REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934 |
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered | ||
(The Nasdaq Global Select Market) | ||||
US$0.0001 per share* |
(The Nasdaq Global Select Market) |
* |
Large accelerated filer ☐ | ☒ |
Non-accelerated filer ☐ |
Emerging growth company |
† | The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012. |
☒ |
International Financial Reporting Standards as issued by the International Accounting Standards Board ☐ |
Other ☐ |
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• | “ADSs” are to the American depositary shares, each of which represents five of our ordinary shares; |
• | “CAR” are to chimeric antigen receptor; |
• | “ADRs” are to the American depositary receipts that evidence the ADSs; |
• | “CDE” are to the Center for Drug Evaluation of the National Medical Products Administration in China; |
• | “China” and “PRC” are to the People’s Republic of China, excluding, for the purpose of this annual report only, the Hong Kong Special Administrative Region, the Macau Special Administrative Region and Taiwan; “Greater China” does not exclude Hong Kong Special Administrative Region, the Macau Special Administrative Region and Taiwan; |
• | “CR” are to complete response, which generally means the disappearance of all signs of cancer in response to treatment, with the exact criteria varying from indication to indication; |
• | “CRi” are to complete response with incomplete hematologic recovery; |
• | “CRS” are to cytokine release syndrome, a symptom complex and an expected adverse event associated with CAR-T cell therapies and measured by Lee grading system or ASBMT grading system. Grade 1 CRS is generally associated with non-life threatening symptoms and requires symptomatic treatment only, Grade 2 or Grade 3 CRS requires moderate to more aggressive intervention, and Grade 4 or higher CRS is associated with life-threatening symptoms that require ventilation support, or death; |
• | “FDA” are to U.S. Food and Drug Administration; |
• | “Gracell,” “we,” “us,” “our company,” or “our” are to Gracell Biotechnologies Inc. and its subsidiaries and, in the context of describing our operations and consolidated financial information, also include the VIE and its subsidiary; |
• | “GvHD” are to graft versus host disease, where donor cells recognize the patient’s normal tissues as foreign and cause potentially lethal tissue damage; |
• | “HvG” are to host versus graft rejection, where a patient’s immune cells recognize infused non-HLA-matched |
• | “ICANS” are to immune effector cell-associated neurotoxicity syndrome, a common adverse event and treatment-related toxicity observed after CAR-T cell therapies and measured by ASBMT grading system. Grade 1 ICANS is generally associated with low depressed level of consciousness where patients awaken spontaneously, Grade 2 or Grade 3 ICANS is generally associated with moderate depressed level of consciousness where patients still awaken to voice or tactile stimulus, and clinical seizure that resolves rapidly, and Grade 4 ICANS is generally associated more serious symptoms such as stupor, coma, prolonged seizure and deep focal motor weakness; |
• | “MRD” are to minimal residual disease, the small number of cancer cells in the body after cancer treatment. An MRD positive or MRD+ test result means that disease was still detected after treatment; an MRD negative or MRD- result means that no disease was detected after treatment; |
• | “NMPA” are to the National Medical Products Administration in China; |
• | “Onset” are to the first appearance of any sign or symptom of an illness; |
• | “ordinary shares” are to ordinary shares of our company, par value US$0.0001 per share; |
• | “ORR” are to overall response rate, percentage of patients achieving a response to therapy; |
• | “Renminbi” and “RMB” are to the legal currency of the PRC; |
• | “PFS” are to progression-free survival, the length of time during and after the treatment of a disease, such as cancer, that a patient lives without the disease getting worse; |
• | “PR” are to partial response; |
• | “Preferred Shares” are to the series A, series B-1, series B-2 and series C preferred shares, par value $0.0001 per share; |
• | “sCR” are to stringent complete response, a deeper response category than CR used in multiple myeloma; |
• | “SOC” are to standard of care; |
• | “TME” are to tumor microenvironment; |
• | “US$,” “U.S. dollars,” “$,” and “dollars” are to the legal currency of the United States; |
• | “we,” “us,” “our company” and “our” are to Gracell Biotechnologies Inc., a Cayman Islands exempted company and its subsidiaries and, in the context of describing our operations and consolidated financial information, also include its consolidated PRC affiliated entities; and |
• | “VGPR” are to very good partial response. |
• | the ability of our investigator-initiated trials and clinical trials to demonstrate acceptable safety and efficacy of our product candidates, and other positive results; |
• | the timing, progress and results of preclinical studies, investigator-initiated trials and clinical trials for product candidates we may develop, including statements regarding the timing of initiation and completion of studies or trials and related preparatory work, the period during which the results of the trials will become available, and our research and development programs; |
• | the timing, scope and likelihood of regulatory filings and approvals, including final regulatory approval of our product candidates; |
• | our ability to develop and advance our current product candidates and programs into, and successfully complete, clinical trials; |
• | our manufacturing, commercialization, and marketing capabilities and strategy; |
• | our plans relating to commercializing our product candidates, if approved, including the geographic areas of focus and sales strategy; |
• | the need to hire additional personnel and our ability to attract and retain such personnel; |
• | the size of the market opportunity for our product candidates, including our estimates of the number of patients who suffer from the diseases we are targeting; |
• | our expectations regarding the approval and use of our product candidates as first, second or subsequent lines of therapy or in combination with other drugs; |
• | our ability to consistently maintain effective internal control over financial reporting; |
• | our competitive position and the success of competing therapies that are or may become available; |
• | our estimates of the number of patients that we will enroll in our clinical trials; |
• | the beneficial characteristics, safety, efficacy and therapeutic effects of our product candidates; |
• | our ability to obtain and maintain regulatory approval of our product candidates; |
• | our plans relating to the further development of our product candidates, including additional indications we may pursue; |
• | our intellectual property position, including our ability to obtain, maintain, expand, protect and enforce our intellectual property rights covering product candidates we may develop, including the extensions of existing patent terms where available, the validity of intellectual property rights held by third parties, and our ability not to infringe, misappropriate or otherwise violate any third-party intellectual property rights; |
• | our continued reliance on third parties to conduct additional clinical trials of our product candidates, and for the manufacture of our product candidates for preclinical studies and clinical trials; |
• | our ability to obtain, and negotiate favorable terms of, any collaboration, licensing or other arrangements that may be necessary or desirable to develop, manufacture or commercialize our product candidates; |
• | the pricing and reimbursement of our product candidates we may develop, if approved; |
• | the rate and degree of market acceptance and clinical utility of our product candidates we may develop; |
• | our estimates regarding expenses, future revenue, capital requirements and needs for additional financing; |
• | our financial performance; |
• | the period over which we estimate our existing cash and cash equivalents will be sufficient to fund our future operating expenses and capital expenditure requirements; |
• | the impact of laws and regulations; |
• | our expectations regarding the period during which we will qualify as an emerging growth company under the JOBS Act; |
• | the effect of epidemics and pandemics, such as the COVID-19 pandemic, or other business disruptions on our business; and |
• | our anticipated use of our existing resources and the proceeds from our initial public offering. |
Item 1. |
Identity of Directors, Senior Management and Advisers |
Item 2. |
Offer Statistics and Expected Timetable |
Item 3. |
Key Information |
• | The PRC government has significant authority to regulate or intervene in the China operations of an offshore holding company, such as us, at any time. Therefore, investors in the ADSs and our business face potential uncertainty from the PRC government’s policy. The Chinese government may intervene or influence our operations at any time, or may exert more control over offerings conducted overseas and/or foreign investment in China-based issuers, which could result in a material change in our operations and/or the value of our ADSs. Any actions by the Chinese government to exert more oversight and control over offerings that are conducted overseas and/or foreign investment in China-based issuers could significantly limit or completely hinder our ability to offer or continue to offer securities to investors and cause the value of such securities to significantly decline. See “Item 3. Key Information—D. Risk Factors—Risks Related to Doing Business in China—The PRC government has significant authority to regulate or intervene in the China operations of an offshore holding company, such as us, at any time. Therefore, investors in the ADSs and our business face potential uncertainty from the PRC government’s policy”; |
• | We believe that our corporate structure and contractual arrangements with the VIE comply with the current applicable PRC laws and regulations. As of the date of this annual report, we believe that our PRC subsidiaries and the VIE are not required to obtain permission or approval from the Chinese Securities Regulatory Commission, or the CSRC, or the Cyberspace Administration of China, or the CAC, to operate their respective business in China or to approve our contractual arrangements with the VIE and its shareholders. |
• | Recently, the PRC government initiated a series of regulatory actions and released guidelines to regulate business operations in China with little advance notice, including those related to data security or anti-monopoly concerns, which may have an impact on our ability to conduct certain business in China, accept foreign investments, or list on a U.S. or other foreign exchange. For a detailed description of risks and regulations related to doing business in China, see “Item 3. Key Information—D. Risk Factors—Risks Related to Doing Business in China.” |
For the years ended December 31, |
||||||||||||||||
2019 |
2020 |
2021 |
||||||||||||||
RMB |
RMB |
RMB |
US$ |
|||||||||||||
|
|
|
|
|
|
|
|
|||||||||
(in thousands) |
||||||||||||||||
Fees paid for services to the VIE and its subsidiaries |
6,604 | 16,906 | 16,226 | 2,546 |
Hypothetical pre-tax earnings in the VIE(1) |
100 | % | ||
Tax on earnings at statutory rate of 25% at WFOE level |
(25 | )% | ||
|
|
|||
Amount to be distributed as dividend from WFOE to Gracell HK (2) |
75 | % | ||
Withholding tax at tax treaty rate of 5% |
(3.75 | )% | ||
|
|
|||
Amount to be distributed as dividend at Gracell HK level and net distribution to Gracell Cayman (3) |
71.25 | % | ||
|
|
(1) | For purposes of this example, the tax calculation has been simplified. The hypothetical book pre-tax earnings amount is assumed to equal Chinese taxable income. |
(2) | China’s Enterprise Income Tax Law imposes a withholding income tax of 10% on dividends distributed by a Foreign Invested Enterprise to its immediate holding company outside of Mainland China. A lower withholding income tax rate of 5% is applied if the Foreign Invested Enterprise’s immediate holding company is registered in Hong Kong or other jurisdictions that have a tax treaty arrangement with Mainland China, subject to a qualification review at the time of the distribution. There is no incremental tax at Gracell HK level for any dividend distribution to Gracell Cayman. |
(3) | If a 10% withholding income tax rate is imposed, the withholding tax will be 7.5 and the amount to be distributed as dividend at Gracell HK level and net distribution to Gracell Cayman will be 67.5. |
As of December 31, 2020 |
||||||||||||||||||||||||
Parent Only |
Other Equity Subsidiaries |
WFOE |
VIE and VIE’s Subsidiary |
Eliminating adjustments |
Consolidated Totals |
|||||||||||||||||||
RMB |
RMB |
RMB |
RMB |
RMB |
RMB |
|||||||||||||||||||
ASSETS |
||||||||||||||||||||||||
Current assets: |
||||||||||||||||||||||||
Cash and cash equivalents |
683,565 | 448 | 20,546 | 49,749 | — | 754,308 | ||||||||||||||||||
Short-term investments |
— | — | — | 18,743 | — | 18,743 | ||||||||||||||||||
Amounts due from Group companies |
— | — | 270,885 | 48,505 | (319,390 | ) | — | |||||||||||||||||
Prepayments and other current assets |
— | 7 | 13,259 | 29,152 | — | 42,418 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total current assets |
683,565 |
455 |
304,690 |
146,149 |
(319,390 |
) |
815,469 |
|||||||||||||||||
Investment in subsidiaries |
148,654 | 149,678 | — | — | (298,332 | ) | — | |||||||||||||||||
Amounts due from Group companies-long-term |
29,915 | — | — | — | (29,915 | ) | — | |||||||||||||||||
Property, equipment and software |
— | — | 40,682 | 78,401 | — | 119,083 | ||||||||||||||||||
Other non-current assets |
17,568 | — | 3,086 | 9,744 | — | 30,398 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
TOTAL ASSETS |
879,702 |
150,133 |
348,458 |
234,294 |
(647,637 |
) |
964,950 |
|||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
LIABILITIES, MEZZANINE EQUITY AND SHAREHOLDERS’ EQUITY (DEFICIT) |
||||||||||||||||||||||||
Current liabilities: |
||||||||||||||||||||||||
Amounts due to Group companies |
45,586 | — | 3,800 | 270,004 | (319,390 | ) | — | |||||||||||||||||
Accruals and other current liabilities |
14,453 | 1,479 | 15,312 | 11,157 | — | 42,401 | ||||||||||||||||||
Short-term borrowings |
— | — | — | 49,990 | — | 49,990 | ||||||||||||||||||
Current portion of long-term borrowings |
— | — | — | 970 | — | 970 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total current liabilities |
60,039 |
1,479 |
19,112 |
332,121 |
(319,390 |
) |
93,361 |
|||||||||||||||||
Deficit in subsidiaries |
— | — | — | — | — | — | ||||||||||||||||||
Deficit in VIEs |
— | — | 179,668 | — | (179,668 | ) | — | |||||||||||||||||
Amounts due to Group companies-long-term |
— | — | — | 29,915 | (29,915 | ) | — | |||||||||||||||||
Long-term borrowings |
— | — | — | 51,926 | — | 51,926 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
TOTAL LIABILITIES |
60,039 |
1,479 |
198,780 |
413,962 |
(528,973 |
) |
145,287 |
|||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Mezzanine equity |
1,407,536 |
— |
— |
— |
— |
1,407,536 |
||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Shareholders’ equity (deficit): |
||||||||||||||||||||||||
Ordinary shares |
68 | 336 | 469,813 | 6,016 | (476,165 | ) | 68 | |||||||||||||||||
Additional paid-in capital |
— | 552,447 | 72,150 | 66,134 | (690,731 | ) | — | |||||||||||||||||
Accumulated other comprehensive income |
(23,912 | ) | (1,408 | ) | — | — | 1,408 | (23,912 | ) | |||||||||||||||
Accumulated deficit |
(564,029 | ) | (402,721 | ) | (392,285 | ) | (251,818 | ) | 1,046,824 | (564,029 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total shareholders’ equity (deficit) |
(587,873 |
) |
148,654 |
149,678 |
(179,668 |
) |
(118,664 |
) |
(587,873 |
) | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
TOTAL LIABILITIES, MEZZANINE EQUITY AND SHAREHOLDERS’ EQUITY (DEFICIT) |
879,702 |
150,133 |
348,458 |
234,294 |
(647,637 |
) |
964,950 |
|||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
As of December 31, 2021 |
||||||||||||||||||||||||
Parent Only |
Other Equity Subsidiaries |
WFOE |
VIE and VIE’s Subsidiary |
Eliminating adjustments |
Consolidated Totals |
|||||||||||||||||||
RMB |
RMB |
RMB |
RMB |
RMB |
RMB |
|||||||||||||||||||
ASSETS |
||||||||||||||||||||||||
Current assets: |
||||||||||||||||||||||||
Cash and cash equivalents |
1,517,362 | 106,790 | 82,634 | 122,220 | — | 1,829,006 | ||||||||||||||||||
Short-term investments |
— | — | — | 3,615 | — | 3,615 | ||||||||||||||||||
Amounts due from Group companies |
— | 50,000 | 487,676 | 65,705 | (603,381 | ) | — | |||||||||||||||||
Prepayments and other current assets |
26 | 11 | 11,454 | 40,968 | — | 52,459 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total current assets |
1,517,388 |
156,801 |
581,764 |
232,508 |
(603,381 |
) |
1,885,080 |
|||||||||||||||||
Investment in subsidiaries |
— | 159,818 | — | — | (159,818 | ) | — | |||||||||||||||||
Investment in VIEs |
— | — | — | — | — | — | ||||||||||||||||||
Amounts due from Group companies-long-term |
372,092 | — | — | — | (372,092 | ) | — | |||||||||||||||||
Property, equipment and software |
— | — | 62,874 | 60,944 | — | 123,818 | ||||||||||||||||||
Operating lease right-of-use |
— | — | 24,825 | 4,827 | — | 29,652 | ||||||||||||||||||
Other non-current assets |
— | — | 13,604 | 7,983 | — | 21,587 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
TOTAL ASSETS |
1,889,480 |
316,619 |
683,067 |
306,262 |
(1,135,291 |
) |
2,060,137 |
|||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT) |
||||||||||||||||||||||||
Current liabilities: |
||||||||||||||||||||||||
Amounts due to Group companies |
45,587 | — | 71,000 | 486,794 | (603,381 | ) | — | |||||||||||||||||
Accruals and other current liabilities |
6,989 | 5,096 | 21,350 | 35,685 | — | 69,120 | ||||||||||||||||||
Short-term borrowings |
— | — | — | 66,100 | — | 66,100 | ||||||||||||||||||
Operating lease liabilities, current |
— | — | 13,160 | 4,367 | — | 17,527 | ||||||||||||||||||
Current portion of long-term borrowings |
— | — | — | 2,376 | — | 2,376 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total current liabilities |
52,576 |
5,096 |
105,510 |
595,322 |
(603,381 |
) |
155,123 |
|||||||||||||||||
Deficit in subsidiaries |
1,069 | — | — | — | (1,069 | ) | — | |||||||||||||||||
Deficit in VIEs |
— | — | 403,639 | — | (403,639 | ) | — | |||||||||||||||||
Amounts due to Group companies-long-term |
— | 312,592 | — | 59,500 | (372,092 | ) | — | |||||||||||||||||
Operating lease liabilities, non-current |
— | — | 14,100 | 730 | — | 14,830 | ||||||||||||||||||
Long-term borrowings |
— | — | — | 54,349 | — | 54,349 | ||||||||||||||||||
Other non-current liabilities |
8,464 | — | — | — | — | 8,464 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
TOTAL LIABILITIES |
62,109 |
317,688 |
523,249 |
709,901 |
(1,380,181 |
) |
232,766 |
|||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Shareholders’ equity (deficit): |
||||||||||||||||||||||||
Ordinary shares |
223 | 336 | 820,452 | 6,016 | (826,804 | ) | 223 | |||||||||||||||||
Additional paid-in capital |
2,902,856 | 787,791 | 80,034 | 67,812 | (935,637 | ) | 2,902,856 | |||||||||||||||||
Accumulated other comprehensive income |
(57,936 | ) | (321 | ) | — | — | 321 | (57,936 | ) | |||||||||||||||
Accumulated deficit |
(1,017,772 | ) | (788,875 | ) | (740,668 | ) | (477,467 | ) | 2,007,010 | (1,017,772 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total shareholders’ equity (deficit) |
1,827,371 |
(1,069 |
) |
159,818 |
(403,639 |
) |
244,890 |
1,827,371 |
||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
TOTAL LIABILITIES, AND SHAREHOLDERS’ EQUITY (DEFICIT) |
1,889,480 |
316,619 |
683,067 |
306,262 |
(1,135,291 |
) |
2,060,137 |
|||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
For the year ended December 31, 2019 |
||||||||||||||||||||||||
Parent Only |
Other Equity Subsidiaries |
WFOE |
VIE and VIE’s Subsidiary |
Eliminating adjustments |
Consolidated Totals |
|||||||||||||||||||
RMB |
RMB |
RMB |
RMB |
RMB |
RMB |
|||||||||||||||||||
Revenues |
||||||||||||||||||||||||
Other-intercompany(a) |
— | — | — | 6,604 | (6,604 | ) | — | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total revenues |
— | — | — | 6,604 | (6,604 | ) | — | |||||||||||||||||
Expenses |
||||||||||||||||||||||||
Research and development expenses |
(2,289 | ) | — | (34,073 | ) | (82,856 | ) | (119,218 | ) | |||||||||||||||
Administrative expenses |
(3,334 | ) | (2,812 | ) | (11,986 | ) | (9,230 | ) | — | (27,362 | ) | |||||||||||||
Other - intercompany(a) |
(6,604 | ) | — | 6,604 | — | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Loss from operations |
(5,623 |
) |
(2,812 |
) |
(52,663 |
) |
(85,482 |
) |
— |
(146,580 |
) | |||||||||||||
Interest income(d) |
2,904 | — | 61 | 991 | (24 | ) | 3,932 | |||||||||||||||||
Interest expense(d) |
— | — | — | (24 | ) | 24 | — | |||||||||||||||||
Other income |
— | — | — | 1,449 | — | 1,449 | ||||||||||||||||||
Foreign exchange gain (loss), net |
— | — | 2,556 | — | — | 2,556 | ||||||||||||||||||
Equity in losses of subsidiaries and VIE(c) |
(135,924 | ) | (133,112 | ) | (83,066 | ) | — | 352,102 | — | |||||||||||||||
Others, net |
(21 | ) | — | — | — | — | (21 | ) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Loss before income taxes |
(138,664 |
) |
(135,924 |
) |
(133,112 |
) |
(83,066 |
) |
352,102 |
(138,664 |
) | |||||||||||||
Income tax expense |
— | — | — | — | — | — | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Net loss |
(138,664 |
) |
(135,924 |
) |
(133,112 |
) |
(83,066 |
) |
352,102 |
(138,664 |
) | |||||||||||||
Deemed contribution from convertible redeemable preferred shareholders |
(25,390 | ) | — | — | — | — | (25,390 | ) | ||||||||||||||||
Accretion of convertible redeemable preferred shares to redemption value |
(36,802 | ) | — | — | — | — | (36,802 | ) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Net loss attributable to Gracell Biotechnologies Inc.’s ordinary shareholders |
(200,856 |
) |
(135,924 |
) |
(133,112 |
) |
(83,066 |
) |
352,102 |
(200,856 |
) | |||||||||||||
Other comprehensive income (loss) |
||||||||||||||||||||||||
Foreign currency translation adjustments, net of nil tax |
(3,159 | ) | (159 | ) | — | — | 159 | (3,159 | ) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total comprehensive loss attributable to Gracell Biotechnologies Inc.’s ordinary shareholders |
(204,015 |
) |
(136,083 |
) |
(133,112 |
) |
(83,066 |
) |
352,261 |
(204,015 |
) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
For the year ended December 31, 2020 |
||||||||||||||||||||||||
Parent Only |
Other Equity Subsidiaries |
WFOE |
VIE and VIE’s Subsidiary |
Eliminating adjustments |
Consolidated Totals |
|||||||||||||||||||
RMB |
RMB |
RMB |
RMB |
RMB |
RMB |
|||||||||||||||||||
Revenues |
||||||||||||||||||||||||
Other-intercompany(a) |
— | — | — | 16,906 | (16,906 | ) | — | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total revenues |
— | — | — | 16,906 | (16,906 | ) | — | |||||||||||||||||
Expenses |
||||||||||||||||||||||||
Research and development expenses |
(1,753 | ) | (1,185 | ) | (53,356 | ) | (112,536 | ) | (168,830 | ) | ||||||||||||||
Administrative expenses |
(13,745 | ) | (6,439 | ) | (18,463 | ) | (6,919 | ) | — | (45,566 | ) | |||||||||||||
Other - intercompany(a) |
(16,906 | ) | — | 16,906 | — | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Loss from operations |
(15,498 |
) |
(7,624 |
) |
(88,725 |
) |
(102,549 |
) |
— |
(214,396 |
) | |||||||||||||
Interest income(d) |
2,179 | — | 822 | 554 | (685 | ) | 2,870 | |||||||||||||||||
Interest expense(d) |
— | — | — | (2,840 | ) | 685 | (2,155 | ) | ||||||||||||||||
Other income |
— | — | 54 | 4,653 | — | 4,707 | ||||||||||||||||||
Foreign exchange gain (loss), net |
(1,551 | ) | — | (1,362 | ) | (1 | ) | — | (2,914 | ) | ||||||||||||||
Equity in losses of subsidiaries and VIE(c) |
(197,030 | ) | (189,406 | ) | (100,195 | ) | — | 486,631 | — | |||||||||||||||
Others, net |
— | — | — | (12 | ) | — | (12 | ) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Loss before income taxes |
(211,900 |
) |
(197,030 |
) |
(189,406 |
) |
(100,195 |
) |
486,631 |
(211,900 |
) | |||||||||||||
Income tax expense |
— | — | — | — | — | — | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Net loss |
(211,900 |
) |
(197,030 |
) |
(189,406 |
) |
(100,195 |
) |
486,631 |
(211,900 |
) | |||||||||||||
Accretion of convertible redeemable preferred shares to redemption value |
(62,733 | ) | — | — | — | — | (62,733 | ) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Net loss attributable to Gracell Biotechnologies Inc.’s ordinary shareholders |
(274,633 |
) |
(197,030 |
) |
(189,406 |
) |
(100,195 |
) |
486,631 |
(274,633 |
) | |||||||||||||
Other comprehensive income (loss) |
||||||||||||||||||||||||
Foreign currency translation adjustments, net of nil tax |
(20,754 | ) | (1,249 | ) | — | — | 1,249 | (20,754 | ) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total comprehensive loss attributable to Gracell Biotechnologies Inc.’s ordinary shareholders |
(295,387 |
) |
(198,279 |
) |
(189,406 |
) |
(100,195 |
) |
487,880 |
(295,387 |
) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
For the year ended December 31, 2021 |
||||||||||||||||||||||||
Parent Only |
Other Equity Subsidiaries |
WFOE |
VIE and VIE’s Subsidiary |
Eliminating adjustments |
Consolidated Totals |
|||||||||||||||||||
RMB |
RMB |
RMB |
RMB |
RMB |
RMB |
|||||||||||||||||||
Revenues |
||||||||||||||||||||||||
Licensing and collaboration revenue |
— | — | — | 366 | — | 366 | ||||||||||||||||||
Other-intercompany(a)(b) |
— | — | 22,958 | 16,226 | (39,184 | ) | — | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total revenues |
— | — | 22,958 | 16,592 | (39,184 | ) | 366 | |||||||||||||||||
Expenses |
||||||||||||||||||||||||
Research and development expenses |
(15,245 | ) | (24,296 | ) | (82,651 | ) | (204,707 | ) | — | (326,899 | ) | |||||||||||||
Administrative expenses |
(58,594 | ) | (14,202 | ) | (46,337 | ) | (17,907 | ) | — | (137,040 | ) | |||||||||||||
Other-intercompany(a)(b) |
(16,226 | ) | (22,958 | ) | 39,184 | — | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Loss from operations |
(73,839 |
) |
(38,498 |
) |
(122,256 |
) |
(228,980 |
) |
— |
(463,573 |
) | |||||||||||||
Interest income(d) |
8,292 | 36 | 1,413 | 630 | (1,255 | ) | 9,116 | |||||||||||||||||
Interest expense(d) |
— | — | — | (6,318 | ) | 1,255 | (5,063 | ) | ||||||||||||||||
Other income |
— | — | 45 | 9,075 | — | 9,120 | ||||||||||||||||||
Foreign exchange gain (loss), net |
(55 | ) | 691 | (1,933 | ) | — | — | (1,297 | ) | |||||||||||||||
Equity in losses of subsidiaries and VIE(c) |
(386,152 | ) | (348,381 | ) | (225,650 | ) | — | 960,183 | — | |||||||||||||||
Others, net |
— | — | — | (57 | ) | — | (57 | ) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Loss before income taxes |
(451,754 |
) |
(386,152 |
) |
(348,381 |
) |
(225,650 |
) |
960,183 |
(451,754 |
) | |||||||||||||
Income tax expense |
— | — | — | — | — | — | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Net loss |
(451,754 |
) |
(386,152 |
) |
(348,381 |
) |
(225,650 |
) |
960,183 |
(451,754 |
) | |||||||||||||
Accretion of convertible redeemable preferred shares to redemption value |
(1,989 | ) | — | — | — | — | (1,989 | ) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Net loss attributable to Gracell Biotechnologies Inc.’s ordinary shareholders |
(453,743 |
) |
(386,152 |
) |
(348,381 |
) |
(225,650 |
) |
960,183 |
(453,743 |
) | |||||||||||||
Other comprehensive income (loss) |
||||||||||||||||||||||||
Foreign currency translation adjustments, net of nil tax |
(34,024 | ) | 1,087 | — | — | (1,087 | ) | (34,024 | ) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total comprehensive loss attributable to Gracell Biotechnologies Inc.’s ordinary shareholders |
(487,767 |
) |
(385,065 |
) |
(348,381 |
) |
(225,650 |
) |
959,096 |
(487,767 |
) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
(a) | Reflects elimination of inter-company technical service fees charged by VIE to the WFOE subsidiaries. The VIE provided research and development related service to the WFOE and recognized revenue of RMB6.6 million, RMB16.9 million and RMB16.2 million in the years ended December 31, 2019, 2020 and 2021, respectively. |
(b) | Reflects the elimination of the inter-company administrative expenses charged by WFOE to the VIE subsidiaries. The VIE received the business cooperation support from the WFOE and recognized the administrative expenses of RMB23.0 million in total in the year ended December 31, 2021. |
(c) | Reflects the equity in loss of subsidiaries and VIEs which is eliminated in consolidation. |
(d) | Reflects the elimination of the inter-company interest income and expenses. |
For the year ended December 31, 2019 |
||||||||||||||||||||||||
Parent Only |
Other Equity Subsidiaries |
WFOE |
VIE and VIE’s Subsidiary |
Eliminating adjustments |
Consolidated Totals |
|||||||||||||||||||
RMB |
RMB |
RMB |
RMB |
RMB |
RMB |
|||||||||||||||||||
Net cash (used in) generated from operating activities |
(5,499 |
) |
(2,012 |
) |
(40,605 |
) |
(87,277 |
) |
— |
(135,393 |
) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Cash flows from investing activities: |
||||||||||||||||||||||||
Purchase of property, equipment and software |
— | — | (17,913 | ) | (38,519 | ) | (56,432 | ) | ||||||||||||||||
Investment in subsidiaries |
(174,739 | ) | (171,274 | ) | — | — | 346,013 | — | ||||||||||||||||
Loans to Group companies and VIEs(e)(f) |
(23,000 | ) | — | (80,024 | ) | — | 103,024 | — | ||||||||||||||||
Investments in short-term investments |
— | — | — | (80,200 | ) | (80,200 | ) | |||||||||||||||||
Proceeds from disposal of short-term investments |
— | — | — | 178,000 | 178,000 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Net cash (used in) generated from investing activities |
(197,739 |
) |
(171,274 |
) |
(97,937 |
) |
59,281 |
449,037 |
41,368 |
|||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Cash flow from financing activities |
||||||||||||||||||||||||
Repurchase of ordinary shares and preferred shares |
— | — | — | (44,705 | ) | — | (44,705 | ) | ||||||||||||||||
Proceeds from issuance of convertible redeemable preferred shares, net of issuance costs |
439,501 | — | — | — | — | 439,501 | ||||||||||||||||||
Borrowings under loans from Group companies(e)(f) |
— | — | 60 | 102,964 | (103,024 | ) | — | |||||||||||||||||
Capital contribution from parent |
— | 174,739 | 171,274 | — | (346,013 | ) | — | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Net cash (used in) generated from financing activities |
439,501 |
174,739 |
171,334 |
58,259 |
(449,037 |
) |
394,796 |
|||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Effect of exchange rate on cash and cash equivalents |
— | — | (603 | ) | — | — | (603 | ) | ||||||||||||||||
Net increase (decrease) in cash and cash equivalents |
236,263 |
1,453 |
32,189 |
30,263 |
— |
300,168 |
||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Cash and cash equivalents at the beginning of year |
— | — | — | 11,890 | — | 11,890 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Cash and cash equivalents at the end of year |
236,263 |
1,453 |
32,189 |
42,153 |
— |
312,058 |
||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
For the year ended December 31, 2020 |
||||||||||||||||||||||||
Parent Only |
Other Equity Subsidiaries |
WFOE |
VIE and VIE’s Subsidiary |
Eliminating adjustments |
Consolidated Totals |
|||||||||||||||||||
RMB |
RMB |
RMB |
RMB |
RMB |
RMB |
|||||||||||||||||||
Net cash (used in) generated from operating activities |
(13,309 |
) |
(6,952 |
) |
(93,026 |
) |
(84,862 |
) |
— |
(198,149 |
) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Cash flows from investing activities: |
||||||||||||||||||||||||
Purchase of property, equipment and software |
— | — | (25,313 | ) | (54,087 | ) | (79,400 | ) | ||||||||||||||||
Investment in subsidiaries |
(305,734 | ) | (298,538 | ) | — | — | 604,272 | — | ||||||||||||||||
Loans to Group companies and VIEs(e)(f) |
(6,915 | ) | — | (189,980 | ) | — | 196,895 | — | ||||||||||||||||
Investments in short-term investments |
— | — | — | (28,055 | ) | (28,055 | ) | |||||||||||||||||
Proceeds from disposal of short-term investments |
— | — | — | 13,514 | — | 13,514 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Net cash (used in) generated from investing activities |
(312,649 |
) |
(298,538 |
) |
(215,293 |
) |
(68,628 |
) |
801,167 |
(93,941 |
) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Cash flow from financing activities |
||||||||||||||||||||||||
Repayment of convertible loans |
(138,695 | ) | (138,695 | ) | ||||||||||||||||||||
Proceeds from issuance of convertible redeemable preferred shares, net of issuance costs |
795,420 | — | — | — | — | 795,420 | ||||||||||||||||||
Borrowings under loans from Group companies(e)(f) |
— | — | — | 196,895 | (196,895 | ) | — | |||||||||||||||||
Capital contribution from parent |
305,734 | 298,538 | (604,272 | ) | — | |||||||||||||||||||
Proceeds from bank borrowings |
— | — | — | 103,008 | — | 103,008 | ||||||||||||||||||
Repayments of bank borrowings |
— | — | (122 | ) | — | (122 | ) | |||||||||||||||||
Payment of initial public offering costs |
(2,645 | ) | — | (499 | ) | — | — | (3,144 | ) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Net cash (used in) generated from financing activities |
792,775 |
305,734 |
298,039 |
161,086 |
(801,167 |
) |
756,467 |
|||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Effect of exchange rate on cash and cash equivalents |
(19,515 | ) | (1,249 | ) | (1,363 | ) | — | — | (22,127 | ) | ||||||||||||||
Net increase (decrease) in cash and cash equivalents |
447,302 |
(1,005 |
) |
(11,643 |
) |
7,596 |
— |
442,250 |
||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Cash and cash equivalents at the beginning of year |
236,263 | 1,453 | 32,189 | 42,153 | — | 312,058 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Cash and cash equivalents at the end of year |
683,565 |
448 |
20,546 |
49,749 |
— |
754,308 |
||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
For the year ended December 31, 2021 |
||||||||||||||||||||||||
Parent Only |
Other Equity Subsidiaries |
WFOE |
VIE and VIE’s Subsidiary |
Eliminating adjustments |
Consolidated Totals |
|||||||||||||||||||
RMB |
RMB |
RMB |
RMB |
RMB |
RMB |
|||||||||||||||||||
Net cash (used in) generated from operating activities |
2,039 |
(34,535 |
) |
(105,277 |
) |
(166,777 |
) |
— |
(304,550 |
) | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Cash flows from investing activities: |
||||||||||||||||||||||||
Purchase of property, equipment and software |
— | — | (38,886 | ) | (17,857 | ) | (56,743 | ) | ||||||||||||||||
Investment in subsidiaries |
(227,146 | ) | (350,638 | ) | — | — | 577,784 | — | ||||||||||||||||
Loans to Group companies and VIEs(e)(f) |
(342,177 | ) | (50,000 | ) | (192,454 | ) | — | 584,631 | — | |||||||||||||||
Investments in short-term investments |
— | — | — | (10,000 | ) | (10,000 | ) | |||||||||||||||||
Proceeds from disposal of short-term investments |
— | — | — | 25,127 | 25,127 | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Net cash (used in) generated from investing activities |
(569,323 |
) |
(400,638 |
) |
(231,340 |
) |
(2,730 |
) |
1,162,415 |
(41,616 |
) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Cash flow from financing activities |
||||||||||||||||||||||||
Proceeds from initial public offering and over-allotment, net of underwriting discounts and commissions |
1,448,959 | — | — | — | — | 1,448,959 | ||||||||||||||||||
Proceeds from exercise of options and restricted share units |
1,745 | — | — | — | — | 1,745 | ||||||||||||||||||
Borrowings under loans from Group companies(e)(f) |
— | 312,592 | 50,000 | 222,039 | (584,631 | ) | — | |||||||||||||||||
Capital contribution from parent |
— | 227,146 | 350,638 | (577,784 | ) | |||||||||||||||||||
Proceeds from bank borrowings |
— | — | — | 71,233 | — | 71,233 | ||||||||||||||||||
Repayments of bank borrowings |
— | — | — | (51,294 | ) | — | (51,294 | ) | ||||||||||||||||
Payment of initial public offering costs |
(14,458 | ) | — | — | — | — | (14,458 | ) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Net cash (used in) generated from financing activities |
1,436,246 |
539,738 |
400,638 |
241,978 |
(1,162,415 |
) |
1,456,185 |
|||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Effect of exchange rate on cash and cash equivalents |
(35,165 | ) | 1,777 | (1,933 | ) | — | — | (35,321 | ) | |||||||||||||||
Net increase (decrease) in cash and cash equivalents |
833,797 |
106,342 |
62,088 |
72,471 |
— |
1,074,698 |
||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Cash and cash equivalents at the beginning of year |
683,565 | 448 | 20,546 | 49,749 | — | 754,308 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Cash and cash equivalents at the end of year |
1,517,362 |
106,790 |
82,634 |
122,220 |
— |
1,829,006 |
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(e) | The VIE received the loans from the parent company of RMB23.0 million, RMB6.9 million and RMB29.6 million in total in the years ended December 31, 2019, 2020 and 2021, respectively. |
(f) | The VIE received the loans from the WFOE of RMB80.0 million, RMB190.0 million and RMB192.5 million in total in the years ended December 31, 2019, 2020 and 2021, respectively. |
• | We are a clinical-stage biopharmaceutical company with limited operating history, which may make it difficult for you to evaluate the success of our business to date and to assess our future viability. |
• | We have incurred significant losses in every year since our inception. We expect to continue to incur losses over the next several years and may never achieve or maintain profitability. |
• | We will need to obtain funding from time to time to complete the development and any commercialization of our product candidates, which may not be available on acceptable terms, or at all. If we are unable to raise capital when needed, we may be forced to delay, reduce or eliminate our product development programs or other operations. |
• | Raising additional capital may cause dilution to holders of the ADSs or other securities of our company, restrict our operations or require us to relinquish rights to our technologies or product candidates. |
• | Our product candidates are based on novel technologies, which make it difficult to predict the timing, results and cost of product candidate development and likelihood of obtaining regulatory approval. |
• | Our future success is highly dependent on the regulatory approval of GC012F, GC027, GC502 and our other pipeline programs. All of our product candidates will require significant preclinical study and clinical trial before we can seek regulatory approval for and launch a product commercially. |
• | We may not be successful in our efforts to extend our pipeline of product candidates, including identifying or discovering additional product candidates in the future. |
• | Our preclinical programs may experience delays or may never advance to clinical trials, which would adversely affect our ability to obtain regulatory approvals or commercialize these product candidates on a timely basis or at all, which would have an adverse effect on our business. |
