Exhibit No. |
Description | |
99.1 | Unaudited Interim Condensed Consolidated Financial Statements for the six months periods ended June 30, 2021 and 2022 | |
99.2 | Recent Development | |
101.INS | Inline XBRL Instance Document – this 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 | |
101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase | |
101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase | |
101.LAB | Inline XBRL Taxonomy Extension Label Linkbase | |
101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase | |
104 | Cover Page Interactive Data File (embedded within the Inline IXBRL document) |
Gracell Biotechnologies Inc. | ||
By: | /s/ Yili Kevin Xie | |
Name: | Yili Kevin Xie | |
Title: | Chief Financial Officer |
Unaudited Interim Condensed Consolidated Financial Statements |
PAGES |
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F-2 |
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F-4 |
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F-5 |
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F-6 |
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F-7 |
As of December 31, |
As of June 30, |
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2021 |
2022 |
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Notes |
RMB |
RMB |
US$ |
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(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 |
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Total current assets |
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Property, equipment and software |
4 | |||||||||||||
Operating lease right-of-use |
5 | |||||||||||||
Other non-current assets |
6 | |||||||||||||
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TOTAL ASSETS |
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LIABILITIES AND SHAREHOLDERS’ EQUITY |
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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 RMB |
5 | |||||||||||||
Amounts due to related parties |
13 | |||||||||||||
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 | |||||||||||||
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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 RMB |
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 |
14 |
As of December 31, |
As of June 30, |
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2021 |
2022 |
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Notes |
RMB |
RMB |
US$ |
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(Note 2) |
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Shareholders’ equity: |
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Ordinary shares (par value of US$ |
9 | |||||||||||||||
Additional paid-in capital |
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Accumulated other comprehensive income/(loss) |
( |
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Accumulated deficit |
( |
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Total shareholders’ equity |
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TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY |
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For the six months ended June 30, |
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2021 |
2022 |
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Notes |
RMB |
RMB |
US$ |
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(Note 2) |
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Expenses |
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Research and development expenses |
( |
) | ( |
) | ( |
) | ||||||||
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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Interest income |
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Interest expense |
( |
) | ( |
) | ( |
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Other income |
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Foreign exchange gain (loss), net |
( |
) | ( |
) | ( |
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Others, net |
( |
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Loss before income tax |
( |
) |
( |
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( |
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Income tax expense |
11 | |||||||||||||
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Net loss |
( |
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( |
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( |
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Accretion of convertible redeemable preferred shares to redemption value |
12 | ( |
) |
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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 income (loss) |
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Foreign currency translation adjustments, net of |
( |
) |
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Total comprehensive loss attributable to Gracell Biotechnologies Inc.’s ordinary shareholders |
( |
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( |
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( |
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Weighted average number of ordinary shares used in per share calculation: |
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—Basic |
12 | |||||||||||||
—Diluted |
12 | |||||||||||||
Net loss per share attributable to Gracell Biotechnologies Inc.’s ordinary shareholders |
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—Basic |
12 | ( |
) | ( |
) | ( |
) | |||||||
—Diluted |
12 | ( |
) | ( |
) | ( |
) |
Ordinary shares |
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Number of shares |
Amount |
Additional paid-in capital |
Accumulated other comprehensive gain/(loss) |
Accumulated deficit |
Total shareholders’ equity/(deficit) |
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RMB |
RMB |
RMB |
RMB |
RMB |
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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 |
— | — | ||||||||||||||||||||||
Foreign currency translation adjustment |
— | — | — | ( |
) | — | ( |
) | ||||||||||||||||
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Balance as of June 30, 2021 |
( |
) |
( |
) |
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Ordinary shares |
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Number of shares |
Amount |
Additional paid-in capital |
Accumulated other comprehensive gain/(loss) |
Accumulated deficit |
Total shareholders’ equity |
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RMB |
RMB |
RMB |
RMB |
RMB |
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Balance as of December 31, 2021 |
( |
) |
( |
) |
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Net loss |
— | — | — | — | ( |
) | ( |
) | ||||||||||||||||
Share-based compensation |
— | — | — | — | ||||||||||||||||||||
Exercise of options and restricted share units |
— | — | ||||||||||||||||||||||
Foreign currency translation adjustment |
— | — | — | — | ||||||||||||||||||||
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Balance as of June 30, 2022 |
( |
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For the six months ended June 30, |
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2021 |
2022 |
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RMB |
RMB |
US$ |
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(Note 2) |
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Cash flows from operating activities: |
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Net loss |
( |
) | ( |
) | ( |
) | ||||||
Adjustments to reconcile net loss to net cash used in operating activities: |
