Document and Entity Information
Document and Entity Information | 6 Months Ended |
Jun. 30, 2023 | |
Document and Entity Information | |
Document Type | 6-K |
Document Period End Date | Jun. 30, 2023 |
Entity Registrant Name | Gracell Biotechnologies Inc. |
Entity Central Index Key | 0001826492 |
Document Fiscal Period Focus | Q2 |
Document Fiscal Year Focus | 2023 |
Amendment Flag | false |
Current Fiscal Year End Date | --12-31 |
UNAUDITED INTERIM CONDENSED CON
UNAUDITED INTERIM CONDENSED CONSOLIDATED BALANCE SHEET ¥ in Thousands, $ in Thousands | Jun. 30, 2023 CNY (¥) | Jun. 30, 2023 USD ($) | Dec. 31, 2022 CNY (¥) |
Current assets: | |||
Cash and cash equivalents | ¥ 1,184,430 | $ 163,340 | ¥ 1,454,645 |
Short-term investments | 3,574 | 493 | 3,559 |
Prepayments and other current assets | 59,402 | 8,192 | 37,551 |
Total current assets | 1,247,406 | 172,025 | 1,495,755 |
Property, equipment and software | 106,698 | 14,714 | 123,126 |
Operating lease right-of-use assets | 12,896 | 1,778 | 21,546 |
Other non-current assets | 10,886 | 1,501 | 15,849 |
TOTAL ASSETS | 1,377,886 | 190,018 | 1,656,276 |
Current liabilities: | |||
Accruals and other current liabilities (including accruals and other current liabilities of the consolidated VIEs without recourse to the Company of RMB41,425 and RMB24,654 as of December 31, 2022 and June 30, 2023, respectively) | 75,580 | 10,422 | 85,991 |
Short-term borrowings (including short-term borrowings of the consolidated VIEs without recourse to the Company of RMB104,600 and RMB90,000 as of December 31, 2022 and June 30, 2023, respectively) | 90,000 | 12,412 | 104,600 |
Operating lease liabilities, current (including operating lease liabilities, current of the consolidated VIEs without recourse to the Company of RMB4,998 and RMB3,259 as of December 31, 2022 and June 30, 2023, respectively) | 12,472 | 1,720 | 17,545 |
Amounts due to a related party | 2,760 | 381 | 4,662 |
Current portion of long-term borrowings (including current portion of long-term borrowings of the consolidated VIEs without recourse to the Company of RMB 7,844 and RMB13,004 as of December 31, 2022 and June 30, 2023, respectively) | 13,004 | 1,793 | 7,844 |
Total current liabilities | 193,816 | 26,728 | 220,642 |
Operating lease liabilities, non-current (including operating lease liabilities, non-current of the consolidated VIEs without recourse to the Company of RMB4,436 and RMB2,542 as of December 31, 2022 and June 30, 2023, respectively) | 2,542 | 351 | 6,485 |
Long-term borrowings (including long-term borrowings of the consolidated VIEs without recourse to the Company of RMB46,505 and RMB39,958 as of December 31, 2022 and June 30, 2023, respectively) | 39,958 | 5,510 | 46,505 |
Other non-current liabilities | 4,851 | 669 | 6,879 |
TOTAL LIABILITIES | 241,167 | 33,258 | 280,511 |
Commitments and contingencies | |||
Shareholders' equity: | |||
Ordinary shares (par value of US$0.0001 per share; 500,000,000 and 500,000,000 shares authorized; 338,498,819 and 340,655,139 shares issued and outstanding as of December 31, 2022 and June 30, 2023 respectively; | 225 | 31 | 223 |
Additional paid-in capital | 2,942,348 | 405,768 | 2,927,295 |
Accumulated other comprehensive income | 118,089 | 16,285 | 73,528 |
Accumulated deficit | (1,923,943) | (265,324) | (1,625,281) |
Total shareholders' equity | 1,136,719 | 156,760 | 1,375,765 |
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | ¥ 1,377,886 | $ 190,018 | ¥ 1,656,276 |
UNAUDITED INTERIM CONDENSED C_2
UNAUDITED INTERIM CONDENSED CONSOLIDATED BALANCE SHEET (Parenthetical) ¥ in Thousands, $ in Thousands | Jun. 30, 2023 CNY (¥) shares | Jun. 30, 2023 USD ($) $ / shares shares | Dec. 31, 2022 CNY (¥) shares | Dec. 31, 2022 $ / shares |
Accounts payable and accrued liabilities, current | ¥ 75,580 | $ 10,422 | ¥ 85,991 | |
Short-term borrowings | 90,000 | 12,412 | 104,600 | |
Operating lease liabilities, current | 12,472 | 1,720 | 17,545 | |
Current portion of long-term borrowings | 13,004 | 1,793 | 7,844 | |
Operating lease liabilities, non-current | 2,542 | 351 | 6,485 | |
Long-term borrowings | ¥ 39,958 | $ 5,510 | ¥ 46,505 | |
Ordinary shares, par value | $ / shares | $ 0.0001 | $ 0.0001 | ||
Ordinary shares, shares authorized | shares | 500,000,000 | 500,000,000 | 500,000,000 | |
Ordinary shares, shares issued | shares | 340,655,139 | 340,655,139 | 338,498,819 | |
Ordinary shares , shares outstanding | shares | 340,655,139 | 340,655,139 | 338,498,819 | |
Variable Interest Entity, Primary Beneficiary | ||||
Accounts payable and accrued liabilities, current | ¥ 24,654 | ¥ 41,425 | ||
Short-term borrowings | 90,000 | 104,600 | ||
Operating lease liabilities, current | 3,259 | 4,998 | ||
Current portion of long-term borrowings | 13,004 | 7,844 | ||
Operating lease liabilities, non-current | 2,542 | 4,436 | ||
Long-term borrowings | ¥ 39,958 | ¥ 46,505 |
UNAUDITED INTERIM CONDENSED C_3
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS ¥ in Thousands, $ in Thousands | 6 Months Ended | ||
Jun. 30, 2023 CNY (¥) ¥ / shares shares | Jun. 30, 2023 USD ($) $ / shares shares | Jun. 30, 2022 CNY (¥) ¥ / shares shares | |
Expenses | |||
Research and development expenses | ¥ (241,309) | $ (33,278) | ¥ (238,895) |
Administrative expenses | (66,438) | (9,162) | (66,656) |
Loss from operations | (307,747) | (42,440) | (305,551) |
Interest income | 19,895 | 2,744 | 5,198 |
Interest expense | (3,360) | (463) | (3,082) |
Other income | 6,538 | 902 | 1,940 |
Foreign exchange loss, net | (9,736) | (1,343) | (3,395) |
Others, net | (4,226) | (583) | 2 |
Loss before income tax | (298,636) | (41,183) | (304,888) |
Income tax expense | (26) | (4) | |
Net loss attributable to Gracell Biotechnologies Inc.'s ordinary shareholders | (298,662) | (41,187) | (304,888) |
Other comprehensive income | |||
Foreign currency translation adjustments, net of nil tax | 44,561 | 6,145 | 75,591 |
Total comprehensive loss attributable to Gracell Biotechnologies Inc.'s ordinary shareholders | ¥ (254,101) | $ (35,042) | ¥ (229,297) |
Weighted average number of ordinary shares used in per share calculation: | |||
-Basic | 339,951,916 | 339,951,916 | 338,244,214 |
-Diluted | 339,951,916 | 339,951,916 | 338,244,214 |
Net loss per share attributable to Gracell Biotechnologies Inc.'s ordinary shareholders | |||
-Basic | (per share) | ¥ (0.88) | $ (0.12) | ¥ (0.90) |
-Diluted | (per share) | ¥ (0.88) | $ (0.12) | ¥ (0.90) |
UNAUDITED INTERIM CONDENSED C_4
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (Parenthetical) - CNY (¥) ¥ in Thousands | 6 Months Ended | |
Jun. 30, 2023 | Jun. 30, 2022 | |
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS | ||
Foreign currency translation adjustments tax | ¥ 0 | ¥ 0 |
UNAUDITED INTERIM CONDENSED C_5
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY ¥ in Thousands, $ in Thousands | Ordinary shares CNY (¥) shares | Additional paid-in capital CNY (¥) | Accumulated other comprehensive (loss)/gain CNY (¥) | Accumulated deficit CNY (¥) | CNY (¥) | USD ($) |
Beginning Balance at Dec. 31, 2021 | ¥ 223 | ¥ 2,902,856 | ¥ (57,936) | ¥ (1,017,772) | ¥ 1,827,371 | |
Beginning Balance (Shares) at Dec. 31, 2021 | shares | 337,969,926 | |||||
Net loss | (304,888) | (304,888) | ||||
Share-based compensation | 15,598 | 15,598 | ||||
Exercise of options and registration of restricted share units | 131 | 131 | ||||
Exercise of options and registration of restricted share units (shares) | shares | 400,698 | |||||
Foreign currency translation adjustment | 75,591 | 75,591 | ||||
Ending Balance at Jun. 30, 2022 | ¥ 223 | 2,918,585 | 17,655 | (1,322,660) | 1,613,803 | |
Ending Balance (Shares) at Jun. 30, 2022 | shares | 338,370,624 | |||||
Beginning Balance at Dec. 31, 2022 | ¥ 223 | 2,927,295 | 73,528 | (1,625,281) | 1,375,765 | |
Beginning Balance (Shares) at Dec. 31, 2022 | shares | 338,498,819 | |||||
Net loss | (298,662) | (298,662) | $ (41,187) | |||
Share-based compensation | 14,911 | 14,911 | ||||
Exercise of options and registration of restricted share units | ¥ 2 | 142 | 144 | |||
Exercise of options and registration of restricted share units (shares) | shares | 2,156,320 | |||||
Foreign currency translation adjustment | 44,561 | 44,561 | 6,145 | |||
Ending Balance at Jun. 30, 2023 | ¥ 225 | ¥ 2,942,348 | ¥ 118,089 | ¥ (1,923,943) | ¥ 1,136,719 | $ 156,760 |
Ending Balance (Shares) at Jun. 30, 2023 | shares | 340,655,139 |
UNAUDITED INTERIM CONDENSED C_6
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS ¥ in Thousands, $ in Thousands | 6 Months Ended | ||
Jun. 30, 2023 CNY (¥) | Jun. 30, 2023 USD ($) | Jun. 30, 2022 CNY (¥) | |
Cash flows from operating activities: | |||
Net loss | ¥ (298,662) | $ (41,187) | ¥ (304,888) |
Adjustments to reconcile net loss to net cash used in operating activities: | |||
Depreciation of property, equipment and software | 25,631 | 3,535 | 33,859 |
Losses on disposal of property and equipment | 4,226 | 583 | |
Share-based compensation | 14,911 | 2,056 | 15,598 |
Amortization of right-of use assets and interest of lease liabilities | 9,048 | 1,248 | 9,147 |
Foreign exchange loss, net | 9,736 | 1,343 | 3,395 |
Changes in operating assets and liabilities: | |||
Prepayments and other current assets | (21,851) | (3,014) | 19,704 |
Amounts due to a related party | (1,902) | (263) | 2,563 |
Accruals and other current liabilities | (11,528) | (1,590) | 23,858 |
Other non-current assets | 47 | 7 | (46) |
Lease liabilities | (9,436) | (1,302) | (7,200) |
Other non-current liabilities | (2,028) | (280) | (700) |
Net cash used in operating activities | (281,808) | (38,864) | (204,710) |
Cash flows from investing activities: | |||
Purchase of property, equipment and software | (9,974) | (1,375) | (24,597) |
Investments in short-term investments | (24) | (3) | (238,605) |
Proceeds from disposal of property and equipment | 2,871 | 396 | |
Proceeds from disposal of short-term investments | 10 | 1 | 70,021 |
Net cash used in investing activities | (7,117) | (981) | (193,181) |
Cash flows from financing activities: | |||
Proceeds from exercise of options and restricted share units | 144 | 20 | 131 |
Proceeds from bank borrowings | 35,000 | 4,827 | 49,600 |
Repayments of bank borrowings | (50,987) | (7,031) | (17,179) |
Payment of "at the market offering" costs | (157) | (22) | (744) |
Net cash generated from/(used in) financing activities | (16,000) | (2,206) | 31,808 |
Effect of exchange rate on cash and cash equivalents | 34,710 | 4,786 | 72,195 |
Net decrease cash and cash equivalents | (270,215) | (37,265) | (293,888) |
Cash and cash equivalents at the beginning of year | 1,454,645 | 200,605 | 1,829,006 |
Cash and cash equivalents at the end of the period | 1,184,430 | 163,340 | 1,535,118 |
Supplemental cashflow disclosures: | |||
Interest paid | 3,360 | 463 | ¥ 3,082 |
Payables of property, equipment and software | ¥ 1,117 | $ 154 |
ORGANIZATION AND BASIS OF PRESE
ORGANIZATION AND BASIS OF PRESENTATION | 6 Months Ended |
Jun. 30, 2023 | |
ORGANIZATION AND BASIS OF PRESENTATION | |
ORGANIZATION AND BASIS OF PRESENTATION | 1. ORGANIZATION AND BASIS OF PRESENTATION (a) Nature of operations Gracell Biotechnologies Inc. (the “Company”), an exempted company with limited liability, was incorporated in Cayman Islands on May 22, 2018. The Company, through its consolidated subsidiaries and variable interest entity (“VIE”) (collectively referred to as the “Group”) engaged primarily in the business of discovering and developing cell therapies to resolve industry challenges and fulfill unmet medical needs in the treatment of cancer (collectively referred to as the “Gracell Business”). The Group’s principal operation and geographic market is in the People’s Republic of China (“PRC”). (b) Reorganization The Group carried out its principal business in the People’s Republic of China (the “PRC”) since May 22, 2017 mainly through Gracell Biotechnologies (Shanghai) Co., Ltd. (“Gracell Biotechnologies” or the “VIE”) in the PRC. In connection with the Company’s initial public offering on the overseas capital market and facilitate offshore financing, the Group underwent a reorganization through which Gracell Biotechnologies (HK) Limited and Gracell Bioscience (Shanghai) Co., Ltd., (the “WFOE”), were established. The Company then entered into a series of contractual arrangements among the WFOE, the VIE and the VIE’s shareholders in January 2019 and the VIE’s shareholders swapped their shares in the VIE for shares in the Company to establish the Company as the ultimate holding company and the VIE became the variable interest entity of the Group (“Reorganization”). As of June 30, 2023, the Company’s principal subsidiaries, VIE and VIE’s subsidiary are as follows: Percentage of Date of Place of legal ownership incorporation incorporation by the Company Principal activities Subsidiaries Gracell Biotechnologies Holdings Limited (“Gracell BVI”) May 22, 2018 British Virgin Islands 100 % Investment holding Gracell Biotechnologies (HK) Limited (“Gracell HK”) June 7, 2018 Hong Kong 100 % Investment holding Gracell Bioscience (Shanghai) Co., Ltd. August 24, 2018 The PRC 100 % Research and development of innovative medicines Gracell Biopharmaceuticals, Inc. February 11, 2020 The United States of America 100 % Research and development of innovative medicines Gracell Biomedicine (Shanghai) Co., Ltd. August 19, 2020 The PRC 100 % Research and development of innovative medicines Hainan Gracell Biomedicine Co., Ltd. June 25, 2021 The PRC 100 % Research and development of innovative medicines Suzhou Gracell Bioscience Co., Ltd. July 12, 2021 The PRC 100 % Research and development of innovative medicines VIE Gracell Biotechnologies (Shanghai) Co., Ltd. May 22, 2017 The PRC — Research and development of innovative medicines VIE’s subsidiary Suzhou Gracell Biotechnologies Co., Ltd. (“Suzhou Gracell”) April 23, 2018 The PRC — Research and development of innovative medicines 1. ORGANIZATION AND BASIS OF PRESENTATION (CONTINUED) (c) Basis of Presentation for the Reorganization The Reorganization consists of transferring the Gracell Business to the Group, which is controlled by William Wei Cao (the “Founder”) immediately before and after the Reorganization. The Reorganization was a recapitalization with no substantial changes in the shareholding of the Company. Accordingly, the Reorganization is accounted for as a transaction under common control. Therefore, the accompanying consolidated financial statements include the assets, liabilities, revenue, expenses and cash flows of the Gracell Business for the periods presented and are prepared on a carryover basis as if the corporate structure of the Group after the Reorganization had been in existence throughout the periods presented. Accordingly, the effect of the ordinary shares and the preferred shares issued by the Company pursuant to the Reorganization have been presented retrospectively as of the beginning of the earliest period presented on the consolidated financial statements or the original issue date, whichever is later, as if such shares were issued by the Company when the Group issued such interests. (d) Contractual agreements with the VIE The Group operates certain of its businesses in the PRC through the VIE, whose equity interests are ultimately held by the Founder and other shareholders of the Group through the VIE’s nominee shareholder. Neither the Company nor its subsidiaries own any equity interest or direct foreign investment in the VIE, Gracell Biotechnologies (Shanghai) Co., Ltd., or Shanghai Gracell Biotech, and the VIE’s subsidiary, Suzhou Gracell Biotechnologies Co., Ltd., or Suzhou Gracell Biotech. Instead, the Company relies on contractual arrangements among its PRC subsidiary, the VIE and the VIE’s nominee shareholders, which allow the Company to (i) direct the activities of the VIE that most significantly impact the VIE’s economic performance; (ii) receive substantially all of the economic benefits of the VIE and the VIE’s subsidiary; and (iii) have an exclusive option to purchase all or part of the equity interests in the VIE when and to the extent permitted by PRC law. As a result of these contractual arrangements, the Company is considered the primary beneficiary of the VIE and the VIE’s subsidiary for accounting purposes and is able to consolidate the financial results of the VIE and VIE’s subsidiary in the consolidated financial statements in accordance with U.S. GAAP. The financial results of the VIE were included in the Group’s consolidated financial statements in accordance with the basis of presentation as stated in Note 2. The following is a summary of the principal terms of the contractual agreements entered into by and among the WFOE, the VIE and the nominee shareholders of the VIE are described below: Voting rights proxy agreement The WFOE, the Group’s VIE and the nominee shareholders of the VIE have entered into an voting rights proxy agreement, pursuant to which the nominee shareholders of the Group’s VIE irrevocably appointed the WFOE or its designated persons as their attorney-in-fact to exercise all of their rights as a shareholder of the VIE, including, but not limited to, propose to hold a shareholders’ meeting, exercise all shareholder’s voting rights with respect to all matters to be discussed and voted in the shareholders’ meeting including but not limited to designate and appoint the director, the chief executive officer and other senior management members of the VIE and exercise other voting rights the shareholders are entitled to. The agreement will remain in force for twenty (20) years and can be extended only if the WFOE gives its written notice of the extension of this agreement before the expiration of this agreement and the other parties shall agree with this extension without reserve. 