• | Adverse effects or other safety risks associated with our product candidates could delay or preclude approval, cause us to suspend or discontinue clinical trials, cause us to abandon product candidates, limit the commercial profile of an approved label or result in significant negative consequences following any potential marketing approval. |
• | We have derived and plan to continue to derive results from investigator-initiated trials of our product candidates to expedite our global clinical development activities. Investigator-initiated trials are sponsored and conducted by principal investigators. As a result, our role and access to the clinical results and data are limited and there is no assurance that the clinical data from these trials will be accepted or considered by the FDA, the NMPA, or other comparable regulatory authorities. |
• | All of our product candidates are in early stages of development. If we are unable to advance our product candidates through clinical development, obtain regulatory approval and ultimately commercialize our product candidates, or experience significant delays in doing so, our business will be materially harmed. |
• | Our product candidates are based on novel technologies, which make it difficult to predict the timing, results and cost of product candidate development and likelihood of obtaining regulatory approval. |
• | As a company currently with substantial operations outside of the United States, our business is subject to economic, political, regulatory and other risks associated with international operations. |
• | We are a fast-growing emerging company and may experience difficulties in managing this growth. |
• | Even if we complete the necessary preclinical studies and clinical trials, the regulatory approval process is expensive, time-consuming and uncertain and may prevent us from obtaining approvals for the commercialization of some or all of our product candidates. As a result, we cannot predict when or if, and in which territories, we will obtain marketing approval to commercialize a product candidate. |
• | Obtaining and maintaining regulatory approval of our product candidates in one jurisdiction does not mean that we will be successful in obtaining regulatory approval of our product candidates in other jurisdictions. |
• | If we are unable to establish sales, marketing and distribution capabilities for our product candidates, or enter into sales, marketing and distribution agreements with third parties, we may not be successful in commercializing our product candidates, if and when they are approved. |
• | We operate in a rapidly changing industry and face significant competition, which may result in others discovering, developing or commercializing products before or more successfully than we do. |
• | If we are unable to obtain, maintain, defend and enforce patent and other intellectual property rights for our technologies and product candidates, or if the scope of the patent and other intellectual property rights obtained is not sufficiently broad, our competitors and other third parties could develop and commercialize technology and biologics similar or identical to ours, and our ability to successfully commercialize our technology and product candidates may be impaired. |
• | The intellectual property landscape around technology involving cellular therapies, including CAR-T cell therapies, is highly dynamic, and third parties may initiate legal proceedings alleging that we are infringing, misappropriating or otherwise violating their intellectual property rights, the outcome of which would be uncertain and could significantly harm our business. |
• | The uncertainties in the PRC legal system may subject our contractual arrangements to different interpretations or enforcement challenges, or subject us to severe penalties or force us to relinquish our interests in our operations. |
• | We rely on contractual arrangements with the VIE and its shareholders to exercise control over our business, which may not be as effective as direct ownership in providing operational control. |
• | The PRC government has significant authority to regulate or intervene in the China operations of an offshore holding company, such as us, at any time. Therefore, investors in the ADSs and our business face potential uncertainty from the PRC government’s policy. |
• | The pharmaceutical industry in China is highly regulated and such regulations are subject to change which may affect approval and commercialization of our drugs. |
• | Changes in U.S. and international trade policies, particularly with regard to China, may adversely impact our business and operating results. |
• | If we are classified as a “resident enterprise” of China under the PRC Enterprise Income Tax Law, we and our non-PRC shareholders could be subject to unfavorable tax consequences, and our business, financial condition and results of operations could be materially and adversely affected. |
• | The approval, filing or other requirements of the CSRC, the CAC or other PRC government authorities may be required under PRC law in connection with our issuance of securities overseas. |
• | We and our shareholders face uncertainty with respect to indirect transfers of equity interests in PRC resident enterprises, assets attributed to a PRC establishment of a non-PRC company or immovable properties located in China owned by non-PRC companies. |
• | The PCAOB is currently unable to inspect our auditor in relation to their audit work performed for our financial statements and the inability of the PCAOB to conduct inspections over our auditor deprives our investors with the benefits of such inspections. |
• | Our ADSs will be prohibited from trading in the United States under the Holding Foreign Companies Accountable Act, or the HFCAA, in 2024 if the PCAOB is unable to inspect or fully investigate auditors located in China, or 2023 if proposed changes to the law are enacted. The delisting of our ADSs, or the threat of their being delisted, may materially and adversely affect the value of your investment. |
• | Various proceedings and legislative and regulatory developments due to political tensions between the U.S. and China may have an adverse impact on our listing and trading in the U.S., including adverse impact on the market prices of the ADSs. |
• | Proceedings instituted by the SEC against the “big four” PRC-based accounting firms, including our independent registered public accounting firm, could result in financial statements being determined to not be in compliance with the requirements of the Exchange Act, adverse impact on the trading prices of the ADSs, or possible delisting. |
• | If we fail to maintain effective internal controls over financial reporting, our ability to produce accurate financial statements on a timely basis could be impaired. |
• | Holders of the ADSs have fewer rights than our shareholders and must act through the depositary to exercise their rights. |
• | continue our ongoing and planned research and development of our pipeline product candidates; |
• | conduct preclinical studies and clinical trials for any additional product candidates that we may pursue in the future, including ongoing and planned development of additional therapies for the treatment of hematologic malignancies and solid tumors; |
• | seek to discover and develop additional product candidates and further expand our clinical product pipeline; |
• | seek regulatory approvals for any product candidates that successfully complete clinical trials; |
• | continue to scale up manufacturing capacity with the aim of securing sufficient quantities to meet our capacity requirements for clinical trials and potential commercialization; |
• | establish sales, marketing and distribution infrastructure to commercialize any product candidate for which we may obtain regulatory approval; |
• | develop, maintain, expand and protect our intellectual property portfolio; acquire or in-license other product candidates and technologies; |
• | hire additional clinical, quality control and manufacturing personnel; |
• | add clinical, operational, financial and management information systems and personnel, including personnel to support our product development and planned future commercialization efforts; |
• | expand our operations in China and establish our operations in the United States and other geographic regions; and |
• | incur additional legal, accounting and other expenses associated with operating as a public company. |
• | the progress, results and costs of laboratory testing, manufacturing, and preclinical and clinical development for our current product candidates; |
• | the scope, progress, results and costs of preclinical development, laboratory testing and clinical trials of other product candidates that we may pursue; |
• | the development requirements of other product candidates that we may pursue; |
• | the timing and amounts of any milestone or royalty payments we may be required to make under future license agreements, if we enter into such agreements; |
• | the costs of expanding our research and development capacities and manufacturing infrastructure into the United States, including hiring additional research and development, clinical, quality control and manufacturing personnel; |
• | the costs, timing and outcome of regulatory review of our product candidates; |
• | the costs and timing of future commercialization activities, including product manufacturing, marketing, sales and distribution, for any of our product candidates for which we receive marketing approval; |
• | the amount of revenue, if any, received from commercial sales of our product candidates for which we receive marketing approval; |
• | the costs and timing of preparing, filing and prosecuting patent applications, obtaining, maintaining, protecting and enforcing our intellectual property rights and defending against any intellectual property-related claims; |
• | the costs of operating as a public company; and |
• | the extent to which we acquire or in-license other product candidates and technologies. |
• | completing preclinical studies and receiving regulatory approvals or clearance for conducting clinical trials for our preclinical-stage programs; |
• | obtaining positive results in our clinical trials demonstrating efficacy, safety and durability of effect of our product candidates; |
• | receiving approvals for commercialization of our product candidates from regulatory authorities; |
• | manufacturing our product candidates at an acceptable quality and cost; and |
• | maintaining and growing an organization of scientists, medical professionals and business people who can develop and commercialize our products and technology. |
• | obtaining regulatory approval for our product candidates, as the FDA, the NMPA and other regulatory authorities have limited experience with CAR-T therapies for cancer; |
• | in the case of autologous CAR-T cell therapies, developing and deploying consistent and reliable processes for engineering a patient’s T cells ex vivo and infusing the engineered T cells back into the patient; |
• | conditioning patients with chemotherapy in conjunction with delivering each of our products, which may increase the risk of adverse effects of our product candidates; |
• | sourcing clinical and, if approved, commercial supplies of the materials used to manufacture our product candidates; |
• | developing programming modules with the desired properties, while avoiding adverse reactions; |
• | creating viral vectors capable of delivering multiple programming modules; |
• | developing a reliable and consistent ex vivo gene modification and manufacturing process; |
• | establishing manufacturing capacity suitable for the manufacture of our product candidates in line with expanding enrollment in our clinical studies and our projected commercial requirements; |
• | achieving cost efficiencies in the scale-up of our manufacturing capacity; |
• | minimizing and avoiding infection and contamination during production of product candidates; |
• | developing protocols for the safe administration of our product candidates; |
• | educating medical personnel regarding our CAR-T technologies and the potential side effect profile of each of our product candidates, such as potential adverse effects related to cytokine release syndrome, or CRS, neurotoxicity, including immune effector cell-associated neurotoxicity syndrome, or ICANS, and/or graft versus host disease, or GvHD; |
• | establishing integrated solutions in collaboration with specialty treatment centers in order to reduce the burdens and complex logistics commonly associated with the administration of T cell therapies; |
• | establishing sales and marketing capabilities or partnerships to successfully launch and commercialize our product candidates if and when we obtain any required regulatory approvals, and risks associated with gaining market acceptance of a novel therapy if we receive approval; and |
• | the availability of coverage and adequate reimbursement from third-party payors for our novel and personalized therapies in connection with commercialization of any approved product candidates. |
• | regulatory requirements governing gene and cell therapy products have changed frequently and may continue to change in the future. To date, only a few CAR-T cell therapy products that involve the genetic modification of patient cells have been approved in the United States and/or the European Union, and two CAR-T cell therapy products have been approved in China; |
• | genetically modified products in the event of improper insertion of a gene sequence into a patient’s chromosome could lead to lymphoma, leukemia or other cancers, or other aberrantly functioning cells; |
• | although our viral vectors are not able to replicate, there is a risk with the use of retroviral or lentiviral vectors that they could lead to new or reactivated pathogenic strains of virus or other infectious diseases; and |
• | the FDA recommends a 15-year follow-up observation period for all patients who receive treatment using gene therapies and a trial guidance promulgated by NMPA requires a similar follow-up observation period for patients who receive cell therapeutic products, which has to be sufficient and could be as long as life-time, and we may need to adopt an observation period for our product candidates. |
• | disagreement with the design, protocol or conduct of our clinical trials; |
• | failure to demonstrate that a product candidate is safe and effective for its proposed indication; |
• | failure of clinical trials to meet the level of statistical significance required for approval; |
• | failure to demonstrate that a product candidate’s clinical and other benefits outweigh its risks; |
• | disagreement with our interpretation of data from preclinical studies or clinical trials; |
• | insufficiency of data collected from clinical trials of our product candidates to support the submission and filing of a biologics license application, or BLA, or other submission or to obtain regulatory approval; |
• | a delay in or the ability of health authorities to complete regulatory inspections of our development activities, regulatory filings or manufacturing operations, whether as a result of the COVID-19 pandemic or other reasons, or our satisfactorily complete such inspections; |
• | failure to obtain approval of the manufacturing processes of our facilities; |
• | changes in the approval policies or regulations that render our preclinical and clinical data insufficient for approval; or |
• | lack of adequate funding to complete a clinical trial in a manner that is satisfactory to the applicable regulatory authority. |
• | we may not be successful in identifying additional product candidates; |
• | we may not be able or willing to assemble sufficient resources to acquire or discover additional product candidates; |
• | our product candidates may not succeed in preclinical or clinical testing; |
• | a product candidate may on further study be shown to have harmful side effects or other characteristics that indicate it is unlikely to be effective or otherwise does not meet applicable regulatory criteria; |
• | competitors may develop alternatives that render our product candidates obsolete or less attractive; |
• | product candidates we develop may nevertheless be covered by third parties’ patents or other exclusive rights; |
• | the market for a product candidate may change during our development program so that the continued development of that product candidate is no longer reasonable; |
• | a product candidate may not be capable of being produced in commercial quantities at an acceptable cost, or at all; and |
• | a product candidate may not be accepted as safe and effective by patients, the medical community or third-party payors, if applicable. |
• | the patient eligibility criteria defined in the protocol; |
• | the number of patients with the disease or condition being studied; |
• | the understanding of risks and benefits of the product candidate in the trial; |
• | clinicians’ and patients’ perceptions as to the potential advantages of the product candidate being studied in relation to other available therapies, including any new drugs that may be approved for the indications we are investigating or drugs that may be used off-label for these indications; |
• | the size and nature of the patient population who meet inclusion criteria; |
• | the proximity of patients to study sites; |
• | the design of the clinical trial; |
• | our ability to recruit clinical trial investigators with the appropriate competencies and experience; |
• | competing clinical trials for similar therapies or other new therapeutics not involving T cell-based immunotherapy; |
• | our ability to obtain and maintain patient consents; and |
• | the risk that patients enrolled in clinical trials will drop out of the clinical trials before completion of their treatment. |
• | regulatory authorities may withdraw approvals of such product; |
• | regulatory authorities may require additional warnings on the label; |
• | we may be required to create a Risk Management Plan, or RMP, or similar risk management plan, which could include a medication guide outlining the risks of such side effects for distribution to patients, a communication plan for healthcare providers and/or other elements to assure safe use; |
• | we could be sued and held liable for harm caused to patients; and |
• | our reputation may suffer. |
• | the FDA, the NMPA or other comparable regulatory authority may disagree as to the number, design or implementation of our clinical trials, or may not interpret the results from clinical trials as we do; |
• | regulators or institutional review boards may not authorize us or our investigators to commence a clinical trial or conduct a clinical trial at a prospective trial site; |
• | we may not reach agreement on acceptable terms with prospective clinical trial sites, the terms of which can be subject to extensive negotiation and may vary significantly among different clinical trial sites; |
• | clinical trials of our product candidates may produce negative or inconclusive results; |
• | we may decide, or regulators may require us, to conduct additional clinical trials or abandon product development programs; |
• | the number of patients required for clinical trials of our product candidates may be larger than we anticipate, enrollment in these clinical trials may be slower than we anticipate, participants may drop out of these clinical trials at a higher rate than we anticipate or we may fail to recruit eligible patients to participate in a trial; |
• | our third-party contractors may fail to comply with regulatory requirements or meet their contractual obligations to us in a timely manner, or at all; |
• | regulators may issue a clinical hold, and regulators or institutional review boards may require that we or our investigators suspend or terminate clinical research for various reasons, including noncompliance with regulatory requirements or a finding that the participants are being exposed to unacceptable health risks; |
• | the cost of clinical trials of our product candidates may be greater than we anticipate; |
• | the FDA, the NMPA or other comparable regulatory authorities may fail to approve our manufacturing processes or facilities; |
• | the supply or quality of our product candidates or other materials necessary to conduct clinical trials of our product candidates may be insufficient or inadequate; |
• | our product candidates may have undesirable side effects or other unexpected characteristics, particularly given their novel, first-in-human |
• | the approval policies or regulations of the FDA, the NMPA or other comparable regulatory authorities may significantly change in a manner rendering our clinical data insufficient for approval. |
• | an inability to initiate or continue clinical trials of our product candidates under development; |
• | delay in submitting regulatory applications, or receiving marketing approvals, for our product candidates; |
• | loss of the cooperation of future collaborators; |
• | subjecting third-party manufacturing facilities or our manufacturing facilities to additional inspections by regulatory authorities; |
• | requirements to cease development or to recall batches of our product candidates; and |
• | in the event of approval to market and commercialize our product candidates, an inability to meet commercial demands for our product or any other future product candidates. |
• | economic weakness, including inflation, or political instability in particular non-U.S. economies and markets; |
• | differing and changing regulatory requirements for product approvals; |
• | differing jurisdictions could present different issues for securing, maintaining or obtaining freedom to operate in such jurisdictions; |
• | potentially reduced protection for intellectual property rights; |
• | difficulties in compliance with different, complex and changing laws, regulations and court systems of multiple jurisdictions and compliance with a wide variety of foreign laws, treaties and regulations; |
• | changes in non-U.S. regulations and customs, tariffs and trade barriers; |
• | foreign exchange risks and currency controls; |
• | changes in a specific country’s or region’s political or economic environment; |
• | trade protection measures, import or export licensing requirements or other restrictive actions by governments; |
• | differing reimbursement regimes and price controls in certain non-U.S. markets; |
• | negative consequences from changes in tax laws; |
• | compliance with tax, employment, immigration and labor laws for employees living or traveling abroad, including, for example, the variable tax treatment in different jurisdictions of options granted under our share incentive plans; |
• | workforce uncertainty in countries where labor unrest is more common than in the United States; |
• | litigation or administrative actions resulting from claims against us by current or former employees or consultants individually or as part of class actions, including claims of wrongful terminations, discrimination, misclassification or other violations of labor law or other alleged conduct; |
• | difficulties associated with staffing and managing international operations, including differing labor relations; |
• | production shortages resulting from any events affecting raw material supply or manufacturing capabilities abroad; and |
• | business interruptions resulting from geo-political actions, including war and terrorism, health epidemics, or natural disasters including earthquakes, typhoons, floods and fires. |
• | identifying, recruiting, integrating, maintaining and motivating additional employees; |
• | managing our internal development efforts effectively, including the clinical, NMPA, FDA review processes for our product candidates; and |
• | improving our operational, financial and management controls, reporting systems and procedures. |
• | increased operating expenses and cash requirements; |
• | the assumption of additional indebtedness or contingent liabilities; |
• | assimilation of operations, intellectual property and products of an acquired company, including difficulties associated with integrating new personnel; |
• | the diversion of our management’s attention from our existing programs and initiatives in pursuing such a strategic partnership, merger or acquisition; |
• | retention of key employees, the loss of key personnel and uncertainties in our ability to maintain key business relationships; |
• | risks and uncertainties associated with the other party to such a transaction, including the prospects of that party and their existing products or product candidates and regulatory approvals; and |
• | our inability to generate revenue from acquired technology sufficient to meet our objectives in undertaking the acquisition or even to offset the associated acquisition and maintenance costs. |
• | limitation in patient enrollment, disruptions to patient follow-up during the lockdown periods, and curtailed screening visits; |
• | delays or difficulties in enrolling patients in our clinical trials; |
• | delays or difficulties in clinical site initiation, including difficulties in recruiting clinical site investigators and clinical site staff; |
• | delays in clinical sites receiving the supplies and materials needed to conduct our clinical trials; |
• | diversion of healthcare resources away from the conduct of clinical trials, including the diversion of hospitals serving as our clinical trial sites and hospital staff supporting the conduct of our clinical trials; |
• | interruption of key clinical trial activities, such as clinical trial site monitoring, due to limitations on travel imposed or recommended by governments, employers and others; |
• | limitations in employee resources that would otherwise be focused on the conduct of our clinical trials, including because of sickness of employees or their families or the desire of employees to avoid contact with large groups of people; |
• | delays in receiving approval from local regulatory authorities to initiate our planned clinical trials; |
• | interruption in global shipping that may affect the transport of clinical trial materials; |
• | changes in local regulations as part of a response to the COVID-19 coronavirus outbreak which may require us to change the ways in which our clinical trials are conducted, which may result in unexpected costs, or to discontinue the clinical trials altogether; |
• | delays in necessary interactions with local regulators, ethics committees and other important agencies and contractors due to limitations in employee resources or forced furlough of government employees; and |
• | refusal of the relevant regulatory authorities to accept data from clinical trials in these affected geographic regions. |
• | litigation involving patients taking our products; |
• | restrictions on such products, manufacturers or manufacturing processes; |
• | restrictions on the labeling or marketing of a product; |
• | restrictions on product distribution or use; |
• | requirements to conduct post-marketing studies or clinical trials; |
• | warning or untitled letters; |
• | withdrawal of the products from the market; |
• | refusal to approve pending applications or supplements to approved applications that we submit; |
• | recall of products; |
• | fines, restitution or disgorgement of profits or revenue; |
• | suspension or withdrawal of marketing approvals; |
• | suspension of any ongoing clinical trials; |
• | damage to relationships with any potential collaborators; |
• | unfavorable press coverage and damage to our reputation; |
• | refusal to permit the import or export of our products; |
• | product seizure; or |
• | injunctions or the imposition of civil or criminal penalties. |
• | the U.S. federal Anti-Kickback Statute, which prohibits, among other things, persons from knowingly and willfully soliciting, offering, receiving or providing remuneration, directly or indirectly, in cash or in kind, to induce or reward, or in return for, either the referral of an individual for, or the purchase, lease, order or recommendation of, any good, facility, item or service, for which payment may be made, in whole or in part, under federal and state healthcare programs such as Medicare and Medicaid. The term “remuneration” has been broadly interpreted to include anything of value. This statute has been interpreted to apply to arrangements between pharmaceutical manufacturers on the one hand and prescribers, purchasers and formulary managers on the other hand. Although there are a number of statutory exceptions and regulatory safe harbors protecting certain common activities from prosecution or other regulatory sanctions, the exceptions and safe harbors are drawn narrowly, and practices that involve remuneration that are alleged to be intended to induce prescribing, purchases or recommendations may be subject to scrutiny if they do not qualify for an exception or safe harbor. Failure to meet all of the requirements of a particular applicable statutory exception or regulatory safe harbor does not make the conduct per se illegal under the federal Anti-Kickback Statute. Instead, the legality of the arrangement will be evaluated on a case-by-case |
• | U.S. federal civil and criminal false claims laws, including the federal False Claims Act, which can be enforced through civil whistleblower or qui tam actions, and civil monetary penalty laws, which, among other things, impose criminal and civil penalties, against individuals or entities for, among other things, knowingly presenting, or causing to be presented, to the federal government, including the Medicare and Medicaid programs, claims for payment that are false or fraudulent or making a false statement to avoid, decrease or conceal an obligation to pay money to the federal government. Pharmaceutical and other healthcare companies have been prosecuted under these laws for, among other things, allegedly inflating drug prices they report to pricing services, which in turn were used by the government to set Medicare and Medicaid reimbursement rates, and for allegedly providing free product to customers with the expectation that the customers would bill federal programs for the product. In addition, certain marketing practices, including off-label promotion, may also violate false claims laws. Further, pharmaceutical manufacturers can be held liable under the False Claims Act even when they do not submit claims directly to government payors if they are deemed to “cause” the submission of false or fraudulent claims. Criminal prosecution is also possible for making or presenting a false, fictitious or fraudulent claim to the federal government; |
• | HIPAA, which contains new federal criminal statutes that prohibit knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program or obtain, by means of false or fraudulent pretenses, representations or promises, any of the money or property owned by, or under the custody or control of, any healthcare benefit program, regardless of whether the payor is public or private, knowingly and willfully embezzling or stealing from a healthcare benefit program, willfully obstructing a criminal investigation of a healthcare offense and knowingly and willfully falsifying, concealing or covering up by any trick or device a material fact or making any materially false statements in connection with the delivery of, or payment for, healthcare benefits, items or services relating to healthcare matters; |
• | HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act of 2009, or HITECH, and their respective implementing regulations, which impose obligations on “covered entities,” including certain healthcare providers, health plans, and healthcare clearinghouses, as well as their respective “business associates” that create, receive, maintain or transmit individually identifiable health information for or on behalf of a covered entity, with respect to safeguarding the privacy, security and transmission of individually identifiable health information. Additionally, HITECH also contains four new tiers of civil monetary penalties; amends HIPAA to make civil and criminal penalties directly applicable to business associates and gave state attorneys general new authority to file civil actions for damages or injunctions in U.S. federal courts to enforce the federal HIPAA laws and to seek attorneys’ fees and costs associated with pursuing federal civil actions; |
• | the U.S. federal Food, Drug and Cosmetic Act, which prohibits, among other things, the adulteration or misbranding of drugs, biologics and medical devices; |
• | the U.S. federal Physician Payments Sunshine Act, created under Section 6002 of the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act, or collectively, the ACA, and its implementing regulations, created annual reporting requirements for certain manufacturers of drugs, devices, biologicals and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program (with certain exceptions), to report information related for certain payments and “transfers of value” provided to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors) and teaching hospitals, as well as ownership and investment interests held by physicians and their immediate family members; and analogous state laws and regulations and foreign laws, such as state anti-kickback and false claims laws, which may apply to sales or marketing arrangements and claims involving healthcare items or services reimbursed by non-governmental third-party payors, including private insurers; state and foreign laws that require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government or to adopt compliance programs as prescribed by state laws and regulations, or that otherwise restrict payments that may be made to healthcare providers; state and foreign laws that require drug manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers, marketing expenditures or drug pricing; state and local laws that require the registration of pharmaceutical sales representatives; and state and foreign laws governing the privacy and security of health information in certain circumstances, many of which differ from each other in significant ways and often are not preempted by HIPAA, thus complicating compliance efforts. |
• | the negotiation and execution of these agreements is a long process that may not result in an agreement being signed or that can delay the development or commercialization of the product candidate concerned; |
• | these agreements are subject to cancellation or nonrenewal by our collaborators, or may not be fully complied with by our collaborators; |
• | in the case of a license granted by us, we lose control of the development of the product candidate licensed; |
• | in such cases we would have only limited control over the means and resources allocated by our partner for the commercialization of our product; and |
• | collaborators may not properly obtain, maintain, enforce, or defend our intellectual property or proprietary rights or may use our proprietary information in such a way as to invite litigation that could jeopardize or invalidate our proprietary information or expose us to potential litigation. |
• | the clinical indications for which our product candidates are approved; |
• | physicians, hospitals, cancer treatment centers, and patients considering our product candidates as a safe and effective treatment; |
• | hospitals and cancer treatment centers establishing the infrastructure required for the administration of redirected CAR-T cell therapies; |
• | the potential and perceived advantages of our product candidates over alternative treatments; |
• | the prevalence and severity of any side effects; |
• | product labeling or product insert requirements of the FDA, the NMPA or other comparable regulatory authorities; |
• | limitations or warnings contained in the labeling approved by the FDA, the NMPA or other comparable regulatory authorities; |
• | the timing of market introduction of our product candidates as well as competitive products; |
• | the cost of treatment in relation to alternative treatments; |
• | the amount of upfront costs or training required for physicians to administer our product candidates; |
• | the availability of coverage, adequate reimbursement, and pricing by third-party payors and government authorities; |
• | the willingness of patients to pay out-of-pocket |
• | relative convenience and ease of administration, including as compared to alternative treatments and competitive therapies; and |
• | the effectiveness of our sales and marketing efforts and distribution support. |
• | reduced resources of our management to pursue our business strategy; |
• | decreased demand for any product candidates or products that we may develop; |
• | injury to our reputation and significant negative media attention; |
• | withdrawal of clinical trial participants; |
• | initiation of investigations by regulators; |
• | product recalls, withdrawals or labeling, marketing or promotional restrictions; |
• | significant costs to defend the resulting litigation; |
• | substantial monetary awards paid to clinical trial participants or patients; |
• | loss of revenue; and |
• | the inability to commercialize any products that we may develop. |
• | partners may not have sufficient resources or decide not to devote the necessary resources due to internal constraints such as budget limitations, lack of human resources or a change in strategic focus; |
• | partners may believe our intellectual property is not valid or is unenforceable or the product candidate infringes on the intellectual property rights of others; |
• | partners may dispute their responsibility to conduct development and commercialization activities pursuant to the applicable collaboration, including the payment of related costs or the division of any revenue; |
• | partners may decide to pursue a competitive product developed outside of the collaboration arrangement; |
• | partners may not be able to obtain, or believe they cannot obtain, the necessary regulatory approvals; or |
• | partners may delay the development or commercialization of our product candidates in favor of developing or commercializing another party’s product candidate. |
• | the scope of rights granted under the license agreement and other interpretation-related issues; |
• | the extent to which our technology and processes infringe, misappropriate or violate the intellectual property of the licensor that is not subject to the license agreement; |
• | our diligence obligations under the license agreement and what activities satisfy those diligence obligations; |
• | the sublicensing of patent and other rights to third parties under any such agreement or collaborative relationships; |
• | the inventorship and ownership of inventions and know-how resulting from the joint creation or use of intellectual property by our licensors and us and our partners; and |
• | the priority of invention of patented technology. |
• | any product candidates we may develop will eventually become commercially available in generic or biosimilar product forms; |
• | others may be able to make products that are similar to any product candidates we may develop or utilize similar technology but that are not covered by the claims of the patents that we may own or license now or in the future; |
