GRCL - Gracell Biotechnologies Inc. (GRCL) Q4 2022 Earnings Call Transcript
2023-03-13 12:03:10 ET
Gracell Biotechnologies Inc. (GRCL)
Q4 2022 Earnings Conference Call
March 13, 2023, 08:00 AM ET
Company Participants
Kevin Yili Xie - Chief Financial Officer
William Wei Cao - Founder, Chairman, and Chief Executive Officer
Wendy Li - Chief Medical Officer
Conference Call Participants
Carly Kenselaar - Citi
James Shin - Wells Fargo
Justin Zelin - BTIG
Emily Bodnar - H.C. Wainwright
Presentation
Operator
[Operator Instructions] I would now like to turn the call over to Dr. Kevin Xie, CFO. Please go ahead.
Kevin Yili Xie
Good morning, and welcome to Gracell's Fourth Quarter 2022 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 developments and upcoming objectives as we head into 2023. After our formal remarks, we will conduct a question-and-answer session.
This morning, Gracell issued a press release announcing unaudited financial results for the quarter and full year ended December 31, 2022. 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, Gracell 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 filings with SEC for a full disclosure of these risks and factors. This conference call contains time sensitive information that's accurate only as of the date of this live broadcast, March 13, 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 equitable securities laws.
I will now turn the call over to Gracell's CEO, Dr. William Cao. William?
William Wei Cao
Thank you, Kevin. And again, welcome, everyone, to our fourth quarter 2022 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 Li, to provide insight into the two company-sponsored trials for GC012F in relapsed refractory multiple myeloma that we plan to commence in 2023. Thereafter, our CFO, Dr. Kevin Xie, will discuss our fourth quarter and full year 2022 financial results. After our prepared remarks, we will open the call to questions.
Let me start by emphasizing the high level of conviction that we have in the therapeutic and commercial potential of our lead autologous CAR-T candidate, GC012F in hematology and potentially in immunology indications.
Autologous CAR T therapy has now established itself as the most potent treatment for several hematologic malignancies, but significant unmet needs continue to exist for patients and physicians who are facing supply limits, long waste times and high cost, as well as calling for improved safety and durable efficacy. These needs have been propelling the CAR-T industry to move forward and innovate.
At Gracell, we believe 12F represents a next generation of autologous CAR-T therapy candidate and has the potential to push the boundary of autologous CAR-T on many fronts, such as manufacturing speed, safety, cost and even durability of efficacy.
Utilizing our proprietary FasTCAR manufacturing process. GC012F is comprised of younger, more fit T cells that are manufactured within 24 to 36 hours. FasTCAR not only helps to shorten patient wait time to weeks from months but also provides key advantages in advanced sales quality and cost savings.
Next, 12F features novel BCMA and the CD19 dual-targeting. This is designed to enable the deepest response and durable efficacy based on the dual mechanism of action. Our clinical data generated from 45 multiple myeloma patients has shown a consistent 100% MRD negative rate in all patients treated with GC012F, which represents the deepest level of eliminating malignant cells in bone marrow. And on the durability side, we plan to provide an important data update from our relapsed/refractory multiple myeloma investigator-initiated trial study around midyear. And hopefully, that will add to the expanding volume [ph] of evidence supporting 12Fs significant potential.
I also hope to point out that the dual targeting mechanism of action provides GC012F with wide applicability across diseases, where either BCMA or and CD19 could be antigen targets, including multiple myeloma, NHL and beyond, for example, in certain immunology indications.
Lastly, but very importantly, GC012F has demonstrated a highly differentiated safety profile in high IIT studies. No neurotoxicity was observed in the 48 patients dosed in 3 studies underway in RRMM, newly diagnosed high-risk multiple myeloma and in relapsed/refractory non-Hodgkin lymphoma.
While the cytokine release syndrome or CRS observed in the studies have been mostly low grade, it is also worthwhile highlighting that the median onset of CRS is around 6 days across our MM studies. These safety features could potentially provide critical differentiation and benefit in earlier lines or outpatient settings.
Last month, we have announced that the U.S. FDA and China NMPA cleared our IND application, which included our China IIT data. Gracell has reached a very exciting juncture in its development life cycle as two company-sponsored studies evaluating 12F IN IMM but on track to commence soon.
Advancing our lead fast CAR-T candidate towards a U.S.-based Ib/II clinical trial is a major milestone, and we plan to initiate enrollment in the second quarter. The Phase I/II clinical trial in China is expected to commence in the third quarter of 2023. Our CMO, Dr. Li, will provide additional details shortly.