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Depreciation and amortization |
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Share-based compensation |
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Amortization of right-of use assets and interest of lease liabilities |
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Foreign exchange gain, net |
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Changes in operating assets and liabilities: |
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Prepayments and other current assets |
( |
) | ||||||||||
Amounts due to related party |
— | |||||||||||
Accruals 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 |
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Net cash generated from (used in) investing activities |
( |
) |
( |
) |
( |
) | ||||||
Cash flows from financing activities: |
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Proceeds from initial public offering and over-allotment, net of underwriting discounts and commissions |
— | — | ||||||||||
Proceeds from exercise of options and restricted share units |
— | |||||||||||
Proceeds from bank borrowings |
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Repayments of bank borrowings |
( |
) | ( |
) | ( |
) | ||||||
Payment of “at the market offering” costs |
— | ( |
) | ( |
) | |||||||
Payment of initial public offering costs |
( |
) | — | — | ||||||||
Net cash generated from financing activities |
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Effect of exchange rate on cash and cash equivalents |
( |
) | ||||||||||
Net increase (decrease) cash and cash equivalents |
( |
) |
( |
) | ||||||||
Cash and cash equivalents at the beginning of year |
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Cash and cash equivalents at the end of the period |
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Supplemental cashflow disclosures: |
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Interest paid |
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Non-cash activities: |
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Accretion of convertible redeemable preferred shares to redemption value |
— | — |
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 |
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Gracell Biotechnologies (Shanghai) Co., Ltd. | The PRC | — | ||||||
VIE’s subsidiary |
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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 the VIE; |
• |
restricting or prohibiting the Group’s use of the proceeds of the public offering to finance the Group’s business and operations in China; or |
• |
taking other regulatory or enforcement actions that could be harmful to the Group’s business. |
As of December 31, |
As of June 30, |
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2021 |
2022 |
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RMB |
RMB |
US$ |
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(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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Amounts due from Group companies |
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Prepayments and other current assets |
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Total current assets |
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Property, equipment and software |
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Operating lease, right-of-use |
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Other non-current assets |
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TOTAL ASSETS |
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LIABILITIES |
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Current liabilities: |
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Amounts due to related parties |
||||||||||||
Short-term borrowings |
||||||||||||
Operating lease liabilities, current |
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Current portion of long-term borrowings |
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Accruals and other current liabilities |
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Total current liabilities |
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Long-term borrowings |
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Amounts due to Group companies |
||||||||||||
Operating lease liabilities, non-current |
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TOTAL LIABILITIES |
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For the six months ended June 30, |
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2021 |
2022 |
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RMB |
RMB |
US$ |
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(Note 2) |
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Net loss |
( |
) |
( |
) |
( |
) |
For the six months ended June 30, |
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2021 |
2022 |
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RMB |
RMB |
US$ |
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(Note 2) |
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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, |
As of June 30, |
|||||||||||
2021 |
2022 |
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RMB |
RMB |
US$ |
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(Note 2) |
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Deductible value-added tax input |
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Prepayments for CRO and other services |
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Deferred expenses |
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Prepayment for raw materials |
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Deposits |
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Others |
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As of December 31, |
As of June 30, |
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2021 |
2022 |
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RMB |
RMB |
US$ |
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(Note 2) |
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Machinery and laboratory equipment |
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Leasehold improvements |
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Construction in progress |
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Vehicles |
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Others |
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Total property, equipment and software |
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Less: accumulated depreciation and amortization |
( |
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) | ( |
) | ||||||
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Property, equipment and software, net |
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As of December 31, |
As of June 30, |
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2021 |
2022 |
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RMB |
RMB |
US$ |
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(Note 2) |
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Assets |
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Operating lease right-of-use |
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Liabilities |
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Operating lease liabilities, current |
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Operating lease liabilities, non-current |
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RMB |