• | we, or any future license partners or collaborators, might not have been the first to make the inventions covered by the issued patent or pending patent application that we own or license now or in the future; |
• | we, or any future license partners or collaborators, might not have been the first to file patent applications covering certain of our or their inventions; |
• | others may independently develop similar or alternative technologies or duplicate any of our technologies without infringing our intellectual property rights; |
• | it is possible that our pending patent applications or those that we may own in the future will not lead to issued patents; |
• | it is possible that there are prior public disclosures that could invalidate our issued patents, or parts of our issued patents; |
• | it is possible that there are unpublished applications or patent applications maintained in secrecy that may later issue with claims covering our product candidates or technology similar to ours; |
• | issued patents that we hold rights to may be held invalid or unenforceable, including as a result of legal challenges by our competitors; |
• | the claims of our patent applications, if and when issued, may not cover our product candidates; |
• | our competitors might conduct research and development activities in countries where we do not have patent rights and then use the information learned from such activities to develop competitive products for sale in our major commercial markets; |
• | the laws of foreign countries may not protect our proprietary rights or the proprietary rights of license partners or current or future collaborators to the same extent as the laws of the United States; |
• | the inventors of our patent applications may become involved with competitors, develop products or processes that design around our patents, or become hostile to us or the patents or patent applications on which they are named as inventors; |
• | we engage in scientific collaborations and will continue to do so in the future, and our collaborators may develop adjacent or competing products that are outside the scope of our patents; |
• | any product candidates we develop may be covered by third parties’ patents or other exclusive rights; |
• | the patents of others may harm our business; |
• | we may not develop additional proprietary technologies that are patentable; and |
• | we may choose not to file a patent in order to maintain certain trade secrets or know-how, and a third-party may subsequently file a patent covering such intellectual property. |
• | revoking the business licenses and/or operating licenses of such entities; |
• | discontinuing or placing restrictions or onerous conditions on our operation through any transactions between the WFOE and the VIE; |
• | imposing fines, confiscating the income from the WFOE or the VIE, or imposing other requirements with which we or the VIE may not be able to comply; |
• | requiring us to restructure our ownership structure or operations, including terminating the contractual arrangements with the VIE and deregistering the equity pledges of the VIE, which in turn would affect our ability to consolidate, derive economic interests from, or exert effective control over the VIE; |
• | restricting or prohibiting use of any of our offering proceeds to finance our business and operations in China, and taking other regulatory or enforcement actions that could be harmful to our business; |
• | confiscating any of our income deemed to be obtained through illegal operations; |
• | discontinuing or placing restrictions or onerous conditions on our operations; |
• | imposing additional conditions or requirements with which we may not be able to comply; or |
• | taking other regulatory or enforcement actions against us that could be harmful to our business. |
• | only one of our three classes of directors will be elected each year; |
• | shareholders will be entitled to remove directors only for cause; |
• | shareholders will not be permitted to take actions by written consent; |
• | shareholders must give advance notice to nominate directors or submit proposals for consideration at annual general meetings. |
• | the commencement, enrollment or results of our planned and future clinical trials; |
• | positive or negative results from, or delays in, testing and clinical trials by us, collaborators or competitors; |
• | the loss of any of our key scientific or management personnel; |
• | regulatory or legal developments in the United States, China and other countries; |
• | the success of competitive products or technologies; |
• | adverse actions taken by regulatory agencies with respect to our clinical trials or manufacturers; |
• | changes or developments in laws or regulations applicable to our product candidates and preclinical program; |
• | changes in the structure of healthcare payment systems; |
• | changes to our relationships with collaborators, manufacturers or suppliers; |
• | concerns regarding the safety of our product candidates or CAR-T cells in general; |
• | announcements concerning our competitors or the pharmaceutical industry in general; |
• | actual or anticipated fluctuations in our operating results; |
• | changes in financial estimates or recommendations by securities analysts; |
• | potential acquisitions, financing, collaborations or other corporate transactions; |
• | the results of our efforts to discover, develop, acquire or in-license additional product candidates; |
• | the trading volume of the ADSs on Nasdaq; |
• | sales of the ADSs or ordinary shares by us, members of our senior management and directors or our shareholders or the anticipation that such sales may occur in the future; |
• | general economic, political, and market conditions and overall fluctuations in the financial markets in the United States or China; |
• | stock market price and volume fluctuations of comparable companies and, in particular, those that operate in the biopharmaceutical industry; |
• | investors’ general perception of us and our business; and |
• | other events and factors, many of which are beyond our control. |
Item 4. |
Information on the Company |
• | With FasTCAR, we are able to deliver younger, less exhausted T cells for autologous cell therapies with enhanced activities and next-day manufacturing versus the industry norm of two to six weeks. Our lead FasTCAR-enabled autologous product candidate, GC012F, has achieved high percentage of negative minimal residual disease, or MRD-, stringent complete responses, or sCR, in relapsed or refractory multiple myeloma, or r/r MM, patients in an ongoing investigator-initiated Phase 1 trial in China. |
• | With TruUCAR, we are able to derive T cells from non-HLA-matched CAR-T cell therapies that are readily available off-the-shelf CAR-T cell therapies. Our lead TruUCAR-enabled allogeneic product candidate, GC027, has achieved high percentage of complete responses, or CR, in relapsed or refractory T cell acute lymphoblastic leukemia, or r/r T-ALL, patients in an ongoing investigator-initiated Phase 1 trial in China. |
• | FasTCAR. in vivo . In addition, FasTCAR manufactured CAR-T cells are younger, less exhausted and show enhanced proliferation, tissue migration and tumor cell clearance activities as demonstrated in preclinical studies, eliminating the need for the ex vivo expansion phase in the conventional process. This streamlined process significantly shortens the production time from an industry norm of two to six weeks and achieves next-day manufacturing. Shorter manufacturing time is of particular importance to increasing the widespread utility of CAR-T cell therapies, particularly in the case of rapidly progressing cancers. We established fully-closed capability designed to produce FasTCAR product candidates while reducing the risk of contamination and optimizing cost-efficiency. Our significantly shorter manufacturing time and highly efficient manufacturing process may result in meaningful cost savings, increasing the accessibility of cell therapies for cancer patients. We are developing our lead autologous product candidate, GC012F, on our FasTCAR platform. |
• | TruUCAR. CAR-T cell therapies that can be administered “off-the-shelf” CAR-T approaches. TruUCAR is designed to specifically target a patient’s T cells and natural killer, or NK, cells that would otherwise be directed against the foreign, or allogeneic, cells resulting in rejection by the patients. This feature allows our allogeneic cell therapies to expand in the patient without the need for combination treatment with immunosuppressive agents like anti-CD52 antibodies that may leave a patient at increased risk for infection. TruUCAR is designed to avoid HvG and GvHD, severe adverse events of allogeneic CAR-T cell therapies, and rapidly eliminate cancer cells. As a result, TruUCAR’s approach has the potential to significantly reduce the cost and length of treatment by achieving fast remission and avoiding anti-CD52 treatment and potentially HSCT. We believe that TruUCAR could potentially result in meaningful cost savings, further increasing the accessibility of cell therapies for cancer patients. We are developing our lead allogeneic product candidates, GC027 and GC502, as well as multiple allogeneic pipeline candidates based on our TruUCAR platform. |
• | GC012F. CAR-T product candidate being studied in investigator-initiated Phase 1 trials across multiple centers in China, for two indications, MM and B-NHL. Data was presented at ASCO 2021 where 19 r/r MM patients had been enrolled and treated. 18 out of 19 patients (94.7%) were classified as high-risk according to mSMART 3.0 criteria, a subgroup of MM patients with less favorable treatment outcomes for SOC treatment. As of the January 12, 2021 data cutoff date, 18 of 19 patients responded to therapy, resulting in an overall response rate, or ORR, of 94.7%. Based on these results, we expect to submit IND applications for GC012F in r/r MM to the FDA and the NMPA in the second half of 2022. We have extended our timeline for IND submission in the U.S. for GC012F for r/r MM to the second half of 2022. While we have made significant progress with our tech transfer from our Suzhou GMP manufacturing facility to the U.S. CDMO, this revised timeline reflects the impact to the industry-wide high demand for cell therapy manufacturing capacity. |
• | GC019F. CAR-T product candidate that has been studied for the treatment of adult B-ALL in an investigator-initiated Phase 1 trial across multiple centers in China. We have obtained IND approval from the NMPA to study GC019F in adult B-ALL and have initiated the Phase 1 trial for GC019F in r/r B-ALL. |
• | GC027. CD7-directed allogeneic CAR-T product candidate being studied for the treatment of adult T-ALL in an investigator-initiated Phase 1 trial across multiple centers in China. As of February 2021, six adult r/r T-ALL patients were enrolled and treated on study. All six patients enrolled had relapsed from, or were refractory to, their prior line of therapy. All six evaluable patients achieved a CR or CRi, resulting in all patients obtaining a response, including five patients, or 83%, achieving MRD- CR on Day 28 after treatment. CRS was observed in all patients and was resolved with treatment. No patient developed ICANS or acute GvHD. We expect to initiate regulatory interactions for GC027 during the next 12 months. |
• | GC502. off-the-shelf CAR-T product candidate being studied for the treatment of B-cell malignancies in an ongoing investigator-initiated Phase 1 trial in China. GC502 is manufactured using T cells from non-HLA matched healthy donors. An enhancer molecule is embedded in the basic construct of TruUCAR to enhance proliferation of TruUCAR T cells. Optimized for CD19/CD7 dual CAR functionality and in vivo |
• | GC007g. CAR-T cell therapy that has been studied for the treatment of r/r B-ALL in a completed investigator-initiated Phase 1 trial, where CAR-T cells were manufactured using T cells from an HLA-matched healthy donor. We have obtained IND approval from the NMPA to study GC007g in B-ALL and were granted approval from the NMPA on December 24, 2020 for a seamless Phase 1/2 registrational trial. Following completion of enrollment of the first dosing cohort, we have advanced GC007g to the second dose cohort in the Phase 1/2 registrational trial. Our goal is to submit a biologics license application, or BLA, to the NMPA for GC007g upon completion of a registrational trial. |
Patient # |
Tumor Burden |
Dose Level |
Peak TruUCAR cells/ul blood |
Peak TruUCAR copies/ug DNA |
||||||||||||
Patient 1 |
38.20 | % | 3 | 9,716 | 872,170 | |||||||||||
Patient 3 |
4 | % | 2 | 69 | 308,303 | |||||||||||
Patient 4 |
80.2 | % | 2 | 0.06 | 205,963 | |||||||||||
Patient 5 |
6.7 | % | 2 | 613.44 | 98,460 | |||||||||||
Patient 2 |
45.84 | % | 1 | 2,179 | 1,241,762 | |||||||||||
Patient 6 |
6.57 | % | 1 | 648.26 | 525,508 |
Efficacy |
DL1 (n=3) |
DL2 (n=9) |
DL3 (n=1) |
Overall (n=13) | ||||
ORR (Day 28) |
3 (100%) | 7 (77.8%) | 1 (100%) | 11 (84.6%) | ||||
MRD- (Day 28) |
3 (100%) | 6 (66.7%) | 1 (100%) | 10 (76.9%) |
Safety |
DL1 (n=3) |
DL2 (n=9) |
DL3 (n=2) |
Overall (n=14) | ||||
CRS |
1 (33.3%) | 9 (100%) | 2 (100%) | 12 (85.7%) | ||||
Grade 3 or higher CRS |
0 | 1 (11.1%) | 0 | 1 (7.1%) | ||||
Neurotoxicity |
0 | 0 | 0 | 0 | ||||
Grade 3 or higher neurotoxicity |
0 | 0 | 0 | 0 | ||||
acute GvHD |
0 | 2 (22.2%) | 0 | 2 (14.3%) |
• | GC202. CAR-T product candidate for the treatment of Peripheral T cell lymphoma, or PTCL, a subtype of non-Hodgkin lymphoma, or NHL. PTCL develops from mature T cells and is a subtype of NHL with a high unmet medical need. PTCL patients represent approximately 7-10% and 10-15% of the NHL patient populations in the United States and China, respectively. Patients with r/r PTCL usually have poor prognosis and high long-term mortality rates. |
• | GC207. CAR-T product candidate for the treatment of T-ALL or T cell lymphoblastic leukemia/lymphoma. |
• | GC212. CAR-T product candidate for the treatment of r/r MM. While autologous CAR-T cell therapies for MM have achieved significant success, there are still more than 10% of the MM patient population who are not suitable for autologous CAR-T cell therapy. We are developing this program with additional modifications designed to produce TruUCAR T cells that are more potent and capable to deliver safer and more durable responses. |
• | GC503. TM -enabled CAR-T therapy targeting mesothelin for the treatment of mesothelin-positive solid tumors including ovarian cancer. |
• | GC506. TM -enabled CAR-T therapy targeting Claudin 18.2 for the treatment of Claudin 18.2-positive solid tumors. |
• | completion of preclinical laboratory tests and animal studies performed in accordance with the FDA’s good laboratory practices, or GLP, regulations; |
• | submission to the FDA of an IND, which must become effective before clinical trials may begin and must be updated annually or when significant changes are made; |
• | approval by an independent Institutional Review Board, or IRB, or ethics committee at each clinical site before the trial is commenced; |
• | performance of adequate and well-controlled human clinical trials to establish the safety and effectiveness of the proposed biologic product candidate for its intended indications; |
• | preparation of and submission to the FDA of a BLA when adequate data are obtained from pivotal clinical trials; |
• | a determination by the FDA within 60 days of its receipt of a BLA to accept the application for review; |
• | satisfactory completion of an FDA Advisory Committee review, if applicable; |
• | satisfactory completion of an FDA pre-approval inspection of the manufacturing facility or facilities at which the proposed product is produced to assess compliance with cGMP and to assure that the facilities, methods and controls are adequate to preserve the biological product’s continued safety, purity and potency, and of selected clinical investigation sites to assess compliance with Good Clinical Practices, or GCP regulations; and |
• | FDA review and approval of the BLA to permit commercial marketing of the product for particular indications for use in the United States. |
• | Phase 1. |
• | Phase 2. |
• | Phase 3. |
• | restrictions on the marketing or manufacturing of a product, complete withdrawal of the product from the market or product recalls; |
• | fines, warning letters or holds on post-approval clinical studies; |
• | refusal of the FDA to approve pending applications or supplements to approved applications, or suspension or revocation of existing product approvals; and |
• | product seizure or detention, or refusal of the FDA to permit the import or export of products. |
• | The centralized MA, which is issued by the European Commission through the Centralised Procedure, based on the opinion of the Committee for Medicinal Products for Human Use of the European Medicines Agency, or EMA, and which is valid throughout the entirety of the EEA. The Centralised Procedure is mandatory for certain types of products, such as biotechnology medicinal products, orphan medicinal products, and medicinal products indicated for the treatment of AIDS, cancer, neurodegenerative disorders, diabetes, auto immune and viral diseases. The Centralised Procedure is optional for products containing an active substance not authorized in the EEA before May 20, 2004, for products that constitute a significant therapeutic, scientific or technical innovation or for which a centralized authorization would be in the interest of patients. |
• | National MAs, which are issued by the competent authorities of the Member States of the EEA and only cover their respective territory, are available for products not falling within the mandatory scope of the Centralised Procedure. Where a product has already been authorized for marketing in a Member State of the EEA, this National MA can be recognized in another Member State through the Mutual Recognition Procedure. If the product has not received a National MA in any Member State at the time of application, it can be approved simultaneously in various Member States through the Decentralized Procedure. |
• | the second applicant can establish that its product, although similar, is safer, more effective or otherwise clinically superior; |
• | the applicant consents to a second orphan medicinal product application; or |
• | the applicant cannot supply sufficient quantities of the orphan medicinal product. |
(1) | Shareholders of Shanghai Gracell Biotech are Dr. William Wei Cao and Xiaomi Hua holding 99.9% and 0.1%, respectively, of the equity interest in the VIE. Dr. Cao is our Founder, Chairman of board of directors and Chief Executive Officer. |
• | the ownership structures of the VIE and the WFOE do not and will not result in any violation of PRC laws or regulations currently in effect; and |
• | the contractual arrangements among the WFOE, the VIE and the shareholders of the VIE governed by PRC law are valid, binding and enforceable, and will not result in any violation of PRC laws or regulations currently in effect. |
Item 4A. |
Unresolved Staff Comments |
Item 5. |
Operating and Financial Review and Prospects |
• | continue our ongoing and planned research and development of our lead product candidates, GC012F for the treatment of relapsed or refractory multiple myeloma, or r/r MM and B-NHL, GC027 for the treatment of relapsed or refractory T cell acute lymphoblastic leukemia, or r/r T-ALL, and GC502 for the treatment of B-cell malignancies; |
• | continue our ongoing and planned clinical activities for our other product candidates, including those we are developing for the treatment of B-cell acute lymphoblastic leukemia, or B-ALL, and B-cell non-Hodgkin’s lymphoma, or B-NHL; |
• | continue our ongoing and planned research and development activities; |
• | seek to discover and develop additional product candidates and further expand our clinical product pipeline; |
• | seek regulatory approvals for any product candidates that successfully complete clinical trials; |
• | continue to scale up manufacturing capacity with the aim of securing sufficient quantities to meet our capacity requirements for clinical trials and potential commercialization; |
• | establish sales, marketing and distribution infrastructure to commercialize any product candidate for which we may obtain regulatory approval; |
• | develop, maintain, expand and protect our intellectual property portfolio; |
• | hire additional clinical, quality control, manufacturing and administrative personnel; and |
• | expand our operations globally. |
• | cost of personnel engaged in research and development activities, including salaries, benefits and share-based compensation expense, if any; |
• | costs of funding research performed by third parties including laboratory, contract research organization, and other investigator and vendor expenses related to the execution of preclinical and clinical trials; |
• | costs related to production of preclinical and clinical materials; |
• | facilities and other expenses, which include expenses for rent and maintenance of facilities, depreciation and amortization expense and other supplies; |
• | expenses related to regulatory activities, including filing fees paid to regulatory agencies; and |
• | fees for maintaining licenses under our third-party licensing agreements. |
• | per patient trial costs; |
• | the number of patients that participate in the trials; |
• | the number of sites included in the trials; |
• | the countries in which the trials are conducted; |
• | the length of time required to enroll eligible patients; |
• | the number of doses that patients receive; |
• | the drop-out or discontinuation rates of patients; |
• | potential additional safety monitoring or other studies requested by regulatory agencies; |
• | the duration of patient follow-up; |
• | the efficacy and safety profile of the product candidates; |
• | the cost and timing of manufacturing of our product candidates; |
• | the number of trials required for regulatory approval; |
• | the receipt of regulatory approvals from applicable regulatory authorities; |
• | the timing, receipt and terms of any marketing approvals from applicable regulatory authorities; and |
• | the extent to which we establish collaboration, licensing or similar arrangements and the performance of any related third parties. |
For the Years Ended December 31, |
||||||||||||||||||||
2020 |
2021 |
Year-Over-Year Change |
||||||||||||||||||
RMB |
RMB |
US$ |
RMB |
US$ |
||||||||||||||||
(in thousands) |
||||||||||||||||||||
Consolidated Statement of Operations Data: |
||||||||||||||||||||
Revenue: |
||||||||||||||||||||
Licensing and collaboration revenue |
— | 366 | 57 | 366 | 57 | |||||||||||||||
Operating expenses: |
||||||||||||||||||||
Research and development expenses |
(168,830 | ) | (326,899 | ) | (51,298 | ) | (158,069 | ) | (24,805 | ) | ||||||||||
Administrative expenses |
(45,566 | ) | (137,040 | ) | (21,505 | ) | (91,474 | ) | (14,354 | ) | ||||||||||
Loss from operation |
(214,396 | ) | (463,573 | ) | (72,746 | ) | (249,177 | ) | (39,101 | ) | ||||||||||
Interest income |
2,870 | 9,116 | 1,430 | 6,246 | 980 | |||||||||||||||
Interest expense |
(2,155 | ) | (5,063 | ) | (794 | ) | (2,908 | ) | (456 | ) | ||||||||||
Other income |
4,707 | 9,120 | 1,431 | 4,413 | 693 | |||||||||||||||
Foreign exchange gain (loss), net |
(2,914 | ) | (1,297 | ) | (204 | ) | 1,617 | 254 | ||||||||||||
Others, net |
(12 | ) | (57 | ) | (9 | ) | (45 | ) | (7 | ) | ||||||||||
Loss before income tax |
(211,900 | ) | (451,754 | ) | (70,892 | ) | (239,854 | ) | (37,638 | ) | ||||||||||
Income tax expense |
— | — | — | — | — | |||||||||||||||
Net loss |
(211,900 | ) | (451,754 | ) | (70,892 | ) | (239,854 | ) | (37,638 | ) | ||||||||||
For the Year Ended December 31, |
Year-Over-Year Change |
|||||||||||
2019 |
2020 |
|||||||||||
RMB |
RMB |
RMB |
||||||||||
(in thousands) |
||||||||||||
Consolidated Statement of Operations Data: |
||||||||||||
Operating expenses: |
||||||||||||
Research and development expenses |
(119,218 | ) | (168,830 | ) | (49,612 | ) | ||||||
Administrative expenses |
(27,362 | ) | (45,566 | ) | (18,204 | ) | ||||||
Loss from operation |
(146,580 | ) | (214,396 | ) | (67,816 | ) | ||||||
Interest income |
3,932 | 2,870 | (1,062 | ) | ||||||||
Interest expense |
— | (2,155 | ) | (2,155 | ) | |||||||
Other income |
1,449 | 4,707 | 3,258 | |||||||||
Foreign exchange gain, net |
2,556 | (2,914 | ) | (5,470 | ) | |||||||
Others, net |
(21 | ) | 12 | 9 | ||||||||
Loss before income tax |
(138,664 | ) | (211,900 | ) | (73,236 | ) | ||||||
Income tax expense |
— | — | — | |||||||||
Net loss |
(138,664 | ) | (211,900 | ) | (73,236 | ) | ||||||
For the Year Ended December 31, |
||||||||||||||||
2019 |
2020 |
2021 |
||||||||||||||
RMB |
RMB |
RMB |
US$ |
|||||||||||||
(in thousands, except for per share data) |
||||||||||||||||
Net cash used in operating activities |
(135,393 | ) | (198,149 | ) | (304,550 | ) | (47,792 | ) | ||||||||
Net cash (used in)/ generated from investing activities |
41,368 | (93,941 | ) | (41,616 | ) | (6,530 | ) | |||||||||
Net cash generated from financing activities |
394,796 | 756,467 | 1,456,185 | 228,507 | ||||||||||||
Net (decrease)/increase in cash and cash equivalents |
300,168 | 442,250 | 1,074,698 | 168,644 | ||||||||||||
Cash and cash equivalents at the beginning of the period |
11,890 | 312,058 | 754,308 | 118,367 | ||||||||||||
Cash and cash equivalents at the end of the period |
312,058 | 754,308 | 1,829,006 | 287,011 | ||||||||||||
|
|
|
|
|
|
|
|
Less than 1 Year |
1 to 3 Years |
3 to 5 Years |
More than 5 Years |
Total |
||||||||||||||||
(in RMB thousands) |
||||||||||||||||||||
Operating Lease obligations |
20,230 | 13,657 | — | — | 33,887 |
• | the timing, receipt and amount of sales of any future approved or cleared products, if any; |
• | the scope, progress, results and costs of researching and developing our existing product candidates or any future product candidates, and conducting preclinical studies and clinical trials; |
• | the timing of, and the costs involved in, obtaining regulatory approvals or clearances for our existing product candidates or any future product candidates; |
• | the time and costs involved in obtaining regulatory approval for our product candidates and any delays we may encounter as a result of evolving regulatory requirements or adverse results with respect to any of these product candidates; |
• | the number and characteristics of any additional product candidates we develop or acquire; |
• | the cost of manufacturing our product candidates and any products we successfully commercialize, including costs associated with developing our manufacturing capabilities; |
• | the costs of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property rights and defending intellectual property-related claims; |
• | the extent to which we acquire or in-license other product candidates and technologies; |
• | our ability to establish and maintain strategic collaborations, licensing or other arrangements and the financial terms of any such agreements that we may enter into; |
• | the expenses needed to attract and retain skilled personnel and senior management; and |
• | the costs associated with being a public company. |
Item 6. |
Directors, Senior Management and Employees |
Directors and Executive Officers |
Age |
Position/Title | ||
William Wei Cao, Ph.D. B.M. |
63 | Founder, Chairman of the Board and Chief Executive Officer | ||
David Guowei Wang M.D., Ph.D. |
60 | Director | ||
Guotong Xu M.D., Ph.D. |
64 | Director | ||
Wendy Hayes |
52 | Director | ||
Christophe Kin Ping Lee |
53 | Director | ||
Martina Sersch, M.D., Ph.D. |
50 | Chief Medical Officer | ||
Yili Kevin Xie, Ph.D. |
51 | Chief Financial Officer | ||
Jenny Yajin Ni, M.D., Ph.D. |
59 | Chief Technology Officer |
Name |
Ordinary Shares & RSUs Underlying Awards |
Exercise Price (US$/Share) |
Date of Grant |
Date of Expiration |
||||||||||||
William Wei Cao |
303,030 | — | January 1, 2021 | January 30, 2031 | ||||||||||||
289,020 | — | February 24, 2022 | February 24, 2032 | |||||||||||||
606,060 | 1,65 | January 1, 2021 | January 1, 2031 | |||||||||||||
1,000,000 | 1.65 | January 13, 2021 | January 13, 2031 | |||||||||||||
1,302,415 | 0.692 | February 24, 2022 | February 24, 2032 | |||||||||||||
David Guowei Wang |
— | — | — | — | ||||||||||||
Guotong Xu |
* | 0.30 | September 1, 2017 | August 31, 2027 | ||||||||||||
* | 4.36 | February 1, 2021 | February 1, 2031 | |||||||||||||
Wendy Hayes |
* | — | January 8, 2021 | January 8, 2031 | ||||||||||||
* | — | January 7, 2022 | January 7, 2023 | |||||||||||||
Christophe Kin Ping Lee |
* | — | July 9, 2021 | July 9, 2031 | ||||||||||||
* | — | February 24, 2022 | February 24, 2032 | |||||||||||||
Martina Sersch |
1,000,000 | 1.06 | June 15, 2020 | June 15, 2030 | ||||||||||||
300,000 | 1.65 | January 13, 2021 | January 13, 2031 | |||||||||||||
* | 4.64 | April 13, 2021 | April 13, 2031 | |||||||||||||
* | 0.692 | February 24, 2022 | February 24, 2032 | |||||||||||||
Yili Kevin Xie |
* | — | February 24, 2022 | February 24, 2032 | ||||||||||||
3,000,000 | 1.06 | July 16, 2020 | July 16, 2030 | |||||||||||||
* | 1.65 | December 9, 2020 | December 8, 2030 | |||||||||||||
* | 1.65 | January 13, 2021 | January 13, 2031 | |||||||||||||
* | 4.64 | April 13, 2021 | April 13, 2031 | |||||||||||||
Jenny Yajin Ni |
800,000 | 2.3 | May 6, 2021 | May 6, 2031 | ||||||||||||
Other grantees |
8,257,520 | |
0.30 (August 8, 2017 through January 2, 2019) 1.06 (January 3, 2019 through November 3, 2020) 1.65 (November 4, 2020 through March 31, 2021) 4.64 (March 15, 2021 through April 13, 2021) |
|
From August 8, 2017 |
|
|
Ten years from date of award |
| |||||||
Total |
17,538,060 |
* | Less than 1% of our total outstanding ordinary shares on an as-converted basis. |
• | selecting the independent auditors; |
• | reviewing and approving the independent auditors’ annual engagement letter; |
• | review responsibilities, budget, compensation and staffing of our internal audit function; |
• | reviewing with the independent auditor any audit problems or difficulties and management’s response; |
• | reviewing and pre-approving related party transactions; |
• | reviewing and discussing the annual audited financial statements with management and the independent auditor; |
• | reviewing and discussing with management and the independent auditors about all critical accounting policies and practices to be used; |
• | reviewing reports prepared by management and/or the independent auditors relating to significant financial reporting issues and judgments; |
• | reviewing earnings press releases, as well as financial information and earnings guidance provided to analysts and rating agencies; |
• | reviewing with management and the independent auditors the effect of regulatory and accounting initiatives, as well as off-balance sheet structures, on our financial statements; |
• | discussing policies with respect to risk assessment and risk management with management and internal auditors; |
• | timely reviewing reports from the independent auditors regarding all critical accounting policies and practices to be used by our company, and all other material written communications between the independent auditors and management; |
• | establishing procedures for the receipt, retention and treatment of complaints received from our employees regarding accounting, internal accounting controls or auditing matters and the confidential, anonymous submission by our employees of concerns regarding questionable accounting or auditing matters; |
• | such other matters that are specifically delegated to our audit committee by our board of directors from time to time; and |
• | meeting separately, periodically, with management, internal auditors and the independent auditor. |
• | reviewing, evaluating and, if necessary, revising our overall compensation plans; |
• | reviewing and evaluating the performance of our directors and relevant executive officers and determining the compensation of relevant executive officers; |
• | reviewing and approving any severance or termination agreements to be made with any executive officers; |
• | reviewing our general compensation plans and other employee benefit plans, including our incentive compensation plan and equity-based compensation plans; |
• | administering our equity-based compensation plans in accordance with the terms thereof; and |
• | such other matters that are specifically delegated to the compensation committee by our board of directors from time to time. |
• | selecting and recommending to our board of directors nominees for election by the shareholders or appointment by the board; |
• | reviewing annually with our board of directors the current composition of our board of directors with regards to characteristics such as independence, knowledge, skills, experience and diversity; |
• | making recommendations on the frequency and structure of our board of directors meetings and monitoring the functioning of the committees of our board of directors; and |
• | advising our board of directors periodically with regards to significant developments in the law and practice of corporate governance as well as our compliance with applicable laws and regulations, and making recommendations to the board on all matters of corporate governance and on any remedial action to be taken. |
• | conducting and managing the business of our company; |
• | representing our company in contracts and deals; |
• | appointing attorneys for our company; |
• | selecting and removing senior management; |
• | providing employee benefits and pensions; |
• | managing our company’s finance and bank accounts; |
• | evaluating the performance and determining the compensation level of chief executive officer; |
• | exercising the borrowing powers of our company and mortgaging the property of our company; and |
• | exercising any other powers conferred by the shareholders meetings or under our amended and restated memorandum and articles of association. |
• | Class I, which will consist of Christophe Kin Ping Lee, whose term will expire at our annual meeting of shareholders in 2024; and |
• | Class II, which will consist of Guotong Xu and David Guowei Wang, whose term will expire at our annual meeting of shareholders in 2022; |
• | Class III, which will consist of William Wei Cao and Wendy Hayes, whose term will expire at our annual meeting of shareholders in 2023. |
Country of Principal Executive Offices |
People’s Republic of China | |||||||
Foreign Private Issuer |
Yes | |||||||
Disclosure Prohibited under Home Country Law |
No | |||||||
Total Number of Directors |
5 |
Female |
Male |
Non- Binary |
Did Not Disclose Gender |
|||||||||||||
Part I: Gender Identity |
||||||||||||||||
Directors |
1 | 4 | 0 | 0 | ||||||||||||
Part II: Demographic Background |
||||||||||||||||
Underrepresented Individual in Home Country Jurisdiction |
0 | |||||||||||||||
LGBTQ+ |
0 | |||||||||||||||
Did Not Disclose Demographic Background |
0 |
• | each of our directors and executive officers; |
• | all of our directors and executive officers as a group; and |
• | each person known to us to beneficially own more than 5% of our ordinary shares. |
Ordinary Shares Beneficially Owned |
||||||||
Number |
% |
|||||||
Directors and Executive Officers**: |
||||||||
William Wei Cao (1) |
95,096,137 | 27.5 | ||||||
David Guowei Wang |
— | — | ||||||
Guotong Xu |
* | * | ||||||
Wendy Hayes |
* | * | ||||||
Christophe Kin Ping Lee |
* | * | ||||||
Martina Sersch |
* | * | ||||||
Yili Kevin Xie |
* | * | ||||||
Jenny Yajin Ni |
* | * | ||||||
All Directors and Executive Officers as a Group |
96,867,184 | 28.0 | ||||||
Principal Shareholders: |
||||||||
Gracell Venture Holdings Limited (1) |
92,347,450 | 26.7 | ||||||
TLS Beta Pte. Ltd. (2) |
49,509,702 | 14.3 | ||||||
Entities affiliated with LAV (3) |
25,406,680 | 7.3 | ||||||
Entities affiliated with OrbiMed (4). |
66,220,230 | 19.1 | ||||||
Entities affiliated with Wellington (5) |
21,460,705 | 6.2 | ||||||
Capital International Investors (6) |
20,318,820 | 5.9 |
* | Less than 1% of our total ordinary shares on an as-converted basis outstanding as of the date of this annual report. |
** | Business address of Dr. William Wei Cao, Dr. Martina Sersch and Dr. Yili Kevin Xie is Building 12, Block B, Phase ll, Biobay Industrial Park, 218 Sangtian St., Suzhou Industrial Park, Jiangsu Province, China. Dr. David Guowei Wang’s business address is Unit 4706, Raffles City Shanghai Office Tower, 268 Middle Xizang Road, Huangpu District, Shanghai, China. Ms. Lili Shen’s business address is 320 Wuyuan Road, Xuhui District, Shanghai, China. Dr. Guotong Xu’s business address is Room 102, No.18, Lane 29, Lingling Road, XuHui District, Shanghai, China. Ms. Wendy Hayes’s business address is 2370 Roanoke Trail, Reno, NV 89523. |
(1) | Represents 92,090,000 ordinary shares and 257,450 ordinary shares (in the form of ADSs) held by Gracell Venture Holdings Limited, a company incorporated in the British Virgin Islands, and 2,748,687 ordinary shares that William Wei Cao has the rights to acquire within 60 days. Gracell Venture Holdings Limited is wholly owned by Land Blossom Limited, a company incorporated in the British Virgin Islands. Land Blossom Limited, under The Cao Family Trust, or the Trust, established under the law of Republic of Singapore and managed by VISTRA Trust (Singapore) Pte. Limited, or the Trustee, is wholly owned and managed by the Trustee. Dr. William Wei Cao is the Settlor of the Trust and Dr. Cao and his family members are the Trust’s beneficiaries. Under the terms of the Trust, Dr. Cao has the power to direct the Trustee with respect to the retention or disposal of, and the exercise of any voting and other rights attached to the shares held by Gracell Venture Holdings Limited in our company. The registered address of Gracell Venture Holdings Limited is Sertus Chambers, P.O. Box 905, Quastisky Building, Road Town, Tortola, British Virgin Islands. |
(2) | Represents 49,509,702 ordinary shares held by TLS Beta Pte. Ltd., a company incorporated in Singapore. TLS Beta Pte. Ltd. is a direct wholly-owned subsidiary of Temasek Life Sciences Private Limited. Temasek Life Sciences Private Limited, is a direct wholly-owned subsidiary of Fullerton Management Pte Ltd, or FMPL, which in turn is a direct wholly-owned subsidiary of Temasek Holdings (Private) Limited, or Temasek. Temasek is wholly owned by the Singapore Minister for Finance. Under the Singapore Minister for Finance (Incorporation) Act (Chapter 183), the Minister for Finance is a body corporate. As a commercial investment company, Temasek has its own Board of Directors and a professional management team. Temasek owns and manages its portfolio with full commercial discretion and flexibility under the guidance of its Board. The Singapore Government is not involved in Temasek’s investment, divestment, or any other business or operational decisions. The principal business address of TLS Beta Pte. Ltd. is 60B Orchard Road #06-18 Tower 2, The Atrium@Orchard, Singapore 238891. |