1. ORGANIZATION AND BASIS OF PRESENTATION (CONTINUED) (d) Contractual agreements with the VIE (Continued) Call option agreement The WFOE, the Group’s VIE and the nominee shareholders of the VIE have entered into a call option agreement, pursuant to which the shareholders of the VIE irrevocably granted the WFOE an exclusive option to purchase, or have its designated person to purchase, at its discretion, to the extent permitted under PRC law, all or part of their equity interests in the VIE and the purchase price shall be the lowest price permitted by applicable PRC law. The shareholders undertake that, without the prior written consent of the WFOE, they shall not sell, transfer, mortgage or otherwise dispose of its equity interests in the VIE or allow the encumbrance thereon of any security interest, increase or decrease the registered capital of the VIE, appoint or replace any directors of the VIE, sell, transfer, mortgage or dispose of the VIE’s assets or beneficial interest in the business or revenues, conduct any merger, acquisition or investments, declare or distribution any dividend; change or amend articles of association or incur any debts or guarantee liabilities. The exclusive option agreement will remain effective until all equity interests in the VIE are transferred or assigned to the WFOE or its designated representative(s). Technology consultation and service agreement The WFOE and the VIE entered into a technology consultation and service agreement under which the VIE engages the WFOE as its exclusive consultant and provider of fund, human, technology and intellectual properties services and technical support, consulting services and other commercial services on exclusive basis in relation to the principal business. The WFOE has exclusive and proprietary rights and interests in all rights, ownership, interests and intellectual properties arising out of or created during the performance of this agreement. During the term of the agreement, the VIE may not enter into any agreement with third parties for the provision of identical or similar service without prior consent of the WFOE. In exchange, the VIE agrees to pay an annual service fee to the WFOE and such fee is determined by the WFOE based on its services provided including various factors such as the WFOE’s incurred technology support and consulting services fees, performance data and the VIE’s revenues. The agreement will remain in force for twenty (20) years and can be extended with the WFOE’s written notice of the extension before the expiration of this agreement and the VIE shall agree with this extension without reserve. Business cooperation agreement Under the business cooperation agreement entered between the VIE and the WFOE, the WFOE has the exclusive right to provide to the VIE technology support, consulting services and other commercial services including market analysis and consultation, products research and development, training and operation management consultation services. The VIE can’t sell, dispose, pledge the intellectual property rights created by the performance of this agreement which should be exclusively owned by the WFOE. In exchange, the VIE agrees to pay a monthly service fee to the WFOE based on the services provided including various factors such as WFOE’s incurred technology support and consulting services fees, performance data and the VIE’s profit. The agreement shall maintain effective unless terminated under applicable PRC laws and regulations. Equity Pledge Agreement Pursuant to the share pledge agreement entered between the VIE and its shareholders and the WFOE, the shareholders of the VIE have to pledge all of their equity interests in the VIE to the WFOE to guarantee the performance by the VIE and its shareholders’ performance of their respective obligations under the call option agreement, technology consultation and service agreement, business cooperation agreement and voting rights proxy agreement. If the VIE and/or its shareholders breach their contractual obligations under those agreements, the WFOE, as pledgee, will be entitled to certain rights, including the right to sell the pledged equity interests. The shareholders of the VIE also undertakes that, during the term of the equity pledge agreements, they shall not dispose of the pledged equity interests or create or allow any encumbrance on the pledged equity interests. During the term of the equity pledge agreement, the WFOE has the right to receive all of the dividends and profits distributed on the pledged equity interests. The pledge will remain binding until the VIE and their shareholders discharge all their obligations under the contractual arrangements. 1. ORGANIZATION AND BASIS OF PRESENTATION (CONTINUED) (d) Contractual agreements with the VIE (Continued) Spouse Consent Letter On January 3, 2019, the spouse of the Founder, unconditionally and irrevocably agreed that the equity interest in the VIE held by the Founder will be disposed of pursuant to the equity pledge agreement, the voting rights proxy agreement and the call option agreement. The spouse agreed not to make any assertions in connection with the equity interest in the VIE held by the Founder. Risks in relation to the VIE structure A significant part of the Group’s business is conducted through the VIE of the Group, of which the Company is the ultimate primary beneficiary. In the opinion of the management, the contractual arrangements with the VIE and the nominee shareholder are in compliance with PRC laws and regulations and is legally binding and enforceable. Nominee shareholders indicate that they will not act contrary to the contractual arrangements. However, there are substantial uncertainties regarding the interpretation and application of the PRC laws and regulations including those that govern the contractual arrangements, which could limit the Group’s ability to enforce these contractual arrangements and if nominee shareholders of the VIE was to reduce their interests in the Group, their interest may diverge from that of the Group and that may potentially increase the risk that they would seek to act contrary to the contractual arrangements. It is possible that the Group’s operation of certain of its operations and businesses through the VIE could be found by PRC authorities to be in violation of PRC law and regulations prohibiting or restricting foreign ownership of companies that engage in such operations and businesses. While the Group’s management considers the possibility of such a finding by PRC regulatory authorities under current law and regulations to be remote, on March 15, 2019, the National People’s Congress adopted the Foreign Investment Law of the PRC, which became effective on January 1, 2020 and replaces three laws regulating foreign investment in China, namely, the Wholly Foreign-Invested Enterprise Law of the PRC, the Sino-Foreign Cooperative Joint Venture Enterprise Law of the PRC and the Sino-Foreign Equity Joint Venture Enterprise Law of the PRC, together with their implementation rules and ancillary regulations. The Foreign Investment Law of the PRC embodies an expected PRC regulatory trend to rationalize its foreign investment regulatory regime in line with prevailing international practice and the legislative efforts to unify the corporate legal requirements for both foreign and domestic investments. However, since it is relatively new, uncertainties still exist in relation to its interpretation and implementation. For example, the Foreign Investment Law of the PRC adds a catch-all clause to the definition of “foreign investment” so that foreign investment, by its definition, includes “investments made by foreign investors in China through other means defined by other laws or administrative regulations or provisions promulgated by the State Council” without further elaboration on the meaning of “other means.” It leaves leeway for the future legislations promulgated by the State Council to provide for contractual arrangements as a form of foreign investment. It is therefore uncertain whether the Group’s corporate structure will be seen as violating the foreign investment rules as the Group are currently leveraging the contractual arrangements to operate certain businesses in which foreign investors are prohibited from or restricted to investing. Furthermore, if future legislations prescribed by the State Council mandate further actions to be taken by companies with respect to existing contractual arrangement, the Group may face substantial uncertainties as to whether the Group can complete such actions in a timely manner, or at all. If the Group fails to take appropriate and timely measures to comply with any of these or similar regulatory compliance requirements, the Group’s current corporate structure, corporate governance and business operations could be materially and adversely affected. If the Group’s corporate structure or the contractual arrangements with the VIE were found to be in violation of any existing or future PRC laws and regulations, the PRC regulatory authorities could, within their respective jurisdictions: ● 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; 1. ORGANIZATION AND BASIS OF PRESENTATION (CONTINUED) (d) Contractual agreements with the VIE (Continued) Risks in relation to the VIE structure (Continued) ● 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. The imposition of any of these restrictions or actions could result in a material adverse effect on the Group’s ability to conduct its business. In such case, the Group may not be able to operate or derive economic interests from the VIE, which may result in deconsolidation of the VIE in the Group’s consolidated financial statements. In the opinion of the management, the likelihood for the Group to lose such ability is remote based on current facts and circumstances. The Group believes that the contractual arrangements among each of the VIE, their respective shareholders and relevant wholly foreign owned enterprise are in compliance with PRC law and are legally enforceable. The Group’s operations depend on the VIE to honor their contractual arrangements with the Group. These contractual arrangements are governed by PRC law and disputes arising out of these agreements are expected to be decided by arbitration in the PRC. The Company’s management believes that each of the contractual arrangements constitutes valid and legally binding obligations of each party to such contractual arrangements under the PRC laws. However, the interpretation and implementation of the laws and regulations in the PRC and their application on the legality, binding effect and enforceability of contracts are subject to the discretion of competent PRC authorities, and therefore there is no assurance that relevant PRC authorities will take the same position as the Group herein in respect of the legality, binding effect and enforceability of each of the contractual arrangements. Meanwhile, since the PRC legal system continues to evolve, the interpretations of many laws, regulations and rules are not always uniform and enforcement of these laws, regulations and rules involve uncertainties, which may limit legal protections available to the Group to enforce the contractual arrangements should the VIE or the nominee shareholders of the VIE fail to perform their obligations under those arrangements. 1. ORGANIZATION AND BASIS OF PRESENTATION (CONTINUED) (d) Contractual agreements with the VIE (Continued) Risks in relation to the VIE structure (Continued) The following financial information of the Group's VIE and the VIE's subsidiary as of December 31, 2022 and June 30, 2023 and for the six months ended June 30, 2022 and 2023 is included in the accompanying condensed consolidated financial statements of the Group as follows: As of December 31, As of June 30, 2022 2023 RMB RMB US$ (Note 2) ASSETS Current assets: Cash and cash equivalents 110,479 88,872 12,256 Short-term investments 3,559 3,574 493 Amounts due from Group companies 93,705 93,705 12,923 Prepayments and other current assets 20,675 26,042 3,591 Total current assets 228,418 212,193 29,263 Property, equipment and software 44,742 39,258 5,414 Operating lease, right-of-use assets 7,911 5,801 800 Other non-current assets 2,746 4,349 600 TOTAL ASSETS 283,817 261,601 36,077 LIABILITIES Current liabilities: Amounts due to related parties 676,174 776,470 107,080 Short-term borrowings 104,600 90,000 12,412 Operating lease liabilities, current 4,998 3,259 449 Current portion of long-term borrowings 7,844 13,004 1,793 Accruals and other current liabilities 41,425 24,654 3,401 Total current liabilities 835,041 907,387 125,135 Long-term borrowings 46,505 39,958 5,510 Amounts due to Group companies 59,500 59,500 8,205 Operating lease liabilities, non-current 4,436 2,542 351 TOTAL LIABILITIES 945,482 1,009,387 139,201 For the six months ended June 30, 2022 2023 RMB RMB US$ (Note 2) Net loss (134,070) (86,121) (11,876) For the six months ended June 30, 2022 2023 RMB RMB US$ (Note 2) Net cash used in operating activities (68,293) (2,104) (290) Net cash used in investing activities (4,847) (3,516) (485) Net cash generated from/(used in) financing activities 83,988 (15,987) (2,204) 1. ORGANIZATION AND BASIS OF PRESENTATION (CONTINUED) (d) Contractual agreements with the VIE (Continued) Risks in relation to the VIE structure (Continued) The Company’s involvement with the VIE is through the contractual arrangements disclosed in Note 1. All recognized assets held by the VIE are disclosed in the table above. In accordance with various contractual agreements, the Company has the power to direct the activities of the VIE and can have assets transferred out of the VIE. Therefore, the Company considers that there are no assets in the respective VIE that can be used only to settle obligations of the respective VIE, except for the registered capital of the VIE. As the respective VIE is incorporated as limited liability company under the PRC Company Law, creditors do not have recourse to the general credit of the Company for the liabilities of the respective VIE. There is currently no contractual arrangement that would require the Company to provide additional financial support to the VIE. As the Group is conducting certain businesses in the PRC through the VIE, the Group may provide additional financial support on a discretionary basis in the future, which could expose the Group to a loss. There is no VIE in the Group where the Company or any subsidiary has a variable interest but is not the primary beneficiary. The Company’s ability to operate or derive economic interests from the VIE also depends on the voting rights proxy and the effect of the share pledge under the Equity Pledge Agreement and the WFOE has to vote on all matters requiring shareholders’ approval in the VIE. As noted above, the Company believes this voting right proxy is legally enforceable but may not be as effective as direct equity ownership. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 6 Months Ended |
Jun. 30, 2023 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of presentation The interim unaudited condensed consolidated financial statements have been prepared in conformity with generally accepted accounting principles in the United States of America (“U.S. GAAP”) for interim financial information. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. The interim unaudited condensed consolidated financial statements have been prepared on the same basis as the annual audited consolidated financial statements. In the opinion of management, all adjustments, consisting of normal recurring adjustments necessary for the fair statement of results for the periods presented, have been included. The results of operations of any interim period are not necessarily indicative of the results of operations for the full year or any other interim period. The comparative year-end condensed balance sheet data was derived from the annual audited consolidated financial statements but is condensed to the same degree as the interim condensed balance sheet data. The interim unaudited condensed consolidated financial statements and related disclosures have been prepared with the presumption that users have read or have access to the annual audited consolidated financial statements for the preceding fiscal year. Principal accounting policies followed by the Company in the preparation of the accompanying consolidated financial statements are summarized below. Principles of Consolidation The Group’s consolidated financial statements include the financial statements of the Company, its subsidiaries and the VIE for which the Company is the primary beneficiary. All transactions and balances among the Company, its subsidiaries, and the VIE have been eliminated upon consolidation. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Principles of Consolidation (Continued) A subsidiary is an entity in which the Company, directly or indirectly: (1) controls more than one half of the voting power; (2) has the power to appoint or remove the majority of the members of the board of directors; (3) casts a majority of votes at the meeting of the board of directors; or (4) governs the financial and operating policies of the investee under a statute or agreement among the shareholders or equity holders. The Company applies the guidance codified in Accounting Standard Codification (“ASC”) 810, Consolidations, which contains guidance of accounting for VIEs. The guidance requires certain variable interest entities to be consolidated by the primary beneficiary of the entity in which it has a controlling financial interest. A consolidated VIE is an entity in which the Company, or its subsidiary, through contractual arrangements, bears the risks of, and enjoys the rewards normally associated with, ownership of the entity, and therefore the Company or its subsidiary is the primary beneficiary of the entity. Use of estimates The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosures of contingent assets and liabilities at the balance sheet dates and the reported amounts of expenses during the reporting periods. Significant estimates and assumptions reflected in the Group’s consolidated financial statements include, but are not limited to, the useful lives and impairment of long-lived assets, deferred tax valuation allowance, share-based compensation expenses. Management bases the estimates on historical experience and various other assumptions that are believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results could materially differ from those estimates. Foreign currency translation The Group uses Chinese Renminbi (“RMB”) as its reporting currency. The United States Dollar (“US$”) is the functional currency of the Group’s entities incorporated in the Cayman Islands, British Virgin Islands, United States of America and Hong Kong, the RMB is the functional currency of the Company’s PRC subsidiaries. Transactions denominated in currencies other than in the functional currency are translated into the functional currency using the exchange rates prevailing at the transaction dates. Monetary assets and liabilities denominated in foreign currencies are translated into functional currency using the applicable exchange rates at the balance sheet date. Non-monetary items that are measured in terms of historical cost in foreign currency are re-measured using the exchange rates at the dates of the initial transactions. Exchange gains or losses arising from foreign currency transactions are included in the consolidated statements of comprehensive loss. The consolidated financial statements of the Group are translated from the functional currency to the reporting currency, RMB. Assets and liabilities of the subsidiaries are translated into RMB using the exchange rate in effect at each balance sheet date. Income and expenses are translated at the average exchange rates prevailing during the fiscal year. Foreign currency translation adjustments arising from these are reflected in the accumulated other comprehensive income. Translations of balances in the consolidated balance sheets, consolidated statements of comprehensive loss, consolidated statements of changes in shareholders’ equity and consolidated statements of cash flows from RMB into US$ as of and for the 6 months ended June 30, 2023 are solely for the convenience of the readers and were calculated at the rate of US$1.00=RMB7.2513, representing the noon buying rate in The City of New York for cable transfers of RMB as certified for customs purposes by the Federal Reserve Bank of New York on June 30, 2023. No representation is made that the RMB amounts could have been, or could be, converted, realized or settled into US$ at that rate on June 30, 2023, or at any other rate. The US$ convenience translation is not required under U.S. GAAP and all US$ convenience translation amounts in the accompanying consolidated financial statements are unaudited. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Cash and cash equivalents Cash and cash equivalents primarily consist of cash and demand deposits which are highly liquid. The Group considers highly liquid investments that are readily convertible to known amounts of cash and with original maturities from the date of purchase of three months or less to be cash equivalents. All cash and cash equivalents are unrestricted as to withdrawal and use. Short-term investments Short-term investments are deposits at bank with maturities of greater than three months, but less than twelve months. Short-term investments are stated at cost, which approximates fair value. Interest earned is included in interest income. Expected credit losses The Group accounts for the impairment of financial instruments in accordance with ASU No. 2016-13, “Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” (“ASC Topic 326”), effective from January 1, 2023. The Group’s deposits and other receivables are within the scope of ASC Topic 326. Receivables with similar risk characteristics have been grouped into pools. For each pool, the Group considers the historical credit loss experience, current economic conditions, supportable forecasts of future economic conditions, and any recoveries in assessing the lifetime expected credit losses. The Group adopted this ASC Topic 326 using a modified retrospective approach. The cumulative effect on the accumulated deficit as at January 1, 2023 was not material. Fair value measurements The Group applies ASC 820, Fair Value Measurements and Disclosures Level 1—Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets. Level 2—Includes other inputs that are directly or indirectly observable in the marketplace. Level 3—Unobservable inputs which are supported by little or no market activity. ASC 820 describes three main approaches to measuring the fair value of assets and liabilities: (1) market approach; (2) income approach; and (3) cost approach. The market approach uses prices and other relevant information generated from market transactions involving identical or comparable assets or liabilities. The income approach uses valuation techniques to convert future amounts to a single present value amount. The measurement is based on the value indicated by current market expectations about those future amounts. The cost approach is based on the amount that would currently be required to replace an asset. The Group does not have any non-financial assets or liabilities that are recognized or disclosed at fair value in the financial statements on a recurring basis. The carrying amounts of cash and cash equivalent, short-term investments, other current assets, accrued liabilities and other current liabilities and short-term borrowings approximate their fair values because of their generally short maturities. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Property, equipment and software Property, equipment and software are stated at cost less accumulated depreciation and amortization. Depreciation and amortization is computed using the straight-line method over the estimated useful lives of the assets as follows: Category Estimated Useful Life Machinery and laboratory equipment 5-10 years Vehicles 4 years Furniture and tools 3-5 years Electronic equipment 3 years Computer software 3-5 years Leasehold improvements Lesser of lease terms or estimated useful lives of the assets Repair and maintenance costs are charged to expense as incurred, whereas the cost of renewals and betterments that extend the useful lives of property, equipment and software are capitalized as additions to the related assets. Retirements, sales and disposals of assets are recorded by removing the cost and accumulated depreciation and amortization from the asset and accumulated depreciation and amortization accounts with any resulting gain or loss reflected in the consolidated statements of comprehensive loss. Impairment of long-lived assets The Group evaluates the recoverability of its long-lived assets, including fixed assets, for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be fully recoverable. When these events occur, the Group measures impairment by comparing the carrying amount of the assets to the estimated undiscounted future cash flows expected to result from the use of the assets and their eventual disposition. If the sum of the expected undiscounted cash flows is less than the carrying amount of the assets, the Group recognizes an impairment loss based on the excess of the carrying amount of the assets over their fair value. Fair value is generally determined by discounting the cash flows expected to be generated by the assets, when the market prices are not readily available. The adjusted carrying amount of the assets is the new cost basis and is depreciated over the assets’ remaining useful lives. Long-lived assets are grouped with other assets and liabilities at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities. No impairment loss was recorded for the six months ended June 30, 2022 and 2023. Segment reporting In accordance with ASC 280, Segment Reporting Research and development expenses Elements of research and development expenses primarily include (1) payroll and other related costs of personnel engaged in research and development activities, (2) costs related to pre-clinical testing of the Group’s technologies under development and clinical trials such as payments to contract research organizations (“CRO”) and contract manufacturing organizations (“CMO”), investigators and clinical trial sites that conduct the clinical studies; (3) costs to develop the product candidates, including raw materials and supplies, product testing, depreciation and amortization, and facility related expenses, (4) other research and development expenses. Research and development expenses are charged to expense as incurred when these expenditures relate to the Group’s research and development services and have no alternative future uses in accordance with ASC 730, Research and Development 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Government subsidies Government subsidies primarily consist of financial subsidies received from provincial and local governments for operating a business in their jurisdictions and compliance with specific policies promoted by the governments. The Group’s PRC based subsidiaries received government subsidies from certain local governments. The Group’s government subsidies consist of specific subsidies and other subsidies. Specific subsidies are subsidies that the local government has set certain conditions for the subsidies. Other subsidies are the subsidies that the local government has not set any conditions and are not tied to future trends or performance of the Group, receipt of such subsidy income is not contingent upon any further actions or performance of the Group and the amounts do not have to be refunded under any circumstances. For the six months ended June 30, 2022 and 2023, no specific subsidies were received by the Group. Other subsidies of RMB1,798 and RMB6,104 for the six months ended June 30, 2022 and 2023, respectively, are recognized as other income upon receipt as further performance by the Group is not required. Leases The Group adopted ASC 842, Leases, on January 1, 2021. Leases are classified at the inception date as either a finance lease or an operating lease. Leases that transfer substantially all of the benefits and risks incidental to the ownership of assets are accounted for as finance leases as if there was an acquisition of an asset and incurrence of an obligation at the inception of the lease. All other leases are accounted for as operating leases. Under ASC 842, at the commencement date, a lessee should recognize a financing liability equal to the present value of future lease payments and a right to use (“ROU”) asset. The expense recognition is consistent with the expense recognition under the existing lease guidance, wherein rental payments are expensed on a straight-line basis over their respective lease terms. The Group leases certain office space under non-cancelable operating lease agreements. Certain lease agreements contain rent holidays. Rent holidays are considered in determining the straight-line rent expense to be recorded over the lease term. The lease term begins on the date of initial possession of the leased property for purpose of recognizing lease expense on straight-line basis over the term of the lease. For leases with a term of 12 months or less, the Group makes an accounting policy election by class of underlying asset not to recognize lease assets and lease liabilities and recognizes lease expenses for such lease generally on a straight-line basis over the lease term. Comprehensive loss Comprehensive loss is defined as the changes in equity of the Group during a period from transactions and other events and circumstances excluding transactions resulting from investments by shareholders and distributions to shareholders. Accumulated other comprehensive loss of the Group includes foreign currency translation adjustments. Income taxes The Group follows the liability method of accounting for income taxes in accordance with ASC 740, Income Taxes (“ASC 740”). Under this method, deferred tax assets and liabilities are determined based on the difference between the financial reporting and tax bases of assets and liabilities using enacted tax rates that will be in effect in the period in which the differences are expected to reverse. The Group records a valuation allowance to offset deferred tax assets if based on the weight of available evidence, it is more likely than not that some portion, or all, of the deferred tax assets will not be realized. The effect on deferred taxes of a change in tax rate is recognized in tax expense in the period that includes the enactment date of the change in tax rate. The Group evaluates its uncertain tax positions using the provisions of ASC 740, which prescribes a recognition threshold that a tax position is required to meet before being recognized in the consolidated financial statements. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Income taxes (Continued) The Group recognizes in the consolidated financial statements the benefit of a tax position which is “more likely than not” to be sustained under examination based solely on the technical merits of the position assuming a review by tax authorities having all relevant information. Tax positions that meet the recognition threshold are measured using a cumulative probability approach, at the largest amount of tax benefit that has a greater than fifty percent likelihood of being realized upon settlement. It is the Group’s policy to recognize interest and penalties related to unrecognized tax benefits, if any, as a component of income tax expense. Borrowings Borrowings are recognized initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated at amortized cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognized in the consolidated statements of comprehensive loss over the period of the borrowings using the effective interest method. Share-based compensation The Company grants share-based awards to eligible employees and consultants and accounts for share-based compensation in accordance with ASC 718, Compensation—Stock Compensation The Company follows ASC 718 to determine whether a share-based award should be classified and accounted for as a liability award or equity award. All grants of share-based awards to employees, management and nonemployees classified as equity awards are recognized in the financial statements based on their grant date fair values which are calculated using the binomial option pricing model. Employees’ share-based compensation awards are measured at the grant date fair value of the awards and recognized as expenses (a) immediately at the grant date if no vesting conditions are required; or (b) for share-based awards granted with only service conditions, using the straight-line method, over the vesting period; or (c) for share-based awards granted with service conditions and the occurrence of an IPO as performance condition, cumulative share-based compensation expenses for the options that have satisfied the service condition should be recorded upon the completion of the IPO, using the graded vesting method. Net loss per share In accordance with ASC 260, Earnings Per Share 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Employee defined contribution plan Full time employees of the Group in the PRC participate in a government mandated defined contribution plan, pursuant to which certain pension benefits, medical care, employee housing fund and other welfare benefits are provided to the employees. Chinese labor regulations require that the PRC subsidiaries and the VIE of the Group make contributions to the government for these benefits based on certain percentages of the employees’ salaries, up to a maximum amount specified by the local government. The Group has no legal obligation for the benefits beyond the contributions made. The total amounts of such employee benefit expenses, which were expensed as incurred, were approximately RMB10.2 million and RMB9.25 million for the six months ended June 30, 2022 and 2023, respectively. Concentration of risks Concentration of credit risk As of December 31, 2022 and June 30, 2023, the aggregate amount of cash and cash equivalents and short-term investments of RMB1,403,024 and RMB1,098,676 respectively, were held at major financial institutions located in the mainland of China, and RMB55,180 and RMB89,328, respectively, were deposited with major financial institutions located outside the mainland of China. These financial institutions are of high credit quality and management continually monitors the credit worthiness of these financial institutions. Business and economic risk The Group believes that changes in any of the following areas could have a material adverse effect on the Group’s future consolidated financial position, results of operations or cash flows, changes in the overall demand for services; competitive pressures due to new entrants; advances and new trends in new technologies and industry standards; changes in certain strategic relationships; regulatory considerations and risks associated with the Group’s ability to attract employees necessary to support its growth. The Group’s operations could also be adversely affected by significant political, regulatory, economic and social uncertainties in the PRC. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Concentration of risks (Continued) Foreign currency exchange rate risk A significant portion of the Group’s businesses are transacted in RMB, which is not a freely convertible currency. On January 1, 1994, the PRC government abolished the dual rate system and introduced a single rate of exchange as quoted daily by the People’s Bank of China (the “PBOC”). However, the unification of the exchange rates does not imply that the RMB may be readily convertible into US$ or other foreign currencies. All foreign exchange transactions continue to take place either through the PBOC or other banks authorized to buy and sell foreign currencies at the exchange rates quoted by the PBOC. Approval of foreign currency payments by the PBOC or other institutions requires submitting a payment application form together with suppliers’ invoices, shipping documents and signed contracts. From July 21, 2005, the RMB is permitted to fluctuate within a narrow and managed band against a basket of certain foreign currencies. For U.S. dollar against RMB, there was appreciation of approximately 3.8% in the six months ended June 30, 2023. It is difficult to predict how market forces or PRC or U.S. government policy may impact the exchange rate between the RMB and the U.S. dollar in the future. Recently issued accounting pronouncements The Group qualifies as an “emerging growth company”, or EGC, pursuant to the Jumpstart Our Business Startups Act of 2012, as amended, or the JOBS Act. As an EGC, the Group does not need to comply with any new or revised financial accounting standards until such date that a private company is otherwise required to comply with such new or revised accounting standards. The Group adopts the following standards based on extended transition period provided to private companies or early adopts as necessary as permitted by the respective standards. New and amended standards adopted by the Group In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). ASU 2016-13 is intended to improve financial reporting by requiring timelier recording of credit losses on loans and other financial instruments held by financial institutions and other organizations. This ASU requires the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. This ASU requires enhanced disclosures to help investors and other financial statement users better understand significant estimates and judgments used in estimating credit losses, as well as the credit quality and underwriting standards of the Group’s portfolio. These disclosures include qualitative and quantitative requirements that provide additional information about the amounts recorded in the financial statements. In November 2019, the FASB issued ASU 2019-10, which extends the adoption date for certain registrants. The amendments in ASU 2016-13 are effective for fiscal years beginning after December 15, 2022, including interim periods within fiscal years beginning after December 15, 2022 for the Group. The Group has adopted ASU 2016-13 and the impact of this adoption was assessed to be not material. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Recently issued accounting pronouncements (Continued) New and amended standards not yet adopted by the Group In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805) — Accounting for Contract Assets and Contract Liabilities from Contracts with Customers (“ASU 2021-08”). It requires issuers to apply ASC 606 Revenue from Contracts with Customers to recognize and measure contract assets and contract liabilities from contracts with customers acquired in a business combination. ASU 2021-08 is effective for fiscal years beginning after December 15, 2023, with early adoption permitted. The Group does not plan to early adopt ASU 2021-08 and is currently in the process of evaluating the impact of adoption of this guidance on its consolidated financial statements. In June 2022, the FASB issued ASU 2022-03 Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions. The update clarifies that a contractual restriction on the sale of an equity security is not considered part of the unit of account of the equity security and, therefore, is not considered in measuring fair value. The update also clarifies that an entity cannot, as a separate unit of account, recognize and measure a contractual sale restriction. The update also requires certain additional disclosures for equity securities subject to contractual sale restrictions. For public business entities, the amendments in this Update are effective for fiscal years beginning after December 15, 2023, and interim periods within those fiscal years. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2024, and interim periods within those fiscal years. Early adoption is permitted for both interim and annual financial statements that have not yet been issued or made available for issuance. As an emerging growth company, the standard is effective for the Group for the year ended December 31, 2025 including interim periods in the year ended March 31, 2025. The Group does not plan to early adopt ASU 2022-03 and is currently in the process of evaluating the impact of adoption of this guidance on its consolidated financial statements. |
PREPAYMENTS AND OTHER CURRENT A
PREPAYMENTS AND OTHER CURRENT ASSETS | 6 Months Ended |
Jun. 30, 2023 | |
PREPAYMENTS AND OTHER CURRENT ASSETS | |
PREPAYMENTS AND OTHER CURRENT ASSETS | 3. PREPAYMENTS AND OTHER CURRENT ASSETS Prepayments and other current assets consist of the following: As of December 31, As of June 30, 2022 2023 RMB RMB US$ (Note 2) Deductible value-added tax input 26,330 35,810 4,938 Prepayments for CRO and other services 5,296 13,513 1,863 Deposits 3,355 3,998 551 Deferred expenses 408 3,489 481 Prepayment for raw materials 1,448 1,699 234 Others 714 893 125 37,551 59,402 8,192 |
PROPERTY, EQUIPMENT AND SOFTWAR
PROPERTY, EQUIPMENT AND SOFTWARE | 6 Months Ended |
Jun. 30, 2023 | |
PROPERTY, EQUIPMENT AND SOFTWARE | |
PROPERTY, EQUIPMENT AND SOFTWARE | 4. PROPERTY, EQUIPMENT AND SOFTWARE Property, equipment and software consist of the following: As of December 31, As of June 30, 2022 2023 RMB RMB US$ (Note 2) Machinery and laboratory equipment 138,049 143,845 19,837 Leasehold improvements 101,048 102,950 14,197 Computer Software 10,417 10,716 1,478 Construction in progress 283 228 31 Others 6,890 7,054 973 Total property, equipment and software 256,687 264,793 36,516 Less: accumulated depreciation and amortization (133,561) (158,095) (21,802) Property, equipment and software, net 123,126 106,698 14,714 Depreciation and amortization expenses recognized for six months ended June 30, 2022 and 2023 were RMB33,859 and RMB25,631, respectively. |
LEASES
LEASES | 6 Months Ended |
Jun. 30, 2023 | |
LEASES | |
LEASES | 5. LEASES As of June 30, 2023, the Company has operating leases recorded on its balance sheet for certain office spaces and facilities that expire on various dates through 2025. The Group does not plan to cancel the existing lease agreements for its existing facilities prior to their respective expiration dates. When determining the lease term, the Group includes options to extend or terminate the lease when it is reasonably certain that it will exercise that option, if any. All of the Group’s leases qualify as operating leases. Information related to operating leases as of December 31, 2022 and as of June 30, 2023 is as follows. As of December 31, As of June 30, 2022 2023 RMB RMB US$ (Note 2) Assets Operating lease right-of-use assets 21,546 12,896 1,778 Liabilities Operating lease liabilities, current 17,545 12,472 1,720 Operating lease liabilities, non-current 6,485 2,542 351 24,030 15,014 2,071 5. LEASES (CONTINUED) Future minimum payments under non-cancelable operating leases with initial terms in excess of one year consist of the following as of June 30, 2023: RMB US$ (Note 2) For the years ending: 2023 9,245 1,275 2024 4,515 623 2025 1,623 224 2026 — — 2027 and thereafter — — Total undiscounted lease payments 15,383 2,122 Less: imputed interest (369) (51) Total lease liabilities 15,014 2,071 The below table summarizes lease costs and other information for the six months ended June 30, 2023: For the six months ended June 30, 2022 2023 RMB RMB US$ (Note 2) Lease cost Operating lease cost 9,147 9,048 1,248 Short-term lease cost 534 1,015 140 Total lease cost 9,681 10,063 1,388 Other information Cash paid for amounts included in the measurement of lease liabilities 7,200 9,436 1,301 Right-of-use assets obtained in exchange for new operating lease liabilities 1,010 — — Weighted-average remaining lease term 1.47 years 1.15 years 1.15 years Weighted-average discount rate 5.0 % 5.0 % 5.0 % For the six months ended June 30, 2022 and 2023, the Company did not have variable lease cost or sublease income. |
OTHER NON-CURRENT ASSETS
OTHER NON-CURRENT ASSETS | 6 Months Ended |
Jun. 30, 2023 | |
OTHER NON-CURRENT ASSETS | |
OTHER NON-CURRENT ASSETS | 6. OTHER NON-CURRENT ASSETS Other non-current assets consist of the following: As of December 31, As of June 30, 2022 2023 RMB RMB US$ (Note 2) Prepayments for property, equipment and software 10,282 5,084 701 Long-term deposits 2,430 2,383 329 Others 3,137 3,419 471 15,849 10,886 1,501 |
ACCRUALS AND OTHER CURRENT LIAB
ACCRUALS AND OTHER CURRENT LIABILITIES | 6 Months Ended |
Jun. 30, 2023 | |
ACCRUALS AND OTHER CURRENT LIABILITIES | |
ACCRUALS AND OTHER CURRENT LIABILITIES | 7. ACCRUALS AND OTHER CURRENT LIABILITIES Accruals and other current liabilities consist of the following: As of December 31, As of June 30, 2022 2023 RMB RMB US$ (Note 2) Accrued external research and development related expenses 47,073 40,288 5,556 Salary and welfare payables 20,622 18,699 2,579 Professional service fees 10,252 7,765 1,071 Deferred income for reimbursement of the expenses related to the establishment of the ADS facility 2,902 3,234 446 Others 5,142 5,594 770 85,991 75,580 10,422 |
BORROWINGS
BORROWINGS | 6 Months Ended |
Jun. 30, 2023 | |
BORROWINGS | |
BORROWINGS | 8. BORROWINGS As of December 31, As of June 30, 2022 2023 RMB RMB US$ (Note 2) Current Short-term borrowings: Bank loans 104,600 90,000 12,412 Current portion of long-term borrowings 7,844 13,004 1,793 Total current borrowings 112,444 103,004 14,205 Non-Current Long-term borrowings: Bank loans 46,505 39,958 5,510 Total non-current borrowings 46,505 39,958 5,510 Total borrowings 158,949 142,962 19,715 8. BORROWINGS (CONTINUED) Short-term borrowings In December 2022, Suzhou Gracell entered into a loan agreement with China Construction Bank, under which Suzhou Gracell borrowed RMB20 million for a term of 12 months. The effective interest rate of this borrowing is 3.8% per annum.Suzhou Gracell is required to make interest payments on the loan on a monthly basis and repay the principal at the end of the loan term. In August 2022, Suzhou Gracell entered into a loan agreement with China CITIC Bank. Under the agreement Suzhou Gracell borrowed a principal amount of RMB20.0 million in the form of a term loan for 12 months. The effective interest rate of this borrowing is 3.8% per annum. Suzhou Gracell is required to make interest payments on the loan on a monthly basis and repay the principal at the end of the loan term. In March and June 2022, Suzhou Gracell entered into three loan agreements with China Industrial Bank Co., Ltd., under which Suzhou Gracell borrowed principal amounts of RMB9.9 million, RMB9.9 million and RMB9.8 million in the form of three term loans for 12 months. The effective interest rate of these borrowings is 4.30% per annum. These loans were paid back to the bank during 2023. In March 2022, Suzhou Gracell entered into a loan agreement with Hangzhou Bank. Under the agreement, Suzhou Gracell borrowed a principal amount of RMB20.0 million in the form of a term loan for 12 months. The effective interest rate of these borrowings is 4.35% per annum. The loan was paid back to the bank in March 2023. In August 2022 and February 2023, Suzhou Gracell entered into two loan agreements with Hangzhou Bank, under which Suzhou Gracell borrowed principal amounts of RMB15.0 million and RMB35.0 million in the form of two term loans for 12 months and 12 months, respectively. Interest on the outstanding loan balance accrues at a fixed annual rate at 3.76% and 3.76%, respectively. Suzhou Gracell is required to make interest payments on the loan on a monthly basis and repay principal at the end of the loan term. Long-term borrowings In January 2020, Suzhou Gracell entered into a loan agreement with Bank of China, under which Suzhou Gracell obtained a term loan facility of RMB69.0 million for a term of 72 months commencing from the first drawdown date. Interest on the outstanding loan balance accrues at a variable annual rate equal to the five-year loan prime rate plus 0.2%. Suzhou Gracell is required to make interest payments on the loan on a semi-annual basis and payments of principal according to the agreed repayment schedule which will commence from the end of the 42nd month after the first drawdown date. Suzhou Gracell borrowed an aggregate principal amount of RMB44.28 million within the facility limit as of June 30, 2023. The effective interest rate of these borrowings is 4.85% to 5.00% per annum. In July 2020, Suzhou Gracell entered into a loan agreement with China Merchants Bank, under which Suzhou Gracell obtained a term loan facility of RMB 29.0 million for a term of 60 months commencing from June 2, 2020 and ending on June 1, 2025. During the term, Suzhou Gracell may make multiple drawdowns within the facility limit. Interest on the outstanding loan balance accrues quarterly at a variable annual rate equal to the one-year loan prime rate plus 1% . Suzhou Gracell is required to make payments of principal and interest on the loan on a semi-annual basis unless otherwise agreed by the parties. Suzhou Gracell borrowed an aggregate principal amount of RMB 13.87 million within the facility limit and repaid RMB 5.19 million as of June 30, 2023. The effective interest rate of these borrowings is 4.85% per annum. |
ORDINARY SHARES
ORDINARY SHARES | 6 Months Ended |
Jun. 30, 2023 | |
ORDINARY SHARES | |
ORDINARY SHARES | 9. ORDINARY SHARES As of December 31, 2022, 338,498,819 shares of ordinary shares were issued As of June 30, 2023, 340,655,139 shares of ordinary shares were issued |
SHARE-BASED COMPENSATION
SHARE-BASED COMPENSATION | 6 Months Ended |
Jun. 30, 2023 | |
SHARE-BASED COMPENSATION | |
SHARE-BASED COMPENSATION | 10. SHARE-BASED COMPENSATION (a) Employee Stock Option Plan On August 8, 2017, the Company adopted the 2017 Employee Stock Option Plan (“PRC Plan” or “2017 Plan”), which was replaced by the Amended and Restated 2017 Employee Stock Option Plan (“Global Plan”) on April 15, 2019 to reserve a pool of 4,388,060 shares of the Company’s ordinary shares to be granted to the officers, directors, employees and consultants of the Company as part of the Reorganization. The replacement of PRC Plan with Global Plan and revocation of the original 2017 Plan are viewed as having no accounting impacts as the 2017 Plan has remained effective throughout and there’s essentially no change but merely just to change the form of the plan due to the Reorganization. In July 2020, the Company adopted the Second Amended and Restated Employee Stock Option Plan (“the Second Global Plan”) and increased the maximum number of shares issuable to 7,388,060. In October 2020, the Company adopted the Third Amended and Restated Employee Stock Option Plan (“the Third Global Plan”) and increased the maximum number of shares issuable to 10,216,234. The terms of the Second Global Plan and the Third Global Plan are substantially the same other than the maximum aggregate number of shares the Company may issue under the respective plan. Share options granted will be exercisable upon the Company completes a listing and the grantee renders service to the Company in accordance with a stipulated service. Grantees are generally subject to a four-year vesting schedule, under which the shares vest in four equal instalments over the four years Prior to the Company completes a listing, all share options granted to a grantee shall be forfeited at the time the grantee terminates his service with the Group. After the Company completes a listing, vested options not exercised by a grantee shall be exercised until later of: (i) 90 days after the date when the options become exercisable, or (ii) 3 months after the date of cessation of employment or directorship, or such longer period as the Board may determine. The share option awards shall expire no more than 10 years from their grant dates (“Option Period”). If a listing is not achieved, a share option will lapse automatically upon the expiry of the Option Period. In December 2020, the Company adopted 2020 Share Incentive Plan (the “2020 Plan”), which became effective immediately prior to the completion of the Company’s IPO. Under the 2020 Plan, the maximum aggregate number of ordinary shares available for issuance shall initially be three percent (3%) of the ordinary shares of the Company outstanding immediately upon completion of the Company’s IPO. Subsequently, the maximum aggregate number of ordinary shares available for issuance will be increased on an annual basis on the first calendar day of the fiscal year to be the lesser of a number determined by the board of directors or one percent (1%) of the total issued and outstanding ordinary shares on the last day of the immediately preceding fiscal year. The 2020 Plan is governed by the Company’s board of directors or a designated committee and permits various types of awards to be granted to eligible persons under specific terms and vesting schedule evidenced by an award agreement. 