US$ |
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(Note 2) |
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For the years ending: |
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2022 |
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2023 |
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2024 |
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2025 |
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2026 and thereafter |
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Total undiscounted lease payments |
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Less: imputed interest |
( |
) |
( |
) | ||||
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Total lease liabilities |
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For the six months ended June 30, |
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2022 |
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RMB |
US$ |
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(Note 2) |
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Lease cost |
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Operating lease cost |
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Short-term lease cost |
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Total lease cost |
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Other information |
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Cash paid for amounts included in the measurement of lease liabilities |
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Right-of-use |
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Weighted-average remaining lease term |
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Weighted-average discount rate |
% | % |
As of December 31, |
As of June 30, |
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2021 |
2022 |
|||||||||||
RMB |
RMB |
US$ |
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(Note 2) |
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Prepayments for property, equipment and software |
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Long-term deposit s |
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Others |
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As of December 31, |
As of June 30, |
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2021 |
2022 |
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RMB |
RMB |
US$ |
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(Note 2) |
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Accrued external research and development related expenses |
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Salary and welfare payables |
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Professional service fees |
||||||||||||
Deferred income for reimbursement of the expenses related to the establishment of the ADS facility |
||||||||||||
Others |
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As of December 31, |
As of June 30, |
|||||||||||
2021 |
2022 |
|||||||||||
RMB |
RMB |
US$ |
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(Note 2) |
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Current |
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Short-term borrowings: |
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Bank loans |
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Current portion of long-term borrowings |
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Total current borrowings |
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Non-Current |
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Long-term borrowings: |
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Bank loans |
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Total non-current borrowings |
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Total borrowings |
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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 |
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US$ per |
US$ per |
RMB per |
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option |
option |
option |
Years |
RMB |
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Outstanding at January 1, 2021 |
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Granted |
— | — | ||||||||||||||||||||||
Forfeited |
( |
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Outstanding at June 30, 2021 |
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Outstanding at January 1, 2022 |
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Granted |
— | — | ||||||||||||||||||||||
Forfeited |
( |
) | — | |||||||||||||||||||||
Exercised |
( |
) | — | — | ||||||||||||||||||||
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Outstanding at June 30, 2022 |
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For the six months ended June 30, |
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2021 |
2022 |
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Risk-free interest rate |
% | % | ||||||
Dividend yield |
% | % | ||||||
Expected volatility range |
% | % | ||||||
Exercise multiple |
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Contractual life |
For the six months ended June 30, |
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2021 |
2022 |
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RMB |
RMB |
US$ |
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(Note 2) |
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Research and development expenses |
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Administrative expenses |
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|
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For the six months ended June 30, |
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2021 |
2022 |
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RMB |
RMB |
US$ |
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(Note 2) |
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Research and development expenses |
||||||||||||
Administrative expenses |
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|
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|
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For the six months ended June 30, |
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2021 |
2022 |
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RMB |
RMB |
US$ |
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(Note 2) |
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Numerator: |
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Net loss attributable to Gracell Biotechnologies Inc.’s shareholders |
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Accretion of convertible redeemable preferred shares to redemption value |
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Net loss attributable to Gracell Biotechnologies Inc.’s ordinary shareholders |
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Weighted-average number of ordinary shares outstanding—basic and diluted |
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Net loss per share attributable to Gracell Biotechnologies Inc.’s ordinary shareholders—basic and diluted |
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For the six months ended June 30, |
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Unitex Capital Ltd. |
For the six months ended June 30, |
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Unitex Capital Ltd (a) |
Exhibit 99.2
RECENT DEVELOPMENT
Unless otherwise stated or unless the context otherwise requires, the terms, we, us, our, our Company, Gracell refer to Gracell Biotechnologies Inc.