(3) | Represents (i) 10,049,125 ordinary shares (in the form of ADSs) held by LAV Biosciences Fund V, L.P., a Cayman Islands exempted limited partnership, (ii) 14,981,730 ordinary shares (in the form of ADSs) held by LAV Granite Limited, a British Virgin Island company, and (iii) 375,825 ordinary shares (in the form of ADSs) held by LAV Biosciences Fund V Sub A, L.P., a United States limited partnership, as reported on Schedule 13G filed by LAV Granite Limited, among others, on February 9, 2022. LAV Corporate V GP, Ltd. is the general partner of LAV GP V, L.P., which is the general partner of LAV Biosciences Fund V, L.P. Dr. Yi Shi is a Managing Partner of LAV Corporate V GP, Ltd and has voting power and investment discretion with regard to the shares held of record by LAV Biosciences Fund V, L.P. LAV Granite Limited is wholly owned by LAV Biosciences Fund IV, LP. Dr. Yi Shi is the managing partner of LAV Corporate IV GP, Ltd the general partner of LAV GP IV, L.P., which is the general partner of LAV Biosciences Fund IV, LP. The voting and investment power of shares held by LAV Granite Limited is exercised by Dr. Yi Shi. The registered address of LAV Biosciences Fund V, L.P. is 75 Fort Street, PO Box 1350, Grand Cayman KY1-1108, Cayman Islands. The registered address of LAV Granite Limited is PO Box 4301, Road Town, Tortola, British Virgin Islands. |
(4) | Represents (i) 1,914,198ADSs held by OrbiMed Capital LLC, a Delaware corporation, (ii) 5,970,672 ADSs held by OrbiMed Advisors LLC, a Delaware corporation, and (iii) 5,359,176 ADSs held by OrbiMed Asia GP III, L.P., as reported on Schedule 13G filed by OrbiMed Capital LLP on February 11, 2022. OrbiMed Asia GP III, L.P. is the general partner of OrbiMed Asia Partners III, L.P., or OAP III. OrbiMed Advisors LLC, or Advisors, and OrbiMed Capital LLC, or Capital, are investment advisors in accordance with ss.240.13d-1(b)(1)(ii)(E). Advisors is the investment manager to OrbiMed Asia GP III, L.P.. The principal business address of OrbiMed Capital LLC and OrbiMed Advisors LLC is 601 Lexington Avenue, 54th Floor, New York, NY 10022. |
(5) | Represents 21,460,705 ordinary shares held by Wellington Investment Advisors Holdings LLP, a Delaware limited partnership, as reported on Schedule 13G filed by Wellington Group Holdings LLP, among others, on February 4, 2022. Wellington Management Group LLP is the parent holding company of certain holding companies and the Wellington Investment Advisers. The securities are owned of record by clients of the Wellington Investment Advisers. Wellington Investment Advisors Holdings LLP controls directly, or indirectly through Wellington Management Global Holdings, Ltd., the Wellington Investment Advisers. Wellington Investment Advisors Holdings LLP is owned by Wellington Group Holdings LLP. Wellington Group Holdings LLP is owned by Wellington Management Group LLP. The principal business address is 280 Congress Street, Boston, MA 02210. |
(6) | Represents 20,318,820 ordinary shares (in the form of ADSs) held by Capital International Investors, a Delaware corporation, as reported on Schedule 13G filed by Capital International Investors on February 11, 2022. Capital International Investors is a division of Capital Research and Management Company, as well as its investment management subsidiaries and affiliates Capital Bank and Trust Company, Capital International, Inc., Capital International Limited, Capital International Sarl, Capital International K.K., and Capital Group Private Client Services, Inc. Capital International Investors’ divisions of each of the aforementioned investment management entities collectively provide investment management services under the name “Capital International Investors.” Capital International Investors is deemed to be the beneficial owner of 20,318,820 shares. The principal business address is 333 South Hope Street, 55th Fl, Los Angeles, CA 90071. |
Item 7. |
Major Shareholders and Related Party Transactions |
Item 8. |
Financial Information |
Item 9. |
The Offer and Listing |
Item 10. |
Additional Information |
• | the instrument of transfer is lodged with us, accompanied by the certificate for the ordinary shares to which it relates and such other evidence as our board of directors may reasonably require to show the right of the transferor to make the transfer; |
• | the instrument of transfer is in respect of only one class of ordinary shares; |
• | the instrument of transfer is properly stamped, if required; |
• | in the case of a transfer to joint holders, the number of joint holders to whom the ordinary share is to be transferred does not exceed four; |
• | the ordinary shares transferred are free of any lien in favor of our company; and |
• | a fee of such maximum sum as The Nasdaq Global Select Market may determine to be payable or such lesser sum as our directors may from time to time require is paid to us in respect thereof. |
• | the designation of the series; |
• | the number of shares of the series; |
• | the dividend rights, dividend rates, conversion rights, voting rights; |
• | the rights and terms of redemption and liquidation preferences; and |
• | any other powers, preferences and relative, participating, optional and other special rights. |
• | authorize our board of directors to issue preferred shares in one or more series and to designate the price, rights, preferences, privileges and restrictions of such preferred shares without any further vote or action by our shareholders; and |
• | limit the ability of shareholders to requisition and convene general meetings of shareholders. |
• | does not have to file an annual return of its shareholders with the Registrar of Companies; |
• | is not required to open its register of members for inspection; |
• | does not have to hold an annual general meeting; |
• | may issue negotiable or bearer shares or shares with no par value; |
• | may obtain an undertaking against the imposition of any future taxation (such undertakings are usually given for 20 years in the first instance); |
• | may register by way of continuation in another jurisdiction and be deregistered in the Cayman Islands; |
• | may register as a limited duration company; and |
• | may register as a segregated portfolio company. |
• | the statutory provisions as to the required majority vote have been met; |
• | the shareholders have been fairly represented at the meeting in question and the statutory majority are acting bona fide without coercion of the minority to promote interests adverse to those of the class; |
• | the arrangement is such that may be reasonably approved by an intelligent and honest man of that class acting in respect of his interest; and |
• | the arrangement is not one that would more properly be sanctioned under some other provision of the Companies Act. |
• | a company acts or proposes to act illegally or ultra vires; |
• | the act complained of, although not ultra vires, could only be effected duly if authorized by more than a simple majority vote that has not been obtained; and |
• | those who control the company are perpetrating a “fraud on the minority.” |
(i) | no law which is enacted in the Cayman Islands imposing any tax to be levied on profit or income or gains or appreciations shall apply to the Company or its operations; and |
(ii) | no tax be levied on profits, income, gains or appreciations or which is in the nature of estate duty or inheritance tax shall be payable by the Company: |
• | on or in respect of the shares, debenture, or other obligations of the Company; or |
• | by way of withholding in whole or in party of any relevant payment as defined in section 6(3) of the Tax Concessions Law (as amended). |
• | banks and other financial institutions; |
• | insurance companies; |
• | pension plans; |
• | cooperatives; |
• | regulated investment companies; |
• | real estate investment trusts; |
• | corporations that accumulate income to avoid U.S. federal income tax; |
• | broker-dealers; |
• | dealers or traders that elect to use a mark-to-market |
• | certain former U.S. citizens or long-term residents; |
• | tax-exempt entities (including private foundations); |
• | governmental organizations; |
• | investors who acquire their ADSs or ordinary shares pursuant to any employee share option or otherwise as compensation; |
• | investors that will hold their ADSs or ordinary shares as part of a straddle, hedge, conversion, constructive sale or other integrated transaction for U.S. federal income tax purposes; |
• | investors that have a functional currency other than the U.S. dollar for U.S. federal income tax purposes; |
• | investors required to accelerate the recognition of any item of gross income with respect to their ADSs or ordinary shares as a result of such income being recognized on an applicable financial statement; |
• | investors that actually or constructively own 10% or more of our stock (by vote or value); or |
• | partnerships or other entities or arrangements taxable as partnerships for U.S. federal income tax purposes, or persons holding ADSs or ordinary shares through such entities, |
• | an individual who is a citizen or resident of the United States; |
• | a corporation (or other entity treated as a corporation for U.S. federal income tax purposes) created in, or organized under the law of the United States or any state thereof or the District of Columbia; |
• | an estate, the income of which is includible in gross income for U.S. federal income tax purposes regardless of its source; or |
• | a trust (A) the administration of which is subject to the primary supervision of a U.S. court and which has one or more U.S. persons who have the authority to control all substantial decisions of the trust or (B) that has otherwise validly elected to be treated as a U.S. person under the Code. |
• | the excess distribution or gain will be allocated ratably over the U.S. Holder’s holding period for the ADSs or ordinary shares; |
• | the amount allocated to the current taxable year and any taxable years in the U.S. Holder’s holding period prior to the first taxable year in which we are classified as a PFIC (each, a “pre-PFIC year”), will be taxable as ordinary income; |
• | the amount allocated to each prior taxable year, other than a pre-PFIC year, will be subject to tax at the highest tax rate in effect for individuals or corporations, as appropriate, for that year; and |
• | the interest charge generally applicable to underpayments of tax will be imposed on the tax attributable to each prior taxable year, other than a pre-PFIC year. |
Item 11. |
Quantitative and Qualitative Disclosures about Market Risk |
Item 12. |
Description of Securities Other than Equity Securities |
Persons depositing or withdrawing Class A ordinary shares or ADS holders must pay: |
For: | |
$5.00 (or less) per 100 ADSs (or portion of 100 ADSs) | • Issuance of ADSs, including issuances resulting from a distribution of shares or rights or other property | |
• Cancellation of ADSs for the purpose of withdrawal, including if the deposit agreement terminates | ||
$0.05 (or less) per ADS | • Any cash distribution to ADS holders | |
A fee equivalent to the fee that would be payable if securities distributed to you had been shares and the shares had been deposited for issuance of ADSs | • Distribution of securities distributed to holders of deposited securities (including rights) that are distributed by the depositary to ADS holders | |
$0.05 (or less) per ADS per calendar year | • Depositary services | |
Registration or transfer fees | • Transfer and registration of shares on our share register to or from the name of the depositary or its agent when you deposit or withdraw shares | |
Expenses of the depositary | • Cable (including SWIFT) and facsimile transmissions (when expressly provided in the deposit agreement) | |
• Converting foreign currency to U.S. dollars | ||
Taxes and other governmental charges the depositary or the custodian has to pay on any ADSs or shares underlying ADSs, such as stock transfer taxes, stamp duty or withholding taxes | • As necessary | |
Any charges incurred by the depositary or its agents for servicing the deposited securities | • As necessary |
Item 13. |
Defaults, Dividend Arrearages and Delinquencies |
Item 14. |
Material Modifications to the Rights of Security Holders and Use of Proceeds |
Item 15. |
Controls and Procedures |
Item 16A. |
Audit Committee Financial Expert |
Item 16B. |
Code of Ethics |
Item 16C. |
Principal Accountant Fees and Services |
For the Year Ended December 31, |
||||||||
2020 |
2021 |
|||||||
Audit fees (1) |
US$ | 530 | US$ | 1,018 | ||||
All other fees (2) |
US$ | 50 | US$ | 23 |
(1) | “Audit fees” means the aggregate fees billed in each of the fiscal years listed for professional services rendered by our principal auditors for the audit of our annual financial statements and assistance with and review of documents filed with the SEC. In 2020 and 2021, the audit refers to financial audit. |
(2) | “All other fees” means the aggregate fees billed in each of the fiscal years listed for professional services rendered by our principal auditors associated with certain permitted tax services, permissible services to review and comment on internal control design over financial reporting and other advisory services. |
Item 16D. |
Exemptions from the Listing Standards for Audit Committees |
Item 16E. |
Purchases of Equity Securities by the Issuer and Affiliated Purchasers |
Item 16F. |
Change in Registrant’s Certifying Accountant |
Item 16G. |
Corporate Governance |
• | the requirement that each member of the compensation committee must be an independent director as set forth in Nasdaq Rule 5605(d)(2)(A); |
• | the requirement that director nomination should be made by a vote in which only independent directors participate or by a nominations committee comprised solely of independent directors as set forth in Nasdaq Rule 5605(e)(1); |
• | the requirement to obtain shareholder approval for certain issuances of securities, including shareholder approval of stock option plans; and |
• | the requirement that the board of directors shall have regularly scheduled meetings at which only independent directors are present as set forth in Nasdaq Rule 5605(b)(2). |
Item 16H. |
Mine Safety Disclosure |
Item 16I. |
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections |
Item 17. |
Financial Statements |
Item 18. |
Financial Statements |
Item 19. |
Exhibits |
101.INS* | Inline XBRL Instance Document — the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document |
101.SCH* | Inline XBRL Taxonomy Extension Schema Document |
101.CAL* | Inline XBRL Taxonomy Extension Calculation Linkbase Document |
101.DEF* | Inline XBRL Taxonomy Extension Definition Linkbase Document |
101.LAB* | Inline XBRL Taxonomy Extension Labels Linkbase Document |
101.PRE* | Inline XBRL Taxonomy Extension Presentation Linkbase Document |
104 | Cover Page Interactive Data File — the cover page XBRL tags are embedded within the Exhibit 101 Inline XBRL document set |
* | Filed with this Annual Report on Form 20-F. |
** | Furnished with this Annual Report on Form 20-F. |
^ | Pursuant to Item 601(b)(10)(iv) of Regulation S-K promulgated by the Securities and Exchange Commission, certain portions of this exhibit have been redacted because they are both not material and the type that the Company treats as private or confidential. |
Gracell Biotechnologies Inc. | ||||||
By: | /s/ William Wei Cao | |||||
Name: William Wei Cao | ||||||
Title: Chairman of the Board of Directors and Chief Executive Officer | ||||||
Date: April 22, 2022 |
PAGES |
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F-2 |
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As of December 31, |
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Notes |
2020 |
2021 |
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RMB |
RMB |
US$ (Note 2) |
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ASSETS |
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Current assets: |
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Cash and cash equivalents |
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Short-term investments |
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Prepayments and other current assets |
3 | |||||||||||||
Total current assets |
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Property, equipment and software, net |
4 | |||||||||||||
Operating lease right-of-use |
5 | |||||||||||||
Other non-current assets |
6 | |||||||||||||
TOTAL ASSETS |
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LIABILITIES, MEZZANINE EQUITY AND SHAREHOLDERS’ EQUITY (DEFICIT) |
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Current liabilities: |
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Accruals and other current liabilities (including accruals and other current liabilities of the consolidated VIEs without recourse to the Company of RMB |
7 | |||||||||||||
Short-term borrowings (including short-term borrowings of the consolidated VIEs without recourse to the Company of RMB |
8 | |||||||||||||
Operating lease liabilities, current (including operating lease liabilities, current of the consolidated VIEs without recourse to the Company of |
5 | |||||||||||||
Current portion of long-term borrowings (including current portion of long-term borrowings of the consolidated VIEs without recourse to the Company of RMB |
8 | |||||||||||||
Total current liabilities |
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Operating lease liabilities, non-current (including operating lease liabilities, non-current of the consolidated VIEs without recourse to the Company of |
5 | |||||||||||||
Long-term borrowings (including long-term borrowings of the consolidated VIEs without recourse to the Company of RMB |
8 | |||||||||||||
Other non-current liabilities |
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TOTAL LIABILITIES |
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Commitments and contingencies |
15 | |||||||||||||
Mezzanine equity: |
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Series A convertible redeemable preferred shares (US$ 2 0 and 2021, respectively) |
10 | |||||||||||||
Series B-1 convertible redeemable preferred shares (US$ |
10 | |||||||||||||
Series B-2 convertible redeemable preferred shares (US$ |
10 |
Series C convertible redeemable preferred shares (US$ |
10 | |||||||||||||||
Total mezzanine equity |
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Shareholders’ equity (deficit): |
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Ordinary shares (par value of US$ and |
9 | |||||||||||||||
Additional paid-in capital |
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Accumulated other comprehensive loss |
( |
) | ( |
) | ( |
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Accumulated deficit |
( |
) | ( |
) | ( |
) | ||||||||||
Total shareholders’ equity (deficit) |
( |
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TOTAL LIABILITIES, MEZZANINE EQUITY AND SHAREHOLDERS’ EQUITY(DEFICIT) |
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For the years ended December 31, |
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Notes |
2019 |
2020 |
2021 |
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RMB |
RMB |
RMB |
US$ |
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(Note 2) |
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Revenues |
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Licensing and collaboration revenue |
— | — | ||||||||||||||||||
Expenses |
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Research and development expenses |
( |
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Administrative expenses |
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) | ( |
) | ( |
) | ||||||||||||
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Loss from operations |
( |
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( |
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( |
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( |
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Interest income |
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Interest expense |
— | ( |
) | ( |
) | ( |
) | |||||||||||||
Other income |
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Foreign exchange gain (loss), net |
( |
) | ( |
) | ( |
) | ||||||||||||||
Others, net |
( |
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) | ( |
) | ( |
) | ||||||||||||
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Loss before income tax |
( |
) |
( |
) |
( |
) |
( |
) | ||||||||||||
Income tax expense |
12 | — | — | |||||||||||||||||
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Net loss |
( |
) |
( |
) |
( |
) |
( |
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Deemed dividend to convertible redeemable preferred shareholders |
( |
) | — | — | — | |||||||||||||||
Accretion of convertible redeemable preferred shares to redemption value |
10 | ( |
) | ( |
) | ( |
) | ( |
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Net loss attributable to Gracell Biotechnologies Inc.’s ordinary shareholders |
( |
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( |
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( |
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( |
) | ||||||||||||
Other comprehensive loss |
||||||||||||||||||||
Foreign currency translation adjustments, net of |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||||||
Total comprehensive loss attributable to Gracell Biotechnologies Inc.’s ordinary shareholders |
( |
) |
( |
) |
( |
) |
( |
) | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||||||
Weighted average number of ordinary shares used in per share calculation: |
||||||||||||||||||||
—Basic |
13 | |||||||||||||||||||
—Diluted |
13 | |||||||||||||||||||
Net loss per share attributable to Gracell Biotechnologies Inc.’s ordinary shareholders |
||||||||||||||||||||
—Basic |
13 | ( |
) | ( |
) | ( |
) | ( |
) | |||||||||||
—Diluted |
13 | ( |
) | ( |
) | ( |
) | ( |
) |
Ordinary shares |
||||||||||||||||||||||||
Number of shares |
Amount |
Additional paid-in capital |
Accumulated other comprehensive loss |
Accumulated deficit |
Total shareholders’ equity/(deficit) |
|||||||||||||||||||
RMB |
RMB |
RMB |
RMB |
RMB |
||||||||||||||||||||
Balance as of January 1, 2019 |
— |
( |
) |
( |
) | |||||||||||||||||||
Net loss |
— | — | — | — | ( |
) | ( |
) | ||||||||||||||||
Repurchase of ordinary shares (Note 9) |
( |
) | ( |
) | — | — | ( |
) | ( |
) | ||||||||||||||
Repurchase of convertible redeemable preferred shares (Note 10) |
— | — | — | — | ( |
) | ( |
) | ||||||||||||||||
Accretions of convertible redeemable preferred shares to redemption value |
— | — | — | — | ( |
) | ( |
) | ||||||||||||||||
Foreign currency translation adjustment |
— | — | — | ( |
) | — | ( |
) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Balance as of December 31, 2019 |
( |
) |
( |
) |
( |
) | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Net loss |
— | — | — | — | ( |
) | ( |
) | ||||||||||||||||
Accretions of convertible redeemable preferred shares to redemption value |
— | — | — | — | ( |
) | ( |
) | ||||||||||||||||
Foreign currency translation adjustment |
— | — | — | ( |
) | — | ( |
) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Balance as of December 31, 2020 |
( |
) |
( |
) |
( |
) | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Net loss |
— | — | — | — | ( |
) | ( |
) | ||||||||||||||||
Accretions of convertible redeemable preferred shares to redemption value |
— | — | — | — | ( |
) | ( |
) | ||||||||||||||||
Share-based compensation |
— | — | — | — | ||||||||||||||||||||
Conversion of preferred shares to ordinary shares upon the completion of initial public offering (“IPO”) |
— | — | ||||||||||||||||||||||
Issuance of ordinary shares upon IPO and over-allotment, net of issuance cost |
— | — | ||||||||||||||||||||||
Exercise of options and restricted share units |
— | — | ||||||||||||||||||||||
Foreign currency translation adjustment |
— | — | — | ( |
) | — | ( |
) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Balance as of December 31, 2021 |
( |
) |
( |
) |
||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
For the years ended December 31, |
||||||||||||||||
2019 |
2020 |
2021 |
||||||||||||||
RMB |
RMB |
RMB |
US$ |
|||||||||||||
(Note 2) |
||||||||||||||||
Cash flows from operating activities: |
||||||||||||||||
Net loss |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Adjustments to reconcile net loss to net cash used in operating activities: |
||||||||||||||||
Depreciation of property, equipment and software |
||||||||||||||||
Share-based compensation |
— | — | ||||||||||||||
Amortization of right-of use assets and interest of lease liabilities |
— | — | ||||||||||||||
Foreign exchange (gain) loss, net |
( |
) | ||||||||||||||
Changes in operating assets and liabilities: |
||||||||||||||||
Prepayments and other current assets |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Accrued liabilities and other current liabilities |
||||||||||||||||
Other non-current assets |
— | — | ( |
) | ( |
) | ||||||||||
Lease liabilities |
— | — | ( |
) | ( |
) | ||||||||||
Other non-current liabilities |
||||||||||||||||
Net cash (used in) operating activities |
( |
) |
( |
) |
( |
) | ( |
) | ||||||||
Cash flows from investing activities: |
||||||||||||||||
Purchase of property, equipment and software |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Investments in short-term investments |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Proceeds from disposal of short-term investments |
||||||||||||||||
Net cash (used in) generated from investing activities |
( |
) |
( |
) | ( |
) | ||||||||||
Cash flows from financing activities: |
||||||||||||||||
Proceeds from initial public offering and over-allotment, net of underwriting commissions |
— | — | ||||||||||||||
Proceeds from exercise of options and restricted share units |
— | — | ||||||||||||||
Repayment of convertible loans |
— | ( |
) | |||||||||||||
Proceeds from issuance of convertible redeemable preferred shares, net of issuance costs |
— | — | ||||||||||||||
Repurchase of ordinary shares and preferred shares |
( |
) | — | |||||||||||||
Proceeds from bank borrowings |
— | |||||||||||||||
Repayments of bank borrowings |
— | ( |
) | ( |
) | ( |
) | |||||||||
Payment of initial public offering costs |
— | ( |
) | ( |
) | ( |
) | |||||||||
Net cash generated from financing activities |
||||||||||||||||
Effect of exchange rate on cash and cash equivalents |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Net increase in cash and cash equivalents |
||||||||||||||||
Cash and cash equivalents at the beginning of year |
||||||||||||||||
Cash and cash equivalents at the end of year |
||||||||||||||||
Supplemental cashflow disclosures: |
||||||||||||||||
Interest paid |
— | |||||||||||||||
Non-cash activities: |
||||||||||||||||
Deemed dividend to convertible redeemable preferred shareholders |
— | — | — | |||||||||||||
Accretion of convertible redeemable preferred shares to redemption value |
||||||||||||||||
Payables for deferred initial public offering cost |
— | — | — |
Date of incorporation |
Place of incorporation |
Percentage of legal ownership by the Company |
Principal activities | |||||||
Subsidiaries |
||||||||||
Gracell Biotechnologies Holdings Limited (“Gracell BVI”) |
British Virgin Islands | % | ||||||||
Gracell Biotechnologies (HK) Limited (“Gracell HK”) |
Hong Kong | % | ||||||||
Gracell Bioscience (Shanghai) Co., Ltd. |
The PRC | % | ||||||||
Gracell Biopharmaceuticals, Inc. |
The United States of America | % | ||||||||
Gracell Biomedicine (Shanghai) Co., Ltd. |
The PRC | % | ||||||||
Hainan Gracell Biomedicine Co., Ltd. |
The PRC | % | ||||||||
Suzhou Gracell Bioscience Co., Ltd. |
The PRC | % | ||||||||
VIE |
||||||||||
Gracell Biotechnologies (Shanghai) Co., Ltd. |
The PRC | — | ||||||||
VIE’s subsidiary |
||||||||||
Suzhou Gracell Biotechnologies Co., Ltd. (“Suzhou Gracell”) |
The PRC | — |
• | revoking the business licenses and/or operating licenses of such entities; |
• | discontinuing or placing restrictions or onerous conditions on the Group’s operation through any transactions between the PRC subsidiary and the VIE; |
• | imposing fines, confiscating the income from the PRC subsidiary or the VIE, or imposing other requirements with which the VIE may not be able to comply; |
• | requiring the Group to restructure the ownership structure or operations, including terminating the contractual arrangements with the VIE and deregistering the equity pledges of the VIE, which in turn would affect the Group’s ability to consolidate, derive economic interests from, or exert effective control over the VIE; |
• | restricting or prohibiting the Group’s use of the proceeds of the publ offering to finance the Group’s business and operations in China; or ic |
• | taking other regulatory or enforcement actions that could be harmful to the Group’s business. |
As of December 31, |
||||||||||||
2020 |
2021 |
|||||||||||
RMB |
RMB |
US$ |
||||||||||
(Note 2) |
||||||||||||
ASSETS |
||||||||||||
Current assets: |
||||||||||||
Cash and cash equivalents |
||||||||||||
Short-term investments |
||||||||||||
Amounts due from Group c ompanies |
||||||||||||
Prepayments and other current assets |
||||||||||||
Total current assets |
||||||||||||
Property, equipment and software |
||||||||||||
Operating lease, right-of-use |
— |
|||||||||||
Other non-current assets |
||||||||||||
TOTAL ASSETS |
||||||||||||
LIABILITIES |
||||||||||||
Current liabilities: |
||||||||||||
Amounts due to related parties |
||||||||||||
Accruals and other current liabilities |
||||||||||||
Short-term borrowings |
||||||||||||
Operating lease liabilities, current |
||||||||||||
Current portion of long-term borrowings |
||||||||||||
Total current liabilities |
||||||||||||
Amounts due to Group c ompanies |
||||||||||||
Long-term borrowings |
||||||||||||
Operating lease liabilities, non-current |
||||||||||||
TOTAL LIABILITIES |
||||||||||||
For the years ended December 31, |
||||||||||||||||
2019 |
2020 |
2021 |
||||||||||||||
RMB |
RMB |
RMB |
US$ |
|||||||||||||
(Note 2) |
||||||||||||||||
Total revenue from Group c ompanies |
||||||||||||||||
Net loss |
( |
) |
( |
) |
( |
) |
( |
) |
For the years ended December 31, |
||||||||||||||||
2019 |
2020 |
2021 |
||||||||||||||
RMB |
RMB |
RMB |
US$ |
|||||||||||||
(Note 2) |
||||||||||||||||
Net cash used in operating activities |
( |
) |
( |
) |
( |
) |
( |
) | ||||||||
Net cash generated from (used in) investing activities |
( |
) |
( |
) |
( |
) | ||||||||||
Net cash generated from financing activities |
Category |
Estimated Useful Life | |
Machinery and laboratory equipment | ||
Vehicles | ||
Furniture and tools | ||
Electronic equipment | ||
Computer software | ||
Leasehold improvements |
As of December 31, |
||||||||||||
2020 |
2021 |
|||||||||||
RMB |
RMB |
US$ |
||||||||||
(Note 2) |
||||||||||||
Deductible value-added tax input |
||||||||||||
Prepayments for CRO and other services |
||||||||||||
Deposits |
||||||||||||
Others |
||||||||||||
As of December 31, |
||||||||||||
2020 |
2021 |
|||||||||||
RMB |
RMB |
US$ |
||||||||||
(Note 2) |
||||||||||||
Machinery and laboratory equipment |
||||||||||||
Leasehold improvements |
||||||||||||
Construction in Progress |
||||||||||||
Vehicles |
||||||||||||
Others |
||||||||||||
Total property, equipment and software |
||||||||||||
Less: accumulated depreciation and amortization |
( |
) | ( |
) | ( |
) | ||||||
Property, equipment and software, net |
||||||||||||
As of December 31, |
||||||||||||
2020 |
2021 |
|||||||||||
RMB |
RMB |
US$ |
||||||||||
(Note 2) |
||||||||||||
Assets |
||||||||||||
Operating lease right-of-use |
||||||||||||
Liabilities |
||||||||||||
Operating lease liabilities, current |
||||||||||||
Operating lease liabilities, non-current |
||||||||||||
RMB |
US$ |
|||||||
(Note 2) |
||||||||
For the years ending: |
||||||||
2022 |
||||||||
2023 |
||||||||
2024 |
||||||||
2025 |
||||||||
2026 and thereafter |
||||||||
Total undiscounted lease payments |
||||||||
Less: imputed interest |
( |
) | ( |
) | ||||
Total lease liabilities |
||||||||
As of December 31, |
||||||||
2021 |
||||||||
RMB |
US$ |
|||||||
Lease cost |
(Note 2) |
|||||||
Operating lease cost |
||||||||
Short-term lease cost |
||||||||
Total lease cost |
||||||||
Other information |
||||||||
Cash paid for amounts included in the measurement of lease liabilities |
||||||||
Right-of-use assets obtained in exchange for new operating lease liabilities |
||||||||
Weighted-average remaining lease term |
||||||||
Weighted-average discount rate |
% |
% |
RMB |
||||
For the years ending: |
||||
2021 |
||||
2022 |
||||
2023 |
||||
2024 |
||||
2025 and thereafter |
||||
Total |
As of December 31, |
||||||||||||
2020 |
2021 |
|||||||||||
RMB |
RMB |
US$ |
||||||||||
(Note 2) |
||||||||||||
Prepayment for property, equipment and software |
||||||||||||
Long-term deposit |
||||||||||||
As of December 31, |
|||||||||||||
2020 |
2021 |
||||||||||||
RMB |
RMB |
US$ |
|||||||||||
(Note 2) |
|||||||||||||
Accrued external research and development related expenses |
|||||||||||||
Salary and welfare payables |
|||||||||||||
Professional service fees |
|||||||||||||
Deferred income for reimbursement of the expenses related to the establishment of the ADS facility |
|||||||||||||
Rental fees |
|||||||||||||
Others |
|||||||||||||
As of December 31, |
||||||||||||
2020 |
2021 |
|||||||||||
RMB |
RMB |
US$ |
||||||||||
(Note 2) |
||||||||||||
Current |
||||||||||||
Short-term borrowings: |
||||||||||||
Bank loans |
||||||||||||
Current portion of long-term borrowings |
||||||||||||
Total current borrowings |
||||||||||||
Non-Current |
||||||||||||
Long-term borrowings: |
||||||||||||
Bank loans |
||||||||||||
Total non-current borrowings |
||||||||||||
Total borrowings |
||||||||||||
Mezzanine equity |
Series A |
Series B-1 |
Series B-2 |
Series C |
Total |
||||||||||||||||
RMB |
RMB |
RMB |
RMB |
RMB |
|||||||||||||||||
Balance as of December 31, 2018 |
— | — | — | ||||||||||||||||||
Issuance of Series B-2 Preferred Shares |
— | — | — | ||||||||||||||||||
Repurchase of Series A Preferred Shares |
( |
) | — | — | — | ( |
) |
||||||||||||||
Accretion of Series A Preferred Shares to redemption value |
— | — | — | ||||||||||||||||||
Accretion of Series B-2 Preferred Shares to redemption value |
— | — | — | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||||
Balance as of December 31, 2019 |
— | — | |||||||||||||||||||
Issuance of Series B-1 Preferred Shares |
— | — | — | ||||||||||||||||||
Issuance of Series C Preferred Shares |
— | — | — | ||||||||||||||||||
Accretion of Series A Preferred Shares to redemption value |
— | — | — | ||||||||||||||||||
Accretion of Series B-1 Preferred Shares to redemption value |
— | — | — | ||||||||||||||||||
Accretion of Series B-2 Preferred Shares to redemption value |
— | — | — | ||||||||||||||||||
Accretion of Series C Preferred Shares to redemption value |
— | — | — | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||||
Balance as of December 31, 2020 |
|||||||||||||||||||||
Accretion of Series A Preferred Shares to redemption value |
— | — | — | ||||||||||||||||||
Accretion of Series B-1 Preferred Shares to redemption value |
— | — | — | ||||||||||||||||||
Accretion of Series B-2 Preferred Shares to redemption value |
— | — | — | ||||||||||||||||||
Accretion of Series C Preferred Shares to redemption value |
— | — | — | | |||||||||||||||||
Conversion of preferred shares to ordinary shares upon the IPO |
( |
) |
( |
) |
( |
) |
( |
) |
( |
) |
|||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||||
Balance as of December 31, 2021 |
|||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
Number of Options |
Weighted–Average Exercise Price |
Weighted–Average Grant Date Fair Value |
Weighted–Average Grant Date Fair Value |
Weighted–Average Remaining Contractual Term |
Aggregate Intrinsic Value |
|||||||||||||||||||
US$ per option |
US$ per option |
RMB per option |
Years |
RMB |
||||||||||||||||||||
Outstanding at January 1, 2019 |
||||||||||||||||||||||||
Granted |
— | — | ||||||||||||||||||||||
Forfeited |
( |
) | — | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Outstanding at January 1, 2020 |
||||||||||||||||||||||||
Granted |
— | — | ||||||||||||||||||||||
Forfeited |
( |
) | — | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Outstanding at January 1, 2021 |
||||||||||||||||||||||||
Granted |
— | — | ||||||||||||||||||||||
Forfeited |
( |
) | — | — | ||||||||||||||||||||
Exercised |
( |
) | — | — | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Outstanding at December 31, 2021 |
||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Vested and expected to vest at December 31, 2021 |
||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Exercisable at December 31, 2021 |
||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
For the year ended December 31, 2019 |
For the year ended December 31, 2020 |
For the year ended December 31, 2021 |
||||||||||
Risk-free interest rate |
||||||||||||
Dividend yield |
||||||||||||
Expected volatility range |
||||||||||||
Exercise multiple |
||||||||||||
Contractual life |
As of December 31, |
||||||||
2021 |
||||||||
RMB |
US$ (Note 2) |
|||||||
Research and development expenses |
||||||||
Administrative expenses |
||||||||
|
|
|
|
|||||
|
|
|
|
For the years ended December 31, |
||||||||||||||||
2019 |
2020 |
2021 |
||||||||||||||
RMB |
RMB |
RMB |
US$ |
|||||||||||||
(Note 2) |
||||||||||||||||
Loss before income tax |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Income tax computed at respective applicable tax rate |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Research and development super-deduction |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Non-deductible expenses |
||||||||||||||||
Changes in valuation allowance |
||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Income tax expense |
||||||||||||||||
|
|
|
|
|
|
|
|
For the years ended December 31, |
||||||||||||
2020 |
2021 |
|||||||||||
RMB |
RMB |
US$ |
||||||||||
(Note 2) |
||||||||||||
Deferred tax assets: |
||||||||||||
Net operating loss carry forward |
||||||||||||
Capitalized Inventory |
— | |||||||||||
Depreciation and amortization of property, equipment and software |
||||||||||||
Share-based compensation expenses and others |
— | |||||||||||
|
|
|
|
|
|
|||||||
Gross deferred tax assets |
||||||||||||
Less: valuation allowance |
( |
) | ( |
) | ( |
) | ||||||
|
|
|
|
|
|
|||||||
Total deferred tax assets, net |
||||||||||||
|
|
|
|
|
|
For the years ended December 31, |
||||||||||||
2020 |
2021 |
|||||||||||
RMB |
RMB |
US$ |
||||||||||
(Note 2) |
||||||||||||
Balance as of January 1 |
||||||||||||
Addition |
||||||||||||
|
|
|
|
|
|
|||||||
Balance as of December 31 |
For the years ended December 31, |
||||||||||||||||
2019 |
2020 |
2021 |
||||||||||||||
RMB |
RMB |
RMB |
US$ |
|||||||||||||
(Note 2) |
||||||||||||||||
Numerator: |
||||||||||||||||
Net loss attributable to Gracell Biotechnologies Inc.’s shareholders |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Deemed dividend to convertible redeemable preferred shareholders |
( |
) | — | — | — | |||||||||||
Accretion of convertible redeemable preferred shares to redemption value |
( |
) | ( |
) | ( |
) | ( |
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William Wei Cao |
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Unitex Capital Ltd. |
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Exhibit 4.17
Certain confidential information contained in this document, marked by [***], has been omitted because such information is both not material and is the type that Gracell Biotechnologies Inc. Company customarily and actually treats that as private or confidential.