10. SHARE-BASED COMPENSATION (CONTINUED) (a) Employee Stock Option Plan (Continued) The following table sets forth the share options activities for the six months ended June 30, 2022 and 2023: Weighted– Weighted– Weighted Weighted– Average Average Average Average Grant Grant Remaining Aggregate Number of Exercise Date Date Contractual intrinsic Options Price Fair Value Fair Value Term value US$ per US$ per RMB per option option option Years RMB Outstanding at January 1, 2022 13,102,590 1.60 1.10 7.21 8.86 12,335 Granted 2,199,826 0.65 0.35 2.22 — — Forfeited (397,723) 1.32 0.68 4.40 — — Exercised (66,945) 0.30 0.29 2.00 — — Outstanding at June 30, 2022 14,837,748 1.47 1.00 6.57 8.44 14,455 Outstanding at January 1, 2023 15,162,546 1.39 0.91 5.98 8.14 1,290 Granted 663,405 0.38 0.21 1.46 — — Forfeited (828,031) 2.01 1.01 6.55 — — Exercised (51,730) 0.39 0.22 1.43 — — Expired (93,522) 1.32 0.66 4.35 — — Outstanding at June 30, 2023 14,852,668 1.31 0.88 5.77 7.72 7,490 Fair value of share options The fair value of options was determined using the binomial option valuation model, with the assistance from an independent third-party appraiser. The binomial model requires the input of highly subjective assumptions, including the expected volatility, the exercise multiple, the risk-free interest rate and the dividend yield. For expected volatility, the Group has made reference to historical volatility of several comparable companies in the same industry. The exercise multiple was estimated as the average ratio of the stock price to the exercise price of when employees would decide to voluntarily exercise their vested options. The risk-free interest rate for periods within the contractual life of the options is based on the market yield of U.S. Treasury Strips plus China country risk premium with a maturity life equal to the remaining maturity life of the options as of the valuation date, sourced from Bloomberg. The dividend yield is based on our expected dividend policy over the contractual life of the options. The assumptions used to estimate the fair value of the share options granted are as follows: For the six months ended June 30, 2022 2023 Risk-free interest rate 1.79%-3.12% 3.46%-4.10% Dividend yield 0% 0% Expected volatility range 55.62%-55.94% 57.36%~57.55% Exercise multiple 2.20-2.80 2.20 Contractual life 10 years 10 years Since the exercisability was dependent upon the listing, and it was not probable that this performance condition could be achieved until a listing, the Group has recognized RMB13,763 and RMB6,682 share-based compensation expenses relating to options vested for the six months ended June 30, 2022 and 2023. 10. SHARE-BASED COMPENSATION (CONTINUED) Fair value of share options (Continued) Share-based compensation expenses related to share options were included in: For the six months ended June 30, 2022 2023 RMB RMB US$ (Note 2) Research and development expenses 6,909 2,487 343 Administrative expenses 6,854 4,195 579 13,763 6,682 922 (b) Restricted Shares Units During the six months ended June 30, 2022 and 2023, the Company granted 479,741 and 3,063,665 restricted shares units (“RSUs”) to employees, directors and consultants under the 2020 Plan, respectively. The Company measured the fair value of the RSUs based on the Company’s stock price on the date of the award grant. As of June 30, 2023, 4,873,937 RSUs were vested. Share-based compensation expenses related to RSUs were included in: For the six months ended June 30, 2022 2023 RMB RMB US$ (Note 2) Research and development expenses 644 3,230 445 Administrative expenses 1,191 4,999 689 1,835 8,229 1,134 |
INCOME TAX EXPENSE
INCOME TAX EXPENSE | 6 Months Ended |
Jun. 30, 2023 | |
INCOME TAX EXPENSE | |
INCOME TAX EXPENSE | 11. INCOME TAX EXPENSE The Group has incurred net accumulated operating losses for income tax purposes since its inception. The Group believes that it is more likely than not that these net accumulated operating losses will not be utilized in the future. Therefore, the Group has provided full valuation allowances for the deferred tax assets as of June 30, 2022 and 2023. |
NET LOSS PER SHARE
NET LOSS PER SHARE | 6 Months Ended |
Jun. 30, 2023 | |
NET LOSS PER SHARE | |
NET LOSS PER SHARE | 12. NET LOSS PER SHARE Basic and diluted net loss per share for the six months ended June 30, 2022 and 2023 are calculated as follows: For the six months ended June 30, 2022 2023 RMB RMB US$ (Note 2) Numerator: Net loss attributable to Gracell Biotechnologies Inc.’s ordinary shareholders (304,888) (298,662) (41,187) Denominator: Weighted-average number of ordinary shares outstanding—basic and diluted 338,244,214 339,951,916 339,951,916 Net loss per share attributable to Gracell Biotechnologies Inc.’s ordinary shareholders—basic and diluted (0.90) (0.88) (0.12) The potentially dilutive securities that have not been included in the calculation of diluted net loss per share as their inclusion would be anti-dilutive are as follows: For the six months ended June 30, 2022 2023 shares shares Incremental shares on share options and RSUs 1,241,772 1,455,957 |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 6 Months Ended |
Jun. 30, 2023 | |
RELATED PARTY TRANSACTIONS | |
RELATED PARTY TRANSACTIONS | 13. RELATED PARTY TRANSACTIONS a) Related Parties Name of related parties Relationship William Wei Cao Founder, CEO and a principal shareholder of the Company Unitex Capital Ltd. An entity controlled by Founder b) The Group had the following related party transactions: For the six months ended June 30, 2022 2023 RMB RMB US$ (Note 2) Professional service fees incurred Unitex Capital Ltd (a) 6,952 4,117 594 Note (a): For the six months ended June 30, 2022 and 2023, the Group paid RMB 4,477 and RMB 6,089 professional service fees to Unitex Capital Ltd, respectively. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 6 Months Ended |
Jun. 30, 2023 | |
COMMITMENTS AND CONTINGENCIES | |
COMMITMENTS AND CONTINGENCIES | 14. COMMITMENTS AND CONTINGENCIES Contingencies The Group is currently not involved in any legal or administrative proceedings that may have a material adverse impact on the Group’s business, financial position or results of operations. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 6 Months Ended |
Jun. 30, 2023 | |
SUBSEQUENT EVENTS | |
SUBSEQUENT EVENTS | 15. SUBSEQUENT EVENTS The Group evaluated subsequent events through August 14, 2023, the date these consolidated financial statements were issued. On August 10, 2023, the Company closed a private placement of 138,900,000 ordinary shares (equivalent to 27,780,000 of the Company’s American depositary shares (“ADSs”)) and warrants to purchase up to 44,802,870 ordinary shares (equivalent to 8,960,574 ADSs), exercisable at the election of the investors within 24 months after closing. The Company has received $100 million in proceeds from the private placement of ordinary shares, and will receive up to an additional $50 million if the warrants are fully exercised. The financing included participation from the Company’s new and existing healthcare investors and was led by Vivo Capital, with participation from new and existing shareholders including Adage Capital Partners LP, Exome Asset Management, Janus Henderson Investors, Logos Capital, OrbiMed, Pivotal Life Sciences, RA Capital Management and TCGX, among others. |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 6 Months Ended |
Jun. 30, 2023 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Basis of presentation | Basis of presentation The interim unaudited condensed consolidated financial statements have been prepared in conformity with generally accepted accounting principles in the United States of America (“U.S. GAAP”) for interim financial information. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. The interim unaudited condensed consolidated financial statements have been prepared on the same basis as the annual audited consolidated financial statements. In the opinion of management, all adjustments, consisting of normal recurring adjustments necessary for the fair statement of results for the periods presented, have been included. The results of operations of any interim period are not necessarily indicative of the results of operations for the full year or any other interim period. The comparative year-end condensed balance sheet data was derived from the annual audited consolidated financial statements but is condensed to the same degree as the interim condensed balance sheet data. The interim unaudited condensed consolidated financial statements and related disclosures have been prepared with the presumption that users have read or have access to the annual audited consolidated financial statements for the preceding fiscal year. Principal accounting policies followed by the Company in the preparation of the accompanying consolidated financial statements are summarized below. |
Principles of Consolidation | Principles of Consolidation The Group’s consolidated financial statements include the financial statements of the Company, its subsidiaries and the VIE for which the Company is the primary beneficiary. All transactions and balances among the Company, its subsidiaries, and the VIE have been eliminated upon consolidation. Principles of Consolidation (Continued) A subsidiary is an entity in which the Company, directly or indirectly: (1) controls more than one half of the voting power; (2) has the power to appoint or remove the majority of the members of the board of directors; (3) casts a majority of votes at the meeting of the board of directors; or (4) governs the financial and operating policies of the investee under a statute or agreement among the shareholders or equity holders. The Company applies the guidance codified in Accounting Standard Codification (“ASC”) 810, Consolidations, which contains guidance of accounting for VIEs. The guidance requires certain variable interest entities to be consolidated by the primary beneficiary of the entity in which it has a controlling financial interest. A consolidated VIE is an entity in which the Company, or its subsidiary, through contractual arrangements, bears the risks of, and enjoys the rewards normally associated with, ownership of the entity, and therefore the Company or its subsidiary is the primary beneficiary of the entity. |
Use of estimates | Use of estimates The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosures of contingent assets and liabilities at the balance sheet dates and the reported amounts of expenses during the reporting periods. Significant estimates and assumptions reflected in the Group’s consolidated financial statements include, but are not limited to, the useful lives and impairment of long-lived assets, deferred tax valuation allowance, share-based compensation expenses. Management bases the estimates on historical experience and various other assumptions that are believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results could materially differ from those estimates. |
Foreign currency translation | Foreign currency translation The Group uses Chinese Renminbi (“RMB”) as its reporting currency. The United States Dollar (“US$”) is the functional currency of the Group’s entities incorporated in the Cayman Islands, British Virgin Islands, United States of America and Hong Kong, the RMB is the functional currency of the Company’s PRC subsidiaries. Transactions denominated in currencies other than in the functional currency are translated into the functional currency using the exchange rates prevailing at the transaction dates. Monetary assets and liabilities denominated in foreign currencies are translated into functional currency using the applicable exchange rates at the balance sheet date. Non-monetary items that are measured in terms of historical cost in foreign currency are re-measured using the exchange rates at the dates of the initial transactions. Exchange gains or losses arising from foreign currency transactions are included in the consolidated statements of comprehensive loss. The consolidated financial statements of the Group are translated from the functional currency to the reporting currency, RMB. Assets and liabilities of the subsidiaries are translated into RMB using the exchange rate in effect at each balance sheet date. Income and expenses are translated at the average exchange rates prevailing during the fiscal year. Foreign currency translation adjustments arising from these are reflected in the accumulated other comprehensive income. Translations of balances in the consolidated balance sheets, consolidated statements of comprehensive loss, consolidated statements of changes in shareholders’ equity and consolidated statements of cash flows from RMB into US$ as of and for the 6 months ended June 30, 2023 are solely for the convenience of the readers and were calculated at the rate of US$1.00=RMB7.2513, representing the noon buying rate in The City of New York for cable transfers of RMB as certified for customs purposes by the Federal Reserve Bank of New York on June 30, 2023. No representation is made that the RMB amounts could have been, or could be, converted, realized or settled into US$ at that rate on June 30, 2023, or at any other rate. The US$ convenience translation is not required under U.S. GAAP and all US$ convenience translation amounts in the accompanying consolidated financial statements are unaudited. |
Cash and cash equivalents | Cash and cash equivalents Cash and cash equivalents primarily consist of cash and demand deposits which are highly liquid. The Group considers highly liquid investments that are readily convertible to known amounts of cash and with original maturities from the date of purchase of three months or less to be cash equivalents. All cash and cash equivalents are unrestricted as to withdrawal and use. |
Short-term investments | Short-term investments Short-term investments are deposits at bank with maturities of greater than three months, but less than twelve months. Short-term investments are stated at cost, which approximates fair value. Interest earned is included in interest income. |
Expected credit losses | Expected credit losses The Group accounts for the impairment of financial instruments in accordance with ASU No. 2016-13, “Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” (“ASC Topic 326”), effective from January 1, 2023. The Group’s deposits and other receivables are within the scope of ASC Topic 326. Receivables with similar risk characteristics have been grouped into pools. For each pool, the Group considers the historical credit loss experience, current economic conditions, supportable forecasts of future economic conditions, and any recoveries in assessing the lifetime expected credit losses. The Group adopted this ASC Topic 326 using a modified retrospective approach. The cumulative effect on the accumulated deficit as at January 1, 2023 was not material. |
Fair value measurements | Fair value measurements The Group applies ASC 820, Fair Value Measurements and Disclosures Level 1—Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets. Level 2—Includes other inputs that are directly or indirectly observable in the marketplace. Level 3—Unobservable inputs which are supported by little or no market activity. ASC 820 describes three main approaches to measuring the fair value of assets and liabilities: (1) market approach; (2) income approach; and (3) cost approach. The market approach uses prices and other relevant information generated from market transactions involving identical or comparable assets or liabilities. The income approach uses valuation techniques to convert future amounts to a single present value amount. The measurement is based on the value indicated by current market expectations about those future amounts. The cost approach is based on the amount that would currently be required to replace an asset. The Group does not have any non-financial assets or liabilities that are recognized or disclosed at fair value in the financial statements on a recurring basis. The carrying amounts of cash and cash equivalent, short-term investments, other current assets, accrued liabilities and other current liabilities and short-term borrowings approximate their fair values because of their generally short maturities. |
Property, equipment and software | Property, equipment and software Property, equipment and software are stated at cost less accumulated depreciation and amortization. Depreciation and amortization is computed using the straight-line method over the estimated useful lives of the assets as follows: Category Estimated Useful Life Machinery and laboratory equipment 5-10 years Vehicles 4 years Furniture and tools 3-5 years Electronic equipment 3 years Computer software 3-5 years Leasehold improvements Lesser of lease terms or estimated useful lives of the assets Repair and maintenance costs are charged to expense as incurred, whereas the cost of renewals and betterments that extend the useful lives of property, equipment and software are capitalized as additions to the related assets. Retirements, sales and disposals of assets are recorded by removing the cost and accumulated depreciation and amortization from the asset and accumulated depreciation and amortization accounts with any resulting gain or loss reflected in the consolidated statements of comprehensive loss. |
Impairment of long-lived assets | Impairment of long-lived assets The Group evaluates the recoverability of its long-lived assets, including fixed assets, for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be fully recoverable. When these events occur, the Group measures impairment by comparing the carrying amount of the assets to the estimated undiscounted future cash flows expected to result from the use of the assets and their eventual disposition. If the sum of the expected undiscounted cash flows is less than the carrying amount of the assets, the Group recognizes an impairment loss based on the excess of the carrying amount of the assets over their fair value. Fair value is generally determined by discounting the cash flows expected to be generated by the assets, when the market prices are not readily available. The adjusted carrying amount of the assets is the new cost basis and is depreciated over the assets’ remaining useful lives. Long-lived assets are grouped with other assets and liabilities at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities. No impairment loss was recorded for the six months ended June 30, 2022 and 2023. |