In addition, we remain very excited about the data we have gathered so far in IIT studies. It is underway to evaluate GC012F in a newly diagnosed high-risk multiple myeloma patients. The first inpatient data from this trial was presented at an oral session of the ASH Annual Meeting in December 2022. We were overwhelmed by the very positive reception from the medical community on the data. SKOs [ph] are optimistic about our candidates' potential in frontline stackings [ph] We continue to follow up this study and anticipate sharing additional data later this year.
As a reminder, we also unveiled the first data from an ongoing IIT of GC012F in relapsed refractory NHL at EHA in June 2022. We are continuing the enrollment and the follow-up of these patients in ongoing study and plan to share the updated data at a medical meeting in 2023.
Moving on to the off-the-shelf TruUCAR platform, GC502 is our TruUCAR enabled CD19/CD7 dual-directed allogeneic CAR-T therapy candidates being evaluated as a treatment for r/r B-ALL. At last year's EHA, we present updated IIT data, which shows 3 out of 4 treated patients achieved MRD negative CR/CRi. This study is ongoing.
Next, moving on to our donor-derived CAR-T. In October, we announced the dosing of the first patient in China registration of Phase II trial evaluating GC77G in an allogenetic CD19 targeted CAR-T cell therapy. 77G is derived from HLA match donor for the treatment of r/r B-ALL patients who failed transplant and may not be eligible for autologous CAR-T therapy. We have observed highly encouraging safety and efficacy data in the Phase I portion, and we hope to share the data later 2023.
Lastly, SMART CAR-T is our second-generation technology for the treatment of solid tumors and utilizing a novel construct to take advantage of the suppressive tumor microenvironment and effectively combat solid tumor. Preparations are underway for the IIT trial for the second SMART CAR-T candidate. GC506 targeting Claudin 18.2 and enrollment is on track to commence in the coming months.
As we head into 2023, we are very optimistic about continued advancement of our highly differentiated CAR-T platform as we are on track to commence 2 company-sponsored trials, an advanced enrollment in ongoing studies and push forward other initiatives. We look forward to providing several clinical data updates at upcoming medical meetings throughout 2023.
Now I will hand the call over to our CMO, Dr. Wendy Li, to discuss our participation at ASH in December. Wendy, please go ahead.
Wendy Li
Thank you, William. In the U.S., we plan to initiate a company's sponsored Phase Ib and II clinical trial, evaluating GC012F for the treatment of relapsed and refractory multiple myeloma during the second quarter of 2023. We received clearance from the U.S. FDA for IND application in January 2023. The Phase Ib portion of this trial is designed to evaluate the safety and tolerability of GC012F in 2 dose levels and to determine the recommended Phase II dose.
We plan to enroll approximately 12 patients who have received 3 or more prior lines of therapy in the Phase Ib portion at 2 dose levels. We plan to activate up to 5 to 10 sites that are very experienced in conducting CAR-T trials. We currently anticipate completing the Phase I portion during the first quarter of 2024 and then holding an end of the Phase I meeting with FDA shortly thereafter in 2024 to align on the next steps.
Turning to the company's sponsored trial in China. We plan to initiate enrollment in the Phase I and the II trial evaluating GC012F in r/r MM during the third quarter of 2023. The Phase I portion of the trial is designed to evaluate the safety and tolerability of GC012F across 2 dose levels and to determine the RP2D. We plan to enroll approximately 9 patients at one clinical site in China and anticipate completing enrollment in the Phase I portion during the first half of 2024.
Last December an oral presentation on the first clinical data from ongoing IIT evaluating GC012F in newly diagnosed multiple myeloma patients was conducted at the ASH Annual Meeting. The data demonstrated that GC012F achieved a 100% overall response rate and 100% MRD negativity in all 16 transplant eligible, high-risk NDMM patients across all those levers. The 6 profile was excellent as 75% of the treated patients did not experienced any cytokine release syndrome. Also, no immune effector cell-associated neurotoxicity syndrome or other neurotoxicity of any grade have been observed.
We have received significant enthusiasm from the medical community since the ASH participation. As the data highlighted an impressive 100% ORR and 100% MRD negative in first-line patients that have multiple high-risk features and regardless of whether they have responded to the short infection therapy of 2 rounds of RBD [ph] before the infusion of GC012F.
In contrast, the current standard of care for newly diagnosed multiple myeloma includes as many as 4 to 8 rounds of induction therapy, which can be triplet such as RVd or quadruplet such as the Daratumumab, plus RVd, followed by autologous stem cell transplant and then a few years of maintenance therapy. At the end of the transplant, sCR is typically 30% to 40% and MRD-negative rate could be between 20% to 50%. It's also worked well to mention that typically with the standard of care, we can take a year or more between diagnosis and completing the transplant. While with CAR-T, the median time from diagnosis to infusion of GC012F in the ongoing trial was less than 5 months.