EXCLUSIVE LICENSE AGREEMENT
THIS AGREEMENT is made and entered into on May 11, 2021 (hereinafter the Effective Date) by and between FutureGen Biopharmaceutical Co., Ltd. a PRC corporation, whose address is 201, 2/F, Building No.1, #16 Baoshen South Street, Daxing District, Beijing (hereinafter FUTUREGEN) and Gracell Biotechnologies (HK) Limited, a Hong Kong company, whose business address is Building 3, 418 Guilin Road, Xuhui District, Shanghai, China 200233 (hereinafter GRACELL). FUTUREGEN and GRACELL are sometimes hereinafter referred to individually as a Party and collectively as the Parties.
WHEREAS, FUTUREGEN has unique expertise in the area of antibody development and protein engineering. FUTUREGEN is in the process of prosecuting an international PCT patent with respect to full human claudin 18.2 antibodies (CLDN18.2) of which the PCT application number is [***]. (the Patent);
WHEREAS, FUTUREGEN wishes to have the Patent commercialized to benefit the public good in the Field (as defined below);
WHEREAS, FUTUREGEN is willing to grant an exclusive license to its rights in the Licensed Technology (as defined below) to GRACELL in the Field and GRACELL desires to receive such an exclusive license to commercialize the Patent in and for the market of the Licensed Territory (as defined below) subject to the terms and conditions of this Agreement.
NOW, THEREFORE, in consideration of the foregoing recitals and the mutual promises herein made and exchanged, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:
ARTICLE 1 INCORPORATION OF RECITALS AND DEFINITIONS
1.1. The foregoing recitals are hereby incorporated herein by reference and acknowledged as true and correct. Unless specifically set forth to the contrary in this Agreement, the following terms, whether used in the singular or plural, shall have the respective meanings set forth below.
1.2. Affiliate shall mean with respect to either Party, any other corporation or business entity that directly, or indirectly through one or more intermediaries, controls, is controlled by or is under common control with such Party. For purposes of this definition, the term control and, with correlative meanings, the terms controlled by and under common control with mean direct or indirect ownership of more than fifty percent (50%) of the securities or other ownership interests representing the equity voting stock or general partnership or membership interest of such entity or the power to direct or cause the direction of the management or policies of such entity, whether through the ownership of voting securities, by contract, or otherwise..
1.3. Alliance Manager shall have the meaning ascribed to it in Section 12.7.
1.4. BLA shall mean a Biologics License Application, as defined by the U.S. Food and Drug Administration, or and any other equivalent biologics license application practices applicable in other Licensed Territory (including without limitation biologics license application within National Medical Products Administration in the PRC) as may be amended from time to time, or any successor application having substantially the same function.
1.5. Change of Control shall mean
(a) | any consolidation, merger, combination, reorganization or other transaction in which the Party is not the surviving entity other than a transaction, the principal purpose of which is to effect a change in domicile or the form of entity of the Party; |
(b) | the shares of stock of the Party constituting in excess of fifty percent (50%) of the voting power are exchanged for or changed into other stock or securities, cash, and/or other property other than in the context of a financial transaction; or |
(c) | a sale or other disposition of all or substantially all of the assets of the Party, or the permitted assignment of this Agreement pursuant to Section 17.6. |
1.6. CLDN18.2 shall have the meaning ascribed to it in the introductory paragraph.
1.7. Confidential Information shall mean all information disclosed by one Party to the other during the negotiation of or under this Agreement in any manner, whether orally, visually or tangible or intangible form, that relates to Licensed Technologies (as defined below), or this Agreement itself, unless such information is subject to an exception described in Section 5.2. Confidential Information shall include, without limitation, the following, whether or not patentable: materials, know-how and data (whether technical or non-technical), trade secrets, inventions, methods and processes created or used in the performance or receipt of the services provided hereunder, unless otherwise mutually agreed to by the Parties.
1.8. Effective Date is defined in the introductory paragraph of this Agreement.
1.9. Executive Officer shall mean the Chief Executive Officer of a Party.
1.10. Field shall mean engineered or modified immune cell therapies, including but without limitation T cell, NK cell and Macrophage cell therapies.
1.11. First Commercial Sale shall mean (i) a Net Sale, as defined below, made after the Licensed Technology has received regulatory approval for commercial sale, (ii) the sale is a for-profit sale, and (iii) a minimum of ten (10) different patients have been treated as a result of such for-profit sales. For the avoidance of doubt, a legally permitted use of a Licensed Technology in a market where the Licensed Technology has not been approved for commercial sale, for purposes of (i) treating patients in a single patient trial; or (ii) providing expanded access outside of a clinical trial to patients with serious or life-threatening conditions who do not meet the enrollment criteria for a clinical trial, whether the result of a sale or not, shall not constitute and shall not be considered a First Commercial Sale.
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1.12. FUTUREGEN Know-How shall mean all know-how, technology, trade secrets, Information, regulatory files and data which, as of the Effective Date and during the Term that is controlled by FUTUREGEN or any of its Affiliates is necessary or useful for the research, development, manufacture, use, sale, distribution, importation, exportation or commercialization of the Licensed Technologies in the Field in and for the Licensed Territory.
1.13. Generic Product shall mean, with respect to a particular region and a Product, any pharmaceutical product that (a) contains the same active pharmaceutical ingredient (or one which is substantially the same or bioequivalent) as such Product and is the same or substantially the same as such Product in dosage, safety, effectiveness, strength, stability, and quality, as well as in the way it is taken and should be used; (b) is approved by the Regulatory Authority in such region (i) in full or partial reliance on the Regulatory Approval for the Product in such region in the Licensed Territory in the Field or (ii) under a generic pathway approval as a generic of the Product in such region in the Licensed Territory; and (c) is sold in such region by a third party that is not a Sublicensee or distributor of GRACELL.
1.14. Improvements shall mean, including but not limited to, any improvements, derivative works, enhancements, technical advances, modifications, adaptations, new models, or data, including data resulting from failed or successful tests or trials, created based upon or derived from the Licensed Technology.
1.15. IND shall mean (i) an Investigational New Drug Application, as defined in the U.S. Federal Food, Drug and Cosmetic Act, as amended, and the regulations promulgated thereunder, that is required to be filed with the U.S. Food and Drug Administration before beginning clinical testing of a pharmaceutical product in human subjects or any foreign counterpart of such Investigational New Drug Application, and any other equivalent investigational new drug application practices applicable in other Licensed Territory (including without limitation the investigational new drug application within National Medical Products Administration in the PRC) as may be amended from time to time, and (i) all supplements and amendments that may be filed with respect to the foregoing.
1.16. IND Approval shall mean the acceptance (or deemed acceptance) of the filing of an IND by the applicable regulatory authority in the Licensed Territory.
1.17. Independently Developed IP shall mean any and all patents, patent applications, inventions (whether patentable or not), copyrights, works of authorship, trade secrets, know-how, and all other proprietary or confidential information generated, conceived, developed or reduced to practice (constructively and actually) by or on behalf of GRACELL or its Affiliates, including their employees, agents and contractors, that are not based on or derived from the Licensed Technologies.
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1.18. Intellectual Property Rights means rights in all inventions, patents or patent applications (including all kinds of the same such as utility, process, method, or design), copyrights, trademarks, service marks, trade dress, trade secrets, know-how, utility models, industrial designs, mask works, moral rights, works, or other data or information whether or not protectable under any applicable law in the Licensed Territory, including the right to file for registration or protection for the same and all renewals, continuations, divisionals, reexaminations, and extensions thereof, whether or not such rights have been applied-for, patented or registered in any jurisdiction.
1.19. JSC shall have the meaning ascribed to it in Section 12.1.
1.20. JSC Chair shall have the meaning ascribed to it in Section 12.1.
1.21. License refers to the license granted under Section 2.1.
1.22. Licensed Technology or Licensed Technologies shall mean the information about any process(es), product(s), machine(s), manufacture, composition of matter, apparatus, kit, or any part thereof, which incorporate, embody, utilize, or are claimed in (i) the Patent and the deliverables listed in Appendix A and Appendix B, which is incorporated into this Agreement and any updates, renewals, extensions and Improvements developed solely by or on behalf of FUTUREGEN during the Term from the Patent; (ii) any other intellectual properties controlled by FUTUREGEN as of the Effective Date and during the Term that are related to CLDN18.2 antibodies for the development of engineered or modified immune cell therapies; (iii) any continuations, divisionals, and continuations-in-part, to the extent the claims of the Patent application is directed to subject matter specifically described in the Patent application and the deliverables listed in (i) and (ii) above and any patents that issue therefrom; (iv) any patents or patent applications that claim priority to the patent applications listed in (i), (ii) or (iii) above, any reissues, re-examinations, extensions or substitutions of the patents listed in (i), (ii) or (iii) above, and the relevant international equivalents of any of the foregoing; provided, however, Independently Developed IP shall be excluded. For the avoidance of doubt, the Licensed Technology or Licensed Technologies shall include without limitation the Patent with deliverables listed in Appendix A and Appendix B.
1.23. Licensed Territory shall mean worldwide.
1.24. Net Sales shall mean, with respect to the Patent, the total dollar amount invoiced on sales or other dispositions of the Patent or the Licensed Technology or the Products by GRACELL or any of its Affiliates or Sublicensees (each, a Selling Party) to third parties (other than GRACELLs Affiliates or Sublicensees), less the following deductions:
(a) allowances for damaged or missing goods, and any discount customary in the trade and actually allowed;
(b) trade, cash or quantity discounts not already reflected in the amount invoiced, to the extent related to the gross amount billed or invoiced;
(c) price reductions, rebates and administrative fees (including those paid or credited to pharmacy benefit managers, governmental authorities or otherwise);
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(d) shipping costs, including freight, insurance and other transportation charges or costs incurred in shipping of goods as part of the sales or other dispositions of the Patent or the Licensed Technology or the Products;
(e) sales, use, excise, value-added or similar taxes, customs duties and other governmental fees, charges and surcharges imposed on the sale or other dispositions of the Patent or the Licensed Technology or the Products;
(f) amounts repaid or credited by reason of rejections, defects, recalls or returns;
(g) amounts paid or credited for wholesaler chargebacks;
(h) any receivables that have been included in gross sales and are deemed to be uncollectible according to generally accepted accounting standards (any such bad debt deductions shall be applied to Net Sales in the period in which such receivables are written off); and
(i) any other deductions actually incurred, allowed, paid, accrued or otherwise specifically allocated to the relevant goods sold or otherwise disposed by the Selling Party in accordance with the applicable accounting standards, in either case, consistently applied throughout the organization of the applicable Selling Party.
All such discounts, allowances, credits, rebates and other deductions shall be fairly and equitably allocated to the Patent or the Licensed Technology in accordance with the applicable accounting principles.
Notwithstanding the foregoing, amounts received or invoiced by GRACELL, its Affiliates, or their respective Sublicensees or subcontractors for the sale or other dispositions of the Patent or the Licensed Technology among GRACELL, its Affiliates or their respective Sublicensees or subcontractors shall not be included in the computation of Net Sales hereunder. For purposes of determining Net Sales, the applicable Product shall be deemed to be sold when billed or invoiced, provided that if a such Product is delivered to a third party before being invoiced (or is not invoiced), Net Sales will be calculated at the time all the revenue recognition criteria under the applicable accounting standards are met.
Notwithstanding the foregoing, the transfer or other disposition of the Patent or the Licensed Technology or the Products by GRACELL (x) in connection with the research, development or testing of such Patent or Licensed Technology (including, without limitation, the conduct of clinical trials), (y) for purposes of distribution as promotional samples, or (z) at nominal cost for indigent or similar public support or compassionate use programs, will not, in any case, be included into Net Sales under this Agreement; provided that the event described in (x), (y) and (z) is not profitable.
1.25. New Proprietary Technology shall have the meaning ascribed to it in Section 7.2.
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1.26. Non-Clinical Validation Study shall mean the pre-clinical collection and evaluation of data with respect to the Patent and the Licensed Technology, which data shall establish such scientific evidence that a process is capable of consistently delivering quality products that shall fit GRACELLs commercial goal of validating and selecting specific CLDN18.2 antibodies from available antibodies to further identify, manufacture, develop and commercialize novel immune cell therapies for the treatment of cancer.
1.27. Pivotal Study shall mean (i) a phase II clinical trial, or (ii) a human clinical trial approved by appropriate regulatory bodies, the principal purpose of which is to evaluate the effectiveness of a drug for a particular indication in patients with the disease and to determine the common short-term side effects and risks associated with the drug as required in 21 C.F.R. §312.21(b) or its foreign equivalent (including without limitation the National Medical Products Administration in the PRC).
1.28. Product or Products shall mean the cell product or products that GRACELL develops using the Licensed Technology.
1.29. Reasonable Commercial Efforts shall mean documented efforts that are consistent with those utilized by companies of similar size and type to GRACELL that have successfully developed products and services similar to Licensed Technologies in the Field.
1.30. Regulatory Approval shall mean any and all approvals, licenses, permits, registrations or authorizations of or from any regulatory authority that are necessary to market and sell a pharmaceutical product in any country or other jurisdiction.
1.31. Royalty Rate shall have the meaning ascribed to it in Section 4.3.
1.32. Sublicensee shall have the meaning ascribed to it in Section 3.1.
1.33. Term shall have the meaning ascribed to it in Section 2.2.
1.34. Upfront Payment shall have the meaning ascribed to it in Section 4.1.
1.35. Valid Claim shall mean a claim contained in (a) an issued and unexpired Patent or patents described in the Licensed Technologies which claim has not been found to be unpatentable, invalid, revocable or unenforceable by a decision of a court or other authority of competent jurisdiction in the subject country or jurisdiction, which decision is unappealable or unappealed within the time allowed for appeal, and has not been admitted to be invalid or unenforceable through abandonment, reissue, disclaimer or otherwise, or (b) a Patent or patent application described in the Licensed Technologies that has not been irretrievably cancelled, withdrawn, abandoned or rejected.
ARTICLE 2 LICENSE GRANT AND TERM
2.1. Subject to all the terms and conditions of this Agreement, FUTUREGEN hereby grants and shall cause to be granted to GRACELL, during the Term, an exclusive (even as to FUTUREGEN), royalty-bearing license, with the right to grant sublicenses, under the Licensed Technologies to research, develop, use, make, have made, manufacture, have manufactured, sell, have sold, offer for sale, import, export, promote, market, distribute or commercialize the Licensed Technologies within the Field in and for the Licensed Territory (the License).
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(a) In the event that FUTUREGEN develops any developments or inventions to the Licensed Technology that may be useful to GRACELLs efforts to commercialize the Licensed Technology, FUTUREGEN will promptly notify GRACELL of such developments or inventions and disclose such developments or inventions to GRACELL. FUTUREGEN shall not disclose or license any such developments or inventions to a third party until after GRACELL had the opportunity to evaluate the same for purposes of licensing such developments or inventions.
(b) In the event FUTUREGEN or a third party desires to describe in a scholarly or scientific publication, prior to taking any steps to publishing any such publication, FUTUREGEN shall obtain GRACELLs prior written consent so that GRACELL can determine whether any Confidential Information of GRACELL is at risk of disclosure or publication. Notwithstanding the foregoing, FUTUREGEN shall not publish any publication related to the application of the Licensed Technology in the Field.
2.2. The term of the License (the Term) shall commence on the Effective Date and shall not expire unless this Agreement is terminated earlier as provided in ARTICLE 9.
2.3. FUTUREGEN shall provide GRACELL with complete and accurate copies of the FUTUREGEN Know-How within one (1) month after the Effective Date of this Agreement. The JSC shall establish a reasonable process and schedule for the transfer of additional FUTUREGEN Know-How as required for the performance of any Partys obligations or the exercise of any Partys rights under this Agreement and any other FUTUREGEN Know-How that subsequently comes into existence during the Term in any event at least semi-annually. FUTUREGEN shall reasonably cooperate with GRACELL in providing GRACELL with copies of such FUTUREGEN Know-How in accordance with the process and schedule agreed upon through the JSC.
ARTICLE 3 SUBLICENSES
3.1. Subject to the terms and conditions of this Agreement, GRACELL shall have the right to grant sublicenses under the License and at its sole discretion to (i) an Affiliate of GRACELL, which sublicense shall permit the further grant of sublicenses, or (ii) a third party, which sublicenses shall permit the further grant of sublicenses (the Sublicensees).
ARTICLE 4 PAYMENTS/CONSIDERATION
4.1. License Upfront Payment
(a) GRACELL shall pay to FUTUREGEN a license upfront fee (the Upfront Payment) of [***] dollars ($[***]) within [***] business days of the Effective Date.
(b) In the event that GRACELL exercises its right to grant any sublicense to a Sublicensee and completes such sub-licensing in accordance with Section 3.1, GRACELL shall pay to FUTUREGEN a non-refundable sub-licensee fee of [***]% of any upfront payment received by GRACELL from such Sublicensee for such sub-licensing within [***] days after Gracell receives the relevant payment in full from such Sublicensee.
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4.2. Milestone Payment:
(a) In addition to all other payment required under this Agreement, GRACELL agrees to pay FUTUREGEN milestone payments upon completion of each milestone event as specified as follows:
(i) a non-refundable milestone payment of [***] dollars ($[***]) upon GRACELLs written confirmation on the completion of [***];
(ii) a non-refundable milestone payment of [***] dollars ($[***]) after [***];
(iii) a non-refundable milestone payment of [***] dollars ($[***]) upon the IND Approval of [***];
(iv) a non-refundable milestone payment of [***] dollars ($[***]) upon the launch of [***]; and
(v) a non-refundable milestone payment of [***] dollars ($[***]) upon the BLA approval of [***].
(b) In the event that GRACELL exercises its right to grant any sublicense to a sublicensee and completes such sub-licensing in accordance with Section 3.1, GRACELL shall pay to FUTUREGEN a non-refundable sub-licensee fee of [***]% of any tiered milestone payments received by GRACELL from such Sublicensee for such sub-licensing within [***] business days after Gracell receives the relevant payment in full from such Sublicensee.
4.3. Tiered Royalties. Subject to Section 4.4 and 4.5, GRACELL shall pay royalties to FUTUREGEN, on a Product-by-Product and region-by-region basis, for the Products sold by Selling Party in the Licensed Territory, calculated by multiplying the applicable Royalty Rate (defined below) by the amount of Net Sales of such Product for each calendar year within [***] days after the end of such calendar year. The royalty rate (Royalty Rate) will be determined as follows:
(a) [***] percent ([***]%) of the Net Sales if the Net Sales is less than or equal to [***] dollars ($[***]).
(b) [***] percent ([***]%) of the Net Sales if the Net Sales is between [***] dollars ($[***]) and [***] dollars ($[***]).
(c) [***] percent ([***]%) of the Net Sales if the Net Sales is greater than [***] dollars ($[***]).
4.4. Royalty Term. Royalties under Section 4.3 shall be payable, on a region-by-region and Product-by-Product basis, from the period beginning on the date of the First Commercial Sale of such Product in such region in the Licensed Territory and continuing unless the License is terminated earlier as provided in ARTICLE 9. (the Royalty Term) For the avoidance of doubt, on a Product-by-Product and region-by-region basis, royalties shall not be payable on the Net Sales of the Products occurred after the Royalty Term.
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4.5. Royalty Reduction. Notwithstanding anything to the contrary hereunder, on a region-by-region and Product-by-Product basis, (i) if, the Royalty Term lasts more than [***] years for a Product in a region in the Licensed Territory, then the applicable royalty rate set forth in Section 4.3 shall be reduced by [***]% from the [***] year of the Royalty Term for such Product in such region; and (ii), if, as a result of (i), a commercialization of a Generic Product occurs in such region, then the applicable royalty rate set forth in (i) shall be additionally reduced by [***]%.
ARTICLE 5 CONFIDENTIALITY AND PUBLICITY
5.1. Subject to the Parties rights and obligations pursuant to this Agreement, the Parties agree that until the earlier to occur of (i) the second anniversary of the termination of this Agreement pursuant to ARTICLE 9 or (ii) the date when any patent described in the Licensed Technologies becomes public, each of them:
(a) will keep confidential and will cause their Affiliates and, in the case of GRACELL, its Sublicensees, to keep confidential, Confidential Information disclosed to it by the other Party, by taking whatever action the Party receiving the Confidential Information would take to preserve the confidentiality of its own Confidential Information, which in no event shall be less than reasonable care; and
(b) will only disclose that part of the others Confidential Information to its officers, employees or agents that is necessary for those officers, employees or agents who need to know to carry out its responsibilities under this Agreement; and
(c) will not use the other Partys Confidential Information other than as expressly set forth in this Agreement or disclose the others Confidential Information to any third parties under any circumstance without advance written permission from the other Party; and
(d) will, except to the extent that GRACELL retains the surviving License from FUTUREGEN as provided under Section 9.5, within [***] days of termination of this Agreement, return all the Confidential Information disclosed to it by the other Party pursuant to this Agreement except for one copy which may be retained by the recipient for archival purposes.
5.2. The obligations of confidentiality described above shall not pertain to that part of the Confidential Information that as established by written records:
(a) is already in the recipients possession prior to receipt from the disclosing Party; or
(b) is in the public domain by use and/or publication at the time of receipt from the disclosing Party, or enters into the public domain through no improper act of the receiving Party; or
(c) is developed independently by the receiving Party without reference to the information of the disclosing Party; or
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(d) is properly obtained by receiving Party from a third party with a valid legal right to disclose such information and such third party is not under a confidentiality obligation to such information to the disclosing Party; or
(e) is required to be disclosed by law in the opinion of recipients attorney, but only after the disclosing Party is given prompt written notice and an opportunity to seek relief from the demanding authority.
5.3. Except as required by law, or as may be necessary to obtain advice from its respective attorneys, financial advisors, or accountants or for such individuals to perform their duties, neither Party may disclose the financial terms of this Agreement without the prior written consent of the other Party.
ARTICLE 6 REPORTS
6.1. GRACELL shall, within [***] days after the calendar quarter in which Net Sales first occur, provide FUTUREGEN with a written report, detailing the Net Sales and uses, if any, made by GRACELL, its Sublicensees and Affiliates of Licensed Technology in the Field. Net Sales of Licensed Technology shall be deemed to have occurred on the date of invoice for such Licensed Technology in the Field. Each such report shall be signed by an officer of GRACELL (or the officers designee), and must include names and addresses of all Sublicensees and the type and amount of any Sublicense income received from each Sublicensee.
ARTICLE 7 PATENT PROTECTION AND OWNERSHIP OF IMPROVEMENTS
7.1. FUTUREGEN shall advise GRACELL in writing at such time as the Patent application issued. If GRACELL believes that the Licensed Technology includes any inventions that are or may be patentable in the Field in and for the Licensed Territory, GRACELL shall notify FUTUREGEN, and the Parties together shall consider the further actions that may be advisable to secure applicable patents.
7.2. FUTUREGEN agrees that to the extent that GRACELL, its Affiliates and subcontractors developed or created anything based upon or arising from the Licensed Technologies, whether alone or jointly with FUTUREGEN, including without limitation, deliverables, know-how, protocols, products in the Field, whether patentable or not (the New Proprietary Technology) following the Effective Date of this Agreement in the Licensed Territory, GRACELL shall be the sole owner of the New Proprietary Technology, including all Intellectual Property Rights therein, with all rights to apply for, prosecute, direct the filing, prosecution and maintenance of any applications for patents, trademarks and copyrights covering the same in the Licensed Territory. FUTUREGEN agrees that, if necessary, and at GRACELLs expense, it shall reasonably cooperate with GRACELL in perfecting GRACELLs ownership in such New Proprietary Technology by, including but not limited to executing all further documents requested by GRACELL that may be necessary or advisable to effectuate or perfect GRACELLs ownership in such New Proprietary Technology.
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7.3. Except in connection with the performance of activities under this Agreement, FUTUREGEN shall not (by itself or through any third party), and shall cause its Affiliates and subcontractors (by themselves or through any third party) not to, directly or indirectly, (i) research, develop, manufacture, commercialize or otherwise exploit any engineered or modified immune cell therapy redirected to CLDN18.2; or (ii) sell, assign, transfer, convey, license, sublicense, covenant not to assert or otherwise grant, or transfer to, any third party, any rights or immunities to or under the Licensed Technology to conduct such activities described in this Section 7.3.
ARTICLE 8 INFRINGEMENT AND LITIGATION
8.1. Each Party shall promptly notify the other in writing in the event that (a) it obtains knowledge or becomes reasonably suspicious of activity by third parties infringing or otherwise violating the Intellectual Property Rights in the Licensed Technologies, or (b) it is sued or threatened with an infringement suit, in any country in the Licensed Territory as a result of activities that concern the Licensed Technologies, and shall supply the other Party with documentation of the infringing activities that it possesses.
8.2. During the Term of this Agreement:
(a) GRACELL shall have the first right, but not the obligation, to assert and defend rights in the Licensed Technologies respecting infringement or other violation of Intellectual Property Rights in the Licensed Technologies within the Field by third parties and in the Licensed Territory using counsel of its own selection. This right includes bringing any legal action for infringement and defending any counter claim of a third party respecting the Licensed Technologies such as a counter claim or declaratory judgment for invalidity, non-infringement, or unenforceability. If, in the reasonable opinion of GRACELLs counsel, FUTUREGEN is required to be a named Party to any such suit for standing purposes, GRACELL may join FUTUREGEN as a Party; provided, however, that (i) FUTUREGEN shall not be the first named Party in any such action, (ii) the pleadings and any public statements about the action shall state that the action is being pursued by GRACELL and that GRACELL has joined FUTUREGEN as a Party; and (iii) GRACELL shall keep FUTUREGEN reasonably apprised of all developments in any such action. GRACELL may settle such suits only with FUTUREGENs prior written consent, which shall not be unreasonably withheld, conditioned, or delayed. However, FUTUREGEN shall have the right to participate in any such action through its own counsel and at its own expense. Any recovery shall first be applied to GRACELLs out of pocket expenses and second shall be applied to FUTUREGENs out of pocket expenses, including legal fees. After those expenses have been fully paid by the recovery, FUTUREGEN shall have the right to further obtain ten percent (10%) of the remaining recovery .
(b) In the event GRACELL fails to initiate and pursue or participate in the actions described in the preceding paragraph (a) within [***] days of GRACELL first becoming aware of an infringement or other violation of Intellectual Property Rights in the Licensed Technologies or (b) upon notice by GRACELL to FUTUREGEN that it does not intend to initiate, pursue or participate in such action(s), whichever is earlier, FUTUREGEN shall have the right to initiate or take over such legal action at its own expense and FUTUREGEN may use the name of GRACELL as a Party in such action. In such case, GRACELL shall provide reasonable assistance to FUTUREGEN if requested to do so. FUTUREGEN shall keep GRACELL reasonably apprised of all developments in any such action. FUTUREGEN may settle such actions solely through its own counsel. However, in the event that any such settlement may have a material effect on the License rights granted to GRACELL under this Agreement, FUTUREGEN shall not settle any such action without first consulting with GRACELL and obtaining GRACELLs prior written consent, which shall not be unreasonably withheld. Any recovery shall first be applied to FUTUREGENs out of pocket expenses and second shall be applied to GRACELLs out of pocket expenses in pursuing the legal action solely through FUTUREGENs counsel and settled in favor of FUTUREGEN.
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8.3. In the event GRACELL is permanently enjoined from exercising its LICENSE under this Agreement pursuant to an infringement action brought by a third party, or if both GRACELL and FUTUREGEN elect not to undertake the defense or settlement of a suit alleging infringement for a period of [***] months from notice of such suit, then either Party shall have the right to terminate this Agreement in the country where the suit was filed with respect to the Patent following [***] days written notice to the other Party in accordance with the terms of ARTICLE 15.
ARTICLE 9 TERMINATION
9.1. GRACELL shall have the right to terminate this Agreement upon written notice to FUTUREGEN:
(a) in the event FUTUREGEN commits a breach of any provision of this Agreement, including but not limited to the breach of any of the Representations and Warranties clauses, and such breach is not cured (if capable of being cured) within the [***]-day period after receipt of written notice thereof from GRACELL, or upon receipt of such notice if such breach is not capable of being cured.
(b) in the event of a Force Majeure Event as set forth in Section 17.8.
(c) at any time and in the event it is determined that none of the Licensed Technologies are patentable subject matter by a non-appealable decision of a court of competent jurisdiction or an applicable patent office administrative tribunal, or all the patents included within LICENSED TECHNOLOGIES are declared invalid by a non-appealable decision of a court of competent jurisdiction or an applicable patent office administrative tribunal.
9.2. Within [***] days of termination of this Agreement, FUTUREGEN shall return to GRACELL all of GRACELLs Confidential Information disclosed by GRACELL, or destroy all of Gracells Confidential Information disclosed by GRACELL.
9.3. FUTUREGEN shall have the right to terminate this Agreement upon written notice to GRACELL:
(a) in the event GRACELL commits a breach of any provision of this Agreement and such breach is not cured within the [***]-day period after receipt of written notice thereof from FUTUREGEN. For the avoidance of doubt, in the event there is a dispute between the Parties regarding GRACELLs payment obligations under this Agreement, GRACELL shall not be held liable until such dispute is resolved.
(b) in the event of a Force Majeure Event as set forth in Section 17.8.
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(c) in the event GRACELL fails to get the IND Approval of [***] by the last day of the [***] year from GRACELLs written confirmation of the complete delivery of the deliverables listed in Appendix B;
(d) in the event GRACELL succeeds in getting the IND Approval of [***] but fails to submit the BLA of [***] by the last day of the [***] year from the date GRACELL gets such IND Approval;
9.4. Except to the extent that GRACELL retains the License from FUTUREGEN as provided under Section 9.5, within [***] days of termination of this Agreement, GRACELL shall, and shall cause other Selling Party to, return to FUTUREGEN all of FUTUREGENs Confidential Information disclosed by FUTUREGEN, or destroy all of FUTUREGENs Confidential Information disclosed by FUTUREGEN.
9.5. Upon the expiration or termination (excluding termination by FUTUREGEN pursuant to Section 9.3) of this Agreement, the License shall survive to the extent necessary to exercise any surviving License right hereunder. Except as expressly provided herein, at the date of such termination, GRACELL shall immediately cease using any of the Licensed Technologies; provided, however, that a Selling Party may sell any Products actually in the possession of such Selling Party on the effective date of termination. All other rights and obligations of the Parties under this Agreement shall terminate, except as provided elsewhere under this ARTICLE 9.
9.6. Upon the termination of this Agreement, nothing herein shall be construed to release either Party from any obligation that shall have matured prior to the effective date of such termination.
9.7. The following provisions shall survive any termination: ARTICLE 7, ARTICLE 8, ARTICLE 11, ARTICLE 13, ARTICLE 14.
9.8. The rights provided in this ARTICLE 9 shall be in addition and without prejudice to any other rights and remedies under the law which the Parties may have with respect to any breach of the provisions of this Agreement.
9.9. Upon the termination of this Agreement, GRACELL will pay FUTUREGEN all payment or considerations as described in ARTICLE 4 (including license upfront fee, sublicense fee, milestone payment, and royalty payments) already incurred through the date of notice of termination. In addition, GRACELL will pay FUTUREGEN for any activities the Parties mutually agree FUTUREGEN is required to undertake due to such termination. For the avoidance of doubts, all payment or considerations as described in ARTICLE 4 paid by GRACELL to FUTUREGEN before the termination of this Agreement is non-refundable, and FUTUREGEN has no obligation to repay such payment or considerations to GRACELL due to the termination of this Agreement.