Segment reporting | Segment reporting In accordance with ASC 280, Segment Reporting |
Research and development expenses | Research and development expenses Elements of research and development expenses primarily include (1) payroll and other related costs of personnel engaged in research and development activities, (2) costs related to pre-clinical testing of the Group’s technologies under development and clinical trials such as payments to contract research organizations (“CRO”) and contract manufacturing organizations (“CMO”), investigators and clinical trial sites that conduct the clinical studies; (3) costs to develop the product candidates, including raw materials and supplies, product testing, depreciation and amortization, and facility related expenses, (4) other research and development expenses. Research and development expenses are charged to expense as incurred when these expenditures relate to the Group’s research and development services and have no alternative future uses in accordance with ASC 730, Research and Development |
Government subsidies | Government subsidies Government subsidies primarily consist of financial subsidies received from provincial and local governments for operating a business in their jurisdictions and compliance with specific policies promoted by the governments. The Group’s PRC based subsidiaries received government subsidies from certain local governments. The Group’s government subsidies consist of specific subsidies and other subsidies. Specific subsidies are subsidies that the local government has set certain conditions for the subsidies. Other subsidies are the subsidies that the local government has not set any conditions and are not tied to future trends or performance of the Group, receipt of such subsidy income is not contingent upon any further actions or performance of the Group and the amounts do not have to be refunded under any circumstances. For the six months ended June 30, 2022 and 2023, no specific subsidies were received by the Group. Other subsidies of RMB1,798 and RMB6,104 for the six months ended June 30, 2022 and 2023, respectively, are recognized as other income upon receipt as further performance by the Group is not required. |
Leases | Leases The Group adopted ASC 842, Leases, on January 1, 2021. Leases are classified at the inception date as either a finance lease or an operating lease. Leases that transfer substantially all of the benefits and risks incidental to the ownership of assets are accounted for as finance leases as if there was an acquisition of an asset and incurrence of an obligation at the inception of the lease. All other leases are accounted for as operating leases. Under ASC 842, at the commencement date, a lessee should recognize a financing liability equal to the present value of future lease payments and a right to use (“ROU”) asset. The expense recognition is consistent with the expense recognition under the existing lease guidance, wherein rental payments are expensed on a straight-line basis over their respective lease terms. The Group leases certain office space under non-cancelable operating lease agreements. Certain lease agreements contain rent holidays. Rent holidays are considered in determining the straight-line rent expense to be recorded over the lease term. The lease term begins on the date of initial possession of the leased property for purpose of recognizing lease expense on straight-line basis over the term of the lease. For leases with a term of 12 months or less, the Group makes an accounting policy election by class of underlying asset not to recognize lease assets and lease liabilities and recognizes lease expenses for such lease generally on a straight-line basis over the lease term. |
Comprehensive loss | Comprehensive loss Comprehensive loss is defined as the changes in equity of the Group during a period from transactions and other events and circumstances excluding transactions resulting from investments by shareholders and distributions to shareholders. Accumulated other comprehensive loss of the Group includes foreign currency translation adjustments. |
Income taxes | Income taxes The Group follows the liability method of accounting for income taxes in accordance with ASC 740, Income Taxes (“ASC 740”). Under this method, deferred tax assets and liabilities are determined based on the difference between the financial reporting and tax bases of assets and liabilities using enacted tax rates that will be in effect in the period in which the differences are expected to reverse. The Group records a valuation allowance to offset deferred tax assets if based on the weight of available evidence, it is more likely than not that some portion, or all, of the deferred tax assets will not be realized. The effect on deferred taxes of a change in tax rate is recognized in tax expense in the period that includes the enactment date of the change in tax rate. The Group evaluates its uncertain tax positions using the provisions of ASC 740, which prescribes a recognition threshold that a tax position is required to meet before being recognized in the consolidated financial statements. Income taxes (Continued) The Group recognizes in the consolidated financial statements the benefit of a tax position which is “more likely than not” to be sustained under examination based solely on the technical merits of the position assuming a review by tax authorities having all relevant information. Tax positions that meet the recognition threshold are measured using a cumulative probability approach, at the largest amount of tax benefit that has a greater than fifty percent likelihood of being realized upon settlement. It is the Group’s policy to recognize interest and penalties related to unrecognized tax benefits, if any, as a component of income tax expense. |
Borrowings | Borrowings Borrowings are recognized initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated at amortized cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognized in the consolidated statements of comprehensive loss over the period of the borrowings using the effective interest method. |
Share-based compensation | Share-based compensation The Company grants share-based awards to eligible employees and consultants and accounts for share-based compensation in accordance with ASC 718, Compensation—Stock Compensation The Company follows ASC 718 to determine whether a share-based award should be classified and accounted for as a liability award or equity award. All grants of share-based awards to employees, management and nonemployees classified as equity awards are recognized in the financial statements based on their grant date fair values which are calculated using the binomial option pricing model. Employees’ share-based compensation awards are measured at the grant date fair value of the awards and recognized as expenses (a) immediately at the grant date if no vesting conditions are required; or (b) for share-based awards granted with only service conditions, using the straight-line method, over the vesting period; or (c) for share-based awards granted with service conditions and the occurrence of an IPO as performance condition, cumulative share-based compensation expenses for the options that have satisfied the service condition should be recorded upon the completion of the IPO, using the graded vesting method. |
Net loss per share | Net loss per share In accordance with ASC 260, Earnings Per Share |
Employee defined contribution plan | Employee defined contribution plan Full time employees of the Group in the PRC participate in a government mandated defined contribution plan, pursuant to which certain pension benefits, medical care, employee housing fund and other welfare benefits are provided to the employees. Chinese labor regulations require that the PRC subsidiaries and the VIE of the Group make contributions to the government for these benefits based on certain percentages of the employees’ salaries, up to a maximum amount specified by the local government. The Group has no legal obligation for the benefits beyond the contributions made. The total amounts of such employee benefit expenses, which were expensed as incurred, were approximately RMB10.2 million and RMB9.25 million for the six months ended June 30, 2022 and 2023, respectively. |
Concentration of risks | Concentration of risks Concentration of credit risk As of December 31, 2022 and June 30, 2023, the aggregate amount of cash and cash equivalents and short-term investments of RMB1,403,024 and RMB1,098,676 respectively, were held at major financial institutions located in the mainland of China, and RMB55,180 and RMB89,328, respectively, were deposited with major financial institutions located outside the mainland of China. These financial institutions are of high credit quality and management continually monitors the credit worthiness of these financial institutions. Business and economic risk The Group believes that changes in any of the following areas could have a material adverse effect on the Group’s future consolidated financial position, results of operations or cash flows, changes in the overall demand for services; competitive pressures due to new entrants; advances and new trends in new technologies and industry standards; changes in certain strategic relationships; regulatory considerations and risks associated with the Group’s ability to attract employees necessary to support its growth. The Group’s operations could also be adversely affected by significant political, regulatory, economic and social uncertainties in the PRC. Concentration of risks (Continued) Foreign currency exchange rate risk A significant portion of the Group’s businesses are transacted in RMB, which is not a freely convertible currency. On January 1, 1994, the PRC government abolished the dual rate system and introduced a single rate of exchange as quoted daily by the People’s Bank of China (the “PBOC”). However, the unification of the exchange rates does not imply that the RMB may be readily convertible into US$ or other foreign currencies. All foreign exchange transactions continue to take place either through the PBOC or other banks authorized to buy and sell foreign currencies at the exchange rates quoted by the PBOC. Approval of foreign currency payments by the PBOC or other institutions requires submitting a payment application form together with suppliers’ invoices, shipping documents and signed contracts. From July 21, 2005, the RMB is permitted to fluctuate within a narrow and managed band against a basket of certain foreign currencies. For U.S. dollar against RMB, there was appreciation of approximately 3.8% in the six months ended June 30, 2023. It is difficult to predict how market forces or PRC or U.S. government policy may impact the exchange rate between the RMB and the U.S. dollar in the future. |
Recently issued accounting pronouncements | Recently issued accounting pronouncements The Group qualifies as an “emerging growth company”, or EGC, pursuant to the Jumpstart Our Business Startups Act of 2012, as amended, or the JOBS Act. As an EGC, the Group does not need to comply with any new or revised financial accounting standards until such date that a private company is otherwise required to comply with such new or revised accounting standards. The Group adopts the following standards based on extended transition period provided to private companies or early adopts as necessary as permitted by the respective standards. New and amended standards adopted by the Group In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). ASU 2016-13 is intended to improve financial reporting by requiring timelier recording of credit losses on loans and other financial instruments held by financial institutions and other organizations. This ASU requires the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. This ASU requires enhanced disclosures to help investors and other financial statement users better understand significant estimates and judgments used in estimating credit losses, as well as the credit quality and underwriting standards of the Group’s portfolio. These disclosures include qualitative and quantitative requirements that provide additional information about the amounts recorded in the financial statements. In November 2019, the FASB issued ASU 2019-10, which extends the adoption date for certain registrants. The amendments in ASU 2016-13 are effective for fiscal years beginning after December 15, 2022, including interim periods within fiscal years beginning after December 15, 2022 for the Group. The Group has adopted ASU 2016-13 and the impact of this adoption was assessed to be not material. Recently issued accounting pronouncements (Continued) New and amended standards not yet adopted by the Group In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805) — Accounting for Contract Assets and Contract Liabilities from Contracts with Customers (“ASU 2021-08”). It requires issuers to apply ASC 606 Revenue from Contracts with Customers to recognize and measure contract assets and contract liabilities from contracts with customers acquired in a business combination. ASU 2021-08 is effective for fiscal years beginning after December 15, 2023, with early adoption permitted. The Group does not plan to early adopt ASU 2021-08 and is currently in the process of evaluating the impact of adoption of this guidance on its consolidated financial statements. In June 2022, the FASB issued ASU 2022-03 Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions. The update clarifies that a contractual restriction on the sale of an equity security is not considered part of the unit of account of the equity security and, therefore, is not considered in measuring fair value. The update also clarifies that an entity cannot, as a separate unit of account, recognize and measure a contractual sale restriction. The update also requires certain additional disclosures for equity securities subject to contractual sale restrictions. For public business entities, the amendments in this Update are effective for fiscal years beginning after December 15, 2023, and interim periods within those fiscal years. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2024, and interim periods within those fiscal years. Early adoption is permitted for both interim and annual financial statements that have not yet been issued or made available for issuance. As an emerging growth company, the standard is effective for the Group for the year ended December 31, 2025 including interim periods in the year ended March 31, 2025. The Group does not plan to early adopt ASU 2022-03 and is currently in the process of evaluating the impact of adoption of this guidance on its consolidated financial statements. |
ORGANIZATION AND BASIS OF PRE_2
ORGANIZATION AND BASIS OF PRESENTATION (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
ORGANIZATION AND BASIS OF PRESENTATION | |
Summary of variable interest entities and subsidiaries | As of June 30, 2023, the Company’s principal subsidiaries, VIE and VIE’s subsidiary are as follows: Percentage of Date of Place of legal ownership incorporation incorporation by the Company Principal activities Subsidiaries Gracell Biotechnologies Holdings Limited (“Gracell BVI”) May 22, 2018 British Virgin Islands 100 % Investment holding Gracell Biotechnologies (HK) Limited (“Gracell HK”) June 7, 2018 Hong Kong 100 % Investment holding Gracell Bioscience (Shanghai) Co., Ltd. August 24, 2018 The PRC 100 % Research and development of innovative medicines Gracell Biopharmaceuticals, Inc. February 11, 2020 The United States of America 100 % Research and development of innovative medicines Gracell Biomedicine (Shanghai) Co., Ltd. August 19, 2020 The PRC 100 % Research and development of innovative medicines Hainan Gracell Biomedicine Co., Ltd. June 25, 2021 The PRC 100 % Research and development of innovative medicines Suzhou Gracell Bioscience Co., Ltd. July 12, 2021 The PRC 100 % Research and development of innovative medicines VIE Gracell Biotechnologies (Shanghai) Co., Ltd. May 22, 2017 The PRC — Research and development of innovative medicines VIE’s subsidiary Suzhou Gracell Biotechnologies Co., Ltd. (“Suzhou Gracell”) April 23, 2018 The PRC — Research and development of innovative medicines |
Summary of financial statements of the variable interest entity and subsidiaries | As of December 31, As of June 30, 2022 2023 RMB RMB US$ (Note 2) ASSETS Current assets: Cash and cash equivalents 110,479 88,872 12,256 Short-term investments 3,559 3,574 493 Amounts due from Group companies 93,705 93,705 12,923 Prepayments and other current assets 20,675 26,042 3,591 Total current assets 228,418 212,193 29,263 Property, equipment and software 44,742 39,258 5,414 Operating lease, right-of-use assets 7,911 5,801 800 Other non-current assets 2,746 4,349 600 TOTAL ASSETS 283,817 261,601 36,077 LIABILITIES Current liabilities: Amounts due to related parties 676,174 776,470 107,080 Short-term borrowings 104,600 90,000 12,412 Operating lease liabilities, current 4,998 3,259 449 Current portion of long-term borrowings 7,844 13,004 1,793 Accruals and other current liabilities 41,425 24,654 3,401 Total current liabilities 835,041 907,387 125,135 Long-term borrowings 46,505 39,958 5,510 Amounts due to Group companies 59,500 59,500 8,205 Operating lease liabilities, non-current 4,436 2,542 351 TOTAL LIABILITIES 945,482 1,009,387 139,201 For the six months ended June 30, 2022 2023 RMB RMB US$ (Note 2) Net loss (134,070) (86,121) (11,876) For the six months ended June 30, 2022 2023 RMB RMB US$ (Note 2) Net cash used in operating activities (68,293) (2,104) (290) Net cash used in investing activities (4,847) (3,516) (485) Net cash generated from/(used in) financing activities 83,988 (15,987) (2,204) |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Summary of property plant and equipment useful lives | Category Estimated Useful Life Machinery and laboratory equipment 5-10 years Vehicles 4 years Furniture and tools 3-5 years Electronic equipment 3 years Computer software 3-5 years Leasehold improvements Lesser of lease terms or estimated useful lives of the assets |