Results of Operations for the Six Months of 2022
Set forth below is a discussion of our unaudited statements of comprehensive loss data for the six months ended June 30, 2021 and 2022. In the below discussion, all translations from Renminbi to U.S. dollars and from U.S. dollars to Renminbi are made at a rate of RMB6.6981 to US$1.00, the exchange rate in effect as of June 30, 2022 as set forth in the H.10 statistical release of The Board of Governors of the Federal Reserve System. We make no representation that any Renminbi or U.S. dollar amounts could have been, or could be, converted into U.S. dollars or Renminbi, as the case may be, at any particular rate, or at all.
Six Months Ended June 30, 2022 compared to Six Months Ended June 30, 2021
Research and Development Expenses
Research and development expenses for the six months ended June 30, 2022 were RMB238.9 million (US$35.7 million), compared to RMB130.7 million for the six months ended June 30, 2021. This increase of RMB108.2 million (US$16.2 million) was primarily due to the increased spending on research, development, and clinical trials, as well as higher payroll and personnel expenses attributable to increased headcount, higher facility-related costs in support of continuing expansion of research and development activities.
Administrative Expenses
Administrative expenses for the six months ended June 30, 2022 were RMB66.7 million (US$10.0 million), compared to RMB62.2 million for the six months ended June 30, 2021. This increase of RMB4.5 million (US$0.7 million) was primarily attributable to the increase in payroll and personnel expenses due to the expansion of administrative functions.
Interest Income
Interest income for the six months ended June 30, 2022 was RMB5.2 million (US$0.8 million) as compared to RMB2.7 million for the six months ended June 30, 2021. This increase of RMB2.5 million (US$0.4 million) was primarily attributable to interest earned on the new short-term investments made in the six months ended June 30, 2022.
Interest Expense
Interest expense for the six months ended June 30, 2022 was RMB3.1 million (US$0.5 million), compared to RMB2.6 million for the six months ended June 30, 2021. This increase of RMB0.5 million (US$0.1 million) was primarily attributable to interest incurred on the new borrowings in the six months ended June 30, 2022.
Other Income
Other income for the six months ended June 30, 2022 was RMB1.9 million (US$0.3 million), compared to RMB0.1 million for the six months ended June 30, 2021. This increase of RMB1.8 million (US$0.3 million) was primarily attributable to the subsidies we received from the PRC local government in the six months ended June 30, 2022.
Foreign Exchange Loss
Foreign exchange loss for the six months ended June 30, 2022 was RMB3.4 million (US$0.5 million), compared to a foreign exchange loss of RMB1.1 million for the six months ended June 30, 2021. This increase in the foreign exchange loss of RMB2.3 million (US$0.3 million) was primarily attributable to unfavorable foreign exchange rate fluctuating during the six months ended June 30, 2022.
Liquidity and Capital Resources
We do not currently have any approved products and have not generated any revenue from product sales. We have funded our operations to date primarily through a combination of equity and debt financing. As of June 30, 2022, we have RMB1,707.3 million (US$254.9 million) in cash and cash equivalents and short-term investments.
Cash Flows
Operating Activities
Net cash used in operating activities for the six months ended June 30, 2022 was RMB204.7 million (US$30.6 million), primarily attributable to a net loss of RMB304.9 million (US$45.5 million), which were partially offset by an adjustment from the RMB33.9 million (US$5.1 million) recognized in depreciation and amortization, and an increase of RMB23.9 million (US$3.6 million) in accruals and other current liabilities.
Investing Activities
Net cash used in investing activities for the six months ended June 30, 2022 was RMB193.2 million (US$28.8 million), primarily attributable to an increase of RMB238.6 million (US$35.6 million) in short-term investments, partially offset by proceeds of RMB70.0 million (US$10.5 million) from the disposal of short-term investments.
Financing Activities
Net cash provided by financing activities in the six months ended June 30, 2022 was RMB31.8 million (US$4.7 million), primarily attributable to proceeds of RMB49.6 million (US$7.4 million) from bank borrowings, particularly offset by RMB17.2 million (US$2.6 million) in repayment of bank borrowings.