So our data is among the first to demonstrate the material benefits CAR-T can bring to the newly diagnosed multiple myeloma patients, including shortening the diagnosis to treatment time, deepening the response and maximizing the response rate or achieved with a good safety profile. We continue to follow the patients in our study to further evaluate the long-term benefits. We are very encouraged by this initial data and currently evaluating the path forward for this indication.
I will now hand the call over to our CFO, Dr. Kevin Xie. Kevin?
Kevin Yili Xie
Thank you, Wendy. Turning to our financials. I'd like to touch on a few financial trends. As of December 31, 2022, the company had RMB 1,458.2 million [ph] or USD 211.4 million in cash and cash equivalents and short-term investments. We expect the cash used for this year to be approximately USD 100 million. Primarily to fund our R&D and clinical programs in the U.S. and China, we expect our current cash position to be sufficient to cover our operation plan and R&D activities towards the end of 2024.
Net loss attributable to ordinary shareholders for the 3 months ended December 31, 2022, was RMB 130.7 million or USD 18.9 million compared to RMB 128.6 million for the same period in 2021. Net loss attributable to ordinary shareholders for the full year ended December 31, 2022, was RMB 607.5 million or USD 88.1 million compared to RMB 453.7 million for the same period in 2021.
Research and development expenses for the 3 months ended December 31, 2022, were RMB 113.1 million or USD 16.4 million as compared to RMB 107.6 million for the same period in 2021. For the full year ended December 31, 2022, research and development expenses were RMB 485.4 million or USD 70.4 million, compared to RMB 326.9 million for the same period in 2021. The increase was primarily due to the increased spending on research, development, and clinical trials, as well as higher payroll and personnel expenses attributable to increased headcount, and higher facility-related costs in support of continuing expansion of research and development activities.
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 Nochomovitzi from Citi. Please proceed.
Carly Kenselaar
Hi, team. This is Carly on Yigal. Thanks so much for taking our questions. First, can you comment on the vein-to-vein time you are anticipating for GC012F in the U.S. Phase I with the current process and quality control procedures that you have in place? And then, I guess, how much further do you believe that can be optimized as you move into later-stage development and eventually the commercial setting?
William Wei Cao
Hi, Carly. Very good question. The first part is very good. Second part is better. Let me sort of put together pieces so that you understand because each are - we're probably using different definition. So let's say, at the delivery time, meaning we receive the sample and return the sales to the hospital. That's about - that's supposed to be 7 days. However, you add on logistics and then QC everything, it's about 12 days now, before I get to lymphodepletion, okay?
The releasing tests in our hand is 5 days, 7 days. However, we - in the U.S., the test is being done by third-party laboratory. So that will add on a few more days. So it's not going to be 7 days really to test. It's then probably 9 days, 10 days and perhaps even longer. So that part, I can't give you a definitive answer yet. So basically, it's 3 days manufacture from receiving and by having the sales ready, plus a week to 7 or some days to 10 days of testing days. Now vein-to-vein time, including lymphodepletion, so that will add on 3 days plus. So total together, I would say about probably up to 3 weeks.
Then the second part of the question is, is any possibility to optimize? Yes, of course. Moving forward, we will establish in-house - the test can be done within CDMO, then it will shorten the time of logistics, shipping in and out.
Carly Kenselaar
Okay. Great. That's super helpful. And then we just had one follow-up. I guess we've heard from some companies that...
William Wei Cao
No, sorry, probably...
Carly Kenselaar
Yes.
William Wei Cao
Probably there is one more, one minor point I would like to add on here.
Carly Kenselaar
Sure.
William Wei Cao
If we could further optimize the releasing tests, let's say, shorten from 7 days to 5 days, for example, then is some area we can optimize as well.
Carly Kenselaar
Okay. Perfect. And then our follow-up was just on enrollment. I guess we've heard from some companies that enrolling late-line myeloma patients in the U.S. is becoming increasingly difficult, given the availability of the BCMA bispecific. So just curious, any feedback you're hearing from KOLs around this and what steps you could take to facilitate enrollment in the Phase I/II? Thank you so much.
William Wei Cao
Sure. Wendy do you want me to try first and then you can..
Wendy Li
Yes, go ahead.
William Wei Cao
Okay.
Wendy Li
Yes. Go ahead. Yes. My signal is not very clear...
