria? And any additional details you can provide on that time line. Thank you.
William Cao
Wendy.
Wendy Li
We still keep that -- like you just mentioned about right, about 10 months that we have to finish the Phase Ib, yes. And then we're going to have the NMPA [Ph] meeting with FDA, and then we'll be more clear with the next step.
William Cao
Regarding the competing therapies, so far, we don't see that happening, and given the enthusiasm from 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 fast turnaround, safety profile, these are still very attractive. So far, we see everything as planned.
Yigal Nochomovitz
Okay, thank you.
William Cao
Welcome.
Operator
There are no further questions at this time. Kevin Xie, I'll turn the call back over to you.
Kevin Xie
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 most competitive candidates, including the FasTCAR GC012F. The U.S. IND trial in RRMM is now underway, and we look forward to submitting the IND filing in SLE later this year. We remain committed to pushing the boundaries of medical innovation and improving patient outcomes through our transformative therapies.
Operator
Thank you. This does conclude today's conference call. Thank you for participating. You may now disconnect.
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Gracell Biotechnologies Inc. (GRCL) Q2 2023 Earnings Call Transcript