Gracell Biotechnology Becomes First Chinese Biotech Fully Acquired by MNC in Landmark $1.2B Deal with AstraZeneca

On December 26, AstraZeneca announced that it had reached an agreement with Gracell Biotechnology to acquire the latter for a total price of approximately 1.2 billion US dollars. After the acquisition is completed, Gracell Biotechnology will operate as a wholly-owned subsidiary of AstraZeneca in China and the United States.

According to the final agreement terms, AstraZeneca will acquire all diluted shares of Gracell Biotechnologies (including all shares represented by ADS). At the closing of the transaction, AstraZeneca will complete the acquisition at a cash price of $2.00 per share of the company’s common stock ("Common Stock") (equivalent to $10.00 per ADS). Additionally, the terms include a non-tradable contingent value right, under which AstraZeneca will pay a cash price of $0.30 per share of Common Stock ($1.50 per ADS) upon achieving specific regulatory-related milestones. The upfront cash portion of the offer represents a transaction value of approximately $1 billion, a 62% premium over Gracell's closing price on December 22, 2023, and a 154% premium over the 60-day volume-weighted average price (VWAP) of $3.94 per ADS prior to the announcement.

If the upfront payment and potential or valuable payments are achieved, the total transaction value is approximately $1.2 billion, representing an 86% premium over Gracell's closing price on December 22, 2023, and a 192% premium over the 60-day VWAP.

As part of the proposed transaction, AstraZeneca will acquire the remaining cash, cash equivalents, and short-term investments on Gracell's balance sheet. As of September 30, 2023, the total amount of cash and marketable securities on Gracell's balance sheet was $234 million. The transaction is expected to be completed in the first quarter of 2024.

Following the news, Gracell's U.S. stock price increased by 8.38%. Additionally, Gracell’s Q3 financial report showed a significant reduction in net loss to 67.6 million yuan, with R&D expenses decreasing by approximately 32.5%.

This proposed acquisition will add GC012F CAR-T cell therapy to AstraZeneca's expanding pipeline of cell therapies.

As a core product developed based on the FasTCAR technology platform, GC012F is an innovative BCMA/CD19 dual-target autologous chimeric antigen receptor T (CAR-T) cell therapy currently in the clinical stage. It has the potential to become a next-generation treatment for multiple myeloma, various other malignant hematological tumors, and autoimmune diseases, including systemic lupus erythematosus (SLE).

GC012F is a CAR-T therapy targeting BCMA/CD19. According to an oral presentation by Gracell at the 65th American Society of Hematology (ASH) Annual Meeting, as of October 1, 2023, in 22 evaluable patients with a median follow-up time of 18.8 months, the efficacy results showed: ORR remained as high as 100%, sCR rate was also up to 95.5%, and MRD- rate stayed at 100%; median DOR and median PFS data are not yet mature. In terms of safety, GC012F continued its consistently excellent performance. Only 27% (6/22) of patients experienced cytokine release syndrome (CRS), all of which were low-grade, including Grade 1 (23%, 5/22) and Grade 2 (5%, 1/22). No cases of ICANS or other neurotoxicity of any grade were observed.

Currently, the FDA has approved the phase 1/2 clinical trial application for GC012F in the treatment of refractory systemic lupus erythematosus. On December 21, the clinical trial of GC012F injection was approved in China for the proposed development in treating refractory systemic lupus erythematosus (SLE).

Notably, GC012F incorporates the groundbreaking CD19/BCMA dual-target design and the revolutionary FasTCAR next-day production technology. The principle of autologous CAR-T cell therapy is to reprogram and modify the patient's own immune T cells to target and attack pathogenic cells for disease treatment. The complex and lengthy production process is a major bottleneck currently faced by the cell therapy industry. To address this, Gracell has pioneered the development of the FasTCAR next-day production technology platform, which not only significantly reduces production time but also enhances the health status of T cells, thereby improving the potential efficacy of autologous CAR-T therapy for patients. This technology also holds future potential for application in the treatment of rare diseases.

Gracell, founded six years ago, is the fourth Chinese cell therapy company to go public after Nanjing Legend, Wuxi Juno, and Eternity Bio.

In response to the current industry challenges of CAR-T cell therapy, Gracell has established its own three technology platforms, including the FasTCAR next-day production technology platform, TruCAR, and SMART CART.

ruCAR is Gracell's proprietary technology platform aimed at developing high-quality "off-the-shelf" allogeneic CAR-T cell therapies, further reducing costs while providing greater convenience. TruUCAR achieves differentiated design through genetic editing and can control host-versus-graft rejection (HvG) and graft-versus-host disease (GvHD) without the need for combination with immunosuppressive drugs. The innovative dual CAR design of TruUCAR enables the CAR targeting tumor antigens to kill tumor cells, while the CAR targeting CD7 inhibits the host-versus-graft reaction, allowing TruUCAR T cells to become an "off-the-shelf" allogeneic CAR-T therapy that can be used as a single agent.

SMART CART is the company's second-generation enhanced CAR-T technology module, designed to address the multiple challenges of solid tumor treatment, including the negative impact of the immunosuppressive tumor microenvironment (TME) on T-cell activation and survival, tumor heterogeneity, and difficulty in penetrating into the tumor core. In preclinical studies, SMART CAR has already demonstrated several unique advantages, including superior expansion capacity, persistence, and tumor-killing efficacy.

Based on three major technology platforms, Gracell is building a rich clinical-stage pipeline that includes various autologous and allogeneic product candidates, which is expected to create significant differentiation from current CAR-T cell therapies in the industry.

GC007g is Gracell's first innovative product to receive clinical approval. The product is a donor-derived CD19-targeting chimeric antigen receptor (CAR-T) cell therapy for the treatment of relapsed or refractory B-cell acute lymphoblastic leukemia (B-ALL). This treatment utilizes healthy T cells collected from stem cell transplant donors, which are then engineered through lentiviral transduction to target CD19-expressing tumor cells, specifically addressing patients with B-ALL who have relapsed after allogeneic bone marrow transplantation. Compared to using the patient’s own T cells, this strategy results in better T-cell fitness and is expected to deliver enhanced efficacy. For patients with relapsed or refractory B-cell lymphoblastic leukemia who may not be able to provide compliant cells due to infection, unsuccessful autologous CAR-T production, or lack of clinical benefit from autologous CAR-T therapy, GC007g could serve as an alternative solution. Another advantage of donor-derived CAR-T products is that they can be manufactured in advance, avoiding disease progression caused by patient waiting periods.

Since the history of China's Biotech, Gracell is the first Chinese innovative pharmaceutical company to be wholly acquired by an MNC.