William Wei Cao
Okay. That's what we – more we hear is [ph] slightly different. Perhaps the PIs, the carriers [ph] we have been working with are very enthusiastic and seems to us the Phase Ib, 12 patients enrollment not going to be an issue. Now hopefully, our sites, we select are very experienced that we know. And hopefully, the patients that enroll in that sites also looking forward fast delivery products like GC012F. But anyhow, so far, we don't have any special concern about the speed of enrollment. Does that answer your question? Or Wendy, do you have anything to add on?
Wendy Li
Yeah, you are right.
Carly Kenselaar
Its perfect. Thank you.
William Wei Cao
Thanks, Carly. Did we answer your question?
Operator
Our next question comes from the line of James Shin from Wells Fargo. Please proceed.
James Shin
Good morning, guys. Thanks for taking my question. Just wanted to touch base on comments regarding a partnership and it didn't seem quite – we didn't see mentioned in the press release, and then I have a follow-up.
William Wei Cao
Yes. You haven't seen in press release. You're right. We wish it come to material. We - since our ASH presentation of newly diagnosed multiple myeloma study and the immediate news about IND filing, we do receive positive response and interest. But I can't review more details in that direction. But please being ensured that on top of our priority this is the right way to go. So we'll continue to pursue that.
James Shin
Got it. Okay. And then for the Claudin program, what sort of - would you expect to see responses this earlier? Or is this sort of like a proof of concept? Can you say anything on your expectations for solid tumors for cell therapy?
William Wei Cao
Claudin program, you mean SMART CAR [ph] for solid tumor?
James Shin
Yes, GC506?
William Wei Cao
Okay. Yes. The target is Claudin 18.2. We will initiate clinical IIT first, which will commence very soon, I believe, yes, very soon. So we'll have a reasonable time to assess solid tumor response, but this will take, I don't know, 6 months to evaluate the new product.
James Shin
Okay. All right. Thank you.
William Wei Cao
Yes. We haven't published any data, including the clinical data mechanism of study. So I can't really comment on the details. But the purpose of this whole program or the objective of the new design on Claudin 18.2 plus the SMART device is to enhance the efficacy. And we believe for solid tumor, you do need a strong push of the CAR-T cell into tumor tissue to combat the suppressive environment. So hopefully, with the addition of SMART design, plus this widely recognized target 18.2, we're going to see some signal, but we did have to wait...
James Shin
Thank you for that.
Operator
Our next question comes from the line of Justin Zelin from BTIG. Please proceed.
Justin Zelin
Hi. Good morning, guys. Thanks for taking the question and congrats on the progress here. I had a question just on the IIT durability data that we're expecting later this year. Are you targeting a medical meeting for disclosure of that data? Or could that come as kind of a company event here? And I have a follow-up.
William Wei Cao
Yes. Wendy, I think it that's for you.
Wendy Li
Yes. That's right. Yes, we're going to have - yeah, explore the data in the later this year for the meetings for the managed craft [ph] So yes, we're looking forward to public those information later within this year.
Justin Zelin
Okay. Great. And...
William Wei Cao
May add-on you here from Dr. Li that both paper and presentation conference plans, so whichever come out first, it's possible mid of the year if you know, ASCO, EHA [ph] of these we can gain on time, and if the paper published earlier than that. So it's all ballpark. It's ballpark within this year.
Justin Zelin
Got it. Okay. That makes sense to me. And then for the 29 patients, I think the last update we got last year, the median duration of follow-up was approaching a year. For this next update, do you think we could potentially see like a 2-year median duration of follow-up or year and half like in that kind of range?
Wendy Li
Yes. That's true.
Justin Zelin
Okay, excellent. All right. Thanks for taking my question.
William Wei Cao
Thank you, Justin.
Operator
Our next question comes from the line of Kelly Shi from Jefferies. Please proceed.
Unidentified Analyst
Hi. Thank you for taking my question. This is Dev for Kelly Shi. Actually I have a question on GC007g and B-ALL in China. So you said data will be in 2023. Can you add some color on when the submission to an NPA is planned? And maybe some color on market opportunity of GC007g and B-ALL in China? Thank you.
William Wei Cao
Wendy, do you want to take that one?
Wendy Li
Yes. 007, right?
William Wei Cao
Yes.
Wendy Li
Yes, right. The first two portion is ongoing right now, the clinical trial. We have observed very encouraged data in the Phase I. So we're going to share the data again later this year. Do you have more...
Unidentified Analyst
No, I think that provides...
Wendy Li
That's correct. All right. Thank you.
Operator
Our next question comes from Emily Bodnar from H.C. Wainwright. Please proceed.