9.10. Waiver by either Party of one or more defaults or breaches shall not deprive such Party of the right to terminate because of any subsequent default or breach.
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9.11. Accrued Obligations; Survival. Neither expiration nor any termination of this Agreement shall relieve either Party of any obligation or liability accrued prior to such expiration or termination, nor shall the expiration or any termination of this Agreement preclude either Party from pursuing all rights and remedies it may have under this Agreement, at law or in equity, with respect to breach of this Agreement. In addition, the Parties rights and obligations under ARTICLE 5, ARTICLE 9, ARTICLE 15 and ARTICLE 16 of this Agreement shall survive expiration or any termination of this Agreement.
ARTICLE 10 REPRESENTATIONS AND WARRANTIES
10.1. FUTUREGEN represents and warrants to GRACELL, as of the Effective Date, as follows:
(a) FUTUREGEN (i) has sufficient, sole and exclusive legal and/or beneficial title or ownership, free and clear from any mortgages, pledges, liens, security interests, encumbrances, charges or claim of any kind, of and to the Licensed Technologies to grant the License; and (ii) has not granted any right to any third party with respect to the Licensed Technologies that would conflict with the License or rights granted to GRACELL hereunder.
(b) FUTUREGEN has not received any written or oral notice that any third party has taken any action before any applicable patent office or any court or arbitration tribunal or governmental authority, claiming ownership or license of any Licensed Technologies.
(c) FUTUREGEN has not received any written or oral notice from any third party asserting that the issued patents described in the Licensed Technologies are invalid or unenforceable.
(d) No reexamination, interference, invalidity, opposition, nullity or similar claim or proceeding is pending or threatened with respect to the patents described in the Licensed Technologies, and none of such patents existing as of the Effective Date has been adjudged, in a final and non-appealable decision, invalid, unenforceable or unpatentable by any governmental authority of competent jurisdiction.
(e) FUTUREGEN has not received any written or oral notice from any third party asserting or alleging that (i) any research, development, manufacture or commercialization of the Licensed Technologies prior to the Effective Date or any Licensed Technologies infringed or misappropriated the intellectual property rights of such third party, or (ii) the development, manufacture or commercialization of the Licensed Technologies in the Licensed Territory would infringe or misappropriate the intellectual property rights of such third party.
(f) No third party is infringing or has infringed any Licensed Technology.
(g) All maintenance fees, annuity payments, and similar payments relating to the patents described in the Licensed Technologies have been made, and will be made, in a timely manner. Prior to the Effective Date, FUTUREGEN has not taken action or failed to undertake an action in connection with filing, prosecuting and maintaining such patents in violation of any applicable law.
(h) FUTUREGEN has complied with all applicable laws in connection with the prosecution of the patents described in the Licensed Technologies, including the duty of candor owed to any patent office pursuant to such laws.
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(i) FUTUREGEN has not entered, and shall not enter, into any agreement with any third party that is in conflict with the rights granted to GRACELL under this Agreement, and has not taken and shall not take any action that would in any way prevent it from granting the rights granted to GRACELL under this Agreement, or that would otherwise materially conflict with or adversely affect GRACELLs rights under this Agreement.
10.2. Each Party hereby represents and warrants to the other Party that: (i) it is duly authorized to execute and deliver this Agreement and to perform its obligation hereunder; (ii) this Agreement is a legal and valid obligation binding upon it and enforceable in accordance with its terms; (iii) the execution, delivery and performance of this Agreement do not conflict with any agreement, instrument or understanding , oral or written, to which it is a Party or by which it may be bound, nor violate any law or regulation of any court, government body or administrative or other agency having jurisdiction over it.
ARTICLE 11 COVENANTS
11.1. FUTUREGEN covenants that it will not grant license to others in the Licensed Territory to use, make or sell products or processes in engineered or modified immune cell therapies redirected to CLDN 18.2 which is not covered by the Licensed Technology and may be similar and/ or compete with the Licensed Technologies in the Field.
11.2. FUTUREGEN covenants to provide GRACELL, its Affiliates the Licensed Technologies in full and in a timely manner in accordance with Section 2.3.
11.3. FUTUREGEN covenants to provide the GRACELL and its Affiliates with technical support and training, ensuring that GRACELL and its Affiliates and its Sublicensees fully grasp the Licensed Technology and are capable of independent application of Licensed Technology. A separate agreement may be entered into if GRACELL intends to entrust FUTUREGEN to develop ancillary products based on the Patent or patents in the Licensed Technologies.
11.4. The Parties recognize that each Party may perform some or all of its obligations or exercise some or all of its rights under this Agreement through one or more Affiliates or subcontractors or, in the case of GRACELL, Sublicensees; provided, in each case, that (a) none of the other Partys rights hereunder are diminished or otherwise adversely affected as a result of such delegation or subcontracting, and (b) each such Affiliate, subcontractor or Sublicensee undertakes in writing obligations of confidentiality and ownership of intellectual properties which are substantially the same as those undertaken by the Parties pursuant to this Agreement; and provided, further, that such Party shall at all times be fully responsible for the performance by such Affiliate, subcontractor or Sublicensee of the obligations with respect to confidentiality and ownership of intellectual properties.
ARTICLE 12 GOVERNANCE AND JOINT STEERING COMMITTEE
12.1. Within [***] days after the Effective Date, the Parties shall establish a cross-functional joint steering committee (the JSC) composed of three (3) representatives from each Party. The JSC may, from time to time, establish subcommittees as it deems necessary to further the purposes of this Agreement. Each Party shall appoint its respective representatives to the JSC from time to time, and may change its representatives, in its sole discretion, effective upon notice to the other Party designating such change. The representatives from each Party shall have appropriate technical credentials, experience and knowledge pertaining to and ongoing familiarity with this Agreement. One (1) of the GRACELL representatives on the JSC shall be designated the chair of the JSC (the JSC Chair). The JSC Chair will be responsible for calling meetings of the JSC, circulating agendas and performing administrative tasks required to assure efficient operation of the JSC.
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12.2. The JSC shall have the following functions and powers:
(a) review, discuss and coordinate the Parties activities under this Agreement;
(b) review, discuss and coordinate the overall strategy for the research, development and commercialization of the Patent and the Licensed Technologies in the Licensed Territory;
(c) discuss the progress of the research and development programs, including any pre-clinical validation protocols;
(d) oversee and coordinate the on-going disclosure, sharing and/or transfer of any new inventions or new intellectual property works, including any New Proprietary Technology or Independently Developed IP, generated in or related to the research and development programs;
(e) establish subcommittees, direct and oversee any operating subcommittee on all significant issues, and resolve disputed matters that may arise at the subcommittees;
(f) perform such other functions as appropriate to further the purposes of this Agreement, as expressly set forth in this Agreement or as determined by the Parties in writing.
12.3. The JSC will meet at least once every quarter during the Term. The JSC may conduct such meetings by telephone, videoconference, or in person. Each Party may call special meetings of the JSC with at least [***] Business Days prior written notice, or a shorter time period in exigent circumstances, to resolve particular matters requested by such Party that are within the purview of the JSC. Meetings of the JSC are effective only if at least one (1) representative of each Party participates in such meeting. Each Party may invite a reasonable number of participants, in addition to its representatives, to attend JSC meetings in a non-voting capacity; provided, that if either Party intends to have any third party (including any consultant) attend such a meeting, such Party shall provide prior written notice to the other Party. Such Party shall ensure that such third party is bound by confidentiality and non-use obligations consistent with the terms of this Agreement. Each Party is responsible for its own expenses incurred in connection with participating in and attending all such meetings. The JSC Chair or his/her designee shall keep minutes of each JSC meeting that records in writing all decisions made, action items assigned or completed and other appropriate matters. The JSC Chair shall send meeting minutes to all members of the JSC promptly after a meeting for review. Each member shall have [***] Business Days from receipt to comment on and to approve the minutes (such approval not to be unreasonably withheld, conditioned or delayed). If a member, within such time period, does not notify JSC that he/she does not approve of the minutes, the minutes shall be deemed to have been approved by such member.
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12.4. Decisions. The JSC will endeavor to make decisions by consensus, with the representatives of each Party having, collectively, [***]. If the JSC cannot reach consensus or a dispute arises that cannot be resolved within the JSC, either Party may refer such dispute to the Executive Officers for resolution. Such Executive Officers will use good faith efforts to resolve promptly such matter, which good faith efforts will include at least one meeting between such Executive Officers within [***] Business Days after the JSCs submission of such matter to them. If consensus cannot be reached with respect to a decision within [***] Business Days after attempted resolution by the Executive Officers, then [***].
12.5. Authority. The JSC, the JSC Chair, and each subcommittee has only the powers assigned expressly to it in this Agreement, and does not have any power to amend, modify, or waive compliance with this Agreement. Each Party retains the rights, powers and discretion granted to it under this Agreement and neither Party may delegate or vest such rights, powers, or discretion in the JSC or subcommittee unless expressly provided for in this Agreement or the Parties expressly so agree in writing. The JSC shall not have the power to amend, waive or modify any term of this Agreement, and no decision of the JSC shall be in contravention of any terms and conditions of this Agreement. It is understood and agreed that issues to be formally decided by the JSC are limited to those specific issues that are expressly provided in this Agreement to be decided by the JSC.
12.6. Discontinuation of JSC. The JSC will continue until the expiration or termination of the Term, at which time the JSC shall be promptly disbanded with immediate effect.
12.7. Alliance Manager. Within [***] days following the Effective Date, each Party shall also appoint an individual to act as the alliance manager for such Party (each, an Alliance Manager). Each Alliance Manager shall thereafter be permitted to attend meetings of the JSC and any sub-committee as a nonvoting observer. The Alliance Managers shall be the primary point of contact for the Parties regarding the collaboration activities contemplated by this Agreement and shall help facilitate all such activities hereunder.
ARTICLE 13 INDEMNITY
13.1. FUTUREGEN hereby indemnifies Gracell, its Affiliates and their respective directors, officers, employees, agents, successors and assignees against (each, a Gracell Indemnitee) and agrees to hold each of them harmless from any and all damage, loss, liability and expense (including reasonable expenses of investigation and reasonable attorneys fees and expenses in connection with any action, suit or proceeding whether involving a third party claim or a claim solely between the Parties hereto and any incidental, indirect or consequential damages, losses, liabilities or expenses, and any lost profits or diminution in value) (Losses), incurred or suffered by any Gracell Indemnitee arising out of any misrepresentation or breach of warranty (determined without regard to any qualification or exception contained therein relating to materiality or material adverse effect or any similar qualification or standard, including specified dollar thresholds) or breach of covenant or agreement made or to be performed by FUTUREGEN pursuant to this Agreement regardless of whether such Losses arise as a result of the negligence, strict liability or any other liability under any theory of law or equity of, or violation of any law by, FUTUREGEN, any of its Affiliates or any of their respective directors, officers, employees, agents, successors and assignees.
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ARTICLE 14 TAXES
14.1. Taxes on Income. Except as otherwise provided in this ARTICLE 14, each Party shall be solely responsible for the payment of all taxes imposed on its share of income arising directly or indirectly from the efforts of the Parties under this Agreement.
14.2. Withholding Taxes. Each Party shall be entitled to deduct and withhold from any payment to be made by such Party (the Payor) to the other Party (the Payee) hereunder the amount of any tax, levy, impost, duty or other charge or withholding of a similar nature (Tax) required by Applicable Laws and the relevant amounts payable to the Payee hereunder shall be reduced by the amount of Taxes deducted and withheld, which shall be treated as paid to the Payee in accordance with this Agreement. To the extent that the Payor is required to deduct and withhold Taxes on any payments under this Agreement, the Payor shall pay the amounts of such Taxes to the proper governmental authority in a timely manner and the Payor shall promptly provide the Payee with the relevant receipts issued by the applicable governmental authority with respect to such deduction or withholding.
14.3. VAT. All payments due to the Payee from the Payor hereunder are inclusive of, and without further payment by the Payor of, any value-added tax (including, for greater certainty, any goods and services tax, harmonized sales tax and any similar provincial sales tax) (VAT) required by any applicable laws. The Payee shall be responsible for the payment of all VAT applicable to the transactions contemplated by this Agreement and shall file all required VAT tax returns. To the extent any VAT is required by applicable laws to be withheld from any amounts payable to the Payee under this Agreement or any other agreement herein, such amounts payable shall be reduced by the amount of VAT withheld, which shall be treated as paid to the Payee in accordance with this Agreement. The Payee shall cooperate, to the extent reasonably required, with the filing of any such VAT tax returns. If the Payee determines that it is required to report any such tax, the Payor shall promptly provide the Payee with applicable receipts and other documentation necessary for such report.
ARTICLE 15 NOTICES
15.1. Any payment, notice or other communication required by this Agreement (a) shall be in writing; (b) may be delivered personally, sent via electronic mail, or sent by reputable overnight courier with written verification of receipt; (c) shall be sent to the following addresses or to such other address as such Party shall designate by written notice to the other Party, and (d) shall be effective upon receipt:
if to FUTUREGEN: | FutureGen Biopharmaceutical Co., Ltd. [***] Attention: [***] Email: [***] | |
with a copy to: | Attention: [***] Email: [***] |
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if to GRACELL: | Gracell Biotechnologies (HK) Limited [***] Attention: [***] Email: [***] | |
with a copy to: | Attention: [***] Email: [***] |
ARTICLE 16 LAWS, FORUM AND REGULATIONS
16.1. This Agreement shall be governed by, and construed and interpreted in accordance with, the laws of the Peoples Republic of China without reference to conflict of laws principles or statutory rules of arbitration included therein.
16.2. Any Dispute arising under this Agreement or other legal proceeding relating to this Agreement or the enforcement of any provision of this Agreement may be submitted by either Party to arbitration. Any dispute shall be submitted to the Shanghai International Economic and Trade Arbitration Commission in Shanghai for arbitration in accordance with its rules. The arbitral award shall be final and binding on the Parties.
ARTICLE 17 MISCELLANEOUS
17.1. This Agreement shall be binding upon and inure to the benefit of the Parties and their respective legal representatives, successors and permitted assigns.
17.2. This Agreement constitutes the entire agreement of the Parties relating to the Licensed Technologies, and all prior representations, agreements and understandings, written or oral, are merged into this Agreement and are superseded by this Agreement.
17.3. If, for any reason, any part of this Agreement is adjudicated invalid, unenforceable or illegal by a court of competent jurisdiction, such adjudication shall not affect or impair, in whole or in part, the validity, enforceability or legality of any remaining portions of this Agreement. All remaining portions shall remain in full force and effect as if the original Agreement had been executed without the invalidated, unenforceable or illegal part. The Parties shall use their Reasonable Commercial Efforts to replace the invalid, illegal or unenforceable provision(s) with valid, legal and enforceable provision(s) in a way that, to the extent practicable and legally permissible, implements the original intent of the Parties.
17.4. Article headings are inserted for convenience of reference only and do not form a part of this Agreement.
17.5. No person not a Party to this Agreement, including any employee of either Party to this Agreement, shall have or acquire any rights by reason of this Agreement. The relationship between the Parties is that of independent contractors. Nothing contained in this Agreement shall be construed as creating any agency, partnership, joint venture or other form of joint enterprise, employment, or fiduciary relationship between the Parties, and neither Party shall have authority to contract for or bind the other Party in any manner whatsoever.
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17.6. This Agreement may not be amended or modified except by written agreement executed by each of the Parties. Neither this Agreement nor any right or obligation hereunder may be assigned or otherwise transferred by either Party without written consent of the other Party, which consent shall not be unreasonably withheld, conditioned, or delayed, except each Party may, without consent of the other Party, assign or otherwise transfer this Agreement and its rights and obligations hereunder in whole or in part: (a) to any Affiliate; or (b) in connection with a Change of Control. Any permitted assignee shall assume in writing all assigned obligations of its assignor under this Agreement. The Party making any assignment or other transfer permitted under this Section 17.6 shall provide prompt written notice to the other Party of such assignment or transfer.
17.7. The failure of any Party hereto to enforce at any time, or for any period of time, any provision of this Agreement shall not be construed as a waiver of either such provision or of the right of such Party thereafter to enforce each and every provision of this Agreement.
17.8. Neither Party shall be liable or responsible to the other Party, nor be deemed to have defaulted under or breached this Agreement, for any failure or delay in fulfilling or performing any terms of this Agreement, including any obligation to timely make any payment hereunder, when and to the extent such failure or delay is caused by: (a) acts of nature; (b) flood, fire, or explosion; (c) war, terrorism, invasion, riot, or other civil unrest; (d) embargoes or blockades in effect on or after the Effective Date of this Agreement; (e) national or regional emergency; (f) strikes, labor stoppages or slowdowns, or other industrial disturbances; (g) any passage of law or governmental order, rule, regulation or direction, or any action taken by a governmental or public authority, including imposing an embargo, export or import restriction, quota, or other restriction or prohibition; or (h) national or regional shortage of adequate power or telecommunications or transportation facilities (each of the foregoing, a Force Majeure Event); in each case, provided that (x) such event is outside the reasonable control of the affected Party; (y) the affected Party provides prompt written notice to the other Party, stating the period of time the occurrence is expected to continue; and (iii) the affected Party uses diligent efforts to end the failure or delay and minimize the effects of such Force Majeure Event. GRACELL may terminate this Agreement if a Force Majeure Event affecting FUTUREGEN continues substantially uninterrupted for a period of [***] days or more. Unless GRACELL terminates this Agreement pursuant to the preceding sentence, all dates by which GRACELL must perform any act or on which a GRACELL obligation is due shall automatically be extended for a period up to the duration of the Force Majeure Event.
17.9. The Parties agree that this Agreement may be executed and delivered by facsimile, electronic mail, internet, or any other suitable electronic means, and the Parties agree that signatures delivered by any of the aforementioned means shall be deemed to be original, valid, and binding upon the Parties.
17.10. This Agreement may be executed in counterparts, including by transmission of facsimile or PDF copies of signature pages to the Parties or their representative legal counsel, each of which shall be deemed an original document, and all of which, together with this writing, shall be deemed one instrument.
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17.11. The Parties agree that they have been represented by counsel during the negotiation and execution of this Agreement and, therefore, waive the application of any applicable law or rule of construction providing that ambiguities in an agreement will be construed against the Party drafting such agreement.
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IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed by their duly authorized representatives.
FutureGen Biopharmaceutical Co., Ltd. | ||
By: | /s/ Zhaoyu Jin | |
Name: | ZHAOYU JIN | |
Title: | CEO |
Signature Page to Exclusive License Agreement
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed by their duly authorized representatives.
Gracell Biotechnologies (HK) Limited | ||
By: | /s/ Wei Cao | |
Name: | Wei Cao | |
Title: | CEO |
Signature Page to Exclusive License Agreement
Appendix A
[***]
Appendix A
Appendix B
[***]
Appendix B
Exhibit 4.18
Certain confidential information contained in this document, marked by [***], has been omitted because such information is both not material and is the type that Gracell Biotechnologies Inc. Company customarily and actually treats that as private or confidential.
MANUFACTURING SERVICES AGREEMENT
This Manufacturing Services Agreement (the Agreement) is executed on March 31, 2021 and takes into effect on April 1, 2021 (the Effective Date) between Lonza Houston, Inc., 14905 Kirby Drive, Pearland, TX 77047, USA (LONZA), Suzhou Gracell Biotechnologies Co., Ltd. (Gracell Suzhou), Building 12, Zone B, Phase II, Biomedical Industrial Park, No. 218 Sangtian Road, Suzhou Industrial Park, Suzhou, Jiangsu Province, China 215123, and Gracell Biopharmaceuticals, Inc., 1209 Orange Street, City of Wilmington, County of New Castle, Delaware, USA 19801 (Gracell US, together with Gracell Suzhou, CLIENT) (each of LONZA and CLIENT, a Party and, collectively, the Parties).
RECITALS
A. LONZA operates a multi-client production facility located at 14905 Kirby Drive, Pearland, TX 77047, USA, and/or such other location as LONZA may, in accordance with Sections 2.7 and 2.8, designate in writing from time to time (the Facility).
B. CLIENT desires to have LONZA produce certain Product(s) (as defined below) intended for therapeutic use in humans, and LONZA desires to produce such Product(s).
C. CLIENT desires to have LONZA conduct work according to individual Statements of Work, as further defined below.
NOW, THEREFORE, in consideration of the foregoing and the mutual promises and covenants hereinafter set forth, LONZA and CLIENT, intending to be legally bound, hereby agree as follows:
AGREEMENT
1. | DEFINITIONS |
When used in this Agreement, capitalized terms shall have the meanings as defined below and throughout the Agreement. Unless the context indicates otherwise, the singular will include the plural and the plural will include the singular.
1.1. | Acceptance Period shall have the meaning set forth in Section 5.2.1. |
1.2. | Affiliate means, with respect to either Party, any other corporation or business entity that directly, or indirectly through one or more intermediaries, controls, is controlled by or is under common control with such Party. For purposes of this definition, the term control and, with correlative meanings, the terms controlled by and under common control with mean direct or indirect ownership of more than fifty percent (50%) of the securities or other ownership interests representing the equity voting stock or general partnership or membership interest of such entity or the power to direct or cause the direction of the management or policies of such entity, whether through the ownership of voting securities, by contract, or otherwise. |
1.3. | Background Intellectual Property means any Intellectual Property either (i) owned or controlled by a Party prior to the Effective Date or (ii) not invented, generated, developed, acquired or derived from or in connection with this Agreement but owned or controlled by a Party during the term of the Agreement. |
1.4. | Batch means a specific quantity of Product that is intended to have uniform character and quality, within specified limits, and is produced according to a single manufacturing order during the same cycle of manufacture. |
1.5. | Batch Records means the production record pertaining to a Batch. |
1.6. | cGMP or GMP means the applicable regulatory requirements, as amended from time to time, for current good manufacturing practices, including without limitation those promulgated by (i) the FDA under the United States Federal Food, Drug and Cosmetic Act, 21 C.F.R. §§ 210 et seq., or (b) the European Medicines Agency or under the European Union guide to good manufacturing practice for medicinal products. |
1.7. | cGMP Batch means any Batch which is required under the relevant Statement of Work to be manufactured in accordance with cGMP. |
1.8. | Cancellation Fee has the meaning set forth in Section 4.5. |
1.9. | Change Order has the meaning set forth in Section 2.2. |
1.10. | CLIENT Development Materials has the meaning set forth in Section 2.3. |
1.11. | CLIENT Materials means the CLIENT Development Materials and the CLIENT Production Materials. |
1.12. | CLIENT Parties has the meaning set forth in Section 15.1. |
1.13. | CLIENT Personnel has the meaning set forth in Section 4.10.1. |
1.14. | CLIENT Production Materials has the meaning set forth in Section 4.1. |
1.15. | CLIENTs FasTCAR Technology means all technical, scientific and other know-how and information, trade secrets, knowledge, means, methods, processes, practices, formulae, instructions, skills, techniques, procedures, experiences, ideas, designs, drawings, assembly procedures, apparatuses, specifications, data, results and other material, including pharmaceutical, biological, chemical, pharmacological, toxicological, physical and analytical, pre-clinical, clinical, safety, manufacturing and quality control data and information, including study designs and protocols, assays and biological methodology, in each case (whether or not confidential, proprietary, patented or patentable) in written, electronic or any other form now known or hereafter developed in connection with FasTCART. |
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1.16. | Commencement Date means the date set forth in the relevant Statement of Work for the commencement of Services, including the production of the Product. |
1.17. | Confidential Information has the meaning set forth in Section 10.1. |
1.18. | Disapproval Notice shall have the meaning set forth in Section 5.2.1. |
1.19. | Engineering Batch means a Batch generated during an engineering run in order to demonstrate the transfer of the Process to the Facility. |
1.20. | FDA means the U.S. Food and Drug Administration, and any successor agency thereof. |
1.21. | First Statement of Work has the meaning set forth in Section 2.1. |
1.22. | Force Majeure Event has the meaning set forth in Section 17.2. |
1.23. | Forecast has the meaning set forth in Section 6.1. |
1.24. | Indemnitee has the meaning set forth in Section 15.3.1. |
1.25. | Indemnitor has the meaning set forth in Section 15.3.1. |
1.26. | Intellectual Property means all worldwide patents, copyrights, trade secrets, know-how, technical data, trademarks, trade names, service marks, logos and other corporate identifiers, design right, confidential or proprietary information, and all other intellectual property rights, including all applications and registrations with respect thereto. |
1.27. | LONZA Operating Documents means the corporate standards, batch records, standard operating procedures, electronic programs and files, raw material specifications, protocols, validation documentation, and supporting documentation used by LONZA, such as environmental monitoring, for operation and maintenance of the Facility and LONZA equipment used in the process of producing the Product, excluding any of the foregoing that is unique to the manufacture of Product. |
1.28. | LONZA Parties has the meaning set forth in Section 15.2. |
1.29. | LONZA Production Materials has the meaning set forth in Section 4.4. |
1.30. | Losses has the meaning set forth in Section 15.1. |
1.31. | Materials means all raw materials and supplies to be used in the production of a Product. |
1.32. | Minimum Capacity has the meaning set forth in Section 6.1. |
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1.33. | Process means the manufacturing process for a Product. |
1.34. | Product has the meaning set forth in the relevant Statement of Work. |
1.35. | Product Warranties has the meaning set forth in Section 5.2.1. |
1.36. | Project Documentation means the compilation of documentation generated by LONZA in preparation of and during the performance of a given SOW, including, without limitation, executed Batch Records, component records, test records and test record forms, certificates of analysis, study protocols, study summary reports, deviation reports, laboratory investigations, environment excursions, formulation records, and other related documents. |
1.37. | Production Rerun has the meaning set forth in Section 5.4.1. |
1.38. | Quality Agreements has the meaning set forth in Section 2.9. |
1.39. | Recall has the meaning set forth in Section 5.5.1. |
1.40. | Regulatory Approval means the approval by the FDA or other applicable governmental authority to market and sell the Product in the applicable markets. |
1.41. | Remaining CLIENT Property has the meaning set forth in Section 7.2. |
1.42. | SIAC has the meaning set forth in Section 17.14. |
1.43. | Services means the activities to be performed by LONZA, its Affiliates and/or any approved Third Party subcontractor under the relevant Statement of Work. |
1.44. | SOP means standard operating procedure. |
1.45. | Specifications means the Product specifications set forth in the certificate of analysis, the Quality Agreement or otherwise by the Parties, in writing, in connection with the production of a particular Batch of Product hereunder, including without limitation the specification of the Materials, the manufacturing specifications, directions and processes, the storage requirements, and all other specifications for the Product; provided that Specifications for Engineering Batches shall be non-binding targets for reference only. |
1.46. | Statement of Work or SOW means a plan to develop a Process or Product that is attached hereto as Appendix A or later becomes attached through an amendment by the Parties. |
1.47. | Supply Failure has the meaning set forth in Section 4.5. |
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1.48. | Technology Transfer means the transfer of documentation, specifications, and production process by CLIENT to LONZA for the development of the Project Documentation for the manufacture of the Product specifically for CLIENT. For the avoidance of doubt, Technology Transfer does not constitute the transfer of the ownership of the relevant technology, Intellectual Property, documentation or information from CLIENT or its Affiliate to LONZA or LONZAs Affiliate, and CLIENT expressly retains the ownership of the relevant technology, Intellectual Property, documentation and information. |
1.49. | Third Party means any party other than LONZA, CLIENT or their respective Affiliates. |
2. | STATEMENTS OF WORKPROCESS AND PRODUCT DEVELOPMENT; PROCESS OR PRODUCT MANUFACTURE |
2.1 Statement of Work. Prior to performing Technology Transfer, or Process or Product manufacture, the Parties shall collaborate to develop a Statement of Work, describing the activities to be performed by the Parties, or to be subcontracted by LONZA to Third Parties in accordance with Section 17.11. In the event of a conflict between the terms and conditions of this Agreement and any Statement of Work, the terms and conditions of this Agreement shall control, unless a Statement of Work expressly and specifically amends or disclaims the conflicting language and signed by both LONZA and CLIENT. The first Statement of Work, which is attached hereto, is numbered Appendix A-1 and is hereby incorporated and made a part of this Agreement (the First Statement of Work). It is contemplated that each separate project shall have its own Statement of Work. As each subsequent Statement of Work is agreed to by the Parties, each shall state that it is to be incorporated and made a part of this Agreement and shall be consecutively numbered as A-2, A-3, etc.
2.2 Modification of Statement of Work. Should CLIENT desire to change a Statement of Work or to include additional Services to be provided by LONZA, CLIENT may propose to LONZA an amendment to the Statement of Work with the desired changes or additional Services (Change Order). LONZA shall consider CLIENTs request in good faith. If LONZA determines that it has the resources and capabilities to accommodate such Change Order, LONZA shall prepare a modified version of the relevant Statement of Work reflecting such Change Order (including, without limitation, any changes to the estimated timing, charges or scope of a project) and shall submit such modified version of the Statement of Work to CLIENT for review and comment. The modified Statement of Work shall be binding on the Parties only if it refers to this Agreement, states that it is to be made a part thereof, and is signed by both Parties. Whereafter such modified version of the Statement of Work shall be deemed to have replaced the prior version of the Statement of Work. Notwithstanding the foregoing, if a modified version of the Statement of Work is not agreed to by both Parties, the existing Statement of Work shall remain in effect.
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2.3 CLIENT Deliverables. Within the time period specified in a Statement of Work, CLIENT shall provide LONZA with (a) the materials that are not commercially available in the U.S. and CLIENT is responsible for delivering to LONZA under the relevant Statement of Work, and any handling instructions, protocols, SOPs and other documentation necessary to maintain the properties of such materials for LONZAs performance under the Statement of Work, and (b) any other protocols, SOPs and other information and documentation in possession or control of CLIENT and necessary for LONZAs performance of the Statement of Work, and for LONZAs preparation of the Project Documentation in conformance with cGMP, including, without limitation, process information, SOPs, development data and reports, quality control assays, raw material specifications (including vendor, grade and sampling/testing requirements), product and sample packaging and shipping instructions, and product specific cleaning and decontamination information, (collectively, the CLIENT Development Materials). For the avoidance of doubt, LONZA shall procure other materials, protocols, SOPs, information and documentation required for the performance of the relevant Statement of Work, except for CLIENT Development Materials. If CLIENT does not provide the CLIENT Development Materials within the time period specified in the relevant Statement of Work, then CLIENT shall be responsible for any actual and reasonable costs incurred by LONZA arising from such failure, provided that LONZA shall use commercially reasonable efforts to minimize such costs. It is hereby agreed that CLIENT Development Materials, to the extent such are maintained as Confidential Information or proprietary information by CLIENT, are the proprietary and Confidential Information of CLIENT and shall be used by LONZA only for the purpose of performing LONZAs obligations under this Agreement and the relevant Statement of Work.
2.4 Performance by LONZA. Subject to the provision by CLIENT of the CLIENT Development Materials pursuant to Section 2.3, LONZA shall use commercially reasonable efforts to diligently perform, directly or, subject to the terms of the Statement of Work, through a Third Party subcontractor appointed in accordance with Section 17.11, the work described in the relevant Statement of Work in a professional and workmanlike manner in accordance with the terms of this Agreement. LONZA shall provide the Services and perform its obligations under this Agreement and the relevant Statement of Work in compliance with all applicable laws, regulations and standards, including without limitation, those related to data privacy, cGMP standards, good laboratory practice, good clinical practice, distortion and storage practices. LONZA shall promptly notify CLIENT of any delay that arise during the performance of the relevant Statement of Work. For the avoidance of doubt, any delay of the relevant Commencement Date or the scheduled delivery date by more than [***] days shall be considered a material delay of the relevant Statement of Work.
2.5 Engineering Batches. LONZA shall manufacture Engineering Batches in accordance with the relevant Statement of Work. Both Parties shall discuss and agree on the price for each Engineering Batch. LONZA shall use commercially reasonable efforts to minimize the number of Engineering Batches that it needs to manufacture prior to the manufacturing of cGMP Batches set forth in Section 2.6. CLIENT shall have the right to make whatever further use of the Engineering Batches as it shall determine, provided that CLIENT pays for such Batches at a price mutually agreed to between the Parties in writing and such use is not for human use, and upon such payment, all right and title to, and interest in, the Engineering Batch shall be transferred from LONZA to CLIENT. LONZA makes no warranty that Engineering Batches will meet cGMP or the Specifications. Regardless of whether any Engineering Batch meets cGMP or the Specifications, CLIENT shall pay to LONZA the price for such Engineering Batch plus the cost of any materials and any materials handling fee associated with such Engineering Batches, for which CLIENT has not previously paid. In the event that CLIENT does not use the Engineering Batches, LONZA shall dispose of such Engineering Batches according to LONZAs standard procedure at its own expense.
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2.6 cGMP Batches. LONZA shall, in accordance with the terms of this Agreement and the Quality Agreement, manufacture at the Facility and release to CLIENT, cGMP Batches that comply with the Process, cGMP and the Specifications, together with a certificate of analysis; provided, however, that manufacturing of cGMP Batches shall not commence until at least one (1) successful Engineering Batch has been manufactured in compliance with cGMP and Specifications. Prior to the commencement of manufacturing of cGMP Batches, LONZA shall review the manufacturing and testing specifications provided by CLIENT. In the event that there is a material difference in the manufacturing and testing specifications provided by CLIENT as compared with the process results demonstrated during the manufacture of Engineering Batches, the Parties shall meet to discuss in good faith a revision to the Batch price to reflect such difference.
2.7 Affiliates. An Affiliate of LONZA may, in accordance with Section 17.12, execute a Statement of Work with CLIENT pursuant to this Agreement and submit invoices to CLIENT under such Statement of Work. Under such circumstances, all references in this Agreement to LONZA shall be deemed to be to the applicable Affiliate of LONZA with respect to (i) that particular Statement of Work or (ii) the relevant portions of that particular Statement of Work under which such Affiliate will be performing specified Services. The Affiliate shall be entitled to enforce this Agreement with respect to such Statement of Work, or as applicable the relevant portions of such Statement of Work, in its own name as an intended third party beneficiary and the Affiliate shall be liable to CLIENT for any obligations and liabilities undertaken pursuant to such Statement of Work and subject to the terms of this Agreement. LONZA shall ensure that LONZAs Affiliate(s) perform its obligations pursuant to the terms of this Agreement. Notwithstanding the foregoing, LONZA shall remain fully liable for the performance of its Affiliates.