Capital Expenditure
We incurred capital expenditure of RMB24.6 million (US$3.7 million) for the six months ended June 30, 2022, primarily in connection with our expenditure for the purchase of property and equipment. These purchases primarily relate to (i) equipment used for research and production activities and (ii) renovation in Suzhou facility.
Based upon our current operating plan, we believe that our existing cash and cash equivalents will enable us to fund our operating expenses and capital expenditure requirements for at least the next 12 months.
Update on Clinical Programs
GC012F
GC012F is a FasTCAR-enabled dual BCMA- and CD19-directed autologous CAR-T product candidate being studied in investigator-initiated trials in China for two indications, multiple myeloma (MM) and B cell non-Hodgkins lymphoma (B-NHL).
Multiple Myeloma
Data from an investigator-initiated trial in China evaluating GC012F for the treatment of relapsed or refractory MM (r/r MM) was presented at American society of Clinical Oncology Annual Meeting 2022 (ASCO 2022) and European Hematology Association 2022 Congress (EHA 2022). 29 patients had been enrolled and treated as of the June 8, 2022 data cutoff date, of which 90% were classified as high-risk according to mSMART 3.0 criteria. As of the June 8, 2022 data cutoff date, GC012F achieved a 100% minimal residual disease (MRD)-negativity rate in all 29 patients, underscoring the deep responses previously achieved. GC012F also consistently demonstrated favorable safety profile and promising median duration of response (mDOR) of 15.7 months in all patients. We expect to submit the U.S. and China IND filings for r/r MM in the second half of 2022.
In addition, we have initiated and are enrolling patients for an investigator-initiated trial in China, evaluating GC012F in patients with newly diagnosed multiple myeloma (NDMM).
B cell Non-Hodgkins Lymphoma
Data from an investigator-initiated trial in China evaluating GC012F for the treatment of relapsed or refractory B-NHL (r/r B-NHL) was presented at EHA 2022, where three patients had been enrolled and treated as of the February 22, 2022 data cutoff date. GC012F demonstrated potent and fast activity with 100% complete response (CR) rate at one-month observed in all three patients with r/r B-NHL, including patients with bulky disease.
GC502
GC502 is a TruUCAR-enabled dual CD19- and CD7 -directed, off-the-shelf allogeneic CAR-T product candidate being studied in an ongoing investigator-initiated trial in China for the treatment of adult relapsed or refractory B cell acute lymphoblastic leukemia (r/r B-ALL). Updated data from this investigator-initiated trial with longer follow-up data was presented at EHA 2022, where four patients had been enrolled and treated as of the February 22, 2022 data cutoff date. Data from four patients across two formulations demonstrated very promising response rates at their one-month assessments, manageable and reversible adverse events, and robust expansion of GC502.
GC027
GC027 is a TruUCAR-enabled CD7-directed allogeneic CAR-T product candidate being studied in an investigator-initiated trial in China for the treatment of adult relapsed/refractory T cell acute lymphoblastic leukemia (r/r T-ALL). We target to have regulatory interactions globally and in China in the next 12 months.
GC503
GC503 is SMART CARTTM-enabled CAR-T therapy targeting mesothelin for the treatment of mesothelin-positive solid tumors including ovarian cancer. We expect to commence patient enrollment in 2022 for an investigator-initiated trial in China to study GC503 in mesothelin-positive solid tumors.
GC506
GC506 is SMART CARTTM-enabled CAR-T therapy targeting Claudin 18.2 for the treatment of Claudin 18.2-positive solid tumors. We plan to commence an investigator-initiated trial in China to study GC506 in Claudin 18.2-positive solid tumors.
GC007g
GC007g is a donor-derived CD19-directed allogeneic CAR-T product candidate being studied in an ongoing registrational Phase 1/2 clinical trial under a China IND for the treatment of r/r B-ALL. We have completed the Phase 1 portion of this trial, and expect to commence the Phase 2 portion in the third quarter of 2022.
Changes in Management
We have appointed Dr. Samuel Zhang as Chief Business Officer, effective in July 2022, and Dr. Wendy Li as Chief Medical Officer, effective in August 2022.