Emily Bodnar
Hi. Thanks for taking the questions. I guess since you said you expect to finish the Phase Ib portion of the U.S. study in the first quarter of '24. Should we not expect any data updates from the Phase I this year? I guess kind of a follow-up on the durability question. Maybe just tell us how you're thinking about what would be considered positive? I know previously, you said 15.7 months was an estimate. But are you looking to see something around that range? Or could we potentially see something higher?
And maybe now that you're advancing 12F into later-stage studies, how are you kind of thinking about prioritizing the rest of your pipeline for development? And is there any other indications besides ALL that we could see data this year? Thanks.
William Wei Cao
There are about three questions. First one, will we have any data release for Phase Ib of 12F prior to first quarter of next year? The second question is the durability of the 29 patients IIT study. What was the third part?
Emily Bodnar
Just prioritization of the rest of the pipeline for this year.
William Wei Cao
Right. That's right. Wendy, do you want to take the first one, the 12F Ib study?
Wendy Li
Actually, I think just like you just mentioned about the completion will be the first Phase Ib interment will be like a 2024 first quarter. So - and then I think the data, we're just looking for that timing - timeframe. So now its early and premature yet. So the second question...
William Wei Cao
12F durability.
Wendy Li
The durability, actually, we're very confident from our 29 patients from the IIT already. We've got a very good data, right? And also durability [ph] case we're going to explore the data, I think we just mentioned about a couple of people opting for in this year later on right, either one on the meeting or manuscript, right?
William Wei Cao
Yes. We can't provide more details about the durability, but you can - you hear from us, we're very encouraged. I'm very confident. So...
Wendy Li
Yes.
William Wei Cao
Let's look forward. Now the third part, which is prioritization, the 12F has been demonstrated such safe, very outstanding safety profile, as well as efficacy across about now total what, 50 patients and across 3 indications, MM –NDMM, newly diagnosed NHL. We believe this dual targeting compound has very unique applicability in addition to hematological cancers, there will be a possibility to cross the line to immunology indications because of BCMA and CD19 or CD19 or and the CD19. So we reprioritized our resources, and we like to focus on expansion of the application of this product.
Emily Bodnar
All right...
Wendy Li
Okay. Thank you very much.
William Wei Cao
You're welcome.
Operator
And with that, our final question comes from the line of Louise Chen from Cantor Fitzgerald. Please proceed.
Unidentified Analyst
Hi. This is Wayne on for Louise. Congrats on the progress and thanks for squeeze us in. So my first question is, do you think the Phase II portion of the U.S. study for the GC012 that could serve as the basis for accelerated approval? And then I also wanted to ask, you have a lot of going on this year, very, very busy. So what are your key most important readouts that you're looking forward to this year? Thank you.
William Wei Cao
Yes, two questions. Wendy, do you want to take that one?
Wendy Li
Yes, go ahead.
William Wei Cao
Okay. The - the Phase II - after the Phase II 50 patients enrollment, are we looking at a breakthrough? It's very possible, of course. But let's see from Phase Ib data, and we'll certainly look forward to apply for that. Now we do have a lot going on this year, particularly this year, lots going on. R&D study in the U.S. and new programs entering clinical IIT and we are moving on filling some of these new products, R&D filing in U.S. as well as in China.
But it's all been laid out nicely. They are stack out with all the resources aligned. And of course, the focus is continue to be without hesitation, pushing forward with the 12F R/R MM, because that's going to demonstrate a lot of features of this product. And then additional application of this compound is sort of being laid out, newly diagnosed NHL and potentially the immunology indication. So these are sort of key focus.
But then we're also very excited about a solid tumor program. Claudin 18.2 is sort of proven target. Now our logic is very simple. If we add on SMART CAR device with the efficacy be better, which is so much needed for solid tumor, right? Now for the TrueCar platform, we're continuing refinement of the UCART product technology, as well as the product with the goal of extending the persistence, which is the key to off-the-shelf CAR-T product, and we do see very encouraging preclinical data in both solid tumor program, as well as the UCART program. And then we'll see now what's going to happen in preclinical model and we would like to see in human model, in human studies. So it's a very exciting year, and we're looking forward to see data coming out in the mid of the year and end of the year.
Unidentified Analyst
Got it. Thank you very much.
William Wei Cao
Okay. You're welcome, Louise.
Operator
I would now like to turn the call back to Dr. William Cao.
William Wei Cao
Thank you again to everyone for joining us on the call. We are proud of the progress the Gracell team made over the past year. 2023 will be a critical year for us as we are on track to initiate our r/r MM IND studies in this U.S. and China. We believe Gracell is well positioned to deliver CAR-T cell therapy 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 Inc. (GRCL) Q4 2022 Earnings Call Transcript