2.8 Facility. All Process and Services shall be performed at the Facility, or a facility of a LONZA Affiliate that executed a Statement of Work with CLIENT in accordance with Section 2.7, unless otherwise agreed in writing by CLIENT. LONZA shall, at its own expense, provide and maintain all labor, plant, equipment and Services necessary to enable LONZA and/or its Affiliate to fulfil all obligations under cGMP, this Agreement, the Quality Agreement and the Statements of Work, including without limitation the manufacturing of the Product.
2.9 Quality Agreement. The Parties and/or their applicable Affiliates shall enter into one or more agreements covering the Product(s), containing the policies, procedures and standards that the Parties shall coordinate and implement in the operational and quality assurance activities and for regulatory compliance objectives contemplated under this Agreement (collectively, the Quality Agreements).
2.10 Non-exclusivity. The Product under this Agreement shall be provided on a non-exclusive basis and CLIENT reserves the right to manufacture the Product for itself and to purchase the Product and similar products from any other Third Parties. CLIENT is not obligated to purchase any minimum or specific quantity or dollar amount of Product under this Agreement. Specific Product quantities and Product pricing will be further specified under the respective SOWs.
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3. | TECHNOLOGY TRANSFER |
3.1 Based on the information provided by CLIENT and including the Process definition or changes developed by LONZA pursuant to any applicable Statement of Work, LONZA shall use commercially reasonable efforts to prepare the Project Documentation for the Process in accordance with the relevant Statement of Work. CLIENT shall inform LONZA of any specific requirements CLIENT may have relating to the Project Documentation, including, without limitation, any information or procedures CLIENT wishes to incorporate therein. If LONZA intends to include in the Project Documentation the use of any assay, medium, or other technology that is not commercially available, LONZA shall inform CLIENT of such intention and the Parties shall meet to discuss and attempt to agree in good faith on the terms of use of such non-commercially available Materials or technology in the Process. The applicable Project Documentation, as set forth in the SOW, shall be completed and delivered by LONZA at completion of a Batch.
3.2 CLIENT shall reasonably cooperate with LONZA to assist LONZA to develop the Project Documentation and Process, including, without limitation, providing LONZA with additional information and procedures as LONZA may reasonably require to create the Project Documentation, Process, and/or any of the following: (i) manufacturing process information, SOPs, and development reports, (ii) quality control assays, (iii) Specifications of raw Materials (including vendor, grade and sampling/testing requirements), (iv) Product and sample packaging and shipping instructions, (v) Product-specific cleaning and decontamination information.
3.3 LONZA shall deliver a draft version of the applicable portions of the Project Documentation to CLIENT for its review and approval in accordance with the schedule set forth in the Statement of Work. CLIENT shall notify LONZA in writing of any objections it has to such draft Project Documentation, and upon such notification, representatives of LONZA and CLIENT shall meet promptly to resolve such objections. Upon CLIENTs written acceptance of the draft Project Documentation, or in the event that CLIENT does not submit a written notice setting forth CLIENTs objections to the draft Project Documentation within [***] business days following the receipt of such draft by CLIENT, such draft shall be deemed to have been approved by CLIENT.
3.4 The Process, Project Documentation, Specifications, and any improvements or modifications thereto developed during the term of this Agreement, but excluding any LONZA Operating Documents or Confidential Information of LONZA included in any of the foregoing, shall be deemed CLIENTs property and Confidential Information and subject to the provisions set forth in Article 10. CLIENT shall be permitted to use the Process and/or the Project Documentation to manufacture and sell Product; provided, however, that if the Process and/or the Project Documentation incorporates or contains any Intellectual Property of LONZA or Confidential Information of LONZA, prior to any disclosure of such Intellectual Property or Confidential Information of LONZA to, or use by, a Third Party manufacturer, CLIENT shall obtain LONZAs written consent to such disclosure, which consent shall not be unreasonably withheld, delayed or conditioned.
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4. | MANUFACTURE OF PRODUCT; ORDER PROCESS; DELIVERIES |
4.1 CLIENT Deliverables. Within any time period agreed to in any applicable Statement of Work, CLIENT shall provide LONZA with the Materials that are not commercially available in the U.S. and listed in the Statement of Work required to be supplied by CLIENT for the production of the Product, and any handling instructions, protocols, SOPs and other documentation necessary to maintain the properties of such materials for the performance of the Statement of Work (collectively, the CLIENT Production Materials). For the avoidance of doubt, LONZA shall procure other materials, handling instructions, protocols, SOPs, information and documentation required for the performance of the relevant Statement of Work, except for CLIENT Production Materials. It is hereby agreed that CLIENT Production Materials are the proprietary and Confidential Information of CLIENT and shall be used by LONZA solely for the purpose of this Agreement.
4.2 Commencement Date. The Statement of Work shall include a Commencement Date agreed upon by the Parties.
4.3 Manufacture by LONZA. LONZA shall manufacture, package, store, ship, handle quality assurance and quality control for the Product, all as set forth in the Statement of Work and the Quality Agreements, and to deliver to CLIENT the Product stated in the Statement of Work, all in accordance with the terms set forth in Section 4.7 below. Lonza and CLIENT agree to adhere to production schedules mutually agreed upon in the relevant Statement of Work. LONZA will use commercially reasonable efforts to deliver according to such production schedules and will consult in advance and in good faith with CLIENT regarding any amendment or change to the production schedule or the Commencement Date with respect to a Statement of Work.
4.4 Procurement of Material. LONZA shall ensure that Materials other than CLIENT Production Materials (hereinafter LONZA Production Materials) meet the requirements set forth in the relevant Project Documentation. LONZA shall, and shall cause its Affiliates and approved Third Party subcontractors to, at its/their own cost, purchase, qualify, test, and inspect all such LONZA Production Materials. LONZA shall (i) apply first-expiry, first out methods of usage to any stock of Materials, (ii) keep CLIENT informed of the material terms and status of the Materials supply, (iii) ensure that critical Materials as determined by CLIENT are only supplied from suppliers approved in writing by CLIENT, and (iv) keep CLIENT informed without delay of any possible interruptions with respect to the Materials supply as soon as LONZA becomes aware of any possibility of such interruption.
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4.5 Cancellation of a Statement of Work. Any Statement of Work may be cancelled by either Party based on a material breach by the other Party of such Statement of Work, or by CLIENT in the event that LONZA fails to produce and deliver Product in compliance with the Product Warranties [***]. Each Statement of Work shall provide for cancellation fees for such Statement of Work (the Cancellation Fee); provided, however, that, if such Statement of Work does not provide for cancellation fees, the Cancellation Fee shall be the remaining amount outstanding under such Statement of Work if such Statement of Work is cancelled by CLIENT due to reasons not attributable to LONZA, but except for reasons beyond CLIENTs control (such as a Force Majeure Event); provided, further, that, as soon as possible but no later than [***] days after such cancellation, LONZA shall use commercially reasonable efforts to reallocate the relevant Materials, labor resources, suite, equipment and any other resources under such Statement of Work and provide to CLIENT a good faith calculation of the total value of such reallocated Materials, labor resources, suite, equipment and any other resources within [***] days after such cancellation, and the Cancellation Fee shall be reduced by an amount equal to such total value.
4.6 Payment of Cancellation Fee.[***].
4.7 Packaging and Shipping. LONZA shall package and label the Product for shipment in accordance with the Project Documentation and LONZAs standard practices in effect at the time of LONZAs performance of the relevant Statement of Work. LONZA shall not be entitled to deliver partial shipments of the Product unless expressly authorized by CLIENT in writing to do so. LONZA shall ship the Product Ex Works (INCOTERMS® 2020) the LONZA Facility through (i) a common carrier designated by CLIENT to LONZA, or (ii) a carrier recognized and accepted by CLIENT according to LONZAs recommendation, in each case in writing not less than [***] days prior to the applicable delivery date unless otherwise agreed to in a Statement of Work. LONZA shall (i) arrange for shipping and insurance, and (ii) at LONZA risk and expense, obtain any export license or other official authorization and carry out all customs formalities necessary to export the Product. CLIENT shall provide to LONZA its account number with the selected carrier (if applicable) and shall pay for the shipping costs after the delivery of the Product to the carrier in connection with each shipment of Product. Each shipment shall be accompanied by the documentation listed in the Statement of Work or required by Ex Works (INCOTERMS® 2020). Risk and title in the Product shall pass to CLIENT upon delivery to the carrier. LONZA will, subject to the production schedule in the applicable Statement of Work, unless it is unable to do so due to one or more Batches of Product not complying with the Product Warranties (provided that each such non-compliance shall constitute one occasion for the purpose of determining whether there is a Supply Failure under Section 4.5), exercise commercially reasonable efforts to deliver each shipment of Product to CLIENT on the requested delivery date for such shipment. LONZA shall promptly notify CLIENT, but in any case no later than [***] days before the delivery date, if LONZA reasonably believes that it will be unable to meet a delivery date. In such case, any such delay to the delivery dates, whether or not accepted by CLIENT, is without prejudice to CLIENTs rights and remedies under this Agreement and applicable laws. CLIENT shall be required to take physical possession of a Batch of Product within [***] days after acceptance of such Batch in accordance with Section 5.2 (the Delivery Period), unless CLIENT requests in writing, and LONZA consents in writing, to store the Product on CLIENTs behalf and at CLIENTs expense.
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4.8 Genetic Alterations. LONZA is not responsible for any genetic alterations that occur during the production of any Product, except for those genetic alterations that result from negligent or intentionally or knowingly wrongful acts or omission of LONZA and not as a result of the predisposition of any Materials provided by CLIENT. Unless they arise from negligent or wrongful acts or omissions of LONZA, genetic alterations shall not be the basis for a breach of warranty claim by CLIENT. If LONZA fails to deliver the Product in accordance with the terms of this Agreement or a Statement of Work, or if the Product produced pursuant to the Statement of Work fails to meet any Specifications required by the Statement of Work, and such failure is due to genetic alterations which do not arise from a negligent or wrongful act or omission of LONZA, LONZA shall re-perform the specific project at issue at the earliest practicable time, for an additional fee equal to the original fee for that part of the project.
4.9 Records. LONZA shall maintain true, complete and accurate written records for the production of the Product and all activities related to the Process, as required by applicable laws, regulations and industry standards. In no event shall LONZA transfer or dispose of any of the foregoing records kept or generated by LONZA without the prior written consent from CLIENT. LONZA shall retain possession of the Project Documentation, all Batch Records and LONZA Operating Documents, and shall make copies thereof available to CLIENT upon CLIENTs request and at CLIENTs expense. LONZA Operating Documents shall remain Confidential Information of LONZA. CLIENT shall have the right to use and reference any of the foregoing in connection with a filing for Regulatory Approval of the Product or as otherwise authorized by the Agreement with no consideration.
4.10 CLIENT Access.
4.10.1 CLIENTs employees and agents (including its independent contractors) (collectively, CLIENT Personnel) may participate in the production of the Product only in such capacities as may be approved in writing in advance by LONZA. CLIENT Personnel working at the Facility are required to comply with LONZA Operating Documents and any other applicable LONZA safety policies. For the avoidance of doubt, CLIENT Personnel may not physically participate in the production or manufacture of any Product that may be used in or on humans.
4.10.2 CLIENT Personnel working at the Facility shall be and remain employees or agents (as applicable) of CLIENT, and CLIENT shall be solely responsible for the payment of compensation for such CLIENT Personnel (including applicable federal, state and local withholding and other payroll taxes, workers compensation insurance, health insurance, and other similar statutory benefits).
4.10.3 CLIENT shall pay for the actual cost of repairing or replacing to its previous status (to the extent that LONZA determines, in its reasonable judgment, that repairs cannot be adequately effected, and to the extent not exceeding the greater of the applicable market price or LONZAs book value) any property of LONZA damaged or destroyed by CLIENT Personnel, provided CLIENT shall not be liable for repair or replacement costs resulting from ordinary wear and tear or instructions from LONZA.
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4.10.4 CLIENT Personnel visiting or having access to the Facility shall abide by LONZA standard policies, SOPs and the security procedures established by LONZA. CLIENT shall be liable for any breaches of security by CLIENT Personnel. In addition, CLIENT shall reimburse LONZA for the cost of any lost security cards issued to CLIENT Personnel, at the rate of $[***] per security card. All CLIENT Personnel shall agree to abide by applicable LONZA policies and SOPs established by LONZA, and will sign an appropriate confidentiality agreement in a form reasonably acceptable to CLIENT.
4.10.5 CLIENT shall indemnify and hold harmless LONZA from and against any and all Losses arising out of any injuries suffered by CLIENT Personnel while at the Facility or elsewhere, except to the extent caused by the negligence or misconduct on the part of, or instruction from, any LONZA Party.
4.11 Disclaimers. CLIENT acknowledges and agrees that LONZA shall not engage in any Product refinement or development. CLIENT acknowledges and agrees that LONZA has not participated in the invention or testing of any Product, and has not evaluated its safety or suitability for use in humans or otherwise.
5. | PRODUCT WARRANTIES; ACCEPTANCE AND REJECTION OF PRODUCTS |
5.1 Product Warranties. LONZA warrants that any Product manufactured by LONZA pursuant to this Agreement, at the time of delivery pursuant to Section 4.7: [***] LONZA further warrants that any Product manufactured by LONZA pursuant to this Agreement, at the time of delivery pursuant to Section 4.7, will be free from any Third Party security interest, claims, demands, liens or other encumbrances of any kind or character.
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5.2 Approval of Completed Product.
5.2.1[***].
5.2.2 If Product is deemed accepted in accordance with Section 5.2.1, then, the Product shall, within [***] days of such acceptance, be delivered to CLIENT, and CLIENT shall either (i) accept delivery at the common carrier in accordance with Section 4.7, or (ii) arrange for storage of the Product by LONZA for CLIENT in accordance with agreed upon terms of a SOW which covers all relevant details of a Product storage engagement.
5.3 Dispute Resolution. LONZA and CLIENT shall attempt to resolve any dispute regarding the conformity of a cGMP Batch with the Product Warranties. If such dispute cannot be settled within [***] days of the notice by either Party of such dispute to the other Party, then CLIENT may submit a sample of the cGMP Batch of the disputed Product to an independent expert or independent testing laboratory of recognized repute selected by CLIENT and approved by LONZA (such approval not to be unreasonably withheld or delayed) for analysis, under quality assurance procedures in accordance with the Quality Agreement, of the conformity of such cGMP Batch with the relevant Product Warranties. The costs associated with such analysis by such independent expert or independent testing laboratory (as applicable) shall be paid by the Party whose assessment of the conformity of the cGMP Batch with the Product Warranties was mistaken.
5.4 Remedies for Non-Conforming, Damaged, or Destroyed Product.
5.4.1 In the event that the Parties agree, or independent expert or independent testing laboratory (as applicable) determines, pursuant to Section 5.3, that a cGMP Batch, Product or Material (i) is destroyed or damaged by LONZA, LONZA Personnel or a Third Party subcontractor appointed by LONZA due to a negligent or intentional act or omission by any of said parties, or (ii) fails to conform to the Product Warranties in any material respect due to the failure of LONZA, LONZA Personnel or a Third Party subcontractor appointed by LONZA to execute the Project Documentation or to comply with cGMP, the Quality Agreement, then, at CLIENTs request, LONZA shall, as soon as it is commercially practicable to do so, produce for CLIENT sufficient quantities of Product to replace the non-conforming, damaged or destroyed portion of such cGMP Batch (the Production Rerun), in accordance with the provisions of this Agreement and at no additional cost to CLIENT; provided, however, CLIENT shall have first paid for the original cGMP Batch. If a replacement Product cannot be provided to CLIENT, then LONZA shall refund the cost of the original Batch of Product if CLIENT has paid for the original Batch of Product.
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5.4.2 In the event that the Parties agree, or an independent testing laboratory determines, pursuant to Section 5.3, that a cGMP Batch materially fails to conform to the Product Warranties, or Product and/or Materials are destroyed or damaged by LONZA Personnel, for any reason other than as set forth in Section 5.4.1, then LONZA shall have no liability to CLIENT with respect to such cGMP Batch, Product or Material and LONZA will, at CLIENTs request, produce for CLIENT a Production Rerun at CLIENTs expense. Notwithstanding anything to the contrary set forth in Section 5.4, if during the manufacture of Product pursuant to this Agreement, Product or Materials are destroyed or damaged by LONZA Personnel while LONZA Personnel were acting at the direction of CLIENT Personnel, then LONZA will have no liability to CLIENT as the result of such destruction or damage.
5.4.3 Notwithstanding anything to the contrary herein, in case CLIENT discovers during the registered shelf life of a Product any non-conformity of such Product with the Product Warranties, which non-conformity was not reasonably detectable by visual inspection, CLIENT shall have the right to deliver a Disapproval Notice to LONZA in accordance with Section 5.2 within [***] days following its discovery of such non-conformity.
5.4.4 CLIENT acknowledges and agrees that its sole remedy with respect to (i) the failure of Product to conform with any of the Product Warranties and (ii) damaged or destroyed Materials and/or Product, except in the event that such damage or destruction is due to an intentional act or omission of LONZA Personnel or a Third Party subcontractor appointed by LONZA, is as set forth in this Section 5.4, and in furtherance thereof, CLIENT hereby waives all other remedies at law or in equity regarding the foregoing claims.
5.5 Product Recall and Return
5.5.1 Recall. Each Party shall notify the other Party as soon as possible when they receive information, whether directly or indirectly, which might affect the marketability, quality, safety or effectiveness of the Product and/or which might result in the Recall or seizure of the Product. For purposes of this Agreement, a Recall shall mean any action: (i) by CLIENT to recover title to or possession of quantities of the Product sold or shipped to Third Parties (including without limitation, the voluntary withdrawal of the Product from the market), (ii) by any governmental authorities to detain or destroy any of the Product, or (iii) the election by CLIENT to refrain from selling or shipping quantities of the Product to Third Parties that would have been subject to a Recall if sold or shipped. Each Party shall maintain records as may be necessary to permit a Recall of the Product. CLIENT shall have the sole right to institute a Recall or field alert of the Product as a consequence of any defect that CLIENT deems sufficiently serious.
5.5.2 Liability. For all Recalls which result from a non-conformity of a Product with the Product Warranties, LONZA shall: (i) promptly credit CLIENTs account for LONZA invoice price to CLIENT of such recalled Product; if CLIENT has previously paid for such Product, LONZA shall promptly, at CLIENTs election, either (a) refund the invoice price, (b) offset the amount thereof against other amounts then due to LONZA hereunder, or (c) replace the recalled Product with new Product at no additional cost to CLIENT; and (ii) reimburse CLIENT for all reasonable documented out-of-pocket costs and expenses incurred by CLIENT resulting from such Recall.
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6. | FORECASTS |
6.1 CLIENT shall supply LONZA with a written forecast showing CLIENTs good faith estimated requirements for Batches for the following period (the Forecast). Applicable Forecasts will be defined in the relevant manufacturing SOWs and agreed upon in a manner that is suitable for the Product. Following LONZAs receipt of a Forecast, LONZA shall provide written notice to CLIENT of whether that it has capacity available to manufacture the number of Batches forecasted therein and shall provide CLIENT with an estimated production schedule showing the estimated Commencement Date and estimated delivery date of each Batch. Notwithstanding the forgoing, during the term of this Agreement, LONZA shall maintain a monthly minimum capacity for the manufacturing of [***] percent ([***]%) of the applicable Forecast (Minimum Capacity). LONZA shall use commercially reasonable efforts to increase its capacity up to the required quantity of Product within a reasonable time if CLIENT requires a higher minimum capacity at any time during this Agreement, provided LONZAs failure to achieve an increased level of capacity that is in excess of [***] percent ([***]%) of the then-applicable Forecast shall not constitute a material breach of this Agreement.
7. | STORAGE OF MATERIALS |
7.1 Pre-Production. LONZA shall store at the expense of CLIENT any CLIENT Materials, equipment or other property delivered pursuant to the Statement of Work to the Facility by CLIENT more than [***] days prior to the Commencement Date. The storage rates shall be set forth in the Statement of Work and may be amended from time to time by written consent of the Parties. No storage fees shall be charged during the period starting [***] days prior to the Commencement Date and ending upon completion of the manufacturing of the applicable Product.
7.2 Post-Production. LONZA shall store at the Facility free of charge, or dispose of in accordance with CLIENTs instruction and at CLIENTs expense, any inprocess Materials, CLIENT Materials, equipment and other CLIENT property that remains at the Facility on the date of completion of the manufacturing of the applicable Product or the termination of this Agreement (collectively Remaining CLIENT Property), for up to [***] days. If CLIENT has not provided any instructions as to the shipment or other disposition of Remaining CLIENT Property prior to the expiration of such [***]-day period, LONZA shall notify CLIENT in writing and continue to store such Remaining CLIENT Property at the Facility, and CLIENT shall pay to LONZA a storage charge at LONZAs then-standard monthly storage rates for the period beginning on the [***] day after the completion of the manufacturing of the applicable Product through the date that such storage terminates.
7.3 Product. Notwithstanding the foregoing, if CLIENT fails to take delivery of a Product within the applicable Delivery Period as required by Section 4.7, CLIENT shall pay to LONZA a storage charge at LONZAs then-standard monthly storage rate, which shall begin accruing on the first day following the expiration of the applicable Delivery Period.
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8. | REGULATORY MATTERS |
8.1 Permits and Approvals. During the term of this Agreement, LONZA shall use best efforts to maintain, and cause its Affiliates to maintain, and use commercially reasonable efforts to cause its approved Third Party subcontractors to maintain, all licenses, permits and approvals necessary for the manufacture of the Product in the Facility. LONZA shall promptly notify CLIENT in writing if LONZA, its Affiliate or any approved Third Party subcontractor receives notice that any such license, permit, or approval is or may be revoked, suspended, withdrawn or otherwise under investigation.
8.2 Inspections/Quality Audit by CLIENT.
8.2.1 Except as otherwise set forth in the Quality Agreements, up to once per year and upon not less than [***] days prior written notice, LONZA shall permit CLIENT and its representative to inspect and audit the parts of the Facility where the manufacture of the Product is carried out in order to inspect the CLIENT Materials, assess LONZAs compliance with cGMP and applicable laws, and to discuss any related issues with LONZAs management and technical personnel. LONZA shall make all applicable records maintained in accordance with Section 4.9 available for such inspection and audit. Such audit shall not last for more than [***] business days. CLIENT Personnel engaged in such inspection shall abide by the terms and conditions set forth in Section 4.10.4 and Article 10. Each Party shall bear its own expenses with respect to any audit and inspection pursuant to this Section 8.2.
8.2.2 In addition to the foregoing, CLIENT and/or its representatives shall have the right to perform For Cause audits at any time upon reasonable advance notice and during regular business hours. If a For Cause audit confirms that LONZA did not comply with its obligations under the Agreement, the audit shall not be charged by LONZA and LONZA shall bear its costs for such audit; in all other cases LONZAs standard hourly rates apply; provided that such rates shall not exceed industry standards for CDMO (Contract Development Manufacture Organization) hourly rates and have been notified to CLIENT in advance. Notwithstanding the foregoing, a For Cause audit shall also be at no cost for CLIENT if it is CLIENTs sole audit in such calendar year. For the avoidance of doubt, any and all costs related to deviations and or modifications to the Facility requested and/or approved by CLIENT (outside of those related to GMP violations attributable to LONZA which costs shall be the sole responsibility of LONZA) related to the manufacturing of Products will be charged on an hourly basis according to LONZAs standard hourly rates (which shall not exceed industry standards for CDMO hourly rates and have been notified to CLIENT in advance) and invoiced monthly.
8.2.3 Inspections by Regulatory Agencies. LONZA shall allow representatives of any regulatory agency to inspect the relevant parts of the Facility where the manufacture of the Product is carried out and to inspect the Project Documentation and Batch Records to verify compliance with cGMP and other practices or regulations and shall promptly notify CLIENT of the scheduling of any such inspection which could impact the manufacture of Product. LONZA shall promptly (within [***] days) send to CLIENT a copy of any reports, citations, or warning letters received by LONZA in connection with an inspection by a regulatory agency to the extent such documents relate to or affect the manufacture of the Product.
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9. | FINANCIAL TERMS |
9.1 Payments. CLIENT shall make payments to LONZA in the amounts and on the dates set forth in the Statement of Work after receipt of the relevant invoice from LONZA. In the event that CLIENT has not paid an invoice within [***] business days of the applicable due date (as established by Section 9.2), and fails to pay such amount within [***] days following its receipt of a written late payment notice from LONZA, CLIENTs failure shall be considered a material breach under Section 14.2, subject to the cure provisions set forth therein. Further, in addition to all other remedies available to LONZA, in the event that CLIENT has not paid an invoice within [***] business days of the applicable due date (as established by Section 9.2), LONZA may elect to suspend the provision of all or a portion of the Services under this Agreement, provided that CLIENT shall remain liable for all fees owed for the Services provided or Product delivered pursuant to the Statement of Work during any such suspension.
9.2 Invoices and Pricing. LONZA shall charge for the Services in accordance with the price schedule in the relevant Statement of Work. LONZA shall invoice CLIENT according to the schedule set forth in the relevant Statement of Work. LONZA shall deliver invoices electronically by email, which shall be considered to be an original invoice. Invoices should be e-mailed to [***], and/or to such other e-mail address(es) as CLIENT may stipulate from time to time. LONZA shall not deliver a paper invoice. Payment of invoices is due as provided in the Statement of Work. Unless otherwise provided in the Statement of Work, all pricing excludes taxes and costs relating to shipping, validation and regulatory filings. The price shall be invoiced to CLIENT in U.S. Dollars.
9.3 Taxes. CLIENT agrees that it is responsible for and shall pay any sales, value-added or other taxes (the Taxes) imposed on CLIENT by applicable laws and resulting from LONZAs production of Product under this Agreement (which, for the avoidance of doubt, shall not include income or personal property taxes, or other taxes imposed on LONZA by applicable laws). CLIENT will indemnify and hold harmless the LONZA Parties from and against any and all penalties and reasonable fees, expenses and costs incurred by LONZA due to the failure by CLIENT to pay such Taxes. LONZA will not collect any sales or value-added taxes from CLIENT in connection with the production of any Product or provision of Services hereunder if CLIENT provides to LONZA the appropriate valid exemption certificates.
9.4 Interest. Any fee, charge or other payment due to LONZA by CLIENT under this Agreement that is not paid within [***] business days after it is due will accrue interest on a daily basis at a rate of [***] percent ([***]%) per month (or the maximum interest rate allowed by applicable laws, if less) from and after such date.
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9.5 Method of Payment. Except as otherwise set forth in Section 9.2, all payments to LONZA hereunder by CLIENT shall be in U.S. Dollars and shall be by check, wire transfer, money order, or other method of payment approved by LONZA. Bank information for wire transfers is as follows:
Mailing address for wire transfer payments:
To:
Branch:
Account Number:
ABA# (for Wires):
ABA# (for EFTS):
Swift#:
Please email remittance advice to [***].
9.6 Cost Adjustments. After the first (1st) anniversary of the Effective Date, LONZA may, with prior consultation in good faith with CLIENT, annually adjust the various costs and rates set forth in the Statement of Work attached hereto to reflect changes in the cost of Materials and/or labor rates paid by LONZA in connection with the production of the Product under this Agreement; provided, however, that any increase in cost and rates shall not exceed any percentage increase in the U.S. Consumer Price Index as determined by the U.S. Central Bureau for Statistics on their website for the most recently published percentage change for the [***]-month period preceding the applicable contract anniversary date and (ii) the cost of Materials shall not exceed the applicable market price at the applicable contract anniversary date. In addition to the foregoing, the price may be changed by LONZA, with prior notification to CLIENT, to reflect any material change in an environmental or regulatory standard that substantially impacts LONZAs cost and ability to manufacture the Product subject to Lonza using commercially reasonable efforts to minimize the impact to CLIENT.
10. | CONFIDENTIAL INFORMATION |
10.1 Definition. Confidential Information means all technical, scientific and other know-how and information, trade secrets, Intellectual Property, knowledge, technology, means, methods, processes, practices, formulas, instructions, skills, techniques, procedures, specifications, data, results and other material, pre-clinical and clinical trial results, manufacturing procedures, test procedures and purification and isolation techniques, and any tangible embodiments of any of the foregoing, and any scientific, manufacturing, marketing and business plans, operations, any financial and personnel matters relating to a Party or its present or future products, sales, suppliers, customers, employees, investors or business, regardless of form or medium (e.g. electronic, magnetic, oral, written, information obtained through observation at a Partys facility), that has been disclosed by or on behalf of such Party or such Partys Affiliates to the other Party or the other Partys Affiliates either in connection with the discussions and negotiations pertaining to this Agreement or in the course of performing this Agreement. Without limiting the foregoing, the terms of this Agreement will be deemed Confidential Information and will be subject to the terms and conditions set forth in this Article 10.
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10.2 Exclusions. Notwithstanding the foregoing Section 10.1, any information disclosed by a Party to the other Party will not be deemed Confidential Information to the extent that such information:
(a) at the time of disclosure is in the public domain;
(b) becomes part of the public domain, by publication or otherwise, through no fault of the Party receiving such information;
(c) at the time of disclosure is already in possession of the Party who received such information, as established by contemporaneous written records;
(d) is lawfully provided to a Party, without restriction as to confidentiality or use, by a Third Party lawfully entitled to possession of such Confidential Information; or
(e) is independently developed by a Party without use of or reference to the other Partys Confidential Information, as established by contemporaneous written records.
10.3 Disclosure and Use Restriction. Except as expressly provided herein, the Parties agree that this Article 10 will survive any expiration or termination of this Agreement, each Party and its Affiliates will keep completely confidential and will not publish or otherwise disclose any Confidential Information of the other Party, its Affiliates or approved Third Party subcontractor, except in accordance with Section 10.4. Neither Party will use, disclose, publish or otherwise share with Third Parties Confidential Information of the other Party except as necessary to perform its obligations or to exercise its rights under this Agreement.
10.4 Permitted Disclosures. Each receiving Party agrees to (i) institute and maintain security procedures to identify and account for all copies of Confidential Information of the disclosing Party and (ii) limit disclosure of the disclosing Partys Confidential Information to its Affiliates and each of its and their respective officers, directors, employees, agents, consultants and independent contractors having a need to know such Confidential Information for purposes of this Agreement; provided that such Affiliates and each of its and their respective officers, directors, employees, agents, consultants and independent contractors are informed of the terms of this Agreement and are subject to obligations of confidentiality, non-disclosure and non-use similar to those set forth herein.
10.5 Government-Required Disclosure. If a duly constituted government authority, court or regulatory agency orders that a Party hereto disclose any Confidential Information, such Party shall comply with such order, but shall notify the other Party as soon as possible, so as to provide the other Party an opportunity to apply to a court of record for relief from such order.
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10.6 Publicity. Neither Party shall refer to, display or use the others name, trademarks or trade names confusingly similar thereto, alone or in conjunction with any other words or names, in any manner or connection whatsoever, including any publication, article, or any form of advertising or publicity, except with the prior written consent of the other Party or as otherwise set forth in Section 10.7.
10.7 Publications. The confidentiality provisions of this Article 10 are applicable to all publications, abstracts, and papers authored by LONZA, or its employees, consultants or contractors relating to the Services performed by LONZA hereunder or to data created pursuant to or related to the Statement of Work; provided that no Confidential Information may be disclosed in such publications, abstracts or papers without the prior written consent of CLIENT. Manuscripts of all such publications shall be submitted to CLIENT at least [***] days prior to submission to any publisher. CLIENT shall promptly inform LONZA of any alterations or deletions necessary to protect its rights under this Article 10 and LONZA shall be obligated to make such changes prior to submitting any manuscripts to any publisher. For general business development purposes, LONZA may announce on its website or in press releases the general nature of work performed for CLIENT under any given Statement of Work upon receiving prior written permission from CLIENT, such permission not being unreasonably withheld or delayed.
11. | INTELLECTUAL PROPERTY |
11.1 Ownership.
11.1.1 Except as expressly otherwise provided herein, neither Party will, as a result of this Agreement, acquire any right or title to, or interest in, any Background Intellectual Property of the other Party. Except as expressly otherwise provided herein, nothing in this Agreement shall constitute or grant any implied license or ownership in proprietary rights or permission to file any patent, copyright or any other rights to either Party under the other Partys Background Intellectual Property or any improvements, derivatives, or developments of the other Partys Background Intellectual Property. For the avoidance of doubt, CLIENT is the sole and exclusive owner of CLIENT FasTCAR Technology, notwithstanding the Technology Transfer.
11.1.2 The Parties agree and acknowledge that LONZA will not perform any Process or Product development work and therefore no new Intellectual Property belonging to any LONZA Party will be created under this Agreement. In the event CLIENT requests any Process or Product development work to be carried out by LONZA, then the Parties shall negotiate in good faith to determine the Parties respective rights regarding any Intellectual Property created in connection with such Process or Product development work.
11.2 License Grants.
11.2.1 During the term of this Agreement, CLIENT hereby grants to LONZA a fully paid, non-exclusive, non-transferable and non-sublicensable license under any and all CLIENT Intellectual Property for the sole and limited purpose of LONZAs performance of its obligations under this Agreement, including, without limitation, the development of the Process and the manufacture of Product for CLIENT, provided that LONZAs use of such license grant is subject to and in accordance with the disclosure and use restrictions as set forth in Section 10.3.
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11.2.2 Subject to the terms and conditions set forth herein (including the payment required under this Agreement), LONZA hereby grants to CLIENT a non-exclusive, world-wide, fully paid-up, irrevocable and transferable license, including the right to grant sublicenses, under the Intellectual Property of LONZA, to use, sell, process, integrate, combine, export and import the Product manufactured under this Agreement, to the extent necessary for CLIENT to fulfill its obligations and exercise its rights under this Agreement.