PREPAYMENTS AND OTHER CURRENT_2
PREPAYMENTS AND OTHER CURRENT ASSETS (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
PREPAYMENTS AND OTHER CURRENT ASSETS | |
Summary of prepayments and other current assets | As of December 31, As of June 30, 2022 2023 RMB RMB US$ (Note 2) Deductible value-added tax input 26,330 35,810 4,938 Prepayments for CRO and other services 5,296 13,513 1,863 Deposits 3,355 3,998 551 Deferred expenses 408 3,489 481 Prepayment for raw materials 1,448 1,699 234 Others 714 893 125 37,551 59,402 8,192 |
PROPERTY, EQUIPMENT AND SOFTW_2
PROPERTY, EQUIPMENT AND SOFTWARE (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
PROPERTY, EQUIPMENT AND SOFTWARE | |
Summary of property, equipment and software | As of December 31, As of June 30, 2022 2023 RMB RMB US$ (Note 2) Machinery and laboratory equipment 138,049 143,845 19,837 Leasehold improvements 101,048 102,950 14,197 Computer Software 10,417 10,716 1,478 Construction in progress 283 228 31 Others 6,890 7,054 973 Total property, equipment and software 256,687 264,793 36,516 Less: accumulated depreciation and amortization (133,561) (158,095) (21,802) Property, equipment and software, net 123,126 106,698 14,714 |
LEASES (Tables)
LEASES (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
LEASES | |
Summary of operating leases | As of December 31, As of June 30, 2022 2023 RMB RMB US$ (Note 2) Assets Operating lease right-of-use assets 21,546 12,896 1,778 Liabilities Operating lease liabilities, current 17,545 12,472 1,720 Operating lease liabilities, non-current 6,485 2,542 351 24,030 15,014 2,071 |
Summary of future minimum payments under non-cancelable operating leases | Future minimum payments under non-cancelable operating leases with initial terms in excess of one year consist of the following as of June 30, 2023: RMB US$ (Note 2) For the years ending: 2023 9,245 1,275 2024 4,515 623 2025 1,623 224 2026 — — 2027 and thereafter — — Total undiscounted lease payments 15,383 2,122 Less: imputed interest (369) (51) Total lease liabilities 15,014 2,071 |
Summary of lease cost and other information | For the six months ended June 30, 2022 2023 RMB RMB US$ (Note 2) Lease cost Operating lease cost 9,147 9,048 1,248 Short-term lease cost 534 1,015 140 Total lease cost 9,681 10,063 1,388 Other information Cash paid for amounts included in the measurement of lease liabilities 7,200 9,436 1,301 Right-of-use assets obtained in exchange for new operating lease liabilities 1,010 — — Weighted-average remaining lease term 1.47 years 1.15 years 1.15 years Weighted-average discount rate 5.0 % 5.0 % 5.0 % |
OTHER NON-CURRENT ASSETS (Table
OTHER NON-CURRENT ASSETS (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
OTHER NON-CURRENT ASSETS | |
Summary of other non-current assets | As of December 31, As of June 30, 2022 2023 RMB RMB US$ (Note 2) Prepayments for property, equipment and software 10,282 5,084 701 Long-term deposits 2,430 2,383 329 Others 3,137 3,419 471 15,849 10,886 1,501 |
ACCRUALS AND OTHER CURRENT LI_2
ACCRUALS AND OTHER CURRENT LIABILITIES (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
ACCRUALS AND OTHER CURRENT LIABILITIES | |
Summary of accruals and other current liabilities | As of December 31, As of June 30, 2022 2023 RMB RMB US$ (Note 2) Accrued external research and development related expenses 47,073 40,288 5,556 Salary and welfare payables 20,622 18,699 2,579 Professional service fees 10,252 7,765 1,071 Deferred income for reimbursement of the expenses related to the establishment of the ADS facility 2,902 3,234 446 Others 5,142 5,594 770 85,991 75,580 10,422 |
BORROWINGS (Tables)
BORROWINGS (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
BORROWINGS | |
Summary of borrowings | As of December 31, As of June 30, 2022 2023 RMB RMB US$ (Note 2) Current Short-term borrowings: Bank loans 104,600 90,000 12,412 Current portion of long-term borrowings 7,844 13,004 1,793 Total current borrowings 112,444 103,004 14,205 Non-Current Long-term borrowings: Bank loans 46,505 39,958 5,510 Total non-current borrowings 46,505 39,958 5,510 Total borrowings 158,949 142,962 19,715 |
SHARE-BASED COMPENSATION (Table
SHARE-BASED COMPENSATION (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
SHARE-BASED COMPENSATION | |
Summary of the option activities | Weighted– Weighted– Weighted Weighted– Average Average Average Average Grant Grant Remaining Aggregate Number of Exercise Date Date Contractual intrinsic Options Price Fair Value Fair Value Term value US$ per US$ per RMB per option option option Years RMB Outstanding at January 1, 2022 13,102,590 1.60 1.10 7.21 8.86 12,335 Granted 2,199,826 0.65 0.35 2.22 — — Forfeited (397,723) 1.32 0.68 4.40 — — Exercised (66,945) 0.30 0.29 2.00 — — Outstanding at June 30, 2022 14,837,748 1.47 1.00 6.57 8.44 14,455 Outstanding at January 1, 2023 15,162,546 1.39 0.91 5.98 8.14 1,290 Granted 663,405 0.38 0.21 1.46 — — Forfeited (828,031) 2.01 1.01 6.55 — — Exercised (51,730) 0.39 0.22 1.43 — — Expired (93,522) 1.32 0.66 4.35 — — Outstanding at June 30, 2023 14,852,668 1.31 0.88 5.77 7.72 7,490 |
Summary of the assumptions used to estimate the fair value of the share options | For the six months ended June 30, 2022 2023 Risk-free interest rate 1.79%-3.12% 3.46%-4.10% Dividend yield 0% 0% Expected volatility range 55.62%-55.94% 57.36%~57.55% Exercise multiple 2.20-2.80 2.20 Contractual life 10 years 10 years |
Options | |
SHARE-BASED COMPENSATION | |
Summary of share-based compensation expenses | For the six months ended June 30, 2022 2023 RMB RMB US$ (Note 2) Research and development expenses 6,909 2,487 343 Administrative expenses 6,854 4,195 579 13,763 6,682 922 |
Restricted Stock Units (RSUs) | |
SHARE-BASED COMPENSATION | |
Summary of share-based compensation expenses | For the six months ended June 30, 2022 2023 RMB RMB US$ (Note 2) Research and development expenses 644 3,230 445 Administrative expenses 1,191 4,999 689 1,835 8,229 1,134 |
NET LOSS PER SHARE (Tables)
NET LOSS PER SHARE (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
NET LOSS PER SHARE | |
Summary of basic and diluted net loss per share | For the six months ended June 30, 2022 2023 RMB RMB US$ (Note 2) Numerator: Net loss attributable to Gracell Biotechnologies Inc.’s ordinary shareholders (304,888) (298,662) (41,187) Denominator: Weighted-average number of ordinary shares outstanding—basic and diluted 338,244,214 339,951,916 339,951,916 Net loss per share attributable to Gracell Biotechnologies Inc.’s ordinary shareholders—basic and diluted (0.90) (0.88) (0.12) |
Summary of potentially dilutive securities that have not been included in the calculation of diluted net loss per share as their inclusion would be anti-dilutive | For the six months ended June 30, 2022 2023 shares shares Incremental shares on share options and RSUs 1,241,772 1,455,957 |
RELATED PARTY TRANSACTIONS (Tab
RELATED PARTY TRANSACTIONS (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
RELATED PARTY TRANSACTIONS | |
Summary of related party transactions | For the six months ended June 30, 2022 2023 RMB RMB US$ (Note 2) Professional service fees incurred Unitex Capital Ltd (a) 6,952 4,117 594 Note (a): For the six months ended June 30, 2022 and 2023, the Group paid RMB 4,477 and RMB 6,089 professional service fees to Unitex Capital Ltd, respectively. |
ORGANIZATION AND BASIS OF PRE_3
ORGANIZATION AND BASIS OF PRESENTATION - Summary of Variable Interest Entities and Subsidiaries (Details) | 6 Months Ended |
Jun. 30, 2023 | |
Gracell Biotechnologies Holdings Limited | |
ORGANIZATION AND BASIS OF PRESENTATION | |
Date of incorporation | May 22, 2018 |
Percentage of legal ownership by the Company | 100% |
Principal activities | Investment holding |
Gracell Biotechnologies HK Limited | |
ORGANIZATION AND BASIS OF PRESENTATION | |
Date of incorporation | Jun. 07, 2018 |
Percentage of legal ownership by the Company | 100% |
Principal activities | Investment holding |
Gracell Bioscience Shanghai Co Ltd | |
ORGANIZATION AND BASIS OF PRESENTATION | |
Date of incorporation | Aug. 24, 2018 |
Percentage of legal ownership by the Company | 100% |
Principal activities | Research and development of innovative medicines |
Gracell Biopharmaceuticals Inc | |
ORGANIZATION AND BASIS OF PRESENTATION | |
Date of incorporation | Feb. 11, 2020 |
Percentage of legal ownership by the Company | 100% |
Principal activities | Research and development of innovative medicines |
Gracell Biomedicine Shanghai Co Ltd | |
ORGANIZATION AND BASIS OF PRESENTATION | |
Date of incorporation | Aug. 19, 2020 |
Percentage of legal ownership by the Company | 100% |
Principal activities | Research and development of innovative medicines |
Hainan Gracell Biomedicine Company Limited | |
ORGANIZATION AND BASIS OF PRESENTATION | |
Date of incorporation | Jun. 25, 2021 |
Percentage of legal ownership by the Company | 100% |
Principal activities | Research and development of innovative medicines |
Suzhou Gracell Bioscience Company Limited | |
ORGANIZATION AND BASIS OF PRESENTATION | |
Date of incorporation | Jul. 12, 2021 |
Percentage of legal ownership by the Company | 100% |
Principal activities | Research and development of innovative medicines |
Gracell Biotechnologies Shangai Company Limited | |
ORGANIZATION AND BASIS OF PRESENTATION | |
Date of incorporation | May 22, 2017 |
Principal activities | Research and development of innovative medicines |
Suzhou Gracell Biotechnologies Co Ltd Suzhou Gracell | |
ORGANIZATION AND BASIS OF PRESENTATION | |
Date of incorporation | Apr. 23, 2018 |
Principal activities | Research and development of innovative medicines |
ORGANIZATION AND BASIS OF PRE_4
ORGANIZATION AND BASIS OF PRESENTATION - Summary of Financial Statements of the Variable Interest Entity and its Subsidiaries (Details) ¥ in Thousands, $ in Thousands | 6 Months Ended | ||||
Jun. 30, 2023 CNY (¥) | Jun. 30, 2023 USD ($) | Jun. 30, 2022 CNY (¥) | Jun. 30, 2023 USD ($) | Dec. 31, 2022 CNY (¥) | |
Current assets: | |||||
Cash and cash equivalents | ¥ 1,184,430 | $ 163,340 | ¥ 1,454,645 | ||
Short-term investments | 3,574 | 493 | 3,559 | ||
Prepayments and other current assets | 59,402 | 8,192 | 37,551 | ||
Total current assets | 1,247,406 | 172,025 | 1,495,755 | ||
Property, equipment and software | 106,698 | 14,714 | 123,126 | ||
Operating lease, right-of-use assets | 12,896 | 1,778 | 21,546 | ||
Other non-current assets | 10,886 | 1,501 | 15,849 | ||
TOTAL ASSETS | 1,377,886 | 190,018 | 1,656,276 | ||
Current liabilities: | |||||
Amounts due to related parties | 2,760 | 381 | 4,662 | ||
Short-term borrowings | 90,000 | 12,412 | 104,600 | ||
Operating lease liabilities, current | 12,472 | 1,720 | 17,545 | ||
Current portion of long-term borrowings | 13,004 | 1,793 | 7,844 | ||
Accruals and other current liabilities (including accruals and other current liabilities of the consolidated VIEs without recourse to the Company of RMB41,425 and RMB24,654 as of December 31, 2022 and June 30, 2023, respectively) | 75,580 | 10,422 | 85,991 | ||
Total current liabilities | 193,816 | 26,728 | 220,642 | ||
Long-term borrowings | 39,958 | 5,510 | 46,505 | ||
Operating lease liabilities, non-current | 2,542 | 351 | 6,485 | ||
TOTAL LIABILITIES | 241,167 | 33,258 | 280,511 | ||
Net loss | (298,662) | $ (41,187) | ¥ (304,888) | ||
Net cash used in operating activities | (281,808) | (38,864) | (204,710) | ||
Net cash used in investing activities | (7,117) | (981) | (193,181) | ||
Net cash generated from/(used in) financing activities | (16,000) | (2,206) | 31,808 | ||
Variable Interest Entities And Its Subsidiaries | |||||
Current assets: | |||||
Cash and cash equivalents | 88,872 | 12,256 | 110,479 | ||
Short-term investments | 3,574 | 493 | 3,559 | ||
Amounts due from Group companies | 93,705 | 12,923 | 93,705 | ||
Prepayments and other current assets | 26,042 | 3,591 | 20,675 | ||
Total current assets | 212,193 | 29,263 | 228,418 | ||
Property, equipment and software | 39,258 | 5,414 | 44,742 | ||
Operating lease, right-of-use assets | 5,801 | 800 | 7,911 | ||
Other non-current assets | 4,349 | 600 | 2,746 | ||
TOTAL ASSETS | 261,601 | 36,077 | 283,817 | ||
Current liabilities: | |||||
Amounts due to related parties | 776,470 | 107,080 | 676,174 | ||
Short-term borrowings | 90,000 | 12,412 | 104,600 | ||
Operating lease liabilities, current | 3,259 | 449 | 4,998 | ||
Current portion of long-term borrowings | 13,004 | 1,793 | 7,844 | ||
Accruals and other current liabilities (including accruals and other current liabilities of the consolidated VIEs without recourse to the Company of RMB41,425 and RMB24,654 as of December 31, 2022 and June 30, 2023, respectively) | 24,654 | 3,401 | 41,425 | ||
Total current liabilities | 907,387 | 125,135 | 835,041 | ||
Long-term borrowings | 39,958 | 5,510 | 46,505 | ||
Amounts due to Group companies | 59,500 | 8,205 | 59,500 | ||
Operating lease liabilities, non-current | 2,542 | 351 | 4,436 | ||
TOTAL LIABILITIES | 1,009,387 | $ 139,201 | ¥ 945,482 | ||
Net loss | (86,121) | (11,876) | (134,070) | ||
Net cash used in operating activities | (2,104) | (290) | (68,293) | ||
Net cash used in investing activities | (3,516) | (485) | (4,847) | ||
Net cash generated from/(used in) financing activities | ¥ (15,987) | $ (2,204) | ¥ 83,988 |
ORGANIZATION AND BASIS OF PRE_5
ORGANIZATION AND BASIS OF PRESENTATION - Additional Information (Details) | 6 Months Ended |
Jun. 30, 2023 | |
Voting rights proxy agreement | |
ORGANIZATION AND BASIS OF PRESENTATION | |
Agreement term | 20 years |
Technology consultation and service agreement | |
ORGANIZATION AND BASIS OF PRESENTATION | |
Agreement term | 20 years |
SUMMARY OF SIGNIFICANT ACCOUN_4
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) ¥ in Thousands | 6 Months Ended | ||
Jun. 30, 2023 CNY (¥) segment | Jun. 30, 2022 CNY (¥) | Dec. 31, 2022 CNY (¥) | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |||
Closing foreign exchange rate | 7.2513 | ||
Impairment of long lived assets held for sale | ¥ 0 | ¥ 0 | |
Number of operating segment | segment | 1 | ||
Number of reportable segment | segment | 1 | ||
Specific subsidies | ¥ 0 | 0 | |
Other subsidiary | 6,104 | 1,798 | |
Defined contribution plan expenses | ¥ 9,250 | ¥ 10,200 | |
Percentage appreciation in the foreign currency | 3.80% | ||
CHINA | |||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |||
Cash and cash equivalents and short term investments | ¥ 1,098,676 | ¥ 1,403,024 | |
Outside China | |||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |||
Cash and cash equivalents and short term investments | ¥ 89,328 | ¥ 55,180 |
SUMMARY OF SIGNIFICANT ACCOUN_5
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Summary of Property Plant and Equipment Useful Lives (Details) | 6 Months Ended |
Jun. 30, 2023 | |
Machinery and laboratory equipment | Maximum | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Property, plant and equipment, useful life | 10 years |
Machinery and laboratory equipment | Minimum | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Property, plant and equipment, useful life | 5 years |
Vehicles | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Property, plant and equipment, useful life | 4 years |
Furniture and tools | Maximum | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Property, plant and equipment, useful life | 5 years |
Furniture and tools | Minimum | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Property, plant and equipment, useful life | 3 years |
Electronic equipment | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Property, plant and equipment, useful life | 3 years |
Computer software | Maximum | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Property, plant and equipment, useful life | 5 years |
Computer software | Minimum | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Property, plant and equipment, useful life | 3 years |
Leasehold improvements | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Property, plant and equipment, estimated useful lives | Lesser of lease terms or estimated useful lives of the assets |
PREPAYMENTS AND OTHER CURRENT_3
PREPAYMENTS AND OTHER CURRENT ASSETS - Summary of Prepayment And Other Assets (Details) ¥ in Thousands, $ in Thousands | Jun. 30, 2023 CNY (¥) | Jun. 30, 2023 USD ($) | Dec. 31, 2022 CNY (¥) |
PREPAYMENTS AND OTHER CURRENT ASSETS | |||
Deductible value-added tax input | ¥ 35,810 | $ 4,938 | ¥ 26,330 |
Prepayments for CRO and other services | 13,513 | 1,863 | 5,296 |
Deposits | 3,998 | 551 | 3,355 |
Deferred expenses | 3,489 | 481 | 408 |
Prepayment for raw materials | 1,699 | 234 | 1,448 |
Others | 893 | 125 | 714 |
Prepayments and other current assets | ¥ 59,402 | $ 8,192 | ¥ 37,551 |
PROPERTY, EQUIPMENT AND SOFTW_3
PROPERTY, EQUIPMENT AND SOFTWARE - Summary of Property Equipment And Software (Details) ¥ in Thousands, $ in Thousands | Jun. 30, 2023 CNY (¥) | Jun. 30, 2023 USD ($) | Dec. 31, 2022 CNY (¥) |
PROPERTY, EQUIPMENT AND SOFTWARE | |||
Total property, equipment and software | ¥ 264,793 | $ 36,516 | ¥ 256,687 |
Less: accumulated depreciation and amortization | (158,095) | (21,802) | (133,561) |
Property, equipment and software, net | 106,698 | 14,714 | 123,126 |
Machinery and laboratory equipment | |||
PROPERTY, EQUIPMENT AND SOFTWARE | |||
Total property, equipment and software | 143,845 | 19,837 | 138,049 |
Leasehold improvements | |||
PROPERTY, EQUIPMENT AND SOFTWARE | |||
Total property, equipment and software | 102,950 | 14,197 | 101,048 |
Computer Software | |||
PROPERTY, EQUIPMENT AND SOFTWARE | |||
Total property, equipment and software | 10,716 | 1,478 | 10,417 |
Construction in progress | |||
PROPERTY, EQUIPMENT AND SOFTWARE | |||
Total property, equipment and software | 228 | 31 | 283 |
Others | |||
PROPERTY, EQUIPMENT AND SOFTWARE | |||
Total property, equipment and software | ¥ 7,054 | $ 973 | ¥ 6,890 |
PROPERTY, EQUIPMENT AND SOFTW_4
PROPERTY, EQUIPMENT AND SOFTWARE - Additional Information (Details) ¥ in Thousands, $ in Thousands | 6 Months Ended | ||
Jun. 30, 2023 CNY (¥) | Jun. 30, 2023 USD ($) | Jun. 30, 2022 CNY (¥) | |
PROPERTY, EQUIPMENT AND SOFTWARE | |||
Depreciation and amortization expenses | ¥ 25,631 | $ 3,535 | ¥ 33,859 |
LEASES - Summary of Operating L
LEASES - Summary of Operating Leases (Details) ¥ in Thousands, $ in Thousands | Jun. 30, 2023 CNY (¥) | Jun. 30, 2023 USD ($) | Dec. 31, 2022 CNY (¥) |
Assets | |||
Operating lease right-of-use assets | ¥ 12,896 | $ 1,778 | ¥ 21,546 |
Liabilities | |||
Operating lease liabilities, current | 12,472 | 1,720 | 17,545 |
Operating lease liabilities, non-current | 2,542 | 351 | 6,485 |
Total lease liabilities | ¥ 15,014 | $ 2,071 | ¥ 24,030 |
LEASES - Summary of Future Mini
LEASES - Summary of Future Minimum Payment Operating Leases (Details) ¥ in Thousands, $ in Thousands | Jun. 30, 2023 CNY (¥) | Jun. 30, 2023 USD ($) | Dec. 31, 2022 CNY (¥) |
LEASES | |||
2023 | ¥ 9,245 | $ 1,275 | |
2024 | 4,515 | 623 | |
2025 | 1,623 | 224 | |
2026 | 0 | 0 | |
2027 and thereafter | 0 | 0 | |
Total undiscounted lease payments | 15,383 | 2,122 | |
Less: imputed interest | (369) | (51) | |
Total lease liabilities | ¥ 15,014 | $ 2,071 | ¥ 24,030 |
LEASES - Summary of Lease Cost
LEASES - Summary of Lease Cost and Other Information (Details) ¥ in Thousands, $ in Thousands | 6 Months Ended | ||
Jun. 30, 2023 CNY (¥) | Jun. 30, 2023 USD ($) | Jun. 30, 2022 CNY (¥) | |
Lease cost | |||
Operating lease cost | ¥ 9,048 | $ 1,248 | ¥ 9,147 |
Short-term lease cost | 1,015 | 140 | 534 |
Total lease cost | 10,063 | 1,388 | 9,681 |
Cash paid for amounts included in the measurement of lease liabilities | ¥ 9,436 | $ 1,301 | 7,200 |
Right-of-use assets obtained in exchange for new operating lease liabilities | ¥ 1,010 | ||
Weighted-average remaining lease term | 1 year 1 month 24 days | 1 year 1 month 24 days | 1 year 5 months 19 days |
Weighted-average discount rate | 5% | 5% | 5% |
LEASES - Additional Information
LEASES - Additional Information (Details) - CNY (¥) ¥ in Thousands | 6 Months Ended | |
Jun. 30, 2023 | Jun. 30, 2022 | |
LEASES | ||
Variable lease cost | ¥ 0 | ¥ 0 |
OTHER NON-CURRENT ASSETS (Detai
OTHER NON-CURRENT ASSETS (Details) ¥ in Thousands, $ in Thousands | Jun. 30, 2023 CNY (¥) | Jun. 30, 2023 USD ($) | Dec. 31, 2022 CNY (¥) |
OTHER NON-CURRENT ASSETS | |||
Prepayments for property, equipment and software | ¥ 5,084 | $ 701 | ¥ 10,282 |
Long-term deposits | 2,383 | 329 | 2,430 |
Others | 3,419 | 471 | 3,137 |
Total other non-current assets | ¥ 10,886 | $ 1,501 | ¥ 15,849 |
ACCRUALS AND OTHER CURRENT LI_3
ACCRUALS AND OTHER CURRENT LIABILITIES (Details) ¥ in Thousands, $ in Thousands | Jun. 30, 2023 CNY (¥) | Jun. 30, 2023 USD ($) | Dec. 31, 2022 CNY (¥) |
ACCRUALS AND OTHER CURRENT LIABILITIES | |||
Accrued external research and development related expenses | ¥ 40,288 | $ 5,556 | ¥ 47,073 |
Salary and welfare payables | 18,699 | 2,579 | 20,622 |
Professional service fees | 7,765 | 1,071 | 10,252 |
Deferred income for reimbursement of the expenses related to the establishment of the ADS facility | 3,234 | 446 | 2,902 |
Others | 5,594 | 770 | 5,142 |
Accruals and other current liabilities | ¥ 75,580 | $ 10,422 | ¥ 85,991 |
BORROWINGS - Schedule of Borrow
BORROWINGS - Schedule of Borrowings (Details) ¥ in Thousands, $ in Thousands | Jun. 30, 2023 CNY (¥) | Jun. 30, 2023 USD ($) | Dec. 31, 2022 CNY (¥) |
Short-term borrowings: | |||
Bank loans | ¥ 90,000 | $ 12,412 | ¥ 104,600 |
Current portion of long-term borrowings | 13,004 | 1,793 | 7,844 |
Total current borrowings | 103,004 | 14,205 | 112,444 |
Long-term borrowings: | |||
Bank loans | 39,958 | 5,510 | 46,505 |
Total non-current borrowings | 39,958 | 5,510 | 46,505 |
Total borrowings | ¥ 142,962 | $ 19,715 | ¥ 158,949 |
BORROWINGS - Additional Informa
BORROWINGS - Additional Information (Details) ¥ in Thousands | 1 Months Ended | |||||||
Feb. 28, 2023 CNY (¥) loan | Dec. 31, 2022 CNY (¥) | Aug. 31, 2022 CNY (¥) loan | Jun. 30, 2022 CNY (¥) loan | Mar. 31, 2022 CNY (¥) loan | Jul. 31, 2020 CNY (¥) | Jan. 31, 2020 CNY (¥) | Jun. 30, 2023 CNY (¥) | |
Bank Of China | Term loan | Maximum | ||||||||
BORROWINGS | ||||||||
Short term debt effective rate of interest | 5% | |||||||
Bank Of China | Term loan | Minimum | ||||||||
BORROWINGS | ||||||||
Short term debt effective rate of interest | 4.85% | |||||||
Bank Of China | Term Loan Facility Two | ||||||||
BORROWINGS | ||||||||
Long term debt instrument term | 60 months | |||||||
Five-year loan prime rate | Bank Of China | Term loan | ||||||||
BORROWINGS | ||||||||
Debt instrument variable interest rate spread | 0.20% | |||||||
Suzhou Gracell Biotechnologies Co Ltd Suzhou Gracell | Bank Of China | ||||||||
BORROWINGS | ||||||||
Line of credit facility maximum borrowing capacity | ¥ 69,000 | |||||||
Suzhou Gracell Biotechnologies Co Ltd Suzhou Gracell | Bank Of China | Term loan | ||||||||
BORROWINGS | ||||||||
Long term debt instrument term | 72 months | |||||||
Long term line of credit aggregate amount drawn | ¥ 44,280 | |||||||
Suzhou Gracell Biotechnologies Co Ltd Suzhou Gracell | China Merchants Bank | Term Loan Facility Two | ||||||||
BORROWINGS | ||||||||
Line of credit facility maximum borrowing capacity | ¥ 29,000 | |||||||
Long term line of credit aggregate amount drawn | 13,870 | |||||||
Long term line of credit aggregate amount repaid | ¥ 5,190 | |||||||
Suzhou Gracell Biotechnologies Co Ltd Suzhou Gracell | One-year loan prime rate | China Merchants Bank | Term Loan Facility Two | ||||||||
BORROWINGS | ||||||||
Debt instrument variable interest rate spread | 1% | |||||||
Hangzhou Bank | Suzhou Gracell Biotechnologies Co Ltd Suzhou Gracell | Term Loan Agreement One | ||||||||
BORROWINGS | ||||||||
Short term loan period | 12 months | 12 months | ||||||
Debt instrument face value | ¥ 35,000 | ¥ 15,000 | ||||||
Short Term Loan Agreement One | China Industrial Bank | Suzhou Gracell Biotechnologies Co Ltd Suzhou Gracell | ||||||||
BORROWINGS | ||||||||
Debt instrument face value | ¥ 9,900 | ¥ 9,900 | ||||||
Short Term Loan Agreement Two | Suzhou Gracell Biotechnologies Co Ltd Suzhou Gracell | China Merchants Bank | ||||||||
BORROWINGS | ||||||||
Short term debt effective rate of interest | 4.85% | |||||||
Short Term Loan Agreement Two | China Industrial Bank | Suzhou Gracell Biotechnologies Co Ltd Suzhou Gracell | ||||||||
BORROWINGS | ||||||||
Debt instrument face value | 9,900 | 9,900 | ||||||
Short Term Loan Agreement Three | China Industrial Bank | Suzhou Gracell Biotechnologies Co Ltd Suzhou Gracell | ||||||||
BORROWINGS | ||||||||
Debt instrument face value | ¥ 9,800 | ¥ 9,800 | ||||||
Short Term Loan Agreements | China Construction Bank | Suzhou Gracell Biotechnologies Co Ltd Suzhou Gracell | ||||||||
BORROWINGS | ||||||||
Proceeds From short-term debt | ¥ 20,000 | |||||||
Short term loan period | 12 months | |||||||
Short term debt effective rate of interest | 3.80% | |||||||
Short Term Loan Agreements | China CITIC Bank | Suzhou Gracell Biotechnologies Co Ltd Suzhou Gracell | ||||||||
BORROWINGS | ||||||||
Short term loan period | 12 months | |||||||
Debt instrument face value | ¥ 20,000 | |||||||
Short term debt effective rate of interest | 3.80% | |||||||
Short Term Loan Agreements | China Industrial Bank | Suzhou Gracell Biotechnologies Co Ltd Suzhou Gracell | ||||||||
BORROWINGS | ||||||||
Short term loan period | 12 months | 12 months | ||||||
Short term debt effective rate of interest | 4.30% | 4.30% | ||||||
Number of loan agreements | loan | 3 | 3 | ||||||
Short Term Loan Agreements | Hangzhou Bank | Suzhou Gracell Biotechnologies Co Ltd Suzhou Gracell | ||||||||
BORROWINGS | ||||||||
Short term loan period | 12 months | |||||||
Debt instrument face value | ¥ 20,000 | |||||||
Short term debt effective rate of interest | 3.76% | 3.76% | 4.35% | |||||
Number of loan agreements | loan | 2 | 2 | 2 |
ORDINARY SHARES (Details)
ORDINARY SHARES (Details) - shares | Jun. 30, 2023 | Dec. 31, 2022 |
ORDINARY SHARES | ||
Ordinary shares, shares issued | 340,655,139 | 338,498,819 |
Ordinary shares, shares outstanding | 340,655,139 | 338,498,819 |
SHARE-BASED COMPENSATION (Detai
SHARE-BASED COMPENSATION (Details) ¥ in Thousands, $ in Thousands | 1 Months Ended | 6 Months Ended | |||||
Dec. 31, 2020 | Jun. 30, 2023 CNY (¥) installment shares | Jun. 30, 2023 USD ($) installment shares | Jun. 30, 2022 CNY (¥) shares | Oct. 31, 2020 shares | Jul. 31, 2020 shares | Apr. 15, 2019 shares | |
SHARE-BASED COMPENSATION | |||||||
Number of equal installments | installment | 4 | 4 | |||||
Vesting period | 4 years | 4 years | |||||
Period to exercise vested options when the option becomes exercisable | 90 days | 90 days | |||||
Period to exercise vested options on cessation of employment or directorship | 3 months | 3 months | |||||
Share based compensation by share based payment arrangement additional number of shares available for issuance as percentage of outstanding stock maximum | 1% | ||||||
Share-based compensation arrangement by share-based payment award, percentage of outstanding stock maximum | 3% | ||||||
Restricted Stock Units (RSUs) | |||||||
SHARE-BASED COMPENSATION | |||||||
Allocated share based compensation expense | ¥ 8,229 | $ 1,134 | ¥ 1,835 | ||||
Number of units vested | 4,873,937 | 4,873,937 | |||||
Restated And Amended Employee Stock Option Plan Two Thousand And Nineteen | |||||||
SHARE-BASED COMPENSATION | |||||||
Ordinary shares reserved for future issuance | 4,388,060 | ||||||
Maximum number of shares issuable | 10 years | 10 years | |||||
Second Amended and Restated Employee Stock Option Plan | Maximum | |||||||
SHARE-BASED COMPENSATION | |||||||
Share-based compensation arrangement by share-based payment award, number of shares authorized | 7,388,060 | ||||||
Third Amended And Restated Employee Stock Option Plan | |||||||
SHARE-BASED COMPENSATION | |||||||
Ordinary shares reserved for future issuance | 10,216,234 | ||||||
2020 Plan | Restricted Stock Units (RSUs) | Employees Directors And Consultants | |||||||
SHARE-BASED COMPENSATION | |||||||
Number of units granted | 3,063,665 | 3,063,665 | 479,741 |
SHARE-BASED COMPENSATION - Sche
SHARE-BASED COMPENSATION - Schedule of the option activities (Details) | 6 Months Ended | 12 Months Ended | |||||
Jun. 30, 2023 $ / shares | Jun. 30, 2023 CNY (¥) ¥ / shares shares | Jun. 30, 2022 $ / shares | Jun. 30, 2022 CNY (¥) ¥ / shares shares | Dec. 31, 2022 $ / shares | Dec. 31, 2022 CNY (¥) ¥ / shares shares | Dec. 31, 2021 CNY (¥) ¥ / shares shares | |
SHARE-BASED COMPENSATION | |||||||
Number of Options, Outstanding at beginning balance | shares | 15,162,546 | 13,102,590 | 13,102,590 | ||||
Number of Options, Granted | shares | 663,405 | 2,199,826 | |||||
Number of Options, Forfeited | shares | (828,031) | (397,723) | |||||
Number of Options, Exercised | shares | (51,730) | (66,945) | |||||
Number of Options, Expired | shares | (93,522) | ||||||
Number of Options, Outstanding at ending balance | shares | 14,852,668 | 14,837,748 | 15,162,546 | 13,102,590 | |||
Weighted Average Exercise Price, Outstanding at beginning balance | $ / shares | $ 1.39 | $ 1.60 | $ 1.60 | ||||
Weighted Average Exercise Price, Granted | $ / shares | 0.38 | 0.65 | |||||
Weighted Average Exercise Price, Forfeited | $ / shares | 2.01 | 1.32 | |||||
Weighted-Average Exercise Price, Exercised | $ / shares | 0.39 | 0.30 | |||||
Weighted-Average Exercise Price, Expired | $ / shares | 1.32 | ||||||
Weighted Average Exercise Price, Outstanding at ending balance | $ / shares | 1.31 | 1.47 | 1.39 | ||||
Weighted-Average Grant Date Fair Value, Outstanding at beginning balance | (per share) | 0.91 | ¥ 5.98 | 1.10 | ¥ 7.21 | 1.10 | ¥ 7.21 | |
Weighted-Average Grant Date Fair Value, Granted | (per share) | 0.21 | 1.46 | 0.35 | 2.22 | |||
Weighted-Average Grant Date Fair Value, Forfeited | (per share) | 1.01 | 6.55 | 0.68 | 4.40 | |||
Weighted-Average Grant Date Fair Value, Exercised | (per share) | 0.22 | 1.43 | 0.29 | 2 | |||
Weighted-Average Grant Date Fair Value, Expired | (per share) | 0.66 | 4.35 | |||||
Weighted-Average Grant Date Fair Value, Outstanding at ending balance | (per share) | $ 0.88 | ¥ 5.77 | $ 1 | ¥ 6.57 | $ 0.91 | ¥ 5.98 | ¥ 7.21 |
Weighted Average Remaining Contractual Term, Outstanding at beginning balance (In Years) | 7 years 8 months 19 days | 8 years 5 months 8 days | 8 years 1 month 20 days | 8 years 10 months 9 days | |||
Weighted Average Remaining Contractual Term, Outstanding at ending balance | 7 years 8 months 19 days | 8 years 5 months 8 days | 8 years 1 month 20 days | 8 years 10 months 9 days | |||
Aggregate Intrinsic Value, Outstanding at beginning balance | ¥ | ¥ 1,290,000 | ¥ 12,335 | ¥ 12,335 | ||||
Aggregate Intrinsic Value, Outstanding at ending balance | ¥ | ¥ 7,490 | ¥ 14,455 | ¥ 1,290,000 | ¥ 12,335 |
SHARE-BASED COMPENSATION - Sc_2
SHARE-BASED COMPENSATION - Schedule of assumptions used to estimate fair value of the share options granted (Details) | 6 Months Ended | |
Jun. 30, 2023 | Jun. 30, 2021 | |
SHARE-BASED COMPENSATION | ||
Risk-free interest rate minimum | 0.0346% | 0.0179% |
Risk-free interest rate maximum | 0.041% | 0.0312% |
Dividend yield | 0% | 0% |
Expected volatility range minimum | 0.5736% | 0.5562% |
Expected volatility range maximum | 0.5755% | 0.5594% |
Exercise multiple | 2.20 | |
Contractual life | 10 years | 10 years |
Maximum | ||
SHARE-BASED COMPENSATION | ||
Exercise multiple | 2.80 | |
Minimum | ||
SHARE-BASED COMPENSATION | ||
Exercise multiple | 2.20 |
SHARE-BASED COMPENSATION- Share
SHARE-BASED COMPENSATION- Share-based compensation expenses (Details) ¥ in Thousands, $ in Thousands | 6 Months Ended | ||
Jun. 30, 2023 CNY (¥) | Jun. 30, 2023 USD ($) | Jun. 30, 2022 CNY (¥) | |
Options | |||
SHARE-BASED COMPENSATION | |||
Share-based compensation expenses | ¥ 6,682 | $ 922 | ¥ 13,763 |
Restricted Stock Units (RSUs) | |||
SHARE-BASED COMPENSATION | |||
Share-based compensation expenses | 8,229 | 1,134 | 1,835 |
Research and development expenses | Options | |||
SHARE-BASED COMPENSATION | |||
Share-based compensation expenses | 2,487 | 343 | 6,909 |
Research and development expenses | Restricted Stock Units (RSUs) | |||
SHARE-BASED COMPENSATION | |||
Share-based compensation expenses | 3,230 | 445 | 644 |
Administrative expenses | Options | |||
SHARE-BASED COMPENSATION | |||
Share-based compensation expenses | 4,195 | 579 | 6,854 |
Administrative expenses | Restricted Stock Units (RSUs) | |||
SHARE-BASED COMPENSATION | |||
Share-based compensation expenses | ¥ 4,999 | $ 689 | ¥ 1,191 |
NET LOSS PER SHARE - Summary of
NET LOSS PER SHARE - Summary of Earning Per Shares Basic and Diluted (Details) ¥ / shares in Units, $ / shares in Units, ¥ in Thousands, $ in Thousands | 6 Months Ended | ||
Jun. 30, 2023 CNY (¥) ¥ / shares shares | Jun. 30, 2023 USD ($) $ / shares shares | Jun. 30, 2022 CNY (¥) ¥ / shares shares | |
Numerator: | |||
Net loss attributable to Gracell Biotechnologies Inc.'s ordinary shareholders | ¥ (298,662) | $ (41,187) | ¥ (304,888) |
Denominator: | |||
Weighted-average number of ordinary shares outstanding-basic (in shares) | 339,951,916 | 339,951,916 | 338,244,214 |
Weighted-average number of ordinary shares outstanding-diluted (in shares) | 339,951,916 | 339,951,916 | 338,244,214 |
Net loss per share attributable to Gracell Biotechnologies Inc.'s ordinary shareholders-basic | (per share) | ¥ (0.88) | $ (0.12) | ¥ (0.90) |
Net loss per share attributable to Gracell Biotechnologies Inc.'s ordinary shareholders-diluted | (per share) | ¥ (0.88) | $ (0.12) | ¥ (0.90) |
NET LOSS PER SHARE - Summary _2
NET LOSS PER SHARE - Summary of Anti-dilutive Securities (Details) - shares | 6 Months Ended | |
Jun. 30, 2023 | Jun. 30, 2022 | |
Incremental shares on share options and RSUs | ||
Summary of Anti-dilutive Securities | ||
Anti-dilutive securities | 1,455,957 | 1,241,772 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details) - Unitex Capital Ltd ¥ in Thousands, $ in Thousands | 6 Months Ended | ||
Jun. 30, 2023 CNY (¥) | Jun. 30, 2023 USD ($) | Jun. 30, 2022 CNY (¥) | |
RELATED PARTY TRANSACTIONS | |||
Payment for professional service fee | ¥ 4,117 | $ 594 | ¥ 6,952 |
Payment of professional service fees paid | ¥ 6,089 | ¥ 4,477 |
SUBSEQUENT EVENTS (Details)
SUBSEQUENT EVENTS (Details) - Subsequent Event $ in Millions | Aug. 10, 2023 USD ($) shares |
SUBSEQUENT EVENTS | |
Number of shares sold in Private Placement | 138,900,000 |
Number of shares called by warrants issued in Private Placement | 44,802,870 |
Term of warrants issued in Private Placement | 24 months |
Proceeds from the private placement of ordinary shares if the warrants are fully exercised | $ | $ 100 |
Maximum additional proceeds if warrants issued in Private Placement are fully exercised | $ | $ 50 |
American depositary shares | |
SUBSEQUENT EVENTS | |
Number of shares sold in Private Placement | 27,780,000 |
Number of shares called by warrants issued in Private Placement | 8,960,574 |