11.3 Third Party Intellectual Property. LONZA shall not, and shall cause its Affiliates, Third Parties subcontractors and agents and their respective personnel involved in the performance of this Agreement not to, necessarily incorporate into the Product or Process in the performance of its obligations under this Agreement or any Statement of Work, any technology, information, know-how, trade secret or materials of a Third Party except for which LONZA is freely permitted to utilize without compensation or other obligation to any Third Party.
11.4 Further Assurances. Each Party agrees to take all necessary and proper acts, and will cause its employees, Affiliates, contractors, and consultants to take such necessary and proper acts, to effectuate the ownership provisions set forth in this Article 11.
11.5 Prosecution of Patents. CLIENT shall have the sole right and discretion to file, prosecute and maintain patent applications and patents claiming any new Intellectual Property of CLIENT at CLIENTs expense. LONZA shall use commercially reasonable efforts to cooperate with CLIENT to file, prosecute and maintain patent applications and patents claiming such new Intellectual Property of CLIENT.
11.6 IP Infringement. If LONZA becomes aware of any infringement of CLIENT or its Affiliates Intellectual Property relating to the Product or Processes, LONZA shall use commercially reasonable efforts to promptly notify CLIENT in writing thereof. For clarity, LONZA shall have no affirmative obligation to monitor for any such infringement nor any obligation to perform investigations regarding said infringement or any other obligation beyond those made express in this Section 11.6. CLIENT acknowledges that LONZA is not responsible for monitoring CLIENT or its Affiliates Intellectual Property or the infringement thereof by Third Parties and that LONZA will not be monitoring as such.
12. | REPRESENTATIONS AND WARRANTIES |
12.1 By CLIENT. CLIENT hereby represents and warrants to LONZA that,
12.1.1 (i) it has the requisite Intellectual Property and legal rights related to the CLIENT Materials and the Product to authorize the performance of LONZAs obligations under this Agreement, and (ii) to the best of its knowledge, the performance of the Statement of Work and the production by LONZA of the Product as contemplated in this Agreement will not give rise to a cause of action by a Third Party against LONZA for infringement or another violation of Intellectual Property rights by the CLIENT Materials; provided, that such representation and warranty will not apply to any equipment or production materials supplied by LONZA, and
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12.1.2 it has the corporate power, authority and the legal right to enter into this Agreement and to perform its obligations under this Agreement; this Agreement has been duly executed and delivered on behalf of CLIENT, and constitutes a legal, valid and binding obligation, enforceable against CLIENT in accordance with its terms except that the enforceability may be limited by bankruptcy, fraudulent conveyance, insolvency, reorganization, moratorium and other laws relating to or affecting creditors rights generally and by general equitable principles; the execution, delivery and performance of this Agreement does not breach, violate, contravene or constitute a default under any contracts, arrangements or commitments to which CLIENT is a party or by which it is bound nor does the execution, delivery and performance of this Agreement by CLIENT violate any order, law or regulation of any court, governmental body or administrative or other agency having authority over it.
12.2 By LONZA. LONZA hereby represents and warrants to CLIENT that,
12.2.1 it or its Affiliates have the requisite Intellectual Property rights in Intellectual Properties of LONZA, LONZA Confidential Information, and its equipment and Facility to be able to perform its obligations under this Agreement and the Statements of Work;
12.2.2 to the best of its knowledge, LONZAs or its Affiliates use of its equipment and Facility as contemplated in this Agreement and the Statements of Work will not give rise to a potential cause of action by a Third Party against CLIENT for infringement or violation of Intellectual Property rights; and as of the Effective Date, no Third Party has filed, pursued or maintained or threatened in writing to file, pursue or maintain any claim, lawsuit, charge, complaint or other action alleging infringement of the Intellectual Property of a Third-Party based on the Intellectual Property of LONZA that will be used in connection with this Agreement;
12.2.3 it or its Affiliate holds all necessary permits, approvals, consents and licenses to enable it to perform the Services at the Facility;
12.2.4 it owns or lawfully controls the Facility;
12.2.5 it has the corporate power, authority and the legal right to enter into this Agreement and the Quality Agreement and to perform its obligations under this Agreement and the Quality Agreement; this Agreement has been duly executed and delivered on behalf of LONZA, and constitutes a legal, valid and binding obligation, enforceable against LONZA in accordance with its terms except that the enforceability may be limited by bankruptcy, fraudulent conveyance, insolvency, reorganization, moratorium and other laws relating to or affecting creditors rights generally and by general equitable principles; the execution, delivery and performance of this Agreement does not breach, violate, contravene or constitute a default under any contracts, arrangements or commitments to which LONZA is a party or by which it is bound nor does the execution, delivery and performance of this Agreement by LONZA violate any order, law or regulation of any court, governmental body or administrative or other agency having authority over it; and
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12.2.6 neither LONZA or its Affiliates nor any of its or their employees or Third Party subcontractors have been debarred by the FDA, or subject to a similar sanction from another regulatory authority, nor have, to LONZAs best knowledge, any debarment proceedings against LONZA, its Affiliates or any of its or their employees or Third Party subcontractors been commenced.
13. | DISCLAIMER; LIMITATION OF LIABILITY |
13.1 DISCLAIMER. EXCEPT FOR THE EXPRESS WARRANTIES SET FORTH IN THIS AGREEMENT, NEITHER PARTY MAKES ANY REPRESENTATIONS OR GRANTS ANY WARRANTIES, EXPRESS OR IMPLIED, EITHER IN FACT OR BY OPERATION OF LAW, BY STATUTE OR OTHERWISE, UNDER THIS AGREEMENT. EXCEPT AS OTHERWISE SET FORTH IN THIS AGREEMENT, LONZA SPECIFICALLY DISCLAIMS ANY AND ALL WARRANTIES, WHETHER WRITTEN OR ORAL, OR EXPRESS OR IMPLIED, INCLUDING ANY WARRANTY OF QUALITY, MERCHANTABILITY OR FITNESS FOR A PARTICULAR USE OR PURPOSE WITH RESPECT TO THE PRODUCTS, MATERIALS, OR SERVICES PROVIDED UNDER THIS AGREEMENT.
13.2 DISCLAIMER OF CONSEQUENTIAL DAMAGES. IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER OR ANY OF ITS AFFILIATES FOR ANY CONSEQUENTIAL, INCIDENTAL, INDIRECT, SPECIAL, PUNITIVE OR EXEMPLARY DAMAGES (INCLUDING, WITHOUT LIMITATION, LOST PROFITS, BUSINESS OR GOODWILL) SUFFERED OR INCURRED BY SUCH OTHER PARTY OR ITS AFFILIATES IN CONNECTION WITH THIS AGREEMENT, EVEN IF ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
13.3 LIMITATION OF LIABILITY. BOTH PARTIES HEREBY AGREE THAT TO THE FULLEST EXTENT PERMITTED BY LAW, EACH PARTYS LIABILITY TO THE OTHER PARTY, FOR ANY AND ALL INJURIES, CLAIMS, LOSSES, EXPENSES, OR DAMAGES, WHATSOEVER, ARISING OUT OF OR IN ANY WAY RELATED TO THIS AGREEMENT FROM ANY CAUSE OR CAUSES, INCLUDING, BUT NOT LIMITED TO, NEGLIGENCE, ERRORS, OMISSIONS OR STRICT LIABILITY, SHALL NOT EXCEED THE TOTAL CONSIDERATION PAID UNDER THE APPLICABLE STATEMENT OF WORK. TO THE EXTENT THAT THIS CLAUSE CONFLICTS WITH ANY OTHER CLAUSE, THIS CLAUSE SHALL TAKE PRECEDENCE OVER SUCH CONFLICTING CLAUSE. IF APPLICABLE LAW PREVENTS ENFORCEMENT OF THIS CLAUSE, THEN THIS CLAUSE SHALL BE DEEMED MODIFIED TO PROVIDE THE MAXIMUM PROTECTION FOR THE RELEVANT PARTY AS IS ALLOWABLE UNDER THE APPLICABLE LAW. NOTWITHSTANDING ANY OTHER PROVISION CONTAINED HEREIN, THIS LIMITATION OF LIABILITY SHALL NOT EXTEND TO DAMAGES CAUSED BY A GROSSLY NEGLIGENT OR WILFUL VIOLATION OF ARTICLES 10 (CONFIDENTIAL INFORMATION) OR 11 (INTELLECTUAL PROPERTY) OR TO CLIENTS INDEMNITY LIABILITY UNDER SECTION 15.2(a), (c), and (d).
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14. | TERM AND TERMINATION |
14.1 Term. The term of this Agreement will commence on the Effective Date and will continue until the fifth (5th) anniversary of the Effective Date unless terminated prior to that time or extended by the Parties.
14.2 Termination for Material Breach. Either Party may terminate this Agreement, by written notice to the other Party, for any material breach of this Agreement by the other Party, if such breach is not cured within [***] days after the breaching Party receives written notice of such breach from the non-breaching Party; provided, however, that if such breach is not capable of being cured within such [***]-day period and the breaching Party has commenced and diligently continued actions to cure such breach within such [***]-day period, except in the case of a payment default, the cure period shall be extended to [***] days, so long as the breaching Party is making diligent efforts to cure such default. Such termination shall be effective upon expiration of such cure period.
14.3 Other Termination by CLIENT.
14.3.1 CLIENT may terminate this Agreement by [***] days written notice to LONZA, in the event of a Supply Failure by LONZA.
14.3.2 After the first anniversary of the Effective Date, CLIENT may terminate this Agreement by providing a written notice of termination no less than twelve months in advance of the date of termination.
14.4 Termination for Insolvency. Either Party may terminate this Agreement upon notice to the other Party, upon (a) the dissolution, termination of existence, liquidation or business failure of the other Party; (b) the appointment of a custodian or receiver for the other Party who has not been terminated or dismissed within [***] days of such appointment; (c) the institution by the other Party of any proceeding under national, federal or state bankruptcy, reorganization, receivership or other similar laws affecting the rights of creditors generally or the making by such Party of a composition or any assignment for the benefit of creditors under any national, federal or state bankruptcy, reorganization, receivership or other similar laws affecting the rights of creditors generally, which proceeding is not dismissed within [***] days of filing. All rights and licenses granted pursuant to this Agreement are, and shall otherwise be deemed to be, for purposes of Section 365(n) of Title 11 of the United States Code, licenses of rights of intellectual property as defined therein.
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14.5 Effects of Termination.
14.5.1 | Accrued Rights. Termination of this Agreement for any reason will be without prejudice to any rights that will have accrued to the benefit of a Party prior to such termination. Such termination will not relieve a Party of obligations that are expressly indicated to survive the termination of this Agreement. Without limitation of the foregoing, in the event of termination hereunder other than termination by CLIENT under Section 14.2 or 14.3.1, LONZA shall be compensated for (i) Services rendered up to the date of termination, including in respect of any Product in-process; (ii) all reasonable and adequately documented costs incurred or non-cancellable commitments through the date of termination, including costs and fees for Materials used or purchased for use in connection with the Services; and (iii) except in the case of termination by CLIENT under Section 14.2, 14.3.1 or 14.4, any applicable Cancellation Fees. In the case of termination by LONZA for CLIENTs material breach, all scheduled Services and Batches shall be deemed cancelled by CLIENT, and Cancellation Fees, if any, shall be calculated as of the date of written notice of termination. In the case of termination by CLIENT for LONZAs material breach, a Supply Failure or LONZAs insolvency, LONZA shall use commercially reasonable efforts to support and finance the transfer of the manufacturing of the Products to a new and competent manufacturer which shall be appointed at the sole discretion of CLIENT and is capable of carrying out the activities defined in the relevant SOWs, provided that LONZAs support, financing, and total liability under this Section 14.5.1 shall not exceed [***] USD (US$[***]). |
14.5.2 Disposition of Remaining CLIENT Property and Confidential Information. Upon termination or expiration of this Agreement, LONZA shall (i) store, or dispose of in accordance with CLIENTs instruction and at CLIENTs expense, any Remaining CLIENT Property as set forth in Section 7.2, and (ii) at CLIENTs option, return or destroy any Confidential Information of CLIENT in the possession or control of LONZA. Likewise, CLIENT shall, at LONZAs option, return or destroy any Confidential Information of LONZA in the possession or control of CLIENT. Notwithstanding the foregoing provisions: (A) LONZA may retain and preserve, at its sole cost and expense, samples and standards of each Product following termination or expiration of this Agreement solely for use in determining LONZAs rights and obligations hereunder; and (B) each Party may retain a single copy of the other Partys Confidential Information for documentation purposes only and which shall remain subject to the obligations of nonuse and confidentiality set forth in this Agreement.
14.5.3 Survival. Sections 3.4, 7.2, 10, 11.1, 11.2, 11.4, 11.5, 11.6, 13, 14.5, 15, 17.3, 17.5 and 17.14 of this Agreement, together with any appendices referenced therein, will survive any expiration or termination of this Agreement.
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15. | INDEMNIFICATION |
15.1 Indemnification of CLIENT. LONZA shall indemnify CLIENT, its Affiliates, and their respective directors, officers, employees, agents, successors and assignees (the CLIENT Parties), and defend and hold each of them harmless, from and against any and all losses, damages, liabilities, costs and expenses (including reasonable attorneys fees and expenses, collectively, Losses) incurred or suffered by the CLIENT Parties to the extent such Losses arise out of or result from any claim, settlements, penalties, proceeding, lawsuit, or other action or threat by a Third Party (collectively, Third Party Claims) arising out of or in connection with: (a) any breach by any LONZA Party of this Agreement, the Quality Agreement or any Statement of Work, (b) any Supply Failure by LONZA, (c) any infringement or misappropriation of CLIENT Intellectual Property or any Third Party Intellectual Property, with respect to LONZA Parties performance of the Services to the extent such infringement or misappropriation was caused by a LONZA Party, or (d) the gross negligence, intentional act or omission, or misconduct on the part of one or more of the LONZA Parties in performing any activity contemplated by this Agreement or any Statement of Work, except for those Losses for which CLIENT has an obligation to indemnify the LONZA Parties pursuant to Section 15.2, as to which Losses each Party will indemnify the other to the extent of their respective liability for the Losses.
15.2 Indemnification of LONZA. CLIENT will indemnify LONZA and its Affiliates, and their respective directors, officers, employees and agents (the LONZA Parties), and defend and hold each of them harmless, from and against any and all Losses to the extent such Losses arise out of or result from any Third Party Claim arising out of or in connection with: (a) any breach by CLIENT of this Agreement, the Quality Agreement or any Statement of Work, (b) the gross negligence, intentional act or omission, or misconduct on the part of CLIENT or its Affiliates in performing any activity contemplated by this Agreement, (c) the use or sale of Products, except to the extent such Losses arise out of or result from a breach by LONZA of the Product Warranties including the Quality Agreement, or (d) the use or practice by LONZA of any process, invention or other Intellectual Property supplied by CLIENT to LONZA under this Agreement, except for those Losses for which LONZA has an obligation to indemnify the CLIENT Parties pursuant to Section 15.1, as to which Losses each Party will indemnify the other to the extent of their respective liability for the Losses.
15.3 Indemnification Procedure.
15.3.1 The Party seeking indemnification under Section 15.1 or Section 15.2 (the Indemnitee) agrees to give prompt notice in writing to the Party against whom indemnity is to be sought (the Indemnitor) of the assertion of any Third Party Claim in respect of which indemnity may be sought under Section 15.1 or Section 15.2 (as applicable). Such notice shall set forth in reasonable detail such Third Party Claim and the basis for indemnification (taking into account the information then available to the Indemnitee). The failure to so notify the Indemnitor shall not relieve the Indemnitor of its obligations hereunder, except to the extent such failure shall have materially and adversely prejudiced the Indemnitor.
15.3.2 The Indemnitor shall be entitled to participate in the defense of any Third Party Claim and, subject to the limitations set forth in this Section 15.3, shall be entitled to control and appoint lead counsel for such defense, in each case at its own expense.
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15.3.3 The Indemnitor shall not be entitled to assume or maintain control of the defense of any Third Party Claim and shall pay the reasonable fees and expenses of counsel retained by the Indemnitee if the Indemnitor has failed or is failing to prosecute or defend vigorously the Third Party Claim.
15.3.4 If the Indemnitor shall assume the control of the defense of any Third Party Claim in accordance with the provisions of this Section 15.3, the Indemnitor shall obtain the prior written consent of the Indemnitee before entering into any settlement of such Third Party Claim if the settlement does not expressly unconditionally release the Indemnitee and its Affiliates from all liabilities and obligations with respect to such Third Party Claim or the settlement imposes injunctive or other equitable relief against the Indemnitee or any of its affiliates.
15.3.5 In circumstances where the Indemnitor is controlling the defense of a Third Party Claim in accordance with Section 15.3.2 and Section 15.3.3 above, the Indemnitee shall be entitled to participate in the defense of such Third Party Claim and to employ separate counsel of its choice for such purpose, in which case the fees and expenses of such separate counsel shall be borne by the Indemnitee.
15.3.6 Each Party shall cooperate, and cause its Affiliates to cooperate, in the defense or prosecution of any Third Party Claim and shall furnish or cause to be furnished such records, information and testimony, and attend such conferences, discovery proceedings, hearings, trials or appeals, as may be reasonably requested in connection therewith.
15.4 Insurance. Each Party shall maintain in full force and effect, at its sole cost and expense, and at all times during the term of this Agreement, a policy of commercial general liability insurance, including product liability, with limits of not less than US$[***] in the aggregate. Each Party shall maintain its respective insurance policies required under this Section 15.4 with an insurance company having a minimum AM Best rating of A. LONZA shall also maintain property insurance for the storage of Client Production Materials at the LONZA Facility. LONZA will reimburse the value of any destroyed Client Production Materials to the extent of LONZAs insurance proceeds according to policies governing such losses.
16. | ADDITIONAL COVENANTS |
16.1 Non-Solicitation. During the term of this Agreement and for one (1) year thereafter, each of the Parties agrees not to seek to induce or solicit any employee of the other Party or its Affiliates to discontinue his or her employment with the other Party or its Affiliate in order to become an employee of the soliciting Party or its Affiliate; provided, however, that neither Party shall be in violation of this Section 16.1 as a result of making a general solicitation for employees. For the avoidance of doubt, the publication of an advertisement shall not constitute solicitation or inducement.
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16.2 Non-USE. LONZA will not, will cause its Affiliates and their respective employees not to, and will use commercially reasonable efforts to cause its Third Party subcontractors and their employees not to, acquire any right or title to, or interest in, and will not use, any Confidential Information, inventions (whether or not patentable), discoveries, improvements, data, information, reports and any and all related documentation provided by CLIENT, including but not limited to information with respect to CLIENTs FasTCAR Technology, to LONZA under the Agreement or a Statement of Work.
16.3 Covenants. LONZA agrees that: (i) it will engage and employ only professionally qualified personnel to perform the Services; (ii) its obligations under this Agreement and the Statements of Work will be performed in professional and workmanlike manner and in compliance with this Agreement, the Quality Agreements, and any applicable laws and industry standards; and (iii) all individuals and entities that perform any Services for or on behalf of LONZA are under written obligations to assign all right and title to, and interest in, any Intellectual Property arising from such Services to LONZA and to protect Confidential Information of CLIENT in accordance with Article 10 of this Agreement. LONZA will promptly notify CLIENT in writing if LONZA becomes aware that LONZA, its Affiliates or any of its or their employees or Third Party subcontractors are debarred by the FDA or any other regulatory authority, or that any debarment proceedings have commenced against any of the above referenced entities or individuals.
17. | MISCELLANEOUS |
17.1 Independent Contractors. Each of the Parties is an independent contractor and nothing herein contained shall be deemed to constitute the relationship of partners, joint venturers, nor of principal and agent between the Parties. Neither Party shall at any time enter into, incur, or hold itself out to Third Parties as having the authority to enter into or incur, on behalf of the other Party, any commitment, expense, or liability whatsoever.
17.2 Force Majeure. Neither Party shall be in breach of this Agreement if there is any failure of performance under this Agreement caused by any reason beyond the control and without the fault or negligence of the Party affected thereby, including, without limitation, an act of God, fire, flood, act of government or state, war, civil commotion, insurrection, acts of terrorism, embargo, sabotage, a viral, bacterial or mycoplasma contamination (except for effects of the COVID-19 pandemic which occurred and were known to the affected Party before or on the Effective Date) which causes a shutdown of the Facility, prevention from or hindrance in obtaining energy or other utilities, a shortage of raw materials or other necessary components, or any other reason beyond the control and without the fault or negligence of the Party affected thereby (a Force Majeure Event). Such excuse shall continue as long as the Force Majeure Event continues. Upon cessation of such Force Majeure Event, the affected Party shall promptly resume performance under this Agreement as soon as it is commercially reasonable for the Party to do so. Each Party agrees to give the other Party prompt written notice of the occurrence of any Force Majeure Event, the nature thereof, and the extent to which the affected Party will be unable to fully perform its obligations under this Agreement. Each Party further agrees to use commercially reasonable efforts to correct the Force Majeure Event as quickly as practicable and to give the other Party prompt written notice when it is again able to perform such obligations.
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17.3 Notices. Any notice required or permitted to be given under this Agreement by any Party shall be in writing and shall be (a) delivered personally, (b) sent by registered mail, return receipt requested, postage prepaid, (c) sent by a nationally-recognized courier service guaranteeing next-day or second day delivery, charges prepaid, or (d) delivered by facsimile or e-mail (with documented evidence of transmission and confirmation by another communication method as listed above), to the e-mail addresses or facsimile numbers of the other Party set forth below, or at such other addresses as may from time to time be furnished by similar notice by any Party. The effective date of any notice under this Agreement shall be the date of receipt by the receiving Party.
If to LONZA:
[***]
Attn: [***]
Email: [***]
With a copy to:
[***]
Fax: [***]
Email: [***]
If to CLIENT:
[***]
Attn: [***]
Email: [***]
With a copy to:
[***]
Attn: [***]
Email: [***]
Either Party may change its address for notice by giving notice thereof in the manner set forth in this Section 17.3.
17.4 Entire Agreement; Amendments. This Agreement, including the appendices attached hereto and referenced herein, constitutes the full understanding of the Parties and a complete and exclusive statement of the terms of their agreement with respect to the specific subject matter hereof and supersedes all prior agreements and understandings, oral and written, among the Parties with respect to the subject matter hereof. No terms, conditions, understandings or agreements purporting to amend, modify or vary the terms of this Agreement (including any Appendix hereto) shall be binding unless hereafter made in a written instrument referencing this Agreement and signed by each of the Parties.
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17.5 Governing Law. The construction, validity and performance of the Agreement and Statements of Work shall be governed by and construed in accordance with the laws of the US State of New York, without giving effect to its conflict of law provisions.
17.6 Counterparts. This Agreement and any amendment hereto may be executed in any number of counterparts, each of which shall for all purposes be deemed an original and all of which shall constitute the same instrument. This Agreement shall be effective upon full execution by facsimile or original, and a facsimile signature shall be deemed to be and shall be as effective as an original signature.
17.7 Severability. If any part of this Agreement shall be found to be invalid or unenforceable under applicable laws in any jurisdiction, such part shall be ineffective only to the extent of such invalidity or unenforceability in such jurisdiction, without in any way affecting the remaining parts of this Agreement in that jurisdiction or the validity or enforceability of the Agreement as a whole in any other jurisdiction. In addition, the part that is ineffective shall be reformed in a mutually agreeable manner so as to as nearly approximate the intent of the Parties as possible.
17.8 Titles and Subtitles. All headings, titles and subtitles used in this Agreement (including any Appendix hereto) are for convenience only and are not to be considered in construing or interpreting any term or provision of this Agreement (or any Appendix hereto).
17.9 Exhibits. All RECITALS, DEFINITIONS, exhibits and appendices referred to herein form an integral part of this Agreement and are incorporated into this Agreement by such reference.
17.10 Pronouns. Where the context requires, (i) all pronouns used herein will be deemed to refer to the masculine, feminine or neuter gender as the context requires, and (ii) the singular context will include the plural and vice versa.
17.11 Subcontractors. LONZA shall not subcontract or delegate any portion of its obligations under this Agreement, any Statement or Work or the Quality Agreement to any Third Party without the prior written approval of CLIENT, such approval not to be unreasonably withheld, delayed or conditioned. In the event CLIENT consents to the use of a subcontractor to provide any of the Services, (i) LONZA shall be fully liable for the performance of Services by such subcontractor and for compliance by such subcontractor with the terms of this Agreement, the relevant Statement or Work and the Quality Agreement, (ii) the agreement between LONZA and such subcontractor must be consistent with LONZAs obligations to CLIENT under this Agreement, the relevant Statement or Work and the Quality Agreement, and (iii) LONZA shall be exclusively responsible for all costs associated with any such subcontract relationship.
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17.12 Assignment. This Agreement shall be binding upon the successors and assigns of the Parties and the name of a Party appearing herein shall be deemed to include the names of its successors and assigns. Neither Party may assign or transfer this Agreement or any rights or obligations hereunder without the prior written consent of the other Party, except that a Party may make such an assignment or transfer to its Affiliate without the other Partys consent, provided that such Party shall remain primarily liable for any acts or omissions of such Affiliate. Any permitted assignment of this Agreement by either Party will be conditioned upon that Partys permitted assignee agreeing in writing to comply with all the terms and conditions contained in this Agreement. Any purported assignment without a required consent shall be void. No assignment shall relieve any Party of responsibility for the performance of any obligation that accrued prior to the effective date of such assignment.
17.13 Waiver. The failure of any Party at any time or times to require performance of any provision of this Agreement (including any Appendix hereto) will in no manner affect its rights at a later time to enforce the same. No waiver by any Party of any term, provision or condition contained in this Agreement (including any Appendix hereto), whether by conduct or otherwise, in any one or more instances, shall be deemed to be or construed as a further or continuing waiver of any such term, provision or condition or of any other term, provision or condition of this Agreement (including any Appendix hereto).
17.14 Dispute Resolution. Each of the Parties hereto agrees that any dispute or controversy arising out of, relating to, or concerning any interpretation, construction, performance or breach of this Agreement, shall be settled by arbitration to be held in Singapore which shall be administered by the Singapore International Arbitration Centre (SIAC) in accordance with the SIAC Arbitration Rules in force at the time of the commencement of the arbitration. There shall be three (3) arbitrators. The claimant shall select one (1) arbitrator, and the respondent shall select one (1) arbitrator. The third arbitrator, who shall be the presiding arbitrator, shall be jointly appointed by the claimant and respondent. If either the claimant or the respondent fails to select the third arbitrator or the Parties fail to agree on the choice of the third arbitrator, SIAC shall make the appointment on their behalf. The arbitration shall be conducted in English. The seat of arbitration shall be Singapore. The decision of the arbitration tribunal shall be final, conclusive and binding on the Parties to the arbitration.
17.15 No Presumption Against Drafter. For purposes of this Agreement, each Party hereby waives any rule of construction that requires that ambiguities in this Agreement (including any Appendix hereto) be construed against the drafter.
17.16 Rights and Obligations of CLIENT. Gracell Suzhou and Gracell US shall each be individually entitled to exercise all rights of CLIENT hereunder, and LONZA shall accordingly be entitled to rely on any notice duly received from either of Gracell Suzhou or Gracell US in accordance with section 17.3. Gracell Suzhou and Gracell US shall be jointly and severally liable for all obligations of CLIENT hereunder.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed as of March 31, 2021 by their duly authorized representatives.
GRACELL BIOPHARMACEUTICALS, INC. | ||
By: | /s/ Wei Cao |
Name: Wei Cao
Title: CEO |
IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed as of March 31, 2021 by their duly authorized representatives.
SUZHOU GRACELL BIOTECHNOLOGIES, CO., LTD. (SEAL) | ||
By: | /s/ Wei Cao | |
Name: Wei Cao | ||
Title: CEO |
IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed as of March 31, 2021 by their duly authorized representatives.
LONZA HOUSTON, INC. | ||
By: | /s/Thomas Fellner | |
Name: Thomas Fellner | ||
Title: | VP, Global Head of Sales & Program Management |
Exhibit 8.1
Significant Subsidiaries, Consolidated Entity and Subsidiary of Consolidated Affiliated Entity of the Registrant
Subsidiary |
Place of Incorporation | |
Gracell Biotechnologies Holdings Limited | British Virgin Islands | |
Gracell Biotechnologies (HK) Limited | Hong Kong | |
Gracell Biopharmaceuticals, Inc. | United States | |
Gracell Bioscience (Shanghai) Co., Ltd. | Peoples Republic of China | |
Gracell Biomedicine (Shanghai) Co., Ltd. | Peoples Republic of China | |
Suzhou Gracell Bioscience Co., Ltd. | Peoples Republic of China | |
Hainan Gracell Biomedicine Co., Ltd. | Peoples Republic of China | |
Consolidated Variable Interest Entity |
Place of Incorporation | |
Gracell Biotechnologies (Shanghai) Co., Ltd. | Peoples Republic of China | |
Consolidated Variable Interest Entity |
Place of Incorporation | |
Suzhou Gracell Biotechnologies Co., Ltd. | Peoples Republic of China |
Exhibit 12.1
Certification by the Principal Executive Officer
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
I, William Wei Cao, certify that:
1. I have reviewed this annual report on Form 20-F of Gracell Biotechnologies Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report;
4. The companys other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the company and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the companys disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the companys internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the companys internal control over financial reporting; and
5. The companys other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the companys auditors and the audit committee of the companys board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the companys ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the companys internal control over financial reporting.
Date: April 22, 2022 | ||
By: | /s/ William Wei Cao | |
Name: | William Wei Cao | |
Title: | Chief Executive Officer |
Exhibit 12.2
Certification by the Principal Financial Officer
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
I, Yili Kevin Xie, certify that:
1. I have reviewed this annual report on Form 20-F of Gracell Biotechnologies;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report;
4. The companys other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the company and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the companys disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the companys internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the companys internal control over financial reporting; and
5. The companys other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the companys auditors and the audit committee of the companys board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the companys ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the companys internal control over financial reporting.
Date: April 22, 2022 | ||
By: | /s/ Yili Kevin Xie | |
Name: | Yili Kevin Xie | |
Title: | Chief Financial Officer |
Exhibit 13.1
Certification by the Principal Executive Officer
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
In connection with the annual report of Gracell Biotechnologies Inc. (the Company) on Form 20-F for the fiscal year ended December 31, 2021 as filed with the Securities and Exchange Commission on the date hereof (the Report), I, William Wei Cao, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:
(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Date: April 22, 2022 | ||
By: | /s/ William Wei Cao | |
Name: | William Wei Cao | |
Title: | Chief Executive Officer |
Exhibit 13.2
Certification by the Principal Financial Officer
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
In connection with the annual report of Gracell Biotechnologies Inc. (the Company) on Form 20-F for the fiscal year ended December 31, 2021 as filed with the Securities and Exchange Commission on the date hereof (the Report), I, Yili Kevin Xie, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:
(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Date: April 22, 2022 | ||
By: | /s/ Yili Kevin Xie | |
Name: | Yili Kevin Xie | |
Title: | Chief Financial Officer |
Exhibit 15.1
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We hereby consent to the incorporation by reference in the Registration Statement on Form S-8 (File No. 333-253486) of Gracell Biotechnologies Inc. of our report dated April 22, 2022 relating to the financial statements, which appears in this Form 20-F.
/s/ PricewaterhouseCoopers Zhong Tian LLP |
Shanghai, the Peoples Republic of China April 22, 2022 |
Exhibit 15.2
Date: April 22, 2022
Gracell Biotechnologies Inc.
Building 12, Block B, Phase II
Biobay Industrial Park
218 Sangtian St.
Suzhou Industrial Park, 215123
Peoples Republic of China
Dear Sir or Madam:
Gracell Biotechnologies Inc. (the Company)
We are attorneys-at-law qualified to practise in the Cayman Islands and have been asked to provide this consent to you with regard to the laws of the Cayman Islands in relation to the Companys Annual Report on Form 20-F for the year ended 31 December 2021 (the Annual Report), which will be filed with the Securities and Exchange Commission (the SEC) in the month of April 2022.
We hereby consent to the reference to our firm and the summary of our opinion under the headings Item 3. Key Information and Item 10. Additional InformationE. Taxation Cayman Islands Taxation in the Annual Report, and further consent to the incorporation by reference of the summary of our opinion under these headings into the Registration Statement on Form S-8 (File No. 333-253486) pertaining to the Companys Third Amended and Restated 2017 Employee Stock Option Plan and the 2020 Share Incentive Plan. We also consent to the filing of this consent letter with the SEC as an exhibit to the Annual Report.
In giving such consent, we do not thereby admit that we come within the category of persons whose consent is required under Section 7 of the Securities Act of 1933, or under the Securities Exchange Act of 1934, in each case, as amended, or the regulations promulgated thereunder.
Yours Sincerely, |
/s/ Harney Westwood & Riegels |
Harney Westwood & Riegels |
Exhibit 15.3
Date: April 22, 2022
Gracell Biotechnologies Inc.
Building 12, Block B, Phase II
Biobay Industrial Park
218 Sangtian St.
Suzhou Industrial Park, 215123
Peoples Republic of China
Dear Sir/Madam:
We hereby consent to the reference to our firm and the summary of our opinion under the headings Item 3. Key Information, Item 3. Key InformationD. Risk FactorsRisks Related to Our Corporate Structure, Item 4. Information on the CompanyC. Organizational Structure, Item 4. Information on the CompanyB. Business OverviewRegulations and Item 10. Additional InformationE. TaxationPRC Taxation in Gracell Biotechnologies Inc.s annual report on Form 20-F for the year ended December 31, 2021 (the Annual Report), which will be filed with the Securities and Exchange Commission (the SEC) in the month of April 2022, and further consent to the incorporation by reference of the summary of our opinion under these headings into the Registration Statement on Form S-8 (File No. 333-253486) pertaining to Gracell Biotechnologies Inc.s Third Amended and Restated 2017 Employee Stock Option Plan and the 2020 Share Incentive Plan. We also consent to the filing of this consent letter with the SEC as an exhibit to the Annual Report.
In giving such consent, we do not thereby admit that we come within the category of persons whose consent is required under Section 7 of the Securities Act of 1933, or under the Securities Exchange Act of 1934, in each case, as amended, or the regulations promulgated thereunder.
Yours Sincerely, |
/s/ AllBright Law Offices |
AllBright Law Offices |